20200825PAC to Staff 1-8.pdf

ROCKY MOUNTAIN
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Salt Lake City, Utah 84116
August 25,2020
Jan Noriyuki
Dayn Hardie
Idaho Public Utilities Commission
472W. Washington
Boise,ID 83702-5918
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dayn.hardie@puc. idaho. gov
RE: ID PAC-E-20-03
IPUC I't Set Data Request (l-8)
Please find enclosed Rocky Mountain Power's Responses to IPUC Data Requests 1-2 and 5.
Provided via encryption are Confidential Attachments IPUC I -{l-2) and?-{l-2). Provided on
CD is voluminous Confidential Attachment IPUC 5. Confidential information is provided
subject to protected under IDAPA 31.01.01.067 and 31.01 .01.233, the Idaho Public Utilities
Commission's Rules of Procedure No. 67 - lnformation Exempt from Public Review, and
further subject to any subsequent Non-Disclosure Agreement (NDA) executed in this
proceeding.
If you have any questions, please feel free to call me at [phone].
Sincerely,
-1sl-J. Ted Weston
Manager, Regulation
Enclosures
C.c.: Eric L. Olser/IIPA [e-mail]
Anthony Yankel/IIPA [e-mail]
PAC-E-20-03 / Rocky Mountain Power
August 25,2020
IPUC Data Request I
IPUC Data Request 1
Please provide the Company's net present value (NPV) economic and risk
analysis/analyses, including all work papers in Excel format with formulas intact
and enabled for the Foote Creek I repowering project. Please also include the
following:
(a) A detailed description of the scope and the process used to perform the
analysis/analyses.
(b) A list of all the assumptions and inputs included in the analysis/analyses, and
a srunmary of the parameters that were changed for each risk scenario and./or
sensitivity analysis performed.
(c) An NPV comparison of the analysis/analyses results with and without the
project, for each risk scenario and/or sensitivity analysis, including an annual
breakdown of the costs and benefits for each scenario. The breakdown should
include all major cost and benefit categories including, but not limited to,
annual generation (MWh), fixed and variable O&M cost (net power cost
broken out separately), Production Tax Credits, Wyoming Wind Production
tax, etc.
Response to IPUC Data Request 1
Please refer to Confidential Attachment IPUC 1-1 for a description of the
assumptions and results of the Company's net present value (NPV) economic and
risk analysis/analyses. Please refer to Confidential Attachment IPUC 1-2 which
provides the work papers with formulas intact.
Confidential information is provided subject to protected under IDAPA
31.01.01.067 and3l.01.0l .233,the Idaho Public Utilities Commission's Rules of
Procedure No. 67 - Information Exempt from Public Review, and further subject
to any subsequent Non-Disclosure Agreement (NDA) executed in this proceeding.
Recordholder:
Sponsor:
Mark Paul
To Be Determined
PAC-E-20-03 / Rocky Mountain Power
August 25,2020
IPUC Data Request 2
IPUC Data Request 2
Please provide the Company's NPV economic and risk analysis/analyses,
including all work papers in Excel format with formulas intact and enabled, for
the Pryor Mountain wind project. Please also include the following:
(a) A detailed description ofthe scope and the process used to perform the
analysis/analyses.
(b) A list of all the assumptions and inputs included in the analysis/analyses, and
a sunmary of the parameters that were changed for each risk scenario and/or
sensitivity analysis performed.
(c) An NPV comparison of the analysis/analyses results with and without the
project, for each risk scenario and/or sensitivity analysis, including an annual
breakdown of the costs and benefits for the system and for Idaho's share. The
breakdown should include all major cost and benefit categories including, but
not limited to, annual generation (MWh), fixed and variable O&M cost (net
power cost broken out se,parately), Production Tax Credits, Wyoming Wind
Production tax, etc.
Response to IPUC Data Request 2
(a) Please refer to Confidential Attachment IPUC 2-l atdConfidential
Attachment IPUC 2-2whichprovide the financial modeling which derive the
costs and benefits of the Pryor Mountain Wind Project.
(b) All assumptions regarding Pryor Mountain's costs are defined in Confidential
Attachment IPUC 2-2, specifrcally tab ooMain". The cases, defined as "MM"
and "LN", which adjust natural gas price and carbon dioxide (CO, price are
defined in Confidential Attachment IPUC 2-1.
(c) Please refer to Confidential Afiachment IPUC 2-2 for a breakdown of all
major cost and benefit categories including, but not limited to, annual
generation (megawatt-hours (Ivtwh)), fixed and variable operations and
maintenance (O&M) costs (with net power costs (NPC) broken out
separately), production tax credits (PTC), Wyoming wind production tax, etc.
Please refer to Confidential Affachment IPUC 2-2 for the net present value
(NPD comparison of the results with and without the Pryor Mountain in
PacifiCorp's portfolio for each risk scenario. For Idaho's share, multiply
Idaho's system generation (SG) allocation factor of 5.91 1 I percent by the
Total Company numbers provided in this response.
Confidential information is provided subject to protected under IDAPA
31.01.01.067 and 31.01 .01.233,the Idaho Public Utilities Commission's Rules of
PAC-E-20-03 / Rocky Mountain Power
August 25,2020
IPUC Data Request 2
Procedure No. 67 - Information Exempt from Public Review, and further subject
to any subsequent Non-Disclosure Agreement (NDA) executed in this proceeding.
