20120420IPC to Micron 72-100.pdf

RECEIVED PIVER®
An IOACORP Company
3:51
JASON B. WILLIAMS 10AHM
Corporate Counsel UTILITS C
jwitIiamsidahopower.com
April 20, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-12-08
IN THE MATTER OF IDAHO POWER COMPANY'S APPLICATION TO
INCREASE ITS RATES DUE TO REVISED DEPRECIATION RATES FOR
ELECTRIC PLANT-IN-SERVICE
Dear Ms. Jewell:
Enclosed for filing are an original and three (3) copies of Idaho Power Company's
Response to the Second Production Request of Micron Technology, Inc. ("Micron") to
Idaho Power Company in the above matter.
Also enclosed are four (4) copies of a non-confidential disk containing information
being produced in response to Micron's Second Production Request.
If you have any questions about the enclosed documents, please do not hesitate to
contact me.
Very truly yours,
~ason B. Williams
JBW:kkt
Enclosures
JASON B. WILLIAMS (ISB No. 8718)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
jwiIIiams(idahopower.com
lnordstromcäidahopower.com
RECEIVED
2aIZ APR 2O PM 3:5f
tr ' I I_. Li,.f UTLLIflEs OOMMISS1O1
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION TO
INCREASE ITS RATES DUE TO
REVISED DEPRECIATION RATES FOR
ELECTRIC PLANT-IN-SERVICE.
CASE NO. IPC-E-12-08
IDAHO POWER COMPANY'S
RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
MICRON TECHNOLOGY, INC.,
TO IDAHO POWER COMPANY
COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and in
response to the Second Production Request of Micron Technology, Inc. ("Micron"), to
Idaho Power Company dated April 10, 2012, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -1
PRODUCTION REQUEST NO. 72: [Account 310] - Please state if there are
any specific expiration dates to any of the Company's land and water rights set forth in
Account 310. To the extent there are any expiration dates associated with land and
water rights, identify the amount, the in service date, the expiration date, and the basis
for the expiration date for each.
RESPONSE TO PRODUCTION REQUEST NO. 72: Idaho Power is unaware of
any specific expiration dates to the land and water rights it has recorded in Account
310.2.
The response to this Request was prepared by Randy Henderson, Finance
Team Leader, Idaho Power Company, in consultation with Jason Williams, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -2
PRODUCTION REQUEST NO. 73: [Account 310] - Please identify the quantity
of water rights (e.g., 10,000 acre feet, etc.) owned by the Company, or for which the
Company has control and can sell. Further, provide all indications of water right values
in the general region from which the water rights are obtained.
RESPONSE TO PRODUCTION REQUEST NO. 73: Idaho Power is not
specifically named on any of the contracts or agreements for land or water rights at our
jointly owned thermal plants, and therefore, does not have unilateral control of potential
disposal decisions. PacifiCorp possesses a natural flow right to divert up to 45,000 acre
feet of water from the Green River for use at the plant. Idaho Power paid an amount in
the early 1970's for its one-third share of the cost for this right but the exact amount paid
cannot be determined. The majority of the balance recorded by Idaho Power in Account
310.2 for the Bridger plant is related to this Green River water right. Based on feedback
received from contacts at PacifiCorp, it appears that rights for water are not currently
scarce in the Northern Colorado River Basin. The water authority in Wyoming is
actively issuing Green River water rights which indicate a secondary market may be
very limited or non-existent. Therefore, Idaho Power cannot predict what, if any, value
these rights would have upon termination of Bridger plant operations.
Nevada Energy possesses ground water rights for the operation of the North
Valmy plant. Nevada water law requires that the party possessing the right
demonstrate the water is actively being put to beneficial use. There is currently very
limited agricultural or industrial development in close proximity to the plant site. It is
unknown if there are potential buyers who could put the water rights to beneficial use at
that location. Therefore, Idaho Power cannot predict what, if any, value these rights
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -3
would have upon termination of the North Valmy plant operations. A possible outcome
could be that the rights revert back to the Nevada water authority through forfeiture or
abandonment.
