20140128IPC to ICIP 1-6.pdf

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An IDACORP CompanY
LISA D. NORDSTROM
Lead Gounsel
I n ordstrom@idah ooower.com
January 28,2014
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-13-20
Idaho Power Company's Base Leve! NPSE - ldaho Power Company's
Response to the First Production Request of The lndustrial Customers of
ldaho Power
Dear Ms. Jewell:
Enclosed forfiling in the above matter are an original and three (3) copies of ldaho
Power Company's Response to the First Production Request of The lndustrial Customers
of ldaho Power ('lClP') to ldaho Power Company. AIso, enclosed are four (4) copies of a
confidential disk containing information responsive to lClP's Production Request No. 4.
Please handle the confidential information in accordance with the Protective Agreement
executed in this matter.
Also, enclosed are four (4) copies of a non-confidential disk containing information
responsive to ICIP's Production Request Nos. 1 and 5.
Sincerely,
fuAfuw,*t
LDN:evp
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd strom @ idahopower. co m
Attomey for ldaho Power Company
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO ESTABLISH A NEW
BASE LEVEL OF NET POWER
SUPPLY EXPENSE
I ',!! n.1 :" I - rr. [i, '. ]1
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. |PC-E-13-20
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE
INDUSTRIAL CUSTOMERS OF
IDAHO POWER TO IDAHO POWER
COMPANY
COMES NOW, ldaho Power Company ("ldaho Powe/' or "Comp?ry"), and in
response to the First Production Request of The lndustrial Customers of ldaho Power
('lClP") to ldaho Power Company dated January 7,2014, herewith submits the following
information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE ]NDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 1
REQUEST NO. 1: The prefiled direct testimony (page 18) of Timothy Tatum
states:
The Company proposes to use the same energy allocation
basis that would exist under the PCA to apportion the
approximately $99.3 million base rate increase to each
customer class; that is, in proportion to each class's annual
energy consumption. By using the same energy allocation
basis applied in next year's PCA filing, each customer class
will contribute exactly the same amount of revenue to offset
NPSE that would exist under the PCA collection.
A. Would the results be the same, e.g. identical contribution of revenue that would
exist under the PCA, if the $99.3 million were allocated under a full cost-of-service
allocation?
B. lf the answer to A is no, please indicate what portion of the $99.3 million each
customer class would be responsible for and the total percentage change for each class
if the $99.3 were allocated on a cost of service basis.
C. Please provide the full cost of service run, in electronic format, with the proposed
$99.3 included.
RESPONSE TO REQUEST NO. 1:
A. No.
B. The attached Excel file presents the allocation of the incremental $99.3 million in
Net Power Supply Expenses ("NPSE') to customer classes utilizing the Company's
class cost-of-service methodology and allocation factors from its most recent general
rate case, Case No. IPC-E-11-08 ("2011 Rate Case").
The "Allocation" tab on the Excel file utilizes factors from the 2011 Rate Case to
allocate the proposed incremental change in NPSE to the base demand, peak demand,
and energy classifications, then to customer classes. Please note the allocation factor
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 2
percentages used in these calculations have been adjusted to reflect the removal of
Hoku as a special contract customer.
The "lmpact" tab of the Excel file summarizes the differences between the
energy-based allocation proposed by the Company in the current proceeding and the
cost-of-service allocation calculated in the "Allocation" tab. ln the "lmpact" tab, the
reduction to cost recovery through the Power Cost Adjustment is allocated to customer
classes on an energy basis as proposed in the Company's initia! filing, while the
corresponding increase to base NPSE is allocated to customer classes according to the
cost-of-service methodology described above. The net revenue impact to each
customer class resulting from the differing allocation methodologies is reflected in the
"Percent Change" column of the "lmpact" tab.
C. Because "a full cost-of-seryice run" was not performed for the current proceeding
the requested study does not exist. However, the Excel file provided in the Company's
response to lClP's Production Request No. 1.B details the class allocation that would
have occurred utilizing the fu!! cost-of-service methodology and allocation factors from
the Company's last genera! rate case.
