20130924IPC to Staff 49-61 .pdf

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Lead Counsel
September 24,2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho 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 Response to the Fifth 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 Response to the Fifth Production Request of the Commission Staff
("Staff') to ldaho Power Company. ln addition, enclosed in a separate envelope are an
originaland three (3) copies of ldaho PowerCompany's Confidential Responsesto Staffs
Production Request Nos. 54 and 57.
Also, enclosed are four (4) copies of a confidential disk containing information
responsive to Staffs Production Request No. 50. Please handle the confidential
information in accordance with the Protective Agreement executed in this matter.
Sincerely,
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
Y 1:c4(ArzuU. /l ula/rut'--'vr\_
Lisa D. Nordstrom
LDN:kkt
Enclosures
LISA D. NORDSTROM (lSB No. 5733)
JENNIFER M. REINHARDT-TESSMER (lSB No. 7432)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd strom@ idahopower. com
i rei n hardt@ idaho power. co m
Attorneys for Idaho Power Company
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR A
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSIry FOR THE INVESTMENT
IN SELECTIVE CATALYTIC REDUCTION
CONTROLS ON JIM BRIDGER UNITS 3
AND 4.
CASE NO. !PC-E-13-16
IDAHO POWER COMPANY'S
RESPONSE TO THE FIFTH
PRODUCTION REQUEST OF
THE COMMISSION STAFF TO
IDAHO POWER COMPANY
ilr ! - r)l
! ii L;'J'i
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
COMES NOW, ldaho Power Company ("ldaho Powe/' or "Comp?[y"), and in
response to the Fifth Production Request of the Commission Staff ("Staff') to ldaho
Power Company dated September 10,2013, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1
REQUEST NO. 49: Please provide a justification for the $333,333 difference in
the contingency budget for Jim Bridger Units 3 and 4 (see Staff Production Request No.
1).
RESPONSE TO REQUEST NO. 49: The capital cost estimate for the Unit 4
selective catalytic reduction ("SCR') is higher than for the Unit 3 SCR because the work
scope for Unit 4 includes the replacement of the currently undersized induced draft
('lD") fans; and a corresponding addition of an inserted variable frequency drive ("VFD")
for the lD fans. Unit 4 has a different flue gas desulfurization system ("FGD"), which
requires larger fans. The higher capita! cost estimate for Unit 4 is the reason for the
additional $333,333 in the contingency budget. The Unit 3 lD fans were already
upgraded in 2011.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2
REQUEST NO. 50: Please provide copies of all Aurora input and output files,
analysis, and worksheets (with all formula intact) used to develop the total portfolio
costs for Jim Bridger Unit 3 and Jim Bridger Unit 4 shown in Figure 4 (page 16) of the
Coa! Unit Environmental lnvestment Analysis.
RESPONSE TO REQUEST NO. 50: The confidential input and output files,
analysis, and worksheets used to develop the Net Present Value ('NPV") total portfolio
are provided on the confidential DVD included with this response and require use of the
Aurora and Access programs to view them. lf the Staff or a party that has signed the
Protective Agreement does not have the Aurora and Access programs at its offices,
ldaho Power will make them available for viewing at its corporate headquarters. Please
contact Doug Jones at 388-2615 or Camilla Victoria at 388-5821 to view the material.
The confidential DVD will 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 RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3
REQUEST NO. 51: Please provide the resource portfolio used as a baseline to
conduct the Total Portfolio Cost analysis for each of the three altematives (install SCR,
retire and replace with CCCT, and natural gas conversion) contained in the Coal Unit
Environmental lnvestment Analysis. Please provide the name, type, and net
dependable capacity in MW for each resource in the portfolio.
RESPONSE TO REQUEST NO. 51: The starting point or baseline portfolio of
resources is provided in the attached Excel workbook. The three alternatives (install
SCR, retire and replace with combined-cycle combustion turbine ("CCCT'), and natural
gas conversion) contained in the Coal Unit Environmental lnvestment Analysis were
derived from this baseline resource portfolio.
The response to this Request is sponsored by Lisa Grow, Senior Vice President
of Power Supply, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
REQUEST NO. 52: Please provide the resource portfolio used to determine the
Projected Generation Forecast contained in Table A-26 of the SAIC Coa! Environmental
Compliance Upgrade lnvestment Evaluation. Please provide the name, type, and net
dependable capacity in MW for each resource in the portfolio.
RESPONSE TO REQUEST NO. 52: The resource portfolio used to determine
the Projected Generation Forecast contained in Table A-26 was the baseline resource
portfolio provided in the Company's response to Staffs Request No. 51 as modified to
reflect the "install SCR altemative."
