20100303IPC to ICIP 1-10.pdf

e'jll:~POR~
An IDACORP Company
BARTON L. KLINE
Lead Counsel
bklinetmidahopower.com
March 3, 2010 Office of the
REcei E
MAR - 3 2010
VIA HAND DELIVERY Boise, Idaho
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-10-01
BASE LEVEL FOR NET POWER SUPPL Y EXPENSES FOR 2010
Dear Ms. Jewell:
Enclosed for filing are an original and three (3) copies of Idaho Power Company's
Response to the First Production Request of the Industrial Customers of Idaho Power in
the above matter. In addition, four (4) confidential disks containing attachments responsive
to the production requests have been provided in a separate envelope. The confidential
disks have been provided to those parties that have signed the Protective Agreement.
Vert truly yours,~~
Barton L. Kline
BLK:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise. 10 83702
-I
..
BARTON L. KLINE (ISB No. 1526)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
bklineCâidahopower.com
InordstromCâidahopower.com
blic U\i\ìtìes comfí\lS$\O'I,idaho ~~.ce of the secretllrt
'RECEIVED
MAR - 3 2010
Boise, idahOAttorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY TO
ESTABLISH ITS BASE LEVEL FOR NET
POWER SUPPLY EXPENSES FOR 2010.
)
) CASE NO. IPC-E-10-01
)
) IDAHO POWER COMPANY'S
) RESPONSE TO THE FIRST
) PRODUCTION REQUEST OF THE
) INDUSTRIAL CUSTOMERS OF
) IDAHO POWER
)
COMES NOW, Idaho Power Company ("Idaho Powet' or "the Company"), and in
response to the First Production of Request of the Industrial Customers of Idaho Power
dated February 10, 2010, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 1
..
REQUEST NO.1: For each month in 2010, please provide information in the
following table format. (BCC equals Bridger Coal Company.)
January February March Etc
BCC Surface cost per ton
(with EITF 04-6 effect)
BCC Underground cost per ton
BCC Incremental cost per ton
(if applicable)
BCC Total cost per ton
3rd Party coal cost per ton
(list separately for each supplier)
3rd Party coal transportation cost
per ton
(list separately for each supplier)
Total Bridger Costs
BCC Surface Cost per ton
(without EITF 04-6 effect)
RESPONSE TO REQUEST NO.1: Please see the enclosed CD.
Since this data is confidential, Idaho Power is providing this information only to
parties that have executed the Protective Agreement.
The response to this Request was prepared by Kent Christensen, Joint Venture
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 2
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REQUEST NO.2: As a follow up to Production Request NO.1, please also
explain any third party deferred pricing.
a. Is this price added to the spot price to determine the cost for the
associated delivery or is it a stand-alone price per ton?
b. For each month, please provide the total cost and average cost per ton for
the third party mine based on tons delivered.
RESPONSE TO REQUEST NO.2:
a. The prices shown in the attachment provided in response to Request No.
1 for third-party deferred pricing are stand-alone prices per ton for coal deliveries under
the prior contract that were deferred until now. Additional new coal deliveries are not
available at deferred prices.
b. Please see the enclosed CD which provides the total cost and average
cost per ton for the third party mine based on tons delivered.
Since this data is confidential, Idaho Power is providing this information only to
parties that have executed the Protective Agreement.
The response to this Request was prepared by Kent Christensen, Joint Venture
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 3
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REQUEST NO.3: For each month in 2010, please provide the following
information in the following table format. (BCC equals Bridger Coal Company.) Please
provide IPC share (33.33 percent).
January February March Etc
BCC Surface tons
BCC Underground tons
BCC Incremental tons
(if applicable)
BCC Total tons
3rd Party tons (list separately
or each supplier)
lTotal tons supplied to Bridger
RESPONSE TO REQUEST NO.3: Please see the enclosed CD.
Since this data is confidential, Idaho Power is providing this information only to
parties that have executed the Protective Agreement.