The response to this Request is sponsored by Timothy E. Tatum, Senior
Manager of Cost of Service, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 3
REQUEST NO. 2: The prefiled direct testimony (page 3) of Scott Wright states:
The Company and Commission have historically used the
term "variable power supply expenses" as the sum of fuelexpenses and purchased power expenses not
including purchases from qualifying facilities ., minus
surplus sales revenues . . . The AURORA model is used to
quantify these components which cumulatively are referred
to as NPSE.
A. Please provide a list of all company resources that are included in the AURORA
model run used in this docket to find NPSE that are not included in the last Commission
approved cost-of-service model in Case No. IPC-E-11-08.
B. PIease provide the dollar amount of the rate base resource listed in A, above,
that were used in the AUROM runs in this docket to find NSPE.
C. For each resource listed in A and B above, please provide the original in service
cost and the amount of depreciation associated with each discreet resource.
RESPONSE TO REQUEST NO. 2:
A. The NPSE amount determined by the AURORA model was updated in Case No.
IPC-E-10-01 and remained the same in Case No. IPC-E-11-08. The Companyadded
Langley Gulch in Case No. IPC-E-12-14, which accounts for the only new Company-
owned resource that has been added between Case No. IPC-E-10-01 and Case No.
lPc-E-13-20.
B. The AURORA output is a calculation of variable operating expenses and does
not include any rate base amounts in the calculations. While not used in the AURORA
analysis, the plant balance for Langley Gulch ending December 31, 2012, is
$370,057,116.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 4
C. Please see the Company's response to lclP's Production Request No. 2.8 for
the plant balance booked to Langley Gulch ending December 31, 2012. The
depreciation reserve balance for Langley Gulch ending December 31, 2012, is
($s,62t ,817).
The response to this Request is sponsored by Scott Wright, Regulatory Analyst
ll, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 5
REQUEST NO. 3: The prefiled direct testimony (pages 6 - 7) of Scott Wright
states:
For the 2013 Base Level NPSE, the Company segmented
PURPA generation into two categories, .PURPA Wind" and
all other PURPA. PURPA Wind was modeled by applying
the 2012 hourly actua! historical PURPA Wind generation to
shape to the monthly forecasted generation amounts.
A. For the AURORA mode! runs used in this docket, how did the Company model
the Elkhorn Wind Project's hourly generation?
B. lf the Elkhorn Wind Project's generation was modeled differently from 'PURPA
Wind" please explain fully why and provide the basis for its different model.
RESPONSE TO REQUEST NO. 3:
A. The Elkhorn Wind project is a Purchased Power Agreement ("PPA"), which was
modeled by applying the 2012 hourly actual historical generation from the Elkhorn Wind
project.
B. The only difference in modeling between the Elkhorn Wind project and PURPA
Wind is the historical hourly generation profile used for each project. Because Elkhom
Wind is a PPA, it has its own historical hourly generation profile that is different than the
PURPA Wind which excludes the Elkhorn Wind generation.
The response to this Request is sponsored by Scott Wright, Regulatory Analyst
ll, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 6
REQUEST NO. 4: The prefiled direct testimony (page 9) of Scott Wright states:
For the 2010 Base Leve! NPSE, natural gas prices were
assumed to be $S.Zg per MMBtu for Henry Hub and $5.50per MMBtu for natural gas delivered to the Company's
plants. For the 2013 Base Leve! NPSE, they are forecasted
to be $3.62 per MMBtu for Henry Hub and $3.68 per MMBtu
for natural gas delivered to the Company's plants.
A. Please explain why the 2010 natural gas price delivered to the Company's plants
is less expensive than the natural gas priced at the Henry Hub and why 2013 natural
gas price delivered to the Company's plants is more expensive than natural gas priced
at the Henry Hub.
B. Please provide all workpapers used to derive the $3.62 per MMBtu Henry Hub
price and for the $9.04 price for gas delivered to the Company's plants along with an
explanation of the logic used in finding these NPSE Base Level prices.
