20180307PAC to Staff WY WIEC Set 18 (1-7) (2).pdf

ROCKY MOUNTAIN
POWER
A DIVISION OF PACIFICORP 1407 W North Temple,Suite 330
Salt Lake City,Utah 84116
February 28,2018
Abigail C.Briggerman,#7-5476
Holland &Hart LLP
6380 South Fiddlers Green Circle,Suite 500
Greenwood Village,CO 80111
[e-mail] (C)
RE:Wyoming Docket 20000-520-EA-17
WIEC 18th Set Data Request (1-7)
Please find enclosed Rocky Mountain Power's Responses to WIEC 18th Set Data Request 18.1,
18.2,18.5,and 18.6.Provided on the enclosed Confidential CD are Confidential Attachments
WIEC 18.1 and 18.2.Confidential information is provided subject to the terms and conditions of
the protective agreement in this proceeding.
If you have any questions,please call me at [phone].
Sincerely,
Stacy Splittstoesser,
Manager,Regulation
Enclosures
C.C.:Meridith Bell/WPSC [e-mail](C)
Lori L.Brand/WPSC [e-mail] (W)
John Burbridge/WPSC [e-mail] (W)
Michelle Bohanan/WPSC [e-mail] (W)
Kara Seveland/WPSC [e-mail](W)
Morgan Fish/WPSC [e-mail] (W)
Dave Walker/WPSC [e-mail] (W)
Perry McCollom/WPSC [e-mail] (W)
Patti Penn/WIEC [e-mail](W)
Thor Nelson/WIEC tnelson hollandhart.com (C)(W)
Emanuel Cocian/WIEC [e-mail] (W)
Adele Lee/WIEC [e-mail] (W)
Nik Stoffel/WIEC [e-mail] (C)(W)
Christopher Leger/OCA [e-mail] (C)
Crystal J.McDonough/[e-mail] (C)
Callie Capraro/NLRA [e-mail]
Lisa Tormoen Hickey/[e-mail] (C)
Brandon L.Jensen/RMSC [e-mail] (C)
Roxane Perruso/TOTCO [e-mail]
Jane M.France/TOTCO [e-mail] (C)
Constance E.Brooks/Anadarko [e-mail] (C)
Danielle Bettencourt/Anadarko [e-mail] (C)(W)
Paul Kapp/Anadarko [e-mail] (C)
Lisa Christian/TOTCO [e-mail] (C)
J.Kenneth Barbe/Southland [e-mail] (C)
20000-520-EA-17 /Rocky Mountain Power
February 28,2018
WIEC Data Request 18.1
WIEC Data Request 18.1
Referring to the solar sensitivity analysis discuss by Mr.Rick T.Link in his Second
Supplemental Direct Testimony,please provide the followinginformation:
(a)Please provide the total net present value of revenue requirements associated with the
solar PPAs for each of the price policy scenarios analyzed.
(b)Please provide the total net present value of capital investment associated with the
Combined Projects for each of the price policy scenarios analyzed.
(c)Please provide the total net present value of expected equity returns for investors
related to the combined projects.
(d)Please provide the total net present value of expected equity returns for investors
related to the solar PPAs.
(e)Please provide the fully executable work papers for the solar sensitivity cases with
only the solar PPAs add (no Combined Projects)compared to the system without the
solar PPAs and without the Combined Projects on nominal revenue requirement basis
through 2050 similar to those provided for the Combined Projects for each price
policy scenario analyzed.If the Company did not prepare the solar sensitivity
analysis using the same methods as it prepared the Combined Projects analysis,which
included a full nominal revenue requirements analysis though 2050,explain in detail
why the Company chose to omit this analysis from the solar sensitivities.
(f)Please provide the PVRR(d)resulting from the solar projects without the Combined
Projects compared to the system without the combined projects and without solar
PPA utilizing the same nominal revenue requirement analysis through 2050.If the
Company did not prepare the solar sensitivity analysis using the same methods as it
prepared the Combined Projects analysis,which included a full nominal revenue
requirements analysis though 2050,explain in detail why the Company chose to omit
this analysis from the solar sensitivities.
(g)Is it RMPs position that the combined projects are needed if the solar PPA option is
pursued?Please explain your response.
Response to WIEC Data Request 18.1
(a)Please refer to the confidential work papers supporting the corrected supplemental
testimony of Company witness,Rick T.Link,specifically the worksheet "PaR -RFP
Solar Sensitivity"in the confidential file "EV2020 Second Supp Results Summary
File -VOM adjusted CONF.xlsx".
The data in row 111 contain revenue requirement associated with solar power
purchase agreements (PPA)for the sensitivityassuming these PPAs are pursued
without the Combined Projects when applying medium natural gas,medium carbon
dioxide (CO2)price-policy assumptions.
