20180329PAC to Staff UT UAE Set 5 (1-29) (2).pdf

1407 W.North Temple
ROCKY MOUNTAIN Salt Lake City,UT 84116
POWER
A DIVISION OF PACIFICORP
March 15,2018
Gary A.Dodge
Phillip Russell
HATCH,JAMES &DODGE
10 West Broadway,Suite 400
Salt Lake City,Utah 84101
gdodge_@hjdlaw_.co_m(C)
[e-mail] (C)
Kevin Higgins
Neal Townsend
ENERGY STRATEGIES
215 S.State Street,#200
Salt Lake City,UT 84111
[e-mail] (C)
[e-mail](C)(W)
RE:UT Docket No.17-035-40
UAE 5th Set Data Request (1-29)
Please find enclosed Rocky Mountain Power's Responses to UAE 5th Set Data Requests 5.4,5.7-
5.16,5.18,5.20-5.26,and 5.28-5.29.The remaining response will be provided seperately.
Provided on the enclosed Confidential CD is Confidential Attachment UAE 5.18.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 Peac/DPU [e-mail] (C)(W)
Aliea Afnan/DPU [e-mail] (W)
kea.co__m (W)
Philip Hayet/OCS [e-mail] (C)
Béla Vastag/OCS [e-mail](C)
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/WRA [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
March 15,2018
UAE Data Request 5.4
UAE Data Request 5.4
Reference the Second SupplementalDirect Testimony of Rick T.Link,lines 81 through
85: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.If no,please explain why the cost of those
ongoing capital additions and replacements have been excluded.
Response to UAE Data Request 5.4
PacifiCorp's revenue requirement analyses does not consider any ongoing capital
additions or replacements for the proposed Aeolus-to-Bridger/AnticlineD.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/Anticlinetransmission line.PacifiCorp's economic analysis does includes
operation and maintenance (O&M)costs of $1 million per year in 2017 dollars.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.7
UAE Data Request 5.7
Reference the January 16,2018 Supplemental Direct and Rebuttal Testimony of Rick T.
Link,lines 1200 through 1204:Mr.Link states "In general,it is likelythat spot prices are
somewhat systematically risky,because demand for most commodities tends to move
with the economy as a whole.Thus,it is unlikely that the appropriatediscount 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 PacifiCorp 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)What interest rate does PacifiCorp believe would be most appropriately used 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 explain why
the PacifiCorp has not made this adjustment.
Response to UAE Data Request 5.7
(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
independently establishes 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 actuallyhigher 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).
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.8
UAE Data Request 5.8
Reference the SupplementalDirect and Rebuttal Testimony of Rick T.Link at lines 1212
through 1219:Mr.Link states "Mr.Mullins'position here is contradicted by his
testimony before the Oregon Commission earlier this year."
(a)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.
(b)Does PacifiCorp expect the new Wind Projects to impact the 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 UAE Data Request 5.8
(a)No.The day-ahead/real-time(DA-RT)adjustment discussed in the Oregon transition
adjustment mechanism (TAM)(Docket UE 323)is not applied in the System
Optimizer model (SO model)and Planning and Risk (PaR)model.
The Company's SO model and PaR model 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.
(b)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 relativelyhigh,while when the Company's needs are low,market
prices also tend to be relativelylow.As a result,the average price of the Company's
purchase transactions is typically higher 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 significantlymore 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.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.8
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 R17-Base-MM
1801011727.xlsm",and "PaR Summary Reports\PaR Stochastic Summary P_R17-
FSLW-MM _1802091508.xlsm",and specifically the "Cost Sumary"worksheet in
each file,cells Cl8:19.In the medium-gas,medium carbon dioxide (CO2)pTÏCC-
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 associated with the new wind and transmission.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.9
UAE Data Request 5.9
Reference the SupplementalDirect and Rebuttal Testimony of Rick T.Link at lines 1336
through 1340:Mr.Link states that "[t]he GRID studies and assumptions referred to by
Mr.Mullins were used in the 2017 IRP,but not in the economic analysis included in this
case"
(a)Does PacifiCorp agree that,in preparing the economic analyses identified in the
February 16,2018 Second SupplementalDirect Testimony of Rick T.Link,it has
incorporated the adjustments underlyingthe referenced supplemental GRID studies
into the System Optimizer and Planning and Risk models?