RESPONSE TO REQUEST NO. 4:
A. The basis between Henry Hub and the natural gas price delivered to the
Company's plants vary from year to year. Historically Henry Hub prices have been
influenced by higher priced Northeast U.S. markets. The lack of regional supply for the
Northeast tended to drive up prices at Henry Hub and cause it to trade above the
Northwest regional price, therefore allowing delivery to the Company's plants to be at a
discount to Henry Hub. Currently, advancements in shale drilling and the development
of the Marcellus shale field have reduced the reliance on Henry Hub as a supply source
for the Northeast. At the same time, lack of new development of regional gas for the
Northwest has led to actual production stagnation in the Northwest region and regional
prices now trade at a slight discount or a premium to Henry Hub, depending on the
season (minimal discount in summer, premium in winter).
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY. 7
B. Please see confidential Attachment 1 and confidential Attachment 2 provided on
the confidential CD containing the workpapers that derive the Henry Hub price of $3.62
per MMBtu and the $0.06 basis for natura! gas delivered to the Company's natural gas
plants. The confidential CD will be provided to those parties that have executed the
Protective Agreement in this proceeding.
The response to this Request is sponsored by Scott Wright, Regulatory Analyst
ll, ldaho Power Company.
]DAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 8
REQUEST NO. 5: The prefiled direct testimony (page 9) of Scott Wright states:
The total coal expenses quantified in the 2010 Base Level
NPSE were $167.2 million. For the 2013 Base Level NPSE,
total coal expenses are forecasted to be $108.5 million or a
decrease of $58.7 million.
Please provide a list of all of the thermal resources included in the 2O1O and the 2013
Base Level NPSE. For each listed resource provide the MWh produced and associated
costs included in the NPSE.
RESPONSE TO REQUEST NO. 5: The thermal resources included for 2O1O
were: Bridger, Boardman, Valmy, Danskin, and Bennett Mountain. The attached PDF
file contains the generation and expenses for the Company's thermal resources
approved by the Commission in Order No. 31042. The thermal resources included for
2013 are Bridger, Boardman, Valmy, Langley Gulch, Danskin, and Bennett Mountain.
Please refer to Exhibit No. 1 in this case for generation and expenses for the
Company's thermal resources.
The response to this Request is sponsored by Scott Wright, Regulatory Analyst
ll, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWERTO IDAHO POWER COMPANY - 9
REQUEST NO. 6: The prefiled direct testimony (page 12) of Scott Wright states:
Because actual 2013 conditions were reflective of an
atypical year, the Company used 2012 actual water lease
expense to reflect a more realistic expectation for a
normalized level of FERC Account 536, Water for Power
expense.
A. What metric does the Company use to measure typical and atypical water years?
B. Using the response in A, above, please indicate the leve! of the metric for 2012
and 2013 along with the amount of the water lease expense for each year.
C. Pease describe what the Company considers average and median water
conditions.
RESPONSE TO REQUEST NO. 6:
A. Based on low water conditions lor 2013, water was not available to adequately
fulfill the water leases. Therefore, Idaho Power considered 2013 to be an atypical year.
B. Actual water lease expense for 2012 was $2,380,597 while the water lease for
2013 was $673,111, which includes actual values for January through August and
forecast values for September through December.
C. The NPSE for Case No. IPC-E-13-20 is calculated by simulating 85 water year
conditions in the AURORA model and then averaging the results of all 85 NPSE to
create an "average" NPSE. A median water condition would be simulating one water
year condition in the exact middle of the 85 individual water year conditions and take the
NPSE results from that single water year condition.
The response to this Request is sponsored by Scott Wright, Regulatory Analyst
ll, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 1O
DATED at Boise, ldaho, this 28th day of January 2014.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 11
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 28th day of January 2O'l4l served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
TO IDAHO POWER COMPANY upon the following named parties by the method
indicated below, and addressed to the following:
Gommission Staff
Karl T. Klein
Deputy Attomey General
Idaho Public Utilities Commission
47 2 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
lndustrial Customerc of ldaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street
Boise, ldaho 83702
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
karl. klein@puc. idaho.oov
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IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER TO IDAHO POWER COMPANY - 12