20170925Utah_DPU Set 5 (1-9).pdf

1407 W.NorthTemple
ROCKY MOUNTAIN Salt Lake City,UT 84116
POWER
A DIVISION OF PACIFICOftP
August 18,2017
Erika Tedder
Division of Public Utilities
160 E 300 S,4th Floor
Salt Lake City,UT 84114
NLudAtayegelt@uLM&Y
ete_dder@uttahgov (C)
RE:UT Docket No.17-035-39
DPU 5th Set Data Request (1-9)
Please find enclosed Rocky MountainPower's Responses to DPU 5th Set Data Requests 5.1-5.9.
Also provided is Attachment DPU 5.3.
If you have any questions,please call Tarie Hansen at [phone].
Sincerely,
Bob Lively
Manager,Regulation
Enclosures
C.c.:Dan Kohler/DPU [e-mail](C)
Dan Peac/DPU [e-mail] (C)(W)
Aliea Afnan/[e-mail] (W)
[e-mail] (W)
Béla Vastag/OCS [e-mail](C)
Philip Hayet/OCS p_h_ayet@jkennso_m (C)
Gary A.Dodge/UAE gdo_dge@hjdla_wso_m(C)
Kevin Higgins/UAE [e-mail] (C)
Neal Townsend/UAE (C)(W)
17-035-39 /Rocky Mountain Power
August 18,2017
DPU Data Request 5.1
DPU Data Request 5.1
Crane Testimonv.In reference to Ms.Crane's Testimony,lines 75-84:
(a)What is the status of regulatory filings in other state jurisdictions?
(b)Will the repowering project continue if it the Company's applications are rejected in
other jurisdictions?
(c)The California proceeding is scheduled for 2019,after the deadlines noted in this
proceeding.How would a rejection by California impact the project and Utah
ratepayers?
Response to DPU Data Request 5.1
(a)The related regulatory filings in the other state jurisdictionsare ongoing.Please see
the Company's response to DPU Data Request 1.2 for the docket numbers of the
filings in the other states.
(b)The Company objects to this request as requiring speculation.Without waiving this
objection,the Company responds as follows:
The Company's decision to continue pursuing the opportunity would depend,at least
in part,on the findings and conclusions in any applicable commission order,the
opportunityto pursue traditional ratemaking treatment for the projects,and the
treatment of the mismatch of the costs and benefits through any existing ratemaking
mechanisms.
(c)The Company objects to this request as requiring speculationand development of a
special study or informationnot maintained in the ordinary course of
business.Without waiving these objections,the Company responds as follows:
The majority of PacifiCorp's repowering projects will be addressed through
traditional ratemaking processes in Pacific Power's next general rate case in
California,which will use a 2019 test period.The Companyhas not analyzed the
effect on Utah customers,if any,if the projects are disallowed.
17-035-39 /Rocky Mountain Power
August 18,2017
DPU Data Request 5.2
DPU Data Request 5.2
Crane Testimony.In reference to Ms.Crane's Testimony,lines 117-136:Please
differentiate between the purchases made in 12/2016 and the purchases planned for early
2018.Please provide an itemization of completed and planned equipment purchases.
Response to DPU Data Request 5.2
Please refer to the Company's response to OCS Data Request 1.26.
17-035-39 /Rocky Mountain Power
August 18,2017
DPU Data Request 5.3
DPU Data Request 5.3
Crane Testimony.In reference to Ms.Crane's Testimony,lines 229-241:
(a)Provide any analysis performed by or for the Company related to the impact on the
Company's credit rating of a denial of this application.
(b)Provide any analysis quantifyingthe impact to customers of a denial of this
application,includingcredit rating impacts,collateral impacts,financing terms
impacts,etc.
Response to DPU Data Request 5.3
(a)The Company has not performed any specific analysis regarding denial of this
application.In its June 23,2017 Ratings Methodology paper,Moody's Investor
Service provides informationon their "approach to assessing credit risk for regulated
electric and gas utilities,"in whichthey state the importance of rate recovery:
The ability to recover prudentlyincurred costs on a timely
basis and to attract debt and equity capital are crucial credit
considerations.The inability to recover costs,for instance if
fuel or purchased power costs ballooned during a rate freeze
period,has been one of the greatest drivers of financial stress in
this sector,as well as the cause of some utility defaults.In a
sector that is typically free cash flow negative (due to large
capital expendituresand dividends)and that routinelyneeds to
refinance very large maturities of long-term debt,investor
concerns about a lack of timely cost recovery or the sufficiency
of rates can,in an extreme scenario,strain access to capital
markets and potentiallylead to insolvency of the utility[.]'
If the Company is not allowed to recover its prudentlyincurred costs on a timely
basis,it may not have consistent access to capital markets at reasonable costs.Future
borrowings and the resulting costs to build and maintain facilities become more
expensivethan they otherwise would be.
Please refer to Attachment DPU 5.3,which provides a copy of the full Moody's
Ratings Methodology paper.
(b)The Company has not analyzed the effect on Utah customers,if any,if the projects
are disallowed.
1 Moody's Investors Service (June 23,2017).
17-035-39 /Rocky Mountain Power
August 18,2017
DPU Data Request 5.4
DPU Data Request 5.4
Link Testimony.In reference to Mr.Link's Testimony,lines 58-63:
(a)Please explain why the Company did not include a REC value in the economic
analysis.
(b)Please provide work papers supporting the $11 million benefit value.Work papers
should be provided in electronic spreadsheet format with formulas intact.
Response to DPU Data Request 5.4
(a)The renewable energy credit (REC)market is not consistently active and is illiquid.
There is little price transparency in REC markets.Most transactions are conducted as
bilateral contracts between parties,and prices are not reported.The current vintage
unbundledREC prices have been ranging between $0.75 per REC ($/REC)and
$2.25/REC based on transactions the Company has executed and based on quotes
from market participants.The price of RECs depends on the volume of RECs
available in the market at any given point in time,the vintage of the REC,applicable
program for which the RECs are eligible,and location of the facility that is generating
the RECs.With these considerations,the Company's economic analysis
conservatively does not rely on a revenue stream to support the all-in economic
benefits for customers.Rather,the Company quantified how REC revenues could
improve the economic benefits from the wind repowering project.
(b)Please refer to the confidential work papers that accompanied the Direct Testimony of
Company witness,Rick T.Link,specifically the folder entitled "Exhibits Figures
Tables",the file entitled "Repower Results Direct Testimony",bottom of "Price-
Policy Annual-PaR"worksheet (row 903),which reports the REC benefit estimate
of $11 million.
17-035-39 /Rocky Mountain Power
August 18,2017
DPU Data Request 5.5
DPU Data Request 5.5
Link Testimonv.In reference to Mr.Link's Testimony,lines 64-67:Please explain why
the Company structured the economic benefits analysis as a 20-year study.
Response to DPU Data Request 5.5
The 20-year study period is consistent with the planning horizon used to identify the
preferred portfolio in the 2017 Integrated Resource Plan (IRP).The System Optimizer
model (SO model)and Planning and Risk (PaR)model,used in the 2017 IRP and used to
support the economic analysis in this proceeding,are configured with long-term planning
assumptions that align with this 20-year planning horizon.
17-035-39 /Rocky MountainPower
August 18,2017
DPU Data Request 5.6
DPU Data Request 5.6
Link Testimonv.In reference to Mr.Link's Testimony,lines 276-283:
The previous data request alluded to the Company's 20-year economic analysis.How
were the re-powered wind resources analyzed given their renewed 30-year or,potentially,
40-year lives?Were their economic analyses for 30 and 40 years?Or,were they analyzed
over 20 years,but with,say,different depreciation rates?
Response to DPU Data Request 5.6
Please refer to the Direct Testimony of Company witness,Rick T.Link's direct
testimony,lines 412-431.PacifiCorp's base analysis assumes that repowering will reset
the 30-year depreciablelife of the asset.In the System Optimizer model (SO model)and
the Planning and Risk (PaR)model,all incremental capital was depreciated over the 30-
year life (or the 40-year life for the sensitivity case assuming a longer depreciablelife).
The resulting revenue requirement was then levelized and reflected in the SO model and
PaR model results through 2036.
17-035-39 /Rocky Mountain Power
August 18,2017
DPU Data Request 5.7
DPU Data Request 5.7
Link Testimony.In reference to Mr.Link's Testimony,lines 303-334:
How was Goodnoe Hills analyzed,i.e.was it added to the list into the SO and Par
analyses in a similar manner to Leaning Juniper?Was the analyses for Goodnoe Hills
given the same 20,30,and 40 year economic evaluation as were the other projects (per
the Company's answers to data requests 5.5 and 5.6)?Was Leaning Juniper removed
from the analysis with GoodnoeHills included to determine whether or not it,Leaning
Juniper,remained an economically viable repowering option?
Response to DPU Data Request 5.7
As described in the Direct Testimony of Company witness,Rick T.Link,lines 303-334,
PacifiCorp first started with the wind repowering scope assumed in the 2017 Integrated
Resource Plan (IRP)preferred portfolio that included 905 megawatts (MW)of existing
wind resource capacity.PacifiCorp analyzed the present value revenue requirement
(PVRR)impact with and without Leaning Juniper as it has the lowest expected annual
average capacity factor.These results show that when customer benefits are higher when
Leaning Juniper is included in the scope of the wind repowering project,and therefore,
PacifiCorp did not analyze furtherreductions to the wind repowering scope.PacifiCorp
then looked at expanding the scope and analyzed the addition of Goodnoe Hills,again
starting with the 905 MW included in the 2017 IRP preferred portfolio that includes the
Leaning Juniper facility.In this study,there are 999.1 MW of existing wind capacity
included in the wind repowering scope.As described in Mr.Link's Direct Testimony,
includingGoodnoeHills in the repowering scope further improved customer benefits.
17-035-39 /Rocky Mountain Power
August 18,2017
DPU Data Request 5.8
DPU Data Request 5.8
Link Testimony.In reference to Mr.Link's Testimony,lines 246-263:Please provide
detailed calculations of the risk-adjusted PVRR,includingall calculations related to
"adding five percent of system variable costs,from the 95th percentile of the distribution
of system variable costs,to the stochastic-mean PVRR."
Response to DPU Data Request 5.8
Please refer to the confidential work paper that accompanied the Direct Testimony of
Company witness,Rick T.Link;specifically the folder entitled "Exhibits Figures Tables",
the file entitled "Repower Results Direct Testimony.xlsm",the worksheet entitled "Risk
Adjustment".
17-035-39 /Rocky Mountain Power
August 18,2017
DPU Data Request 5.9
DPU Data Request 5.9
Link Testimony.In reference to Mr.Link's Testimony,lines 314-317:Please provide a
reference to specific work papers where the $7 million value is calculated.If this value is
not calculated in work papers alreadyprovided,please provide all analysis supporting
this value.
Response to DPU Data Request 5.9
The risk-adjusted present value of revenue requirements (PVRR)is calculated by adding
five percent of system variable costs,from the 95th percentile of the distribution of
system variable costs,to the stochastic-mean PVRR.
Stochastic PYRR
(M lions S)
95th Iteration.Risk-adjusted
95th Iteration Expected PYRR
Mean (with (with fixed Value (Mean +.05 *
Desenption Cases fixed costs)costs)(prob =5%)95th iteration|
Repower,no Leaning Juniper DEV-MM-RPE-UN 24,163 24,459 1,223 25,386
Repower with Leaning Juniper DEV-MM-RPE-D 24,157 24,453 1,223 25,379
PVRR(d)(7)
Please refer to the followingconfidential work papers that accompanied the Direct
Testimony of Company witness,Rick T.Link,that support the values referenced in the
table above,specifically:
(1)Folder entitled "PaR Summary Reports,"the file entitled "PaR Stochastic Summary
P_DEV-MM-RPE-LJ _1705181709.xlsm,"and
(2)Folder entitled "PaR Summary Reports,"the file entitled "PaR Stochastic Summary
P DEV-MM-RPE-LJN 1705181714.xlsm."