20130927Redacted Harvey Exhibit 5A.pdf

3Effi*.
An loAcoRP company
/) -"! a1t-,L' I ilLISA D. NORDSTROM
Lead Gounsel
I nordstrom@ida,hopower.com
September 27,2013
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VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 W esl Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-13-16
Certificate for Public Convenience and NecessityforJim Bridger Units 3 and
4 - ldaho Power Company's Redacted Exhibit 5A
Dear Ms. Jewel!:
Enclosed for filing in the above matter are an original and nine (9) copies of ldaho
Power Company's Redacted Exhibit 5A which was originally filed as Confidential Exhibit 5
to Tom Harvey's Direct Testimony on June 28,2013.
To facilitate the filing of testimony and cross-examination at hearing, the Snake
RiverAlliance requested that ldaho Power redact the confidentia! information from Exhibit
5. ldaho Power consulted the operating partners of the Bridger and North Valmy power
plants regarding the sensitivity of the inputs they provided for the study in Exhibit 5. To
clarify which portions of the study are confidentia!, ldaho Power redacted the forward-
looking financial information included the utilities' business plans and proprietaryoperating
data from the study.
Sincerely,
-Z /1 .42d2,- U //^/-{"e.*-,
Lisa D. Nordstr&rn
LDN:evp
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
BEFORE THE ir,.:, '. .-.1 i ,
:
IDAHO PUBLIC UTILITIES COMMISS]ON . -
CASE NO. IPC-E-I3-16
IDAHO POWER COMPANY
HARVEY, DI
TESTIMONY
EXHIBIT NO.5A
FinalReport
Coal Environmental Compliane
Upgrade lnvestment Evaluation
ldaho Power Company
February8,2013
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page I of 52
5AIE,,
ThE r€podrB bfin p'lpsrtd bilp l,lc of thc dLntbr0le lpocnc putpaes 5erfied ln the
r€port. Ihe condrdont, otcrntrtlonr, end morrnadallonr ontafird hcruh elllh.{od ts
SAIC err0fuh hr ophloru dSAIC. To tho txirytt h.t.tsbtncnb, lfllbmdon ad oCnlonr
protld€d !yhoclenaorotnn ]Ercbfrnu$d hthe ptsprdon dtt{snport, SA|Cltrr il.d
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e a)13sArc
All dght! 'Een€d.
Exhibit No.5A
Case No. IPC-E-1$16
T. Harvey, IPC
Page 3 of 52
Coal Environmental Compliance Upgrade lnvestment
Evaluation
ldaho Power Company
Table of Conbnts
Table of C.ontents
List of Tables
Iist ofFigures
Section l BACKGROUND
Sectlon 2 ENVIRONMENTAL COST AND PERFORMANCE
REVIEW.....
2.1 lntroduction. ....,....2-l2.2 lim Bridger.. ...,.....2-l
2.3 North Valmy ........2-3
$ection 3 STUDY DEFINITION AND METIIODOLOGY $13.1 Inhoduction. .........3-l3.2 Scenarios and Seasitivities...........,....... ..........3-l
3.2.1 Scenarios..... ..........,.......3-l
3.2.2 Se,trsitivities. ...........,.,.,..3-6
3.3 Analysis Methodology ...-......-...3-8
3.3.1 Sttrdy Period and Replacement Capacity...... ..........3-8
3.3.2 Fuel, Start Charges, and Emissions costs..................................... 39
3.3.3 Capital and O&M costs............. ......... 3-9
3.3.4 Net Present Value ('NPtf) anatysis ....................3-10
Section 4 OPTIONAL ANALY$S RESULTS 4-l
1-l
2-l
5AIE,.
Exhibit No.5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 4 of 52
Fib: !15320210?
Table of Contents
Sectlon 5 CONCLUSIONS
5.1,1 North Valmy ................. 5-2
5.1.2 Jim Bridger. .................. 5-3
5.1.3 Conchrsioru. ..................5-3
Ustof AppendicesA Principle Considcrations and Assumptions
Llst of Tabhs
Table 4-l PreseotValue of PowerCostby Scenario ($2013 M)....................,...........4-l
Table 4-2 Prosent Value Powr Cost Deltas by Sccnario ($2013 M and o/o).,..,.......,. *2
Table 4-3 Jim Bridger Uait I -Total Costs NPV ($2013M) ................4-3
Table zl-4 Jim Bridger Uuit 2 - Toal Costs NPV ($2013 M) .................................... .l-5
Table 4-5 Jim Bridger Unit 3 - Tohl Costs NPV ($2013 M) .....................,.............. 4-6
Table 4{ Jim Bridger Unit 4 - Toul Cosb NPV ($2013 M) .................................... +8
Tablo 4-7. Norrh Vdmy Unit I - Toal Cosrs NPV ($2013 M) ,.........................,......4-9
Table 4-8. North Valmy Unit 2 - Total Costs NPV ($2013 M)-.............................. 4-l I
List of Figures
Figur€ 4-1. Jim Bridgcr Unit I Planning Case - Total Costs ,.......... ..... 4-3
Fignre 4-2. IimBridgcr Unit I All Cases - Total Costs.. ..................... 44
Figure 4-3. Jim Bridger Unit 2 Planning Case - Total Costs ........... ....44
Figurc 4-4. Jim Bridger Unit 2 All Casas - Total Costs.. ..............,...... 4-5
Figure 4-5. Jim Bridger Unit 3 Plauning Case - Total Costr ........... ....4-6
Figure 4{. Jim Bridger Unit 3 All Cases - Total Costs........... ........,,..4-7
Figure 4-7. Jim Bridger Unit 4 Plarni4g Case - Total Costs........... ....4-7
Figtre 4-8. Jim Bridger Unit 4 All Cases - Total Costs...... ,................4-8
Figure4-9. NorthValtnyUnitlPlannturyCase-TotalCosts..................................4-9
Figue 4-10. North Valmy Unit I All Cases - Total Costs............ ..... 4-10
Figure4-ll. NorthValmyUnit2PlanningCaso-TotalCosts..............................4-10
Figure 4-12. North Valmy Unit 2 All Cases - Total Costs...,........ .....4-l I
5-l
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 5 of 52
Iv SAIC Energy, Enviroomcot & Intastructurc, L[,C
Section 1
BACKGROUND
1.1 lntroduction
Like many utilities around the country, Idaho Power Company ("IPC') is frcing
signifrcant decisions regarding its generation portfolio. Rment and pending
Bnvironmental Protection Agency ("EPA') regulations could rcquire substantial
capital invesunent at the Jim Bridg€r Plant ('Jim Bridger') and North Valmy
Gsneration Station ('North Val,my') ooal-fired power plants to remain in
e,nvironmental compliance. IPC decided to conduct a planning lcvel study of the
relativc costs and benefits of cither making significant environmental investments in
additional emissions control equipment, or retiring affected units at the plants and
replacrng them with alternat€ gencration capaclty. IPC eugaged SAIC Energy,
Environment & Infrastnrcture, LLC C'SAIC") to conduct this strrdy and identiff which
options wore likely io be the most cost effective and warrant further sbdy.