The response to this Request was prepared by Randy Henderson, Finance
Team Leader, Idaho Power Company, in consultation with Jason Williams, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -4
PRODUCTION REQUEST NO. 74: [Account 316] - Please provide all basis
and support for the selection of a -2% net salvage for Account 316, specifically including
reference to the net salvage summary set forth on page 111-80 of Exhibit No. 1 .1
RESPONSE TO PRODUCTION REQUEST NO. 74: The determination of net
salvage percentages by account are described on pages 11-28 through 11-31 of the
depreciation study. Specifically, Account 316 has a recommended net salvage percent
of negative 2 percent. The basic range for this account among the industry is 0 to
negative 5 percent. The recorded gross salvage the last few years is not expected to
be recurring for years to come. The moderate amount of cost of removal as a
percentage of retirements is expected to continue; therefore, the negative 2 percent net
salvage was recommended. As stated on page 11-29, the statistical analyses set forth
on page 111-180 for Account 316 was not a major contributor to the determination of the
net salvage percent for the account.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
All references to Exhibit No. 1 herein refer to Exhibit No. 1 to the Direct Testimony of John J.
Spanos filed by the Company in this proceeding.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -5
PRODUCTION REQUEST NO. 75: [Account 336] - Please provide all support
and justification for the assumed 75R3 life-curve combination for Account 336,
specifically addressing the observed life table and graphical presentation set forth on
page 111-75 through 111-77 of Exhibit No. 1.
RESPONSE TO PRODUCTION REQUEST NO. 75: The 75-R3 life and curve
combination is based on my professional judgment as to the nature of the assets in the
account. The currently approved estimate is the same 75-R3 curve. It is anticipated
that portions of the roads, railroads, and bridges will be replaced over time, even
though, to date, only small portions have been replaced.
The observed life table shows a large portion of the exposures have reached 50
years and a smaller portion have reached beyond 50 years. Therefore, it is anticipated
many of the younger assets will be replaced prior to age 80.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -6
PRODUCTION REQUEST NO. 76: [Account 334] - Please provide all support
and justification for the proposed 45S2 life-curve combination for Account 344
specifically addressing the graphical presentation on page 111-84 of Exhibit No. I and the
fact that no retirement activity has been recorded for this account.
RESPONSE TO PRODUCTION REQUEST NO. 76: The historical analyses set
forth on page 111-84 of Exhibit No. I is inconclusive as almost all assets are 8.5 years or
younger. Therefore, the determination of the 45-S2 interim survivor curve is based on
my professional judgment which includes estimates of other utilities, the nature of the
assets, and the expectations of the Company for these assets. The 45-S2 curve
assumes little to no retirements for the first 15 years and only 25 percent to be replaced
by age 35. This is a reasonable life characteristic for generator assets.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -7
PRODUCTION REQUEST NO. 77: [Other Production] - Please provide all
support and justification for the assumed zero level of net salvage for Other Production
investment. The response should specifically reference why the Company believes it
cannot sell any portion of any of its Other Production generating facilities as usable
equipment at the time of retirement
RESPONSE TO PRODUCTION REQUEST NO. 77: The majority of the assets
in Other Production are relatively new so judgment is required for the net salvage
percent. At this time, and based on my professional judgment, the zero percent net
salvage for Other Production accounts represents the expectation that gross salvage
and cost of removal in the future would be approximately the same. The overall market
for portions of Other Production facilities has not been high, to date, across the country.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -8
PRODUCTION REQUEST NO. 78: [Account 350.2] - Please state whether the
land rights and easements set forth in Account 350.2 have a specific expiration date.
To the extent any of the land rights and easements have a specific expiration date,
identify the original cost of the land right or easement, the in service date and the
expiration date.
RESPONSE TO PRODUCTION REQUEST NO. 78: Specific information for
land rights and easements in Category 35020 is not maintained in Idaho Power's Asset
Management system. Information contained is used for financial reporting and analysis
of the total investment. Please see the Excel file provided on the non-confidential CD
for investment by location and vintage year for land rights and easements contained in
Category 35020.
The response to this Request was prepared by Larry Tuckness, Business
Finance Team Leader, Idaho Power Company, in consultation with Jason B. Williams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -9
PRODUCTION REQUEST NO. 79: [Account 350.2] - Please explain how the
Company can justify relying on a 70R3 life-curve combination for Account 350.2 when
the structures such as towers and fixtures that reside upon such land rights and
easements are assigned a 65-year average service life with a dispersion around the
average, implying that some towers and fixtures will last much longer than 70 years.
