20170302IPC to Staff Redacted 1-23.pdf

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An IDACORP Company
LISA D. NORDSTROTTI
Lead Counsel
[e-mail]
,.,:i -i 1-.'rl(ClIil,
March 2,2017
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-16-24
Recovery of Costs Associated with North Valmy Power Plant - Idaho Power
Company's Response to the First Production Request of the Commission
Staff
Dear Ms. Hanian
Enclosed forfiling in the above matter please find an original and three (3) copies of
ldaho Power Company's Redacted Response to the First Production Request of the
Commission Staff. !n addition, enclosed for filing are an original and three (3) copies of
ldaho Power Company's Confidential Response to the Commission Staffs Request No. 4.
Also 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.
ly yours,
Lisa D. Nordstrom
LDN:csb
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 n ord strom @ ida hopowe r. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS RATES
FOR ELECTRIC SERVICE TO RECOVER
COSTS ASSOCIATED WITH THE NORTH
VALMY PLANT
CASE NO. !PC-E-16-24
IDAHO POWER COMPANY'S
REDACTED RESPONSE TO THE
F!RST PRODUCTION REQUEST
OF THE COMMISSION STAFF
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COMES NOW, ldaho Power Company ("ldaho Power" or "Company"), and in
response to the First Production Request of the Commission Staff to ldaho Power dated
February 9 and 14,2017, herewith submits the following information:
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 1
REQUEST NO. l: Please provide all attachments and exhibits included in the
filing, as well as any attachment or workpapers as a result of data requests, in
executable format. This is an ongoing request.
RESPONSE TO REQUEST NO. 1: Please see Attachments 1-9 provided on the
non-confidential CD for copies of all attachments and exhibits in executable format
included in the filing. Exhibit No. 2 and related workpapers were provided in the
Company's response to Micron Technology lnc.'s Request No. 1-2. As a matter of
course, copies of ldaho Power's responses to any future discovery requests in this case
will be provided to all intervening parties.
The response to this Request is sponsored by Matt Larkin, Revenue
Requirement Manager, ldaho Power Company, and Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 2
REQUEST NO. 2: The Company's 2015 IRP stated that the P9 portfolio with
retirement of North Valmy Unit #1 in 2019 and retirement of Unit #2 in 2025 was the
lowest cost and least risk on a quantitative basis. The Company chose the P6(b)
portfolio with Valmy retirement of both units in 2025 with an NPV that was some $75
million greater than P9. The Company justified its selection of P6(b) based on the
following subjective risk criteria:
a) The near term impact to customer rates of Unit #1 retirement in 2019.
b) 320 MW of PURPA solar online uncertainty as described on page 6 in the
Company's reply comments filed in Case No. IPC-E-15-19.
c) Uncertainty of cooperation by Valmy operating partner.
i. Does the Company believe that the NPV differential identified in the
2015 IRP between P6(b) and P9 portfolios would be at least as large using updated
cost assumptions? lf not, why not? lf the Company does not believe this to be a
reasonable approximation, please provide an approximate revenue requirement
differential that is reasonable.
ii. Has the uncertainty associated with the subjective risk criteria listed
above changed since the 2015 IRP was issued? Please explain.
iii. Has the Company tried to identify the cost of mitigating the
subjective risk associated with criteria b and c described above if it pursued the P9
portfolio? lf so, please provide the analysis. lf not, why not?
iv. Given subjective risk criteria b described above, please estimate
the probability of contract cancellations for each project that make up the 320 MW of
PURPA capacity. Please describe the factors (e.9. milestone achievement, source of
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
financing, etc.) that affect the likelihood that a PURPA project will be cancelled and for
each project, provide the status of each project relative to each of those factors.
v. Given subjective risk criteria b described above, if the Company
was to close Valmy Unit #1 in 2019, what alternative resource could the Company
implement to mitigate capacity deficits due to the cancellation of one or more of these
PURPA projects to alleviate this risk? What is the NPV revenue requirement impact of
potentially replacing cancelled PURPA project capacity with Ieast-cost alternative
resource(s)?
vi. The Company has chosen to forgo $75 million in NPV benefits
associated with the lower cost, lower risk Pg portfolio identified in the 2015lRP in favor
of a higher cost, higher risk P6(b) portfolio based on the subjective uncertainty and
associated risks described above. Please describe the level of NPV savings that would
need to occur before the Company would pursue the lower cost, lower risk portfolio.
Please provide the rationalfor establishing such a savings leve!.
