20170331IPC to Staff Supplemental Attachment Redacted 2.pdf

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Lisa D. Nordstrom
An IDACORP Company
1221 W. ldaho 5t. (81702)
PO. Box 70
Boise, lD 83707
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LISA D. NORDSTROM
Lead Counsel
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March 31,2017
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re Case No. !PC-E-16-24
Recovery of Costs Associated with North Valmy Power Plant - ldaho Power
Company's Supplemental Response to the Commission Staffs Production
Request No. 2.
Dear Ms. Hanian
Enclosed for filing in the above matter please find an original and three (3) copies of
ldaho Power Company's Supplemental Response to the Commission Staffs Production
Request No. 2.
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.
Very truly yours,
dr*p.@
LDN:csb
Enclosures
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
lnordstrom@ hooower.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
AUTHORIry TO INCREASE ITS RATES
FOR ELECTRIC SERVICE TO RECOVER
COSTS ASSOCIATED WITH THE NORTH
VALMY PLANT
CASE NO. IPC-E-16-24
IDAHO POWER COMPANY'S
SUPPLEMENTAL RESPONSE
TO THE COMMISSION STAFF'S
PRODUCTION REQUEST NO. 2
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COMES NOW, ldaho Power Company ("ldaho Powe/' or "Company"), and
supplements its response to the ldaho Public Utilities Commission Staffs ("Staff')
Request No. 2 dated February 9 and 14,2017 , as follows:
IDAHO POWER COMPANY'S SUPPLEMENTAL RESPONSE
TO THE COMMISSION STAFF'S PRODUCTION REQUEST NO. 2 - 1
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 SUPPLEMENTAL RESPONSE
TO THE COMMISSION STAFF'S PRODUCTION REQUEST NO. 2 - 2
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 least-cost alternative
resource(s)?
vi. The Company has chosen to forgo $75 million in NPV benefits
associated with the lower cost, lower risk P9 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 rational for establishing such a savings level.
SUPPLEMENTAL RESPONSE TO REQUEST NO. 2:
i. ln accordance with the Company's initial response to Staffs Request No.
2.i, ldaho Power has performed a supplemental Valmy Unit 1 shutdown analysis "in line
with the 2017 lntegrated Resource Plan ("lRP") and . . . updated Valmy capital and
operations and maintenance ('O&M") budgets." The results of this analysis are
provided as Attachments 1, 7, and 8 on the non-confidential CD and confidential
Attachments 2 through 6 on the confidential CD. The confidential CD will only be
provided to those parties that have executed the Protective Agreement in this matter.
IDAHO POWER COMPANY'S SUPPLEi'IENTAL RESPONSE
TO THE COMMISSION STAFF'S PRODUCTION REQUEST NO. 2 - 3
The following table provides a description of the information contained in each
attachment:
!n summary, the results of the analysis presented in Attachments 1 and
confidential Attachments 2 through 6 indicate that a 2019 shutdown for Valmy Unit 1
results in the least cost, least risk portfolio. As such, the Company has incorporated the
2019 Valmy Unit 1 shutdown date into its portfolio planning process that will be reflected
in the upcoming 2017 lRP. As detailed in Attachments 7 and 8, the annual levelized
revenue requirement associated with the updated 2019 Unit 112025 Unit 2 scenario is
approximately $52 million, in comparison with the Company's filed request of $28.5
million reflecting the 2025 Units 1 and 2 shutdown scenario.
The response to this Request is sponsored by Tom Harvey, Planning and
Operations Director, ldaho Power Company, and Matt Larkin, Revenue Requirement
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S SUPPLEMENTAL RESPONSE
TO THE COMMISSION STAFF'S PRODUCTION REQUEST NO. 2 - 4
No.File Name Description
1 Analysis Summary Results Narrative of assumptions, changes
factors, analysis results, and
recommendation.
in risk
final
2 Confidential Fixed Cost lmpact Detailed calculation of fixed cost impacts
presented in Table 1 of Attachment 1 .
3 Confidentia! AURORA Base
Gas
AURORA output in support of variable cost
impacts under base gas scenario as detailed
in Table 2 of Attachment 1.
4 Confidential AURORA 200
Percent Gas
Same as Attachment 3, but reflecting 200o/o
gas scenario.
5 Confidential AURORA 300
Percent Gas
Same as Attachment 3, but reflecting 300%
gas scenario.
6 Confidential AURORA 400
Percent Gas
Same as Attachment 3, but reflecting 40Oo/o
qas scenario.
7 Levelized Rev Req - 2019 U1 An n ualized revenue requ i rement determ ination
reflectino 2019 Unit 1 shutdown assumptions.
8 Levelized Rev Req -2025 U2 Annualized revenue requirement determination
reflecting 2025 Unit 2 shutdown assumptions.
DATED at Boise, ldaho, this 313t day of March 2017.
D
Attorney for ldaho Power Company
IDAHO POWER COMPANYS SUPPLEHENTAL RESPONSE
TO THE COMMISSION STAFF'S PRODUCTION REQUEST NO.2.5
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 31st day of March 2017 ! served a true and
correct copy of IDAHO POWER COMPANY'S SUPPLEMENTAL RESPONSE TO THE
COMMISSION STAFF'S PRODUCTION REQUEST NO. 2 upon the following named
parties by the method indicated below, and addressed to the following:
Gommission Staff
Camille Christen
Deputy Attorney General
ldaho Public Utilities Commission
472 W est 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 Village, Colorado 80111
Pete Bennett
Micron Technology, lnc.
8000 South FederalWay
Boise, ldaho 83707
Idaho lrrigation Pumpers Association, lnc.
Eric L. Olsen
ECHO HAWK & OLSEN, PLLC
505 Pershing Avenue, Suite 100
P.O. Box 6119
Pocatello, ldaho 83205
Anthony Yankel
12700 Blake Avenue, Unit 2505
Lakewood, Ohio 44107
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fsch m idt@ hol la nd hart. com
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bhansen@hollandhart. com
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kmtrease@ holland hart. com
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IDAHO POWER COMPANY'S SUPPLEMENTAL RESPONSE
TO THE COMMISSION STAFF'S PRODUCTION REQUEST NO. 2 - 6
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street
P.O. Box 844
Boise, ldaho 83701
Sierra Glub
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 General Counsel (GC-76)
The United States Department of Energy
1000 lndependence Avenue, SW (Room 6D-033)
Washington, D.C.20585
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Christa Bearry, Legal
IDAHO POWER COMPANY'S SUPPLEMENTAL RESPONSE
TO THE COMMISSION STAFF'S PRODUCTION REQUEST NO. 2 - 7