RESPONSE TO PRODUCTION REQUEST NO. 79: The implication of the
question is incorrect. The 70-R3 curve for Account 350.2 has an average life of 70
years which is longer than any average life of the associated assets that reside upon
land rights and easements, and the maximum life of the 70-R3 is approximately 120
years which is comparable or longer than the associated assets which reside on the
land rights. The towers have a shorter average life and shorter maximum life than
Account 350.2.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -10
PRODUCTION REQUEST NO. 80: [Account 390] - Please identify the 10
largest investments in Account 390 structures and improvements and for each provide
the following:
a.The original cost;
b.Whether the facility is owned or leased;
C. The location of the investment;
d.A detailed description of the investment;
e.The current property tax value;
f.The construction type and material associated with the investment;
g.When the property was first placed in service; and
h.Any current plans to retire each property, if any.
RESPONSE TO PRODUCTION REQUEST NO. 80: Please see the Excel file
provided on the non-confidential CD for a list of the 10 largest investments in Account
390 - Structures and Improvements. Due to the age of the properties and conversion of
data from several systems in the last 25-30 years, original cost information is not readily
available. All information is provided except for the current property tax value.
Property values are unavailable by specific location because all of Idaho Power's
property located in Idaho including property under construction is appraised for ad
valorem tax purposes in a lump sum value. That value is apportioned to the counties
where the property is located by a formula. It is from those county values that the
county will generate property tax bills for the Company.
The response to this Request was prepared by Larry Tuckness, Business Unit
Finance Team Leader, Idaho Power Company, and Katrina Basye, Property Tax
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -11
Manager, Idaho Power Company, in consultation with Jason B. Williams, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY - 12
PRODUCTION REQUEST NO. 81: [Account 352] - Please identify what retired
in 2010 for Account 352 in the amount of $220,357. Further, identify the cause of
retirement associated with each of the retirement activities reflected therein.
RESPONSE TO PRODUCTION REQUEST NO. 81: Please see the Excel file
provided on the non-confidential CD for retirements by Project for Account 352 during
2010.
The response to this Request was prepared by Larry Tuckness, Business Unit
Finance Team Leader, Idaho Power Company, in consultation with Jason B. Williams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -13
PRODUCTION REQUEST NO. 82: [Account 352] - Please provide a detailed
narrative and corresponding support for the Company's curve-fitting selection
associated with Account 352 that resulted in a proposed 65R3 life-curve combination.
The response should specifically address the deviation of the proposed life-curve
combination with the observed life table beginning around 35 years of age. Further,
specifically state and justify why a life-curve combination with a longer average service
life would not also be appropriate.
RESPONSE TO PRODUCTION REQUEST NO. 82: The basis for the 65-R3
survivor curve for Account 352, Structures and Improvements, is a combination of
historical analyses and my informed, professional judgment just like all other accounts.
The current estimate is a 60-R3 survivor curve. The industry range for these type of
structures is 50-65 years. The structures in this account are a mix of masonry
structures and modular structures. The 65-year average life and maximum life of 105
years are reasonable expectations. This is not an account where the historical data is a
major factor in the determination of the life analysis so a deviation at the beginning of
the age interval and the end of the age interval is possible and retirements of structures
will not necessarily produce smooth curves.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -14
PRODUCTION REQUEST NO. 83: [Account 390.2] - Please provide a detailed
narrative and corresponding full justification for the proposed 35S3 life-curve
combination for Account 390.2. The response should specifically address which
portions of the observed life table were assigned greater significance in the Company's
curve fitting process as set forth on page 111-1 64 of Exhibit No. 1. Further, provide all
support and justification for the portion of the observed life table that were assigned
greater significance in the curve fitting process.
