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
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InordstromCâidahopower.com
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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
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