20200504Compliance Filing 2019.pdf

LISA D. NORDSTROM
Lead Counsel
[e-mail]

May 4, 2020

ELECTRONIC FILING

Diane M. Hanian, Secretary
Idaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, Idaho 83714

Re: Case No. IPC-E-12-09
Compliance Filing – Boardman Power Plant Annual Review (2019)

Dear Ms. Hanian:

Pursuant to Idaho Public Utilities Commission (“Commission”) Order No. 32549
in Case No. IPC-E-12-09, attached for electronic filing is Idaho Power Company’s
(“Company”) Boardman Power Plant Annual Review report for the year ending 2019.
Also included is the electronic file with the workpapers supporting the attachments. The
Company is providing the electronic file for informational purposes, and requests that it
not be posted to the Commission’s website.

If you have any questions regarding this filing, please contact Senior Regulatory
Analyst Courtney Waites at [phone] or [e-mail].

Sincerely,

Lisa D. Nordstrom

LDN:kkt
Attachments
cc: Service List

RECEIVED
2020 May 4,PM4:58
IDAHO PUBLIC
UTILITIES COMMISSION
Page 1 of 9

BOARDMAN POWER PLANT ANNUAL REVIEW
FOR THE YEAR ENDING 2019
May 4, 2020

I. INTRODUCTION
Pursuant to Idaho Public Utilities Commission (“Commission”) Order Nos. 32457
(Case No. IPC-E-11-18) 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 2019. 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. While the results
of this annual review demonstrate that there is a difference between associated revenue
from current rates and the updated Boardman levelized revenue requirement, 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-11-18). 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 with
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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 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, 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. On March 12, 2013,
Idaho Power filed its Boardman Power Plant Annual Review report 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. Idaho Power filed its Boardman Power Plant Annual Review each
year from 2012 through year-end 2017 without requesting to adjust rates.
On October 17, 2019, Idaho Power filed an application in Case No. IPC-E-19-32
requesting to decrease customer rates $1,058,225 effective January 1, 2020, to reflect
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the updated Boardman levelized revenue requirement amount. On December 26, 2019,
the Commission issued Order No. 34519 approving the requested rate change.
III. THE LEVELIZED REVENUE REQUIREMENT CALCULATION
The revenue requirement calculation approved by Order No. 34519 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 a forecast of 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. 32457.1 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.
A. 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