RESPONSE TO PRODUCTION REQUEST NO. 83: Account 390.2, Structures
and Improvements - Leasehold Improvements, represents assets that are part of a
structure. The current estimate is a 25-S3 curve. These assets are likely to be retired
in large amounts at one time. The 35-year average life is an increase in average life by
10 years and the S3 type curve represents very few retirements early in life, then higher
rates of retirement from age 25 to age 40. The entire curve shown on page 111-1 64 was
considered important in supporting the 35-S3 curve, but it should be understood that
statistical analyses is not the only component in determining an estimate.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -15
PRODUCTION REQUEST NO. 84: [Account 391.1] - Please provide the dollar
amount of investment in Account 391.1 that has retired subsequent to June 30, 2011.
Specifically identify the date of installation corresponding to the retired property.
RESPONSE TO PRODUCTION REQUEST NO. 84: Please see the Excel file
provided on the non-confidential CD for retirements of category 39110 between June
30, 2011, and December 31, 2011. The Vin Year is considered the date of installation.
The amounts for vintages 1988 through 1990, totaling $256,543, have been properly
reclassified as a result of the PeopleSoft conversion and exist within the amortization
period vintages. As shown in the Excel file, the 1991 vintage was retired in 2011.
General Plant assets are retired annually based on the vintage of the asset
according to Commission Order No. 26937 issued in Case No. IPC-E-97-04.
The response to this Request was prepared by Larry Tuckness, Business Unit
Finance Team Leader, Idaho Power Company, and John J. Spanos, Vice President of
the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY - 16
PRODUCTION REQUEST NO. 85: [Account 391.1] - Please provide a detailed
narrative identifying the specific basis for the selection of a 20SQ life-curve combination
for the investment in Account 391.1. Further, provide all support and justification for the
basis employed to develop such life-curve combination.
RESPONSE TO PRODUCTION REQUEST NO. 85: The 20-SQ life and curve
combination represents a 20-year amortization period. This account has been
amortized at the 20-year period since the 2001 depreciation study.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -17
PRODUCTION REQUEST NO. 86: [Account 392] - Please provide a detailed
narrative explaining and justifying the determination of a 121-2 life-curve combination for
Accounts 392.1, 392.4, and 392.5.
RESPONSE TO PRODUCTION REQUEST NO. 86: The combined analyses for
Accounts 392.1, 392.4, and 392.5 relate to automobiles, small trucks, and
miscellaneous equipment for small trucks. The current estimate for these accounts is a
9-1-3 curve. The 12-year average service life for these types of assets is reasonable
based on utilization of the transportation equipment. The 12-year average is longer
than the current estimate and represents a life characteristic that matches Company
practices.
The historical analyses for Accounts 392.1, 392.4, and 392.5 are combined with
related Accounts 316.1, 316.4, and 316.5 and set forth on pages 11-30 and 11-31. The
12-1-2 curve is an excellent fit to the historical data.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -18
PRODUCTION REQUEST NO. 87: [Account 392] - Please provide a detailed
narrative along with all support and justification for the proposed 201-2 life-curve
combination for Accounts 392.6 and 392.7.
RESPONSE TO PRODUCTION REQUEST NO. 87: The combined analyses for
Accounts 392.6 and 392.7 relate to large trucks. The current estimate for these types of
trucks is a 17-S2.5 curve. The 20-year average life is long for these types of trucks in
the industry, but it matches the Company's utilization practices for large trucks.
The historical analyses for Accounts 392.6 and 392.7 are combined with related
Accounts 316.6 and 316.7 and set forth on pages 11-32 and 11-33. The 20-1-2 curve is an
excellent fit to the historical data.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -19
PRODUCTION REQUEST NO. 88: [Account 395] - Please provide a detailed
narrative and corresponding support for the selection of a 20SQ life-curve combination
for Account 395.
RESPONSE TO PRODUCTION REQUEST NO. 88: The 20-SQ life and curve
combination represents a 20-year amortization period. This account has been
amortized at the 20-year period since the 2001 depreciation study.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -20
PRODUCTION REQUEST NO. 89: [Account 395] - Please provide the monthly
retirements in Account 395 subsequent to June 2011. For each retirement, identify the
date of installation.
RESPONSE TO PRODUCTION REQUEST NO. 89: Please see the Excel file
provided on the non-confidential CD for retirements of category 39500 from June 30,
2011, through December 31, 2011. The Vin Year is considered the date of installation.