SAIC has a designated group of economists, e,ngineers, analysts, and other
professionals who provide a range of energy resoru?e planning and advisory sorvices.
We have a long history of providing independent engineering scrr.ices to pmject
dwelopers and financiers for hrmdreds of power plants in the U.S. and around the
world; our independent cngineering teams ar€ widely acknowledgod in the power
supply industry as being industry leaders in providing unbiased and technically
superior services. SAIC's utilities consulting goup has combined financial and
planning insights with robust analyticat skills to assist hundreds of utilities with
planning efforts, spanning from individual project decisions to comprehensive
Intcgratcd Resource Plans. SAIC applied ow expertise aod experience to nrview and
comment on [PC's investment decisions rclating to either upgrading iB coal units,
coaverthg them to burn natural gas, pursuing a retirerrent and rc,placement strategy,
or some combination of these options,
1.2 Objectives
In its 201 I Integrated Resource Plan ("IRP"), IPC identified a number of pending EPA
regulations which may affect the Jim Bridger and North Valmy plants. However, at
the time of the development of the IRP, many of those environmental regulations had
not yet been issued by the EPA. While several of the applicable environmental
regulations have faced legal challenges, IPC desired a study which examines the costs
of environmantal upgrades required for compliance under the regulations as currently
proposed. Specifically, IPC had the following objeotives for the study:
r Review IPC's assumptions regarding the capital cost assumptions of the
proposed environmental compliancc upgrades, including Selective Catalytic
Reduction ("SCR'), Dty Sorbed lnjection ("DSI'), Wet Flue Gas
5AIE,.
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 6 of 52
Fft: 3153204007
Sectlon 1
Desulfurization ("WFGD), and other systems, as well as the costs of
replacemcnt capacity.
r Review IPC's assumptions rcgarding the variable cost assumptions of the
proposed environmental compliance upgrados and rtplaccment capacity.
r Develop cetimates of the cosg for each unit going forward, inoluding total costs
reflecting eirvironmental compliance upgEade investue,nts as well as total
replacement capacity costs.
r Provide conclusions as to the economic feasibility of the eavironmental
cornpliance upgrades and netirsment optious.
This Cod Environmental Compliance Upgrade Investnent Evaluatiou Report
(the "Report') provides the rosults of fte SAIC etudy.
1.3 Approach
At this stage of the decision Focessr SAIC felt that duc to the uncemainties involved
in the future envircnmeNrtal regulations, capital expeuditures, and fuel forocasts, a
planning lwcl shrdy was thc most ap,propriate approach. This study examined the
likely ranges of costs involved with the relevant options ideirtified for each writ based
on a simplified analysis of the costs of generation for each of those options.
The study identified a total of 2l options involving the six Jim Bridger and
NorthValny units, ranging from minimum to e,nhanced cnrrironmental compliance
upgrades, fuel switching to natural gas, and retirement of the units. SAIC analped ilrc
scenarios under a variety of potential fuel and carbon costs, to o€mhe the sensitivity
of each option to changes in future assumptions. The following four asks dcscribe the
sardyapprorch:
Tack 1: Scenarlo and Senrifivity ldentiflcrtlon. SAIC met with IPC shff to
discuss the objectives of tre study and to identiff the appropriate orptions to
analyze for each unit A nrmtbcr of sceirarios were initially identified for each
unit, including minimum compliance environmental upgrades for all unitq and
enhanced compliance upgradcs for the North Valmy units. After considering
several ditrer€nt tlpes of replacement capacity for both the Jim Bridger and
North VaLny units, SAIC and IPC mutually agreed to limit the rc,placement
capacity units to natral gas fired combined cycle rmire. Further, to increase
the analysis to include a wider range of possible outcomeq SAIC and IPC
decided to evaluate the potential conversion of all four Jim Bridger Units from
coal fired boilers to natural gas fired boilers. Eventually the potcntial natural
gas conversion scenarios were expanded to include the Norttr Valmy I & 2
units.
The potential environmental compliance upgrade, fuel switching, and
retirement scenarios addressed many of *re uncertainties in futur€
environmental regulations. SAIC and IPC also decided to include sensitivities
desigrred to address the uncertainties involved in forecastrng natural gas prioes
as well as possible carbon regulation compliance costs. Ultimately, SAIC
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 7 of 52
1-2 SAIC Energy, Environment & Infrastructure, LLC
BACKGROUI{D
subjected each of the sce,narios described above to nine different combinations
of low case, planning Gure, and high case projections for both natrual gas
prices and oarbon compliance oosts.
