Loading...
HomeMy WebLinkAbout20100305IPC to ICIP 13-24.pdfBARTON L. KLINE Lead Counsel bklinetáidahopower.com March 4,2010 VIA HAND DELIVERY Jean D. Jewell, Secretary Idaho Public Utilities Commission 472 West Washington Street P.O. Box 83720 Boise, Idaho 83720-0074 esIDA~PORCI An IDACORP Company 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 Third Production Request of the Industrial Customers of Idaho Power in the above matter. In addition, enclosed in a separate envelope are four (4) confidential disks and hard copies of confidential information that are being prövidedin response to the production requests. The confidential information has been provided to those parties that have signed the Protective Agreement. Very truly yours,~~ Barton L. Kline BLK:csb Enclosures P.O. Box 70 (83707) 1221 W. Idaho St. Boise, ID 83702 BARTON L. KLINE (ISB No. 1526) LISA D. NORDSTROM (ISB No. 5733) Idaho Power Company P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-2682 Facsimile: (208) 388-6936 bklineCâidahopower.com InordstromCâidahopower.com R~E C:~, F~ Zinn lJi'.R( -t. P¡~ 4: 53. v ¡ y , ttl l f Attorneys 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 THIRD ) PRODUCTION REQUEST OF THE ) INDUSTRIAL CUSTOMERS OF ) IDAHO POWER ) COMES NOW, Idaho Power Company ("Idaho Powet' or "the Company"), and in response to the Third Production Request of the Industrial Customers of Idaho Power dated February 24, 2010, herewith submits the following information: IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 1 REQUEST NO. 13: Please provide the average cost and tonnage of coal delivered from Bridger Coal Company (BCC) and Black Butte (BB) Mines for each year 2005 through 2009. a. For the years 2007 and 2009, please provide costs and tons delivered per month per year from both BCC and BB. RESPONSE TO REQUEST NO. 13: Please see the spreadsheets included on 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 2 REQUEST NO. 14: Please explain the purpose of "mixing" BCC surface and underground coal to achieve required quality levels. a. What are the quality metrics that are being achieved (Le., Btu, S02, other)? b. How is "mixing" performed during the months that BCC does not provide surface coal? c. Is the BB coal used for "mixing"? Please explain. RESPONSE TO REQUEST NO. 14: All three coal sources for the Jim Bridger Plant (Bridger surface, Bridger underground, and Black Butte) have quality cycles. Geology and quality can vary within a seam as well as from seam to seam. Through blending of coals, both the Bridger Mine and the Jim Bridger Plant minimize quality variations that undermine optimal plant performance. Both the Bridger Mine and the Jim Bridger Plant have installed coal analyzers that provide operations with instantaneous data. With this information, both the mine and the plant can adapt their blending. The CoalScan Analyzers located at the Bridger Mine measure ash content. The ash content of the underground operation fluctuates depending upon the ash content of the mined seam and the amount of coal produced by the continuous miners. In 2010, for instance, the ash content of the underground coal is projected to range from approximately 10 percent to 22 percent. Comparatively, the ash content of the surface operation is projected to be from 7 percent to 13 percent. In addition to ash, the Bridger Mine has established coal quality targets for heat content (Btu/lb), ash softening temperature, iron, sodium, and calcium with sodium, ash, IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 3 and heat content as the most critical variables. From a coal quality perspective, the Bridger surface and underground operations are complementary. On average, the Bridger surface operation produces the coal with the highest sodium, and lowest ash content and ash softening temperatures, while the Bridger underground operation produces the coal with the lowest sodium, and highest ash content and ash fusion temperatures. Fueling plans are prepared to ensure Bridger Mine coal deliveries, in aggregate, conform to established targets. The Jim Bridger Plant also performs blending. To maximize generating availabilty, a Thermo Fischer CQM Elemental Analyzer has been installed at the Jim Bridger Plant. This analyzer provides the Plant with instantaneous coal quality data as coal is transferred from the stockpile to the coal silos. The plant operator is provided with measurements of moisture, ash, sulfur, heat content, ash softening temperature, iron, calcium, and sodium. a. Coal quality targets have been established for heat content (Btu/lb), ash content, sulfur, ash softening temperature, sodium, calcium, and iron for Bridger Coal Company, Black Butte Coal Company, and the Jim Bridger Plant. Personnel from the PacifiCorp Fuels Department, Bridger Mine, Idaho Power, and Jim Bridger Plant all participate in daily calls. Fueling plans are jointly reviewed by the participants. Depending upon Black Butte's coal content, the Bridger Mine wil adjust the proportion of surface and underground deliveries to ensure coal, in aggregate, conforms to established targets. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 4 Coal Quality Targets Btu Content AshSul Ash softni Tempeatu Sodiw Calciw Iron ~4% Jim BrigerPla ~9200 12% 0.60% ~2175 ~3.2% ~8% ~6% Briger Coal Company ~9200 12% - 14% 0.60% ~ 2175 2%- 3% ~8% ~6% Black But Coal ~9000 11.50% 0.60% b. Coal deliveries from the Bridger surface operation are projected in all but three months of the test period. During the three months of non-surface deliveries, the Bridger Mine can assure a consistent coal quality by blending stockpiled underground coaL. Bridger Mine has stockpiled limited amounts of underground coal with varying quality in three locations. The largest stockpile of underground coal is contained in the stacking tubes located outside the underground portal. c. Black Butte coal is blended with Bridger Mine coal at the Jim Bridger Plant. Under the prior Black Butte coal supply agreement, in addition to their deliveries by rail, Black Butte Coal Company sourced the Jim Bridger Plant with 750 k tons of premium low sodium, high ash fusion temperature coal from Pits 22, 23, and 24 (Leucite Hils Mine). This coal was transported by truck and stockpiled by Black Butte at a site adjacent to the Bridger Plant. Bridger Plant personnel utilzed this coal for blending on an as needed basis. These ultra-low sodium reserves, however, were depleted in 2009. Under the new Black Butte agreement, with the term of 2010 though 2014, the coal is being sourced from the higher sodium Pit 11 and Pit 14. The current contract specification allows Black Butte Coal Company to ship coal with up to 4 percent sodium on a monthly basis. Sodium content above 3.2 percent causes ash to slag on the boiler IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 5 tubes. Blending with lower sodium Bridger Mine coal is required to mitigate Black Butte coal deliveries with sodium content above 3 percent. 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 6 REQUEST NO. 15: Please outlne any specifications I quality differences (Btu, S02, etc.) between BCC and BB coaL. a. Is BB coal of a sufficient specification I quality to burn at Bridger or is there some type of mixing or treatment required to burn BB coal that is not required for BCC coal? Please explain. RESPONSE TO REQUEST NO. 15: Similar to Bridger Coal, the Black Butte mine ships a blended product. Black Butte is currently mining in two pits. The two active pits, Pit 14 and Pit 11, have significantly different sodium levels and heat content. The sodium content of Pit 11 is much higher and can cause slagging of ash on the boiler walls. The plant has established an approximate 3 percent sodium target. The current contract specifications allow the Black Butte mine to ship coal with up to 4 percent sodium on a monthly basis. At times, the Black Butte mine has had limited production capacity of low sodium content. During periods of high sodium Black Butte coal, low sodium Bridger surface coal is critical for blending. 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 7 REQUEST NO. 16: As a follow-up ICIP's Request for Production NO.2 in this docket (Oregon PUC Staffs Data Request No. 20 in Oregon PUC Docket No. UE 214), please explain the November 2010 BB tonnage, which is higher than the other eleven months. a. What in BB's contract allows for increased tonnage during this month? Please explain. b. What in BB's contract limits this increased supply for only one month? Please explain. RESPONSE TO REQUEST NO. 16: The Black Butte coal supply contract specifies that deliveries wil be in approximately equal monthly quantities except as otherwise agreed upon from time-to-time by PacifiCorp, Idaho Power, and Black Butte. When modeling the forecasted deliveries from any coal source, Idaho Power attempts to model monthly coal deliveries to achieve a balance between forecasted consumption, forecasted deliveries from all sources, and forecasted inventory levels. The November 2010 Black Butte tonnage was adjusted to achieve these forecasting goals. Actual monthly deliveries from Black Butte wil depend on the number of delivery days in the month, the allocation of monthly deliveries between Idaho Power and PacifiCorp, and Black Butte's abilty to deliver during the month. 