RESPONSE TO REQUEST NO. 2:
i. To help clarify the differences between the December 31, 2019, and
December 31, 2025, Valmy Unit 1 shutdown dates, a supplemental analysis is being
prepared for filing. The Valmy Unit 1 shutdown analysis will use updated assumptions
in line with the 2017 lntegrated Resource Plan ("lRP") and use updated Valmy capital
and operations and maintenance ("O&M") budgets. The Company expects to provide
the results of the supplemental analysis as a supplemental response to this Request no
later than the end of March 2017.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 4
ii. Yes, the uncertainty associated with the Public Utility Regulatory Policies
Act of 1978 ('PURPA") risk criteria listed above has changed since the 2015 lRP. The
solar PURPA projects under contract in 2014 have either moved forward with
construction or been cancelled. Please see the Company's response to subpart iv
below for more details.
iii. The Company has not tried to identify the cost of mitigating the risk
associated with criteria b and c described above. As discussed in the Company's
response to subpart iv below, information to evaluate the probability of PURPA Energy
Sales Agreement ('ESA') cancellations is unavailable to ldaho Power. Discussions with
NV Energy on mutually agreed to shutdown dates for Valmy Unit 1 and Valmy Unit 2
have occurred but firm dates have not been set.
iv. ldaho Power does not estimate the probability of contract cancellations
regarding PURPA ESAs. The Company does not have the information available to
make such a determination, especially factors that relate to a project's own
development criteria, which include sources of financing, the likelihood of achieving
project development milestones, etc.
The Company does enforce ESAs in accordance with the terms and conditions of
the contracts and tracks compliance items, such as: posting of security, delay
damages, and dates relating to delay cure periods. lf a project is following the
requirements of its ESA, ldaho Power expects the project wil! be developed and plans
accordingly.
Of the 320 megawatts ("MW') of solar projects included in the 2015lRP, one 20
MW project voluntarily terminated its ESA and three projects reduced the project
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
nameplate capacities as allowed under their respective Oregon standard ESAs. Since
the 2015 IRP, ldaho Power has entered into three new Oregon standard ESAs for
projects totaling 8.75 MW. The total solar nameplate capacity currently under contract
for PURPA solar projects is 298.25 MW. Idaho Power is expecting all projects currently
under contract to come on-line under their respective ESAs. As of the date of this
response, 249.5 MW of PURPA solar are on-line, one 20 MW solar project is
completing ESA requirements to be granted a First Energy Date, another 20 MW project
is under construction, and 8.75 MW are expected to be on-line in October 2019.
v. As discussed in response to subpart iv above, since completion of the
2015 !RP, uncertainty surrounding the 320 MW of solar projects no longer exists.
Therefore, alternative resources associated with mitigating this risk are no longer
applicable. The Company's supplemental analysis discussed in its response to subpart
i above will reflect updated information with respect to known PURPA capacity.
vi. The supplemental analysis referenced in the Company's response to
subpart i above will provide an updated net present value ("NPV") revenue requirement
difference between the referenced Valmy shutdown scenarios. The results of this
analysis will inform the Company's preferred Valmy shutdown scenario.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, Idaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 6
REQUEST NO. 3: Are the Loss of Load Probabilities (LOLP) for Portfolio P6(b)
and P9 as reflected in the 2015 IRP results reasonable LOLP approximations for the
Company's present filing and for a comparable North Valmy Unit #1 2019 closure
scenario with updated assumptions as discussed in Production Request No. 2,
respectively? If the Company does not believe these to be reasonable approximations,
please explain why, and provide LOLP approximations that are reasonable.
RESPONSE TO REQUEST NO. 3: The LOLPs as reflected in the 2015lRP are
a reasonable approximation for the Company's present filing and for a comparable 2019
Valmy closure scenario.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 7
REQUEST NO. 4: ln emails between Tom Harvey from ldaho Power and Kevin
Geraghty from NV Energy from April 19 through May 2,2016 supplied in Response to
Sierra Club Production Request No. 1-5, the two companies discussed
Please describe the nature
of this inquiry and the result. AIso, please provide any documents, agendas and/or
meeting minutes, descriptions of phone conversations, and any other evidence of
communications that the Company has had with NV Energy to investigate, negotiate
and/or alter the contract with NV Energy to allow for different Valmy closure dates.
RESPONSE TO REQUEST NO. 4: ldaho Power and NV Energy have been
discussing options related to North Valmy for several years. These particular
conversations related to whether NV Energy had interest in
Pertinent documents, agendas, and/or meeting minutes were provided in the
Company's response to the Sierra Club/ldaho Conservation League's Request No. 1-5.