Tesk 2: Environmentsl Costr end Performance Review. SAIC examined
the emissions profile of each unit, and addrcssed ttre adequacy of proposed
environmental up$ades to address mvironsreotal complimce. Additionally,
SAIC revie\iled the prcposed capital and variable costs for each upgrade to
determine whethcr thc identified costs were within the reasonably expocted
rango for such costs,
Task 3: Options Analyslr. IFC's primary goal for this study was to
specific direction regarding up$ading each of the units at North Valmy ad
Jim Bridger. SAIC used extonsive forecast and operational data provided by
IPC for each of the units to compile a comprehensive analysis of each option's
total costs for the druation of thc appropriate time horizon. These oosts were
the,n compared to other options for each unit on I net present value basis.
Terk 4: Summrry. The rssulb and conclusions of the analysis were compilcd
in a draft rcport and reviewed inrcmally by IPC and SAIC for quality
assurancc. Results were thcn compiled and p,rovided in this Report. Results
also have bccn communicated in various conversations between SAIC team
members and IPC.
The Report contains five Sections:
Sectlon 1 contains an introduction and backgrormd-
Sectlon
Review.
2 provides the resulb of the Environmental Cost and Performmce
Section 3 addresses the Options Analysis, and describes fre methodology aud
primary assumptions used in the Analysis.
Section 4 provides the results of the Options Analysis.
Section 5 provides the conclusions ofthe study.
A detailed summary of the assumptions used in the analysis is included in
Appandix A.
This Report summarizes tlre results of our investigations and analyses up to the date of
thi-q f,gpo6 Changed conditions occurring or becoming lnown after such date could
affect the material presented herein io the extent of such cha:rges. Nothing contained
in this Report is intended to indicate conditions with respect to safety or to security
regarding the proposed upgrades or to confonnanoe with agreerrcnts, codes, permits,
rules, or regulations of any party having jurisdiction with respect to the constnrction,
operatiou, and maintenance of the Jim Bridger and North Valmy ptants, which matters
are outside the scope and purposes of &is Report.
SAIC Encrgy, Environment & Infrastructure, LLC l-3
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page I of 52
Filc: !11320200?
Section 2
ENVIRONMENTAL COST AND PERFORMANCE REVIEW
2.1 lntroduction
Coal-fired as well as other electric pow€r generating units must comply with various
environmcntal laws and regulations depending on their sizq location, and fuel
characteristics. In the case of the Jim Bridger and North Valmy units, these
regulations includc thc Mercury and Air Toxics Rule ("MATS') published by tlre
United States Environme'ntal Protection Agency C'USEPA") Febnrary 16, 2012, and
the state of Wyoming's regulations addressing USEPA's regionol haze nrles.
Other proposed or potential environmental regulations that could impact IPC's coal-
fired generating plants include the Clean Water Act Section 3160) regulations, Coal
Combustion Residuals ("CCR') environmental regulations, and carbon
legislation/regulation. Such proposed or potential regulations could require additional
capital expenditures and an increasc in thc Fixed and Variable Operatioo and
Maintenance ('O&IW') costs of affected geirerating units., Compliance with these
environmental regulatory chaqges could also impact the effrcicncy or heat rate of
affocted units.
SAIC reviewcd the projected capital and O&M costs for the retofit of environmental
conhols to comply with the MATS and regional haze rules for Jim Bridger and thc
projected capital and O&M coets for the rehofit of environmental controls to comply
with MATS for the North Valmy Unit t ('NVl'). Additionally, as a possible
enhanced environmental compliance case, we reviewed the projected capital and
O&M costs associated with possible SCR and WFGD qlst€ms for both North Valmy
units.
2.2 Jim Bridger
Based on information provided by IPC, the Jim Bridger rurits are cr.rrrently €quippd
with sulfur dioxide C'SO2") scnrbbers for the contnol of SQ and electrostatic
precipitators ("ESPs") for the control ofparticulates. [t is our undersanding that the
SO2 emission rate during 2010 and 20ll was below 0.2pounds per million Btu
("lb/MMBtu"), which is the limit set MATS forth in the rule for cornpliancc with acid
gases (0.18 lbA{MBtu for2010 and 0.15 lb/MMBh for 20ll). SOz can be used as a
surrogate for meeting acid gas emissions limits.
It is also our understanding that Jim Bridger will require additional conEols 0o comply
with mercury limits as well as SCR systems to reduce the emissions of nitrogeir oxide
(*NO,'). PacifiCorp, in conjunction with the Wyoming Dc?artment of Envirorunental
Quality, agreed to install SCRs on Units 3 and 4 and potentially Units I and 2 in order
to allow a path for timely submittal of the state's Regional Haze Implernentation Plan
(RH FIP) in January 2011. For the purposes of this Report, the installation of the
5AIE.
Exhibit No. 5A
Case No. IPC-E-13-'16
T. Harvey, IPC
Page 10 of 52
Filc: 3153202007
Section 2
SCRs for Unib 3 and 4 are planned for 2015 and 2016, respectively. The EPA
announced that it would ro-propose thc plant-specific NOx control provisiors of its
RH FIP in March 2013 and would not finalize tha RH FIP until Septenrber 2013. At
tho present time, an SCR rctrofit for Unit 2 is planned for 2021and for Unit 1 in 2022,
IPC provided the following estimatod rstofit costs for thc Jim Bridger SCR rctrofits;
it is SAIC's understanding that these estimrt€o were originally provided to IPC by
PacifiCorp, the majority owncr of Jim Bridgcr. Note that these figrucs rcpreent the
total costs for the lim Bridger upgrades in nominal dollars; the tPC share of these
costs is 33 percent. The total costs including Allowance Funds During Construction
C'AFUDC') are disoussed below for the purposes of cvaluating their reasonablorcss,
while the IPC ahar€ of the costs were used in the analysis as desoribed in Section 3 of
the Report. unit t(2ozz) --. unit2 eozt)-Ir unit3(2ols)--
r Unit4(2016)--
The above costs are in the range of approximately
The estimates appear b be adequate for the
the upper emd of the range of retnofit costs for similar unis with which we are familiar;
without performiag detailed, line item engineering reviews of the IPC estimates, SAIC
cannot refme that opinion firther. Based on SAIC's ocperience in Foviding
independent and owner's engineering services for a wide varicty of similar retrofit
installations, SAIC estimates variable O&lVt costs in the range of I
Jmegawatt-hour (*MWh') for the openation of the SCRs (inclusivo of tlre ca@
rr,placeurent costs ev€ry two !o three yean). The IPC cost estimates for variable O&M
associated with the SCRS fall within the range of
-MWh.
