20150701IPC to Staff 1-7.pdf

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An IDACORP Company
LISA D. NORDSTROM
Lead Gounsel
[e-mail]
July 1 ,2015
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Enclosures
ll li .JUi-
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Gommission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-15-17
Long Term Program Contract with Siemens Energy, lnc. - ldaho Power
Company's Response to the First Production Request of the Commission
Staff
Dear Ms. Jewell:
Enclosed forfiling in the above matter please find an original and three (3) copies of
ldaho Power Gompany's Response to the First Production Request of the Commission
Staff.
ln addition, enclosed are four (4) copies each of non-confidential and confidential
disks containing information responsive to Staffs production requests. Please handle the
confidential information in accordance with the Protective Agreement executed in this
matter.
Very truly yours,
d,^.1-,%^/-Jr-a4"r
Lisa D. Nordstrom
1221 W. ldaho 5t. (83702)
P.O. Box 70
Boise, lD 83707
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd stro m @ ida hopowe r. co m
Attorney for ldaho Power Company
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AN
ORDER AUTHORIZING THE APPROVAL
OF A LONG TERM PROGRAM CONTRACT
WITH SIEMENS ENERGY, INC., AND
DEFERRAL OF ASSOCIATED COSTS.
'_-l
CASE NO. IPC-E-15-17
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE COMMISSION STAFF
.10
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
COMES NOW, ldaho Power Company ("ldaho Powe/' or "Compory"), and in
response to the First Production Request of the Commission Staff to ldaho Power
Company dated June 18,2015, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1
REQUEST NO. 1: Please provide a copy of Exhibit No. 1 in an electronic Excel
format with allformulas intact.
RESPONSE TO REQUEST NO. 1: Please see the confidentia! Excel file
provided on the confidential CD for a copy of Exhibit No. 1 in electronic format with all
formulas intact. The confidential CD will only be provided to those parties that have
executed the Protective Agreement in this matter.
The response to this Request is sponsored by Courtney Waites,
Regulatory Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 2
REQUEST NO. 2: Page 6, line 22-25 through page 7, line 1 of Trevor Mahlum's
direct testimony states "However, Idaho Power did contract with a professional
knowledgeable in long-term program contracts who contacted multiple third-party
providers of gas plant maintenance as part of a formal request for information process."
a. Please identify the professiona!.
b. Please identify the third-party providers.
c. Please provide a copy (or access to a copy) of each proposal received.
d. Please explain the criteria used to evaluate the proposals.
e. Please provide a copy of the proposal evaluation results.
RESPONSE TO REQUEST NO. 2:
a. The Company hired Jeff Fassett of IEM Energy Consultants to aid in the
review of third-party vendor capabilities.
b. Mr. Fassett provided the Company with a spreadsheet matrix of the third-
party vendors' capabilities that would meet the Company's specific needs. The vendors
include: ACT; Allied Power Group; Alstom/PSM; Leading Edge; Pratt & Whitney Power
Services; ProEnergy Services; S.T. Cotter Turbine Services, lnc.; Sulzer-Hickham; TRS
Services, lnc.; and Universal Plant Services.
c. Please see confidential Attachment 1 provided on the confidential CD for
Mr. Fassett's matrix.
d. Because the ldaho Power does not have a background in vetting third-
party turbine vendors, it relied heavily on Mr. Fassett's research and recommendations
on individual shop capabilities. However, regarding the overall criteria to select either a
third-party vendor or the origina! equipment manufacturer ("OEM"), proposals were
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCT]ON REOUEST OF THE COMMISSION STAFF - 3
compared to the same services that the OEM could provide. Where third-party vendors
could not perform the same service, cost adderc were input that reflected the need to
supplement their service with comparable OEM service. As can be seen in the
capabilities matrix that Mr. Fassett provided, Alstom/PSM had the closest level of
capabilities to the OEM. Because Alstom/PSM had nearly the same capabilities as the
OEM, the Company pursued a request for proposal from both Alstom/PSM and the
OEM of the parts and services of the Danskin and Bennett Mountain combustion
turbines ("CT'). (lt should be noted that all inquiries into the capabilities of third-party
vendors were limited to the Danskin and Bennett Mountain turbines. Mr. Fassett had
indicated early in discussions that the Langley Gulch turbine was too new, with
technologically advanced parts that no third-party vendor could service). The
responses received from the request for proposal process were reviewed by both the
Company and Mr. Fassett on a basis of completeness, technica! competency, and
economic risk.
e. Following the evaluations, a recommendation memo was written to the
Company's Power Production Manager; please see confidential Attachment 2 provided
on the confidential CD. ln addition, a summary memo of the full evaluation, including
the Long Term Program ('LTP') Contract negotiations, was provided by Mr. Fassett and
is included on the confidential CD as Attachment 3.
