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HomeMy WebLinkAbout20170925Utah_DPU Set 1 (1-16).pdf1407 W.North Temple ROCKY MOUNTAIN Salt Lake City,UT 84116 POWER A DIVISION OF PACIFICORP July 26,2017 Erika Tedder Division of Public Utilities 160 E 300 S,4 Floor Salt Lake City,UT 84114 etedger@_utah ov (C) RE:UT Docket No.17-035-39 DPU 16 Set Data Request (1-16) Please find enclosed Rocky Mountain Power's Responses/Redacted Responses to DPU 161 Set Data Requests 1.1-1.12 and 1.14-1.16.The response to DPU 1.13 is Confidential in its entirety. Also provided are Attachments DPU 1.3 -3 and 1.16.Provided on the enclosed Confidential CD are Confidential Responses DPU 1.3,1,8,1.13,1.14,and 1.15 and Confidential Attachments DPU l.3 -(1-2),1.4,1.5,1.7,1.8,1.9,and 1.10.Confidential information is provided subject to Public Service Commission of Utah (UPSC)Rules 746-1-602 and 603. If you have any questions,please call Tarie Hansen at (801)220-2053. Sincerely, Bob Lively Manager,Regulation Enclosures 17-035-39 /Rocky Mountain Power July26,2017 DPU Data Request 1.1 DPU Data Request 1.1 Please provide copies of all of PacifiCorp's responses to data requests submitted by all parties in this docket.In addition,please provide copies of PacifiCorp's responses to wind repowering data requests submitted by all parties in the states of Idaho, Washington,Oregon,Wyoming,and California in addition to those in Utah.This includes public and confidential data responses.Please provide the responses at,or shortlyafter,the time when the Company files its responses to other parties.This is an ongoing request. Response to DPU Data Request 1.1 DPU will be provided copies of data requests and responses. 17-035-39 /Rocky Mountain Power July 26,2017 DPU Data Request 1.2 DPU Data Request 1.2 Please provide the respective docket numbers of any related wind repowering filings in any of the Company's other state jurisdictions. Response to DPU Data Request 1.2 Idaho Case PAC-E-17-06 Wyoming Docket 20000-519-EA-17 17-035-39 /Rocky Mountain Power July26,2017 DPU Data Request 1.3 DPU Data Request 1.3 The followingquestions pertain to the Company's procurement activities with GE and Vestus: 1.3.1 Please provide a copy of the non-competitivelybid contract with General Electric International,Inc.(GE).Did the Company actuallypurchase equipment or just enter into a contract to purchase equipment?What are the liquidated damages if the Company cancels the contract or purchase? 1.3.2 Please explain,per the Company's Notice of Non-Competitive Procurement letter filed on January 15,2017 with the Commission,what the "related services to retrofit several of PacifiCorp's wind energy projects"includes.Please provide supporting documentation for the 'related services." 1.3.3 Please provide a breakdown of the $52,640,700referenced in the January 15, 2017 letter to the Commission as well as supporting documentation for this number. 1.3.4 Please provide a copy of the contract or other document that the Company signed with Vestus with respect to wind repowering.Did the Company actually purchase equipment or justenter into a contract to purchase equipment?What are the liquidated damages if the Company cancels the contract or purchase? 1.3.5 Please identify with a map of the WTGs for each wind farm site that clearly marks each WTG that has (or did have)a defective gearboxes on it.Please circle or otherwise indicate the WTGs that have had the gearbox replaced to date. Please state how many gearboxes at each site have been replaced,how many still need to be replaced,and how many the Company intends not to replace.Please provide the dates of replacement for each respective gearbox.Please state the manufacturer of the defective gearboxes and state whether there was an insurance, warranty,or other maintenance agreement that covers the cost of the defective WTGs.Please state exactly what is defective in the gear boxes. 1.3.6 If the Company provided notice of non-competitive procurement to the Utah Public Service Commission (or any other state commission)with respect to the Vestus equipment,please provide a copy of that letter. Confidential Response to DPU Data Request 1.3 The Company assumes that the reference to "Vestus"is intended to be a reference to Vestas American Wind Technology,Inc.Based on the foregoing assumption,the Company responds as follows: 17-035-39/Rocky Mountain Power July26,2017 DPU Data Request 1.3 1.3.1 The contract between PacifiCorp and General Electric International,Inc.(GE) dated December 2,2016,is considered highly confidential and commercially sensitive.The Company requests special handling.Please contact Bob Lively at (801)220-4052 to make arrangements for review.Through this contract,the Company purchased,took delivery,and made payment for the wind turbine generator equipment in December 2016 that was necessary to qualify subsequent repowering projects for 100 percent of the value of available federal production tax credits (PTC),consistent with Internal Revenue Service (IRS)guidance regarding "safe harbor"equipment purchases.There are no liquidated damages payableunder the contract should the contract now be terminated. 1.3.2 The related services described in the contract include engineering,transportation and idle maintenance services for the wind turbine equipment.The supporting documentation describing these services is Attachment 1 to the contract between PacifiCorp and GE dated December 2,2016.Please refer to the Company's response to subpart (1)above. 1.3.3 The breakdown of costs,less five percent state and county sales taxes paid on the equipment,is containedwithin Attachment I to the contract between PacifiCorp and GE dated December 2,2016.Please refer to the Company's response to subpart (1)above. 1.3.4 The contract between PacifiCorp and Vestas American Wind Technology,Inc. (Vestas)dated December 28,2016,is considered highly confidential and commercially sensitive.The Company requests special handling.Please contact Bob Livelyat (801)220-4052 to make arrangements for review.Throughthis contract,the Company purchased,took delivery,and made payment for the wind turbine generator equipment in December 2016 that was necessary to qualify subsequent repowering projects for 100 percent of the value of available federal production tax credits (PTC),consistent with InternalRevenue Service (IRS) guidance regarding "safe harbor"purchases.There are no liquidated damages payableunder the contract should the contract now be terminated. 1.3.5 Please refer to Confidential Attachment DPU l.3 -l,which provide the maps depicting the gearbox types that are experiencing premature failures as described in the Company's Application in this proceeding.Please refer to Confidential Attachment DPU 1.3 -2;specifically the tab titled "WindTurbineGBoxFailures", which indicates the dates impacted gearboxes failed and whether the subsequent replacement was performed under warranty.Gearbox replacements out of the warranty period have not been performed under service agreements or insurance coverage that would cover those costs. [CONFIDENTIALBEGINS] 17-035-39 /Rocky Mountain Power July26,2017 DPU Data Request 1.3 [CONFIDENTIALENDS] 1.3.6 The Company provided notice of non-competitive procurementto the Public Service Commission of Utah (UPSC)related to the Vestas safe-harbor equipment purchase on January 26,2017.Please refer to Attachment DPU l.3 -3,which provides a copy of the Company's notice.The notice is also publicly available on the UPSC website in Docket 17-999-01 and can be accessed using the following website link: https://pse,utah.gov/2017/0 1/13/docket-no-17-999-01 / No notices were provided to other state commissions. Confidential information is provided subject to Public Service Commission of Utah (UPSC)Rules 746-1-602 and 603. 17-035-39 /Rocky Mountain Power July26,2017 DPU Data Request 1.4 DPU Data Request 1.4 Please provide,where applicable,the followingsupporting documentation for each of the wind turbine generators that the Company proposes to repower: (a)Expenditure requisitions; (b)Appropriation requests (APR); (c)Investment appraisal documents (IAD); (d)Engineering service agreement studies; (e)Cost benefit analysis; (f)Any other relevant studies,analyses,reports and spreadsheets (with formulae intact). Response to DPU Data Request 1.4 (a)The expenditure requisitions (ER)for the 2016 safe-harbor wind turbine purchases are considered highly confidential and commercially sensitive.The Company requests special handling.Please contact Bob Livelyat (801)220-4052 to make arrangements for review. (b)The appropriation requests (APR)for the 2016 safe-harbor wind turbine purchases are considered highly confidential and commercially sensitive.The Company requests special handling.Please contact Bob Livelyat (801)220-4052 to make arrangements for review. (c)The investment appraisal documents (IAD)are included,where applicable,with the documentation compiled for the Company's response to subpart (b)above. (d)The Company retained the services of Black &Veatch,Inc (Black &Veatch or B&V)to prepare an analysis of the suitabilityof the existing foundations with the new proposed wind turbines.A copy of those studies is included as Confidential Attachment DPU 1.4. (e)Please refer to the financial analysis supporting the repowering project included in the Direct Testimony of Company witness,Rick T.Link and his supporting work papers. (f)The Company objects to this data request to the extent it seeks information protected by the attorney-client privilege or attorney work product doctrine.Please refer to DPU l.4(a)-(e)and DPU 1.9 for relevant studies,analyses and reports. 17-035-39/Rocky Mountain Power July26,2017 DPU Data Request 1.4 Confidential information is provided subject to Public Service Commission of Utah (UPSC)Rules 746-1-602 and 603. 17-035-39 /Rocky Mountain Power July 26,2017 DPU Data Request 1.5 DPU Data Request 1.5 Please provide a copy of the Black Veatch report for the wind repowering.Please provide any summary reports or supporting documentation that was used in the report or study. Response to DPU Data Request 1.5 The Company assumes the reference to "Black Veatch"is intended to reference Black & Veatch,Inc.Based on the foregoing assumption,the Company responds as follows: The Black Veatch report for the wind repowering project,referenced in Company witness TimothyJ.Hemstreet direct testimony,ll.228-238,is attached as Confidential Attachment DPU 1.5. Confidential informationis provided subject to Public Service Commission of Utah UPSC)Rules 746-1-602 and 603. 17-035-39/Rocky Mountain Power July26,2017 DPU Data Request 1.6 DPU Data Request 1.6 Please state the earliest date that the Company was made aware of the opportunityto repower the wind turbines.Also,please state if the repowering projects were in the Company's 2016 ten-year Business Plan.Please provide supporting documentation. Response to DPU Data Request 1.6 The Internal Revenue Service (IRS)issued guidance clarifying the requirements for repowered wind projects to re-qualifyfor available production tax credits (PTC)on May 5,2016.Later in May 2016,PacifiCorp was approached by General Electric International,Inc.(GE),regarding the potential to repower PacifiCorp's GE fleet of wind turbines.PacifiCorp subsequently worked with GE to assess the feasibility of repowering and finally determined that repowering was a viable opportunityafter GE completed a technical feasibility analysis of repowering an existing wind project on November 1, 2016.A limited repowering effort focused on repowering approximately 100 megawatts (MW)of an existing wind project was included in the Company's Fall 2016 10-year Business Plan.The IRS guidance (Notice 2016-31)can be accessed using the following website link: 17-035-39/Rocky Mountain Power July26,2017 DPU Data Request 1.7 DPU Data Request 1.7 Please state if the Company has filed any LGIA's to date with respect to wind repowering.If so,please provide all copies of LGIA filings.If not,please state when the Company intends to file each respective LGIA.Please provide copies of the LGIAs as they are made available.Please provide a breakdown of all costs associated with transmission upgrades or other investments pertaining to each respective LGIA. Response to DPU Data Request 1.7 The Company filed generationinterconnection applications for the additional generation at the existing points of interconnection (POI)for the plannedrepowering projects described in the application,except for Leaning Juniper and Goodnoe Hills.The Company expects to file generation interconnection requests for Leaning Juniper and Goodnoe Hills with the transmission provider (BonnevillePower Administration)by October 27,2017. PacifiCorp transmission is currentlyreviewing the applications and preparing the required studies under PacifiCorp's Open Access Transmission Tariff (OATT).The completed studies will provide information on the transmission upgrades,if any,needed to accommodate the interconnection request.Once all studies are complete,PacifiCorp's transmission function will offer revised Large Generator Interconnection Agreements (LGIA)will to PacifiCorp's merchant function. The LGIA applications are provided in Confidential Attachment DPU 1.7. Confidential information is provided subject to Public Service Commission of Utah (UPSC)Rules 746-1-602 and 603. 