Bascd on the
information provided by IPC, in SAIC's opinion tho SCR fistillations for Jim Bridger
should bo sulficient to oontol the plant's NOx emissioas to a level consistent with
riy'yoming's regional haze implementation plm,
A control systcm (scnrbber additives with calciun bmmide and possibly powder
activated carbon) is proposed for the cornpliance of morcury emissions wifi MATS
regulations. The systcm is proposed for dl four units, to be installed in 2014. An
estimate of
-
(2015 dollars) retsofit cryital cost was prese,nted by
PacifiCorp for all fou rrnits. This estimato amears adequate for the installation of the
systcms and is in the rpper rarrge of retr,ofit costs for similar rurits with which SAIC is
familiar. O&M costs for the s_vstem arp ostimated b-v SAIC ", I The
mercury contol spt€,m cont€rrylatod for the Jim Bridger plant sboukfFsuilEient to
control the plant's mercury eruissions to a level consistmt with the MATS de.
ln addition to the SCR and mercury contnol cosB, certain other enviroumental rehofit
costs have been identified for the plant site, including costs for landfill closures,
catalyst replacemente, and new pond construction for solid waste disposal. SAIC did
not perforrr any plant sitc visits as paft ofthis strdy, and as such, SAIC does not have
enough information to address the adequacy of these cosa (approximatrlyl
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 11 of52
2-2 SAIC Eucrgy, Enviroomont & In&astructurq LLC
ENVIRONi,EiJTAL COST AND PERFORITIAT{CE REVIEW
from 2013 to 2019), or thcir ability to ensurc compliance with their applicable
regulation.
2,3 North Valmy
Based on information obtained &rom IPC, a DSI systun is conte,mplated for NVl to be
installed by 2015 for compliance with MATS. North Valmy Unit 2 (*lrlV2") is
already equipped witr a SOz scrubber syst€m. No additional controls are
contemplated for acid gases, mcrcury or particulates for eithcr unit. Both rnib are
equipped with baghouses forpartioulates control. Using hydrated lime as a reagent for
use in a DSI system should ersure compliance with the MATS rule on NVI for
contnolling hydrochloric acid (HCl) as a surogate for acid gases.
SAIC estimates approximately $13 million in capital costs (btal Unit 1 oosts) for the
installation of the DSI wing hydrated limc as a reagent. This compares favorably with
the approximat"ly I in oapial sssts ealimrte provided by tPC. SAIC
believes the IPC projcctions appcar to be adequate assuming continued operation at a
level similar to recont history; without performing detailed, line item engineering
reviews of the IPC estimates, SAIC cannot refine that opinion further.
IPC also provided oost estimates for the possible installation of SCR and WFGD
systeins on both North Valmy u its, for use in examining a possible 'Enlmrrced
Compliancd scenario for the North Valmy plant. The figures below represe'nt the
total capital costs for the North Vatny upgrades in nominal dollars; the IPC *rare of
these costs would be 50 percent based on IPC's ownership share.
. Unit I sCR(2018)-I
r Unitl wFcD(2018)--
r unit2 scR(2018)--
r Unit2WFGD(2018)--
These estimates appear adaluate for the installation of the systerns and arc in the
upper range of retrofit costs for similar units with which we are fasriliar. Because
mercury emissions at North Valmy are already below required levels for MATS
compliancg no additional contols are required.
SAIC Energr, Environment & hfrashrcture, LLC 2-3
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 12 ot 52
Filc: 31512020O7
Section 3
STUDY DEFINITION AND METHODOLOGY
3.1 lntroduction
SAIC applied a stnrctured, consistent approach to analyzing thc projected costs for
each unit under the various configurations described in Section 2 ofthis report, The
analysis was conductd to provide planning level comparisons of various options IPC
is facing for each of thc six coal fircd units in this analysis. This approach provides
IPC with the relative cosls of each sc€nario for each unit, which will guide IPC's
management and syste,m plaoners in their decisions regarding the investnent decisions
they must make, particularly identifying which investments warrant a further, more
detailed analysis.
3.2 Scenarios and Sensitivities
SAIC worked wifi IPC staffto ide'ntifr key scenarios and sensitivities to be analyzed.
Scenarios involve a particular unit's given situation" and generally include one or more
environmental compliance rrygrades, as well as a retire and replace option. The retire
and replace scenarios examine the relative costs of retiring the given unit and
developing a 5imihily size( natural gas fired combined cycle combustion trubine
C'CCCT') unit in its place. Sensitivity cases invotve oxamining the effects of a
change in natural gas pricing, or a change in the assumption regarding possible sarbon
regulations.
3.2.1 Scenarios
Following is a comprehensive srunmary of the range of sccnarios analyzed
l{orth Valmy Unh 1 Upgrade (lnstall DSII
NVI requires the installstion of DSI for compliance with the acid gases section of the
MATS rule. This requires an initial capital expendituie of J (2015
dollars) IPC share in 2015.
Norfi Valmy Unit 1 Enhanced Upgrade (nstallation of DSl, SCR & WFGD)
Although Valmy is not required by any curent or proposed environmental regulations
to install a SCR and WFGD system, SAIC evaluated tlre costs and benefits associated
with installing these systems on both Valmy units. In addition to the above
installation of DSl, the analysis assumed an SCR installed by January l, 2018 with a
projected cost of J (2018 dollars). The WFGD syst€m was assumed to
be installed by January l, 2018 with a projected capital cost ofJ (2018
dollars).
5AIE,.
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 14 of 52
Filc;115320200?
