20210720IPC to Staff 1-5.pdf

LISA D. NORDSTROM
Lead Counsel
[e-mail]

July 20, 2021

VIA ELECTRONIC FILING

Jan Noriyuki, Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg 8,
Suite 201-A (83714)
PO Box 83720
Boise, Idaho 83720-0074

Re: Case No. IPC-E-21-18
In the Matter of the Application of Idaho Power Company for Authority to
Increase Its Rates Due to Revised Depreciation Rates for Electric Plant-In-
Service

Dear Ms. Noriyuki:

Enclosed for electronic filing, pursuant to Order No. 35058, please find Idaho Power
Company’s Response to the First Production Request of Commission Staff.

If you have any questions about the attached documents, please do not hesitate to
contact me.

Very truly yours,

Lisa D. Nordstrom
LDN:sg
Enclosures
RECEIVED
2021 July 20, PM 4:24
IDAHO PUBLIC
UTILITIES COMMISSION
IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 1

LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]

Attorney for Idaho Power Company

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR AUTHORITY TO
INCREASE ITS RATES DUE TO
REVISED DEPRECIATION RATES FOR
ELECTRIC PLANT-IN-SERVICE.

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CASE NO. IPC-E-21-18

IDAHO POWER COMPANY’S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE
COMMISSION STAFF

COMES NOW, Idaho Power Company (“Idaho Power” or “Company”), and in
response to the First Production Request of the Commission Staff dated June 30, 2021,
herewith submits the following information:

IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 2

REQUEST NO. 1: Please provide a comparison of the following current and
proposed value by account in Excel format:
a. Probable Retirement Date
b. Survivor Curve
c. Net Salvage Percent
d. Accrual Amount
e. Accrual Rate
f. Composite Remaining Life
RESPONSE TO REQUEST NO. 1:
Please see the attached Excel file.
The response to this Request is sponsored by Donna Wheeler, Finance Team
Leader, Idaho Power Company.

IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 3

REQUEST NO. 2: In the accounts listed below, the Company is proposing
differing net salvage percentages between plants, but in the depreciation study the
data is not separated between plants. Please provide documentation supporting
those differing net salvage percentages.
a. 331 – Structures and Improvements
b. 332.1 – Reservoirs, Dams and Waterways – Relocation
c. 332.2 – Reservoirs, Dams and Waterways
d. 333 – Waterwheels, Turbines and Generators
e. 334 – Accessory Electric Equipment
f. 335 – Misc. Powerplant Equipment
g. 336 – Roads, Railroads, and Bridges
h. 341 – Structures and Improvements
i. 342 – Fuel Holders
j. 343- Prime Movers
k. 344 – Generators
l. 345 – Accessory Electric Equipment
RESPONSE TO REQUEST NO. 2:
The net salvage rates for Idaho Power’s production accounts are based upon
interim and final (terminal) net salvage estimates. The Company’s previous net salvage
rates for production accounts did not include estimates for final (terminal) net salvage.
The methodology to estimate net salvage for Idaho Power’s production facilities is
described in Section IV of the 2020 Deprecation Study, provided as Exhibit No. 2,
beginning at the bottom of page IV-4.
IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 4

The overall net salvage estimates for the Company’s production
facilities, for which the life span method is used, is based on estimates of
both final net salvage and interim net salvage. Final (terminal) net salvage
is the net salvage experienced at the end of a production plant’s life span.
Interim net salvage is the net salvage experienced for interim retirements
that occur prior to the final retirement of the plant. The final net salvage
estimates in the study were based on industry decommissioning analyses
performed by various engineering organizations. The interim net salvage
estimates were based in part on analysis of historical interim retirement
and net salvage data. Based on informed judgment that incorporated
these interim net salvage analyses for each plant account, an interim net
salvage estimate of negative 36 percent was used for each hydro plant
account, and negative 7 percent estimate was used for all other
production plant accounts.

The interim survivor curve estimates for each account and
production facility were used to calculate the percentage of plant expected
to be retired as interim retirements and final retirements. These are shown
on Table 1 in the Net Salvage Statistics section on page VIII-2. These
percentages were used to determine the weighted net salvage estimate
for each account and production facility based on the interim and final net
salvage estimates. These calculations, as well as the estimated final net
salvage amounts and interim net salvage amounts, are shown on Table 2
of the Net Salvage Statistics.