20000-520-EA-17 /Rocky Mountain Power
February 28,2018
WIEC Data Request 18.1
The data in row 232 contain revenue requirement associated with solar PPAs for the
sensitivity assuming these PPAs are pursued without the Combined Projects when
applying low natural gas,zero CO2 price-policy assumptions.
The data in row 353 contain revenue requirement associated with solar PPAs for the
sensitivity assuming these PPAs are pursued with the Combined Projects when
applying medium natural gas,medium CO2 price-policy assumptions.
The data in row 474 contain revenue requirement associated with solar PPAs for the
sensitivity assuming these PPAs are pursued with the Combined Projects when
applying low natural gas,zero CO2 price-policy assumptions.
(b)The Company assumes that Wyoming Industrial Energy Consumers'(WIEC)is
referring to the revenue requirement from initial capital associated with the Combined
Projects.Based on this assumption,the Company responds as follows:
Please refer to the confidential work papers supporting Mr.Link's corrected
supplemental testimony,specifically the worksheet "PaR -RFP FSLW Studies"in the
confidential file "EV2020 Second Supp Results Summary File -VOM adjusted
CONF.xlsx".The data in rows 98-99 contain revenue requirement associated with
capital for the Combined Projects.
(c)Please refer to Confidential Attachment WIEC 18.1 CONF.The calculated annual
equity returns in the provided attachment are the product of:
(1)the average annual rate base for the followinginvestments:
(i)Aeolus to Bridger/AnticlineTransmission Line.
(ii)Wyoming Wind -Ekola Flats,TB Flats I and II,Uinta,and Cedar Springs.
(iii)Transmission Network Upgrades for Uinta and Cedar Springs.
(iv)Transmission Network Upgrades for Solar.
(2)the capital structure and cost ordered in Docket 20000-469-ER-15 effective
January 1,2016.This includes an equity capital component of 51.44 percent and an
authorized return on equity of 9.50 percent.
The Company's filing includes four studies:two of the studies,"R17-FSSR-LN"and
"R17-FSSR-MM",do not include the new Wyoming wind resources.The selected
solar resources also varies by study.Therefore,Confidential Attachment WIEC 18.1
CONF includes the equity returns for each study.
Total equity returns are approximately $1.9 billion over the life of the assets.There is
no clear convention on the appropriate discount rate for equity returns.WIEC has the
data required to perform its own present-valuecalculations.
20000-520-EA-17 /Rocky Mountain Power
February 28,2018
WIEC Data Request 18.1
(d)There are no equity returns for a solar PPA.
(e)Please refer to the confidential work papers supporting Mr.Link's corrected
supplemental testimony,specifically the worksheet "PaR -RFP Solar Sensitivity"in
the confidential file "EV2020 Second Supp Results Summary File -VOM adjusted
CONF.xlsx".The data in rows 7-121 provide the requested information for the
medium natural gas,medium CO2 price-policy scenario.The data in rows 129-242
provide the requested information for the low natural gas,zero CO2 price-policy
scenario.
(f)The Company understands this request to be identical in effect to subpart (e)above:
"solar projects without the Combined Projects"compared to "system without the
combined projects and without solar PPA".With this understanding,the Company
responds as follows:
Please refer to the Company's response to subpart (e)above.
If WIEC was intending to replicate its request under subpart (e)for the solar
sensitivitywhere the solar PPAs are pursued with the Combined Projects,please refer
to the confidential work papers supporting Mr.Link's corrected supplemental
testimony,specifically the worksheet "PaR -RFP Solar Sensitivity"in the
confidential file "EV2020 Second Supp Results Summary File -VOM adjusted
CONF.xlsx".The data in rows 249-363 provide the requested information for the
medium natural gas,medium CO2 price-policy scenario.The data in rows 370-484
provide the requested information for the low natural gas,zero CO2 price-policy
scenano.
(g)Yes.If the solar PPAs are pursued,the Combined Projects continue to meet resource
needs and are lower-cost and lower-risk than other resource alternatives.
Confidential information is provided subject to the terms and conditions of the protective
agreement in this proceeding.
Respondent:Ron Scheirer,Mark Paul and Randy Baker
Witness:Rick Link
20000-520-EA-17 /Rocky Mountain Power
February 28,2018
WIEC Data Request 18.2
WIEC Data Request 18.2
Has the Company performed a risk analysis associated with the variability of the wind
output and the effects on the expected customer benefits related to the Combined
Projects?If yes,please provide a full and unredacted copy of the findings.If not,please
explain in detail why not.