The confidential CD will only be provided to those parties that have executed the
Protective Agreement in this matter.
The response to this Request is sponsored by Trevor Mahlum, Area
Maintenance Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 4
REQUEST NO.3: Please provide a schedule showing the expected timing and
amounts for all milestone payments.
RESPONSE TO REQUEST NO. 3: The fee payment projection schedule that
was used to evaluate the LTP Contract is provided on the confidential CD. The
confidential CD will only be provided to those parties that have executed the Protective
Agreement in this matter. The LTP Contract with Siemens Energy, lnc. ("Siemens")
does not contain a specific date defined milestone payment schedule. Services are
rendered once a combustion turbine reaches an OEM recommended maintenance
interval, either in terms of the number of start-ups or the number of hours operated
since service was last completed. The fee schedule projection being provided assumes
the Danskin and Bennett Mountain CTs experience 60 equivalent starts per year, and
the Langley Gulch CT operates 5,000 equivalent base hours per year.
It is important to point out that re@mmended maintenance intervals can be
reached at different times than what is being assumed based on how each combustion
turbine ultimately ends up being operated; therefore, the timing of when fees will be paid
can also fluctuate.
The response to this Request is sponsored by Randall Henderson, Finance
Team Leader ll, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
REQUEST NO. 4: Please explain whether response time for unscheduled
maintenance or repairs will be advercely affected if spare parts are no longer on-site or
in the Company's inventory.
RESPONSE TO REQUEST NO. 4: Response times for unscheduled events will
not likely be impacted without the spare parts in the Company's inventory due to several
contract terms. First, under Section 5.6, the Seller has guaranteed response times to
unscheduled events. Under the contract, the Seller will need to comply with these
response times, whereas, without the contract, the Seller has no obligation and will
respond only if its maintenance crews are available. ln addition, without the contract,
the Company and the Sellefs contracting departments are required to negotiate
contract terms on a case-by-case basis, which may delay the actual repairs.
Second, under Section 6.1, the Seller is required to maintain a five-business-day
availability to a full set of Program Parts for each covered CT. In the event of an
unscheduled outage, the cooling time of a CT, the insulation and instrumentation
removal, and the access to the failed components will likely exceed the five-day delivery
of the replacement Program Parts.
Finally, under Section 2.9, the contract provides for the Company, at its
discretion, to "self-perform" minor maintenance on the CTs. This provision allows the
Company's maintenance crews to perform small repairs without the need to mobilize a
crew from out of town.
The response to this Request is sponsored by Trevor Mahlum, Area
Maintenance Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 6
REQUEST NO. 5: ln multiple areas of testimony and the Application, the
Company discusses buying parts under the current self-manage approach, rather than
using parts already in the Company's inventory.
a. Please explain generally which parts are curently in the Company's
inventory and which must be ordered as needed.
b. Which parts are included in those whose ownership will be transfened
from the Company to Siemens?
c. Please provide a schedule showing all inventory to be transferred to
Siemens with as much detail as possible for the net book value and taxes for each
component.
d. Please distinguish between "!nitia! Spare Parts" and "Program Parts."
RESPONSE TO REQUEST NO. 5:
a. Generally, ldaho Powe/s spare parts inventory includes parts the
Company knows will be used during scheduled near-term outages, including combustor
baskets, nozzles, housings, seals, blades, and vanes. Parts that are not currently in
ldaho Powe/s inventory include parts needed if there is unexpected equipment damage
during an outage, non-Program Parts that need to be replaced, or Program Parts that
are replaced outside of the normal replacement interval.
b. Please see Exhibit G of the LTP Contract provided as confidential
Attachment 1 to the Company's Application for a detailed list of the lnitial Spare Parts,
the parts whose ownership will be transfened to Siemens upon execution of the
agreement.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 7
c. The Excel file provided on the non-confidential CD includes a schedule
showing all inventory to be transfened to Siemens as part of the LTP Contract, including
the net book value and taxes for each component. The first tab includes the inventory
by gas plant, vintage year, and the split between assets included in customer rates and
those added after the Company's last general rate case. The second tab details the tax
computations for the inventory being transferred to Siemens.
d. As described in the LTP Contract provided as confidentialAttachment 1 to
the Company's Application, lnitial Spare Parts are those parts identified in Exhibit G to
the agreement that ldaho Power has in inventory and were ordered from Siemens prior
to the effective date of the agreement. Program Parts are listed in Exhibit B to the
agreement and consist of the major CT parts provided by Siemens and the parts
installed in the CT upon the effective date, all lnitial Spare Parts, and all parts changed
during the length of the contract.
