20160311Compliance Filing 2015.pdf

SIffi*.
iiECEIV ED
LrsA D. NoRDsrRoii ?tl6 jlifl I I Afl l0: I 5
Lead Counsel
[e-mail]
March 11,2016
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-12-09
Compliance Filing - Boardman Power PlantAnnual Review (2015)
Dear Ms. Jewell:
Pursuant to ldaho Public Utilities Commission Order No. 32549 in Case No.
IPC-E-12-09, ldaho Power Company hereby submits an original and four (4) copies of
its Boardman Power Plant Annual Review for the year ending 2015. ln addition, five (5)
copies of a disk containing electronic files of the attachments and workpapers are also
enclosed.
lf you have any questions regarding this filing, please contact Courtney Waites
at [phone] or [e-mail].
Sincerely,
-l . A,,t'/ t
C\au )1."1 (qJ,h,orr-
Lisa D. Nordstrom
LDN:csb
Enclosures
cc: Service List
An IDACORP Conlpanv
1221 \./. ldaho 5t. (8-1/0?)
PO tiox 70
Boi_<tt. ll-r 83 /(]7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 11th day of March 2016 I served a true and
correct copy of IDAHO POWER COMPANY'S BOARDMAN POWER PLANT ANNUAL
REVIEW FOR THE YEAR ENDING 2015 upon the following named parties by the
method indicated below, and addressed to the following:
Commission Staff
Karl T. Klein
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
X Hand Delivered
U.S. Mail
Overnight Mail
FAXX Email Karl. Klein@puc. idaho.sov
CERTIFICATE OF SERVICE
BOARDMAN POWER PLANT ANNUAL REVIEW
FOR THE YEAR ENDING 2015
March 11,2016
I. INTRODUCTION
Pursuant to ldaho Public Utilities Commission ("Commission") Order Nos. 32457
(Case No. IPC-E-11-18) and 32549 (Case No. IPC-E-12-09), ldaho Power Company
("ldaho 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 2015. The purpose of this report is to provide the Commission
with (1) an updated levelized revenue requirement calculation along with a description
of actual investments made during the prior calendar year and rationale for any change
in the forecast of investments to be made in the future and (2) a revenue collection
worksheet that tracks the over or under collection of the previous year's revenue.
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, ldaho 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-11-18). ln
February 2012, the Commission issued Order No. 32457 authorizing the Company to
Page 1 of9
establish a balancing account to track the incremental costs and benefits associated
with the early shutdown of Boardman. ldaho Power wil! 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 then current non-levelized 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 provides an
opportunity for full recovery of Boardman-related costs by Boardman life end.
On February 15, 2012, ldaho 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. On March
12, 2013, ldaho Power filed its Boardman Power Plant Annual Review for the year
ending 2012. The Company did not request to adjust rates at that time and committed
to continue to review the Boardman Balancing Account annually and update the
Boardman levelized revenue requirement. Similarly, ldaho Power filed its Boardman
Power Plant Annual Review for the years ending 2013 and 2014 and did not request to
adjust rates either time.
Page 2 of 9
I!I. THE LEVELIZED REVENUE REQUIREMENT CALCULATION
The revenue requirement calculation approved by Order No. 32457 includes the
return associated with the 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
customers over the 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 Nos. 32424 and 33149 (Case Nos. !PC-E-11-22 and IPC-E-
14-14). 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 offsetting salvage costs.
Revenue Requirement on Existinq lnvestments. 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. ln Case No. IPC-E-12-09, the approved
accelerated depreciation expense was based on a net plant balance that included
Page 3 of 9
actual plant values as of December 31, 2011, and forecasted reserve balances through
May 31 , 2012. During the review of the Boardman Balancing Account for 2012,ldaho
Power updated the revenue requirement on existing investment components to include
actual plant balances as of May 31 ,2012. 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 ldaho
jurisdictional basis. This component of revenue requirement remains constant through
the remaining life of Boardman.
Revenue Requirement on lncremental lnvestments. 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 Company's ("PGE') Boardman shutdown plan with coal-fired
operations ceasing on December 31 , 2020, required investments have been made in
emission controls at the plant as a result of compliance with the Best Available Retrofit
Technology ll (BART ll) standards in addition to normal maintenance repairs required to
keep the plant operational. ldaho Power has completed all anticipated emission
controls upgrades and expects routine capita! expenditures for repairs throughout the
plant's remaining life.
