20180320PAC to PIIC 21-42.pdf

RECEtVED
ROCKY MOUNTAIN 2018 HAR 20 AM 10:05
POWER LPAowistomormemc°"ËSION 1407 W North Temple,Suite 330
Salt Lake City,Utah 84116
March 19,2018
Ronald L.Williams,ISB No.3034
802 W.Bannock Street,Suite 900
Boise,ID 83702
[e-mail](C)
RE:ID PAC-E-17-07
PIIC 5'*Set Data Request (21-42)
Please find enclosed Rocky Mountain Power's Responsesto PIIC 5th Set Data Requests 21-42.
Also provided are Attachments PIIC 25-(1-2)and 29-1.Provided on the enclosed Confidential
CD are Confidential Attachments PIIC 26,29 42-3),and 38.
Confidential information is providedsubject to the terms and conditions of the protective
agreement in this proceeding.
If you have any questions,please feel free to call me at [phone].
Sincerely,
J.Ted Weston
Manager,Regulation
Enclosures
C.c.:Brad Mullins/PIIC [e-mail] (C)
Jim Duke/PIIC [e-mail] (W)
Kyle Williams/PIIC [e-mail](W)
Val Steiner/PIICval.steiner agrium.com (W)
Brian C.Collins/Brubaker&Associates [e-mail] (C)(W)
James R.Smith/[e-mail](C)(W)
Maurice Brubaker/Monsanto [e-mail] (C)(W)
Katie Iverson/Monsantokiverson consultbai.com (C)
Eric Olsen/IIPA elo achohawk.com (C)
Anthony Yankel/IIPA [e-mail](C)
Randall C.Budge/Monsanto [e-mail] (C)
Thomas J.Budge/Monsanto tib racinelaw.net (C)(W)
Diane Hanian/IPUC diane.holt puc.idaho.gov (C)
PAC-E-l7-07 /Rocky Mountain Power
March 19,20 18
PIIC 50'Set Data Request 21
PIIC Data Request 21
Reference the Second Supplemental Direct Testimony of Rick T.Link at 1:6-10.
Please confirm that PacifiCorp did not prepare an updated resource needs
assessment when developing the referenced economic analysis?Please provide an
explanationfor PacifiCorp's response.
Response to PIIC Data Request 21
The Company assumes that "resource needs assessment"refers to the Company's
2017 Integrated Resource Plan (IRP)Volume I,Chapter 5 (Load and Resource
Balance).Based on the foregoing assumption,the Company responds as follows:
No,the Company did not prepare an updated needs assessment relevant to the
second supplemental direct testimony filing.Resource need is an endogenous
consideration of every System Optimizer model (SO model)and Planning and
Risk (PaR)model run,in which the models are identifying the optimal least-cost,
least-risk means to meet all system requirements.To the extent that the Company
has updated loads.prices,resources parameters,etc.,"resource need"has been
automatically updated in the models.
The Company will include an updated load and resource balance assessment in its
2017 IRP Update,to be filed with the Idaho Public Utilities Commission of Utah
(IPUC)on March 31,2018.
Recordholder:Randy Baker
Sponsor:Rick Link
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIlC 5"'Set Data Request 22
PIIC Data Request 22
Reference the Second Supplemental Direct Testimony of Rick T.Link at 1:6-10:
When performing the referenced analyses,did PacifiCorp update the cost of
supply side resources other than the Wind Projects to reflect the passage of the
Tax Cuts and Jobs Act,and/or any other changes that have occurred since its IRP
was filed in 2017?
Response to PHC Data Request 22
Yes,the Company updated the cost of all supply side resources automatically by
updating the capital recovery factor and discount rate in the models to align with
recent tax legislation.
Recordholder:Randy Baker
Sponsor:Rick Link
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PlIC 5'"Set Data Request 23
PIIC Data Request 23
Reference the Second Supplemental Direct Testimony of Rick T.Link at 3:When
preparing the nominal and levelized revenue requirement calculations,what
assumptions did PacifiCorp make with respect to the termination of the Power
Purchase Agreement (PPA)portion of Cedar Springs facility (i.e.did PacifiCoi;
assume that the PPA portion would be renewed,and if so,at what price)?
