20170717_Brandon2.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF

FROM: BRANDON KARPEN
DEPUTY ATTORNEY GENERAL

DATE: JULY 17, 2017

SUBJECT: ROCKY MOUNTAIN POWER’S WIND REPOWERING APPLICATION,
CASE NO. PAC-E-17-06

On July 3, 2017, Rocky Mountain Power applied for a Commission determination on the
Company’s plan to upgrade, or “repower,” its existing wind resources; and approval of associated
ratemaking treatment. The Company claims that repowering its wind resources will increase
production, reduce costs, and qualify the Company for federal production tax credits (PTCs). The
Company estimates that upgrades to the system will increase output by about 19% with no additional
facilities. The Company estimates that the project will cost approximately $1.13 billion. Because of
the large scale of the project, the Company is seeking Commission approval prior to starting the
project.
THE APPLICATION
Citing recent advancements in wind generation technology, the Company proposes to
modernize most of its wind generation resources located in Wyoming, Washington, and Oregon.
Collectively, the facilities represent a total of 999.1 megawatts (MW) of installed capacity (594 MW,
Wyoming; 304.6 MW, Washington; and 100.5 MW, Oregon). Upgrades include longer blades, and
new nacelles with higher capacity generations. The Company estimates that these changes will result
in an 11% to 35% increase in wind generation.
The Company further claims that the repowering will allow for greater control over
quality and voltage, allowing for greater reliability. Additionally, the Company states that the
repowering will extend the useful life of each plan by approximately 10 years, without the cost and
complication of permitting and constructing new facilities. The Company states an intention to file a
new depreciation case in 2019 to reset the 30-year depreciable life of the repowered facilities.
DECISION MEMORANDUM 2
Rocky Mountain states that PTCs for its existing facilities began expiring in 2016, and
will continue to expire through 2020.1 To re-qualify for PTCs, the Company can repower the wind
plant, and meet the IRS 80/20 test—the fair market value of the retained property is no more than
20% of the facility’s total value after installation of the upgrade. The Company’s proposal meets this
requirement. The Company estimates that to meet installation timelines, it will need Commission
approval for the project by December 29, 2017, and likewise requests such a processing timeline.
The Company requests binding ratemaking treatment. It proposes to track repowered
wind project expenses using a resource tracking mechanism as a component of the Company’s
Energy Cost Adjustment Mechanism (ECAM), until the costs and benefits are fully included in base
rates. The Company proposes that customers receive 100% of the benefit of incremental energy
generated from the projects. Once fully in base rates, only the incremental fluctuations associated
with production and PTCs would continue to be tracked in the ECAM.
STAFF RECOMMENDATION
Staff concurs with the Company’s request to process its Application under Modified
Procedure. Staff recommends that the Commission issue a Notice of Application and set an August
8, 2017, intervention deadline. Once the intervenors to this case have been determined, then Staff
recommends that it convene an informal scheduling conference with the parties to develop a schedule
to process this case.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application, set an August 8, 2017,
intervention deadline, and after that deadline, direct Staff to convene an informal conference for the
parties to discuss the appropriate scheduling of this case going forward?

M:PAC-E-17-06_bk

1 For PTCs that have already expired, the Company states that it has purchased “safe-harbor” equipment that will
allow it to qualify for 100% of the value of available PTCs if the repowered units are operational by 2020.