1 Although the ROE floor utilized for the Company’s revenue sharing mechanism was lowered to
9.4 percent as part of Case No. GNR-U-18-01, the Company believes it was the Commission’s intent to tie
the ROE approved with Order No. 32457 to the ROE authorized in Idaho Power’s last general rate case.
Therefore, the Company has maintained a 9.5 percent ROE in the levelized revenue requirement
computation. It should be noted that updating the ROE to 9.4 percent when calculating the levelized
revenue requirement would result in a net increase in costs to customers of approximately $3,800 due to
the present value calculations associated with the levelization.
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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. During the review of the Boardman balancing account for 2012,
Idaho Power updated the revenue requirement on existing investment components to
include actual plant balances as of May 31, 2012. In 2018, Idaho Power corrected an
error in the calculation of the present value updating the total levelized revenue
requirement, including incremental depreciation expense associated with the 2020
shutdown, to approximately $3.9 million on an Idaho jurisdictional basis. This component
of revenue requirement did not change and will remain constant through the remaining
life of Boardman.
B. 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. The Environmental Protection Agency has approved
Portland General Electric Company’s (“PGE”) Boardman shutdown plan with coal-fired
operations ceasing on December 31, 2020, and required investments were made in
emission controls at the plant as a result of compliance with the Best Available Retrofit
Technology II standards in addition to normal maintenance repairs required to keep the
plant operational. Idaho Power completed the majority of the emission controls upgrades
in 2014 and expects routine capital expenditures for repairs throughout the plant’s
remaining life.
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The levelized revenue requirement associated with incremental investments at
Boardman is approximately $749,045 on an Idaho jurisdictional basis. This year’s update
includes actual capital investments made from January 1, 2019, through December 31,
2019. The Boardman capital expenditure forecast for 2020 was updated to negative
$42,289 to reflect adjustments to expenditures of prior year projects, but forecasted
capital additions expected to occur in 2020 remain at zero due to the plant’s upcoming
closure. Total capital additions for 2019 were approximately $43,000, which was slightly
lower than the forecasted 2019 capital additions of $48,206. The majority of the capital
investments made in 2019 were associated with upgrades or replacements of items
required for the continued safe and reliable operation of the plant, including the addition
of deflectors at the outlet of the trona injection ports to remove SO2 from the flue gas and
the replacement of unreliable boiler controls, induced draft fan inlet vane actuators, the
coils of a failed variable frequency drive, and miscellaneous pumps, valves, motors,
piping, and minor tools.
C. Revenue Requirement on Decommissioning and Salvage Costs.
Idaho Power’s initial estimate of the decommissioning and salvage costs was
determined by applying the Company’s 10 percent ownership percentage to the
decommissioning study performed by Black & Veatch for PGE and completed in 2011.
In 2015, PGE contracted with CH2M Hill to prepare a decommissioning, demolition, and
final closure plan for Boardman. The focus of the new plan was to provide planning
guidance, rather than detailed cost estimates. Although the plan did not provide updated
cost estimates, through the work with CH2M Hill, PGE identified three decommissioning
cost elements that could be updated: (1) the elimination of Carty reservoir removal costs
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as the site will remain; (2) transmission assets that will not need to be removed; and (3)
the Tower Road extension costs will no longer be incurred. The update to the
decommissioning costs and expected salvage resulted in a decrease of approximately
$714,000 in Idaho Power’s share of the costs, which equates to a levelized revenue
requirement of approximately $446,000 on an Idaho jurisdictional basis.
In 2018, PGE issued a request for proposal seeking an Owner’s Engineer to
complete design and permitting work in preparation for decommissioning activities,
including capping the ash disposal area, demolishing structures at Boardman (i.e., coal
handling systems), remediating the coal yard, and other selective demolition work across
the site (i.e., support buildings, features supporting coal, coal handling, and coal ash
handling). The cost study prepared by AECOM Technical Services, the Updated
Boardman Coal Plant Decommissioning and Demolition Plan dated October 16, 2019,
indicates a slightly higher decommissioning cost forecast than the estimate prepared in
2011. Because the updated study is a Class III study and therefore the decommissioning
costs are still uncertain to an extent, Idaho Power has not updated the level of
decommissioning and salvage costs currently included in the levelized revenue
requirement calculation at this time.
Attachment 1 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 $3,936,546
Incremental investments $ 749,045
Decommissioning and salvage costs $ 445,875
Updated levelized revenue requirement $5,131,466
Page 7 of 9

With the approval of a change in the incremental revenue requirement of negative
$1,058,225, Order No. 34519 decreased the Boardman-related revenue requirement in
base rates to $5,135,872 on an Idaho jurisdictional basis. The difference between the
updated levelized revenue requirement and the current levelized revenue requirement
amount for Boardman is negative $4,406 ($5,131,466 - $5,135,872 = ($4,406)). Based
on updated plant investment data, the Company’s quantification of the levelized revenue
requirement associated with the early shutdown of Boardman is less than previously
calculated.
D. Revenue Requirement and Tax Reform.
Idaho Power’s income tax expenses and deferred tax liabilities associated with
investments made prior to 2018 and included in the Boardman levelized revenue
requirement amounts were calculated in accordance with the Internal Revenue Code of
1986. The U.S. Tax Cuts and Jobs Act (“Tax Act”), signed into law on December 22,
2017, amends sections of the 1986 code, most notably the reduction in the federal
corporate income tax rate from 35 percent to 21 percent. All changes to the Boardman
levelized revenue requirement resulting from provisions of the Tax Act for investments in-
service at December 31, 2017, were calculated and determined with Order No. 34071 in
Case No. GNR-U-18-01, the Commission’s investigation into the impact of federal tax
code revisions on utility costs and ratemaking, and reflected in revenue requirement
amounts approved in that case. For investments made after January 1, 2018, the
levelized revenue requirement was computed using tax rates amended as part of the Tax
Act.