Response to PIIC Data Request 23
The Company assumed the contract terminates at the termination date.The
Company did not assume the automatic renewal of power purchase agreements
(PPA)in the second supplemental direct testimony filing.This is consistent with
the treatment of contracts,including PPAs and qualifying facilities (QF),in the
2017 Integrated Resource Plan (IRP).
Recordholder:Randy Baker
Sponsor:Rick Link
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 50'Set Data Request 24
PUC Data Request 24
Reference the Second Supplemental Direct Testimony of Rick T.Link at 1:6-10:
Do PacifiCorp's nominal or levelized revenue requirement analyses consider the
impacts of ongoing capital additions to,and replacements of,the proposed
Aeolus-to-Bridger!Anticline D.2 transmission facilities?Ifno,please explain
whythe cost of those ongoing capital additions and replacements have been
excluded?
Response to PHC Data Request 24
PacifiCorp's revenue requirement analyses does not consider any ongoing capital
additions or replacements for the proposed Aeolus-to-Bridger/Anticline D.2
transmission facilities.The Company does not project the need for incremental
post-construction capital additions or replacements across the transmission system
caused by the Aeolus-to-Bridger Anticline transmission line.PacifiCorp's
economic analysis does includes operation and maintenance (O&M)costs of $1
million per year in 20 17 dollars.
Recordholder:Mark Paul
Sponsor:Rick Link
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5"Set Data Request 25
PUC Data Request 25
Please provide a copy of PacitiCorp's most recently completed depreciation
study,along with the final rates by FERC account and sub-account that have been
approved by the Idaho Public Utilities Commission.
Response to PIIC Data Request 25
Please refer to Attachment PIIC 25-1,which provides the most recent
depreciation study filed with the Idaho Public Utilities Commission (IPUC)on
January 22,2013;Case PAC-E-13-02.
Please refer to Attachment PlIC 25-2,which provides a copy of the stipulation
associated with that filing which provides the fmal rates approved by the IPUC.
Recordholder:Cary Boyle
Sponsor:To Be Determined
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIlC 5th Set Data Request 26
PIIC Data Request 26
Please provide PacifiCorp's most recently completed long-term load forecast,
with hourlyloads,and including all time periods considered in the forecast.
Response to PIIC Data Request 26
Please refer to Confidential Attachment PIIC 26,which provides the most
recently completed hourly,system-level long-term load forecast.
Confidential information is provided subject to the terms and conditions of the
protective agreement in this proceeding.
Recordholder:Lee Elder
Sponsor:To Be Determined
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5"'Set Data Request 27
PIIC Data Request 27
Reference the Rebuttal Testimony of Rick T.Link at 25:4-15:Mr.Link states "In
general,it is likely that spot prices are somewhat systematically risky,because
demand for most commodities tends to move with the economy as a whole.Thus,
it is unlikelythat the appropriate discount rate for taking the present value of
expected spot prices will be the risk-free rate that applies to discounting the
forward price".
(a)Does Mr.Link agree that,if one were to apply a higher discount rate for
expected spot prices than the risk-free discount rate applied to the forward
price,as he recommends,it would indicate that the expected spot price is
lower than the forward price?Please explain?
(b)In Mr.Link s opinion,what interest rate would be most appropriatelyused to
determine the present value of the expected spot price?
(c)Did PacifiCorp make any adjustment to the forward prices included in its
economic analysis to account for the higher interest rate applicable to
expected spot market prices,as Mr.Link identifies in the referenced
testimony?If no,please explainwhythe PacifiCorp has not made this
adjustment.
Response to PHC Data Request 27
(a)No.Market participants are not indifferent between options with different
risks.Forward prices,being contractual,are observable with price certainty.