The response to this Request was prepared by Kent Christensen, Joint Venture
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 4
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REQUEST NO.4: Concerning the Direct Testimony of Scott Wright at pages 8-
9, please provide the 2007, 2008, 2009, and 2010 cost per ton for each (affliate and
third party) coal supplier for Bridger in the following table format. Please list each
supplier separately. Please provide applicable pages, of contract that lists pricing.
2007 2008 2009 2010
BCC
Bridger 3rd party
RESPONSE TO REQUEST NO.4: Please see the enclosed CD which contains
a spreadsheet and applicable pages of amendments and contracts that list pricing.
Since this data is confidential, Idaho Power is providing this information only to
parties that have executed the Protective Agreement.
The response to this Request was prepared by Kent Christensen, Joint Venture
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 5
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REQUEST NO.5: As a follow up to Request for Production NO.4, please
explain why the costs for BCC coal have increased.
RESPONSE TO REQUEST NO.5:
Cost Increase 2007 to 2008
Labor. Workforce costs rose approximately $2.6 MM (up $0.457/ton), a 5.2 percent
increase. The main components were increased headcount and a wage increase of
approximately 3.5 percent.
Materials and Supplies. Costs increased approximately $7 MM (up $1.23/ton), a 16.2
percent increase. The main components were increased costs for explosives, diesel
fuel, electricity, repair parts, and operational supplies.
Non-Controllable. Costs increased approximately $6 MM (up $1.05/ton), a 10.6
percent increase. The main components were increases in longwall amortization and
ongoing depreciation and amortization. These costs were partially offset by lower
taxes.
Cost Increase 2008 to 2009
Labor. Workforce costs increased approximately $3.0 MM (up $0.54/ton) a 6.2 percent
increase. The main components were a wage rate increase of approximately 3.5
percent, management labor, unscheduled overtime, and benefits.
Materials and Supplies. Costs increased approximately $5.8 MM (up $1.03/ton), an
11.5 percent increase. The main components were increased costs for explosives,
repair parts, and propane. These costs were partially offset by lower diesel fuel costs.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 6
. .
Other Operational Expenses. Decreased by approximately $4.0 MM (down
$1.05/ton), a 21.5 percent decrease. The main component was reduced highwall
mining.
Cost Increase 2009 to 2010 (Projected)
Labor. Workforce costs are projected to increase approximately $0.75 MM (up
$0.13/ton) a 1.4 percent increase. Headcount and wage rates are projected to
increase. These increases were partially offset by a projected decrease in unscheduled
overtime.
Materials and Supplies. Costs are projected to increase by approximately $3.4 MM
(up $0.58/ton), a 6 percent increase. The main components are projected increases in
diesel fuel, gasoline, electricity, operating supplies, and mine equipment maintenance.
These costs were partially offset by projected reductions for natural gas, explosives,
and repair parts.
Other Operational Expenses. Costs are projected to decrease by $6.9 MM (down
$1.19/ton), a 47.2 percent reduction. The main components are projected decreases
for outside services and highwall mining.
Non-Controllable. Costs are projected to increase approximately $10 MM (up
$1.72/ton), a 15.7 percent increase. The main components are projected increases in
royalties, depreciation and amortization, and taxes.
The response to this Request was prepared by Tom Harvey, Joint Projects
Manager, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 7
..
REQUEST NO.6: Concerning the Direct Testimony of Scott Wright at page 9
regarding the new contract to purchase BCC coal after 2009, please explain why Idaho
Power entered into a contract to purchase its affiliate's (BCC's) surface-mined coal (with
EITF 04-6 effect) when that cost is substantially higher than the cost of coal available
through the Bridger third party.
RESPONSE TO REQUEST NO.6: The Company disagrees with the two
contentions that in the Request (1) additional third-party coal is available to replace
BCC deliveries and (2) that BCC coal is more expensive than third-party coaL. The
"newly negotiated agreements starting in 2010" discussed on page 9 of Scott Wright's
direct testimony refer to the Black Butte Coal Company contract that is effective after
December 31, 2009. The Bridger Coal Company Third Restated and Amended Coal
Sales Agreement was not re-negotiated although it has been recently amended. These
amendments set forth the pricing of coaL. The pricing amendments for 2009 and 2010
are included in this response.
