20031008Notice of Application Order No 29354.pdf

Office of the Secretary
Service Date
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
October 8, 2003
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR A
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY FOR THE RATEBASING OF
THE BENNETT MOUNTAIN POWER PLANT.
CASE NO. IPC-O3-
NOTICE OF APPLICATION
NOTICE OF INTERVENTION
DEADLINE
NOTICE OF PREHEARING
CONFERENCE
ORDER NO. 29354
On September 26 2003 , Idaho Power Company filed an Application for a Certificate
of Public Convenience and Necessity to construct a new generating plant in Mountain Home
Idaho. Idaho Code ~ 61-526 prohibits any electrical corporation from constructing a generating
plant "without having first obtained from the commission a certificate that the present or future
public convenience and necessity require or will require such construction." The Company
proposes that the Bennett Mountain Power Plant be constructed and brought "on-line" in time to
meet peak loads in the summer of 2005. Consequently, Idaho Power requests that the
Application be processed expeditiously via Modified Procedure. The Company requests that the
Commission issue a certificate and authorize the Company to recover its capital costs no later
than December 31 , 2003.
NOTICE OF APPLICATION
A. The Proposed Plant
YOU ARE HEREBY NOTIFIED that in February 2003, the Company issued a
request for proposal (RFP) seeking bids to supply the Company with power in a range between
100 - 200 megawatts (MWs). In response to the RFP, the Company received 11 bids and
eventually selected a bid from Mountain View Power, a Boise-based generation project
developer. Mountain View proposed the construction of a 162-, simple-cycle natural gas-
fired combustion turbine. The plant will be located on approximately 10 acres within the
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
NOTICE OF PREHEARING CONFERENCEORDER NO. 29354
Mountain Home Industrial Park in Mountain Home. According to the Application, the City of
Mountain Home has already issued a conditional use permit for construction of the power plant.
The plant site is also large enough to accommodate an additional future generating unit.
Mountain View has contracted with Siemens-Westinghouse Power Corporation to furnish all of
the labor, equipment, and materials and to perform all the engineering and construction of the
proposed project. Upon completion of construction and passage of the necessary performance
tests, title to the project will transfer from Mountain View to Idaho Power.
YOU ARE FURTHER NOTIFIED that the natural gas necessary to fuel the plant will
be supplied by Williams Northwest Pipeline. The pipeline currently passes less than one mile
from the plant. The plant will be connected to Idaho Power s existing 230 kV transmission
system that passes approximately four miles north of the plant site. Water service to the plant
will be supplied by the City of Mountain Home. The Company notes that the City has
substantial water supply capacity and priority water rights to serve the plant. The plant'
wastewater will be discharged into the City s sewer system. The Bennett Mountain Plant will
operate in compliance with all appropriate Department of Environmental Quality air and water
quality standards.
B. Future Necessity
YOU ARE FURTHER NOTIFIED that the Company maintains its decision to
construct the new generating plant is a result or outcome of its 2002 Integrated Resource Plan
(IRP). The IRP process evaluates the Company s future loads and resources and evaluates
various options for meeting projected loads. These options include: the purchase of power from
the wholesale market; the acquisition of additional generating resources; the implementation of
pricing options; and/or implementing demand-side management programs. Order No. 29189. In
short, the IRP is a planning process on how the Company intends to meet its statutory obligations
to serve its customers' loads.
YOU ARE FURTHER NOTIFIED that the Company asserts its 2002 IRP included
an assumption that the Company would purchase up to 250 MW s of capacity from the proposed
Gamet Plant which was to be constructed in Middleton. The Gamet capacity was to be acquired
to meet the summer peaks beginning June 2005. In October 2002, the Company reported that the
Gamet project was being discontinued because Gamet was unable to secure the necessary
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
NOTICE OF PREHEARING CONFERENCEORDER NO. 29354
financing for the project. The Bennett Mountain Plant partly replaces the loss of the Gamet
capacIty.
C. Estimated Capital Costs
YOU ARE FURTHER NOTIFIED that Idaho Power has contracted with Mountain
View for construction of the plant in the amount of $44.6 million. Based primarily upon this
contract, Idaho Power has offered a "Commitment Estimate." The Commitment Estimate is
based upon the cost of the Mountain View contract and includes "certain additional costs the
Company knows it will incur but cannot quantify with precision at this time." Application at 4.
These additional costs include (but are not limited to): sales taxes; progress payments made to
Mountain View during construction (AFUDC); the cost for Idaho Power to monitor the
construction project; the cost of capitalized start-up fuel; construction contingencies such as
change orders; and other unforeseen events.Idaho Power s Commitment Estimate for the
project is $54.0 million. The Commitment Estimate would also be subject to other adjustments
to account for "documented legally required equipment changes and material changes in
assumed escalation rates.Id. at 5.
YOU ARE FURTHER NOTIFIED that Idaho Power has committed to acquire the
Bennett Mountain Plant for the Commitment Estimate. The Company seeks initial approval to
include the capital costs of the Bennett Mountain Plant in its Idaho rate base for only those costs
actually incurred up to the Commitment Estimate of $54.0 million. If the final capital costs of
the Bennett Mountain Plant exceed the Commitment Estimate, Idaho Power will absorb the extra
costs.