Whereas spot prices are not observable nor certain.This lack of certainty
imposes a risk that spot prices will not equal the observed forward contract
price.Each market participate independentlyestablishes its own forecast of a
spot price and its own view of risk in relation to the observable forward
contract price.To prevent arbitrage,the present value of a forward contract
price,discounted at a risk-free discount rate,should equal the present value of
the market participant's forecasted spot price,discounted at a higher discount
rate.This suggests that the view of spot prices is actually higher than the
observed forward contract price.
(b)PacifiCorp has not established a discount rate applicable to a spot price
forecast.
(c)No.Recognizing that market prices are uncertain,PacifiCorp uses its forward
price curve (FPC)as a reasonable proxy for projected market prices over a
range of different market-price scenarios (i.e.,low,medium,and high).
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PlIC 50'Set Data Request 27
Recordholder:Connie Clonch
Sponsor:Rick Link
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 28
PHC Data Request 28
Reference the Rebuttal Testimony of Rick T.Link at 25:22-26:4:Mr.Link states
"Mr.Mullins'position here is contradicted by his testimony before the Oregon
Commission earlier this year".
(a)Please provide a citation for Mr.Link's characterization of Mr.Mullins
testimony in the above quotation?
(b)Did Mr.Link testify in Oregon Public Utility Commission (OPUC)Docket
No.UE 323?
(c)Is Mr.Link aware that in OPUC Docket No.UE 323,Mr.Mullins testified as
follows?
"The difference in actual versus modeled benefit of known short-term firm
amounts might be (as the Company implies)a hedging benefit,or a premium,
embedded in forward price curves.The Company,however,did not present
any empirical analysis to support its theory,nor have I undertaken extensive
study of the matter,other than measuring the historical benefits of the >7 Day
Transactions.In the past,however,I have observed significant forward
premiums in gas prices,so it would not surprise me if the historical benefits
are a sort of hedging benefit,driven by risk premiums embedded in forward
prices.
(d)Does Mr.Link agree or disagree that the above testimony of Mr.Mullins
referenced above is consistent with Mr.Link's analysis in this matter?
(e)Has Mr.Link reviewed the Day-Ahead /Real-Time system balancing
adjustment that was discussed in OPUC Docket No.UE 323?
(f)Do the economic analyses Mr.Link performed in this matter include the Day-
Ahead /Real-Time modeling adjustments that were at issue in Docket No.UE
323?If no,please explain why those purported costs were excluded?
(g)Does PacifiCorp expect the new Wind Projects to impact tlie cost of Day;
Ahead /Real Time system balancing?Please explain and provide PacifiCorp's
best estimate of the impact of the Wind Projects on the cost of Day-Ahead /
Real Time system balancing.
Response to PHC Data Request 28
(a)See,e.g.,In the Matter of PacifiCorp,dba Pacific Power,2018 Transition
Adjustment Mechanism,Public UtilityCommission of Oregon (OPUC)
Docket UE-323,ICNU/200,Mullins/8-10 (August 2,2017).
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 56'Set Data Request 28
(b)No.
(c)The Company agrees that Mr.Mullins testimony in OPUC Docket UE-323
includes the passage quoted above.
(d)The Company objects to this request because it is vague.Specifically,it is not
clear what is meant by "Mr.Link's analysis in this matter".
(e)No.However,Mr.Link is familiar with the day-ahead/real-time (DA-RT)
adjustment discussed in the Oregon transition adjustment mechanism (TAM)
(Docket UE-323).
(f)The DA-RT adjustment discussed in the TAM is not applied in the System
Optimizer model (SO)model and Planning and Risk (PaR)model.The
Company s SO model and PaR produce a present value of revenue
requirements differential (PVRR(d))that is net of two optimizations.Because
the same price curves are included in both models runs,the net impact of this
adjustment as used in the TAM is expected to be small.
(g)Yes.The DA-RT adjustment is calculated based on the Company's historical
market transactions.which indicate that when the Company's needs are high,
market prices also tend to be relatively high,while when the Company s
needs are low,market prices also tend to be relatively low.As a result,the
average price of the Company's purchase transactions is typicallyhigher than
the average price of the Company's sales transactions as a result of timing
differences.The adjustment would need to be applied in the base case (with
no new wind and transmission projects)and in the new wind and transmission
cases,as both cases use the same price curves for both purchases and sales.
