20111027notice_of_application_order_no_32387.pdf

Office of the Secretary
Service Date
October 27,2O I
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPAY’S REQUEST FOR )CASE NO.IPC-E-11-18
ACCEPTANCE OF ITS REGULATORY )
PLAN REGARDING THE EARLY )NOTICE OF APPLICATION
SHUTDOWN OF THE BOARDMAN POWER )
PLANT )NOTICE OF
)MODIFIED PROCEDURE
)
_________________________________
)ORDER NO.32387
On September 26,2011,Idaho Power Company requested that the Commission issue
an Order:(1)accepting the Company’s accounting and cost recovery plan for the early shutdown
of the Boardman Power Plant;and (2)allowing the Company to establish a balancing account to
track shutdown-related costs and benefits.The Company does not ask the Commission to
approve rate recovery for future expenses associated with the Boardman shutdown at this time.
Application at 1.The Company asks that the matter be processed under Modified Procedure,
and that the Commission issue the requested Order by mid-February 2012.Id.at 16.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that Idaho Power describes Boardman as a single-
generating unit,coal-fired power plant in north-central Oregon.Idaho Power owns 10%,or 58.5
MW (net dependable capacity)of Boardman,which entitles Idaho Power to about 50 aMW.
Application at 1.Portland General Electric (“PGE”)owns 65%of Boardman and operates the
plant.Id.1
YOU ARE FURTHER NOTIFIED that Idaho Power maintains Boardman is subject
to the federal Clean Air Act.Oregon’s Regional Haze Plan,and Oregon’s Utility lvi ercury Rule.
The Company says these laws and regulations require Boardman to be fitted with various
emissions controls.Id.at 2-4.According to Idaho Power,after analyzing each of the Boardman
related control technologies and associated deadlines required by the legal requirements (and a
consent decree in a federal court case),POE determined that closing Boardman in 2020 would
strike “a good balance between the key risk drivers of natural gas and CO2 prices,while
‘Bank of America Leasing and Power Resources Cooperative own the remaining 15%and 10%,respectively.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32387
maintaining system reliability at a relatively low cost.”Id.at 4-6 (quoting PGE 2009 IRP
Addendum,p.103).Under the 2020 closure plan.the owners of the plant would install new
burners to reduce nitrogen oxide emissions by nearly 50%and use lower sulfur coal to reduce
S02 emissions by 50%.
YOU ARE FURTHER NOTIFIED that Idaho Power says PGE’s decision to close
Boardman in 2020 impacts Idaho Power as part owner of the Boardman plant.Id.at 10.
According to Idaho Power,PGEs plan to close Boardman increases Idaho Power’s revenue
requirements related to accelerated depreciation expense.additional plant investments,and
decommissioning costs.Id.at 16.Idaho Power notes that POE has initiated a proceeding at the
Oregon Public Utility Commission (OPUC)that addresses similar concerns.
YOU ARE FURTHER NOTIFIED that Idaho Power proposes a three-step plan to
respond to the proposed 2020 closure.Id.at 10.In sum,Idaho Power will:(1)perform,in early
2012,a depreciation study and ask for new depreciation rates for all plant investment,including
Boardman,to become effective June 1,2012;(2)establish a balancing account to track closure-
related incremental costs and benefits;and (3)ask the Commission,in early 2012,to authorize
the Company to increase customer rates to recover Boardman decommissioning costs,with rates
to take effect June 1,2012 (coincident with the depreciation rate change).id.
