20170504IPC to Staff 1-9 Redacted.pdf

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LISA D. NORDSTROM
Lead Counsel
[e-mail]
May 4,2017
VIA HAND DELIVERY
Diane M. Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Case No. IPC-E-17-06
2017-2018 Power Cost Adjustment - ldaho Power Company's Response to
the First Production Request of the Commission Staff
Dear Ms. Hanian:
Enclosed for filing in the above matter please find an original and three (3) copies of
ldaho Power Company's Response to the First Production Request of the Commission
Staff.
Also enclosed are four (4) copies each of non-confidential and confidential disks
containing information responsive to Staff's production requests. Please handle the
confidential information in accordance with the Protective Agreement executed in this
matter.
Very truly yours,
Re
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Lisa D. Nordstrom
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An IDACORP CompanY
122'l W. ldaho 5t. (83702)
PO. Box 70
Boise, lD 83707
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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]
I nordstrom @ ida h opowe r. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF IDAHO POWER
COM PANY'S APPLICATION FOR
AUTHORITY TO IMPLEMENT POWER
COST ADJUSTMENT (PCA) RATES FOR
ELECTRIC SERVICE FROM JUNE 1,
2017, THROUGH MAY 31,2018
CASE NO. IPC-E-17-06
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE COMMISSION STAFF
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COMES NOW, Idaho Power Company ("ldaho Po,wer" or "Company"), and in
response to the First Production Request of the Commission Staff to ldaho Power
Company dated Apri|'27,2017, herewith submits the followtng information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1
REQUEST NO. 1: Please provide monthly net power supply expense (NPSE)
and the corresponding amount of energy (MWh) for each FERC NPSE account for the
April 2016 through March 2017 deferral period similar to Exhibit No. 1 included in the
Company's application. Please provide a further breakdown of Account 501 and
Account 547 by plant.
RESPONSE TO REQUEST NO. 1: Please see the Excel file provided on the
non-confidential CD.
The response to this Request is sponsored by Nicole Blackwell, Regulatory
Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 2
REQUEST NO. 2: Please provide monthly average coal cost ($/ton) for
Boardman, Bridger, and Valmy coal plants during the April 2016 through March 2017
deferral period and coal price forecasts for the April 2017 through March 2018 forecast
period. lf there were any increases in costs, please provide a detailed explanation
RESPONSE TO REQUEST NO. 2: Please see the confidential attachment
provided on the confidential CD. The confidential CD will only be provided to those
parties that have executed the Protective Agreement in this matter. The confidential
attachment provides the average monthly coal costs for each of the coal plants. The
average monthly coal cost is calculated based on the valuation ($) of the sum of the
previous month's total ending inventory plus any purchases ($) the following month
divided by the sum of last month's total ending inventory, plus any purchases the
following month. These costs fluctuate based on average inventory costs. An average
cost of zero indicates that no coal is forecast to be consumed during that period.
Please see the Company's response to ldaho Public Utilifies Commission Staffs
("Staff') Production Request No. 3 for details on the cost increase at the Jim Bridger
plant ("Bridger") in 2016. lncreased forecast costs in 2018 at the Boardman plant are
due to anticipated increased costs for "spot" coal purchases.
The response to this Request is sponsored by Elizabeth Finley, Senior Mine
Operations Coordinator, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
REQUEST NO. 3: Specific to the Bridger plant, please provide a detailed
explanation of the top 3 reasons why coal costs have increased and the NPSE impact
of each. lf not in the top 3 reasons, please also include an explanation and the NPSE
impact of the Bridger mine long wall collapse.
RESPONSE TO REQUEST NO. 3: Actual fuel expense for Bridger for the April
2016 through March 2017 deferral period was approximately $126 million, which was
$29.3 million higher than forecast due to increased coal costs. The top three reasons
for the increase in coal costs are as follows:
1. The first increase in coal costs is due to a reduction of coal
deliveries from the Bridger Coal Company ('BCC") mine to Bridger. The 2016 BCC
budget included 5.9 million tons of deliveries to Bridger. Due to low market prices,
natural gas prices, and an abundance of renewable generation, the total budgeted
output from Bridger was reduced during the first quarter of 2016. This caused Bridger
to reduce its total delivery of BCC coal to 4.2 million tons from 5.9 million tons.
Reducing the delivered tons to the plant increased the BCC cost per ton from $44.88
per ton to $53.38 per ton, which in turn increased the total cost of fuel at the plant. This
reduction in delivery and subsequent increase in cost per ton at BCC was not included
in the 2016 Power Cost Adjustment ("PCA") filing.
2. The second driver for increased costs at BCC was the
abandonment of the Joy longwall. The Joy longwall operated until December of 2015,
at which time the longwall was halted by soft incompetent clay floor accompanied by
steep floor grades, a thinning coal seam, and uncontrollable caving of the roof.
Attempts to recover the Joy longwall continued until early October 2016, at which time
efforts were discontinued due to safety concerns caused by deteriorating geologic
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 4
conditions. The net book value of the abandoned Joy longwall system was written off
as a period cost to Federal Energy Regulatory Commission ("FERC") Account 501 at
the end of the third quarter of 2016 in the amount of $6.25 million (ldaho Power share).