Sedion 3
t{ofih Valmy Unit 1 2015 ltlatural Gas Coruersion (SCR & ti,FGD not hstdled)
SAIC examined the costs and beirefits of switohing the unit to burn natural gas instead
of coal, reducing the amount of investnent required for environm€ntal compliance.
The fuel conversion was assumed to occru in tho samc time that the SCR installation
would have for NVl, January l, 2015, and assumed a six-month oubge in 2014 to
allow for the convenion to burning natural gas. After the conversiou the malysis
assumed a natural gas heat rate of 10,904 British thmnal units per kilowatt- hour
[8ffiH3,*'^$l','ffi r,':i#Hffi rT##fl iuiitEthe associated natural gas prpeline.
ilorth Valmy Unit 1 2018 llrtral Gas Coruersim (SCR & TUFGD not instslld)
SAIC examined the costs and benefits of switohing the unit to bum natural gas instead
of coal, rerducing the amount of investmcnt rtquired for environmemtal compliancc.
The fuel conversiou was assumed b occur in the same time that the SCR iastallation
would have for NVl, January l, 2018, and assumed a six-month outage in 2017 to
allow for the conversion to burning natural gas. After the conversion5 the analysis
assumed a natral gins heat rata of 10,904 British thermal units per kilowatt- horu
('Btu/kwh'). The fuel conversion assumed a projected capital cost of J(2018 dollars) for NVl, and a projected capital cost ofI (2018 dollars) 6r
the associated natural gas pipeline.
Itlorth Valmy Unit 1 2015 Retirc/Replace wi[r GCCT (SCR & WFGD not instdled)
The NVI netirement scenario assumes that fte lWl unit is retired Deccmber 31,2014
and replaced with a similarly sized CCCT beginning operation on January l, 2015.
For the purpos€s of this analysis, for the NVI retirement and all other unit retirement
analyses, the assumption is that the new CCCT would be sited in a region with access
to the Sunas hub natural gas pricing, with additional gas transportation charges and
capaoity to a generic Idaho City gate. Additionally, the assunption is that the unit
would be sized to exactly replacc the megawatts ("MW') for thc given unig assumed
tobe 122 MW in the case of NV1. The data provided fora ncw CCCT unit assume a
size of 300 MW, at a projected capital cost of $1,336&W(2012 dollars). pel rhis
analysis, SAIC assumed that IPC would eifrer constnrct Ore full size unit and sell the
ox&a capacity, or possibly purchase he 122 MIV of NVI capaclty at the given pricing,
which produces a projected capital cost of $ I 78 .2 million in 20 I 5 assuming an annual
escalation rate of 3 perc€nt. For modeling purposos, the full capial cost was prorated
for the fiftccn years ranaining in the sttrdy poriod, resulting in a cost of $106.9 million
(2015 dollan) applied to this scenario in 2015. The new CCCT assumptions include
annual capital and O&M costs. Complete details on the aszumptions for a new CCCT
are prcvided in the list of assumptions in Appendix A.
North Valmy Unit 1 2{118 RairelReplace with CCCT (SCR & WFGD not inshlled)
The NVt rotirement scsnario assumes that the NVI unit is retired Decembor 3l,2Dl7
and replaced with a similarly sized CCCT beginning operation on January 1, 2018.
For the puposes of this analysis, for the NVl retirernent and all other unit retirement
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 15 of52
3-2 SAIC Enerp, Environmot & Infrastruc{urc, LLC
STUDY DEFNMOil AiID METHODOLOGY
analyscs, the assurrytion is that thc new CCCT would bo sited in a region with aocess
to the Sumas hub natural gas pricing, with additional gas transportation charges and
capacity to a generic Idaho City gate. Additionally, the assumption is that the unit
would be sized to exactty replace the megawatts ("MW') for the given unit assumed
to be 122 MW in tlre case of IWl. The data provided for a now CCCT un't assume a
size of 300 MW, at a p,rojectcd capital cost of $1,336/kW (2012 dollars). For this
analysis, SAIC assumed that IPC would either construct the full size wdt and sell the
exta capacity, or possibly purchase the 122 MW of NVI capacity at the given pricing,
which produces a projected capital cost of i194.72 million in 20tE 6serming an
annual escalation rate of 3 perccnt. For modeling purposes, the full ceitsl cost was
prorated for the fifteeir years renraining in the enrdy period, resulting in a cost of $97.4
million (2018 dollan) applied to this scenario in 2018. The new CCCT assrmptions
include annual capial and O&M costs. Complete details on the assumptions br a ncw
CCCT are pmvided in the list of assumptions in Appendix A.
North Valmy Unit 2 Enhanced Upgrade (lnstallatlon of SCR & WFGO)
NV2 is not expected to require any additional modifications to be compliant with
curcnt eirvironmsotal regulations. Although Valmy is not requirod by the cun€,lxt
regulations to install a SCR and WFGD systcm, SAIC and IPC d€cided to analpe the
costs and benefits associated with installing these systems on both Valmy units. The
analysis assuned an SCR installed by January l, 2018 with a projected cost ofJ
I (2018 dollars). The WFGD system was assumed to be installed by January l,
2018 widr a projected capital cost of- (2018 dollan).
North Valmy Unit 2 Natural Gas Corwersion (SCR & WFGD not installed)
SAIC examined the costs and be,lreEts of switohing the unit to burn natural gas instead
of coal, reducing the amormt of invesment required for environrne, rtal compliance.
The fuel conversion was assumcd to occur in the same time that the SCR installation
would have for NV2, Ianuary 1, 201E, and assumed a six-month outage in 2017 to
allow for the conversion to burning natural gas, After the conversioq the analysis
assumcd a nafiral gas heat -t" of E. The fuel convcrsion assusred a
projected capital cost off (2018 dollars) for NV2, and a projccted capital
cost ofJ (2018 dollars) for the assooiated natural gas pipeline.