The confidential version of this response 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, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF. S
REQUEST NO. 5: Please provide approximate settlement costs that ldaho
Power would have to pay to NV Energy to facilitate North Valmy Unit #1 early closure
dates of 2019,2020,2021,2022,2023, or 2024. PIease provide a basis and calculation
for each estimate (including workpapers with formulae intact).
RESPONSE TO REQUEST NO. 5: Approximate settlement costs between NV
Energy and ldaho Power regarding an early closure of North Valmy Unit t have not
been determined nor have discussions occurred regarding estimating such costs.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 9
REQUEST NO. 6: Please provide a detailed explanation of any contractual
limitations the Company has in either extending the life of the plant beyond 2025 or
retiring the plant earlier than 2025. Harvey Direct at 17.
RESPONSE TO REQUEST NO. 6: Contractua! limitations to either extend the
life of the plant or retire the plant before 2025 are not specified in the Ownership
Agreement or Operation Agreement. As expressed in Section 7.2 of the Valmy
Ownership Agreement, neither partner can unilaterally "partition the project." "End of
the Project" is specifically addressed in Section 6.1.3 and Section 7 in the Valmy
Ownership Agreement. Please see the Ownership Agreement (page 337) and
Operation Agreement (page 296) included in the confidential attachment produced with
the Company's response to the Sierra Club/ldaho Conservation League's Request
No. 1-3.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDAGTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 1O
REQUEST NO. 7: Please provide detailed descriptions and dollar amounts for
any maintenance and incremental capital costs that could be avoided if North Valmy
Unit #1 was closed in 2018, 2019,2020,2021,2022,2023, or 2024. Please include an
explanation of the drivers for each expenditure and why the costs could be avoided.
Additionally, were any of these avoided costs included in the 2019 North Valmy Unit #1
closure in the P9 portfolio of the IRP?
RESPONSE TO REQUEST NO. 7: The requested analyses regarding the
multiple shutdown scenarios for Valmy Unit t have not been performed, with the
exception of the 2019 Unit 1 shutdown assumption included in the P9 portfolio analysis
in the 2015 lRP. ldaho Power intends to revisit O&M savings, incremental capital, and
the overall revenue requirement impact of a 2019 end-of-life for North Valmy Unit 1
within the supplemental analysis of North Valmy Unit 1 comparing the closure dates of
December 31, 2019, and December 31, 2025, as described in the Company's response
to the Idaho Public Utilities Commission ("Commission") Staffs ("Staff') Request No. 2.i.
The present value portfolio analysis related to the P9 portfolio of the 2015lRP reflected
the avoidance of costs related to operation of Unit 1 beyond 2019. These avoided costs
include rate of return on investment recovered early, taxes, non-fuel O&M expenses,
and run rate capital.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 11
REQUEST NO. 8: The Company states that, without any Valmy generation
capacity, peak-hour deficits grow from 24 MW in 2020 to 236 MW in 2024. Harvey
Direct at 13. Please provide alternative load-serving resources that the Company
considered and/or evaluated in preparation for this case to offset lost needed generation
capacity for North Valmy Unit #1 closure dates from 2019 to 2024.
RESPONSE TO REQUEST NO. 8: Because the Company's Application seeks
to align the depreciation schedule for the Valmy plant with the shutdown dates identified
for Units 1 and 2 in the Company's 2015 lRP, the Company did not consider North
Valmy Unit 1 closure dates from 2019 lo 2024 in preparation for this case. The case is
the result of the 2015lRP identifying the likelihood of an earlier shutdown than the 2031
and2034 depreciation schedule used in the 2013lRP.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 12
REQUEST NO. 9: Relative to the Company's proposal with both Valmy units
closing in 2025, please explain how decommissioning costs would change if North
Valmy Unit #1 was closed in 2019.
RESPONSE TO REQUEST NO. 9:Decommissioning costs would not
necessarily change if Unit 1 was closed in 2019 and Unit 2 was closed in 2025.
Decommissioning activities on Unit 1 could accelerate, but it may be more cost-effective
to perform these activities in conjunction with Unit 2 decommissioning.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 13
REQUEST NO. 10: Please provide historical evidence of North Valmy plant
dispatches due to transmission constraints that limited the purchase of market electricity
over the past 5 years.
RESPONSE TO T NO. 10:The confidential Excel spreadsheet
provided on the confidential CD lists instances over the past five years when the North
Valmy plant was dispatched due to transmission constraints. The confidential CD 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, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 14
REQUEST NO. 11: Exhibit No. 6, Appendix A to Harvey's testimony compares
the revenue requirement of Valmy retirement dates of 2025 and 203112034. Please add
a row to the analysis in Figure 1 reflecting a 201912025 retirement date. lf a Unit #1
2019 retirement date would require the Company to acquire alternate resources to meet
capacity deficits (as identified as the P9 portfolio from the 2015lRP), please include that
revenue requirement as well.
