20030929Application.pdf

BARTON L. KLINE , ISB # 1526
MONICA MOEN , ISB # 5734
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
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Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR A
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY FOR THE RATE BASING
OF THE BENNETT MOUNTAIN POWERPLANT.
CASE NO. IPC-03-
APPLICATION
COMES NOW Idaho Power Company ("Idaho Power" or "Company ), and
in accordance with Idaho Code 9 61-526 and RP 112 , hereby applies to the Idaho
Public Utilities Commission ("Commission ) for a Certificate of Public Convenience and
Necessity for inclusion of the Bennett Mountain Power Plant ("Project") in Idaho Power
rate base. This Application is based on the following:
Corporate Status.Idaho Power is a corporation incorporated
under the laws of the state of Idaho and is duly qualified to transact business in the
states of Idaho , Oregon , Nevada, Montana and Wyoming. Idaho Power is engaged in
the business of generating, purchasing, transmitting and distributing electrical energy
and provides retail electric service in the state of Idaho. Idaho Power s principal office is
APPLICATION , Page
situated in Boise, Idaho and its address is 1221 West Idaho Street, Boise, Idaho 83702.
Copies of Idaho Power s Articles of Incorporation and Certificates of Convenience and
Necessity are on file with the Commission.
Notices.Idaho Power requests that copies of all notices, pleadings
and orders in this proceeding be served on the following:
Barton L. Kline
Monica Moen
Attorneys for Idaho Power Company
Idaho Power Company
O. Box 70
Boise , Idaho 83707-0070
bkline (Q) idahopower.com
mmoen (Q) idahopower.com
John P. Prescott
Vice President, Power Supply
Idaho Power Company
O. Box 70
Boise, Idaho 83707-0070
jprescott(Q) idahopower.com
Description of the Bennett Mountain Power Plant.Idaho Power
requests that it be issued a Certificate of Public Convenience and Necessity for the rate
basing of the Bennett Mountain Power Plant. The Project will be constructed by
Mountain View Power, Inc., a Boise-based generation project developer. Siemens-
Westinghouse Power Corporation will provide all labor, materials and equipment and
will engineer and construct the Project. Upon completion of construction and passage
of all required performance tests , including guaranteed net capacity and guaranteed
heat rate , title to the Project will be transferred to Idaho Power. The Project will consist
of a Siemens-Westinghouse 501 F simple-cycle natural gas-fired combustion turbine
rated at 162 MW, together with typical balance of plant facilities and equipment. The
Project is currently scheduled to be available to meet peak loads in the summer of
2005. The Project will be located on an almost ten (10) acre (9.88) site within the
Mountain Home Industrial Park in Mountain Home, Idaho. The City has issued a
Conditional Use Permit for a power plant for the site. The Industrial Park site may
APPLICATION, Page 2
accommodate an additional future generating unit and the Project can also be modified
to operate as a combined cycle plant at some point in the future.
The Project will be connected to the Company s existing 230 kV
transmission system that passes approximately four (4) miles north of the Project.
A natural gas fuel supply will be delivered from the Williams
Northwest Pipeline that passes less than one (1) mile from the site.
Water for generation will be supplied by and purchased from the
City of Mountain Home, Idaho. The City has constructed a network of wells , lines and
storage facilities and has substantial water supply capacity and priority water rights.
The Project's waste water will be discharged to the City of Mountain
Home s sewer system.
The Project will operate in compliance with all appropriate DEO air
and water quality standards.
Maps showing the location of the Project are included as
Attachments 1 and 2.
Consistency With IRP.In its 2002 Integrated Resource Plan
I RP"), Idaho Power indicated in its near-term action plan that it intended to initiate a
request for proposals ("RFP") to acquire additional dispatchable energy and capacity to
be available during the planning period beginning with the summer of 2005. The Project
is the product of that RFP.
The 2002 IRP also noted that Idaho Power intended to pursue
other strategies for satisfying its incremental resource needs during the planning period.
As the Commission is aware, Idaho Power has recently entered into a contract with PPL
APPLICATION , Page 3
Montana , LLP to purchase 83 MW of firm energy during system peak months for a six-
year period beginning June 2004. The 2002 IRP and the PPL Montana LLP contract
are both on file with the Commission and Idaho Power requests that the Commission
take official notice of these documents.
