20050506Comments.pdf

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DONALD L. HOWELL, II
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3366
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UTiLI illS CO i!11SSION
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR AUTHORITY
TO IN CREASE ITS RATES AND CHARGES
FOR ELECTRIC SERVICE DUE TO THE
INCLUSION OF THE BENNETT MOUNTAIN
PLANT INVESTMENT IN ITS RATE BASE.
CASE NO. IPC-OS-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attorney of record, Donald L. Howell, II, Deputy Attorney General, and responds to the Notice of
Application and Notice of Modified Procedure issued on April 1 , 2005.
BACKGROUND
On March 2 2005 , Idaho Power Company (Idaho Power; Company) filed the present
Application to recover its capital investment in the new Bennett Mountain generating facility
located in Mountain Home, Idaho. More specifically, the Company seeks to rate base
$58 022 983 attributable to the cost of constructing the generating plant and the necessary
transmission and interconnection facilities. Idaho Power initially calculated that the addition to
rate base will result in an increase to its annual revenue requirement of$13 482 146.
On March 22, 2005 , Idaho Power filed an Amended Application. The Company noted
that it had used an incorrect "federal and state income tax rate" that overstated the proposed
STAFF COMMENTS MAY 6, 2005
increase in the Company s annual revenue requirement. Using the correct federal and state
income tax rate of 39.1 percent approved by the Commission in rate case Order No. 29601 , the
Company requested a revenue requirement of $9,402 996. Amended Application at 5. To
recover this lower amount, the Company proposed to increase its base rates by approximately
84 percent. Id. at 5- Revised Attch. 4. The Company requests the proposed increase to its base
rates become effective June 1 2005 , which would coincide with any rate change caused by the
annual Power Cost Adjustment (PCA) mechanism.
COMMENTS
Bennett Mountain CPCN, Case No. IPC-O3-
In January 2004, the Commission issued Order No. 29410 approving Idaho Power
Application for a Certificate of Public Convenience and Necessity (CPCN) to construct and
operate the Bennett Mountain Power Plant. Bennett Mountain is a 162 MW natural gas-fired
simple-cycle power plant. The plant was constructed by Mountain View Power, Inc. Williams
Northwest Pipeline will provide the natural gas necessary to fuel the plant. Mountain View also
constructed the natural gas pipeline essential to interconnect with Williams.
In its Application for authority to construct the Bennett Mountain plant, Idaho Power
provided the Commission with a "Commitment Estimate" of the proj ect's total capital costs. The
Commitment Estimate for the proj ect was $54 million, which included the firm bid price of the
project ($44.6 million) plus additional costs such as sales taxes, AFUDC, oversight and change
orders. Order No. 29410 at 4. The Commitment Estimate did not include the cost of
constructing or upgrading transmission facilities necessary to connect Bennett Mountain with the
Company s existing transmission system, any legally required equipment changes, and material
changes in assumed escalation forecast rates. Id. at 16.
At the time, Idaho Power estimated that the interconnection and/or transmission upgrades
for the plant would cost between $5 and $11.6 million. Reasonable ,!nd prudent fuel costs for the
Bennett Mountain Plant were to be recovered through the PCA mechanism. Id.
In Order No. 29410 issued January 2 2004, the Commission authorized Idaho Power to
build the plant, to recover in the ordinary course of events the base price of $44.6 million, and to
recover reasonable expenses in excess of the base price up to the Comn1itment Estimate. The
recovery of costs above the base price was to be reviewed in a subsequent case, i., the present
case. Order No. 29410 at 15-16.
STAFF COMMENTS MAY 6, 2005
Review of Project Costs
Staff has reviewed the project costs and compared them to the costs that were estimated
at the time the Certificate of Convenience and Necessity was granted. The following table
compares the estimated project costs to the final project costs.