The levelized revenue requirement associated with incremental investments at
Boardman is approximately $795,000 on an ldaho jurisdictional basis. This year's
update to the revenue requirement on incrementa! investments includes actual capital
investments made from January 1,2015, through December 31,2015, and an update to
Page 4 of 9
the Boardman capital expenditures forecast for 2016 through 2020. Total capital
additions tor 2015 were approximately $230,000, which was slightly lower than the
forecasted 2015 amount of $264,000. The majority of the capital investments made in
2015 were for the installation of a new sewage lagoon liner, the upgrade of the
calculation engine, a remodel of the control room to improve functionality, and the
installation of variable frequency dumper drives.
The capital additions forecast tor 2016 through 2020 did not change significantly
from last year's Boardman Balancing Account review when reviewed in tota!; an overall
decrease of approximately $350,000 in forecasted plant additions is expected over the
next five years. lncluded in the decrease is the addition of a $450,000 investment in
2018 to expand the ash handling disposal area. The expansion is required to prevent
the plant from having to ship ash to a third-pafi disposal area. However, the increase
in 2018 investments is offset by decreases in forecasted investments in 2016,2017,
2019, and 2020, resulting in the overall reduction in forecasted plant additions of
$350,000.
Revenue Requirement on Decommissionino and Salvaqe Costs. ldaho Power
estimated its share of the decommissioning and salvage costs by applying the
Company's 10 percent ownership percentage to the decommissioning study performed
by Black & Veatch for PGE. Because a new study has not been completed since
approval of the Company's levelized revenue requirement in Case No. IPC-E-12-09, no
updates have been made to the decommissioning costs and expected salvage.
However, PGE has contracted with a vendor to prepare a new decommissioning study,
which is expected to be finalized mid-2016. The updated study will provide ldaho
Page 5 of 9
Power with a more accurate forecast of decommissioning and salvage costs as the
plant's closure nears. ldaho Power anticipates these updated costs will be included
next year when the Company completes its Boardman Balancing Account review for
2016. The total decommissioning costs and expected salvage included in the levelized
revenue requirement calculation is approximately $505,000 on an ldaho jurisdictional
basis.
Attachment 1 details the derivation of the updated levelized revenue requirement
and the ldaho jurisdictional share of the revenue requirement. The following is a
summary of the ldaho jurisdictional levelized revenue requirement computation based
on the sum of the updated components:
Existing investments
! ncremental investments
$3,694,723$ 794,985
Decommissionino and salvase costs $ 505.053
Updated levelized revenue requirement $4,994,761
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 ldaho jurisdictional basis. The difference between the updated
levelized revenue requirement and the current levelized revenue requirement amount
for Boardman is a negative $180,033 ($4,994,761 - $5,174,794 = ($t80,033)). 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.
ln 2014, ldaho Power and PGE entered into an Asset Purchase Agreement
('APA") for the conveyance and sale of a partial interest in certain Boardman
components and common facilities necessary or convenient to the operation of PGE's
Page 6 of 9
Carty Generation Station, collectively referred to as "Shared Facilities." The purchase
price associated with the APA for the purchase of Shared Facilities at Boardman was
$620,205, resulting in a gain of $264,060 on a total system basis. ldaho Power
computed the annual credit to customers by converting the gain into an annuity or level
payment stream over the remaining life of the plant at the time the APA was executed,
or six years. The ldaho jurisdictional portion of this levelized annual payment is $50,712
and is an offset to the annual revenue requirement impact to customers, as shown on
Attachment 1.
IV. THE TRACKING OF REVENUE COLLECTIONS
AND REVENUE REAU!ffi
ln Case No. IPC-E-12-09, 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 approved an
incremental annual revenue requirement of $1,525,501 effective June 1,2012, and
ldaho Power adjusted base rates accordingly using forecasted annual sales of
13,172,433 megawatt-hours. Attachment 2 details the tracking of the monthly
deviations between the forecasted revenue collections and actual revenue collections.
