20130910IPC to Staff 40-44.pdf

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lil pij !: LellLISA D. NORDSTROM
Lead Gounsel
I n [e-mail]
September 10,2013
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Enclosures
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VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-13-16
Certificate for Public Convenience and NecessityforJim Bridger Units 3 and
4 - ldaho Power Company's Third Response to the Third Production
Request of the Commission Staff
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and three (3) copies of ldaho
Power Company's Third Response to the Third Production Request of the Commission
Staff ("Staff') to ldaho Power Company.
Also, enclosed are four (4) copies of a confidential disk containing information
responsive to Staffs Third Production Request. Please handle the confidential information
in accordance with the Protective Agreement executed in this matter.
Sincerely,a. nu//
5f>u"- LL / U^lahal*-Iisa D. Nordstrom
1221 W. ldaho St. (83702)
PO. Box 70
Boise, lD 83707
LISA D. NORDSTROM (lSB No. 5733) : - '"
JENNIFER M. REINHARDT-TESSMER (lSB No. 7432) _^.a __n ,..1 r:,.: r.. r.r
ldaho Power Company ?t:: S:,' I i i ''l \: 4"1
1221West Idaho Street (83702\
P.O. Box 70 , r"iil 'i ; :: ' , . ,,
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd strom @ id a ho powe r. co m
irein hardt@ id a hopower. co m
Attorneys for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
lN THE MATTER OF IDAHO POWER )
coMPANY',S APPLTCATION FOR A ) CASE NO. !PC-E-13-16
CERTTFTCATE OF PUBLTC CONVENTENCE )
AND NECESSITY FOR THE INVESTMENT ) IDAHO POWER COMPANY'S
lN SELECT|VE CATALYTIC REDUCTION ) THTRD RESPONSE TO THE
CoNTROLS ON JtM BRTDGER UNITS 3 ) THrRD PRODUCTTON REQUEST
AND 4.) oF THE COMMTSSTON STAFF
) TO |DAHO POWER COMPANY
)
COMES NOW, ldaho Power Company ("!daho Power" or "Compony"), and in
response to Request Nos. 40-44 of the Third Production Request of the Commission
Staff to ldaho Power Company dated August 21, 2013, herewith submits the following
information:
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1
REQUEST NO. 40: Please provide the Request for Proposal (RFP), competitive
bidding documentation, and RFP evaluation results used to select the static coal study
consultant (SAIC).
RESPONSE TO REQUEST NO. 40: The confidential RFP document provided
on the confidential CD was sent to five consulting firms: HDR lnc.; Sargent & Lundy
LLC; Black and Veatch Corporation; Navigant Consulting lnc.; and SAIC Energy,
Environment & lnfrastructure, LLC. Of those five firms, Sargent & Lundy, LLC, and
Black and Veatch Corporation declined to submit a bid, SAIC Energy and Navigant
Consulting lnc. responded with the confidential proposals included on the confidential
CD, and HDR lnc. did not respond. Confidential e-mail correspondence, as well as both
confidential proposals and Idaho Power's confidential RFP, are included on the
confidential CD. The two proposals were evaluated by the Joint Projects team and
SAIC was chosen to conduct the study.
The confidentia! CD wi!! be provided to those parties that have executed the
Protective Agreement in this matter.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2
REQUEST NO. 41: Please provide the basis and assumptions used to estimate
transportation costs to arrive at an ldaho city-gate price used to develop the natural gas
forecast for the Coal Unit Environmental lnvestment Analysis.
RESPONSE TO REQUEST NO. 41: The transportation cost used to forecast the
price of natural gas delivered to the Company's service territory for the Coal Unit
Environmental lnvestment Analysis was derived from current contractual tariff rates on
the Northwest Pipeline. The tariff rates are comprised of a variable cost component and
a fixed reservation cost component.
The variable cost component is comprised of: commodity, ACA (annual charge
adjustment), and fuel costs. The sum of these variable costs is reported in the table
below.
The fixed reservation costs were forecasted to increase at a rate of 3 percent
every three years. Due to the lack of available capacity in the pipeline, future natural
gas-fired resources will require pipeline expansion to accommodate a significant
increase in capacity. For this reason, future resources were modeled at approximately
twice the reservation cost of existing resources. Fixed reservation costs are also
reported in the table below.
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY.3
Natural Gas Transportation Cost Forecast
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, Idaho Power Company.
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
Variable Transport Cost Forecast
Nominal $slilMBtu
Fixed Reservation Cost Forecast
Nominal $s/llMBtu
Year Existing and New Facilities Existinq Facilities New Facilities
2013
2014
2015
2016
2017
20't8
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
$0.10
$0.11
$0.12
$0.12
$0.1 3
$0.1 3
$0.14
$0.1 5
$0.16
$0.1 7
$0.1 7
$0.18
$0.19
$0.20
$0.21
$0.22
$o.22
$0.23
$0.24
$0.26
$0.41
$0.41
$0.41
$0.42
$0.42
$0.42
$0.43
$0.43
$0.43
$0.45
$0.45
$0.45
$0.46
$0.46
$0.46
$0.48
$0.48
$0.48
$0.49
$0.50
$1.00
$1.00
$1.00
$1.03
$1.03
$1.03
$1.06
$1.06
$1.06
$1.0e
$1.09
$1.09
$1.13
$1.13
$1 .13
$1.16
$1 .16
$1.16
$1.19
$1.23
REQUEST NO. 42: How close is ldaho Power to the two million gallon per
dayl2l percent withdrawal for cooling purpose limit proposed in 316(b) of the federal
Clean Water Act? Please base your answer on historical usage compared to the
standard.