Norfi Valmy Unit 2 RetirdReplace with CCfi (SCR & WFGD not installed)
The NV2 retir€,tnent scenario assumes that ttrc lrl\y'2 unit is retfued December 31,20L7
and replaced with a similarly sized CCCT beginning operation on January l, 2018.
The NV2 137 MW replacement capacity was assumed to have a projected capital cost
of $218.7 million (2018 dollan), including AFUDC. For modeling purposes, tho full
capital cost was prorated for the fifteen yeers rErnaining in the study pcriod" resulting
in a cost of $109.3 million (2018 dollars) applied to this scenario in 2018.
Jim Bridger Unit 1 Upgrade (nstall SCR)
To achieye environmental compliance, Jim Bridger Unit 1 C'JBI") requires a variety
of pollutionconfrol systenrs. The systems include:
SAIC Energy, Environmcnt & Infrastruc'ture, LLC 3-3
Exhibit No. 5A
Case No. IPC-E-I3.16
T. Harvey, IPC
Page 16 of 52
Fih:3153202007
Section 3
. a meroury conhol system in 2014, with a projected capltal cost ofJ
(2015 dollars) including AFUDC;
r an SCR system in 2022, with a total projected capiul cost of
-
(2022 dollars) including AFUDC. For modeling purposes, the full capital cost
was prorated for the elevcn years remaining in the study period" resulting in acostoff (2022dollan);
r a Clean Watcr Act compliance syst€'m in20l7, with a projectcd capital cost of
I (20U doUars) inchding AFTUDC; and
r a CCB compliance systcm with expenditures in 2A14,2015,2019,2023,2025,
and 2031. This system had a total projected capital *rt of- (surn of
nominal dollars in 20121-2031) inctuding AFUDC.
Jim Bridger Unit 1 RetirelReplace wifr CCCT (SCR not instalhd)
The JBI retirement scenario assumes that the JBl unit is retired Decembcr 31,2022
and replaced with a similady sized CCCT begindng operation on Jaauary 1,2023.
The JBI 175 MW replacement copacity was assumod to have a projccted capital cost
of $323.79 million (2023 dollars), including AFLJDC. Formodeling puposcq the full
capital cost was prorated for tte tcn ycars rqnaining in the sttrdy pqio4 resulting in a
cost of $107.9 million (2023 dollars) applied to this scenario n2023.
Jim Bridger Unit 1 ltlaEral Gas Coruerslon 6CR not instalbd)
SAIC examined the costs and benefits of switching the unit to bum natural gas instead
of coal, reducing the amount of investnrent required for environmental compliance.
The fuel conversion assumcd a six-month outagc n2022 to allow for the conversion
to burning natural gas, with natural gas operation commencing January 1, 2023. After
tte conversion, tte analysis assumed a natrral gas heat rare of The
fuel conversion assumed a prcjected capital cost of
JBl, and a projected cepital cost of f (
(202j ibltrrs) for
natural gas pipeline.
Jim Bridger Unit 2 Upgrade onsallSGR)
Similar to JBl, to achierre environmental compliancc, Jim Bridger Unit 2 CTB2')
requires a variety of pollution control systcms, includirg:
. a, m€rcury control syst€rn in 2014, with a projected capital cost ofJ
(2015 dollars) including AFUDC;
r an SCR system in 2021, with a projected capital cost of E(2021 dollars) including AFUDC. For modcling purpos€s! the full capital cost
was prorated for the twelve years remaining in the shrdy period, rcsulting in a
cost ofJ (2021 dollars);
r a Clean Water Act compliance system in 2017, with a projected capital cost of
I (2017 dollan) including AFUDC; and
for the associated
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 17 of 52
3-4 SAIC Energy, Environmcnt & Lrfrastructure, LLC
STUDY DEFIilITIOIII AilD METHODOLOGY
r a CCR compliance system with expendihres in 2014,2015,20L9,2023,2025,
and 2031. This system had a total projocted capital cost ofJ (sum of
nominal dollars in 2014-2031) including AFUDC.
Jim Bddger Unit 2 llatural Gas Conversion (SCR rret installed)
SAIC examined the costs and benefits of switohing the unit to bum natural gas instead
of coal, reducing the amorurt of investrrent required for environme,ntal compliance.
The fuel conversion assumed a six-month outage n 2021 to allow for tha convorsion
to buming natnral gas, with natural gas ope,ration commencing January 1,2022. Lftet
the conyersion, the analysis assumed a naural gas heat rate of f. The
fuel conversion assunred a projected capital cost of I (2022 dollan) for
JB2, and a pmjected capital cost of
-
(2022 dollars) ficr the assooiated
nahual gas pipelinc.
Jim Bddger Unit 2 Retire/Replae with CCCT (SCR not imtalled)
The JB2 retirernent scenario assumed that the JB2 rmit ig retired Dccember 31,2021
and rtplaced with a similarly sized CCCT beginning o,peration on January 1,2022.
The JB2 175 MW replacenrcnt capaclty was agsumed to have a projected capital cost
of $314.36 million (2022 dollars) including AFUDC. For modeling purposes, the full
oapital cost was prorated for the cleven years remaining in the study period, resulting
in a cost of $l15.2 million (2022 dollars) applied to this scenario lul^2022.
Jim Bridger Unit 3 Upgrade (nstal! SCR)
All the Jim Bridger units require a variety of pollution control systems to ashieve
compliance. Jim Bridger Unit 3 C'JB3') upgrades include:
I a m€rcury coutrol system tn 2Ol4, with a projected capital costof J(20t5 dollan) including AFUDC;
r an SCR systcm in 2015, with a projected capital cost of J (2015
dollars) including AFUDC;
r a Cloan Water Act ssmFliaJrce system ua2017, with a projected capital cost of
I @017 dollars) includiag AFUDC; and
r a CCR compliance syst€m with expenditrnes in 2014, 2015, 2019, 2023,2025,
and 2031. This system had a total projected capital "ost ofI (sum of
nominal dollars in 2014-2031) including AFUDC.