From January 1, 2015, through December 31, 2015, actual revenue collections were
slightly higher than forecasted revenue collections, resulting in a 2015 true-up of
approximately negative $40,000. ln an attempt to smooth adjustments to customers'
rates, the Company will spread the true-up of the deviation of the revenue collections
over the remaining Iife of Boardman (i.e., the remaining five years), resulting in a single-
year true-up of approximately negative $8,000. Applying this amount to the single-year
Page 7 of 9
true-ups for 2012,2013, and 2014 produces a total deviation of revenue collections of
approximately negative $31,000.
As stated previously, the deviation between the updated levelized revenue
requirement and the existing levelized revenue requirement is a negative $180,033,
creating a true-up of negative $567,441 since establishment of the Boardman Balancing
Account on June 1, 2012. Smoothing the adjustment to the annual revenue
requirements by spreading the deviation over the remaining five years of Boardman's
life results in a true-up of approximately negative $129,000. Attachment 3 details these
quantifications.
Attachment 1 presents a summary of the updated levelized revenue requirement
calculation as compared to the original Boardman levelized revenue requirement used
to establish current base rates along with other tracking adjustments. As can be seen
on Attachment 1, the net change in the annual revenue requirement associated with the
updated levelized revenue requirement calculation is negative $180,033. The levelized
revenue requirement impact of the gain associated with the sale of the Shared Facilities
to PGE is negative $50,712. The true-up of prior years' revenue collections is negative
$31,438. And, finally, the true-up of the prior years' levelized revenue requirements is
negative $129,024. The sum of each of these categories suggests the updated annual
revenue requirement for Boardman is $391,207 below the level currently reflected in
base rates.
V. RECOMMENDATION
Because the difference in the annual revenue requirement of a negative
$391,207 is quite small as a percentage of ldaho Power's ldaho jurisdictional retail
Page 8 of 9
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 to customers. ldaho Power will continue to annually review the
Boardman Balancing Account and update the Boardman levelized revenue requirement
until the plant has ceased operations and through completion of decommissioning
activities.
Page 9 of 9
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPG-E-12-09
IDAHO POWER COMPANY
\
ATTACHMENT 1
dEd4tr3fieEE6qJE
OJoElq6E
Ft
6lcc
N- S-
99
.=2oooE
96
ooLOs!pho.E61b3
-9 13s
F
@bEcHEmE
hal
o;
ECoo55e9
66F
N@tso
oo@Nd
E9occo
czo-c6
xtpUE'eECo-E)
OFrd
oo
o-gE
o
@
5l6l
sl-l
a
oa,
ooto
do';
cojo
oE
oE
oryo
@_
oN
ooto
d@;
co
fo
EoE
otoo6
.E
u
o=ocof2a3Hodo9=.ckv6
Es'ii cE:
EE,s
ooEO
OFG=EFe,7
EPDo.NooJ;z
eEco
€ EeFe@I
o-9_q
s8Eo_N-q
N@ts
o{@dto soN@
t_ o_ N-o@ts
NOO
d;N
O-ONON
€iriJooo
@q
oo,@_\
N@
o!No@6NOOIN?I oFootodd.nd+d6D6nna
@tN@@o
$O-6orNNN
8883
oi@ v ci
@iNo@
@ts@ot;dirt{dirOO@ts
[e-mail]-o-o-11o_ts_(l
NO60000600000NoooDoi{
!ooooooNO{rOOOFoI OOtsFl6NGrtdddid^id.'loN69NOOtsNNNNNNTT
60NOOts@l6tot@oooE666OOO-dO@O!OrOOONNNNNT
@OO@NSo-6F6O-ONN66666<Or
ddd@ oiN@ @
-FdN6ONOo-@-NoF@F-
oso@N@oo
-F-NooooooooNNNNNNNNeae5ea..oooooo60flflf-lfcccccECc@oo6d600
988NOF..i .j d
@-F-3
i@@ONN
dddN60ooN
ooo Nt@oNn No@l{r o--$$R =338N F 6 @ 5_6E
Ic
6>E o6o;[ o oooE E o---@-F f;gPEdN=@
RR
OO6-gsz9I EEEI EE6I NN{tl ccEI EE
-t 66otOI EEcu 66fil -;Y
EI SHol 90fil iE6I EE.El E ,i-trl U3l 3
ol
EI
EIolololot
@N@A$oNr
Ef;$e =sE E ;EEE E;Eid RRfl E 9EE EEqsl rst e gfiP .is;€E **E E $EE e
#H"qE EEE E EE; E;EEg :':5 E aFb :'a:i.Z;u Ee? p, EE4 E
eEEE ggg g ,gE
E
6:;8 rig cs*E; pEE E
Do oi ortt i6EE ENgEg U
o@)t E
.No
_9iz
i,;5x
o)
o
5
o
5
o
J
o
J
o
IJ
o
IJ
o
J
lf)
oN
S(')
q)€
q)ooa
(!
