20101124PAC to PIIC 116-131, 134-139, 141-142.pdf

..
..~~~~OUNTAIN
CEI
November 23,2010
201 South Main, Suite 2300
2D10NOV 24 AM ì(f5~ke City, Utah 84111
Melinda Davison
Davison Van Cleve, P.C.
333 S.W. Taylor St., Ste. 400
Portland, Oregon 97204
RE: ID PAC-E-10-07
PIIC Data Request (116-145)
Please find enclosed Rocky Mountan Power's responses to PIIC Data Requests 116-131,134-
139,141-142. The remaining responses will be provided separately. Provided on the enclosed
CD is Attachment PIIC 130.
If you have any questions, please feel free to call me at [phone].
Sincerely,
,j¡ T¿tt Iv~/ ~
J. Ted Weston
Manager, Regulation
Enclosure:
cc: Jean Jewell/IPUC (C)/ 3 copies
Eric OlsenlIIPA (C)
Ben Otto/ICL (C)
Randall Budge/Monsanto (C)
James R. Smith/onsanto (C)
Richard Anderson/onsanto (C)
George C. Carer, III/Monsanto (C)
Dennis Peseau/onsanto (C)
Gareth R~Kajander/Monsanto (C)
Maurce Brubaker/Monsanto (C)
Brian Collns/Monsanto (C)
Michael Gormanonsanto (C)
Kathr Iverson/onsanto (C)
Mark Widmer/Monsanto (C)
Greg Meyer/PIIC (C)
Don Shoenbeck/IIC (C)
P AC-E-1 0-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 116
PIIC Data Request 116
Please refer to Shu, Di-Reb, page 5, lines 8-10. Assume hypothetically that the
Company modeled a per-star additional O&M cost of $5,000 per star for a
combined cycle plant.in GRID. Does the Company agree that the logic in the
GRID model will use ths input in determning the optimal number of sta ups for
the plant durng the test year? Does the Company agree that if ths cost is
included in GRID, the models logic will produce fewer starts because it will not
allow the plant to sta in instances where the economic benefit of so doing is less
than the cost of the sta up ($5,000)? Does the Company agree that in effect, this
produes a "ta" on stas which results in a less economic dispatch of the
resource than would occur were it not included?
Response to PIIC Data Request 116
a. Yes.
b. As any other optimization model, if different values are assumed for a cost
component in GRID, the outcome of the model could be different. The
Company has not studied the impact of using $5,000 as the value of the O&M
costs.
c. No.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
P AC-E-1 0-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 117
PIIC Data Request 117
Please refer to Shu, Di-Reb,page 5, lines 8-10. Assume hypothetically that the
Company modeled a per-sta additional O&M cost of $5,000 per sta for a
combined cycle plant in the screening methodology it proposes to use in ths case.
Does the Company agree that the screenig logic used in ths case will use this
input in determining the optimal number of sta ups for the plant during the test
year? Does the Company agree that if ths cost is included in the proposed
screening logic, it will produce fewer stas because it will not allow the plant to
star in instaces where the economic benefit of so doing is less than the cost of
the sta up ($5,000)? Does the Company agree that in effect, ths produces a
"tax" on stas which results in a less economic dispatch of the resource than
would occur were it not included?
Response to PIIC Data Request 117
a. Yes.
b. Please refer to the Company's response to PUC Data Request 116b. Since the
screenig logic is to simulate an optimization algorith, the results of the
screens could be different given different values in inputs.
c. Please refer to the Company's response to PIIC Data Request 116c.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 118
PIIC Data Request 118
Please refer to Shu, Di-Reb, page 5, lines 8-10. Explai why the Company views
the per sta cost for additional O&M as a legitimate input into the GRI model
and into its screening methodology, but it does not view it as a legitimate test year
cost?
Response to PIIC Data Request 118
Sta up O&M costs are a legitimate test year cost, however, they do not fall
with the definition of net power costs. The Company prudently examines all of
its costs when considerig stap and shutdown of its gas unts, not just those
classified as net power costs, as ths results in the most optimal overall operation.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23, 2010
PIIC Data Request 119
PIIC Data Request 119
Please refer to Shu, Di-Reb, page 5, lines 8-10. Is it Mr. Shu's view that
incrementa sta up O&M should be included in the test year if it increases costs
(i.e. screens produce additiona stas) but it should be excluded from the test year
if it reduced costs (i.e. the screens produced fewer stas)? Please explai.