Costs associated with the Joy longwall recovery effort were accounted for as mine
production costs in the amount of $3.64 million (ldaho Power share), and were recorded
to FERC Account 151, Fuel Stock. These costs are included in FERC Account 501 as
coal is burned at the plant.
3. The third driver in increased fuel expense at Bridger is related to
the volume of tons produced at the BCC underground mine. The DBT longwall was put
back into service in August 2016 and mined partially through the 15th right longwall
panel before being extracted in November of 2016. Because there was no longwall
production at the underground mine for the majority of the year, fixed costs were spread
over a relatively small amount of underground tons. The 2016 budgeted underground
tonnage was 3,495,200 tons at $47.04 per ton. Actual underground tonnage was
1,718,300 tons at $74.45 per ton.
As described above, ldaho Power has identified the primary drivers for increased
coal costs; however, the Company is unable to quantify with reasonable precision the
NPSE impact of each contributing factor.
Bridger fuel expense included in the 2017 PCA forecast is approximately $12.1
million higher than the 2016 PCA forecast due to increased coal costs at the BCC mine.
The increase is related to lower production volumes at the BCC mine, which results in
fixed costs being recovered over few tons, causing the cost per ton of coal to increase.
The response to this Request is sponsored by Elizabeth Finley, Senior Mine
Operations Coordinator, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
REQUEST NO. 4: ln the Company's forecast, please explain why Langley Gulch
is not planned to generate April 2017 through June of 2017, especially since Bridger is
planned to run and coal costs are assumed to increase based on Nicole Blackwell's
direct testimony (pp. 8 - l0). What other resources (or market) have lower dispatch
costs than Langley Gulch during this time frame?
RESPONSE TO REQUEST NO. 4: The production forecast from March 2017 for
the period April 2017 through June 2017 does not include Langley Gulch output as it is
scheduled for maintenance for the month of April, and is neither economic nor needed
for system reliability during the months of May and June. The Mid-C Market Prices from
March 2017 for Apri! 2017 are Heavy Load ("HL') $10.80, Light Load ("LL") $2.80; May
2017 HL $14.00, $5.60 LL; and June 2017 HL $15.40 and LL $6.10, which are below
the economic production costs of Langley Gulch. Other resources that have lower
dispatch costs than Langley Gulch, and are included in the energy forecast, are
executed market purchases and the hydro generating units. Jim Bridger is forecast to
run during the April 2017 through June 2017 period as it is needed to maintain system
reliability and flexibility.
The response to this Request is sponsored by Rick Haener, Power Supply
Planning Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 6
REQUEST NO. 5: Please provide monthly dispatch costs for each generation
plant used to develop the Company's forecast. Please include all workpapers with
formula intact.
RESPONSE TO REQUEST NO. 5: Please see the monthly dispatch costs for
each of the Company's coal-fired facilities provided as confidential Attachment 1 on the
confidential CD. Please see the monthly dispatch costs for each of the Company's
natural gas-fired facilities provided as confidential Attachment 2 on the confidential CD.
The confidential CD wi!! only be provided to those parties that have executed the
Protective Agreement in this matter.
The response to this Request is sponsored by Rick Haener, Power Supply
Planning Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 7
REQUEST NO. 6: Please provide al! planned and unplanned downtime for the
Langley Gulch power plant during the April 2016 through March 2017 deferral period. In
addition, please provide the time period and an explanation why the plant was down for
each occurrence.
RESPONSE TO REQUEST NO. 6:Scheduled outages for the Langley Gulch
plant during the April 2016 through March 2017 deferral period included the following
March 25, 2016, to May 5, 2016, maintenance included balance of
plant work (work that is not directly related to the gas turbine or
steam turbine is classified as balance of plant work), preparation for
summer production, and an upgrade to the T-3000 control system
software.
October 24, 2016, to November 30, 2016, maintenance included a
hot gas path inspection on the gas turbine and steam turbine sea!
replacement.
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December 1,2016, to December 15,2016, the routine fall outage
scheduled for October 24, 2016, to November 30, 2016, was
extended as additional wear was discovered on the blade roots,
blade tip seals, and interstage seals on the steam turbine rotor during
inspections. The steam rotor had to be sent off site for repairs.
February 27,2017, to April 1,2017, maintenance included balance of
plant work and replacement of a line that was damaged during winter
freezing events.
Unplanned outages for the Langley Gulch plant during the April 2016 through
March 2017 deferral period included the following
September 30, 2016, to October 8,2016, the gas turbine was off-line
due to a steam leak on the intermittent pressure flange.
October 9, 2016, to October 11,2016, maintenance included repairs
to the clarifier rake, which failed to start due to high density mud.
December 16, 2016, to December 21,20'16, maintenance included
balance of plant work, repairs to a main gas valve that froze shut, a
gas leak on the fuel separator, a static frequency converter trip, and a
bad coil.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 8
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o December 23, 2016, to December 24, 2016, maintenance included
repairs to a faulty sensor for gas turbine vibration.