Capital Cost Commitment Estimate Idaho Power has negotiated
a contract with Mountain View Power containing a firm bid for the completed Project in
the amount of $44.6 million. Based on this contract, Idaho Power is able to make a
reliable estimate of the total capital cost of the Project. This estimate, which Idaho
Power has termed a "Commitment Estimate " is a good faith estimate of the Project'
total capital cost based on the contract with Mountain View Power plus certain
additional costs the Company knows it will incur but cannot quantify with precision at
this time. These additional costs include (but are not limited to) sales taxes, AFUDC on
progress payments made to Mountain View Power during construction, the cost of
Idaho Power oversight of the Project and the cost of capitalized start-up fuel. The
Commitment Estimate also covers contingencies such as change orders and other
unforeseen events. Idaho Power s Commitment Estimate for the Project is $54.
million. The Commitment Estimate does not include the cost of constructing
transmission facilities to interconnect the Project with the Company s transmission
system. The studies needed to define those costs have not been completed. However
Idaho Power s Delivery Business Unit has provided a preliminary upper limit estimate of
$11.6 million to interconnect the Project to the existing 230 kV system.
Idaho Power will commit to procure and install the Project for the
Commitment Estimate. The Commitment Estimate would also be subject to adjustment
APPLICATION , Page 4
to account for documented legally required equipment changes and material changes in
assumed escalation rates. If the final capital cost of the Project exceeds the
Commitment Estimate , Idaho Power will absorb the extra cost. The Company will
include in its Idaho rate base only the amount actually incurred up to the Commitment
Estimate.
If the Project is approved for rate base treatment, Idaho Power will
provide the Commission with periodic percentage of completion and cost expenditure
reports during the construction phase. The final report on the Project will compare the
actual completed cost to the Commitment Estimate.
Fuel Cost.A major component of the operating costs of a
combustion turbine generating plant is the cost of natural gas fuel. Idaho Power owns
firm fuel transportation rights that can be utilized by the Project and anticipates that
management of the fuel supply will be done either by Idaho Power personnel or by
Idaho Power personnel in conjunction with a third party such as IGI. As a part of this
Application, Idaho Power is requesting that the Commission s order issuing the
Certificate allow Idaho Power to include the Project's cost of fuel , fuel storage and fuel
transportation for recovery through the existing Power Cost Adjustment mechanism.
Fuel expenses should be approved for PCA inclusion prior to full review of normal
operational costs in a general revenue requirement case. First year fuel and O&M costs
for the Project are currently estimated to be $57.55 per MWh based on a 20% capacity
factor and a gas price of $4.52 per MMBtu.
Modified Procedure.In order to meet the construction completion
deadlines in the Agreement, Mountain View Power, Inc. has indicated that it needs to
APPLICATION , Page 5
receive a notice to proceed on or before December 31 2003. The Agreement provides
that receipt of a Certificate of Public Convenience and Necessity from the Commission
is a condition precedent to Idaho Power issuing the notice to proceed to Mountain View
Power. Depending on when the Certificate is actually issued , it may be necessary for
Mountain View Power to modify the construction schedule and potentially the pricing for
the Project. For this reason , Idaho Power is requesting that this Application be
processed expeditiously. In order to streamline the process and expedite the
Commission s review of this Application , the direct testimony of Gregory W. Said in
support of this Application is filed concurrently with the filing of this Application. In
addition, Idaho Power has already assembled the documents it anticipates, based on
prior RFP cases, that Staff and any intervenors will likely desire to examine as a part of
their analysis of this Application. As a result, it will not be necessary for Staff to send a
formal request for production prior to reviewing these documents. If additional
questions arise and additional documentation is needed , the Company will work with the
Staff and intervenors on an informal basis to expedite the review process.
Some of the documents provided for review contain information that the
bidders deem to be trade secrets. To assure full bidder participation in future RFP'
the Company will request that Staff and any intervenors sign a standard confidentiality
agreement prior to review of these documents. Hopefully, making these documents
immediately available for review will expedite the processing of this Application.
Finally, Idaho Power requests that this Application be processed under
RP 201 , et. seq., allowing for consideration of issues to be processed under modified
procedure , i.e., by written submissions rather than by evidentiary hearing.
APPLICATION, Page 6
WHEREFORE, Idaho Power respectfully requests that the Commission
issue its order granting Idaho Power a Certificate of Public Convenience and Necessity
for the Project and authorizing the rate-basing of the Project with an upper limit of $54.
million allowed for the Company s investment in the Project (excluding transmission).
Idaho Power also requests that the Commission s order confirm that the fuel costs for
the rate-based Project will be included for recovery in the Company s Power Cost
Adjustment mechanism.
DATED at Boise, Idaho , this 26th day of September, 2003.
()hi
BARTON L. KLINE
Attorney for Idaho Power Company
APPLICATION , Page 7
TT CHMENT
MAPS WERE INCLUDED IN THIS
FIL IN G ARE IN THE FIL
TT CHMENT 2
MAP S WERE IN CL UD ED IN THIS
FILING ARE IN THE FILE