The response to this Request is sponsored by Lisa Grow, Senior Vice President
of Power Supply, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
REQUEST NO. 53: Power plant and coal mine reclamation/decommissioning
costs will eventually be incurred for all three alternatives (install SCR, retire and replace
with CCCT, and natural gas conversion). Were these costs amortized and included in
the Net Present Value (NPV) Tota! Portfolio Cost analysis for each of the three
alternatives for Jim Bridger Units 3 and 4 as reflected in Figure 4 of the Coal Unit
Environmental lnvestment Analysis? If not, please provide the incremental NPV cost
impact for each alternative and natura! gas/carbon future
RESPONSE TO REQUEST NO. 53: Mine reclamation and coa! plant
decommissioning costs are included under all NPV investment alternatives.
Reclamation costs are included in the cost of the coal under all three alternatives. For
the retire and replace with a CCCT alternative, decommissioning costs are included
when the unit is replaced with the CCCT. For the natural gas conversion and install
SCR alternatives, decommissioning costs are included in 2034. The CCCT
replacement units'decommissioning costs are not included in the NPV analysis.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
REQUEST NO. 54: Please describe what the Company believes are the
mercury, acid gas and other hazardous air emissions limits applicable for each Bridger
unit pursuant to the final Mercury and Air Toxics Standards (MATS) and a description of
the controls and investments needed to meet compliance for each limit (Note: this
request can be combined with Staffs Request No. 39 but seeks more detailed
clarification for the specific types of controls and costs for each).
RESPONSE TO REQUEST NO. 54: For compliance with non-mercury
hazardous air pollutant metals requirements of the MATS, the plant is using the
sunogate of particulate matter ("PM"). The PM limit for the MATS is the same as the
state PM limit of 0.030 lb/mmBtu, which is currently met by the use of the electrostatic
precipitators.
For compliance with Acid Gas requirements of MATS, the plant is using the
surrogate of sulfur dioxide ("SOz"). The MATS standard requires the units to meet a
SOz emission limit of 0.20 lb/mmBtu. The plant currently meets the state requirement
SO2 emission limit of 0.15 lb/mmBtu by the use of the wet scrubbers.
For compliance with the Mercury requirements of the MATS, the plant will be
installing a calcium bromide ("CaB/') injection system for the fuel supply (to oxidize the
mercury) and using a reagent additive in the scrubber (to capture the mercury and
prevent readmission) to an emission limit of 1.2 lb/mmBtu. The confidential projected
costs (ldaho Powe/s share) for the mercury controls as used in the Science
Applications Intemational Corporation ("SA!C") Study are as follows:
Unitl-$I
Unit2-$I
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7
Unit3-$I
Unit4-$I
The response to this Request is sponsored by Tom Harvey, Manager Joint
Projects, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY. s
REQUEST NO. 55: The EPA has proposed amendments to the effluent
limitations guidelines and standards for steam electric power generation plants on June
7, 2013 (40 CFR Part 423). What additional investments would be needed to comply
with the new standards? Has a proxy cost of these investments been factored into the
Net Present Value Total Portfolio Cost analysis for each of the three alternatives (install
SCR, retire and replace with CCCT, and natural gas conversion) for Jim Bridger Units 3
and 4 as reflected in Figure 4 of the Coal Unit Environmental lnvestment Analysis? lf
not, please provide a basis for the incremental cost and the incremental NPV cost
impact for each alternative and natural gas/carbon future.
RESPONSE TO REQUEST NO. 55: The Jim Bridger plant is a "zero discharge"
facility, meaning it does not discharge any effluent into any public waterways. Any
additiona! investments for compliance with the effluent guidelines are currently expected
to be minimal and insignificant.
The response to this Request is sponsored Tom Harvey, Joint Projects Manager,
ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 9
REQUEST NO. 56: Please describe ldaho Power's role and specific
responsibilities in the following: (1) developing the Engineering, Procurement, and
Construction (EPC) contractor Request for Proposal (RFP); (2\ evaluating the
proposals; (3) selecting the contractor; and (4) developing the final contract.
RESPONSE TO REQUEST NO. 56: Pursuant to the Agreement for the
Operation of the Jim Bridger Project, PacifiCorp is required to operate and maintain the
Bridger plant at the lowest reasonable cost and in a prudent and skillful manner in
accordance with the standards prevailing in the utility industry and with applicable laws.
Among other things, ldaho Power monitors PacifiCorp's actions through periodic owner
meetings. During such meetings, PacifiCorp updates ldaho Power as to the operation
at the plant, expected future work, budgetary items, and other events and issues. ln the
case of the SCR work, PacifiCorp routinely provided ldaho Power with updates as to the
RFP process, anticipated costs, expected timelines, and other relevant topics.
