20130312Compliance Filing 2012.pdf

- pr IIuIO
An IDACORP Company
-,
I 2 P11rig
- T
LISA D NORDSTROM H ILL
Lead Counsel
lnordstrom(idahoDower.com
March 12, 2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-12-09
Compliance Filing - Boardman Power Plant Annual Review (2012)
Dear Ms. Jewell:
Pursuant to Idaho Public Utilities Commission Order No. 32549 in Case No.
IPC-E-12-09, Idaho Power Company hereby submits its Boardman Power Plant
Annual Review for the year ending 2012.
If you have any questions regarding this filing, please contact Courtney Waites at
388-5612 or cwaites(äidahopower.com .
Sincerely,
Lisa D. Nordstrom
LDN:kkt
Enclosure
cc: Service List
Greg Said
RA File
Legal File
BOARDMAN POWER PLANT ANNUAL REVIEW
FOR THE YEAR ENDING 2012
March 12, 2013
I.INTRODUCTION
Pursuant to the Idaho Public Utilities Commission ("Commission") Order Nos.
32457 (Case No. IPC-E-1 1-18) and 32549 (Case No. IPC-E-12-09), Idaho Power
Company ("Idaho Power" or "Company") has completed its annual update to the
Boardman Power Plant ("Boardman") levelized revenue requirement and review of the
Boardman Balancing Account for 2012. The purpose of this report is to provide the
Commission with (1) an updated levelized revenue requirement calculation describing
actual investments made during the prior calendar year and rationale for any change in
the forecast of investments that will be made, and (2) a revenue collection worksheet
that tracks the over- or under-collection of the previous year's collections. Because the
results of this annual review demonstrate that there is not a material difference between
associated revenue from current rates and the updated Boardman levelized revenue
requirement, and because any such differences are tracked within the Boardman
Balancing Account, the Company is not recommending a rate change as part of this
report.
II.BACKGROUND
On September 26, 2011, Idaho Power filed an application with the Commission
requesting an order (1) accepting the Company's accounting and cost recovery plan for
the early shutdown of Boardman and (2) allowing the Company to establish a balancing
account to track shutdown related costs and benefits (Case No. IPC-E-1 1-18). In
February 2012, the Commission issued Order No. 32457 authorizing the Company to
establish a balancing account to track the incremental costs and benefits associated
Page 1 of 8
with the early shutdown of Boardman. Idaho Power will incur costs associated with (1)
a return on undepreciated capital investments at Boardman until its shutdown, (2) the
accelerated depreciation associated with Boardman investments, and (3)
decommissioning costs related to the Boardman shutdown. Under this approach, the
Company would replace the base rate revenue recovery associated with the Company's
existing investment in Boardman with a levelized revenue requirement that is tracked in
the Boardman Balancing Account. The Boardman Balancing Account smoothes
revenue requirement impacts of the early Boardman retirement over the remaining
years of the plant's life and allows full recovery of Boardman-related costs by Boardman
life end.
On February 15, 2012, Idaho Power requested authority to increase rates to
begin recovery of the levelized revenue requirement associated with Boardman (Case
No. IPC-E-12-09). The Commission issued Order No. 32549 on May 17, 2012,
authorizing implementation of the cost recovery approach approved in Order No. 32457
and increasing the Company's annual revenue requirement by $1,525,501 effective
June 1, 2012, to reflect the new levelized Boardman revenue requirement.
III. THE LEVELIZED REVENUE REQUIREMENT CALCULATION
The revenue requirement calculation approved by Order No. 32457 includes
the return associated with Boardman capital investments net of accumulated
depreciation forecasted through the remaining life of Boardman, the costs of
accelerating the depreciation of the Boardman plant items, and the decommissioning
costs associated with the shutdown of Boardman. Each of these revenue requirement
components are subsequently "levelized" by calculating the present value of each of the
individual items and converting the values into an annuity or level payment stream from
Page 2 of 8
customers over the nine-year remaining life of Boardman using a return on equity
("ROE") of 9.5 percent, as approved in Order No. 32457. The 9.5 percent ROE
corresponds with the ROE threshold for accelerated amortization of accumulated
deferred investment tax credits approved by Order No. 32424 (Case No. IPC-E-1 1-22).
The levelized revenue requirement calculation can be separated into three components:
(1) the revenue requirement on existing investments as of May 31, 2012, prior to when
the Boardman Balancing Account was established; (2) the revenue requirement on
incremental investments after May 31, 2012, after the Boardman Balancing Account
was established; and (3) the revenue requirement associated with future
decommissioning and salvage costs.