Because the new wind resources reduce the volume of system balancing
purchase transactions by significantly more than they increase the expected
volume of system balancing sales transactions,and because DA-RT
adjustment increases the price for system balancing purchase transactions,
applying this adjustment is expected to provide additional benefits in the new
wind and transmission case relative to the base case.The new wind and
transmission benefits provided in testimony are therefore expected to be
conservative (understated).The Company has not quantified the change in
DA-RT expenses specific to the new wind and transmission resources.
For example,please refer to the confidential work papers supporting the
second supplemental direct testimony of Company witness,Rick T.Link,
specifically folder "PaR Summary Reports",files "PaR Stochastic Summary
P_Rl7-Base-MM 1801011727.xlsm",and "PaR Summary Reports\PaR
Stochastic Summary P_Rl7-FSLW-MM 1802091508.xlsm",and
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 28
specifically the "Cost Summary"worksheet in each file,cells C18:19.In the
medium-gas,medium carbon dioxide (CO2)price-policy scenario,the case
with new wind increases system balancing sales by $47 million ($2,367
million minus $2.217 million).System balancing purchases are reduced by
$186 million ($1,190 million minus $1,376 million).Consequently,increasing
the price for system balancing purchases and decreasing the price for system
balancing sales in both the base and new wind cases is expected to produce a
net decrease in net power costs (NPC)associated with the new wind and
transmission.
Recordholder:Rick Link
Sponsor:Rick Link
PAC-E-17-07/Rocky Mountain Power
March 19,2018
PIIC 5"'Set Data Request 29
PIIC Data Request 29
Reference the Rebuttal Testimony of Rick T.Link at 27:17-28:1:Mr.Link states
that "[t]he GRID studies and assumptions referred to by Mr.Mullins were used in
the 20 17 IRP,but not in the economic analysis included in this case".
(a)Does PacifiCorp agree that,in preparing the economic analyses identified in
the Second Supplemental Direct Testimony of Rick T.Link,it has
incorporated the adjustments underlying the referenced supplemental GRID
studies into the System Optimizer and Planning and Risk models?
(b)On what basis,if any,does PacifiCorp conclude that the impacts of the
adjustments underlying the supplemental GRID studies have changed
materially after being incorporated into System Optimizer and Planning and
Risk models?Please provide all studies showing what PacifiCorp believes the
impact of those adjustments to be when incorporated into the System
Optimizer and Planning and Risk models.
(c)Does PacifiCorp°s economic analysis identified in the Second Supplemental
Direct Testimony of Rick T.Link still include an assumption where the
transfer capability between Jim Bridger and Walla Walla is increased by 300
MW corresponding to growing participationin the Energy Imbalance Market
(EIM)?If yes,please provide PacifiCorp s best estimate of the impact of this
assumption on the medium gas and medium CO2 scenario.If no,please
explain.
(d)Does PacifiCorp's economic analysis identified in the Second Supplemental
Direct Testimony of Rick T.Link still include an assumption where the
Wyoming loads are reduced to account for purported line loss benefits of the
Transmission projects?If yes,please provide PacifiCorp's best estimate of the
impact of this assumption on the medium gas and medium CO2 scenario.If
no,please explain?
(e)Does PacifiCorp's economic analysis identified in the Second Supplemental
Direct Testimony of Rick T.Link still include an assumption to account for
reduced de-rates associated with constructing Gateway segment D2?If yes,
please provide PacifiCorp s best estimate of the impact of this assumption on
the medium gas and medium CO2 scenario.If no,please explain.