RESPONSE TO REQUEST NO. 11:This information wi!! be provided in the
supplemental analysis of North Valmy Unit 1 comparing the closure dates of December
31,2019, and December 31,2025, as described in the Company's response to Staffs
Request No. 2.i.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, Idaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 15
REQUEST NO. 12: Exhibit No. 6, Appendix A to Harvey's testimony shows a
comparison of Forecasted Fixed Costs and Total Power Supply Costs through 2025 and
2034, respectively. For the 2034 shutdown scenario, for each year, please provide a
breakdown of the number of megawatts of generation that were dispatched due to
economic reasons versus the number of megawatts of generation that were dispatched
to meet peak load due to system transmission constraints.
RESPONSE TO REQUEST NO. 12: The table below identifies the total
forecasted megawatt-hours of output included in Exhibit No. 6, Appendix A from the
Company's share of Valmy for the years 2025-2034. ldentification of the forecasted
output reason, either economic or load service, is not available within the Company's
Aurora modeling software.
Time_Period
2016
20L7
20t8
2019
2020
202L
2022
2023
2024
2025
2026
2027
2028
2029
2030
203t
2032
2033
2034
Valmyl_Output_MWH
48,860
47,939
72L,957
285,905
394,422
390,210
4t2,029
505,881
581,801
629,550
540,335
551,450
570,L84
582,809
597,586
6t2,4_45
Valmy2_Output_MWH
49,487
58,684
148,396
307,061
405,7L3
417,O7O
435,904
519,650
628,2t1
640,798
606,389
561,087
589,789
625,793
625,546
649,67O
770,390
680,934
709,009
Total_Output_MWH
98,347
L06,623
270,353
592,966
800,135
807,280
847,933
1,024,531
L,zto,OLz
r,2lo,34g
7,146,723
1,\12,537
L,Lsg,973
l,2og,602
L,223,L32
7,262,t74
710,390
680,934
708,009
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 16
REQUEST NO. 13: ln Response to Idaho Conservation League's (lCL)
Production Request No. 1-10, ldaho Power states that, "Based on the final CPP and
historical generation, it appeared that the state of Nevada would be able to meet both
the mass and rate goals with Valmy running until the end of 2025." Meeting compliance
goals aside, did the Company evaluate the cost impact due to the required number and
projected value of allowances necessary to run Valmy to meet ldaho jurisdictional load?
Does the Company believe this to have a potentially large impact to the Company's
proposed analysis in this case if the CPP is implemented in its current form? Why or
why not?
RESPONSE TO REQUEST NO. 13: No, ldaho Power did not evaluate the cost
impact due to allowances necessary to run Valmy to meet ldaho jurisdictional load. The
Clean Power Plan ("CPP') has not been implemented, due to a stay granted by the U.S.
Supreme Court, so the value of allowances is unknown. lf implemented in its current
form, allowance allocation will be performed by each state; ldaho Power will not have
control over this process. The cost impact to the Company of the CPP as currently
written on a mass-based program wil! depend wholly on how the states treat allowances
and/or allocate allowances to Idaho Power. As a result, the magnitude of the impact is
unknown.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDAGTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 17
REQUEST NO. 14: Please provide the load forecast, natural gas forecast, and
Valmy coal price forecast, as well as the water condition assumptions used to develop
the NPV potential revenue requirement impact analysis as discussed on Page 16 of
Tom Harvey's direct testimony. Please describe the sources of information and how
they were used to develop these input assumptions. Please provide in worksheet
format and provide any worksheets used to develop these inputs with all formulae
intact.
RESPONSE TO REQUEST NO. 14: The Excel spreadsheet provided on the
non-confidential CD contains the load forecast, natural gas forecast, and Valmy coal
price forecast used in preparing the filing and includes the sources of information and
how they were used. The source of the Aurora simulation inputs is the 2015lRP except
for the load forecast, natural gas forecast, and the Valmy coal price forecast. The load
forecast, natural gas forecast, and the Valmy coal price forecast are in line with the
2017 IRP draft assumptions as of the date of the analysis.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, Idaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 18
REQUEST NO. 15: According to the Company, it works jointly with NV Energy
to make decisions regarding any environmental investment, plant retirement, or
conversion. Given NV Energy has 50 percent ownership and is the owner/operator of
the Valmy facility, please explain the process for resolving disputes when ldaho Power
and NV Energy have disagreements about investing in the plant, retiring the plant, or
converting the plant. Furthermore, please explain any past disagreements and how
they were resolved.
