20150203PAC to Staff 1-16.pdf

ROCKYMOUNTAIN :.r"ii';: .' !
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February 3,2015 rili! lTi-r ilt''i' l' :':'itli'
Jean Jewell
Idaho Public Utilities Commission
472W. Washington
Boise,ID 83702-5918
jean j [e-mail]. gov (C)
Neil Price
Neil.price@Buc. idaho. gov (C)
201 South Main, Suite 2300
Salt Lake City, Utah 841 I I
RE: ID PAC-E-14-10
IPUC Data Request (l-16)
Please find enclosed Rocky Mountain Power's Responses to IPUC Data Requests 1-16,
excluding 2,5 and 16. The remaining responses will be provided separately. Also provided are
Attachments IPUC I and 3. Provided on the enclosed Confidential CD is Confidential
Attachment IPUC 4. Confidential information is provided subject to the terms and conditions of
the protective agreement in this proceeding.
If you have any questions, please feel free to call me at [phone].
Sincerely,
I
d'.-f'rcl fue4 fu^",1 /,,r**--
J. Ted Weston
Manager, Regulation
Enclosures
PAC-E-14-1 0/Rocky Mountain Power
February 3,24$
IPUC Data Request 1
IPUC Data Request I
Please provide an itemized breakdown of Net Power Cost (NPC) for the 2015
ECAM deferral period for the Hunter and Huntington plants separating cost
associated with this Application (Deer Creek Mine) for each plant from other
costs not associated'*'ith the Application. For the Application related costs,
identi$, the costs that will be ongoing, eliminated, and I or added in the future.
Please include all worksheets with formulas intact.
Response to IPUC Data Request I
fhe Company assumes the question seeks information for the 2015 ECAM
Application, which includes the deferral period December 2013 through
November 2014 for which the Company requested recovery of its costs. F'or this
deferral period, no impacts related to the Deer Creek Mine Application were
included as part of net power costs in either the Hunter or Huntington plants.
Notwithstanding this response, please refer to Attachment IPUC 1, which
provides Hunter and Huntington consumed tons and dollars by month for the
period covered by the 2015 ECAM Application. Coal supplies are received into
coal inventory at each plant by supplier and source. A weighted average price per
ton of coal inventory at the plant is calculated and used to record the cost of coal
consumed at the plant. Consumed coal tons and dollars by specific coal supply is
not available. Please refer to the Company's response to IPUC Data Request 2,
which provides continuing Deer Creek Mine related costs in the Application.
Recordholder: Brian Dickman / Jeff Potter
Sponsor: Doug Stuver
PAC-E- 14-1 0lRocky Mountain Power
February 3,2015
IPUC Data Request 3
IPUC Data Request 3
Please provide the historical actual burn rates (MMBtu's of coal consumed per
MWh produced) for the Huntington and Hunter plants over the past l2 months.
Response to IPUC Data Request 3
Please refer to Attachment IPUC 3.
Recordholder: Greg Hunter
Sponsor: Doug Stuver
PAC-E-I4- I 0/Rocky Mountain Power
February 3,2015
IPUC Data Request 4
IPUC Data Request 4
Please provide all of the cost assumptions and worksheets (with formula's intact)
used to perform the Present Value Revenue Requirement analysis included in
Exhibit No. 6 of witness Crane's testimony.
Response to IPUC Data Request 4
Please refer to Confidential Attachment IPUC 4. Confidential information is
provided subject to the terms and conditions of the protective agreement in this
proceeding.
Recordholder: Brad Davis
Sponsor: Cindy Crane
PAC-E- 1 4- 1 OiRocky Mountain Power
February 3,2015
IPUC Data Request 6
IPUC Data Request 6
Please explain why the Company's proposed calculation of NPC difference
multiplies the base-to-actual weighted-average cost per MMBtu difference times
the "total MMBTU consumed for the two plants included in base net power costs"
instead of actual total MMBtu consumed for the two plants. (See Crane, Di, Page
25,lines 19-23 and Page26,lines 1-3),
Response to IPUC Data Request 6
The Company's proposed calculation of the net power costs Q.{PC) difference
attributable to the transaction takes the difference in weighted-average dollars per
million British thermal units ($/IvIMBtu) between base and actual NPC for Hunter
and Huntington Plants, i.e., the price variance, and multiplies this by MMBtu
consumed at Hunter and Huntington in the base period; this calculation isolates
the impact of the Transaction on fuel costs in the Energy Cost Adjustment
Mechanism (ECAM). Under the Company's proposal, because these impacts
result from the Transaction, which produces net benefits, they should not be
subject to the ECAM sharing band. Volume-related variances, on the other hand,
are unrelated to the Transaction and the Company is not opposed to these being
subject to the sharing band.