Table 1: Comparison of Estimated and Final Bennett Mountain
Pro .eet Costs
Contract Price
AFUDC, sales taxes, IPCo oversi , start-u fuel, all chan e ordersTotal Plant Cost
Transmission & Interconnection
600 000
400,000
000,000
5 - 11.6 million
600 000
596,872
50,196,872
846,074
As shown in the table, the $50 196 872 final costs of the plant, not including transmission
and interconnection, was less than the $54 million Commitment Estimate approved by the
Commission in Order No. 29410. The final transmission and interconnection cost to integrate
the plant into Idaho Power s transmission system was $7 846 074. This cost falls within the $5.
- $11.6 million range estimated previously by Idaho Power. The overall cost of the project of
$58 042 946 came in below the bottom of the estimated range of total project costs.
Audit and Revenue Requirement
To establish costs associated with the construction, transmission and interconnection
facilities attributed to Bennett Mountain, Staff performed a detailed analysis of the Company
present Application and workpapers. The analysis included a comprehensive project specific
desk audit outlining Bennett Mountain actual and estimated transmission and plant expenditures.
The two key contractors on the plant project were TR2, and Siemens Westinghouse Power
Corporation. Combined, these two contracts totaled more than 75 percent of the overall power
plant costs. On the transmission and communication side of the project, the major contractors
were Par Electrical, Thomas & Betts, Paradise Excavation, and Mountain View Power Inc.
To analyze the difference between the contract amounts and the actual amounts, Staff
reviewed all change orders to identify the prudence of these transactions. In addition to the
change orders, Staff reviewed all major vendor invoices, contracts and financial transactions of
the project to insure reasonableness and accuracy. Some of the most prominent change orders
were related to delay issues, environmental impacts, relay protection on transformers, gas
STAFF COMMENTS MAY 6, 2005
pressure losses and the need for additional concrete for retaining walls at the plant. Other than
the single change order discussed below, all change orders seem reasonable and prudent.
In addition to the comprehensive project specific desk audit, Staff conducted a physical
on-site examination of the Bennett Mountain plant, the new Rattlesnake switching station and the
Rattlesnake Butte microwave radio station. The on-site examination included a detailed review
of the major components of the plant, a comparison of the contracts with the equipment installed
and an overview of the plant operations. In addition, Staff verified all capitalized spare parts that
were held in reserve. All parts were reconciled with purchase orders provided by Idaho Power.
Using updated actual costs through March 2005 and projected costs for April 2005
provided by Idaho Power, Staff compiled the following chart showing items purchased and
related costs. These costs are comprised of plant construction costs as well as transmission and
interconnection costs associated with the project. When comparing Idaho Power s original
requested amount of $58 022 983 to the Company s updated expenses of $58 042 946 there is a
variance of$19 936. Staff believes that this variance is due to the nature of the April projections
and does not seem out of the ordinary given the detail and nature of the costs.
Table 2: Bennett Mountain Projeet
Costs
Bennett Mountain Power Plant Construction
Capitalized Spare Parts 2004 Bennett Mountain
Subtotal Plant Costs
BMPR0301 Bennett Mountain Power Plant
Bennett Mountain to Rattlesnake Line
Line 716 Right of Way
New Rattlesnake Switching Station
Rattlesnake Property Purchase
Rattlesnake to Line 906, In/Out
Reconductor Line 906 at Boise
Line 906 In/Out Right of Way
Make Ready Work for Fiber Install
Distribution and Local Service
Fiber From Rattlesnake to Bennett Mountain
Upgrade Communications From Bennett Mountain
Subtotal Transmission & Interconnection Costs
46,751,849 910 733 662 582
534 290 534 290
286 139 910 733 196 872
915 563 255 931 778 210 272
582,302 238 062 629 601
765 765
929 006 288 097 826 263 929
106 517 106 511'
619 613 789 240 631 642
150 173 942 84,264
064 064
170 948 323 52,441
72,439 10,291 807 537
680 200 760 640
548,367 996 039 637,402
037 635 674,663 133776 846 074
STAFF COMMENTS MAY 6, 2005
The $58 042 946 shown in Table 2 as total project costs will be rate based as plant in
service. The net rate base will also reflect the deductions for accumulated depreciation and
deferred income taxes associated with this plant. This net rate base figure will be $52.7 million
if the Commission accepts the proposed Staff adjustment discussed below.
