20060417Application.pdf

IDAHO POWER COMPANY
O. BOX 70
BOISE, IDAHO 83707
MONICA MOEN
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An IDACORP Company
April 14 , 2006
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Jean D. Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise , Idaho 83720-0074
Re:Case No. IPC-06-
Application For A Certificate of Convenience and
Necessity For the Evander Andrews Power Plant
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of Idaho
Power Company s Application for a Certificate of Convenience and Necessity for the
Evander Andrews Power Plant. Also enclosed are nine (9) copies of the testimony of
Idaho Power witness Gregory W. Said , with one copy designated as the Reporter
Copy. A computer disk containing Mr. Said's testimony is also enclosed.
I would appreciate it if you would return a stamped copy of this transmittal
letter in the enclosed self-addressed, stamped envelope.
Very truly yours
Monica Moen
MM:jb
Enclosures
Telephone [phone] Fax [phone] E-mail MMoen~;dahopower.com
MONICA B. MOEN, ISB # 5734
BARTON L. KLINE, ISB # 1526
Idaho Power Company
1221 West Idaho Street
P. O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
mmoen (QI idahopower.com
bkline (QI idahopower.com
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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 CONVENIENCE ANDNECESSITY FOR THE
EV ANDER ANDREWS POWER PLANT
CASE NO. IPC-06-
APPLICATION
COMES NOW Idaho Power Company ("Idaho Power" or the "Company") and
pursuant to Idaho Code ~ 61-526 and RP 112 , hereby applies to the Idaho Public Utilities
Commission ("IPUC" or the "Commission ) for an Order granting the Company a Certificate
of Convenience and Necessity for the Evander Andrews Power Plant ("Project"
Ultimately, it is Idaho Power s intent that the Project be included in Idaho
Power s rate base and that fuel costs be recovered in the Company s Power Cost
Adjustment mechanism. While the Company is aware that the prudency of the capital and
fuel costs of the Project will be evaluated by this Commission in subsequent cases after the
Project has been constructed , Idaho Power requests that the Commission note in its Order
APPLICATION -
in this proceeding that, in the ordinary course of events , Idaho Power can expect to
ratebase the prudent capital costs for this Project and to recover prudent fuel costs in the
Company s Power Cost Adjustment mechanism.
This Application is based on the following:
Corporate Status . Idaho Power is a corporation incorporated under
the laws of the State of Idaho. 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 located in Boise, Idaho and
its business 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 B. Moen
Attorneys for Idaho Power Company
O. Box 70
Boise , Idaho 83707-0070
bkline (Qi idahopower.com
mmoen (Qi idahopower.com
James C. Miller
Sr. Vice President, Generation
Idaho Power Company
O. Box 70
Boise , Idaho 83707-0070
jimmiller(Qi idahopower.com
Description of the Evander Andrews Power Plant.Idaho Power
requests that it be issued a Certificate of Convenience and Necessity for the Evander
Andrews Power Plant. The Project will be constructed by Siemens Power Generation , Inc.
the same entity that provided all labor, materials and equipment and that engineered and
constructed the Company s Bennett Mountain Power Plant.Upon completion of
construction and passage of all required performance tests , including, but not limited to
APPLICATION - 2
guaranteed net capacity and guaranteed heat rate , care , custody and control of the Project
will be transferred to Idaho Power.
The Project will consist of a new Siemens-Westinghouse SGT6-5000F simple
cycle, natural gas-fired combustion turbine rated at 170 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 2008.
The Project will be located at the existing, approximate 40-acre Evander
Andrews Power Complex located north of Mountain Home , Idaho and approximately 45
miles east of Boise. The new unit will be adjacent to two 45 MW gas-fired units built by the
Company in 2001. See I PUC Order No. 28773.
The Project will be interconnected to the Company s 230 kV transmission
system which is located approximately seven miles from the Evander Andrews site. The
natural gas supply for the new plant will be obtained from an existing 16-inch lateral gas
line located at the Evander Andrews site. That lateral is directly connected to the Williams
Northwest Pipeline. Sufficient capacity exists in this lateral line to accommodate the
requirements of the existing facilities and the new facility.
Water for generation will be pumped from an existing deep well on the
Evander Andrews premises. Both substantial water supply capacity and priority water
rights exist for the existing facilities and the proposed Project.
The Project will operate in compliance with all appropriate air and water
quality standards. A map showing the location of the Project is included as Attachment 1.
