20180208IPC to Staff 1-10.pdf

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An IDACORP Company
JULIA A. HILTON
Senior Counsel
[e-mail]
February 8, 2018
VIA HAND DELIVERY
Diane M. Hanian, Secretary
Idaho Public Utilities Commission
47 2 W esl Wash ington Street
Boise, ldaho 83702
Re Case No. !PC-E-17-16
Method of Recovery for Costs Associated with Participation in Energy
lmbalance Market - ldaho 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 Response to the First Production Request of the Commission
Staff.
ln addition, enclosed are four (4) copies of a confidential disk containing
information responsive to Staff's production requests. Please handle the confidentia!
information in accordance with the Protective Agreement executed in this matter.
Very truly
Julia A. H n
JAH:csb
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
(
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
JULIA A. HILTON (!SB No. 7740)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
i h ilton@idahopower. com
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER TO ESTABLISH A
METHOD OF RECOVERY FOR COSTS
ASSOCIATED WITH PARTICIPATION !N
THE WESTERN ENERGY IMBALANCE
MARKET
RECE IVED
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CASE NO. IPC-E-17-16
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE COMMISSION STAFF
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COMES NOW, Idaho Power Company ("ldaho Power" or "Comp?[y"), and in
response to the First Production Request of the Commission Staff to ldaho Power
Company dated January 25,2018, 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 an itemized list of actual capita! investments
and operations and maintenance expenses to date related to participation in the western
ElM. Each line item should include, but not limited to a description of the expense and a
reason why the expense is needed.
RESPONSE TO REQUEST NO. 1: The following table itemizes the actual capital
investments recorded to construction work in progress and the start-up operations and
maintenance ('O&M') expenses deferred to a regulatory asset account through
December 31,2017, and the projected investments and start-up O&M expenses from
January 2018 through March 2018. All O&M expenses incurred through that date are
start-up costs included in the Company's regulatory deferral. The reasons why each
expenditure is needed is explained below.
EIM Costs EstimatedTotalasof January-March12t31t17 2018
Gapital Expenditures
Transformer and Meter Replacement for Revenue Quality
Data
AFU DC - Transformers/Meters
Total T ran sform ers/M eters
Software Desi g n/l nteg ration/l m plementation
AFUDC-Software
Total Software I ntegration
Total Capital Expenditures
Start-up O&M Costs included in Regulatory Deferral
$ 2,213,805 $ 11o,ooo
2,244,505 111,525
3,966,194 1,054,549
6,210,699 1,166,074
30 700 1 525
3,817 ,584 1,015,036
148,610 39,513
768 837 531 767
Total EIM Costs $ 6,979,536 $ 1,697,841
Meters and Transformers. The majority of the meters previously installed on
ldaho Power's generating units could not provide the data granularity that is required for
California lndependent System Operator ('CAISO") settlement purposes. ln addition,
ldaho Power identified a few instrument transformers feeding these generation meters
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 2
and some instrument transformers at several power plant locations that are not revenue
quality and needed to be replaced to provide the data granularity necessary to participate
in the western energy imbalance market ('EIM').
Software. Participation in the western EIM requires software and system
interfaces that allow for information sharing and transacting with CAISO. Because ldaho
Power does not have sufficient internal expertise with the CAISO market, the Company
engaged a system integrator that is providing consulting services throughout the
integration process. ln addition to the costs of the system integrator, ldaho Power is
required to procure a bidto-billsystem, which is a hosted solution. The bid-to-billsystem
allows submission of offers into the market as well as the use and receipt of large amounts
of data required for energy settlements.
Start-up Costs. Under the lmplementation Agreement with CAISO, the Company
is required to pay a fixed implementation fee subject to completion of specific milestones,
to compensate for costs attributable to CAISO's effort to configure its real-time market
systems to incorporate ldaho Power into the western ElM. ln addition to the
implementation fee, the Company has incurred start-up costs associated with the
issuance of a request for information/proposal, outside consulting and legal counsel, and
the hiring of full-time employees dedicated entirely to EIM activities.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
REQUEST NO. 2: Please provide an itemized list of estimated capital investments
and operation and maintenance expenses to be incurred before the Company begins
participation in the western ElM. Each line item should include, but not Iimited to a
description of the expense and a reason why the expense is needed. lnclude a
description of how each expense was estimated.
RESPONSE TO REQUEST NO. 2: The list of estimated capital investments and
O&M expenses, as well as the description of the expense and reason why the expense
is needed is provided in the Company's response to Staffs Request No. 1.
The estimated amounts for January 2018 through March 2018 are based on the
actual costs currently being incurred as wellas any known changes in those amounts and
any incrementa! expenditures necessary to prepare forthe Company's participation in the
EIM.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF.4
REQUEST NO. 3: Please provide an itemized list of EIM-related costs currently
included in the regulatory deferral account created in Order No. 33706.
RESPONSE TO REQUEST NO. 3: The following table Iists the E|M-related costs
included in the Company's regulatory deferra! account as of December 31,2017.