Recordholder: Steve McDougal
Sponsor: Doug Stuver
PAC-E-I 4- I O/Rocky Mountain Power
February 3,2015
IPUC Data Request 7
IPUC Data Request 7
Please explain how the NPC Defenal calculation of "Incremental CostslBenefits
of Fueling Costs related to the Transaction" shown in Cindy Crane's testimony
differs from how the NPC Deferral is calculated using the IPUC authorized
methodology in the ECAM. Please illustrate using an example. (See Crane, Di,
PageZl,lines 19-23 and Page 26, lines 1-3).
Response to IPUC Data Request 7
The principal difference from the current Energy Cost Adjustment Mechanism
(ECAM) calculation is that Hunter and Huntington plant fuel cost calculations
need to be carved out separately from the remainder of the ECAM calculation to
determine the incremental fuel costs at these plants zol subject to sharing bands.
The incremental fuel cost calculation for Hunter and Huntington as described in
Ms. Crane's testimony is calculated in dollars per million British thermal unit
($AvlMBtu), whereas other ECAM calculations are based on dollars per
megawatt-hour ($AvIWh). The units will be converted to be consistent in the
carve-out calculation. Not all fuel cost differences at Hunter and Huntington are
necessarily attributable to the Deer Creek closure; such differences are limited to
the price differences attributable to the closure and replacement coal supply
agreements (CSA).
Other diftbrences including volume differences at these plants will impact the
ECAM but will not be picked up in the carve-out calculation described above; to
the extent such diftbrences exist, they will still be subject to sharing bands.
Recordholder: Steve McDougal
Sponsor: Doug Stuver
PAC-E- 1 4- I 0/Rocky Mountain Power
February 3,2015
IPUC Data Request 8
IPUC Data Request 8
Please explain the reason(s) and/or dependency(s) for the Trail Mountain Mine
being part of the "Transaction".
Response to IPUC Data Request 8
The Trail Mountain Mine assets hold value as a strategic location. The assets
provide possible access to the coal reserves ofthe Fossil Rock Coal Leases.
Recordholder: Cindy Crane
Sponsor: Cindy Crane
PAC-E- 14-1 0/Rocky Mountain Power
February 3,2015
IPUC Data Request 9
IPUC Data Request 9
Please explain the dependency of the Retiree Medical Obligation Settlement to
the overall "Transaction." Is the settlement of this cost obligation dependent upon
any further action by the Company?
Response to IPUC Data Request 9
Settlement of the retiree medical obligation is not dependent on the overall
Transaction; however, settlement of the retiree medical obligation would not have
occumed without early closure of the Deer Creek Mine. In the most recent labor
settlement, the Company was successful in reaching the retiree medical settlement
because the union was aware of the Company's intent to pursue a sale of the Deer
Creek mine, or closure in the event the Company's efforts to sell were
unsuccessful. Without the union's awareness of the Company's intentions, the
Company does not believe it would have been able to settle its retiree medical
obligation. During the preceding unsuccessful labor contract negotiations, the
Company was unable to alter the level of retiree medical benefits provided.
Settlement of the retiree medical obligation is not dependent on any further action
by the Company other than to transfer $150 million to the union in accordance
with the memorandum of understanding (MOU).
Recordholder: Cindy Crane
Sponsor: Cindy Crane
PAC-E- I 4- I 0/Rocky Mountain Power
February 3,2015
IPUC Data Request 10
IPUC Data Request 10
How did the Company ensure that asset prices in the Asset Purchase Agreements
(APA's) are the highest the Company could obtain? Was there a competitive
bidding process for example? Please describe the methods used and provide
documentation showing the results, including bids by interested parties.
Response to IPUC Data Request 10
The Company reached out to several parties who expressed some interest in the
Company's mining assets. Please refer to two Berkshire Hathaway Energy (BHE)
Board presentations made in April 2013 and October 2013. BHE Board
presentations are highly confidential but may be made available for review on the
Company's premises. Please contact Ted Weston at [phone] to make
necessary arrangements for review.
Recordholder: CindyCrane
Sponsor: Cindy Crane
PAC-E- 14- 1 O/Rocky Mountain Power
February 3,2015
IPUC Data Request 11
IPUC Data Request 11
Is the Company seeking a determination of prudency for the Coal Supply
Agreements (CSAs)? If so, is the request for a determination of prudency
compelled by Bowie or by the Company, and u,hy?
