20031030Notice of Modified Procedure Order No 29370.pdf

Office of the Secretary
Service Date
October 30, 2003
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 POWER PLANT.
CASE NO. IPC-03-
NOTICE OF MODIFIED
PROCEDURE
ORDER NO. 29370
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 pursuant to Idaho Code ~61-526. On October 8, 2003, the Commission issued Order
No. 29354 which established a Notice of Intervention Deadline and scheduled a prehearing
conference for October 22 2003. In response to the Commission s Order, Petitions to Intervene
were filed by the Industrial Customers of Idaho Power and by the Idaho Irrigation Pumpers
Association, Inc.
At the prehearing conference on October 22, the Commission granted the two
Petitions to Intervene without objection. The intervenors were not in attendance and no other
person petitioned to intervene in this proceeding. At the conference Idaho Power and the
Commission Staff recommended that this case be processed under Modified Procedure. The
Commission agrees and issues this Notice of Modified Procedure.
THE COMPANY'S APPLICATION
A. The Proposed Plant
In February 2003, Idaho Power 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- MW, simple-cycle natural gas-fired combustion turbine. The plant will be located on
approximately 10 acres within the 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
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29370
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.
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's 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
Idaho Power 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
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.
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 peak loads of
summer beginning in June 2005. In October 2002 , the Company reported the Gamet project was
being discontinued because Gamet was unable to secure the necessary financing for the project.
The Bennett Mountain Plant partly replaces the loss of the Gamet capacity.
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 MODIFIED PROCEDURE
ORDER NO. 29370
C. Estimated Capital Costs
Idaho Power 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 the
Commission 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.
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.
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.
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
ratebasing of plant costs up to the Commitment Estimate of $54.million (excluding
transmission). Idaho Power also requests that the Order confirm that the fuel costs for the
project will be included in the Company s annual PCA proceeding.
D. Expedited Procedure Request
Idaho Power also requested that the Commission expedite its reVIew of the
Application.The Company maintains that its contract with Mountain View contains a
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29370
provisional acceptance date" of April 1 , 2005. Company witness Greg Said states in his
prefiled testimony that Mountain View needs to receive a notice to proceed on or before
December 31 , 2003. Idaho Power does not intend to issue such a notice until it has obtained the
requested certificate from the Commission. Idaho Code ~ 61-526. 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 MODIFIED PROCEDURE
YOU ARE HEREBY NOTIFIED that the Commission has determined that the public
interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission s Rules
of Procedure, IDAP A 31.01.01.201 through -204.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or opposition with the Commission no later
than December 15, 2003. The comment must contain a statement of reasons supporting the
comment. Persons desiring a hearing must specifically request a hearing in their written
comments. Written comments concerning this application shall be mailed to the Commission
and the Applicant at the addresses reflected below:
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
BARTON L KLINE, SENIOR ATTORNEY
IDAHO POWER COMPANY
PO BOX 70
BOISE, ID 83707-0070
E-mail: bkline~idahopower.com
Street Address for Express Mail:
472 WWASHINGTON ST
BOISE, ID 83702-5983
JOHN P PRESCOTT
VICE PRESIDENT - POWER SUPPLY
IDAHO POWER COMPANY
PO BOX 70
BOISE, ID 83707-0070
E-mail: iprescott~idahopower.com
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29370
These comments should contain the case caption and case number shown on the first
page of this document. Persons desiring to submit comments via e-mail may do so by accessing
the Commission s home page located at www.puc.state.id.Click the "Comments and
Questions" icon, and complete the comment form, using the case number as it appears on the
front of this document. These comments must also be sent to Idaho Power at the e-mail
addresses listed above.
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. The Application can also be
reviewed at the principal Boise office of Idaho Power during regular business hours.
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.
ORDER
IT IS HEREBY ORDERED that the Petitions to Intervene submitted by the Industrial
Customers of Idaho Power and the Idaho Irrigation Pumpers Association, Inc. are granted.
IT IS FURTHER ORDERED that this matter be processed via Modified Procedure.
Persons and parties interested in submitting comments in support or opposition to the
Application should do so no later than December 15 2003.
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29370
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 30 +"-
day of October 2003.
PAUL KJELU R, PRESIDENT
~LJ
MARSHA H. SMITH, COMMISSIONER
ENNIS S. HANSEN, COMMISSIONER
ATTEST:
Commission Secretary
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NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29370