Staff notes that under the construction contract between Mountain View Power and Idaho
Power, a letter of "Final Acceptance" was required when Idaho Power was satisfied that the plant
meets all contract specifications and is ready to generate power commercially. The Company
sent that letter on April 1 , 2005 when the construction was essentially complete. Control and
operation of the plant has been transferred to Idaho Power. The plant is now available for
serving Idaho ratepayers. Staff has reviewed the letter of acceptance and agrees that Idaho
Power appropriately accepted the plant and that the costs should be transferred to the Company
books.
Costs Associated with the Delay Change Order
Staff opposes only one change order associated with completion of the project. Because
of Idaho Power s delay in issuing the full "Notice to Proceed" to Mountain View by
December 31 2003 , Idaho Power paid Mountain View an additional amount of$71 875. Section
10.1 of Idaho Power s contract with Mountain View dated November 6, 2003 provided that if the
Commission issued a Certificate of Convenience and Necessity between January 1 2004 and
January 31 , 2004, Idaho Power would pay a penalty of not more than $100 000 as a result of the
delay. Staff Attachment No.1. Idaho Power issued a "partial" Notice to Proceed to Mountain
View on about January 15 2004 and a "full" Notice to Proceed on January 24, 2004. Therefore
Change Order No.1 was executed containing a prorated penalty of$71 875. Staff Attachment
No.
Staff believes that this delay penalty is Idaho Power s responsibility and should not be
passed on to ratepayers. The potential for the penalty was known in advance by Idaho Power
because it was contained in the contract between Idaho Power and Mountain View. In its
September 26 Application the Company requested expedited treatment and that the Commission
issue an Order no later than December 31 , 2003. During the Commission s October 7, 2003
decision meeting, the Company s request for an expedited schedule was discussed. The
Commission expressed some concern about the expedited, fast track schedule. Two
Commissioners noted "that if Idaho Power has determined it needs the resource, then it had
STAFF COMMENTS MAY 6, 2005
better go forward and not wait around for the Commission s pre approval to give it further
assurance of how it will be treated later on." Staff Attachment No.3 (Minutes of Decision
Meeting, October 7 2003). Nevertheless, an extremely compressed schedule was adopted in an
attempt to accommodate the Company s request for expedited treatment.
A chronology of the case is set out below. Events above the solid black line occurred
prior to the filing of the Company s Application; events below the line occurred after the filing
of the Application.
Table 3: Chronology of Case No. IPC-O2-12,
Bennett Mountain CPC
24-Feb-2003
28-Apr-2003
29-Apr-2003
May-2003
June-2003
12-Sep-2003
17-Sep-2003
18-Sep-2003
26-Sep-2003
0ct-2003
7 -Oct-2003
10-0ct-2003
22-0ct-2003
27 -Oct-2003
30-0ct-2003
Nov-2003
Dec-2003
II-Dec-2003
15-Dec-2003
15-Dec-2003
17-Dec-2003
18-Dec-2003
22-Dec-2003
Jan-2004
Jan-2004
12-Jan-2004
24-Jan-2004
26-Jan-2004
RFP Issued
Bids Received by Idaho Power
Idaho Power Began Initial Screening of Bids
Short List Developed
Meetings with Bidders
Final Modifications to Two Top Bids Accepted
Recommendation of Mountain View Power Proposal to IdaCorp Board of Directors
Board of Directors Approved Mountain View Power
Application for Certificate of Public Convenience and Necessity Filed with the Commission
Decision Memo Submitted by Staff
Decision Meeting - Decision to Issue a Notice and Set Prehearing Conference
First Production Request of the Commission Staff to Idaho Power (82 Requests)
Prehearing Conference
IPCo Response to Staffs First Production Request
Notice of Modified Procedure Issued
IPCo Further Response to Staffs First Production Request
IPCo Supplemental Response to Staffs First Production Request
IPCo Supplemental Response to Staffs First Production Request
Staff Comments Filed (37 pps., 10 Attachments)
Comments Received from Advocates for the West
Reply Comments of Mountain View Power
Reply Comments of Idaho Power
Bennett Mountain Case on Decision Meeting Agenda
Order No. 29410 issued Approving Certificate of Public Convenience and Necessity
Certificate of Public Convenience and Necessity Issued
Idaho Power Filed Petition for Clarification
Notice to Proceed Issued by Idaho Power to Mountain View Power
Order No. 29422 on Petition for Clarification
As shown by the case chronology above, Staff and the Commission worked extremely
diligently to process the case quickly. From the time the Application was filed until the time a
final order was issued, barely more than three months elapsed. Staff made 82 production
requests in the case, receiving Idaho Power s last supplemental response just four days before it
STAFF COMMENTS MAY 6, 2005
filed very extensive comments on December 15, 2003. Three days later, Idaho Power filed reply
comments. Merely two working days later, on December 22, 2003, the case was on the
Commission s decision meeting agenda. Deliberation and preparation of an order was
accomplished in six working days, mostly between the Christmas and New Years holidays.