YOU ARE FURTHER NOTIFIED that the Commitment Estimate does not include
the cost of constructing the necessary transmission facilities to interconnect the plant with the
Company s nearby transmission system. Although actual studies for the transmission costs have
not been completed, Idaho Power estimates that constructing the necessary transmission facilities
will not exceed $11.6 million. Natural gas fuel costs should be recovered in the annual power
cost adjustment (PCA) mechanism.
1 In Order No. 29286 issued July 8 , 2003 , the Commission also approved a Power Purchase Agreement (PPA)
between Idaho Power and PPL Montana. The PP A will provide 83 MW s during heavy load hours, six days a week
16 hours per day in the months of June, July and August beginning in June 2004.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
NOTICE OF PREHEARING CONFERENCEORDER NO. 29354
In summary, Idaho Power requests that the Commission issue an Order granting a
Certificate of Public Convenience and Necessity to construct the project and authorize the rate-
basing of plant costs up to the Commitment Estimate of $54.0 million (excluding transmission).
Idaho Power also requests that the Order confirm that the fuel costs for the proj ect will be
included in the Company s annual PCA proceeding.
D. Expedited Procedure Request
YOU ARE FURTHER NOTIFIED that the Company is requesting that the
Commission expedite its review of the Application. The Company maintains that its contract
with Mountain View contains a "provisional acceptance date" of April 1 , 2005. Company
witness Greg Said states that Mountain View needs to receive a notice to proceed on or before
December 31 , 20()3. Idaho Power does not intend to issue such a notice until it has obtained the
requested certificate from the Commission. To meet this agreement condition, the Company
asks that the Application be processed expeditiously using Modified Procedure. To expedite the
process, the Company filed the direct testimony of Greg Said in support of the Application. In
addition, Idaho Power has assembled supporting documents that it anticipates the Staff and any
intervenors will wish to review. Rather than utilize a formal discovery process, the Company
indicated its willingness to work on an informal basis to expedite the review process.
NOTICE OF INTERVENTION DEADLINE
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter
for the purpose of obtaining party status must file a Petition to Intervene with the Commission
pursuant to this Commission s Rules of Procedure 72 and 73, IDAPA 31.01.01.072 and -073.
Persons intending to participate at any prehearing conference or hearing must file a Petition to
Intervene no later than the close of business on October 20, 2003. Persons desiring to present
their views without parties ' rights of participation and cross-examination are not required to
intervene and may present their comments without prior notification to the Commission or the
parties.
NOTICE OF PRE HEARING CONFERENCE
YOU ARE FURTHER NOTIFIED that the Commission shall convene a prehearing
conference in this matter at 10:00 A.M. ON WEDNESDAY. OCTOBER 22. 2003. IN THE
COMMISSION HEARING ROOM. 472 WEST WASHINGTON STREET. BOISE.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
NOTICE OF PREHEARING CONFERENCEORDER NO. 29354
IDAHO [phone] The purpose of the prehearing conference is to discuss the processing
of the Application and to determine the scope of the proceedings. Interested persons desiring to
participate as parties should intervene as set out above.
YOU ARE FURTHER NOTIFIED that all hearings and prehearing conferences in
this matter will be held in facilities meeting the accessibility requirements of the Americans with
Disabilities Act (ADA). Persons needing the help of a sign language interpreter or other
assistance in order to participate in or to understand testimony and argument at a public hearing
may ask the Commission to provide a sign language interpreter or other assistance at the hearing.
The request for assistance must be received at least five (5) working days before the hearing by
contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone] (Telephone)
[phone] (FAX)
Mail: secretarv~puc.state.id.
YOU ARE FURTHER NOTIFIED that based upon the results of agreements reached
or issues presented at a prehearing conference, the Commission may issue a prehearing Order or
Notice. The Order or Notice shall bind all persons who could have participated in the prehearing
conference, but did not, and all those who later filed untimely Petitions to Intervene. IDAP A
31.01.01.214.
YOU ARE FURTHER NOTIFIED that the Application together with supporting
testimony and exhibits, have been filed with the Commission and are available for public
inspection during regular business hours at the Commission offices or on the Commission
Website at www.puc.state.id.under the "File Room" icon.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code and that the
Commission may enter any final order consistent with its authority under Title 61 and
specifically Idaho Code ~~ 61-526 and 61-528.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAP A 31.01.01.000 et seq.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
NOTICE OF PREHEARING CONFERENCEORDER NO. 29354
ORDER
IT IS HEREBY ORDERED that persons desiring to intervene in this case shall do so
no later than October 20 2003.
IT IS FURTHER ORDERED that a prehearing conference be convened on
October 22, 2003 at 10:00 AM.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this f/f#o.
day of October 2003.
(i!(;l~1- AUL E LANDER, PRESIDENT
jrz:;Z:;;RDENNIS S. HANSEN, COMMISSIONER
ATTEST:
~~~l
Commission Secretary
vldlO:IPCE0312 dh
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
NOTICE OF PREHEARING CONFERENCEORDER NO. 29354