Jim Bridger Unft 3 ilatura! Gas Conversion (SCR not installed)
SAIC examined the costs and benefits of switching Ore unit to bunr natural gas instead
of coal, rcducing the amotrnt of investment required for environmcntal cornpliance.
The fuel convcrsion assumed a six-month outage in 2015 to allow for the conversion
to buming natural gas, with nahral gas operation commencing January l, 2016. After
the conversion, the analysis assumed a natural gas heat rarc of f. The
fuel conversion assumed a projected caprtal cost of J (2016 dollan) for
JB3, and a projectcd capital cost ofI (2016 dollars) for the associated
natural gas pipeline.
SAIC Energy, Environment & tnfrastructure, LLC 3-5
Exhibit No.5A
Case No. IPC-E-I3-16
T. Harvey, IPC
Page 18 of52
fih: 3153202007.
Secdon 3
Jim Bridger Unit 3 RetirelReplace with CCCT (SCR not insulled)
The JB3 retirement scsnaf,io assumes that the JB3 unit is retired Dccember 31, 2015
and replaccd with a similarly sized CCCT beginning opcration on January \ 2A16.
The JB3 175 MW replacement capaclty was assumed to have a projected capital cost
of $263.3 million (2016 dollan) including AFUDC, For modoli4g purposcs, the full
capital cost was proratcd for thc sev€ilrtc€n years remaining in thc sUrdy p€do4
resulting in a cost of $149.2 mitlion (2016 dollars) applied to this scc,lrario in 2016.
Jim Bridger Unit 4 ttpgrade (lnstall SCR)
All the Jim Bridgcr units require a variety of pollution conhol systems to achiwe
compliance. Iim Bridgm Unit 4 ('JB4) upgrade include:
a mercury conhol systcrn in2014, with a projectcd capital cort of f(2015 dollars) including AFUDC;
alr SCR systcm in 2016, with a projected capital cost of I(20 I 6 dollars) including AFUDC;
fuel conversion assrmed a projected capital cost of
JB3, rnd a projected capital cost olf (
natural gas pipcline.
r a Clean Water Act complianoe systqn in20l7, with a pojected capital cost of
I (2017 dollars) including AFUDC; and
r a CCR complimce system with expenditras in 2014, 2015,2019,2023,2025,
and 2031. This system had a total proi".{ fpital cost ofI (sum of
uominal dollars it 2014-2031) including AF[rDC.
Jim Bridgr Unil { I{&ral Gas Coruerslon (SCR not inst XGd)
SAIC examined the costs and bcnefits of switching the rmit to bum natural gus instead
of coal, reducing the amount of investrrent rcquired for e'nvironmental compliance,
The fuel conversion assuned a six-month outage in 2016 to allow for thc conversion
to buming natural gas, withnattral gas operation comnemcing January l, 2017. After
the conversion, the analysis assumed a natual gas heat rate of The
6'lErs) for
associated
Jim Bridger Unit { RetirelReplace with CCCT (SCR not installed)
The JB4 retirement scenario assumes that the JB4 unit is retfu€d December 31, 2016
and replaccd with a similarly sized CCCT begfutdng operation on January 1,2017.
The JB4 175 lvI\M replacerneirt capacity was assumod to have a prcjected capi0al cost
of $271.1million (2017 dollars) including AFUDC. For modeling purposqr, the full
capital cost nas prorated for the sevente€,lr years remaining in the sfirdy poriod,
rosulting in a cost of $144.6 million (2017 dollars) applied to this scsnario in 2017.
3.2.2 Sensitivities
Each of the unit sce,narios w€re analyzed using a range of inputs pertaining to the oost
ofnatral gas, and possible carbon legislatioo By ustng these ranges ofinputs, IPC
can gain insight into the drivers behind dre costs involved in either upgrading or
Exhibit No.5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 19 of52
3-6 SAIC Encrgr, Environmort & hfrastnrcturo, LLC
STUDY DEFINITION AND METHODOLOGY
retiring a given unit, and to what extent the variation of those drivers affecB the find
results, Following is a descripfion of the nine sensitivities analyzcd:
Planning Case Gas, Planning Case Ca6on
This sensitivity used the planning case gEs price and planning casc carbon
assumptions. The planning eas€ gas price forecast used in the analysis was provided
by IPC, and corresponds to the price forecast IPC used for its 2013 IRP. Deails
rcgarding the gas price forecast may be found in the list of assumptions in Appendix
A.
The planning case carbon assumption was pmvided by IPC staffand rcpresents IPC's
view of likely carbon legislation. The assurytion is that there would be a projected
carbon compliance cost orpressed in terms of $/MWlu applied to the coal fird
generation, This cost is projected to begin in 2018, at a level of $14.6,4/MWh,
escalating at 3 pcrcent annually.
Lor Gas, Planning Case Carbon
This sensitivity used the low gas price and planning case carbon assumptions. The
low gas prioe used was provided by IPC, and corresponds to the price forecast IPC
used for its 2013 IRP. Details regarding the gas price forecast may be found in the list
of assumptions in Appendix A.
High Gas, Planning Case Garbon
This sensitivity used the high gas price and planning case carton assumptions. The
high gas price used was providd by IPC, and conesponds to the price forecast IPC
used for its 2013 IRP. Details regarding the gas price forccast may bc found in the list
of assumptions in Appendix A.
Planning Case Gas, Low Carbon
This sensitivity used thc planning casc gas price and low carton assumptions. The
low carbon assumption was provided by IPC, and assumes tbat no carbon legislation
will dwelop during the study perio( and assrmes a $O/MWh carton compliance cost
for all years.
Planning Case Gas, High Carbon
This sensitivr$ used thc planning oase gas price and high carbon assumptions. The
high carbon assumption was provided by IPC, and assumes that carton regulation will
occur earlier and at a higher rate than the basc carbon assumption, beginning in 2018
at a level of $3S/IVIWh, escalating at 9 percent annually.
