20170815Utah_OCS Set 2 (1-19).docx

BEFORE THE PUBLIC SERVICE COMMISSION OF UTAHIn the Matter of the Voluntary Request:Docket No. 17-035-39Of Rocky Mountain Power for Approval:Office of Consumer ServicesOf Resource Decision to Repower:Second Data Request toWind Facilities:Rocky Mountain Power:August 4, 2017Please provide responses to:Béla VastagDonna RamasOffice of Consumer ServicesRamas Regulatory Consulting, LLC160 East 300 South 4654 Driftwood DriveSalt Lake City, Utah 84111Commerce Twp., MI 48382(801) 530-6374(248) [e-mail]@aol.comReferto the Direct Testimony of Jeffrey K. Larsen, lines 165 – 172, which indicates, in part, that the Company will “…defer the full amount of the capital investment, ADR and ADIT related to repowering to the RTM and will calculate a return on the net plant balance. Does the Company agree that the net book value of the existing wind projects it is proposing to repower is currently lower than the amounts incorporated in the current base rates for those same projects? If no, explain why not.Since the current net book value (PIS less ADR less ADIT) of the existing wind project assets that are being repowered are lower than the amounts considered in current base rates, please explain why the reduction in the net book value for the existing assets is not being used to offset the net book value associated with the repowering in the proposed RTM calculations.For each of the wind resources the Company proposes to repower (i.e., Glenrock I, Glenrock II, Rolling Hills, etc.), please provide in schedule form the following information:Amount included in rate base in the Company’s adjusted test year in the most recent rate case. This should be broken down by plant in service, accumulated depreciation and ADIT as well as the net resulting balance included in rate base. This should also include the impacts of the adjustments to the wind facilities for plant additions shown on Exhibit RMP__(SRM-3), page 8.6.23, submitted with the Company’s filing in the rate case.The amount of plant in service, accumulated depreciation, ADIT and resulting net book value amount (PIS – ADR – ADIT) as of the most recent date available;The projected amount of plant in service, accumulated depreciation, ADIT and resulting net book value amount (PIS – ADR – ADIT) anticipated immediately prior retiring the existing assets being replaced. Identify the date being used in the projection.With regards to wind plant in its entirety (i.e., not limited to the wind facilities being repowered in this case), please provide in a schedule in excel format: i) plant in service; ii) accumulated depreciation; iii) accumulated deferred income taxes; and net wind plant in service (PIS – ADR – ADIT) on a total Company and on a Utah jurisdictional basis for each of the following periods:As included in the adjusted test year in the Company’s most recent rate case filing – Docket No. 13-035-184;As of December 31, 2016;As of the most recent date available;As projected for December 31, 2019; andAs projected for December 31, 2020.Refer to the Direct Testimony of Jeffrey K. Larsen, lines 170 – 172, which states: “The Company will use the net plant balance described above to calculate a return on investment using the most recent Commission-approved cost of capital and income tax rate.”If Federal legislation is passed and signed into law that lowers the federal corporate income tax rate, resulting in RMP’s effective federal income tax rate being lower than the most recent Commission-approved income tax rate, does RMP intend to base the deferral on the lower actual federal income tax rate applicable to it or the most recent Commission approved rate? Please explain.In the event new legislation is signed into law that results in the Federal income tax rate applicable to RMP being reduced to an amount that is lower than the amount considered in the current Commission-approved rates, explain why the amounts deferred by RMP should be calculated based on an income tax rate that is higher than the actual rate applicable to RMP.Refer to the Direct Testimony of Jeffrey K. Larsen, lines 170 – 172, which states: “The Company will use the net plant balance described above to calculate a return on investment using the most recent Commission-approved cost of capital and income tax rate.”Please provide the actual capital structure ratios for the Company (i.e., percentages of long term debt, preferred stock, and equity) as of December 31, 2016, the most recent date available, and as projected for December 31, 2017 and December 31, 2018.Please provide the actual current average long term debt rate for the Company. This should be comparable to the 5.20% long term debt rate identified in the Commission’s August 29, 2014 Report and Order in Docket No. 13-035-184, at page 8.For the Company’s three most recent long term debt issuances, please provide the following:Amount of debt issued;Maturity Date;Date of issuance; andCost rate (%).Does the Company have any specific funding plans for raising the capital to be invested in the wind repowering projects at issue in this docket? If yes, please provide any written financing and/or funding plans specific to the wind repowering projects at issue in this case.Please provide a copy of all cost/benefit analysis and studies conducted by or for the Company associated with the capital projects at issue in this proceeding.For each of the capital projects at issue in this proceeding please provide the following:Project workorders;Information submitted to management seeking approval of the project;Capital project authorization requests in the most detailed format available (if not already being provided in response to (b), above; and Project