General Plant assets are retired annually based on the vintage of the asset
according to Commission Order No. 26937 issued in Case No. IPC-E-97-04.
The response to this Request was prepared by Larry Tuckness, Business Unit
Finance Team Leader, Idaho Power Company, in consultation with Jason B. Williams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -21
PRODUCTION REQUEST NO. 90: [Other Production] - Please provide a
detailed narrative along with full justification of how and why a 2001 life-curve
combination was selected for Account 396.
RESPONSE TO PRODUCTION REQUEST NO. 90: The assets in Account 396,
Power Operated Equipment, relate to assets such as backhoes, trenches, etc. The
current estimate for this account is a 14-1-0.5 curve. The industry averages are 14-20
years for this type of equipment. The 20-01 curve matches the Company's practices
for these types of assets.
The historical analyses for Account 396 is combined with the related Account
316.8 and set forth on pages 111-35 and 111-36. The 20-01 curve is an excellent fit to the
historical data.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -22
PRODUCTION REQUEST NO. 91: [Account 396] - Please provide full support
and justification for the proposed 30% positive net salvage for Account 396. Further,
provide the actual historical activity for this account.
RESPONSE TO PRODUCTION REQUEST NO. 91: The PDF document
provided on the non-confidential CD sets forth the historical retirements and associated
cost of removal and gross salvage for Account 396. The positive 30 percent net
salvage was based on this activity and the future expectations for these assets. The
expectations are that since the Company is keeping the assets in service longer than
before, then the salvage value at auction will be reduced. If reviewing the 3-year rolling
averages for trends since 2006-2008, the net salvage percent of 30 percent is most
appropriate going forward. The industry range is 0 to positive 30 percent.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -23
PRODUCTION REQUEST NO. 92: [Account 396] - Please provide a detailed
narrative along with all support and justification for not assigning any remaining life to
investment in Account 396 corresponding to vintage years 1994 and earlier as set forth
on page 111-436 of Exhibit No. 1.
RESPONSE TO PRODUCTION REQUEST NO. 92: As of June 30, 2011,
Account 396 has $9,925,158.51 in original cost and $4,046,557 in book reserve. The
proposed life and salvage parameters are a 20-01 curve and positive 30 percent net
salvage, respectively. The current life estimate is a 16-SO survivor curve. Past
recovery rates were considerably higher than the proposed rates. Thus, the book
reserve has increased in the past at a higher rate. Accordingly, the actual book reserve
as of June 30, 2011, is much higher than the theoretical reserve for the proposed
parameters. Consequently, there is only $2.9 million still to be recovered for the $9.9
million original cost. This ratio is the basis for the allocation of the actual book reserve
to the vintage level original cost at the level the theoretical reserve has been established
using the proposed estimates. The large discrepancy between the actual reserve to the
theoretical reserve requires the older vintages to be fully accrued, which in turn lowers
the overall rate for the account to 1.66 percent.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -24
PRODUCTION REQUEST NO. 93: [Account 397] - Please provide all support
and justification along with a detailed narrative of how and why a I5SQ life-curve
combination was proposed the Account 397.2. Further, specifically address the level of
vintage original costs that are still in service after 15 years as set forth on page 111-439 of
Exhibit No. I in conjunction with the proposal for a I 5SQ life-curve combination.
RESPONSE TO PRODUCTION REQUEST NO. 93: The 15-SQ life and curve
combination represents a 15-year amortization period. This account has been
amortized at the 15-year period since the 2001 depreciation study.
Vintages 1992 through 1995, totaling $877,785, have been properly reclassified
as a result of the PeopleSoft conversion and exist within the amortization period
vintages.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -25
PRODUCTION REQUEST NO. 94: [Account 397.2] - Please provide the
monthly level of retirements in Account 397.2 subsequent to June 30, 2011. Further,
identify the corresponding vintage year of addition for each retirement.
RESPONSE TO PRODUCTION REQUEST NO. 94: Please see the Excel file
provided on the non-confidential CD for retirements of category 39720 subsequent to
June 30, 2011, as of December 31, 2011. Vintages 1992 through 1995, totaling
$877,785, have been properly reclassified as a result of the PeopleSoft conversion and
exist within the amortization period vintages.