FERC Regulatory Asset Account
EIM Consulting
Utilicast
E3
Total Consulting
Outside Legal Counsel
Akin Gump Sfrauss Hauer & Feld
Van Ness Feldman
Total Outside Legal Counsel
OATI Annual Maintenance
CAISO - EIM Market Entry Cost
Labor - new positions during implementation
Total
$ 203,750
$ 225,208
21 458
2,933
226,328
229,260
6,594
275,370
The response to this Request is sponsored by Mark Annis, Senior Regulatory
Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
32,405
__$ r9!d9z_
REQUEST NO. 4: Using the revenue requirement amount of $3,393 ,212in Exhibit
No. 1 of Company witness White's direct testimony, is this the amount that will be
subtracted from the PCA forecast filed later this year as described on page 14, lines 12-
16 of her direct testimony? Please explain.
RESPONSE TO REQUEST NO. 4: Yes. As noted in the Company's Application,
for the first year of its participation in the ElM, the Company is estimating the benefits of
participation will equal the costs.
The response to this Request is sponsored by Mark Annis, Senior Regulatory
Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 6
REQUEST NO. 5: Please identify and quantify any ongoing software expenses.
Please separately identify any yearly fees, monthly fees, and continuing software
development fees.
RESPONSE TO REQUEST NO. 5: Please see the table provided on the
confidential CD for the estimated ongoing software expenses. The confidential CD wil!
be provided to those parties that have executed the Protective Agreement in this matter.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 7
REQUEST NO. 6: Please identify and quantify all ongoing fees associated with
CAISO and the western ElM. Who sets the fees?
RESPONSE TO REQUEST NO. 6: The ongoing fees associated with CAISO's
operation of the western EIM are a Grid Management Charge, which consists of the
following separate service charges: (1) the Market Services Charge; (2) the System
Operations Charge; and (3) the Congestion Revenue Rights Services Charge. CAISO
determines the fees, in consultation with stakeholders, based on cost-of-service. These
fees are then applied to each EIM entity based upon load and filed with the Federa!
Energy Regulatory Commission for review. The following table presents the Company's
estimated fees throu gh 2020.
June 1,2018 -
December 31 2018 2019 2020
Estimated EIM Market Fee $ 233,333 $ 420,000 $ 441,000
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 8
REQUEST NO. 7: Please provide the underlying source documents and
spreadsheets for the information contained in Exhibit 1. Please provide the excel
spreadsheet for the Exhibit with all formulas intact.
RESPONSE TO REQUEST NO. 7: Please see the Excel file provided on the
confidential CD for Exhibit No. 1 and the underlying source documents and spreadsheets
supporting the exhibit. 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 Courtney Waites, Senior Regulatory
Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 9
REQUEST NO. 8: How does the recent change in the tax law affect the gross-up
calculation? Please provide updated spreadsheets with the updated tax information.
RESPONSE TO REQUEST NO. 8: The Tax Act reduces ldaho Power's effective
tax from 39.095 percent to 25.977 percent, beginning January '1, 2018, resulting in a
reduction in the gross-up rate from 1.642 to 1.351. Please see the Excel file provided on
the confidential CD for an updated calculation of the revenue requirement, including
Exhibit No. 1 and all underlying source documents, which reflects all changes that result
from the Tax Act. 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 Courtney Waites, Senior Regulatory
Analyst, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF. 1O
REQUEST NO. 9: What is the "Other Available Pertinent Data" as shown on line
21, page 14 of Company Witness White's direct testimony?
RESPONSE TO REQUEST NO. 9: "Other availabb pertinent data" includes data
or analyses collected and prepared by the Company beyond what is provided to the
Company in CAISO's quarterly benefits report. The Company is still determining what
other data, if any, may be available. ln the ldaho Public Utilities Commission's
("Commission") Order No. 33706 approving the Company's accounting treatment for its
participation in the ElM, the Commission ordered:
lT IS HEREBY ORDERED that after ldaho Power Company
has participated in the EIM for one year, it will file a report with
the Commission describing the costs and benefits of
participation thus far and other relevant information. ldaho
Power is directed to include in this report any available benefit
and cost information, including but not limited to the CAISO's
quarterly Quantifying EIM Benefits report. ldaho Power is
further directed to work with Commission Staff to determine
what information may be relevant going fonruard.
The response to this Request is sponsored by Mark Annis, Senior Regulatory
Analyst, ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 11
REQUEST NO. 10: ls the February Revenue Requirement recalculation designed
to cover only the ongoing operation and maintenance (O&M) costs and the start-up
amortization costs? Please explain.
RESPONSE TO REQUEST NO. 10: No The February revenue requirement
recalculation is designed to update all amounts in the revenue requirement, including
ongoing O&M and start-up costs, and also capital-related items such as return on
investment, depreciation, and amortization.
The response to this Request is sponsored by Mark Annis, Senior Regulatory
Analyst, ldaho Power Company.
DATED at Boise, ldaho, this 8th day of February 2018.
J A.N
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 12
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 8th day of February 2018 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
47 2 W est Wash ington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
X Hand Delivered
_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 - 13