Response to PIIC Data Request 29
(a)PacifiCorp does not agree.The line loss,reliability and energy imbalance
market (EIM)assumptions adopted in the 2017 Integrated Resource Plan
(IRP)were previously evaluated in the Generation and Regulation Initiative
Decision Tool (GRID).In the 2017 IRP,PacifiCorp applied the results from
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5"'Set Data Request 29
these GRID studies into the portfolio costs used to analyze the new wind and
transmission projects.In the economic analysis presented in this proceeding,
including the economic analysis summarized in the Company°s second
supplemental direct testimony filing,these assumptions were subsequently
incorporated in the System Optimizer model (SO model)and the Planning and
Risk (PaR)model.Consequently,no results from GRID have been used in the
Company s economic analysis presented in this case.
(b)PacifiCorp has not isolated the incremental impact of referenced assumptions
in the SO model and PaR model.Please refer to the followingsupporting
materials:
EIM Benefit
PacifiCorp's estimate of a 300 megawatt (MW)increase in transfer capability
was based on historical experience with adjacent entities that have joined the
energy imbalance market (EIM)since 2014.Please refer to Attachment PIIC
29-1,which provides the transmission intertie connectivity volumes as of
December 2017.In each case that an entity has joined the EIM,total
transmission connectivity to PacifiCorp has been greater than or equal to 300
MW.Idaho Power Company (IPC)has not yet finalized its transmission
availability to the market,however,it is in each entity's best interest to make
its transmission available to the market to maximize EIM benefits.
Line Loss Benefit
Please refer to Confidential Attachment PIIC 29-2,which provides
calculations supporting the 11.6 average megawatts (aMW)referenced value.
Reliabilitv Benefit
Please refer to Confidential Attachment PllC 29-3,which provides
calculations supporting the 36.5 average megawatts (aMW)referenced value.
(c)Yes.Please refer to the Company s response to subpart (b)above.
(d)Yes.Please refer to the Company's response to subpart (b)above.
(c)Yes.Iflease refer to the Company's responseto subpart (b)above.
Confidential information is provided subject to the terms and conditions of the
protective agreement in this proceeding.
Recordholder:Randy Baker
Sponsor:Rick Link
PAC-E-17-07/Rocky Mountain Power
March 19,2018
PIIC 5"'Set Data Request 30
PIIC Data Request 30
Is PacifiCorp required to submit independently balanced EIM Base Schedules for
PACE and PACW balancing area pursuant to the CAISO's EIM tariff or
PacifiCorp Transmission's EIM tariff"If yes.please provide a citation to the tariff
corresponding to the requirement.If no,please explain how the EIM base
schedules are determined for the respective balancing areas.
Response to PIIC Data Request 30
PacifiCorp objects to this request as not reasonably calculated to lead to the
discovery of relevant or admissible evidence.
Recordholder:Yvonne Hogle
Sponsor:To Be Determined
PAC-E-l7-07 |Rocky Mountain Power
March 19,2018
PIIC 56 Set Data Request 31
PIIC Data Request 31
Does the EIM provide PacifiCorp with the ability to schedule firm energy
between balancing areas in an amount exceeding the firm transmission rights that
PacifiCorp possesses between the two balancing areas?If yes,please explain,
with references to specific tariff provision,how transfers of such firm energy
transfers may be accomplished.
Response to PIIC Data Request 31
PacifiCorp objects to this request as not reasonably calculated to lead to the
discovery of relevant or admissible evidence.
Recordholder:Yvonne Hogle
Sponsor:To Be Determined
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 56 Set Data Request 32
PllC Data Request 32
Please identify the all scheduling information that PacifiCorp submits to the
CAISO on an hour-ahead basis.
Response to P1fC Data Request 32
PacifiCorp objects to this request as not reasonably calculated to lead to the
discovery of relevant or admissible evidence.
Recordholder:Yvonne Hogle
Sponsor:To Be Determined
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5"'Set Data Request 33
PIIC Data Request 33
Please provide a sample of the EIM Base Schedules that PacifiCorp submitted to
the CAISO,including the most granular level of load and resource data available,
corresponding to the followinghours:
(a)June 26,2017,HE 1700.
(b)January 16,2017,HE 800.