YOU ARE FURTHER NOTIFIED that Idaho Power states if Boardman closes in
2020,the Company will incur costs associated with accelerated depreciation.new investment
related to pollution controls,and decommissioning.Id.Idaho Power states it can easily
calculate the incremental depreciation expense for current investment based upon the current
shutdown timeline.However,Idaho Power does not yet know the specific level of investment in
capital additions,actual decommissioning costs,and potential salvage proceeds.With the OPUC
and EPA approving POE’s shutdown plan,Idaho Power says it knows incremental cost impact
will occur,but not precisely what the cost impact will be.Idaho Power thus proposes creating a
balancing account to allow the Company flexibility for the timing and recovery of the
incremental revenue requirement.Idaho Power asserts the balancing account will help the
Company track,on a cumulative basis,the difference between revenues and expenses associated
with the Boardman shutdown,and that this tracking will ensure that customers only pay for
actual expenditures.Id.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32387
YOU ARE FURTHER NOTIFIED that Idaho Power maintains under Accounting
Standards Codification (ASC)980-360-35,that when it abandons an operating asset,the
Company must remove the asset’s cost from plant in service,establish that cost as a regulatory
asset,and recognize any disallowed amount as a loss.Id.Idaho Power believes that PGE’s
decision to shutdown Boardman by December 31,2020,is not an abandonment of Boardman;
rather,it is a downward adjustment to Boardman’s useful life.Adjustments to Boardman’s
useful life previously occurred in 2001 from an original end-of-life date of 2015 to 2020,and
most recently in 2008 to an end-of-life date of 2030.If however,Idaho Power is not allowed to
collect the Boardman plant-related balances by the end-of-life date of December 31,2020,Idaho
Power could be required to account for the Boardman plant as an abandonment,which would
also trigger impairment treatment under ASC 360.Id.
YOU ARE FURTHER NOTIFIED that Idaho Power states it has estimated its
revenue requirement using a 2012 test year that includes impacts from:(a)the accelerated
depreciation of Boardman plant accounts;and (b)increased decommissioning costs.Id.The
Company based incremental depreciation expense on expected December 31,2011 plant
balances.It calculated decommissioning costs using Idaho Power’s 10%share of the costs that
PGE found to be reasonable in the Black &Veatch (B&V)study.Id.at 14-15.The Company
preliminarily estimates a revenue deficiency of approximately $1 .45 million on a total system
basis,or $1.38 million for the Idaho jurisdiction.Id.at 15.
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 that it will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules
of Procedure,IDAPA 3 1.01.01.201 through .204.The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation.
YOU ARE FURTHER NOTIFIED that the Application has been filed with the
Commission and is available for public inspection during regular business hours at the
Commission offices.The Report also is available on the Commission’s web site at
www.puc.idaho.gov by clicking on “File Room”and then “Electric Cases.”
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32387 3
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on
Idaho Power’s Application may file a written comment in support or opposition with the
Commission by January 13,2012.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 matter shall be mailed to the Commission
and Idaho Power at the addresses reflected below:
Commission Secretary Jason Williams
Idaho Public Utilities Commission Lisa D.Nordstrom
P0 Box 83720 Idaho Power Company
Boise,ID 83720-0074 1221 West Idaho Street
P0 Box 70
Street Address for Express Mail:Boise,ID 83 707-0070
472 W.Washington Street E-Mail:lnordstronid?idahopower.com
Boise,ID 83702-5918 jwi1liams(idahopcrcom
Comments should contain the case caption and case number shown on the first page of this
Order.Persons desiring to submit comments via e-mail may do so by accessing the
Commission’s home page located at www.puc,idaho.gov.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 Idaho Power may file reply comments (if
necessary)by January 27,2012.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set,the Commission will consider the Application on its merits and
enter its Order without a formal hearing.If written comments are received within the time limit
set,the Commission will consider them and,in its discretion,may set the same for formal
hearing.
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 specifically
Idaho Code §61-502,61-503,61-524,and 61-525.The Commission may enter any final Order
consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 31.01.01.000,et seq.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32387 4
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons may file written comments by January 13,2012.
IT IS FURTHER ORDERED that Idaho Power may file reply comments (if
necessary)by January 27,2012.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of October,2011.
.4/
PAUL KJEL A ER,PRESIDENT
_Th
MACK A.REDFORD,COMMISSIONER
6La zi&
MARSHA H.SMITH,COMMISSIONER
ATTEST:
J D.JewelYJ
Commission Secretary
O:IPCE-1 1-l8kk
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32387 5