Response to PIIC Data Request 119
The Company objects to the request on the basis that it is arguentative and is not
an accurate interpretation of Dr.Shu's testimony. The Company does not
selectively include or exclude revenues or costs based on whether they would
increase or decrease costs. Without waiving its objection, the Company responds
as follows:
No. Starp O&M is one of the importt factors to consider in GRID when
makng decisions about whether to sta or shut down a unt. For the test period,
normalized O&M costs for the Company's fleet are developed based on actual
historical operations. The Company has not included any O&M costs related to
the "incremental" staups due to screens. As a result, it is incorrect to propose
any adjustments to the "incrementa" stap O&M costs that do not exist in the
Company's fiing.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 120
PIIC Data Request 120
Please refer to Shu, Di-Reb, page 8, lines 10-12. Explain the reasonig
supporting the statement in the testimony.
Response to PIIC Data Request 120
Please refer to Shu, Di-Reb, page 8, lines 13-22.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
P AC-E-1 0-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 121
PIIC Data Request 121
Please refer to Shu, Di-Reb, page 8, lines 10-12. Explain why the Company
would not use the most recent years cost and capacity for the non-firm ("NF")
transmission. Doesn't use of a four year average of capacity and a curent year
cost create a mismatch between cost and capacity?
Response to PIIC Data Request 121
Similar to the STF transmission, the NF transmission vares from year to year.
Also, similar to modeling STF transmission, the Company uses four-year average
availabilty to miize such varation and to estimate the amount of transmission
that would reasonably be available in the test period, and uses the most recent
year of expense to capture the most recent costs associated with acquirg
transmission services from thd-par transmission providers.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 122
PIIC Data Request 122
Please refer to Shu, Di-Reb, page 8, lines 10-12. Does the Company agree that in
ths case, Mr. Widmer used the NF transmission modeling method (four year
average of cost and capacity, with cost assigned on a per MWH basis) that is the
same as the Company has modeled in the 2008 and 2009 Uta Cases (Docket
Nos. 09-035-23 and 09-035-38)? Ifnot, please explain the differences.
Response to PIIC Data Request 122
In the context of applying variable charges on the NF transmission paths, yes.
The Company applied the same methodology in the Uta cases prior to
conducting the recent research on how the Company utilzes the NF transmission
rights.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
P AC-E-1 0-07/Rocky Mountain Power
November 23, 2010
PIIC Data Request 123
PIIC Data Request 123
Please refer to Shu, Di-Reb, page 8, lines 10-12. Does the Company agree that in
2010, the Company has fied 2 new cases in Utah (Docket Nos. 10-035-13 and
10-035-89) where the Company modeled the NF transmission on the basis of a
per MWH pricing and using a four year average for both cost and capacity? If
not, please explain how these filings differ in their modeling ofNF transmission.
Response to PIIC Data Request 123
Both referenced cases were based on the Company's last general rate case in
Utah. The varable charges, rather than tota costs, for the NF transmission paths
were based on four-year historical averages. Please refer to the Company's
response to PIIC Data Request 122.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-1 0-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 124
PUC Data Request 124
Please refer to Shu, Di-Reb, page 8, lines 10-12. Please explain the reasons why
the Company enters into NF transmission.
Response to PIIC Data Request 124
The Company will enter into non-firm transmission agreements with varous
transmission providers for varous reasons. Listed here are priar reasons:
a. Import resources external to PacifiCorp BAs.
b. Transfer resources internal to PacifiCorp BAs.
c. Export resources from PacifiCorp BAs.
d. Transfer resources between locations external to PacifiCorp BAs
These activities are for resources, which canot be wheeled on Network
trsmission. The resources may be used to serve loads when designated
Network resources are insuffcient, have inadequate Network transmission, or
can be economically displaced with other resources. The resources may also
be used to facilitate sales and exchanges.
Recordholder:
Sponsor:
JimPortouw
Hui Shu
PAC-E-10-07/Rocky Mountan Power
November 23,2010
PIIC Data Request 125
PIIC Data Request 125
Please refer to Shu, Di-Reb, page 8, lines 10-12. Does the Company agree that it
canot rely upon NF transmission for reliabilty puroses?