As the SCR work became more likely and prior to the execution of the EPC
contract, ldaho Power increased its diligence and review of the SCR work with
PacifiCorp. ldaho Power took part in multiple additional discussions with PacifiCorp,
which ultimately led to a half-day gathering in Salt Lake City focused on the topics of
SCR costs, compliance options, the RFP process, scheduling concerns, and other
relevant issues. During these meetings PacifiCorp, as the operator, provided its
recommended course of action.
ldaho Power independently verified and analyzed PacifiCorp's
recommendations. ldaho Power took part in a detailed review of numerous documents,
including without limitation, technical evaluation summaries and matrixes, RFP
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1O
memorandums, the proposed EPC contract (including its exhibits), EPC contract
recommendation documents, and short-list memorandums. The EPC contract alone
consisted of nearly 10 binders of documents. These documents were reviewed by
ldaho Powe/s power production and legal departments. ldaho Power's finance
department also assisted in reviewing documents.
Based on ldaho Powe/s continued communication with PacifiCorp and its
independent review of the applicable documents, ldaho Power determined that it
supported PacifiCorp's recommendation to move forward with the Limited Notice To
Proceed in order to meet potential environmental and regulatory deadlines.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 11
REQUEST NO. 57: For the EPC contract, what was the basis for the
$- additional cost using a Limited Notice to Proceed type of contract?
Please provide a breakdown of the specific costs and a description of each.
RESPONSE TO REQUEST NO. 57: When PacifiCorp began the request for
proposal process to competitively bid the engineer, procure and construct ("EPC")
contract in January 2012, PacifiCorp anticipated the State of Wyoming Certificate of
Public Convenience and Necessity ("CPCN') regulatory proceeding and all necessary
environmental permits would be finalized in the fourth quarter of 2012. However, final
rulemaking delays by the U.S. Environmental Protection Agency ("EPA") regarding the
Wyoming Regional Haze State lmplementation Plan resulted in an extended CPCN
proceeding. ln parallel, the State of Wyoming's review and issue of a construction
permit for the project was also delayed. PacifiCorp ultimately recognized it would not be
in position to award the EPC contract on May 15,2013, without limitations. Accordingly,
on March 8,2013, PacifiCorp requested the short-listed bidders submit an altemative
proposal based on a limited notice to proceed ("LNTP") concept.
Under the LNTP concept, the confidential pricing by the least-cost competitively
evaluated bidder (eventuat EPC contractor) increased by approximately $I
The price increase is primarily the result of a delayed schedule for placing purchase
orders (resulting in increased equipment and material costs) and a compressed erection
schedule (resulting in increased labor rates and parallel path construction sequences).
Each of these activities requires a full notice to proceed prior to commencement.
The response to this Request is sponsored by Tom Harvey, Manager Joint
Projects, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 12
REQUEST NO. 58: The boiler and air pre-heater reinforcement work, the
economizer upgrades, the low-load economizer exit gas temperature control systems,
and the flue gas reinforcement are listed to be contracted at a later date separate from
the EPC contract in the EPC contractor's proposal as if the need was still under
evaluation. How certain is the Company that each of these additional parts of the
project will be needed for each Jim Bridger unit? Please explain.
RESPONSE TO REQUEST NO. 58: The necessity for the boiler and air
preheater reinforcement work is 100 percent certain as this work is mandated by the
National Fire Protection Association ('NFPA") 85 Boiler ind Combustion Hazard Code
because the addition of SCRs constitutes a "major modification" of the flue gas path for
each unit. Acting as the "authority having jurisdiction" in the State of Wyoming, and at
the recommendation of PacifiCorp's insurance undenryriters, PacifiCorp consistently
chooses to comply with the obligations of the NFPA 85 Code for work of this nature.
The flue gas path reinforcement work is also mandated by the same NFPA 85 Code
obligation. The precise details of the flue gas path reinforcement work scope cannot be
definitively established until the SCR modified flue gas path transient pressure analysis
modeling, under various boiler upset scenarios, is completed by the EPC contractor.
The EPC contractor will then complete an analysis to either qualify or disqualify the flue
gas path equipment and ductwork for future duty.
It is anticipated that the addition of a low-load economizer exit gas temperature
control system ("EEGT") will be justified as it allows an expanded operating range of
each unit and will provide the necessary operating margin between actual oxides of
nitrogen ("NOx") emissions, given: (1) operating upsets, (2) multiple cold startups, and
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 13
(3) multiple shutdowns events, occurring within the permit stipulated 3O-boiler operating
day periods, and stipulated permit Iimits.
