20180307PAC to Staff UT 40 OCS Set 12 (1-21).pdf

1407 W.North Temple
ROCKY MOUNTAIN Salt Lake City,UT 84116
POWER
A DIVISION OF PACIFICORP
February 23,2018
Béla Vastag
Office of Consumer Services
160 East 300 South
Salt Lake City,Utah 84111
bvastag@utal_Lgov (C)
RE:UT Docket No.17-035-40
OCS 12th Set Data Request (1-21)
Please find enclosed Rocky Mountain Power's Response to OCS 12th Set Data Request 12.21.
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/UAE [e-mail] (C)
Neal Townsend/UAE [e-mail](C)(W)
Kate Bowman/UCE [e-mail](C)
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 23,2018
OCS Data Request 12.21
OCS Data Request 12.21
Refer to the file =Table 2-SD,Table 3-SD,Figure 5 FSL Results Summary File.xlsx,tab
=PaR -RFP WFSL Studies.Cell D109 contains the value $1,474 million and cell C68
contains the value $806 million,and both of these values are Net Project Costs for the
different study length analyses.Please explain if the wind projects Variable O&M costs
are included in both of these project costs,and how VOM costs are incorporated into the
"Lev 2036"studies and the "Nom 2050"studies.
Response to OCS Data Request 12.21
Using the medium natural gas,medium carbon dioxide (CO2)price-policy results as an
example,variable operations and maintenance (VOM)costs,which capture the cost of
the Wyoming wind tax and wind integration,are included in the "Cost of Project"(row
68)of the referenced worksheet in the referenced work paper,which pertains to the "Lev
2036"studies.This row of data reflects the sum of project cost data included in the model
as reported in rows 53 through 55.Specifically,row 54 includes VOM costs for the new
wind projects.
In drafting the response to this data request,the Company realized that it should not have
included the wind integration element of the VOM cost in the Planning and Risk (PaR)
model results.PaR is configured to include an incremental regulation reserve requirement
associated with the volatilityand uncertainty in output from the new wind projects.The
wind integration costs are included in the model so that the system optimizer model (SO
model)simulations,which cannot directly capture the incremental regulation reserve
requirement,capture wind integration costs.However,these costs should be excluded
from the PaR simulations and should not be reported in row 68.Removing these costs
eliminates double counting of wind integration costs.Eliminatingthe wind integration
costs from the PaR studies reduces present-valueproject costs in row 68 by
approximately $22 million in all price-policy scenarios analyzed using PaR,which in
turn,improves net customer benefits by approximately $22 million in all price-policy
scenarios analyzed using PaR.
This adjustment does not apply to the SO model results,which appropriately include the
wind integration cost element of VOM costs.Considering that the SO model was used to
make bid-selections for the 2017 Renewable Request for Proposals (2017R RFP)and is
unaffected by this adjustment,this adjustment does not impact selection of winning bids
to the 2017R RFP final shortlist.
In drafting the response to this data request,the Company also realized that the VOM
costs were inadvertentlyexcluded from the "Nom 2050"studies.Considering that these
studies are based on PaR simulations that account for incremental regulation reserves
associated with the proposed new wind projects,the only element of VOM costs that
should have been included are those associated with the Wyomingwind tax.The cost of
the Wyomingwind tax would increase the present-value project cost by approximately
17-035-40 /Rocky Mountain Power
February 23,2018
OCS Data Request 12.21
$26 million in all price-policy scenarios analyzed using PaR,which in turn degrades net
customer benefits by approximately $26 million in all price-policy scenarios analyzed
using PaR.
The Company also confirmed that these same corrections (understatement of benefits in
the "Lev 2036"studies and overstatement of net benefits in the "Nom 2050")studies
apply to PaR results summarized in its second supplemental testimony filing.In that
filing,the economic benefits reported from PaR in the "Lev 2036"studies are understated
by approximately $24 million and the economic benefits from PaR in the "Nom 2050"
studies are overstated by approximately $29 million.
The Company will file corrected testimony associated with its supplemental direct and
rebuttal testimony and second supplemental testimony filings to ensure that the record in
this proceeding captures the correct treatment of VOM costs.