(c)November 30,2016,HE 800.
(d)July28,2016,HE 1700.
Response to PHC Data Request 33
PacifiCorp objects to this request as not reasonably calculated to lead to the
discovery of relevant or admissible evidence.
Recordholder:Yvonne Hogle
Sponsor:To Be Determined
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5"Set Data Request 34
PIIC Data Request 34
Please provide uninstructed imbalance charges for the followingwind facilities on
a monthlybasis (or the greatest level of granularity available)over the period
January 1,2015 through June 30,2017:
(a)Glenrock.
(b)Glenrock III.
(c)Foote Creek.
(d)McFadden Ridge.
(e)Seven Mile Wind.
(f)Seven Mile Il Wind.
(g)Top of the World Wind.
(h)Dunlap Wind.
(i)High Plains Wind.
(j)Mountain Wind I.
(k)Mountain Wind IL
(1)Rock River I.
(m)Rolling Hills Wind
Response to PIIC Data Request 34
PacifiCorp objects to this request as not reasonably calculated to lead to the
discovery of relevant or admissible evidence.
Recordholder:Yvonne Hogle
Sponsor:To Be Determined
PAC-E-17-07 /Rocky Mountain Power
March 19,20 I 8
PIIC 50'Set Data Request 35
PIIC Data Request 35
Please provide the 5 and 15 minute uninstructed imbalance associated with the
followingwind facilities over the period July 1,2016 through June 30,2017:
(a)Dunlap Wind.
(b)McFadden Ridge.
(c)Top of the World Wind.
Response to PIIC Data Request 35
PacifiCorp objects to this request as not reasonably calculated to lead to the
discovery of relevant or adrnissible evidence.
Recordholder:Yvonne Hogle
Sponsor:To Be Determined
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PllC 5"'Set Data Request 36
PIIC Data Request 36
For each PNode in PacifiCorp's PACE and PACW balancing area,please provide
5-and 15-rninuted EIM prices over the period July 1,2016 through June 30,
2017.
Response to PIIC Data Request 36
PacifiCorp objects to this request as not reasonably calculated to lead to the
discovery of relevant or admissible evidence.
Recordholder:Yvonne Hogle
Sponsor:To Be Determined
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 50'Set Data Request 37
PIIC Data Request 37
Please identify the date that PacifiCorp issued the forward price curve used in the
revenue requirement analyses in the Second Supplemental Direct Testimony of
Rick T.Link.
Response to PIIC Data Request 37
The Company's December 2017 OfTicial Forward Price Curve (OFPC),used in
the revenue requirement analyses in the second supplemental direct testimony of
Company witness,Rick T.Link,was issued January 2,2018.
Accompanying scenarios,used in revenue requirement analyses,were based on
projections issued by third-parties in late December 2017 and early January 2018.
Recordholder:Connie Clonch
Sponsor:Rick Link
PAC-E-17-07/Rocky Mountain Power
March 19,2018
PlIC 56'Set Data Request 38
PHC Data Request 38
Please identify and provide all long-term natural gas price forecasts that
PacifiCorp has received through a third-party subscription service over the period
January 1,2018 through the present.
Response to PHC Data Request 38
PacifiCorp receives long-term natural gas price forecasts from two third-party
subscription services for approximately30 hubs across North America,most of
which are not applicable to this proceeding.As such,please refer to Confidential
Attachment PIIC 38,which provides the long-terrn natural gas price forecasts,
relevant to this proceeding,received by PacifiCorp through third-party
subscription services since January 1,2018.Note:the provided third-party
information is proprietary information and is provided with the permission of the
third-party vendors,and is subject to the confidentiality protections noted below.
Confidential information is provided subject to the terms and conditions of the
protective agreement in this proceeding.
Recordholder:Connie Clonch
Sponsor:Rick Link
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 56'Set Data Request 39
PIIC Data Request 39
Reference the Rebuttal Testimony of Rick V.Vail at 27:15-16:Mr.Vail states
that "[t]he 12 percent figure represents the current level of ATRR funded by
OATT customers".