Despite Staff and the Commission s best efforts, Order No. 29410 approving the Certificate of
Public Convenience and Necessity was not issued until Friday, January 2 2004, the first working
day following December 31 , the deadline for Idaho Power to issue a Notice to Proceed. Issuance
of the Certificate of Public Convenience and Necessity, which is simply a ministerial matter
followed on January 8, 2004. Idaho Power should have filed its Application earlier than
September 26 to allow sufficient and ample time for Commission review. The delay in
submitting the Notice to Proceed could have been avoided if Idaho Power filed its Application
earlier.
There are two other reasons that support Staff s determination that the Change Order
charge is neither reasonable nor prudent. First, Order No. 29410 issued January 2 2004
authorized Idaho Power to construct the Bennett Mountain plant. The second ordering paragraph
states "Idaho Power s Application seeking a Certificate of Public Convenience and Necessity to
build the Bennett Mountain project is approved. Certificate No. 420 will be issued to Idaho
Power." Order No. 29410 at 16. Thus, the Order authorizing the issuance of the Certificate is
service dated January 2 2004. However, the Company did not issue its full "Notice to Proceed"
until January 24 2004. Clearly ratepayers should not be held accountable for Idaho Power
delay in issuing the unconditional Notice to Proceed once the Commission issued its Order on
January 2 2004.
Second, ten days after the Commission issued its authorizing Order Idaho Power filed a
Petition for Clarification/Reconsideration. Idaho Power s concern in its Petition for Clarification
addressed the use of the word "may" in Commission Order No. 29410. In particular, Order No.
29410 stated that "in the ordinary course of events, Idaho Power may anticipate rate basing $44.
million. ..." Order No. 29410 at 11 (emphasis added).
Although the Staff recognizes Idaho Power s right to petition for a clarification, Idaho
Power should have anticipated the possibility of a reconsideration or clarification period in its
contract with Mountain View. According to the chronology set out above, there was
approximately a three-month gap between June 2003 (meeting with bidders) and the date final
bid modifications were due (September 12, 2003). There is no explanation why Idaho Power did
STAFF COMMENTS MAY 6, 2005
not require final bids before September 12. Clearly ratepayers should not be responsible for the
Company s delay in issuing its Notice to Proceed.
In summary, Staff contends that responsibility for issuing the Notice to Proceed 23 days
late rests with Idaho Power for the following reasons:
1. Staff and the Commission adopted an extremely compressed schedule for an
Application of this magnitude, while still meeting requirements for public
notification and comment, and extensive discovery. Idaho Power should have
filed its Application earlier than September 26 to allow sufficient and ample time
for Commission review.
2. Order No. 29410 was issued on January 2 2004. The Order explicitly stated that
Idaho Power s Application seeking a Certificate of Public Convenience and
Necessity to build the Bennett Mountain Power Plant was approved and that
Certificate No. 420 would be issued to Idaho Power.