Response to PUC Data Request 125
The NF transmission rights that the Company acquired provide the same tyes of
servces as the STF tranmission rights, which is the primar reason why the
Company should treat the two tyes of transmission the same.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-1 0-07/Rocky Mounta Power
November 23,2010
PIIC Data Request 126
PUC Data Request 126
Please refer to Shu, Di-Reb, page 8, lines 10-12. Does the Company agree that
the primar reason it should enter into NF transmission purchases is for economy
puroses - only to lower power costs?
Response to PIIC Data Request 126
The majority of non-firm tranmission purchases may be done for economic
puroses (note no evaluation of volumes has been done for ths response) but of
prime importance is the use of non-firm tranmission to serve load that may
otherwse not be served. Therefore consistent with the Company obligation to
serve load, the priar reason it should enter into non-fi transmission
purchases is to serve load. The Company does attempt to serve load on fi
transmission when possible but firm transmission is not always available.
Recordholder:
Sponsor:
JimPortouw
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 127
PIIC Data Request 127
Please refer to Shu, Di-Reb, page 8, lines 10-12. Does the Company agree that it
tyically makes the decision to purchases NF transmission a day or less in
advance of the transaction? Please compare this to the purchase of short term
firm transmission.
Response to PIIC Data Request 127
Decisions to enter into non-firm transmission purchases are typically done on a
preschedule or real-time basis withn a couple of hours or less from execution and
withn a few days or hours of utilzation as par of the day-to-day system
optimization. This is also tyical of many short term firm tranmission purchases
(for day-ahead and hour-ahead the Company will generally purchase firm
transmission service, if available, instead of non-firm when the price is the same
for either product). The Company does some month-ahead purchases of short
term fi transmission and will occasionally purchase monthly non-firm if short
term firm is not available.
Recordholder:
Sponsor:
JimPortouw
Hui Shu
PAC-E-10-07/Rocky Mountan Power
November 23,2010
PIIC Data Request 128
PUC Data Request 128
Please refer to Shu, Di-Reb, page 8, lines 10-12. Please provide the amount of
NF transmission costs the Company proposes to include in the test year.
Response to PIIC Data Request 128
$2.5M. For more information, please refer to the Company's response to PIIC
Data Request 144.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 129
PUC Data Request 129
Please refer to Shu, Di-Reb, page 8, lines 10-12. Please provide the amount of
MWH's transferred using NF transmission in the Company proposed test year
GRID modeL.
Response to PIIC Data Request 129
Please refer to the Company's response to PIlC Data Request 144 for the GRID
model supporting the inputs to GRID for the Company's Rebuttl filing. The
output of the study is available from GRID afer rug the study.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23, 2010
PIIC Data Request 130
PUC Data Request 130
Please refer to Shu, Di-Reb, page 8, lines 10-12. Please provide a calculation
showing the average cost per MWH ofNF transmission purchases for each year
from 2006 through 2009. Provide both the dollars spent and the MWH
transferred.
Response to PIIC Data Request 130
Please refer to Attachment PIIC 130.
Recordholder:
Sponsor:
GeoffIhe
Hui Shu
P AC-E-1 0-07/Rocky Mountain Power
November 23,2010
PII C Data Request 131
PUC Data Request 131
Please refer to Shu, Di-Reb, pages 35, lines 20-33. Explain how the DC Intertie
can provide capacity and diversity benefits if the test year includes no capacity or
energy purchases that rely on ths transmission contract.
Response to PIIC Data Request 131
Similar to many other components in the Company's filing, the level ofload
obligations and availabilty of resources in determining net power costs for the
test year are based on normalized assumptions. Normalized assumptions lack the
volatility and unpredictability of the actual operation. The normalized
assumptions do not mean the need for the resource is non-existent.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-1O-07/Rocky Mountan Power
November 23,2010
PILC Data Request 134
PUC Data Request 134
Please refer to Shu, Di-Reb, page 35, lines 13-18. Does the Company agree that
the benefits cited in ths passage are examples of offsetting benefits of the contract
not reflected in the test year?