authorizations.Refer to the Direct Testimony of Jeffrey K. Larsen, page 10, lines 211-214, which states: “As repowered wind resources are placed into service, the Company will compare the actual O&M expense for each wind resource to the 2014-2017 historical four-year average of O&M expense by wind resource. The difference will be included in the RTM deferral.”Please explain why the historical four-year average of O&M expense by wind resource is proposed to be used instead of the amount included in current base rates by wind resource.Please explain why the 2013 – 2016 years, all of which are now known, are not proposed to be used in the calculation as opposed to including 2017, which is not yet know.Please refer to Exhibit RMP__(SRM-3), page 4.9.1 in the last rate case filing, Docket No. 13-035-184. Does the Company agree that the amounts included in current base rates for non-labor O&M expense for the wind resources is the $23,897,854 shown in column (B) of page 4.9.1 under “Wind Generation”? If no, explain in detail, why not.Please provide the non-labor O&M expense by wind resource included in current base rates. If the Company plans to include labor O&M expenses in the deferral, then separately provide the labor O&M expenses by wind resource included in base rates.Please provide the actual non-labor O&M expense by wind resource for each year, 2013 through 2017 year to date. If the Company intends to include labor-related costs in the O&M expenses to be deferred, then separately provide the actual labor O&M expense by wind resource for each year 2013 through 2017 year to date. Please provide the projected O&M expense by wind resource for 2017, separated between labor and non-labor amounts.Refer to the Direct Testimony of Jeffrey K. Larsen, lines 211 - 214, which states:“As repowered wind resources are placed into service, the Company will compare the actual O&M expense for each wind resource to the 2014-2017 historical four-year average of O&M expense by wind resource. The difference will be included in the RTM deferral.” Does the Company propose to include internal labor costs in the O&M expenses to be deferred? If yes, does the Company currently anticipate that its overall employee compliment on a full time equivalent basis will increase during the period the projects are placed into service as compared to the amounts incorporated in current base rates?Please provide the actual employee compliment on a full time equivalent basis for each month of the base period in the Company’s most recent rate case and as of the most recent date available.Refer to the Direct Testimony of Jeffrey K. Larsen, lines 221-224, which states: “The Company will calculate property taxes associated with the repowered wind resources by taking the monthly average of the capital investment less ADR included in the RTM deferral multiplied by the average property tax rate from the Company’s last general rate case.”Please provide the amount included in the Company’s adjusted test year in the last rate case for property tax expense for each of the wind resources that are at issue in this case.Does the Company agree that the amount of property tax expense associated with the existing wind assets that are being proposed for repowering in this case would decline each year as accumulated depreciation on the assets grows? If no, explain, in detail, why not.Please explain why the Company is proposing to use the “average property tax rate from the Company’s last general rate case” in calculating the deferral instead of using tax rates specific to the taxing jurisdiction in which the wind resources are located.Please provide the estimated property tax rate that was used in the Company’s property tax expense adjustment calculation in the last rate case for each of the wind resources that are at issue in this case.Please provide the “average property tax rate from the Company’s last general rate case” that it proposes to use in its calculation.Please provide the current actual property tax rates that are applicable to each of the wind resources at issue in this proceeding.Is it currently anticipated that each of the applicable taxing authorities will begin charging property taxes on each of the repowering projects the date the projects are placed into service? If no, then identify when it is anticipated that the Company will begin to actually incur property tax expense for each of the projects.For each of the wind resources that are being proposed for repowering in this case, please provide the following information:Property tax base (i.e., amount the property tax rate is applied to) that was used in the Company’s last general rate case filing;Most recent actual property tax base (identify the tax year);Projected property tax base for each year, 2018 through 2020 excluding the capital additions at issue in this case; andProjected property tax base for each year, 2018 through 2020 inclusive of the capital additions at issue in this case.Refer to the Direct Testimony of Jeffrey K. Larsen, lines 221-224, which states: “The Company will calculate the Wyoming wind tax by taking the incremental generation associated with the wind repowering multiplied by the Wyoming wind tax rate.” Additionally, please refer to the Company’s filing in the last general rate case, Exhibit RMP__(SRM-3), page 7.9.1, which shows the projected “Jun-15 NPC MWH Production” to which the Wyoming Wind Generation tax rate was applied, totaling 2,009,507 MWH.Does the Company plan to calculate the “incremental generation associated with the wind repowering” as the difference between the actual annual production post-repowering less the amount assumed in the prior general rate case shown on