Consistencvwith IRP. In its 2004 Integrated Resource Plan ("IRP"
Idaho Power indicated in its Near-Term Action Plan that it intended to initiate a Request for
APPLICATION - 3
Proposals ("RFP") to acquire additional dispatchable energy and capacity to be available
during the planning period. In particular, the IRP called for issuance of an RFP for an 88
MW peaking resource in the Fall of 2004. The IRP also stated that Idaho Power
anticipated some flexibility in both the RFP and the responses to the RFP for the 88 MW
combustion turbine. Idaho Power expected that the RFP would specify a range of turbine
sizes, up to 200 MW, similar to the Bennett Mountain RFP in 2003. The RFP flexibility
allowed the developers to respond to the RFP with their most cost-effect proposals. The
Project is the product of that RFP.
The 2004 IRP also noted that the Company intended to pursue other
strategies for satisfying the incremental resource needs during the planning period.
conformance with the 2004 IRP, Idaho Power is implementing additional demand-side
measures and the Company has issued an RFP for approximately 100 MW of wind-
powered generation and will issue an RFP for 100 MW of geothermal energy this Spring.
Capital Cost Commitment Estimate Idaho Power has negotiated an
Agreement for Engineering, Procurement and Construction of the Evander Andrews
Power Plant with Siemens Power Generation , Inc. ("Agreement"). That Agreement
contains a firm bid for the completed Project in the amount of $49 999 000. Based on this
Agreement, 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's total capital cost based on the Siemens Power
Generation , Inc. Agreement plus certain additional costs the Company knows it will incur
but cannot quantify with precision at this time.
APPLICATION - 4
These additional costs include , but are not limited to , sales taxes, allowances
for funds used during construction (AFUDC), 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. Idaho Power s Commitment Estimate for the Project
is $60 million.
The Commitment Estimate does not include the cost of constructing
transmission and substation facilities required 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 $22.million to interconnect the Project to the Company
transmission system.
Idaho Power will commit to procure and install the Project for the
Commitment Estimate. The Commitment Estimate would be subject to adjustment to
account for documented legally-required equipment changes and material changes in
assumed escalation rates not foreseen at the time of this Application. 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.
Idaho Power will provide the Commission with periodic percentage of
completion and cost expenditure reports during the construction phase of the Project. The
final report on the Project will compare the actual completed cost to the Commitment
Estimate.
APPLICATION - 5
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 undertaken by either Idaho Power personnel or Idaho Power
personnel in conjunction with a third party such as IGI Resources, Inc.
As a part of this Application, Idaho Power is requesting that the Commission
Order issuing the Certificate in this matter allow Idaho Power to include the Project's cost
of fuel , fuel storage and fuel transportation for recovery through the existing Power Cost
Adjustment ("PCA") mechanism. Fuel expenses should be approved for PCA inclusion
prior to full review of normal operational costs in a general revenue requirement case.
Modified Procedure. In order to purchase certain equipment for the
Project at competitive prices, Idaho Power is requesting that this Application be processed
expeditiously. However, the Agreement provides that Idaho Power s receipt of a Certificate
of Convenience and Necessity from the Commission is a condition precedent to the
Company issuing a Notice to Proceed to Siemens Power Generation , Inc.
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 part of their analysis of this Application. As
result , it would not be necessary for 'Staff to send a formal request for production of
documents prior to reviewing these materials. If additional questions arise and additional
APPLICATION - 6
documentation is needed, the Company will work with the Staff and intervenors on an
informal basis to expedite the review process.
Some of documents the Company intends to provide for review contain
information that the bidders deem to be trade secrets. To assure full bidder participation in
future Idaho Power RFPs, the Company will request that Staff and any intervenors sign a
standard confidentiality agreement prior to reviewing these materials. 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, that is, by written submissions rather than by evidentiary hearing.
WHEREFORE, Idaho Power respectfully requests that the Commission issue
its Order granting Idaho Power a Certificate of Convenience and Necessity for the Project
with an upper limit of $60 million allowed for the Company s investment in the Project
excluding transmission costs and subject to adjustment for legally-required changes and
material changes in assumed escalation rates not foreseen at the time of this Application.
Idaho Power also requests that the Commission issue its Order noting that, in
the ordinary course of events, Idaho Power can expect to ratebase the prudent capital
costs for this Project and to recover prudent fuel costs in the Company s Power Cost
Adjustment mechanism.
APPLICATION - 7
DATED at Boise, Idaho this 14th day of April 2006.
(P-
MONICA B. MOEN
Attorney for Idaho Power Company
APPLICATION - 8
BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O6- 0'1
IDAHO POWER COMPANY
ATTACHMENT NO.
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Evander Andrews Power Complex
1862 NW Mashburn Rd.
Mountain Home, ill. 83647