3. Any delay in issuing the Notice to Proceed beyond January 2 2004 was the
responsibility of Idaho Power. On January 12, 2004, Idaho Power filed a Petition
for Clarification of Order No. 29410 seeking clarification of what the
Commission intended by its use of the language "Idaho Power may recover the
reasonable and prudent costs of the Bennett Mountain project."
For these reasons, Staff recommends that the $71 875 delay penalty paid by Idaho Power to
Mountain be disallowed for recovery from ratepayers. In addition to removing a portion of the
plant costs, Staff also removes $2 315 for depreciation expense and $1 384 for property tax
expense that is associated with the capital amounts.
Incremental Power Supply Costs and the PCA
In its Application the Company proposed to adjust base rates to include the costs of the
Bennett Mountain Project, except for the incremental costs of power supply. The incremental
costs of power supply (fuel costs plus purchased power costs less secondary sales revenues)
decrease when a new resource is added. The Idaho jurisdictional decrease in incremental power
supply costs ($478 300) is more than offset by the Iqaho jurisdictional revenue requirement that
comes from fixed cost increases. These fixed costs increase the overall revenue requirement
return on the plant, operation and maintenance expenses, depreciation expense and taxes.
STAFF COMMENTS MAY 6, 2005
However, the Company s proposal is to capture the incremental power supply cost reduction
through the PCA process instead of adjusting base rates. This is done by allowing the PCA to
capture the difference in normalized power supply costs with and without Bennett Mountain and
to also credit ratepayers the 10 percent difference from the sharing mechanism that would
otherwise go to shareholders. This approach captures the same $478 300 reduction in power
supply costs through the PCA mechanism that would be captured ifbase rates were reduced.
Because this reduction occurs under all water conditions, it is not subject to sharing by
shareholders. Thus the 10 percent sharing credit must be provided until base power supply costs
are updated to include Bennett Mountain, which will probably occur in the Company s next
general rate case.
In its next rate case the Company will adjust base rates to reflect reduced incremental
power supply costs and those same incremental power supply costs will be used in the PCA to
measure differences between actual and base conditions. After base rates are adjusted, the PCA
will no longer capture\a difference between normal power supply costs with and without Bennett
Mountain in operation.
Staff accepts the Company s proposed methodology in this filing because it achieves the
same result as the more traditional adjustment to base rates and because the Company has made
its 2005 PCA filing based on this methodology. However, for future filings where the proposal
is to include the revenue requirement associated with fixed costs in base rates, Staff prefers that
incremental power supply costs be included in base rates and that the appropriate PCA
adjustments be made. These adjustments would include updating the PCA base and the forecast
formula.
Rates
To recover the increased base revenue requirement the Company has calculated a
uniform percentage increase to the demand and energy rates within each schedule. The
Company also increased lighting rates by the same percentage. Although Staff proposes to
reduce the revenue requirement requested by the Company in this case, Staff supports the
Company s revenue allocation and rate design methodology. Staff proposes to summarize
specific Bennett Mountain rate impacts in comments filed in Idaho Power s PCA Case
No. IPC-05-15. Staff will also summarize the rate impacts associated with the Income Tax
Case No. IPC-05-14. Rate changes resulting from all three cases are proposed to go into effect
STAFF COMMENTS MAY 6, 2005
on June 1 2005. However, if the Commission adopts the Staffs recommendation in this case to
delete the cost of the Delay Change Order, then Staff will verify the changes in the Company
revenue requirement model for the Idaho Jurisdiction and recalculate Bennett Mountain rate
impacts accordingly.
RECOMMENDATIONS
Staff recommends that the amounts proposed by the Company in its revised filing be
adjusted to reflect actual expenses through March 2005 and updated projections for April 2005.