Revenue Requirement on Existing Investments. The revenue requirement
component related to existing investments is based on the Boardman-related plant
balances in effect prior to the establishment of the Boardman Balancing Account or
existing investments at May 31, 2012. In Case No. IPC-E-12-09, the approved
accelerated depreciation expense was based on a net plant balance that included
actual plant values as of December 31, 2011, and forecasted reserve balances through
May 31, 2012. Idaho Power has updated the revenue requirement on existing
investment components to include actual plant balances as of May 31, 2012. As of that
date, the Boardman investment was approximately $75.5 million and accumulated
depreciation was approximately $52.9 million. These amounts reflect a true-up of
forecasted plant investments to actual plant investments made between January 1,
2012, through May 31, 2012, an increase of approximately $788,000. For actual
Boardman investments as of May 31, 2012, the total levelized revenue requirement,
including incremental depreciation expense associated with the 2020 shutdown, is
approximately $3.7 million on an Idaho jurisdictional basis. This component of revenue
Page 3 of 8
requirement will now remain constant through the remaining life of Boardman; future
updates will only involve the revenue requirements associated with incremental
investments after May 31, 2012 and future decommissioning and salvage costs.
Revenue Requirement on Incremental Investments. The revenue
requirement component related to incremental investments captures all plant
investments made at Boardman after May 31, 2012, or when the Boardman Balancing
Account was established. Although the Environmental Protection Agency has approved
Portland General Electric's Boardman shutdown plan with coal-fired operations ceasing
on December 31, 2020, there will be required investments in emissions controls at the
plant in the future resulting from the Best Available Retrofit Technology II ("BART II")
petition in addition to normal maintenance repairs required to keep the plant operational.
Idaho Power anticipates most of the emission controls upgrades will be made by 2014,
with routine capital expenditures for repairs throughout the plant's remaining life.
This years update to the revenue requirement on incremental investments
includes actual capital investments made from June 1, 2012, through December 31,
2012, and an update to the Boardman capital expenditures forecast for 2013 through
2020. The levelized return on the actual and forecasted incremental investments and
the associated depreciation expense is approximately $833,000 on an Idaho
jurisdictional basis.
The largest portion of the capital investments made in 2012, approximately
$500,000, came from investments in mercury controls required by BART II. Another
investment of approximately $170,000 was related to the expansion of the shop
warehouse. This expansion will provide needed work space for equipment repair and
overhaul and allow for plant personnel to perform the necessary maintenance activities
to ensure that the plant remains operational through the remaining life of the plant. The
Page 4 of 8
remaining dollars were for routine maintenance items, including the installation of a
water recovery from demineralization system ($47,000), new plugged coal chute
detectors ($32,000), miscellaneous pump, valve and motor replacements ($35,000),
Light-Emitting Diode stack lighting ($30,000), and the installation of a redundant
mercury Continuous Emission Monitoring System ($26,000).
Idaho Power's levelized revenue requirement calculation approved in Case
No. IPC-E-12-09 included an estimated $1.77 million in plant investments at Boardman
in 2012; however, actual plant investments made at Boardman in 2012 totaled
approximately $1 million. The difference between forecasted 2012 investments and
actual 2012 investments is primarily driven by timing differences. Approximately
$414,000 of plant investments made in 2012 did not "close to plant" prior to December
31, 2012. As a result, this amount has been added to the capital additions forecast for
2013. Approximately $163,000 in plant investments were made after May 31, 2012,
and are included in the revenue requirement associated with the incremental
investments. The $788,000 of remaining plant investments made prior to June 1, 2012,
are captured in the revenue requirement on existing investments.
The capital additions forecast for 2013 through 2020 did not change
significantly. There was an overall decrease of approximately $670,000 in forecasted
plant additions in 2013 through 2015 and no change from 2016 through 2020. The
decrease in the early years is primarily a result of less wear and tear on plant
investments than expected which results in a decreased need for routine maintenance
items.
Revenue Requirement on Decommissioning and Salvage Costs. Idaho
Power estimated its share of the decommissioning and salvage costs by applying the
Company's 10 percent ownership percentage to the decommissioning study performed
Page 5 of 8
by Black and Veatch for Portland General Electric. Because a new study has not been
performed since approval of the Companys levelized revenue requirement in Case No.
IPC-E-1 2-09, no updates have been made to the decommissioning costs and expected
salvage. The total included in the levelized revenue requirement calculation is
approximately $505,000 on an Idaho jurisdictional basis.