(b)Does the PacifiCorp have any basis to conclude that the impacts of the adjustments
underlyingthe supplemental GRID studies have changed materiallyafter being
incorporated into System Optimizer and Planning and Risk models?If yes,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 PaciflCorp's economic analysis identified in the Second SupplementalDirect
Testimony of Rick T.Link still include an assumption that the transfer capability
between Jim Bridger and Walla Walla is increased by 300 MW corresponding to
growing participation in 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 SupplementalDirect
Testimony of Rick T.Link still include an assumption that the Wyomingloads 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 SupplementalDirect
Testimony of Rick T.Link still include an assumption to account for reduced de-rates
associated with constructing 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.
Response to UAE Data Request 5.9
(a)PacifiCorp does not agree.The line loss,reliability and energy imbalance market
(EIM)assumptions adopted in the 2017 Integrated Resource Plan (IRP)were
previouslyevaluated in the Generation and Regulation Initiative Decision Tool
(GRID).In the 2017 IRP,PacifiCorp applied the results from these GRID studies into
the portfolio costs used to analyze the new wind and transmission projects.In the
economic analysis presented in this proceeding,includingthe economic analysis
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.9
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 Company's responses to DPU Data
Request 4.3,DPU Data Request 4.13,DPU Data Request 4.14,and OCS Data
Request 10.1,which provide information related to the referenced assumptions.
(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.
(e)Yes.Please refer to the Company's response to subpart (b)above.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.10
UAE Data Request 5.10
Is PacifiCorp required to submit independentlybalanced 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 UAE Data Request 5.10
PacifiCorp objects to this request as not reasonably calculated to lead to the discovery of
relevant or admissible evidence.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.11
UAE Data Request 5.11
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 UAE Data Request 5.11
PacifiCorp objects to this request as not reasonably calculated to lead to the discovery of
relevant or admissible evidence.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.12
UAE Data Request 5.12
Please identify all scheduling information that PacifiCorp submits to the CAISO on an
hour-ahead basis.
Response to UAE Data Request 5.12
PacifiCorp objects to this request as not reasonably calculated to lead to the discovery of
relevant or admissible evidence.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.13
UAE Data Request 5.13
Please provide a sample of the EIM Base Schedules that PacifiCorp submitted to the
CAISO,includingthe 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 UAE Data Request 5.13
PacifiCorp objects to this request as not reasonably calculated to lead to the discovery of
relevant or admissible evidence.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.14
UAE Data Request 5.14
Please provide uninstructed imbalance charges for the followingwind facilities on a
monthlybasis (or the greatest level of granularityavailable)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 II Wind
(g)Top of the World Wind
(h)Dunlap Wind
(i)High Plains Wind
(j)Mountain Wind I
(k)Mountain Wind II
(1)Rock River I
(m)RollingHills Wind
Response to UAE Data Request 5.14
PacifiCorp objects to this request as not reasonably calculated to lead to the discovery of
relevant or admissible evidence.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.15
UAE Data Request 5.15
Please provide the 5 and 15 minute uninstructed imbalance associated with the following
wind 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 UAE Data Request 5.15
PacifiCorp objects to this request as not reasonably calculated to lead to the discovery of
relevant or admissible evidence.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.16
UAE Data Request 5.16
For each PNode in PacifiCorp's PACE and PACW balancing area,please provide 5-and
15-minuted EIM prices over the period July 1,2016 through June 30,2017.
Response to UAE Data Request 5.16
PacifiCorp objects to this request as not reasonably calculated to lead to the discovery of
relevant or admissible evidence.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.18
UAE Data Request 5.18
Please identify and provide all long-term natural gas price forecasts that PacifiCorp has
received through a third-partysubscription service over the period January 1,2018
through the present.
Response to UAE Data Request 5.18
PacifiCorp receives long-term natural gas price forecasts from two third-party
subscription services for approximately thirty hubs across North America,most of which
are not applicable to this proceeding.As such,please refer to Confidential Attachment
UAE 5.18 for long-term natural gas price forecasts,relevant to this proceeding,received
by PacifiCorp through third-partysubscription services since January 1,2018.Note:the
provided third-partyinformation is proprietary information and is provided with the
permission of the third-partyvendors,and is subject to the confidentialityprotections
noted below.
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
March 15,2018
UAE Data Request 5.20
UAE Data Request 5.20
Please identify 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.Please include in your answer the identification of
assumptions with respect to Wind Projects included in the final short list and those that
were not included in the final short list.