(a)Please confirm that PacifiCorp assumed that the proportion of ATRR funded
by retail customers will not increase as a result of acquiring the Wind Projects
and Transmission Projects?If no,please explain.
(b)Please explain how PacifiCorp Transmission ATRR costs are allocated
between Network IntegrationTransmission Service and Point-to-Point
transmission customers?
(c)Please identify billing determinants used for Network Integration
Transmission Service and Point-to-Pointtransmission customers,and explain
why the billing determinants are appropriatelyused for the respective
services?
(d)Please identify the transmission service PacifiCorp plans to use with respect to
the Wind Projects (i.e.Network IntegrationTransmission Service or Point-to-
Point Transmission Services).
(e)Pursuant to its OATT,is PacifiCorp allowed to designate front office
transactions as a network resource?If no,please explain why not,and identify
the transmission service used to deliver front office transactions to load?
(f)Does PacifiCorp intend to terminate any Point-to-Pointtransmission rights,in
the event that the Transmission Projects and Wind Projects are constructed?If
yes,please identify each reservation,which PacifiCorp intends to terminate.
(g)Please explain how PacifiCorp loads served by Point-to-Pointtransmission are
considered in the determination of PacifiCorp's MonthlyNetwork Load for
purposes of PacifiCorp's Network IntegrationTransmission Services.
(h)Does PacifiCorp agree that its MonthlyNetwork Load will increase if the
Transmission Projects and Wind Projects are constructed due to the fact that a
greater portion of its load will be served by Network Resources (i.e.the Wind
Projects),rather than through Point-to-Pointtransmission (i.e.Front Office
Transactions).If no,please explain.
(i)Does PacifiCorp agree that,if its MonthlyNetwork Load were to increase as a
result of constructing the Transmission Projects and Wind Projects,and
assuming no changes to reserved Point-to-Pointtransmission rights,that the
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 50'Set Data Request 39
proportion of ATRR funded by retail customers would also increase?If no,
please explain.
Response to PIIC Data Request 39
The Company objects to these requests as overly broad and not reasonably
calculated to lead to the discovery of admissible or relevant evidence.Without
waiving these objections,the Company responds as follows:
(a)The analysis assumes that the added cost of transmission is allocated based on
estimates of the current allocation between retail and third-party customers.
The cost of transmission is allocated between customers based on peak
coincident loads,long-term point-to-point (PTP)contract capacity,and short-
term reservations purchased.The allocation of transmission depends on the
future mix of loads and long-term and short-term capacity.Therefore,the
additional wind generation added in Wyoming does not directly correlate to
additional transmission costs.These resources could be added and designated
as additional network resources and optimized in real-time as part of the
energy imbalance market (EIM).Therefore,no determination has been made
that additional generation results in additional transmission cost.
(b)Transmission costs are allocated to transmission customers based on the
customer's relative share of peak loads,long-term PTP capacity,as well as
short-term reservations purchased on the Open Access Same-Time
Information System (OASIS).A transmission customer with network
integration transmission service is assessed transmission charges based upon
the customer's load at time of the system's coincident peak.
(c)The billing determinant for network service is transmission customer network
load grossed up for stated losses in PacifiCorp's Open Access Transmission
Tariff (OATT).Long-term PTP transmission capacity is assessed on customer
contract capacity plus the capacity loss factor as stated in PacifiCorp's OATT.
These billingdeterminants are appropriate because they are comparable and
represent the utilization of the transmission system.
(d)Network IntegrationTransmission Service (NITS).
(e)PacifiCorp may designate front office transactions (FOT)as a network
resources provided they meet the designation requirements of the OATT.
(f)No.
(g)This question appearsto assume that PaciflCorp's merchant function is
utilizingon-system resources under PTP contracts to serve load in other
balancing authority areas (BAA).In thís case,PacifiCorp is allocated a share
PAC-E-l7-07 /Rocky Mountain Power
March 19,2018
PIIC 56 Set Data Request 39
of PacifiCorp's transmission cost based on the capacity of these long-term
PTP contract rights.PacifiCorp also pays third-party transmission service
providers for load service outside of PacifiCorp's transmission system.