RESPONSE TO REQUEST NO. l5: Dispute resolution between NV Energy and
Idaho Power concerning North Valmy will be done by arbitration as laid out in the Valmy
Operation Agreement Sections 3.6-3.11 and the Ownership Agreement Section 14.
The Ownership Agreement (page 337) and Operation Agreement (page 296) were
included in the confidential attachment produced with the Company's response to the
Sierra Club/ldaho Conservation League's Request No. 1-3. ldaho Power and NV
Energy have never had to invoke arbitration at any time during the partnership.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 19
REQUEST NO. 16: According to the Company, the specific timing and exact
amounts of future investments at Valmy are not yet known. Please explain how the
Company plans to utilize a least cost approach for incremental capital additions and
overall maintenance given the proposed early retirement. Furthermore, please explain
when the Company believes the Commission should determine the prudency of
incremental capital additions and maintenance costs.
RESPONSE TO REQUEST NO. 16: For all future capital investments for the
North Valmy station, the Company will receive a description of the factors driving the
need for the projects and a recommendation for the work to be performed from the plant
operator, NV Energy. The estimated cost of each project will then be compared to the
expected life of the asset as well as the Valmy end-of-life date to determine prudency of
the planned investment. These projects and the corresponding business cases (for all
projects over $1,000,000) will be reviewed during the Company's annual budget
meeting with NV Energy prior to the expenditures being made. ln addition, ldaho Power
and NV Energy will work together to identify ways to reduce O&M as both partners
prepare for future low production from the plant through its end-of-life.
Regarding the Commission's determination of prudence, under the Company's
proposal, ldaho Power would make annual filings with the Commission updating
forecasted expenditures with actual expenditures incurred throughout the year.
Through these annual filings, the Commission will have the opportunity to determine the
prudence of incremental capital additions and maintenance costs that were actually
incurred prior to any rate change related to the Valmy balancing account.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company, and Matt Larkin, Revenue
Requirement Manager, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 20
REQUEST NO. 17: What is the probability and risk of B2H being delayed past
2025? Please provide all analysis evaluating the probability and risk of B2H being
delayed, including any key milestones that must be met in order to achieve the 2025
target. What resource options has the Company evaluated to meet system peak if B2H
is delayed?
RESPONSE TO REQUEST NO. 17: Below are two key Boardman to
Hemingway ("B2H") project milestones.
1. The Bureau of Land Management is expected to issue a Record of
Decision (ROD) in 2017. This milestone represents the culmination of the federal
permitting process.
2. For the separate state of Oregon permitting process, the Oregon Energy
Facility Siting Council is expected to issue a Site Certificate by 2020.
The two key milestones above must be completed before the B2H project can
commence construction. Meeting these milestones wil! provide ldaho Power roughly
five years to complete construction by 2025. ldaho Power anticipates construction will
take approximately three years to complete, providing approximately two years of
schedule float to complete construction by 2025. The primary schedule risk is the timely
issuance of the Oregon Site Certificate. However, given the two years of schedule float,
Idaho Power anticipates there is a reasonable probability that construction can be
completed by 2025.
Multiple and varied resource options are considered during integrated resource
planning. For the 2015 lRP, four of the 23 resource portfolios analyzed were
designated as alternative to B2H portfolios. These portfolios, which are described on
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 21
pages 107-109 of the 2015 lRP, relied on a variety of primarily dispatchable resource
options to meet system peak. Another comparative analysis evaluating B2H and
alternatives to B2H is provided in Figures 7.5 and 7.6 of the 2015 IRP (pages 88-89).
These figures respectively illustrate levelized cost of capacity and levelized cost of
production for resource options considered in the 2015 !RP. B2H is among the lower
cost resource options for both cost metrics. Other evaluated resource options on these
figures having low costs similar to B2H and providing similar capability to meet system
peak include gas-fired resource options, specifically combined-cycle combustion turbine
generating facilities (2x1 and 1x1).
Analysis for the 2017 IRP is not yet complete. However, ldaho Power has
communicated to public stakeholders in the IRP process its plans to continue evaluation
of B2H-alternative resource options. Alternatives to B2H portfolios for the 2017 lRP
contain natural gas-powered reciprocating engines, combined-cycle combustion turbine
generating facilities (1x1), single-axis solar photovoltaic generating facilities, and
expanded demand response.
The response to this Request is sponsored by Mitch Colburn, Engineering
Leader-Customer Operations, Engineering and Construction, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 22
REQUEST NO. 18: Please provide the forecasted yearly capacity factor for the
Valmy plant from 2016 through 2025 based on the Company's updated analysis of the
P6(b) portfolio reflected in this filing.