Attachment No. I details the derivation of the updated levelized revenue
requirement and the Idaho jurisdictional share of the revenue requirement. The
following is a summary of the Idaho jurisdictional levelized revenue requirement
computation based on the sum of the updated components:
Existing investments $3,694,723
Incremental investments $ 832,662
Decommissioning and salvage costs $ 505,053
Updated levelized revenue requirement $5,032,437
With the approval of an incremental revenue requirement of $1,525,501,
Order No. 32549 increased the Boardman-related revenue requirement in base rates to
$5,174,794 on an Idaho jurisdictional basis. The difference between the updated
levelized revenue requirement and the current levelized revenue requirement amount
for Boardman is a negative $142,357 ($5,032,437 - $5,174,794 = ($142,357)). Based
on updated plant investment data, the Company's quantification of the levelized
revenue requirement associated with the early shutdown of Boardman is slightly less
than previously calculated.
IV. THE TRACKING OF REVENUE COLLECTIONS
In Case No. IPC-E-I 2-09, the Company proactively committed to tracking (1)
the monthly deviations between forecast revenue collection and actual revenue
collection and (2) deviations between existing levelized revenue requirement
calculations and updated levelized revenue requirement calculations. Order No. 32549
Page 6 of 8
approved an incremental annual revenue requirement of $1,525,501 effective June 1,
2012, and Idaho Power adjusted base rates accordingly using forecasted annual sales
of 13,172,433 megawatt-hours. Attachment No. 2 details the tracking of the monthly
deviations between the forecasted revenue collections and actual revenue collections.
Because the Boardman Balancing Account went into effect mid-year, the monthly
deviations were only tracked for seven months during 2012; future Boardman related
annual compliance filings will include twelve months of tracking. From June 1, 2012,
through December 31, 2012, actual revenue collections were slightly higher than
forecasted revenue collections, resulting in a true-up of approximately $34,000.
As stated previously, the deviation between the updated levelized revenue
requirement and the existing levelized revenue requirement is a negative $142,357,
creating a true-up of $142,357 related to 2012. In an attempt to smooth adjustments to
customer's rates, the Company will spread the true-up of both the deviations of the
levelized revenue requirement and deviations of revenue collections over the remaining
life of Boardman (i.e., the remaining eight years). This results in a single-year true-up
component of approximately $18,000 and $4,000, respectively. Attachment No. 3
details this quantification. The total true-up related to the tracking of monthly deviations
between forecast and actual revenue collection and the deviations between existing and
updated levelized revenue requirement calculations is a negative $22,000.
Attachment No. I includes a summary of the updated levelized revenue
requirement calculation including the true-up of prior years' revenue collection. The
change in the annual revenue requirement associated with the updated levelized
revenue requirement calculation and the true-up of deviations associated with prior
years' collection is a decrease of $164,390.
Page 7 of 8
V. RECOMMENDATION
Because the difference in the annual revenue requirement of a negative
$164,390 is quite small as a percentage of Idaho Power's Idaho jurisdictional retail
revenues, and because any such differences are tracked through the Boardman
Balancing Account, the Company is not requesting to adjust base rates at this time.
Instead, the Company recommends that the difference in the annual revenue
requirement associated with Boardman and any true-up recorded in the Boardman
Balancing Account remain in the balancing account to offset future positive differences
or for future refund. Idaho Power will continue to annually review the Boardman
Balancing Account and update the Boardman levelized revenue requirement.
Page 8 of 8
ATTACHMENT NO. 1
652,586 - - - - - -
613,752 228,181 - - - - -
574,918 213,744 108,805 - - - -
536,085 199,306 101,455 141,034 • - -
497,251 184,869 94,106 130,817 110,196 -
458,418 170,431 86,757 120,601 101,590 137,567 -
419.584 155,994 79,407 110,385 92,984 125,914 185,968
380,751 141,556 72,058 100,168 84,378 114,280 168,756
4,133,346 1,294,080 542,588 603,004 389,147 377,741 354,723