Staff also recommends disallowance of the cost associated with the Delay Change Order. Staff
further recommends that the rate impacts of this case be effective June 1 2005 using the
allocation and rate design methodology as proposed by the Company. Staff recommends the
actual revenue requirement associated with the adjusted rate base of $52.7 million be reflected in
the Staff comments for the PCA in Case No. IPC-05-15 with combined rates established by the
Commission at that time. This will allow the Commission decisions in this case (IPC-05-10),
the tax case (IPC-05-14) and the PCA case (IPC-05-15) to be accurately reflected in the
Company s Idaho Jurisdictional Revenue Requirement Model w!th the impact of the three cases
included in the PCA Order.
Respectfully submitted this ('I day of May 2005.
/.'
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Donald L. Ho ell, II
Deputy Attorney General
Technical Staff: Alden Holm
Keith Hessing
Eric Johnson
Rick Sterling
i :umisc/comments/ipcO5.Odhrpsahkh
STAFF COMMENTS MAY 6, 2005
Section 9.Resumption of Work
Following any suspension, after receipt of written notice to resume progress of the Works
Seller shall examine the Works affected by the suspension. Seller shall, pursuant to a Change Order
correct, repair or replace any deterioration to, nonconfonnity in or loss of the Works that occulTed
during the suspension.
Section 9.4 Change Order in Event of Suspension
(a) Seller may, at any time prior to thirty (30) days after receipt of written notice to resume
progress of the Works under Section 9.3 above, notify Buyer of its request for a Change Order as a
result of such suspension.
(b) In the event of such suspension requested by Buyer, Seller shall be entitled to a Change
Order to offset Seller s costs, including interest at the Prime Rate for the duration of the Suspension.
In the event the aggregate time of Suspension exceeds ninety (90) days , Seller shall be entitled to
receive payments equal to the cancellation amounts as set forth in Appendix J and in Article 17.
Section 9.Storage in the Event of Suspension
(a) In the event that Buyer is unwilling or unable to receive the Gas Turbine or other
equipment, Seller will upon written notice to Buyer and giving Buyer reasonable opportunity to
designate a mutually acceptable destination, place the Gas Turbine and equipment in storage. If the
Gas Turbine and/or equipment is to be placed into storage pursuant to this provision , delivery of the
Gas Turbine and/or equipment shall be deemed to occur, and any payments due upon such delivery
shall be payable by Buyer, when the Gas Turbine and/or equipment (i) is placed free on board carrier
at the manufacturing facility for shipment to the storage location or (ii) is placed into the storage
location when stored at the manufacturing facility.
(b) In the event of storage pursuant to the preceding paragraph, all expenses thereby incurred
by Seller, including. but not limited to ' preparation for and placement into storage, handling,
transportation, storage , inspection, preservation, Taxes and insurance and any necessary rehabilitation
prior to installation shall be payable by Buyer upon submission of invoices prepared by Seller. When
conditions permit and upon payment to Seller of any amounts due hereunder, Seller, at Buyer
expense shall remove the Gas Turbine and/or equipment from storage.
ARTICLE 10
PROJECT COlVIPLETION
Attachment No.
Case No. IPC-E-05-
Staff Comments5/6/05 Page
Section 10.Notice To Proceed
Subject to a condition precedent that Buyer shall have received a Certificate of Convenience
and Necessity from the Idaho Public Utilities Commission ("IPUC") acceptable to Buyer authorizing,
confinning or allowing Buyer -to enter into this Agreement or to proceed with the Project, Buyer shall
issue to Seller a Notice to Proceed not later than December 31 , 2003. Seller shall commence the Work
- -
ASSET PURCHASE AGREEMENT -Page 25 MVP APprovar~ IPCo Approval
Contract filed 11/6/03
upon receipt of the Notice To Proceed and proceed diligently to complete the Work in accordance with
the Schedule.
If at any time the IPUC issues an Order either denying Buyer said Certificate of Convenience
and Necessity or issuing a Certificate of Convenience and Necessity that is not acceptable to Buyer
Buyer is under no obligation under this Agreement to issue to Seller a Notice to Proceed and Buyer, at
Buyer s sole discretion, may terminate this Agreement by written notice thereof to Seller and, upon
said tennination, Seller shall waive any claims for damages , including loss of anticipated profits on
account thereof, and Seller s sole right and remedy shall be the payment rendered to Seller by Buyer at
the time of execution of this Agreement-. Ownership of the Project and any work in progress shall
remain with the Seller.