RESPONSE TO REQUEST NO. 42: The historical water withdrawal from the
Green River is noted in the following table:
YEAR Averaoe Green River Withdrawal (qallons/dav)
2010 18,530,655
2011 15.063.257
2012 16.245.235
It is estimated that over 90 percent of the water withdrawal is used for cooling
purposes.
At these levels of withdrawal, Jim Bridger power plant exceeds the threshold of
two million gallons per day and would be required to comply with Clean Water Act
("CWA') 316 (b) if it is finalized in its present proposed form. This would not limit
withdrawals to two million gallons per day but would require compliance with CWA
316(b). CWA 316(b) compliance costs were estimated to be less than $100,000 per
unit and were included in the SAIC technical appendix on Tables A-17 and A-2O.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, Idaho Power Company.
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
REQUEST NO. 43: Please provide the amount carbon prices would need to
increase on an average percentage basis (from the base planning CO2 prices) to make
the emission control upgrade option uneconomic in terms of total portfolio cost
expressed in net present value when compared to gas conversion and Combined Cycle
Combustion Turbine (CCCT) replacement alternative cases using base planning
assumptions for all other variables.
RESPONSE TO REQUEST NO. 43: Through an iterative process using the
AURORA model, ldaho Power varied carbon prices to find where the Net Present Value
(.NPV") difference between these investment alternatives crosses zero.
The graph below shows the NPV difference between the Coal Upgrade
lnvestment (installing selective catalytic reduction controls) and a CCCT replacement
for Jim Bridger Unit 3. (Jim Bridger Unit 4 would have similar results.)
,a"no to*"r. iompany
NPV Difference Carbon Price Sensitivities
Coal Upgrade and CCCT lnvestment Alternatives
Percentage Carbon Price lncrease from Planning
Aurora Model - 2013 IRP Coal Study Setup
for the period 2Ot3-2032
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
s30,000,000
s2s,000,000
s20,000,000
Sls,ooo,ooo
Slo,ooo,ooo
ss,000,000
s-
s(s,000,000)
s(10,00o,000)
s(1s,000,000)
s(20,000,00o)
-NPV
Coal Upgrade relative to the CCCT Portfolio cost
The AURORA modeling indicates the planning case carbon adder would need to
increase by approximately 423 percent to make replacing Jim Bridger Unit 3 with a
CCCT economically neutral under the base natural gas price forecast assumption.
lncreasing the carbon adder greater than 423 percent would favor replacing Jim Bridger
Unit 3 with the CCCT alternative under planning natural gas prices. Natural gas
conversion was the least attractive option and is not shown. These results are reflective
of the magnitude increase in planning case carbon prices required to impact the
economics of the environmental investment at the Jim Bridger units compared to a
CCCT investment.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY. T
REQUEST NO. 44: Please provide the amount natural gas prices would need to
decrease on an average percentage basis (from the base planning natura! gas price) to
make the emission control upgrade option uneconomic in terms of total portfolio cost
expressed in net present value when compared to gas conversion and CCCT
replacement alternative cases using base planning assumptions for all other variables.
RESPONSE TO REQUEST NO. 44: Through an iterative process using the
AURORA model, ldaho Power varied natural gas prices to find where the NPV
difference between the investment alternatives crosses zero.
The graph below shows the NPV difference between the Coal Upgrade
lnvestment (installing selective catalytic reduction controls) and a CCCT replacement
for Jim Bridger Unit 3. (Jim Bridger Unit 4 would have similar results.)
ldaho Power Company
NPV Difference Natural Gas Price Sensitivities
Coal Upgrade and CCCT lnvestment Alternatives
Percentage NG Price Reduction from Planning Case
Aurora Model- 2013 IRP Coal Study Setup
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8
s100,000,000
SSo,ooo,ooo
s6o,ooo,ooo
S40,ooo,ooo
s20,000,000
s-
5(20,000,000)
s(4o,ooo,ooo)
s(50,000,000)
s(80,000,000)
s(100,000,000)
-NPV
Coal Upgrade relative to the CCCT Portfolio Cost
,/
,/
,/
,/
,/
A V^(/AI u^
./
,/
The AURORA modeling indicates the planning natura! gas prices would need to
decrease by approximately 52 percent to make replacing Jim Bridger Unit 3 with a
CCCT economically neutral under the base carbon price forecast assumption.
Decreasing the natura! gas prices greater than 52 percent would favor replacing Jim
Bridger Unit 3 with the CCCT alternative. The natural gas conversion was the least
attractive option and is not shown. These results are reflective of the magnitude
decrease in planning case natural gas prices required to impact the economics of the
environmenta! investment at the Jim Bridger units compared to a CCCT investment.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, ldaho Power Company.
DATED at Boise, ldaho, this l Oth day of September 2013.
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 9
Attorney for Idaho Power Company
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this lOth day of September 2013 I served a true and
correct copy of IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER
COMPANY upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
lndustrial Customers of ldaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, Idaho 83703
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street
Boise, ldaho 83702
Snake River Alliance
Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street
P.O. Box 2564
Boise, ldaho 83701
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greq@richardsonadams. com
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IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REOUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1O
Ken Miller, Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
Boise, ldaho 83701
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Overnight Mail
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Email [e-mail]
Christa Bearry, Legal Assistant
IDAHO POWER COMPANY'S THIRD RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 11