Responder:
Sponsor:
Ron Scheirer / Craig Larsen
To Be Determined
PAC-E-20-03 / Rocky Mountain Power
August 25,2020
IPUC Data Request 5
IPUC Data Request 5
Please provide the Company's NPV economic and risk analysis/analyses,
including all work papers in Excel format with formulas intact and enabled, for
the closure of Cholla Unit No. 4. Please also include the following:
(a) A detailed description ofthe scope and the process used to perform the
analysis/analyses.
(b) A list of all the assumptions and inputs included in the analysis/analyses, and
a sunmary of the parameters that were changed for each risk scenario and/or
sensitivity analysis performed.
(c) An NPV comparison of the analysis/analyses results using closure dates at the
end of 2020,2025, and2042. Include all results for each risk scenario and/or
sensitivity analysis, including an annual breakdown of the costs and benefits
for the system and for ldaho's share. The breakdown should include all major
cost and benefit categories including, but not limited to, annual generation
(MWh), fixed and variable O&M cost (net power cost broken out separately),
decommissioning cost, etc. Please also include comparisons that the
Company performed for other closure dates if different from those specified.
Response to IPUC Data Request 5
(a) The economic analysis for the closure of Cholla Unit 4 relies on an
assessment of system value which compares the outcomes of PacifiCorp's
Planning and Risk (PaR) model among different scenarios with a simulation
period covering the 2019 through 2025 time frame. Consistent with
PacifiCorp's 2019IRP preferred portfolio, the simulations use a range of
natural gas price and carbon policy scenarios which incorporate a carbon
dioxide (COz) price beginningin2D25. The price-policy scenarios are
medium natural gas price and medium COz price assumptions (the "MM"
price-policy scenario), low natural gas price and no COz price assumptions
(the "LN" price-policy scenario), and high natural gas price and no COz price
assumptions (the "HN" price-policy scenario)).
Note: For both PaR runs produced under the "MM" price-policy scenario,
price assumptions were developed from PacifiCorp's September 2019 official
forward price curve (OFPC). The "LN" and "fIN" price-policy scenarios were
derived from third-party sources. Natural gas prices in the "LN" price-policy
scenario do not drop below prices in the '(MM" scenario :urrtil2026-beyond
the early retirement study period. Consequently, the primary difference
between the "MM" and "LN" price-policy scenario is the absence of a COz
price in 2025 inthe "LN" scenario.
PAC-E-20-03 / Rocky Mountain Power
August 25,2020
IPUC Data Request 5
Each price-policy scenario was nln twice---one to update the 2019 preferred
portfolio where Cholla Unit 4 is assumed to retire at the end of December
2020, and the other assuming Cholla Unit 4 continues operation through the
Apil2025 timeframe. Each price-policy scenario showed an increase in net
system costs when it was assumed that Cholla Unit 4 operates as a coal-fired
facility through April30, 2025.
(b) Please refer to Confidential Attachment IPUC 5 which provides the
assumptions and inputs used in the economic analysis. The work papers are
relevant to both the System Optimizer (SO) model and PaR model.
2020 cost increases are primarily associated with an estimated $3.3 million of
safe harbor lease early termination payments. PacifiCorp's acquisition of
Cholla Unit 4 was subject to a pre-existing safe harbor lease, for federal
income tax purposes, between the Arizona Public Service Company (APS), as
property owner, and General Electric Company (GE), as tax lessor. PacifiCorp
assumed certain rights and obligations of APS under the safe harbor lease with
respect to Cholla Unit 4. Under the early retirement 56480" case, a casualty
payment is assumed to be paid to GE any for its loss of tax benefits ($2.9
million cost on a present-value basis), and the amortization ofpre-paid
availability and transmission charges related to the Mead-Phoenix line. when
PacifiCorp acquired Cholla Unit 4, the Company paid APS a prepaid
availability and transmission charge in April 1994 and,April 1996. The
charges are related to the construction of transmission facilities that enable
and additional 150 megawatts (MW) of northbound firm transmission
capability on the Phoenix-Mead transmission line. The prepaid transmission
service cost began amortization over a 5O-year life in May 1997 as PacifiCorp
began receiving transmission credits on its bill from APS. Under the early
retirement case, it is assumed the unamortizedbalance would be written off,
which is estimated to have an unamortizedbalance of $9.2 million in2020
and $6.7 million in2025 ($3.9 million cost on a present-value basis).
(c) Please refer to Confidential Attachment IPUC 5, specifically file "Tbl 5,
Figure 6-7 Summary of Cholla Portfolio Results.xlsx", and folder "Graphs
CONF". The 2042 Cholla retirement date was not analyzed as the 2025 results
did not report a customer benefit, nor is a customer benefit expected beyond
2025. Beyond April 30,2025 Cholla would cease operatlng as coal but could
generate using natural gas. For Idaho's share, multiply Idaho's system
generation (SG) allocation factor of 5.91I I percent by the Total Company
numbers provided in this response.
Confidential information is provided subject to protected under IDAPA
31.01.01 .067 and 31.01.01.233, the Idaho Public Utilities Commission's Rules of
Procedure No. 67 - Information Exempt from Public Review, and further subject
to any subsequent Non-Disclosure Agreement (NDA) executed in this proceeding.
PAC-E-20-03 / Roclcy Mountain Power
August 25,2020
IPUC Data Request 5
Recordholder:
Sponsor:
Dan Swan lCraiglarsen
To Be Determined