page 7.9.1 of the referenced exhibit? If no, explain why not and describe, in detail, how the “incremental generation associated with the wind repowering” will be determined for purposes of calculating the incremental Wyoming wind tax expense.Please provide the actual NPC MWH production, by wind plant, in a similar format to page 7.9.1 for each year, 2014 through 2017 year to date.Please provide the actual Wyoming Wind Generation Tax paid by the Company, for each year, 2014 through 2017 year to date, by wind plant.Please provide the actual Wyoming Wind Generation Tax rate for each year, 2014 through the present date. If future rates are known, please also provide the future tax rates through 2020.Refer to the Direct Testimony of Jeffrey K. Larsen, lines 258 through 267, which describes the calculation of the Production Tax Credits that will be included in the RTM and lines 279 – 280, which states: “The RTM is intended to track the PTCs associated with repowered wind resources only.”Please explain with specificity how the amount of “PTCs associated with repowered wind resources” will be calculated for determining the impact on the RTM.Please provide an example calculation of the amount to be included in the RTM associated with the PTCs on the repowered wind resources that will be received by the Company between the date the repowering projects are placed into service and the next base rate case (i.e., before the capital projects proposed in this case are considered in base rates).Will 100% of the PTC received by the Company on the wind resources that are repowered be included in the RTM calculation, or only some incremental amount? If an incremental amount, explain how that “incremental amount” will be calculated.Refer to the Direct Testimony of Jeffrey K. Larsen, lines 286 through 288, which states: “Most of the costs are due to reduced generation from the facilities before and during repowering, and the associated loss of PTCs. These costs will be included in the EBA.” Is the Company proposing to include the “loss of PTCs” due to reduced generation from the wind facilities before and during repowering to be include in the EBA? If no, then explain why “the associated loss of PTCs” was included in this referenced testimony as being included in the EBA. If yes, then explain, in detail, how the “loss of PTCs” due to the reduced generation from the wind facilities before and during repowering will be calculated by the Company for inclusion in the EBA. Include all assumptions that will be used in the calculation (i.e., PTC amount per MWH, calculation of “loss of PTCs”, etc.).Refer to the Direct Testimony of Jeffrey K. Larsen, lines 373 through 376, addresses the salvage value of the replaced equipment. The Company proposes that “To the extent that any salvage value is obtained from the equipment, then the value would be credited to the ADR, reducing the net plant balance.” If additional salvage value is received by the Company after depreciation rates are next set, would the Company be willing to include that additional salvage value as an offset in the subsequent RTM calculation? If no, explain why not. If the salvage on the existing equipment being replaced is received by the Company after the next base rate case such that the offset is not included in base rates but the capital costs associated with the repowering project is included in rate base in that case, does the Company agree that ratepayers would not receive the benefit of the offset caused by the additional salvage received until a subsequent rate case? If no, please explain.If additional salvage value is received by the Company after the next rate case and the associated repowering project is included in rate base in that case, would the Company be willing to include that additional salvage value as an offset in the subsequent RTM calculation? If no, explain why not. Would the Company be willing to agree to reflect any savage amounts received on the equipment being replaced as a credit in the RTM instead of as a credit to the accumulated depreciation reserve? If no, explain why not.Please provide the workpapers, in the most detailed format available, including the assumptions, used to determine each of the amounts presented in Exhibit RMP__(JKL-3). For any of the workpapers calculated using excel, please provide in excel format with all formulas and calculations intact. If not clear from the electronic workpapers, the assumptions used in determining the amounts input into the workpapers should also be provided. This should include, but not be limited to, the determination of the estimated amounts shown in the exhibit on lines 1, 2, 3, 8, 9, 10, 11, 13 and 14.Please refer to Exhibit RMP__(JKL-3). Since the repowered facilities will be replacing older assets, please explain, in detail, why the O&M expenses on line 8 are shown as an increase in the revenue requirement subject to the RTM instead of a reduction in O&M expenses for the projects being repowered as compared to the current cost incorporated in base rates for the facilities.Please refer to Exhibits RMP__(JKL-2) and (JKL-3). Are each of these exhibits based on the Company’s current best estimates of the RTM monthly and annual deferrals that will result if it is granted the treatment requested in this case? If not, then please provided updated versions of these two exhibits, in electronic format with all calculations and formulas intact, based on the Company’s current best estimates. Also, please provide all workpapers and assumptions used in deriving the updated estimates. Include a description and explanation of all modifications to the amounts presented in the exhibits provided with the Company’s filing.