(h)No.Construction of the Transmission Projects and Wind Projects by itself and
designating the resources as network resources does not alone increase
PacifiCorp's MonthlyNetwork Load.The total cost of transmission is
dependent on retail consumption and the relative share of any increase or
decreasein load compared to third-party transmission use.In addition,if
energy is required to serve load through importing energy into PaciflCorp's
BAAs then the cost of that transmission would include both the utilization of
PaciflCorp's transmission as well as any third-party transmission necessary to
wheel the energy to serve load.
(i)No.Construction of the Transmission Projects and Wind Projects would not
alone indicate or lead to an increase in PacifiCorp's MonthlyNetwork Load.
As described in responses to other subparts,the cost of transmission is based
on system loads and reservations of long-term and short-term PTP
transmission.
Recordholder:Eric Arzola /Rachclle Richards /Ernie Knudsen /Zachary
Kanner
Sponsor:Rick Vail
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 56'Set Data Request 40
PIIC Data Request 40
Please provide an explanation for any assumptions PacifiCorp has made with
respect to the terminal value of the Wind Projects in the economic analyses
identified in Second Supplemental Direct Testimony of Rick T.Link.
Response to PIIC Data Request 40
Please refer to page 17,lines 1 to 23,and page 18,lines 1 to 9 of the supplemental
direct testimony of Company witness,Rick T.Link for a description of terminal
value.Components of terminal value include:development rights;transmission
assets (i.e.,network upgrades);and non-transmission infrastructure (i.e.,roads).
The first two components were modeled using a 62-year life,the third was
modeled using a 45-year life.For each month starting from the commercial
operation date of an asset,the remaining life of each component,after
depreciation,is revalued at inflation (assumed at 2.2 percent per year).The
terminal value of the project is the sum of the three components,after
depreciation and revaluation,at the retirement date of the generation asset.The
calculation is in the "Terminal Value Calculation"worksheet of each of the
Company's fmancial models.
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 (SO model (SO model)and
planning and risk (PaR)model are considered commercially sensitive and highly
confidential.The Company does not typicallypermit access to commercially
sensitive 2017R RFP documentation until the RFP has been concluded.Please
contact Ted Weston at [phone] or Yvonne Hogle at [phone] to
make arrangements for review.
Recordholder:Randy Baker
Sponsor:Rick Link
PAC-E-17-07/Rocky Mountain Power
March 19,2018
PIIC 51'Set Data Request 41
PIIC Data Request 41
To the extent that terminal values were included in the economic analysis
identified in Second Supplemental Direct Testimony of Rick T.Link,please
provide a narrative explanation of the methodology used to develop the terminal
value and provide work papers supporting the calculation of the terminal value
amount for each Wind Project included in the short list.
Response to PIIC Data Request 41
Please refer to the response to the Company's response to PIIC Data Request 40.
Recordholder:Randy Baker
Sponsor:Rick Link
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 56'Set Data Request 42
PHC Data Request 42
Has PacifiCorp identified any terminal costs,such as decommissioning costs,
associated with the Wind Projects or Transmission Projects?If yes,please explain
how those additional terminal costs are considered in PacifiCorp's analysis.
Response to PIIC Data Request 42
PacifiCorp's analysis includes removal (or decommissioning)costs associated
with wind and transmission assets.Wind assets have an expected life of 30 years
with removal costs assumed at $65 per kilowatt ($/kW).Transmission assets have
an expected life of 62 years with removal costs of 16 percent of original cost
based on the Company's most recent depreciation study.Removal costs are
recovered from customers on a straight-linebasis over the life of the asset.Please
refer to the confidential work papers supporting the second supplemental direct
testimony of Company witness,Rick T.Link,specifically folder "Transmission",
file "Energy Gateway GM 2017 03 13 21%US Tax".
Recordholder:Alex Lee
Sponsor:Rick Link