Page 8 of 9

IV. THE TRACKING OF REVENUE COLLECTIONS
AND REVENUE REQUIREMENTS

In 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 Idaho 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, 2019, through
December 31, 2019, actual revenue collections were slightly higher than forecasted
revenue collections, resulting in a 2019 true-up of approximately negative $87,000.
The decrease approved with Order No. 34519 incorporated the $473,097 true-up
associated with revenue collections for the June 1, 2012, through August 31, 2019, time
period, including $65,939 related to January 1, 2019, through August 31, 2019, revenue
collections. The resulting 2019 true-up of revenue collections for September 1, 2019,
through December 31, 2019, is negative $20,173. As stated previously, the deviation
between the updated levelized revenue requirement and the existing levelized revenue
requirement is negative $4,406.
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 in
Attachment 1, the net change in the annual revenue requirement associated with the
updated levelized revenue requirement calculation is negative $4,406. The true-up of
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2019 revenue collections is negative $20,173. The sum of these categories suggests the
updated annual revenue requirement for Boardman is $24,580 below the level currently
reflected in base rates.
V. RECOMMENDATION
The results of this annual review demonstrate that there is a difference in the
annual revenue requirement of negative $24,580, or a benefit to customers. 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. As the plant nears its
end of life, Idaho Power intends to file a request with the Commission to update customer
rates removing Boardman revenue requirement amounts upon full collection. As
decommissioning activities commence and decommissioning expenses are incurred, the
Company will true-up any over- or under-collection of decommissioning costs, ensuring
customers pay no more or no less than actual Boardman-related costs.