. December 26, 2016, to December 28, 2016, maintenance included
repairs to frozen lines on the steam turbine hood spray.
The response to this Request is sponsored by Mike Williams, Power Production
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 9
REQUEST NO. 7: Please provide a detailed description of the Langley Gulch
equipment damage and related downtime that happened in October ol 2016. lnclude
any documentation or analysis that indicates root cause.
RESPONSE TO REQUEST NO. 7: During the planned fall outage, scheduled
for October 24, 2016, through November 30, 2016, work was planned to replace the
seals on the high-pressure steam turbine as part of the normal maintenance cycle.
During inspections, additional wear was found on the blade roots, blade tip seals, and
interstage seals on the turbine rotor. Due to these findings, the turbine rotor had to be
shipped to the manufacturer's maintenance facility located in Seattle, Washington, for
repairs. Repairs for the turbine rotor occurred between November 11,2016, and
December 1, 2016. The high-pressure steam turbine was reassembled and plant
maintenance was completed on December 15, 2016.
ldaho Power intends to determine the root cause of the turbine rotor seal wear.
Currently, the Company is working to retrieve historica! plant operating data in order to
trend operating conditions. During the planned spring outage, scheduled for March 25,
2016, to May 5, 2016, the plant computer system was updated. As a result of the
update, the plant historian database, which holds the plant's historical operating data
from2012 to 2016, rebooted and the Company was unable to access the data. ldaho
Power is working with Siemens to recover the historical plant operating data from the
Company's hard drives.
The response to this Request is sponsored by Mike Williams, Power Production
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1O
REQUEST NO. 8: ln reference to the October 2016 outage, please provide the
reduction in NPSE had the Langley Gulch facility remained operational. Please include
the resources, amounts of energy, and cost used to backfill lost generation. lnclude all
workpapers with formula intact.
RESPONSE TO REQUEST NO. 8: Please see the confidential attachment
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 October 2016
Langley Gulch outage was a planned outage, scheduled for October 24,2016, through
November 30, 2016. As discussed in the Company's response to Staffs Production
Request No. 6, due to additional wear discovered during inspections, repairs for the
turbine rotor occurred between November 11,2016, and December 1,2016, which
pushed the maintenance completion date approximately two weeks beyond the target
completion date. The high-pressure steam turbine was reassembled and plant
maintenance was completed on December 15, 2016.
The confidential attachment provides an estimate of the additional NPSE
incurred due to Langley Gulch being down Ionger than anticipated. Langley Gulch
generation was replaced with approximately 16,507 megawatts ("MW") of generation at
Danskin and 105,692 MW of market purchased power. The incremental cost of running
Danskin was $229 ,421 and the incremental cost of market purchases was $504 ,111 , for
a total incremental cost of $733,532.
The response to this Request is sponsored by Perry Kerfoot, Day Ahead
Balancing Operations Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 11
REQUEST NO. 9: Please provide all warranty terms and conditions, information
or insurance policies that could potentially apply to the October 2016 Langley Gulch
outage. Did the Company file for any warranty or insurance claims? Please explain,
why or why not. lf the Company is eligible for insurance or warranty coverage, please
provide the amount the Company is entitled to receive.
RESPONSE TO REQUEST NO. 9: The October 2016 Langley Gulch outage
was planned as part of the normal scheduled maintenance cycle provided in the Long-
Term Service Agreement with Siemens. Scheduled maintenance included work on the
steam turbine to replace the gland seals, which are a normal wear item on a steam
turbine and require periodic maintenance.
The plant start-up issues following the completion of the planned outage on
December 15, 2016, as described in detail in the Company's response to Staff's
Production Request No. 6, were not related to the routine work performed on the gas
turbine or steam turbine during the scheduled outage. Therefore, the Company was not
eligible for and did not file any warranty or insurance claims as a result of the October
2016 Langley Gulch scheduled outage.
As discussed in the Company's response to Staff's Production Request No. 7,
the October 2016 scheduled outage was extended approximately two weeks beyond
the target completion date of November 30, 2016, to December 15, 2016. The
extension was due to turbine rotor seal wear, found during inspection. The Company is
currently working to determine the root cause of the turbine rotor seal wear.
The response to this Request is sponsored by Mike Williams, Power Production
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 12
DATED at Boise, ldaho, this 4th day of May 2017.
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LISA D
Aftorney for ldaho Power Company
IDAHO POWER COMPANYS RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF. 13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 4th day of May 2017 I served a true and correct
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:
Commission Staff
Brandon Karpen
Deputy Attorney General
ldaho Public Utilities Commission
472 West 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 (83702)
P.O. Box 7218
Boise, ldaho 83707
X Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
_Hand DeliveredX U.S. Mail
_Overnight Mai!
_FAXX Email [e-mail]
q req@ richardsonadams. com
Dr. Don Reading
6070 Hill Road
Boise, Idaho 83703
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
Christa Bearry, Legal Assistant
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 14