Response to IPUC Data Request 11
The new Coal Supply Agreements (CSA) are part of the closure of the Deer Creek
Mine for which the Company is seeking approval. The Company is requesting a
determination of prudency so that it may recover these costs in rates.
Recordholder: N/A
Sponsor: N/A
PAC-E- 14-1 0/Rocky Mountain Power
February 3,2015
IPUC Data Request 12
IPUC Data Request 12
Please explain how the Company is ensuring that the Bowie contracted coal prices
in the CSAs are least cost and least risk compared to other coal fueling strategies
(e.g., market) or contracts with other coal suppliers (e.g., competitive bidding
process). Please describe the methods used and provide documentation showing
the results, including any bids by interested parties.
Response to IPUC Data Request 12
The Bowie coal supply agreement (CSA) delivered coal pricing to the Fluntington
plant is below Energy Ventures Analysis (EVA) forecasted market prices for Utah
coal during the time period of the CSA. The risk profile for the Company
associated with the Bowie CSA has changed. Before the CSA, the Huntington
plant's coal supply was dependent upon one mine and one longwall mining
machine. With the CSA, Bowie can provide coal from any of its three different
mining operations in Utah. The supply risk profile has changed by having more
supply sources available. Additionally, Bowie has the right to provide
"substitute" coal from other approved coal supply sources in the region,
Recordholder: Brad Davis
Sponsor: Cindy Crane
PAC-E- I 4- I 0/Rocky Mountain Power
February 3,2015
IPUC Data Request 13
IPUC Data Request 13
Did the Company investigate CSAs with shorter or longer contract terms with
prospective coal suppliers? If so, please provide documentation between the
parties demonstrating that it was investigated and outlining the terms.
Response to IPUC Data Request 13
The Company had internal discussions regarding the proper length of the contract
term. A shorter contract term would have potentially subjected the Company to
the risk of higher coal market pricing. The forecasted higher coal pricing relates
to a decline in the total tons being mined in Utah. With the closure of Deer Creek
and other mining operations that are nearing depletion, the estimated total coal
production is declining. A longer contract term potentially exposes the Company
to more risk and uncertainty surrounding future govemmental environmental
regulation.
Recordholder: Brad Davis
Sponsor: Cindy Crane
PAC-E- 14- 1 0iRocky Mountain Power
February 3,2015
IPUC Data Request 14
IPUC Data Request 14
Please explain how the Company evaluated the risks and fadeoffs associated with
CSAs of varying contract term lengths. Please provide the analysis.
Response to IPUC Data Request 14
Please refer to the Company's response to IPUC Data Request 13.
Recordholder: Brad Davis
Sponsor: Cindy Crane
PAC-E-14-1 0/Rocky Mountain Power
February 3,2015
IPUC Data Request 15
IPUC Data Request 15
In case of scaled back operation at the Huntington Plant due to environmental
regulations, the Right of First Refusal language in the CSA may require
PacifiCorp to take delivery of coal from Bowie for open positions of coal at the
Company's other Utah Plants. Please describe the feasibility of transporting coal
to the Company's other plants and an estimated quantification of additional cost
using comparable current cost estimates.
Response to IPUC Data Request 15
The process of transporting coal to the Company's other Utah plants resulting
from scaled back operations at the Huntington plant due to environmental
regulations is highly feasible. There is adequate trucking capacity and healthy
competition among the various trucking companies conducting business in the
region. There may or may not be added costs in the form of transporting the coal
to other Utah plants. This depends upon the mine sourcing location of the coal.
Truck transportation rates are determined and influenced by the total miles
calculated between the point of origin and loading and the final destination and
delivery point. Depending upon the specific coal source(s), the actual mileage for
transporting coal could actually be less than the mileage determined for a specific
coal source distance to the Huntington plant.
Recordholder: Brad Davis
Sponsor: Cindy Crane
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lD PAC-E-14-10
IPUC 3
Attachment IPUC 3
ldaho Docket PAC-E-14-10
Unit Net Heat Rate Btu/kWh
Attachment IPUC 3
11 e^t-rUI'i,L.?F! ts r'i-'l1.f*'/''-
?fl15 fm -3 PH 3: St+
Hunter uTrJ1dit[Hir;r*uil;st*is
11,530
LL,7A6
10,055
10,165
L0,289
10,381
LO,437
LO,32L
1o,259
10,181
10,344
1o,127
Huntington
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
9,787
9,87L
10,450
10,540
70,377
10,083
9,945
LO,204
LO,464
10,571
lo,49l
10,245
Attach IPUC 3 (2).xlsx Page t of 1