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-12-09

IDAHO POWER COMPANY

ATTACHMENT 1
Revenue Requirement On Existing Investments at May 31, 2012
Existing Accelerated20124,798,006
2013 4,528,526 2014 4,259,046
2015 3,989,566
2016 3,720,087
2017 3,450,607
2018 3,181,127
2019 2,911,647
2020 2,642,167
Total 33,480,780
PV 27,132,599
Payment 4,140,099
Revenue Requirement On Incremental Investments
Layer Layer Layer Layer Layer Layer Layer Layer Layer
Life (years)2012 2013 2014 2015 2016 2017 2018 2019 2020
June, 2012 163,426 9 34,746 - - - - - - - -
January, 2013 1,310,858 8 32,795 295,934 - - - - - - -
January, 2014 2,813,816 7 30,843 278,323 682,781 - - - - - -
January, 2015 229,563 6 28,892 260,713 639,580 60,876 - - - - -
January, 2016 286,744 5 26,940 243,103 596,379 56,764 85,084 - - - - January, 2017 26,499 4 24,989 225,493 553,178 52,652 78,921 9,117 - - -
January, 2018 153,222 3 23,037 207,883 509,977 48,540 72,757 8,405 62,972 - - January, 2019 42,746 2 21,086 190,273 466,776 44,428 66,594 7,693 58,212 24,360 -
January, 2020 (42,289) 1 19,134 172,662 423,574 40,316 60,430 6,981 53,453 22,369 (44,259)
Total 242,463 1,874,384 3,872,245 303,578 363,786 32,194 174,637 46,729 (44,259) Total PV 196,491 1,459,538 2,899,145 218,696 252,361 21,525 112,585 29,100 (26,652) Payments
Payment 29,982 222,707 442,374 33,370 38,507 3,284 17,179 4,440 (4,067) 787,777
Decommissioning Costs and Expected Salvage 2020 Costs Payment
Decommissioning Costs (Estimated in 2020 dollars)7,156,247 623,572
Expected Salvage (Estimated in 2020 dollars)(1,774,700) (154,642)
Net:5,381,547 468,931
Total System Summary Idaho Jurisdictional Summary
4,140,099 Levelized Rev Rqmt - Existing Investment 3,936,546
Levelized Rev Rqmt - Incremental Investments 787,777 Levelized Rev Rqmt - Incremental Investments 749,045
Levelized Rev Rqmt - Decommissioning Costs & Salvage 468,931 Levelized Rev Rqmt - Decommissioning Costs & Salvage 445,875
New Levelized Rev Rqmt (To be tracked through the balancing account)5,396,807 New Levelized Rev Rqmt (To be tracked through the balancing account)5,131,466
Estimated Rev Rqmt Currently in Base Rates (2011)3,812,406 Estimated Rev Rqmt Currently in Base Rates (2011)3,649,293
Rev Rqmt Currently in Base Rates (2012)1,629,969 Rev Rqmt Currently in Base Rates (2012)1,525,501
Rev Rqmt Currently in Base Rates (2020)(40,934) Rev Rqmt Currently in Base Rates (2020)(38,922)
Total Rev Rqmt Currently in Base Rates 5,401,441 Total Rev Rqmt Currently in Base Rates 5,135,872
Net Change in Levelized Rev Rqmt (4,634) Net Change in Levelized Rev Rqmt (4,406)
True-Up of 2019 Collections (20,173) True-Up of 2019 Collections (20,173)
Annual Rev Rqmt. Impact to Customers (24,807) Annual Rev Rqmt. Impact to Customers (24,580)
1. The Revenue Requirement in Base Rates beginning January 1, 2020, approved with Order No. 34519 included additional revenue requirement adjustments associated with the Shared Facilities Gain, True-Up of Prior Year Collections, and the True-Up of the Levelized Revenue
Requirement. The result was an additional rate reduction of $1,047,572 on a system basis, or $1,019,333 on an Idaho jurisdictional basis effective for the January 1, 2020, through December 31, 2020, time period.
Levelized Revenue Requirement for the Boardman Plant Early Shutdown
at December 31, 2019
Levelized Rev Rqmt - Existing Investment
Boardman Capital Additions & Forecast

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-12-09

IDAHO POWER COMPANY

ATTACHMENT 2
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Total
Boardman Forecasted Revenues
Normalized ID Jurisidictional Sales (MWh)1,152,449 1,052,464 962,551 922,125 931,654 1,100,636 1,338,967 1,416,209 1,282,310 1,028,994 928,924 1,055,150 13,172,433
Boardman Rate ($)0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810
Boardman Forecasted Revenues 133,465 121,886 111,473 106,791 107,895 127,465 155,066 164,011 148,504 119,168 107,579 122,197 1,525,501$
Boardman Actual Revenues
Idaho Jurisidictional Sales (MWh)1,153,228 1,135,369 1,082,019 969,133 1,009,175 1,087,846 1,453,791 1,555,867 1,369,800 1,012,013 1,000,525 1,087,235 13,916,000
Boardman Rate ($)0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810 0.115810
Boardman Actual Revenues 133,555 131,487 125,309 112,235 116,873 125,984 168,364 180,185 158,637 117,201 115,871 125,913 1,611,614$
Difference 90 9,601 13,836 5,444 8,978 (1,481) 13,298 16,174 10,132 (1,967) 8,292 3,716 86,113$
Total Over (Under) Collection 90 9,692 23,527 28,971 37,949 36,468 49,765 65,939 10,132 8,166 16,458 20,173 86,113$
Boardman Balancing Account Revenue Tracking
Twelve Months Ended December 31, 2019
CERTIFICATE OF SERVICE
CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 4th day of May 2020 I served a true and correct
copy of IDAHO POWER COMPANY’S BOARDMAN POWER PLANT ANNUAL
REVIEW FOR THE YEAR ENDING 2019 upon the following named parties by the
method indicated below, and addressed to the following:

Commission Staff
Karl T. Klein
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, Idaho 83714
Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email [e-mail]

Kimberly Towell, Executive Assistant