If the IPUC issues a Certificate of Convenience and Necessity acceptable to Buyer authorizing,
confinning or allowing Buyer to enter into this Agreement or to proceed with the Project and issuance
of said Certificate is postponed to a date between January 1 , 2004 and January 31 , 2004, Buyer shall
issue to Seller a Notice to Proceed within forty-eight (48) hours of Buyer s receipt of said Certificate
and the parties agree that the Purchase Price will not increase by more than $100 000.00 as a result of
the delay of issuance of the Notice to Proceed to a date between January 3, 2004 and February 2
2004. Adjustment of the Purchase Price due to delay in the issuance of the Notice to Proceed as
described herein shall require a Change Order pursuant to Article 7. Furthennore, Seller may, at
Seller s sole discretion, notify Buyer that failure to issue the Notice to Proceed on or before December
, 2003 is a material modification to the Schedule (including adjustments to the Guaranteed
Provisional Acceptance Date) requiring a Change Order pursuant to Article 7.
If the IPUC issues a Certificate of Convenience and Necessity acceptable to Buyer authorizing,
confirming or allowing Buyer to enter into this Agreement or to proceed with the Project and issuance
of said Certificate is delayed to a date after January 31 2004, the parties shall , pursuant to Article 7
adjust the Schedule and the Purchase Price via a Change Order.
Section 10.Time for Completion
Seller shall have completed the Works and the Perfonnance Tests in accordance with the
Agreement, as modified by any Change Orders. The Parties agree that the Provisional Acceptance
Date shall occur no later than the Guaranteed Provisional Acceptance Date.
Section 10.Extension of Time for Completion
(a) Seller may make a Claim for an extension of the Guaranteed Provisional Acceptance Date
for delays which are caused by any of the following: At tachmen t No.
Case No. IPC-E-05-
Staff Comments5/6/05 Page
(ii) failure of the Buyer to fulfill any of its material obligations under this Agreement;
(i)Change Orders;
(iii) material delay by any other contractor engaged by the Buyer; or
(iv) Force Majeure.
ASSET PURCHASE AGREEMENT - Page 26
Contract filed 11/6/03
MVP Approval IPCo Approval
IPUC Case No. IPC-OS-
First Production Request
Request No.
Please list and describe all significant change orders (in excess of $5 000) associated
with the Bennett Mountain project. Please list the added costfor each significant change
order.
-----, -..,- ~-"""',,- -'--'------' - '-....-,-----,--,-_.-_--,-,.--,-..---_.,-
Response:
For the Bennett Mountain Power Plant-
Change Order #1 ($71 875.00)
This charge is due to a timing difference between the issuance afthe full Notice to.
Proceed to TR 2 by December 31 st 2003 and receipt of the Certificate of Convenience and
Necessity.
Change Order #2 ($27 322.03)
This charge is to. cover the additional "air permitting" costs incurred by TR2 due to. the
reorientation of the plant to minimize no.ise impacts on the adjoining properties (see
CO#3).
Change Order # 3 ($94 705.50)
This Change Order is related to the desir~-to reduce the environmental impacts to. the
surro.unding properties. '
, The reotientation of the facilities gave the maximum distance fro.m permanently occupied
dwellings. This was necessary to reduce the potential noise levels at the dwellings to. an '
acceptable level (below 58 dba).' This was the best opportunity (before the Facility was
built) to address this potential issue in the mast economic manner. CO # 2 also. relates
this same issue.
Change Qrder # 4 ($39,420.00)
This CO includes charges relating to-
Emergency lighting in the control room (adequate emergency warking lighting)
Switchyard drainage design
Revisions in plant layout (common Control Room)
Cable Trench and the "buyer provided" DC Panel Bo.ard.