Since this data is confidential, Idaho Power is providing this information only to
parties that have executed the Protective Agreement.
The response to this Request was prepared by Tom Harvey, Joint Projects
Manager, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 8
. .
REQUEST NO.7: Please provide a list of the values of the fuel prices,
transportation costs, maintenance outages, heat rates and forced outage rate variables
for all the coal and gas thermal generation plants used in the AURORA model run.
Please explain the variation for any of the variables that are more than 3% different from
the value used in the previous NPSE analysis authorized in Idaho Public Utilities
Commission Order No. 30722 from the 2008 General Rate Case.
RESPONSE TO REQUEST NO.7: Included on the enclosed CD is an Excel
spreadsheet that compares the major inputs that were changed between the 2008 and
2010 Test Years. The change in fuel prices are driven primarily by new updated
information which includes new coal prices, along with an updated gas price forecast.
The planned maintenance schedule for the coal plants change each year, so that
information is updated on a yearly basis. The heat rates for each plant are based on a
rollng average of historical information; therefore, a slight change occurs on a yearly
basis. The forced outage rate for each plant is calculated similar to the heat rate
information, mentioned above.
Since this data is confidential, Idaho Power is providing this information only to
parties that have executed the Protective Agreement.
The response to this Request was prepared by Scott Wright, Pricing Analyst I,
Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 9
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REQUEST NO.8: Please provide an updated list of the PURPA contracts
modeled in the AURORA run including annual output and unit cost. Indicate which are
existing contracts and which are new.
RESPONSE TO REQUEST NO.8: Included on the enclosed CD is an Excel
spreadsheet that includes the PURPA contracts modeled in the AURORA run.
Since this data is confidential, Idaho Power is providing this information only to
parties that have executed the Protective Agreement.
The response to this Request was prepared by Scott Wright, Pricing Analyst I,
Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 10
..
REQUEST NO.9: As a follow up to Request for Production NO.8, please list
each new PURPA contract, and state the online date in the contract and whether the
project is online currently. For new PURPA contracts that are not online currently,
please provide information in possession of the Company regarding any delays in the
likely online date from that set forth in the applicable contract.
RESPONSE TO REQUEST NO.9: See the Company's Response to Production
Response NO.8. The Company is not aware of any delays to the on-line dates
provided.
The response to this Request was prepared by Scott Wright, Pricing Analyst I,
Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 11
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REQUEST NO. 10: Idaho Power recently leased some water rights in the upper
Snake River watershed for August and September. Please demonstrate where the
benefit to hydro power output can be seen from this investment.
RESPONSE TO REQUEST NO. 10: Included on the enclosed CD is the
analysis that provides the net benefit of the water lease agreement.
Since this data is confidential, Idaho Power is providing this information only to
parties that have executed the Protective Agreement.
The response to this Request was prepared by Scott Wright, Pricing Analyst I,
Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power
Company.
3Y"CDATED at Boise, Idaho, this day of March 2010.
ßJú-~BARTANL
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 12
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CERTIFICATE OF SERVICE
o và.I HEREBY CERTIFY that on this ~ day of March 2010 I served a true and
correct copy of the foregoing IDAHO POWER COMPANY'S RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO
POWER upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Scott Woodbury
Deputy Attomey General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
-- Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email Scott.Woodburv((puc.idaho.gov
Industrial Customers of Idaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY
515 North 27th Street
P.O. Box 7218
Boise, Idaho 83702
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email peter((richardsonandolearv.com
greg((richardsonandoleary.com
Dr. Don Reading
6070 Hil Road
Boise, Idaho 83703
_Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email dreading((mindspring.com
Idaho Irrigation Pumpers
Association, Inc.
Eric L. Olsen
RACINE, OLSON, NYE, BUDGE
& BAILEY, CHARTERED
P.O. Box 1391
201 East Center
Pocatello, Idaho 83204-1391
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email elo((racinelaw.net
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 13
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Anthony Yankel
Yankel & Associates, Inc.
29814 Lake Road
Bay Village, Ohio 44140
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email tony((yankel.net
~~Barton L. Kline
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -14