20180208PAC to Staff UT OCS Set 10 (1-16) (2).pdf

1407 W.North Temple
ROCKY MOUNTAIN Salt Lake City,UT 84116
POWER
A DMS10N OF PACIFICORP
February 1,2018
Béla Vastag
Office of Consumer Services
160 East 300 South
Salt Lake City,Utah 84111
[e-mail](C)
RE:UT Docket No.17-035-40
OCS 10*Set Data Request (1-16)
Please find enclosed Rocky Mountain Power's Responses to OCS 10th Set Data Requests 10.2,
10.3,10.4,10.8,10.14,10.15,and 10.16.The remaining responses will be provided separately.
Also provided are Attachments OCS 10.16 -(1-3).Provided on the enclosed Confidential CD
are Confidential Attachments OCS 10.3,10.8,and 10.13.Confidential information is provided
subject to Public Service Commission of Utah (UPSC)Rule 746-1-602 and 746-1-603.
If you have any questions,please call me at [phone].
Sincerely,
Jana Saba
Manager,Regulation
Enclosures
C.c.Erika Tedder/DPU [e-mail]@utah.gov(C)
Dan Kohler/DPU [e-mail](C)
Dan Peaco/DPU [e-mail] (C)(W)
Aliea Afnan/DPU [e-mail] (W)
[e-mail] (W)
Philip Hayet/OCS [e-mail] (C)
Gary A.Dodge/UAE [e-mail] (C)
Phillip Russell/UAE [e-mail] (C)
Kevin Higgins/[e-mail] (C)
Neal Townsend/UAE [e-mail](C)(W)
Sophie Hays/UCE [e-mail](C)
Kate Bowman/UCE [e-mail](C)(W)
Emma Rieves/UCE [e-mail](C)(W)
Lisa Tormoen Hickey/[e-mail] (C)
Mitch Longson/Interwest [e-mail](C)
Nancy Kelly/[e-mail](C)
Jennifer Gardner/WRA [e-mail](C)
Penny Anderson/WRA [e-mail] (W)
Peter J.Mattheis/Nucor [e-mail] (C)
Eric J.Lacey/Nucor [e-mail] (C)(W)
William J.Evans/UIEC [e-mail]
Vicki M.Baldwin/UIEC [e-mail](W)
Chad C.Baker/UIEC [e-mail] (W)
17-035-40 /Rocky Mountain Power
February 1,2018
OCS Data Request 10.2
OCS Data Request 10.2
Terminal Value Benefits.Refer to Mr.Link's rebuttal testimony at line 401 regarding
terminal value benefits:
(a)Did the Company consider these benefits for any other options besides the winning
wind bids?If not,why not,and if so please explain how it was considered.
(b)Please provide all analyses,electronically with all formulas intact that were
developedto model terminal value benefits for every resource in which it was
modeled.
(c)Did the Company consider the terminal value benefits of using retired coal unit sites
to install new units,such as new CC units?If not,why not,and if so,please explain
how it was considered.
Response to OCS Data Request 10.2
(a)Yes,terminal value was considered for all build transfer agreement (BTA)and
benchmark bids considered for selection to the final shortlist.
(b)Due to the ongoing nature of the 2017R Request for Proposals (RFP),the financial
models associated with the 2017R RFP that contain the terminal value calculations
are considered commercially sensitive and highly confidential.The Company does
not typically permit access to commercially sensitive 2017R RFP documentation until
the RFP has been concluded.Please contact Jana Saba at [phone] or Yvonne
Hogle at (80 l)220-4050 to make arrangements for review.
(c)Yes.The Company considers brownfield proxy natural gas plants assumed to be sited
at existing coal plants that are available for resource selection in the system optimizer
model (SO model)when existing coal units are assumed to retire.The cost and
performance assumptions for these brownfield proxy resources are summarized in
PacifiCorp's 2017 Integrated Resource Plan (IRP),Volume I,Chapter 6 (Resource
Options),Table 6.2,pages l 12 and 113.These same assumptions are used in the SO
model simulations supporting the economic analysis summarized in the supplemental
direct and rebuttal testimony of Company witness,Rick T.Link.
17-035-40 /Rocky Mountain Power
February 1,2018
OCS Data Request 10.3
OCS Data Request 10.3
PTC Modeling Sensitivity.Refer to Mr.Link's rebuttal testimony at line 257.Please
supply the sensitivity analysis and work papers,electronically with all formulas intact
that were developedto evaluate levelized PTCs.Please identify the location where any
changes were made to data assumptions for this case.Also provide any written
communication that went back and forth between the Company and the IEs (Utah and/or
Oregon)regarding this sensitivity.
Response to OCS Data Request 10.3
Please refer to Confidential Attachment OCS 10.3,specifically slide 18,which is a
presentation regarding the production tax credit (PTC)sensitivity analysis.
Due to the ongoing nature of the 2017R Request for Proposals (2017R RFP),the work
papers supporting the sensitivity analysis,together with communications between the
Company of the independentevaluators (IE)regarding the PTC sensitivity analysis
associated with the 2017R RFP are considered commercially sensitive and highly
confidential.The Company does not typically permit access to commercially sensitive
2017R RFP documentation until the RFP has been concluded.Please contact Jana Saba at
[phone] or Yvonne Hogle at [phone] to make arrangements for review.
Confidential information is provided subject to Public Service Commission of Utah Rules
746-1-602 and 746-1-603.
17-035-40 /Rocky Mountain Power
February 1,2018
OCS Data Request 10.4
OCS Data Request 10.4
PTC Modeling Sensitivity.Beginning at line 273 of Mr.Link's rebuttal testimony,he
stated that the portfolio selected based on modeling PTCs using a levelization approach is
"inconsistent with how PTC benefits will be treated in customer rates."Explain why this
inconsistency is a problem for modeling PTC benefits,while modeling wind resources
using an economic carrying charge levelization approach is not a problem,in the
Company's view.
Response to OCS Data Request 10.4
Please refer to the Company's response to DPU Data Request 13.1 subpart (a).
17-035-40 /Rocky Mountain Power
February 1,2018
OCS Data Request 10.8
OCS Data Request 10.8
Solar Specifications.Please provide a side-by-sidecomparison of the generic UT solar
resources modeled in direct testimony to the selected solar bids modeled in the rebuttal
filing.Please provide comparisons of energy pattern,resource costs,capacity factors,
capacity contribution percentage,and any other relevant characteristics that were
modeled.
Response to OCS Data Request 10.8
Please refer to Confidential Attachment OCS 10.8,which provides the generic Utah solar
resources modeled in the Company's direct testimony for single tracking.There was no
change to the planning capacity contribution in the Company's direct testimony versus
the Company's supplemental direct and rebuttal testimony.Please refer to the Company's
2017 IntegratedResource Plan (IRP),specifically the total resource cost for supply side
resources -Table 6.2 provided in Volume I,Chapter 6 (Resource Options).The 2017 IRP
is publicly available and can be accessed by utilizing the followingwebsite link:
http://www.pacificorp.com/content/dam/pacificorp/doc/Energy Sources/Integrated Reso
urce Plan/2017 IRP/2017 IRP VolumeI IRP Final.pdf
Due to the ongoing nature of the 2017S Request for Proposals (RFP),the financial
models associated with the 2017S RFP that contain bid costs and energy profiles are
considered commercially sensitive and highly confidential.The Company does not
typically permit access to commercially sensitive 2017S RFP documentation until the
RFP has been concluded.Please contact Jana Saba at [phone] or Yvonne Hogle at
[phone] to make arrangements for review.
Confidential information is provided subject to Public Service Commission of Utah
(UPSC)Rule 746-1-602 and 746-1-603.
17-035-40 /Rocky Mountain Power
February 1,2018
OCS Data Request 10.14
OCS Data Request 10.14
Market Forecast.Please provide,electronically,a long-term (through 2050 or as far out
as data is available),monthlymarket price forecast (medium case is sufficient),for both
the on-peak and off-peak periods,at each of the Company's trading hubs.If only annual
data is available for some of the years,please supply that data.Please ensure this is
consistent with the other modeling assumptions (fuel/CO2/forwardprices)used in the
rebuttal analysis.
Response to OCS Data Request 10.14
Please refer to the non-confidential work papers supporting the supplemental direct and
rebuttal testimony of Company witness,Rick T.Link,specifically the folder "Price-
Policy Scenarios",the file "Base Gas Medium CO2 (MM)".
Please refer to the Company's response to OCS Data Request 10.10 regarding updated
modeling assumptions.
17-035-40 /Rocky Mountain Power
February 1,2018
OCS Data Request 10.15
OCS Data Request 10.15
SO Summary.Refer to "SO Portfolio Rl7-WFSL-MM 1801121945.xlsm"and the
values in rows 228-237 of the "PVRR Table"tab.
(a)Please provide the work papers and general explanation of the process used to derive
the SO inputs for these resources included in rows 228,230,232,234,and 236.
(b)Please reconcile the inputs from part a to the reported values in these rows.
(c)Please explain why some values appear negative (cell G236,cell K236).
(d)Are the project costs "levelized"for the 2020-2036 study period?Please provide the
nominal values past 2036 and levelized value stream past 2036 work papers,which
result in the same NPV.
(e)Are the wind PPA costs included in these rows (228-237)?Please explain.
Response to OCS Data Request 10.15
(a)The SO inputs for the "Proposed Station Fixed Costs"are from a financial model that
incorporated the wind bid receivedby the Company and benchmark data.Specifically
the data "FOM w Nominal PTC ($KW-year)"was the SO model input.Due to the
ongoing nature of the 2017 Renewable Request for Proposals (2017R RFP),the
financial models associated with the 2017R RFP that contain the derivation of inputs
used in the system optimizer model (SO model)and planning and risk (PaR)model
are considered commercially sensitive and highly confidential.The Company does
not typically permit access to commercially sensitive 2017R RFP documentation until
the RFP has been concluded.Please contact Jana Saba at [phone] or Yvonne
Hogle at [phone] to make arrangements for review.
(b)Please refer to the Company's response to subpart (a)above.
(c)The negative "Proposed Station Fixed Costs"reflect the benefits of production tax
credits (PTC)exceeding the wind bid costs for that year.
(d)Yes.Project costs are levelized through 2036.Levelized costs are calculated from the
nominal costs through the life of the asset such that the net present value (NPV)of the
real levelized costs over the life of the asset equal the NPV of the nominal costs over
the life of the asset.Please refer to the Company's response to subpart (a)above.
(e)Yes wind power-purchase agreement (PPA)costs are included in the "Proposed
Station Fixed Costs".
17-035-40 /Rocky Mountain Power
February 1,2018
OCS Data Request 10.16
OCS Data Request 10.16
Bonus Depreciation.Please refer to line 139 of Ms.Kobliha's rebuttal/testimony.Please
provide supporting documentation,memos,industry reports,and legislation,regarding the
changes in bonus depreciation rules as it applies to regulatedutilities.
Response to OCS Data Request 10.16
With respect to the modifications pertaining to the additional first-year depreciation
deduction (bonus depreciation)for certain business assets,the attached legislation,
legislative conference report and industry report support the conclusion that regulated
utilities such as the Company will not be allowed to use bonus depreciation on projects
placed in service after September 27,2017.
Please see "H.R.1"(commonlyreferred to as the "Tax Cuts and Jobs Act"),Attachment
OCS 16.10-1 (Pages 52,54,66 and 67),which states the following
Page 52
"SEC.13201.TEMPORARY 100-PERCENT EXPENSING FOR CERTAIN BUSINESS
ASSETS.
(a)INCREASED EXPENSING.-
(1)IN GENERAL.-Section 168(k)is amended-(A)in paragraph (1)(A),by striking
"50 percent"and inserting "the applicable percentage",and (B)in paragraph (5)(A)(i),
by striking "50 percent"and inserting "the applicable percentage".(2)APPLICABLE
PERCENTAGE.--Paragraph (6)of section 168(k)is amended to read as follows:"(6)
APPLICABLE PERCENTAGE.-For purposes of this subsection-"(A)IN
GENERAL.-Exceptas otherwise provided in this paragraph,the term 'applicable
percentage'means-"(i)in the case of property placed in service after September 27,
2017,and before January 1,2023,100 percent,"(ii)in the case of property placed in
service after December 31,2022,and before January 1,2024,80 percent,"(iii)in the
case of property placed in service after December 31,2023,and before January 1,2025,
60 percent,"(iv)in the case of property placed in service after December 31,2024,and
before January 1,2026,40 percent,and "(v)in the case of property placed in service
after December 31,2025,and before January 1,2027,20 percent.
(B)RULE FOR PROPERTY WITH LONGER PRODUCTION PERIODS.-In the case
of property described in subparagraph (B)or (C)of paragraph (2),the term 'applicable
percentage'means-"(i)in the case of property placed in service after September 27,
2017,and before January 1,2024,100 percent,"(ii)in the case of property placed in
service after December 31,2023,and before January 1,2025,80 percent,"(iii)in the
case of property placed in service after
December 31,2024,and before January 1,2026,60 percent,"(iv)in the case of property
placed in service after December 31,2025,and before January 1,2027,40 percent,and
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February 1,2018
OCS Data Request 10.16
"(v)in the case of property placed in service after December 31,2026,and before
January 1,2028,20 percent."
Page 54
"(d)EXCEPTION FOR CERTAIN PROPERTY.-Section 168(k),as amended by this
section,is amended by adding at the end the followingnew paragraph:"(9)
EXCEPTION FOR CERTAIN PROPERTY.-The term 'qualifiedproperty'shall not
include-"(A)any property which is primarily used in a trade or business described in
clause (iv)of section 163(j)(7)(A)"
Page 66-67
"Section 163(j)(7)TRADE OR BUSINESS.-For purposes of this subsection-"(A)
IN GENERAL.-The term 'trade or business'shall not include-"(i)the trade or
business of performing services as an employee,"(ii)any electing real property trade or
business,"(iii)any electing farming business,or "(iv)the trade or business of the
furnishingor sale of-"(I)electrical energy,water,or sewage disposal services,"(II)
gas or steam througha local distribution system,or "(III)transportation of gas or steam
by pipeline,if the rates for such furnishingor sale,as the case may be,have been
established or approvedby a State or political subdivision thereof,by any agency or
instrumentalityof the United States,by a public service or public utility commission or
other similar body of any State or political subdivision thereof,or by the governing or
ratemaking body of an electric cooperative."
Please see U.S.House of Representatives JOINT EXPLANATORY STATEMENT OF THE
COMMITTEE OF CONFERENCE,Attachment OCS10.16-2,which states the following:
Page 188
"The provision also excludes from the definition of qualified property any property used
in the trade or business of certain regulated public utilities,i.e.,the trade or business of
the furnishingor sale of (1)electrical energy,water,or sewage disposal services,(2)gas
or steam through a local distribution system,or (3)transportation of gas or steam by
pipeline,if the rates for such furnishingor sale,as the case may be,have been established
or approved by a State or political subdivision thereof,by any agency or instrumentality
of the United States,or by a public service or public utility commission or other similar
body of any State or political subdivision thereof."
Please also see KPMG's "Power and Utility IndustryMeasures in New Tax Law",Attachment
OCS 10.16-3,which states the following:
Page 9
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February 1,2018
OCS Data Request 10.16
"In addition,the new law excludes any property used in providing certain utility services
if the rates for furnishingthose services are subject to ratemaking by a government entity
or instrumentalityor by a public utility commission."