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 8 REQUEST NO. 17: Please provide copies of any correspondence with BB that discusses the possibilty of increasing supplies to Bridger over the amounts listed in Idaho Power's response to ICIP's Request for Production NO.2 in this docket (Oregon PUC Staff's Data Request No. 20 in Oregon PUC Docket No. UE 214). a. Has Idaho Power, IERCO, Pacific Minerals, or PacifiCorp specifically inquired about increasing supplies to Bridger to provide more than one-third of Bridgets coal? Please explain and provide copies of relevant correspondence. RESPONSE TO REQUEST NO. 17: The response to this Request contains confidential information and wil be provided to those 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 9 REQUEST NO. 18: Please provide copies of any correspondence in which BB has specifically declined to or has been unable to increase supplies to Bridger in 2008 and 2009, based on requests from Idaho Power, IERCO, Pacific Minerals, or PacifiCorp. RESPONSE TO REQUEST NO. 18: In 2008, the Black Butte mine did not have excess production capacity. Mining was limited to two pits: Pit 8, a low sodium coal, and Pit 11, a high sodium coaL. Low sodium coal production was limited as Pit 8 reserves were close to depletion. Due to limited Pit 8 supplies, Black Butte's deliveries to the Jim Bridger plant averaged in excess of 4.5 percent sodium in 2008, which necessitated blending of low sodium coal from the Bridger Coal surface mine. The Bridger plant owners had several meetings with Black Butte in 2008 regarding the sodium content and limited supply. Sodium content remained high and excess supply non-existent until Black Butte subsequently opened Pit 14, in 2009. Without Bridger Coal surface mine deliveries in 2008, the Bridger plant would have sustained persistent MW deratings due to slagging. In 2009, at the request of Idaho Power and PacifiCorp, Black Butte agreed to pre-deliver 100,000 tons of 2010 contracted Black Butte deliveries. The Bridger plant owners wanted to increase plant stockpile levels prior to January 19, 2010, when the labor agreement with the Utilty Workers Union of America, Local 157 was due to expire. The pre-delivered coal was at the January 2010 contract price. A copy of the First Amendment to the Black Butte Coal Supply Contract has been attached. Since the First Amendment is confidential, Idaho Power is providing this information only to parties that have executed the Protective Agreement. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 10 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 11 REQUEST NO. 19: Please explain the increased BCC underground tons supplied during the months that surface coal is not provided to Bridger. Please explain why this underground supply is not sustainable over the 12-month period. RESPONSE TO REQUEST NO. 19: In the months that very few or zero BCC surface tons are delivered to the plant (only underground tons delivered) the plant is taking reduced deliveries due to various reasons. The underground mine has limited coal storage capabilty and underground deliveries are scheduled to avoid excessive re- handle costs and maintain the operation of the longwall. The Bridger Coal underground mine is operating at full production capacity during the test period. Coal production in any given month is not representative of the annual run rate due to longwall moves and longwall panel development. The primary method of coal extraction at the Bridger Coal underground operation utilzes a longwall mining system and the longwall mining system is dependent upon development of longwall panels by continuous miners. Coal extraction by the longwall system is limited in the test period as the continuous miners are operating at capacity. Continuous miners are used for development of main entries that function as the main access corridors and section entries which branch off the mains and develop longwall coal panels. Also, in the test period, the longwall system wil be down for 45 days as the system is relocated to the next longwall paneL. There are usually one or two longwall moves per year. Production by the longwall system accounts for the majority of the underground mine's production. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 12 Since production from the underground mine is not consistent from month to month, deliveries to and from the Bridger surface mine inventory are utilzed to maintain consistent deliveries to the Bridger plant 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 13 REQUEST NO. 20: As an update to Idaho Powets response to Oregon PUC Staffs Data Request No. 172 in Oregon PUC Docket No. UE 213, please provide the IERCO Operating Cost Summary for 2009. Concerning the Operating Summaries: a. Please state which line items (Le., management fee, other) is allocated between underground and surface operations? b. Please provide the allocation percent and method (Le., tons, operating expenses, etc.) between surface and underground operations. c. For each line item for surface tons delivered, which line item costs are directly allocated to surface operations? d. What surface line item cost (Le., management fee, other) would be transferred to underground operations if the surface operation ceased? Please explain. e. What is the calculated fixed cost per ton for surface operations? RESPONSE TO REQUEST NO. 20: The response to this Request contains confidential information and wil be provided to those 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 14 REQUEST NO. 21: As a follow-up to Idaho Powets response to ICIP's Request for Production NO.1 in this docket (Oregon PUC Staffs Data Request No.1 in Oregon PUC Docket No. UE 214), please explain the difference in BCC total production cost per ton and BCC sale price per ton. RESPONSE TO REQUEST NO. 21: The BCC sales price per ton includes an operating margin, equal to the overall rate of return authorized in general rate cases where IERCO/BBC operations are treated as part of the regulated activities of the Company. The sales price is adjusted periodically as updated BCC mining expense data becomes available. 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 15 REQUEST NO. 22: How is BB coal delivered to Bridger (Le., rail, truck, both, other)? RESPONSE TO REQUEST NO. 22: Under the new Black Butte coal supply contract, with the term of 2010 though 2014, all Black Butte coal is delivered via raiL. 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 16 REQUEST NO. 23: What are the physical limitations, in both qualitative and quantitative terms, of the maximum amount of tonnage regarding delivery of BB coal if higher delivery amounts were needed? Please explain. RESPONSE TO REQUEST NO. 23: Absent any modifications to the Bridger plant unloading facility, the Bridger plant could unload approximately 3.7 milion tons of Black Butte coal shipped by rail annually. 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 THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 17 REQUEST NO. 24: As a follow-up to Idaho Powets response to Oregon PUC Staff's Data Request NO.6 in Oregon PUC Docket No. UE 214, is there a more recent i amendment (after the Eight Amendment) that outlnes BCC prices for coal costs starting or including January 2010 or later? Please explain. If so, please provide a copy. RESPONSE TO REQUEST NO. 24: Please find copies of the Ninth through Eleventh amendments on the enclosed disk. These amendments cover price changes during 2009 and 2010. 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. DATED at Boise, Idaho, this 4th day of March 2010. ~\~ BARTON L. KLINE Attorney for Idaho Power Company IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 18 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 4th day of March 2010 I served a true and correct copy of the foregoing IDAHO POWER COMPANY'S RESPONSE TO THE THIRD 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 Attorney General Idaho Public Utilties Commission 472 West Washington P.O. Box 83720 Boise, Idaho 83720-0074 -- Hand Delivered U.S. Mail _ Overnight Mail FAX -- Email Scott.Woodburvcæpuc.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 petercærichardsonandolearv.com gregcærichardsonandoleary.com Dr. Don Reading 6070 Hil Road Boise, Idaho 83703 _Hand Delivered -- U.S. Mail _ Overnight Mail FAX -- Email dreadingcæmindspring.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 elocæracinelaw.net IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 19 Anthony Yankel Yankel & Associates, Inc. 29814 Lake Road Bay Vilage, Ohio 44140 Hand Delivered .- U.S. Mail _ Overnight Mail FAX .- Email tonyCâyankel.net -f2)~Barton L. Kline IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 20 CERTIFICATE OF ATTORNEY ASSERTION THAT MATERIALS REQUESTED AND PROVIDED DURING THE COURSE OF AN IDAHO PUBLIC UTILITIES COMMISSION PROCEEDING ARE PROTECTED FROM PUBLIC INSPECTION Case No. IPC-E-10-01 The undersigned attorney, in accordance with RP 233, hereby certifies that the disk and document provided by Idaho Power Company in response to the Industrial Customers of Idaho Power's Third Production Request propounded during the course of the above-referenced case contain information that is a trade secret or privileged or confidential as described in Idaho Code § 9-340, et seq., and § 48-801, et seq., and as such are exempt from public inspection, examination, or copying. DATED this 4th day of March 2010. Gì1~Barton L. Kline Attorney for Idaho Power Company i-~~=:.~;; Ii; -0::.t.. CJ(.