General Plant assets are retired annually based on the vintage of the asset
according to Commission Order No. 26937 issued in Case No. IPC-E-97-04.
The response to this Request was prepared by Larry Tuckness, Business Unit
Finance Team Leader, Idaho Power Company, and John J. Spanos, Vice President of
the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -26
PRODUCTION REQUEST NO. 95: [Account 397.4] - Please provide a detailed
narrative along with all support and justification for the proposed IOSQ life-curve
combination for Account 397.4. The response should further address the surviving
balances as set forth on page 111-441 of Exhibit No. I for this account. Finally, provide
the dollar level of retirement activities subsequent to June 30, 2011 for this account
along with the vintage year of addition corresponding to the retirements.
RESPONSE TO PRODUCTION REQUEST NO. 95: The 10-SQ life and curve
combination represents a 10-year amortization period. This account has been
amortized at the 10-year period since the 2001 depreciation study. Please see the
Excel file provided on the non-confidential CD for retirements of category 39740 in
2011.
The remaining amounts for vintages 2000 and 2001, which were not retired
during 2011, have already been reclassified as a result of the PeopleSoft conversion
and exist within the amortization period vintages.
The response to this Request was prepared by John J. Spanos, Vice President
of the Valuation and Rate Division, Gannett Fleming, Inc., in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -27
PRODUCTION REQUEST NO. 96: [Net Salvage] - Please identify each
statutory requirement the Company has to actually demolish any of its production plant
facilities. Further, identify if any statutory requirements exist for restoring the site after
demolition to any pre-existing status.
RESPONSE TO PRODUCTION REQUEST NO. 96: For the Company's hydro
facilities, 16 U.S.C. § 803 generally sets forth the authority of the Federal Energy
Regulatory Commission ("FERC") to include conditions in hydro power licenses.
Included is the authority to require conditions not inconsistent with the provisions of the
Federal Power Act. A standard FERC license article addresses what a licensee must
do if the licensee discontinues operation of the project which may include the removal
and/or destruction, as well as other action necessary to restore and/or reclaim the site
location's waters and surrounding land.
In Idaho, the Idaho Environmental Protection and Health Act (Idaho Code, Title
39) created the Idaho Department of Environmental Quality ("Idaho DEQ") and vests the
agency to ensure clean air, water, and land in the state of Idaho and to protect Idaho
citizens from the adverse impacts of pollution. To the extent allowed by its plenary
authority over state environmental matters, the Idaho DEQ could require Idaho Power to
demolish abandoned production facilities and/or reclaim production sites.
In Wyoming, Wyoming Statute § 35-11-104 created the State Department of
Environmental Quality ("Wyoming DEQ") whose purpose, among other things, is to plan
the development, use, reclamation, preservation, and enhancement of the air, land, and
water resources of Wyoming. W.S. § 35-11-102. To the extent allowed by its plenary
authority over state environmental matters, the Wyoming DEQ could require Idaho
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -28
Power and its operating partners to demolish abandoned production facilities and/or
reclaim production sites.
In Nevada, the Nevada Department of Conservation and Natural Resources,
Division of Environmental Protection ("Nevada DEP"), is vested with implementing and
enforcing Nevada's environmental rules and regulations. While not statutory, the
Nevada DEP's rules and regulations apply to the Company's jointly-owned production
facilities in the state of Nevada. For example, Nevada Administrative Code §
444.6895 - 6896 require that Idaho Power and its operating partner reclaim the ash
landfill sites associated with the Company's production facility. Similar regulations exist
for reclamation of the on-site ash ponds.
In Order No. 10-457, the Public Utility Commission of Oregon accepted Portland
General Electric's ("PGE") plan to cease coal-fired operations as the Boardman Plan as
of 2020. Included in the Commission-approved decommission plan are requirements to
demolish the production facility and conduct site remediation.
In addition, the United States Environmental Protection Agency ("EPA") has
broad, federal jurisdiction over the health and cleanliness of air, water, and land. While
not statutory, there could be instances when the EPA's regulations apply to the
Company's production facilities which could include destruction of the facility or
remediation of a site.