The main cost components relate to the integration of the Substation Contro.l Building
and the Plant Control Building into one common facility. This eliminated the need fo.r a
Switchyard Building (approx. $100 000 reduction in project cost) and allo.wed the
P1ant/Switchyard interface to be simplified. The savings due to this aspect are not as
easily identifiable but direct saving such as a common DC system (Credit $20 950), with
one Battery Bank (thus simplifying maintenance programs) were the main drivers behind
the CO.
Attachment No.
Case No. IPC-E-05-
Staff Comments5/6/05
MINUTES OF DECISION MEETING
OCTOBER 7, 2003 - 1:30 P.
In attendance were Commissioners Paul Kjellander and Marsha Smith. Commissioner Hansen was
absent and excused.
Commissioner Kjellander called the meeting to order. The fIrst order of business was approval of the
CONSENT AGENDA, items 1-3. There was-no discussion. Commissioner Kjellander made a motion
to approve items 1-3. A vote was taken on the motion and it carried unanimously.
The next order of business was MATTERS IN PROGRESS:
4. Don Howell's October 3, 2003 Decision Memorandum re: Idaho Power s Application for a
Certificate of Public Convenience and Necessity for Authority to Build the New Bennett
Mountain Power Plant in Mountain Home, Case No. IPC-03-12.
Mr. Howell reviewed his Decision Memo. Commissioner Smith stated she had no objection to issuing a
Notice of Application or scheduling a prehearing conference, but she had serious concerns about
scheduling a prehearing conference on October 15 , only a week away. She said she was concerned
whether such short notice would provide adequate time for potential intervenors to actually hear about the
application, determine if they have an interest and organize themselves to participate meaningfully in a
prehearing conference. She said that if the company has determined it needs this resource then it had
better go forward and not wait around for the Commission s preapproval to give it further assurance of
how it will be treated later on. She said the PUC ought to process the application as fast as it can while
accommodating the needs of all people who have an interest in the proceeding. Mr. Howell replied that
normally the Commission s rules require 14-day notice for a prehearing conference unless there are
extenuating circumstances. He said Staff was trying to accommodate the expedited nature of the
proceeding.
Commissioner Kj ellander suggested that Staff pick a date for the prehearing conference closer to the 20
in order to give more notice for potential intervenors. He said he agreed with Commissioner Smith'
point that we have been hearing for some time through the IRP process that there is a need for a plant of
this size so the Company should by all means move forward. He made a motion to issue a Notice of
Application and establish dates for intervention and a prehearing conference closer to October 20
depending upon the Commission s calendar. A vote was taken on the motion and it carried unanimously.
5. Discussion re: Avista PCA Surcharge--Scheduled October 11 , 2003 PCA Surcharge
Expiration; Proposed Continuation of 19.4010 ($23.36 million) Surcharge Pending Receipt of
Company Reply to Staff Comments, Final Deliberation and Order. Case No. A VU-03-
(Avista). (No Memo.
Scott Woodbury stated that A vista has requested approval of its Schedule 66 PCA balancing account
deferrals and continuation of an existing 19.4% or $23.6 million PCA surcharge. He said without
Commission action the existing surcharge approved last year will expire on October 11 tho He stated the
case has been processed pursuant to modified procedure with a comment deadline of September 30 . He
stated that in its comments Staff had recommended a Coyote Springs-related $5.8 million adjustment in
net fuel expense for natural gas that was purchased and not burned. He said Staff recommends
continuation of the 19.4% surcharge. He said A vista had contacted Staff and i:i1tends to file a written
reply by mid-week, and in its filing will make a procedural recommendation regarding Staff's proposed
Attachment No.
Case No. IPC-E-05-
Staff Comments5/6/05
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 6TH DAY OF MAY 2005
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN CASE
- NO. IPC-05-, BY MAILING A COpy THEREOF POSTAGE PREPAID TO THE
FOLLOWING:
BARTON L KLINE
MONICA MOEN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
GREGORY W SAID
JOHN R GALE
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
\aJdL
SECRETARY
CERTIFICATE OF SERVICE