RESPONSE TO REQUEST NO. 18: The table below presents the forecasted
yearly capacity factors for the Valmy plant for the years 2016 through 2025.
Year
Valmy I
Capacity Factor
Valmy 2
Gapacity Factor
2016 4o/o 4o/o
2017 4o/o 5o/o
2418 11o/o 12o/o
2019 260/o 260/o
2020 35o/o 34o/o
2021 35o/o 35o/o
2022 37o/o 37o/o
2023 45o/o 44o/o
2024 52o/o 53o/o
2025 57o/o 54o/o
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 23
REQUEST NO. 19: ln the Public Utilities Commission of Nevada (PUCN) final
order, Docket Nos 16-07001, 16-07007, 16-08027, the Nevada Commission ordered NV
Energy to complete an updated Life Span Analysis Process (LSAP) for the North Valmy
power plant. What kind of review will ldaho Power perform relative to this analysis?
Please describe how the results of this analysis and any analysis IPC has done or will
complete in the future, will be used in the process of determining an agreed upon North
Valmy closure date between the two utilities?
RESPONSE TO REQUEST NO. 19: The LSAP analysis wil! be independently
performed by NV Energy as required by the PUCN; as such, ldaho Power will not
contribute to the creation of NV Energy's LSAP. While ldaho Power will assess the
results of the LSAP analysis, the Company is currently in the process of preparing an
independent supplemental analysis of North Valmy Unit 1 comparing the closure dates
of December 31 , 2019, and December 31, 2025, as described in the Company's
response to Staffs Request No. 2.i. The results of the respective analyses will serve to
inform ongoing discussions with regard to the appropriate closure date for Valmy Unit 1
as Idaho Power and NV Energy determine the need and cost-effectiveness of this unit
for purposes of satisfying system load and reliability.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDAGTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF.24
REQUEST NO. 20: Please describe the process, including an approximate
timeline and activity descriptions, the Company will implement to continually ensure that
the Valmy closure scenario the Company has adopted optimizes least-cosUleast-risk to
ldaho ratepayers and to ensure ratepayers will not be exposed to incremental capital
expenditures on a plant that is no longer required for optimal system operation.
Furthermore, please include in this process description, but not limited to: (1) the
activities the Company will perform to engage NV Energy to synchronize Valmy closure
dates which look out for the best interests of ldaho ratepayers; (2) reports the Company
will file with the Idaho Public Utilities Commission that provides evidence of continued
prudent Company decision-making; and (2) [src/ checkpoints to determine potential
cases the Company would file if there is a change in circumstances and an adjustment
in rates is warranted.
RESPONSE TO REQUEST NO. 20: As described in the Company's response to
Staffs Request No. 2.i, ldaho Power is currently performing a supplemental analysis
regarding the shutdown of Valmy Unit 1, with the intent of identifying the differences
between a year-end 2019 shutdown and a year-end 2025 shutdown. The Company
believes this analysis is the first step in identifying the optimal course of action with
respect to the remaining life of Valmy Unit 1, and expects to provide the results of this
analysis as a supplemental response to Staffs Request No. 2.i no later than the end of
March 2017.
With regard to the remaining components of this Request, ldaho Power believes
the results of the supplemental analysis will help to determine the activities the
Company will perform to engage NV Energy to synchronize a Valmy closure date, in
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 25
addition to informing the need for future reports, filings, and/or checkpoints. However,
under any scenario, the Company will continue to monitor the investments and usage of
North Valmy for any significant changes to the assumptions used to determine the
prudent nature of investment at the Valmy plant as detailed in the Company's response
to Staffs Request No. 16. As further discussed in the Company's response to Staffs
Request No. 16, the Company's proposal in this case also includes annual filings with
the Commission containing updated information as forecasted expenditures are
replaced with actual expenditures, providing an annual opportunity to keep the
Commission apprised of current circumstances related to the Valmy plant.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 26
REQUEST NO. 21: Please provide all authorized Environmental Protection
Agency and Nevada Division of Environmental Protection documents (e.g. State
lmplementation Plans, Federal lmplementation Plans, etc.) that mandate environmental
upgrades made to the Valmy plant since the 2011 General Rate Case.