For the economizer upgrade, the SCR inlet flue gas temperature must be limited
to a maximum of 780 degrees Fahrenheit ("oF"), plus or minus a 20 "F variation on a
SCR cross-section basis. The full load economizer exit gas temperature on Unit 4 is
approximately 816 'F requiring that the existing Unit 4 economizer be modified to
reduce the economizer outleUSCR inlet temperature. The existing Unit 3 economizer
outlet temperatures are typically lower, but the necessity of Unit 3 economizer
modification is being studied.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 14
REQUEST NO. 59: How would the Company run Bridger Units 3 and 4 if
converted to be fueled by natural gas (e.9., baseload, intermediate, peaking)? What
capacity factor is anticipated for each unit?
RESPONSE TO REQUEST NO. 59: !f Bridger units 3 and 4 were converted to
burn natural gas, the units would continue to be economically dispatched for the
purposes of serving native load and supporting surplus sales. As modeled in Aurora,
the dispatch of these units varies greatly based on the natural gas price and carbon
adder assumption. ln general and under the expected case natural gas price and
carbon adder, the units tend to be operated more like peaking units and are only
operated in summer peak load months. The modeled operation of these units varies
throughout the 2O-year planning period due to other resource additions and changes in
available transmission capacity. For the months of July and August, the monthly
capacity factor for unit 3 ranges from zero to 22 percent throughout the 2O-year period.
For the same months, the monthly capacity factor for unit 4 ranges from zero to 18
percent.
ln comparison, if SCRs are installed on Bridger units 3 and 4, the units would
continue to be operated as baseload resources because the fuel cost for coal remains
substantially lower than the price of natural gas per megawatt-hour ("MWh") produced.
The response to this Request is sponsored by Lisa A. Grow, Senior Vice
President of Power Supply.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 15
REQUEST NO. 60: Please explain the difference in minimum Net Present Value
Tota! Cost outcomes for Jim Bridger Units 3 and 4 (Table 4.1) between the final SAIC
report and the draft report dated 811312012. Specifically, why did the lowest cost
alternative for (1) low gas/high carbon change from retire and replace to natural gas
conversion; and (2) for base gas/high carbon change from retire and replace to the
upgrade altemative.
RESPONSE TO REQUEST NO. 60: A difference between the SAIC August 13,
2012, draft report and the February 8, 2013, final report is that the draft report used the
2011 lntegrated Resource Plan ("lRP") Prefened Portfolio and assumptions while the
final report used the updated 2013 IRP assumptions and Boardman to Hemmingway
transmission addition. The difference between the NPV and lowest cost alternative
results between the draft and fina! reports are a result of the different MWh forecast
volumes and variable costs assumptions used between the two reports.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 16
REQUEST NO. 61: Please explain the difference in minimum Total Portfolio
Cost Net Present Value outcomes for Jim Bridger Units 3 and 4 between the
1012612012final draft of the Coa! Unit Environmental lnvestment Analysis (Figure 6) and
the final report (Figure 4). Specifically, why did the lowest cost alternative for (1) base
gas/high carbon change from natural gas conversion to the upgrade alternative; (2) high
gas/high carbon change from natural gas conversion to the upgrade alternative; and (3)
low gas/high carbon change from natural gas conversion to retire and replace.
RESPONSE TO REQUEST NO. 61: A difference between the SAIC October 26,
2012, draft report and the February 8, 2013, final report is that the draft report used the
2011 IRP Preferred Portfolio and assumptions while the final report used the updated
2013 IRP assumptions and Boardman to Hemmingway transmission addition. The
difference between the NPV and lowest cost alternative results between the draft and
final reports are a result of the different MWh forecast volumes and variable costs
assumptions used between the two reports.
The response to this Request is sponsored by Tom Harvey, Joint Projects
Manager, Idaho Power Company.
DATED at Boise, ldaho, this 24th day of September 2013.
IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REOUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 17
Attorney for ldaho Power Company
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 24th day of September 20131 served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH
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
47 2 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 8372O-OO7 4
U.S. Mail
Overnight Mail
X Email [e-mail]
lndustrial Customers of ldaho Power Hand Delivered
Hand Delivered
FAX
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, ldaho 83703
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street
Boise, Idaho 83702
Snake River Alliance
Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street
P.O. Box 2564
Boise, Idaho 83701
U.S. Mail
_Overnight Mail_FAXX Email [e-mail]
[e-mail]
Hand Delivered
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FAXX Email [e-mail]
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Hand Delivered
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IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 18
Ken Miller, Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
Boise, ldaho 83701
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IDAHO POWER COMPANY'S RESPONSE TO THE FIFTH PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 19