Please see the attached Excel files for Table 1 and Table 2 in the Net Salvage
Statistics section of the 2020 Depreciation Study.
The response to this Request is sponsored by Donna Wheeler, Finance Team
Leader, Idaho Power Company.
IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 5

REQUEST NO. 3: Please explain the differences in the assets used and any
other documentation supporting the net salvage percentages in Account Nos. 355 –
Poles and Fixtures and 364 – Poles, Towers and Fixtures.
RESPONSE TO REQUEST NO. 3:
The difference between the accounts is due to the nature of their function.
Account No. 355 – Poles and Fixtures includes assets used for overhead transmission
purposes while Account 364 – Poles, Towers and Fixtures includes assets used for
overhead distribution purposes.
The 2020 Deprecation Study, included as Exhibit No. 2, beginning on page IV-3,
provides an example of the methodology and events contributing to the estimation of
net salvage percentages for Account 364.00:
Cost of removal has been high since the early to mid-1980s with a slight
reduction in comparison to retirements in the last six years. The primary cause
of the high levels of cost of removal was the extra effort needed to take out the
larger poles and towers. Many of these retirements were due to highway
relocations. Cost of removal for the most recent five years averaged 60 percent.

Gross salvage has varied widely throughout the period but had begun to
diminish to much lower levels since the early 2000s. The most recent five-year
average of 1 percent gross salvage reflects recent trends and the reduced
market for poles and towers. High levels of gross salvage in 2001 related to
highway relocation projects.

Similarly, for Account 355, transmission poles and fixtures are often taller and
larger than distribution poles and fixtures contributing to an increased cost of removal.
The response to this Request is sponsored by Angela Garrard, Senior
Accountant, Idaho Power Company.
IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 6

REQUEST NO. 4: Please provide all documentation supporting the derivation
and calculation of the amounts contained in Attachment No. 1.
RESPONSE TO REQUEST NO. 4:
Please see the attached Excel file.
The response to this Request is sponsored by Donna Wheeler, Finance Team
Leader, Idaho Power Company.

IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 7

REQUEST NO. 5: Please provide descriptions of events and other factors
explaining the variation in cost of removal and salvage values for the following
accounts:
a. 332.20 Reservoirs, Dams and Waterways
b. 333.00 Water Wheels, Turbines and Generators
c. 353.00 Station Equipment / Transmission
d. 355.00 Poles and Fixtures
e. 362.00 Station Equipment / Distribution
RESPONSE TO REQUEST NO. 5:
a and b. Over the past five years, both Account 332.20 – Reservoirs, Dams
and Waterways and Account 333.00 – Water Wheels, Turbines and Generators have
incurred removal costs for a range of refurbishments and replacements of large
equipment necessary for Idaho Power’s hydro production facilities. The hydro
production facilities with the most notable cost of removal and salvage activity during
the past five years include the: Oxbow Power Plant, Brownlee Power Plant, Hells
Canyon Power Plant, Shoshone Falls Power Plant, and Bliss Power Plant. The net
salvage rates for these production accounts is also affected by the transition to a
weighted net salvage methodology, as further described in Idaho Power’s Response to
Request No. 2.
c. Idaho Power replaces or upgrades station equipment to maintain long-
term operations, often due to aging equipment. Activity in this account included
replacements of large, costly equipment such as capacitor banks and transformers.
Significant transmission station projects with removal and salvage activity over the past
IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 8

five years included upgrades and replacements of equipment (dating from the 1960s,
1970s, and 1980s) at Idaho Power’s Midpoint, Emmett, and Peterson transmission
substations.
d. Idaho Power routinely assesses the condition of transmission equipment
and replaces components as necessary. Transmission line projects with cost of removal
are driven by the need to replace aged and failed equipment, as well as the need to
rebuild lines for relocation, potentially as part of highway expansion projects. In
general, the Company’s cost of materials and contracted services to perform
replacements and transmission line rebuilds has increased contributing to increases in
experienced removal cost.
e. Station rebuild projects are based upon the need for upgrades and
replacements. Significant projects with removal activity over the past five years included
upgrades and replacements of aging equipment, such as metal clad and/or
transformers at multiple substation locations. The equipment retirements associated
with these larger projects included asset vintages from the 1950s through the 1980s.
The response to this Request is sponsored by Angela Garrard, Senior Accountant,
Idaho Power Company.

DATED at Boise, Idaho, this 20th day of July 2021.

________________________________
LISA D. NORDSTROM
Attorney for Idaho Power Company

IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 9

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on the 20th day of July 2021, 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
Dayn Hardie
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg No. 8,
Suite 201-A (83714)
PO Box 83720
Boise, ID 83720-0074

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Industrial Customer of Idaho Power
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707

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Dr. Don Reading
6070 Hill Road
Boise, Idaho 83703
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Idaho Conservation League
Benjamin J. Otto
Idaho Conservation League
710 N. 6th Street
Boise, Idaho 83701
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Micron Technology, Inc.
Austin Rueschhoff
Thorvald A. Nelson
Holland & Hart LLP
555 17th Street, Suite 3200
Denver, CO 80202
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IDAHO POWER COMPANY’S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF - 10

Jim Swier
Micron Technology, Inc.
800 South Federal Way
Boise, Idaho 83707

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City of Boise
Mary Grant
Deputy City Attorney
Boise City Attorney’s Office
150 N. Capitol Blvd.
P.O. Box 500
Boise Idaho 83701-0500
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________________________________
Stacy Gust, Regulatory Assistant