RESPONSE TO REQUEST NO. 21:
o Mercurv and Air Toxics Standards ("MATS") Rule. ln compliance with
Section Vlll of Class I Air Quality Operating Permit No. AP4911-0457.03 and Notice of
Finding and Order No. 2013-10 issued by the Nevada Division of Environmental
Protection, Bureau of Air Pollution Control ("NDEP-BAPC') dated August 6, 2013, the
North Valmy Generating Station (Valmy) was ordered to install Dry Sorbent lnjection
('DS!') Emissions Control Technology on Unit 1 to control hydrogen chloride pursuant to
the U.S. Environmental Protection Agency ("EPA") MATS rule (40 CFR Part 63 Subpart
UUUUU) on or before April 16, 2015. The DSI was installed and operational prior to the
April 16,2015, deadline. A copy of Class I Air Quality Operating Permit No. AP4911-
0457.03 and NDEP-BAPC Notice of Finding and Order No. 2013-10 are provided on the
non-confidential CD as Attachments 1 and 2, respectively.
o MATS Rule. The specific MATS emission limits are specified in Section
V!!! of Class I Air Quality Operating Permit No. AP4911-0457.03 and 40 CFR Part 63
Subpart UUUUU, Table 2. To meet the mercury limit ol 1.21blTBtu (30 boiler operating
day rolling average), Valmy installed a calcium bromide injection system on both Unit 1
and Unit 2. The calcium bromide injection system is currently operational. Additionally,
to measure and monitor the continuous mercury emissions, Valmy installed passive
device sorbent traps on Unit 1 and Unit 2, which are changed out every one to five days
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 27
and analyzed. A copy of Class I Air Quality Operating Permit No. AP4911-0457.03 is
provided on the non-confidential CD as Attachment 1.
o Coal Handlinq Svstem Dust Control Upqrades. Valmy was issued a
Notice of Finding and Order No. 2012-12 by the NDEP-BAPC dated June 14, 2012.
The Order was to address hazard and workplace safety issues posed by handling
Powder River Basin (PRB) coal and to ensure that those issues are addressed in a
timely manner. Valmy was ordered to replace existing dust control baghouses with new
wet extraction units, known as Engart units, on three coal handing systems, to include
the Tripper Hopper Area, Unit 1 Coa! Silos and Unit 2 Coal Silos. Each Engart unit was
installed and operationa! on or before August 1, 2012, as required by the Order. The
NDEP-BAPC Notice of Finding and Order No. 2012-12 is provided on the non-
confidential CD as Attachment 3.
o Coa! Handlinq Svstem Dust Control Upqrades. On December 8,2011,
Valmy was issued five Notices of Alleged Air Quality Violations ("NOAV") for failing to
report deviation of its Title V Operating Permit. The NOAVs resulted in a Consent
Decree between the Nevada Division of Environmental Protection ('NDEP') and NV
Energy filed with the Court on January 23, 2012 (Case No. LV18836). The Consent
Decree required Valmy to evaluate the air pollution control devices on its complete coal
handling system and within 120 days submit an engineering and design plan to the
NDEP for review and approval. The engineering and design plan was submitted on July
23,2012. Upon review of the engineering and design plan, the NDEP issued a Notice
of Finding and Order No. 2013-04 dated December 13, 2012. The Order required the
installation of specific air pollution control devices throughout the coal handling system,
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 28
to include over-belt cartridge collectors, central cartridge collectors, and cartridge bin
vents. Copies of the five NOAVS, the Consent Decree (Case No. LV18836) and the
NDEP-BAPC Notice of Finding and Order No. 2013-04 are provided on the non-
confidential CD as Attachments 4, 5, and 6, respectively.
a Ambient Air Quality Monitors. ln compliance with Section V.H (General
Monitoring, Recordkeeping and Reporting Requirements) and Section Xl (Schedule of
Compliance) of Class lAir Quality Operating Permit No.4P4911-0457.03 issued on
May 28, 201S-within270 days of issuance of the operating permit, Valmy was required
to instal! a device to monitor and record PM2.5 and NO, concentrations on its three
ambient air quality monitoring stations. The PM2.5 and NO, monitors have been
installed and are currently operational. A copy of the Class ! Air Quality Operating
Permit No. AP4911-0457.03 is provided on the non-confidential CD as Attachment 1.