3,020,823 909,358 366,866 392,611 244,193 228,667 207,368
460,940 138,757 55,979 59,908 37,261 34,892 31,642

326,974 Total
184,805 Payments

28,199 875,717
Levelized Revenue Requirement for the Boardman Plant Early Shut-Down
at December 31, 2012
Revenue Requirement On Existinq investments at May 31, 2012
Exist[ ne Accelerated
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
PV
Payment
Revenue Reauirement On Incremental Investments
Boardman Capital Additions & Forecast Life (yeai
June, 2012 M 9
January, 2013 2,890,673 8
January, 2014 940,360 7
January, 2015 410,300 6
January, 2016 475,300 5
January, 2017 320.300 4
January, 2018 325.300 3
January, 2019 320,300 2
January, 2020 310,300 1
Total
PV
Payment
Decommissionlnq Costs and Expected Salvaae
2020 Costs Payment
Decommissioning Costs (Estimated in 2020 dollars) 7,864,900 685,322
Expected Salvage (Estimated in 2020 dollars) (1,769,100) (154,154)
Net: 61095,800 531,168
Levelized Rev Rqmt - Existing investment 3,885,772
Levelized Rev Rqmt - Incremental Investments 875,717
Levelized Rev Rqmt - Decommissioning Costs & Salvage 531,168
New Levelized Rev Rqmt (To be tracked through the balancing account) 5,292,657
Estimated Rev Rqmt Currently In Base Rates (2011) 3,812,406
Rev Rqmt Currently in Base Rates (2012) 1,629,969
Total Rev Rqmt Currently in Base Rates 5,442,375
Net Change in Levelized Rev Rqmt (149,717
True-Up of Prior Year Collections (5,534)
True-Up of Prior Years Levelized Rev Rqmt (18,715
Annual Rev Rqmt. Impact to Customers (173,986
Levelized Rev Rqmt - Existing Investment 3,694,723
Levelized Rev Rqmt - Incremental investments 832,662
Levelized Rev Rqmt - Decommissioning Costs & Salvage 505,053
New Levelized Rev Rqmt (To be tracked through the balancing account) 5,032,437
Estimated Rev Rqmt Currently in Base Rates (2011) 3,649,293
Rev Rqmt Currently in Base Rates (2012) 1.25,501
Total Rev Rqmt Currently In Base Rates 5,174,794
Net Change in Levelized Rev Rqmt (142,357
True-Up of Prior Year Collections (4,238)
True-Up of Prior Years Levelized Rev Rqmt (17.795
Annual Rev Rqmt. Impact to Customers (164,390
Layer Layer Layer Layer Layer Layer Layer Layer Layer
2012 2013 2014 2015 2016 2017 2018 2019 2020
ATTACHMENT NO. 2
Boardman Balancing Account Revenue Tracking
Twelve Months Ended December 31, 2012
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Total
Boardman Forecasted Revenues
Normalized ID Jurisdictional Sales (MWh) 1,152,449 1,052,464 962,561 922,125 931,654 1100,636 1,338,967 1,416,209 1,282,310 1,028,994 928,924 1,055,150 13,172,433
Boardman Rate ($) 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.116810 0.115810 0.115810 0.115810 0.115810
Boardman Forecasted Revenues 133,465 121,886 111,473 106,791 101,896 127,465 155,066 164,011 148,504 119,168 107,579 122,197 $ 1,525,601
Boardman Actual Revenues
Idaho Jurisidictional Sales (MWh) 1,171,781 1428,609 1,501,856 1.343,995 1.045,860 950,263 1,002,578
Boardman Rate ($) 0.115810 0.115810 0.116810 0.115810 0.115810 0.115810 0.115810
Boardman Actual Revenues 135,704 165,447 173,930 155,534 121,121 110,050 116,109 $ 977,895
Difference 8.239 10,381 9,919 7,029 1,953 2,471 (6,088) $ 33,905
Total Over (Under) Collection - - - - - 8,239 18,621 28,539 35,569 37,522 39,993 33,905 $ 33,905
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-12-09
IDAHO POWER COMPANY
ATTACHMENT NO. 3
Total
(142,357) 2012 True-up
2013 True-up
2014 True-up
2015 True-up
2016 Two-up
2017 True-up
2018 True-up
2019 True-up
2010 Two-up
Total Collection (Refund)
True-Up of Prior Year's Levelized Revenue Requirement
2013 2014 2015 2016 2017 2018 2019 2020
(17,795) (17,795) (17,795) (17,795) (17,795) (17,795) (17,795) (17,795) (142,357)
Total
(33,905) 2012 True-up
2013 True-up
2014 True-up
2015 True-up
2016 True-up
2017 True-up
2018 Two-up
2019 True-up
2010 True-up
Total Collection (Refund)
True-Up of Prior Year's Revenue Collections
2013 2014 2015 2016 2017 2018 2019 2020
(4,238) (4,238) (4,238) (4,238) (4,238) (4,238) (4,238) (4,238) (33,905)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 12 th day of March 2013 I served a true and
correct copy of the BOARDMAN POWER PLANT ANNUAL REVIEW FOR THE YEAR
ENDING 2012 upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff X Hand Delivered
Karl T Klein U.S. Mail
Deputy Attorney General Overnight Mail
Idaho Public Utilities Commission FAX
472 West Washington (83702) X Email Karl KIein(äpuc idaho pov
P.0. Box 83720
Boise, Idaho 83720-0074
Lisa D Nordstrom
CERTIFICATE OF SERVICE