Response to UAE Data Request 5.20
Please refer to the Company's response to DPU Data Request 13.20.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.21
UAE Data Request 5.21
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 tenninal value and provide work
papers supporting the calculation of the terminal value amount for each Wind Project
included in the final short list and for each Wind Project that was not included in the final
short list.
Response to UAE Data Request 5.21
Please refer to the Company's response to DPU Data Request 13.20.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.22
UAE Data Request 5.22
Please state whether PacifiCorp assumed a terminal value for any PPA bid responsive to
the 2017R RFP?If yes,please identify the PPA bid for which a terminal value was
assumed,state the amount of the tenninal value assumed for each such project,provide a
narrative explanation of the methodology used to develop the terminal value,and provide
work papers supporting the calculation of each terminal value.
Response to UAE Data Request 5.22
PacifiCorp did not assume a terminal value for any power purchase agreement (PPA)bid
responsive to the 2017 Renewable Request for Proposals (2017R RFP).
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.23
UAE Data Request 5.23
Please state whether the use of terminal values in evaluating the bids responsive to the
2017R RFP affected the selection of bids for the final shortlist?If yes,please explain how
it affected the final shortlist,identify the bids that would and would not have been
included in the final shortlist but for the use of terminal values,and identify the terminal
values associated with each such bid.
Response to UAE Data Request 5.23
No,terminal values did not affect the selection of bids for the final shortlist.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.24
UAE Data Request 5.24
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 UAE Data Request 5.24
PaciflCorp'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-line
basis 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".
17-035-40/Rocky Mountain Power
March 15,2018
UAE Data Request 5.25
UAE Data Request 5.25
Reference the Second Supplemental Direct Testimony of Rick Link Lines 439 through
438.Please provide UAE Consultant Bradley Mullins with access to work papers
supporting the modeling of the solar bids in the solar sensitivity identified in the
referenced testimony.Please provide those work papers in a format substantially similar
to the wind project files Mr.Mullins reviewed in his site visit on February 20,2018.
Response to UAE Data Request 5.25
Due to the ongoing nature of the 2017 Solar Request for Proposals (2017S RFP),the
financial models associated with the 2017S RFP 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.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.26
UAE Data Request 5.26
Reference the Second Supplemental Direct Testimony of Rick Link,lines 46 through53.
Please provide UAE Consultant Bradley Mullins with access to work papers supporting
the modeling of each of the wind and solar bids that were received in the wind and solar
RFPs but were not selected by the Company.
Response to UAE Data Request 5.26
Due to the ongoing nature of the 2017 Solar Request for Proposals (2017S RFP)and the
2017 Renewable RFP (2017R RFP),the financial models associated with the 2017S RFP
and 2017R RFP are considered commercially sensitive and highly confidential.The
Company does not typically permit access to commercially sensitive 2017S RFP and
2017R RFP documentationuntil the RFP has been concluded.Please contact Jana Saba at
[phone] or Yvonne Hogle at [phone] to make arrangements for review.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.28
UAE Data Request 5.28
Reference the Second SupplementalDirect Testimony of Rick Link,lines 68 through78:
Please provide a copy of the power purchase agreement (PPA)associated with the PPA
portion of the Cedar Springs bid.
Response to UAE Data Request 5.28
The pro-forma power purchase agreement (PPA)associated with the Company's 2017
Renewable Request for Proposals (2017R RFP)is publicly available on PacifiCorp's
website and can be accessed by utilizingthe website link provided below:
http://www.pacificorp.com/sup/rfps/2017-rfp/2017R RFP Doc_and_Appendices htrnl
Pursuant to the 2017R RFP process,the Company will engage in detailed negotiations of
a definitive PPA with the intent of having an executable agreement negotiated by April
16,2018.
17-035-40 /Rocky Mountain Power
March 15,2018
UAE Data Request 5.29
UAE Data Request 5.29
Reference the Second SupplementalDirect Testimony of Rick Link,lines 404 through
476:Please provide a copy of the proposed PPAs underlyingeach of the bids selected in
the 2017S RFP.
Response to UAE Data Request 5.29
PacifiCorp has not selected any bids submitted into the 2017 Solar Request for Proposals
(2017S RFP).The pro-forma power purchase agreement (PPA)associated with the
Company's 2017S RFP is publicly available on PacifiCorp's website and can be accessed
by utilizingthe website link provided below:
http://www.pacificorp.com/sup/rfps/20l7S-RFP/2017S_RFP_Doc_and_Appendices.html