Response to WIEC Data Request 18.2
The Company's considered wind-performance risk by analyzing wind data for certain
bids offered into the 2017 Renewable Request for Proposals (RFP).The goal of a wind
assessment is to accurately estimate the wind resource and energy output of each wind
turbine for a project site over its lifetime,which is typicallyfor 20 years to 30 years or
more.Bidders as part of the 2017R RFP utilized wind-performance companies well
known to the wind industry(AWS Truepower,Black and Veatch (B&V),etc.)to provide
long-term wind assessments.These assessments rely on good meteorological-tower data
from met towers,sophisticated physical models and machine-learning algorithms which
combine the results of physical models with observation data from on-site met towers and
further validated by national gridded weather data such as National Aeronautics and
Space Administration's (NASA)Modern Era Retrospective-Analysis for Research and
Applications (MERRA).
Ultimate long-term wind resource results are reported on a probabilistic basis."P50"
results are commonly applied by both developers and/or wind project owners providing
wind resource assessments assuming there is adequate on-site met-tower coverage with
strong data recovery.A review of any surrounding wind data or wind turbine
performance information is also considered in validating final wind-speed profiles.
Lastly,additional performance losses associated with wind-turbine layout and topography
(wake losses),wind turbine operational availability,weather impacts (high-wind
hysteresis,icing,etc.),expected wind turbine degradationfrom the original equipment
manufacturer (OEM)power curve over its life (wind speed versus electrical generation
output)and on-site electrical losses have a significant impact on ultimate long-term
generationestimates.Overall production loss estimates are typically reported in the +/-20
percent range.
As an integral part of this process,the Company engaged a third party (Sapere
Consulting)to review:
Methods applied in determining long-term wind estimates,including met-tower site
coverage,overall loss assumptions includingwake effects
Underlyingmet tower data at the different heights looking for data gaps and
anomalies,includinga review of shear calculations (adjusting met tower wind data up
to actual wind-turbine hub height)
20000-520-EA-17 /Rocky Mountain Power
February 28,2018
WIEC Data Request 18.2
Overall annual production shape,(long-term wind speed estimates applied to the
applicable the wind turbine power curve)assuring reasonable correlation with other
operating projects in the region.
It should be noted that this overall process contributed to:
Certain assets being eliminated due to poor or limited wind-resource information
Adjustments being applied to the overall annual wind-resource assumptions for
certain assets
Please refer to Confidential Attachment WIEC 18.2 CONF,which provides a copy of
Sapere Consulting's Evaluation of Wind Resource Assessments report.PacifiCorp's
economic analysis already captures all adjustments recommended by its wind consultant.
No additional sensitivity analyses were performed.
Confidential information is provided subject to the terms and conditions of the protective
agreement in this proceeding.
Respondent:Ron Scheirer
Witness:Rick Link
20000-520-EA-17 /Rocky Mountain Power
February 28,2018
WIEC Data Request 18.5
WIEC Data Request 18.5
The Company states that it changed the method by which it modeled PTCs in System
Optimizer and PaR (Link Supplemental and Second Supplemental Direct).Did the
Company run System Optimizer with the RFP initial short list as candidate resources
utilizing a levelized approach for both PTCs and capital revenue requirements?If yes,
please provide a fully executable set of results similar to those provided in Mr.Link's
work papers correspondingto this analysis,as well as a summary table of PVRR(d)s
associated with the results.If not,please explain in detail why not.
Response to WIEC Data Request 18.5
In the Company's supplemental direct testimony filing,the Company performed a
sensitivity (the "IE sensitivity")and provided work papers detailing the cost and bid
selection impacts of using a levelized approach to production tax credits (PTC).This
sensitivity was not updated for the Company's second supplemental direct testimony
because considerationof interconnection queue position for specific bids effectively
eliminated the power purchase agreement bids chosen in the original sensitivity.Please
refer to the Company's response to WIEC Data Request 12.1.
Respondent:Randy Baker
Witness:Rick Link
20000-520-EA-17 /Rocky Mountain Power
February 28,2018
WIEC Data Request 18.6
WIEC Data Request 18.6
Did RMP also run System Optimizer and PaR using the RFP initial short list as candidate
resources utilizing a nominal approach for both PTCs and capital revenue
requirements?If yes,please provide a fully executable set of results similar to those
provided in Mr.Link's work papers correspondingto this analysis as well as a summary
table of PVRR(d)s associated with the results.If not,please explain in detail why not.
Response to WIEC Data Request 18.6
No,the Company did not run the System Optimizer model (SO model)and the Planning
and Risk (PaR)model using the initial short list as candidate resources with nominal
capital revenue requirement and production tax credits (PTC).The Company did not
perform this sensitivity because it does not align with how capital revenue requirement
flows through into rates.Revenue requirement from initial capital (i.e.,return on
investment,return of investment,and applicable taxes)is spread out over the life of the
asset.Consequently,levelized capital revenue requirement is used when the study period
is less than the asset life.In contrast,PTCs are applicable over the first ten years of
operation and are not spread out over the life of the asset.
Respondent:Dan Swan
Witness:Rick Link