17-035-39 /Rocky Mountain Power July 26,2017 DPU Data Request 1.8 DPU Data Request 1.8 Mr.Hemstreet's Testimony,pages 16-17,lines 360-367.Please provide the details of the blade failures:(a)the frequency and location by year;(b)the cost to replace;(c)the expected replacement rate of these blades at the time of original purchase and installation and the warranties associated with the blades. Confidential Response to DPU Data Request 1.8 Please refer to Confidential Attachment DPU 1.8,which provides details and costs related to blade failures and refurbishments for the Goodnoe Hills project for the last seven years. [CONFIDENTIALBEGINS] [CONFIDENTIALENDS) Confidential informationis provided subject to Public Service Commission of Utah (UPSC)Rules 746-1-602 and 603. 17-035-39 /Rocky Mountain Power July26,2017 DPU Data Request 1.9 DPU Data Request 1.9 Confidential Exhibit RMP RTL-1).Please provide the detailed costs includingthe derivation of those costs that are shown in the bottom panel of Confidential Exhibit RMP (RTL-1)under the heading "Increase/(Decrease)in Run-Rate Operating Costs Due to Repowering($m)". Response to DPU Data Request 1.9 Please refer to Confidential Attachment DPU 1.9. Confidential information is provided subject to Public Service Commission of Utah (UPSC)Rules 746-1-602 and 603. 17-035-39 /Rocky Mountain Power July 26,2017 DPU Data Request 1.10 DPU Data Request 1.10 Please provide detailed depreciation expenses for the property and equipmentthe Company intends to replace in its wind repowering but keep in rates.Include for each wind site,a description of the property and equipment,the remaining life,and the annual depreciation expense over the remaining life.If any property and equipment is not located at the site of any of the wind projects to be repowered,include that property and equipment separately. Response to DPU Data Request 1.10 Please refer to Confidential Attachment DPU 1.10.All property being replaced is included at the plant sites.The net book balance of the equipment being replaced will remain in accumulated depreciation and will be recovered over the 30 year life-span of the replacement equipment. Confidential information is provided subject to Public Service Commission of Utah (UPSC)Rules 746-1-602 and 603. 17-035-39 /Rocky Mountain Power July 26,2017 DPU Data Request 1.11 DPU Data Request 1.11 Does the approximate $1.3 billion repowering cost figure include removal and disposition costs associated with the property and equipment that is being replaced?Please provide the detail of those costs includingany on-going costs such as storage costs.Please provide detail showing how removal and disposition costs are included in the total repowering costs. Response to DPU Data Request 1.11 The Company assumes that the reference to "$1.3 billion"is intended to be a reference to $1.13 billion.Based on the foregoing assumption,the Company responds as follows: Yes.The repowering cost figures include removal and disposition costs for the equipment that will be replaced. Direct costs estimated for equipment removal and disposition and included in the project costs for each project are shown in the table below.These costs do not include on-going storage costs since the Company has not yet determined whether retaining the equipment followingremoval will be beneficial to customers.Removal and disposition costs are treated as a construction cost included in the overall project. Estimated Direct Equipment Project Removal and Disposition Costs (S000s) Dunlap I $4,477 Glenrock I $3,509 Glenrock III $1,210 Goodnoe Hills $2,844 High Plains $3,993 Leaning Juniper $4,054 Marengo 1 $4,719 Marengo 2 $2,360 McFadden Ridge $1,150 Rolling Hills $2,904 Seven Mile Hill I $3,993 Seven Mile Hill II $787 17-035-39 /Rocky Mountain Power July26,2017 DPU Data Request 1.12 DPU Data Request 1.12 Mr.Link's Testimony,page 35,lines 710-713.What are the system fixed costs that are affected by the wind repowering?What are the non-NPC variable costs'?(See,e.g.,Link page 35,lines 710-713). Response to DPU Data Request 1.12 System fixed costs that are affected by wind repowering captures the change in forecasted system fixed costs between two resource portfolios,excluding the fixed costs specifically associated with the repowering project.The two resource portfolios that are used to calculate the change in system fixed costs include one portfolio with the wind repowering project and one portfolio without the wind repowering project.The resulting change in system fixed costs between these two portfolios captures the difference in fixed costs associated with new proxy resources (i.e.,capital costs and fixed operations and maintenance costs).Please refer to the Direct Testimony of Company witness,Rick T. Link,specifically Exhibit RMP_(RTL-5),which includes a line item labeled "System Fixed Costs"for each price-policy scenario. Variable net power costs (NPC)include fuel costs and the net cost or benefit from market purchases and sales.Non-NPC variable costs include the change in all other system variable costs between two portfolios-onewith and one without the repowering project. The resulting change in these system variable costs captures the difference in variable costs (excluding fuel and the net cost or benefit from market purchases and sales) associated with new and existing resources (i.e.,variable operations and maintenance costs and emissions costs,as applicable).Please refer to Exhibit RMP_(RTL-5),which includes line items labeled "Emissions"and "Other Variable Costs"(collectively,"non- NPC variable costs)for each price-policy scenario. 17-035-39 /Rocky Mountain Power July 26,2017 DPU Data Request 1.14 DPU Data Request 1.14 Production Tax Credits.Please provide a high-levelbreakdown of the fair market value for the assets that will remain in the project,as well as their original costs. Confidential Response to DPU Data Request 1.14 Please refer to the table below,which provides a high-levelbreakdown of the preliminary fair market value (FMV)and original costs for the retained components of the wind turbine generators being repowered at each wind project that will remain in place and be reused. [CONFIDENTIALBEGINS) Preliminary FMV of the Original Cost of theTurbinestoWindProjectRetainedComponentsRetainedComponentsbeRepowered($000s) 74 Glenrock I 58 Glenrock HI 20 Goodnoe Hills 47 McFadden Ridge 19 48 Seven Mile Hill I 66 Seven Mile Hill II 13 [CONFIDENTIALENDS] Confidential information is provided subject to Public Service Commission of Utah (UPSC)Rules 746-1-602 and 603. 17-035-39 /Rocky Mountain Power July26,2017 DPU Data Request 1.15 DPU Data Request 1.15 Production Tax Credits.Please provide a high-levelbreakdown for the expenditures that are being treated as "qualifying expenses"for purposes of the "80/20"rule. Confidential Response to DPU Data Request 1.15 Please refer to the table below which provides a preliminaryhigh-levelbreakdown of the repowering expendituresat each wind project that are being treated as "qualifying expenses"for the purposes of the 80/20 rule.These costs include direct and indirect costs associated with the purchase and installation of the new wind turbine generators (WTGs), includingproject execution and management costs,includingcapitalized property taxes. These costs exclude costs not allowable under Internal Revenue Service (IRS)guidance or otherwise not associated with the new wind turbine generator facilities,such as costs including allowance for funds used during construction,site civil improvements and balance of plant (non-turbine facility)expendituresand costs to remove and dispose of the existing wind turbine generators. [CONFIDENTIALBEGINS] WTGs to be Preliminary Qualifying 80/20ProjectRepoweredExpenses($000s) Dunlap I 74 Glenrock I 58 Glenrock IH 20 Goodnoe Hills 47 High Plains 66 Leaning Juniper 67 Marengo 1 78 Marengo 2 39 McFadden Ridge 19 Rolling Hills 48 Seven Mile Hill I 66 Seven Mile Hill II 13 [CONFIDENTIALENDS] 17-035-39/Rocky Mountain Power July 26,2017 DPU Data Request 1.15 Confidential information is provided subject to Public Service Commission of Utah (UPSC)Rules 746-1-602 and 603. 17-035-39 /Rocky Mountain Power July 26,2017 DPU Data Request 1.16 DPU Data Request 1.16 In reference to Jeff Larsen's testimony,please provide the accounting treatment of the (RTM)as it relates to the repowering.Please provide the "T"accountingjournal entries for the years leading up to capturing the repowering cost/benefits in base rates (GRC)and then two additional years after.Please include the FERC Account number for each entry. Please provide an example of how the surcharge cap would affect the journal entries or would be accounted for. Response to DPU Data Request 1.16 Please refer to Attachment DPU 1.16,which provides the "T"accountingjournal entries associated with the deferral and collection of the repowering costs/benefits for the example Resource Tracking Mechanism (RTM)deferral calculation in Exhibit RMP JKL-2.Exhibit RMP JKL-2 assumes that the incremental savings in net power costs associated with repowering would be returned to customers through the EBA or similar mechanism.These entries are preliminaryforecasts,and additional entries may be necessary to comply with GAAP and FERC accounting standards.The "T"accounting journal entries cover the same period as Exhibit RMP_JKL-2,2019 through 2022.The Company does not have a projection of when these cost/benefits would be included in base rates.