Response to PIIC Data Request 134
No.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23,2010
PILC Data Request 135
PUC Data Request 135
Please refer to Shu, Di-Reb, page 37, lines 6-8. Please provide any documents
supporting the comparson of costs and benefits cited in ths passage.
Response to PIIC Data Request 135
There are no documents comparg DC Intertie agreement costs and the
Company's overall transmission strategy and hedge agaist changes in the
market.
Recordholder:
Sponsor:
JimPortouw
Hui Shu
P AC-E-1 0-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 136
PUC Data Request 136
Please refer to Shu, Di-Reb, page 36, lines 13-16. In ths case, isn't the prudence
determination more properly based on the 2002 decision process rather than that
of an earlier time? Explain.
Response to PUC Data Request 136
No. The prudence determnation for the transmission purchase should be based
on circumstances at the time the Company entered into the contract. The 2002
decision process regarding the WPSA did not include any changes to the DC
Intertie agreement.
Recordholder:
Sponsor:
JimPortouw
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 137
PUC Data Request 137
Please refer to Shu, Di-Reb, page 15, lines 15-20. Does the Company believe that
it would be improper or uneasonable for it to charge wholesale customers the
cost of providing wind integration services?
Response to PUC Data Request 137
As stated in the referenced testimony, the Company is prohibited from charging
for these services under its FERC approved OATT.
Recordholder:
Sponsor:
Hui Shu
HuiShu
PAC-E-1O-07/Rocky Mountan Power
November 23, 2010
PILC Data Request 138
PUC Data Request 138
Does Mr. (sic J Shu dispute that the Company was negligent for not having sought
recovery of wid integration costs from wholesale customers much earlier,
inasmuch as the Company has been aware it would have wind integration costs of
$4/MWH or more since its 2004 IRP?
Response to PUC Data Request 138
Yes.
Recordholder:
Sponsor:
Hui Shu
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23,2010
PIlC Data Request 139
PUC Data Request 139
Please refer to Shu, Di-Reb, page 15, line 23 and page 16, lines 1-14. Given Mr.
Shu's arguents suggesting that the FERC may not approve wind integration
charges for wholesale customers, has the Company evaluated whether it would be
more advantageous to site its own wind fars in control areas other than its own
to obtain integration services from those other balancing authorities? If not,
explain why not.
Response to PUC Data Request 139
The Company evaluates all resource acquisitions with consideration given to a
wide varety of variables. Economic evaluation of wind resources considers the
quaity of the resource, access to transmission, capita costs, and on-going fixed
and variable costs. The cost of integration is only one factor that drves resource
acquisition decisions.
Recordholder:
Sponsor:
Rick Lin
Hui Shu
PAC-E-10-07/Rocky Mountain Power
November 23,2010
PIIC Data Request 141
PUC Data Request 141
Please refer to Crane, Di-Reb, page 12, lines 2-7. Does Ms. Crane agree that if the
Company is successful in these efforts it will improve coal quality for Bridger?
Response to PIIC Data Request 141
Bridger Coal Company has initiated these efforts to reduce delivered coal quaity
varabilty. Although the quality composition of both the underground and
surace coal does not change, the Company anticipates that the consistency of the
heat value and ash coal quaity will improve.
Recordholder:
Sponsor:
Cindy Crane
Cindy Crane
P AC-E-1 0-07/Rocky Mountain Power
November 23,2010
PIlC Data Request 142
PUC Data Request 142
Please refer to Crane, Di -Reb, page 12, lines 2-7. Has the Company included any
costs related to these efforts in the test year, either related to O&M or capital
investment? If so, please quantify the amounts.
Response to PIIC Data Request 142
Bridger Coal Company erected stacking tubes just outside underground mine
portal. Ths was a capital project which was placed in service in March 2007 and
is designed to segregate coal by quality as the coal reaches the surace of the
underground mine. The anual depreciation of ths project, $537K or $358 K for
PacifiCorp's share, is included in test period costs. Many mining operations
utilze stacking tubes for supply and quaity control.
Bridger Coal enlarged the stockpile footprint of trck dump station #2 during the
fall of201O. This was an unbudgeted project; therefore, the costs were not
included in test period expenses.
Recordholder:
Sponsor:
Cindy Crane
Cindy Crane