. Coal Gombustion Residuals ("CCR") Rule. On December 19,2014,
the EPA finalized national regulations that provide a comprehensive set of requirements
to safe disposal of CCR generated from coal-fired electric generating units. On April 17,
2015, the EPA created the CCR Rule, which regulates CCR as a waste under the
Resource Conservation and Recovery Act (RCRA). The law became effective on
October 19,2015. The CCR rule is codified in 40 CFR Part 257. Only the Class lll
CCR Landfill ("Landfill") at Valmy is subject to the CCR rule. Mandated environmental
upgrades to the Landfillto date include:
o !nstalled five groundwater monitoring wells around the Landfill;
o lnitiated Baseline groundwater monitoring by sampling and analysis;
. Developed Publically Accessible Website;
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
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. Developed CCR Fugitive Dust Control Plan;
o Developed Stormwater Run On and Run Off Plan;
o Constructed Stormwater Run On and Run Off controls;
o Developed Landfill Closure Plan; and
o Developed Landfill Post Closure Plan;
A copy of the CCR rule, 40 CFR Part 257 in its entirety is provided on the non-
confidential CD as Attachment 7.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 30
REQUEST NO. 22: Given the Valmy plant partnership with NV Energy, please
explain how the Company has ensured that its managing partner has completed the
capital projects included in Exhibit No. 4 of Harvey's direct testimony, in a least cost
manner (e.g. competitive bidding). ln addition, please provide a copy of the
documentation the Company reviewed (i.e. request for proposals, list of potentia!
bidders, submitted proposals, bid evaluations, and bidder pricing) for the capital projects
that are listed in Exhibit No. 4 of Harvey's direct testimony in performing its due
diligence.
RESPONSE TO REQUEST NO. 22: As discussed in the Company's response
to Staffs Request No. 16, for al! capital investments for the North Valmy station, the
Company receives a description of the factors driving the need for the projects, the
expected cost, and a recommendation for the work to be performed from the plant
operator, NV Energy. The Company reviews this information for each project, as well
as the corresponding business case (at a minimum, for all projects over $1,000,000), at
its annual budget meeting with NV Energy prior to any expenditures being made.
Through these discussions, ldaho Power and NV Energy work together to establish and
approve the capital investments to be made at the plant. Attachments 1-30 provided on
the non-confidential CD contain the business case documents reviewed by Idaho Power
for the capital projects listed in Exhibit No. 4 of Mr. Harvey's direct testimony. ln
addition to these documents, NV Energy as the owner/operator has a Corporate
Procurement Policy, which outlines the procedures to be followed for the procurement
of goods and services in excess of $25,000. NV Energy's Corporate Procurement
Policy is provided as confidential Attachment 31 on the confidential CD. The
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 31
confidential CD 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, Resource Planning
and Operations Director, ldaho Power Company.
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 32
REQUEST NO. 23: PIease provide a copy of final EPC contract, construction
organization charts, construction schedules (baseline vs. actual), project status reports,
action item lists, and change orders for plant investment projects listed in Exhibit No. 4
of Harvey's direct testimony that are greater than $3,000,000 in value.
RESPONSE TO REQUEST NO. 23: Attachments 1-10 provided on the non-
confidential CD include the contacts, change orders, status, invoices, business €ses,
and action items that are available for the projects greater than $3,000,000 in value.
The response to this Request is sponsored by Tom Harvey, Resource Planning
and Operations Director, ldaho Power Company.
DATED at Boise, ldaho, this 2nd day of March 2017.
a
SA D. NORDSTROM
Attorney for ldaho Power pany
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 33
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 2nd day of March 2017 I served a true and
correct copy of IDAHO POWER COMPANY'S REDACTED 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:
Commission Staff
Camille Christen
Deputy Attorney General
!daho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
Micron Technology, lnc.
Thorvald A. Nelson
Frederick J. Schmidt
Emanuel T. Cocian
Brian T. Hansen
HOLLAND & HART, LLP
6380 South Fiddlers Green Circle, Suite 500
Greenwood Vi!!age, Colorado 80111
Pete Bennett
Micron Technology, lnc.
8000 South FederalWay
Boise, ldaho 83707
ldaho lrrigation Pumpers Association, lnc.
Eric L. Olsen
ECHO HAWK & OLSEN, PLLC
505 Pershing Avenue, Suite 100
P.O. Box 6119
Pocatello, Idaho 83205
Anthony Yankel
12700 Blake Avenue, Unit 2505
Lakewood, Ohio 44107
X Hand Delivered
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[e-mail]
etcocian@hol land hart. com
[e-mail]
[e-mail]
kmtrease@ holland hart. com
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[e-mail]
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IDAHO POWER COMPANY'S REDAGTED RESPONSE TO THE
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ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street
P.O. Box 844
Boise, ldaho 83701
Sierra Club
Travis Ritchie
Sierra Club
2101 Webster Street, Suite 1300
Oakland, California 94612
United States Department of Energy and
Federal Executive Agencies
Steven Porter
Office of the Genera! Counsel (GC-76)
The United States Department of Energy
1000 lndependence Avenue, SW (Room 6D-033)
Washington, D.G.20585
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Christa Bearry, Lega
IDAHO POWER COMPANY'S REDACTED RESPONSE TO THE
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