tr
=o!,+..
=a
(E
UI+,trso-
E(E
EEL(Eoo
o
+,
Lorh+,tro
E
.g
=Eouo
co
ott,o
.No
oJ 5
oE.t
eEo
EE
E
=a
o
E-EE
aoa0
NI
-lollol>lfl€r€l ElEtfl
H Ela$H$F$iis] $B$ El
El fl'"""o""]
oo'
flflEl I El
!|
HHEHHFEEE E,F
fi|
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-12-09
IDAHO POWER COMPANY
ATTACHMENT 2
6'
OF60oooN16OF.\i ct i o-E}-S;8-EO
= BEI; *fl;$ 3;lo g.;l=
- u *lu *,1** s;lE s:lP
tttt
* filE * fil*- oFlo N-lF
: qdl- odl-I -t -ttttttt: fil* e Eleo N-16 NFloF o-li iFlo& N- cjl- o- cil-3 -t -ltt
s El= u ;leo 6?l- oFloF -Glo n-16& *- cjl- 6-.jl-: -l -lttg uEls nEls6 s s=ls b=18O i o- cjl- o_ cil--!-tF-tlgE I IgE e;le eelstE e B=lF \-lsEh g :'l- :-'l-d6 IEE _l _leE E EIE g. EIS
HE B s=lE EElsE9 = | |EE I IE sfle eEls
H E $ElP EEI=
- =l- - =l-8- Bl5 s_ ele_6 NFIF 6-lE
E *=l= *=l=
lttt
* file s flxh Nel- ts-16F OFIN N-IF-A o- dl- o- dl-,l -l -ltttti file : Els6 N-lo +Fl@; o-lo o-lNE -- ol- o- cil-+ -l -ltttt
Ig
a= i Ead E "E " E:E e 3=- I E!E E E# E itEal ??e= it;;! te;E lE9FC €EE€ 3iEEE E:EEE E i
EEEE f;E! E :tr.Bt Slgt E e
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-12-09
IDAHO POWER COMPANY
ATTACHMENT 3
loo)@NONON(DF(D(O
- c,i * c.i o;
-OOtOaJ vvvvoF
-tfttF(O(\l---o-N'\]\
-tr)t- (O C.l-- -- (D-(\l t\ r\
OFlr,!tC)-(Onl(\l- F- I o-QNI\No e? vv
C'N
-()rlF(ON
-- -- (D_
6lI\F
-()te(DC{r- -- (D-
NFN
oc)6l
o9NC'N
o(a6t
oDg
C'N
Io
C'NoN
aloN
-t{)-(O
c.i Fj
otroEgoc!
6 50ORo
=troAHtr .g_oELNIEo
o6'oENo-d b9oR
CLl!o7a oF(\a .9oN
tf(\lo-
o)6a
o
c,N
co
Eo.=f,\E5oNto
=LO98.& 33t,No
.No
O '{r:irJ ;.[ib roi:Jro E$cicL 6. i,i,'f :-ffia i$.ilO ,r'1]
Jl&L ldirF !,SL!.f):+ffri,F iiltcr !\,qlN itrg!'4;ift#,iil{:
fficr ri&:
cr d;5&N(ffi
.ffi
:;:*.'jLli,
@(')$t-o9
C'N
Etr
=oE,
tr
-9CLCL'LCL(LCLCLCLCL ;:f33fff:=5 ,oooooo0)o0,0,=PPe=3e=Pe ,sFFFFFFFFF VstC)*rO(Or\@(DO Eooooooooo -oNNN6lN6lNN6l F
EETt
ot
!t0,.go
oJ
.go
CDtrEo.oE9E