The response to this Request is sponsored by Courtney Waites, Senior
Regulatory Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISS]ON STAFF - 8
REQUEST NO. 6: Please list the OEM-recommended scheduled maintenance
intervals for each plant.
RESPONSE TO REQUEST NO. 6: The cunent OEM-recommended scheduled
maintenance for each CT is as follows:
"EBH = Equivalent Base Hours*ES = Equivalent Starts
The differences in inspection intervals between the plants are due to the style (or
model) of components installed. Based on the type of internal components, the OEM
determines the service intervals, identified within the applicable service bulletins. The
current intervals (identified in the table above) are subject to change throughout the
term of the LTP Contract, as seen in Section 1.2 under the terms "Combustor lnspection
lnterval," "Hot Gas Path lnterval," and "Major lnspection lnterval." ln addition, the OEM
has agreed to upgrade the Bennett Mountain components during the first scheduled
HGP inspection, in order to update it to the same service bulletin as Danskin CTI listed
in Exhibit C, page 1. This upgrade allows an additional 50 ES between each
maintenance interval. Under the agreement, the OEM has also agreed to upgrade the
Langley Gulch components to the new 25,000 EBH service interval, listed in Exhibit C,
Addendum 3. This upgrade alleviates the need for three additional Combustor
lnspections: between the first HGP and first Ml, between the first Ml and second HGP,
and between the second HGP and second Ml. These parts are exclusively available to
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 9
Combustor lnspection
("c!")
Hot Gas Path ("HGP")
lnspection
Major lnspection
("M1")
Langley Gulch 12,500 EBH*25,000 EBH 50,000 EBH
Danskin CT1 450 ES**9OO ES 1,800 ES
Bennett Mountain 4OO ES 8OO ES 1,600 ES
LTP customers, substantially decreasing the scheduled maintenance requirements
when compared to a self-perform maintenance scenario.
The response to this Request is sponsored by Trevor Mahlum, Area
Maintenance Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1O
REQUEST NO. 7: The LTP contract appears to only cover the Langley Gulch
CCCT, the Bennett Mountain SCCT, and the Danskin #1 SCCT, but not the Danskin#2
or Danskin #3 SCCT.
a. Please confirm whether this is conect. lf it is conect, why have Danskin
#2 and Danskin #3 units been omitted?
b. Will maintenance of Danskin lt2 and Danskin #3 units continue to be self
managed by the Company?
c. Does the Company have spare parts in inventory specifically for the
Danskin #2 and Danskin #3 units? Will the Company continue to own these parts if the
LTP contract is approved?
RESPONSE TO REQUEST NO. 7:
a. The Danskin units CT2 and CT3 have been omitted from the agreement
due to both their vintage as well as their historical operating profiles. These combustion
turbines are more mature frame units that can be more easily serviced by third-party
vendors. ln addition, due to their historically low usage, the scheduled outages are
many years apart and difficult to forecast. lncluding these within the contract would
likely extend the term we!! past the end dates of the included F-frame turbines.
b. The cunent plan is to continue self-managing the maintenance of the
Danskin units CT2 and CT3. As the scheduled outages approach, the Company will
evaluate the outage needs and contract for support either to the OEM or to third-party
vendorc.
c. The Company has an inventory of spare parts for Danskin units CT2 and
CT3. Because these are identical units, part sharing between the units is possible,
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REOUEST OF THE COMMISSION STAFF - 11
allowing the Company to carry a smaller number of spare parts. Because these units
are not included in the scope of the proposed LTP Contract, the Company will retain title
to the existing inventory and the parts will remain at the warehouse on-site.
The response to this Request is sponsored by Trevor Mahlum, Area
Maintenance Leader, ldaho Power Company.
DATED at Boise, Idaho, this 1"t day of July 2015.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 12
Attomey for ldaho Power Company
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 1"t day of July 2015 I served a true and conect
copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF upon the following named parties by the
method indicated below, and addressed to the following:
Gommission Staff
Kar! T. KIein
Deputy Attomey General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 13
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