The response to this Request was prepared by Jason Williams, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -29
PRODUCTION REQUEST NO. 97: [Reserve] - Please state if the accumulative
provision for depreciation is maintained on an account-by-account basis or if the values
are allocated in any manner. To the extent the account values are allocated, provide
the basis for such allocation along with all support for such allocation.
RESPONSE TO PRODUCTION REQUEST NO. 97: The provision for
accumulated depreciation is maintained at an account level. Various transaction types
(accrual, retirements, removal costs, salvage, and CIAC) post to the reserve and are
quantified in the following manner: (1) The accrual and retirements are specifically
identified to an account and (2) removal costs, salvage, and CIAC are allocated in the
preclose process based on the type of project. The preclose allocation percentages are
based on historical unitization results by project type. At unitization, the preclosed
charges are reversed and the unitized charges are allocated based on the actual
removal as built rows.
The response to this Request was prepared by Larry Tuckness, Business Unit
Finance Team Leader, Idaho Power Company, in consultation with Jason B. Williams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -30
PRODUCTION REQUEST NO. 98: [Net Salvage] - Please identify the per unit
scrap price obtained for scrap metal sales by year for the past 10 years. Further,
identify the accounts to which the amounts pertain.
RESPONSE TO PRODUCTION REQUEST NO. 98: Please see the Excel file
provided on the non-confidential CD for per unit scrap prices. Detailed information has
been kept by Idaho Power's Investment Recovery Department in an Excel format since
2005. Information from 2005 forward is provided in the Excel file. Salvage recorded by
plant account is also provided on the non-confidential CD for the same time period.
The response to this Request was prepared by Larry Tuckness, Business Unit
Finance Team Leader, Idaho Power Company, in consultation with Jason B. Williams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -31
PRODUCTION REQUEST NO. 99: [Net Salvage] - Please provide the level of
overtime costs reflected in cost of removal by year by account for the past 10 years.
RESPONSE TO PRODUCTION REQUEST NO. 99: Please see the Excel file
provided on the non-confidential CD for overtime labor charged to Account 108000 for
the period 2002 through 2011. Overtime costs are charged to Account 108000 and are
identified by Detail Cost Element ("DCE"). Allocations of these removal costs to plant
accounts are done by summing the removal costs in Account 108000 and allocating the
total to plant accounts based on the project type, for the preclose, or the actual
removals, for the final project unitization. The identity of the specific charge is not
available in the allocation (closing) to specific plant accounts.
The response to this Request was prepared by Larry Tuckness, Business Unit
Finance Team Leader, Idaho Power Company, in consultation with Jason B. Williams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -32
PRODUCTION REQUEST NO. 100: [Account 311] - Please provide Exhibit
No. I on electronic medium in Excel readable format with all formulas intact.
RESPONSE TO PRODUCTION REQUEST NO. 100: The depreciation study
conducted by Gannett Fleming, Inc., provided as Exhibit No. 1 to John J. Spanos'
testimony, is the output of a software program. The output generates in the form of a
text file (.txt files). The text files that have been converted to Excel and PDF files are
provided on the non-confidential CD.
The response to this Request was prepared by Courtney Waites, Regulatory
Analyst, Idaho Power Company, in consultation with Jason B. Williams, Corporate
Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 20th day of April 2012.
J'SfJ B. WILLIAMS
Attrney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -33
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 20th day of April 2012 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER
COMPANY upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Donald L. Howell, II
Karl T. Klein
Deputy Attorneys General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Micron Technology, Inc.
Thorvald A. Nelson
Frederick J. Schmidt
Sara K. Rundell
HOLLAND & HART, LLP
6380 South Fiddlers Green Circle, Suite 500
Greenwood Village, Colorado 80111
Richard E. Malmgren
Senior Assistant General Counsel
Micron Technology, Inc.
800 South Federal Way
Boise, Idaho 83716
Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email don. howelkuc.idaho.ciov
karl.kIeinuc.idaho.qov
Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email tneIsonhollandhart.com
fschmidt(äthol land hart. com
sakrundeIl(hoI land hart.com
I nbuchanan(ähoIland hart. corn
_Hand Delivered
U.S. Mail
_Overnight Mail
FAX
X Email remalmqrencmicron.corn
4K, I A "1110~
Kirpberly Towe l)
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC., TO IDAHO POWER COMPANY -34