Low Gas, Low Carbon
This sensitivity used the low gas price and low carbon assumptions. The low gas price
used was provided by IPC, and corresponds to the price forecast IPC used for its 2013
IRP. Details regarding the gas price forecast may be found in the list of assumptions in
Appendix A. The low carbon aszumption was providcd by IPC, and assumes that no
SAIC Energy, Environment & Infrastructure,LLO 1-7
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page20 of 52
Filo: 3151202007
Section 3
carbon legislation will dcvelop during the study period, and uses a $O/MWh oarbon
cornpliance cost for all years.
High Gas, Lou Garbon
Ttis sensitivity used thc high gas price and low carbon assumptions. The high gas
price used was provided by IPC, and corresponds to the price forecast IPC used for its
2013 IRP. Details regarding the gas price forccast may be formd in the list of
assumptions in Appendix A.
Lou Gas, High Carbon
This sensitivity used the high gas price and low carbon assumptions.
High Gas, High Carbon
This sensitivity used the high gas price and high carbon assumptions.
3.3 AnalysisMethodology
The study approach examined the costs and bcnefits of eech unit's upgrade or
retirement decision scparately. This means that ttrc effects of the given unit's scenrio
was isolated, and considered no interaction with any other uib on the IPC system.
This methodology, while linited, provides a plerming level look at the economics of
the rpgrade or rctirernent decision.
For each scenario and for each sensitivity, SAIC uscd the annual generation amounts
for each unit provided by IPC. For purposes of this sueening analysis, the same
annual generation amount for each unit for each year was used before and after the
potential environmental irnprovements or fuol switching, and for the replacoment unit
in the oase the coal unit was assumed to retire. This has the effect of isolating 6e
costs of the upgrade, allowing IPC to det€nnine the relative beirofits of the upgrade or
retinement without any effect of an altered dispatoh on fuel and O&M expcnses. Tte
generation forecasts provided by IPC extended frrough 2032.
The fuel, O&M, start charges, carbon costs, and SOz allowance prices wer€ forecast€d
for each rrnil fq1 the duration of the study period. AdditionallS fte ongoing capital
and O&M expeules were included in the analysis, to ultirnately forecast the total cost
of generation, both fixod and variable, for each unit under each scelrario and
sensitivity.
The costs of the envhonmental upgrades applioablc !o each unit wcre also included
IPC provided total capital costs including AFUDC for each upgrade required as well
as the ongoing incremental O&I\4 costs associated with each upgradc. fi16 timing of
the capial expenditues varied according to the schedule of the given unit's upgrades.
3.3.1 Study Period and Replacement Capacity
The study period used in the analysis was 2013 to 2032.
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page21 oI52
3-E SAIC Encrry, Environrrcnt & Infrasructure, LLC
STUDY DEFNMOil AND I'ETHOOOLOGY
In the retirement scenarios, SAIC assumed that eaoh unit was replaced with generic
CCCT capacity and energy at the end of its life. fire generic replacement capacity
was, as in the retirernent scenarios, assumed to be similar in size to the given coal unit.
Section 3.2 abovo describes the specific costs associated with each NV or JB unit For
the retitement scenarios, the total projoctcd cost is id€ntifi€d abovc. The analysis used
a proratcd cost for the replacement CCCT units, based on how many years remained in
the study period for a given unit. The proration was calculated bas€d on a 30-year life
for the replacement CCCT. For examplc, the Jim Bridger I replacement CCCT was
assnmed to bcgin operations n 2023, with t€n years rcmaining in tho study period.
The full cost of the rcplacement CCCT was prorated by a factor of 10/30,
corresponding to l0 yean in the strdy pcriod out of the 30 year life of the CCCT.
3.3.2 Fuel, Start Charges, and Emissions costs
Each rmit's fuel costs wcne estimated using the average hcat rates provided by IPC.
The dispatch amount of generation was fixed according to the annual pmjected
generation provided by IPC, allowing SAIC to use the average heat rates to calculate
the amotmt of coal burned and total fuel costs.
Similarly, the strrts for each unit were also providd by IPC, as well Es costs p€r start.
SAIC calculated the total start charges for each year ofthe study period.
SOz emissions allowance costs wetE calculated using the total fuGl conzumption
estimates for each year, combined wittr the lbs/MMBtu data provided by IPC for each
rmit, to obain the total tons of SQ. The SOz allowance prices were assumed to be
$0.50/ton in 2012 dollars, and such cosb wer€ escalatcd at 3 per,cent annually. IPC has
zufliciont allowances to cover SO2 emissions for these plants, although they were
included in tho study to be conservative.
Carbon coss wfie calculated according to the given carbon price for each se,nsitivity.
IPC provided catton costs in terms of $A4Wh for the coal fired generation. To
acoount for possible carbon costs for the gas fired replaceme,nt capaoities, SAIC
assumed that 50 percent of the $/MWh pricc for coal would apply to the gas fired
generation- For example, the base carbon scenario calls for coal fired carbon costs of
$16/MWh lr.2021dollars. For the gas-fired generation, SAIC asslmed this would be
$8/MWhin202l dollars.
3.3.3 Capitaland O&M costs
Each rurit has ongoing capital expendihrcs and O&M costs related to the operation of
the unit sepamte from any capital or O&M costs associated with the eirvironmental
upgrados. IPC provided a forecast though 2032 for base capital and O&M
expenditrues. Based on discussions with IPC, the averqge base O&M €xpenses were
escalated at 3 percent annually. The average capital expenditures were escalated at 3
percent annually.
The incrernental O&M experx,es associated with the upgrades were also provided by
IPC thmugh2032.
SAIC Energy, Environment & krliastructure,Ll,C 3-9
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 22 of 52
Fiie.:3153202007
Secthn 3
3.3.1 Net Present Value (.'NPV") analysis
The anoual md cumulative projccted pow6 costs for this Rcport arc pcsartcd on a
NPV basis for each sce,nario. Based ou discussion with IPC, toal annual costs for
each year were discountcd to 2013 dolla$ using I discount value of 6.77 petrr,nt"
wbich rcpresents IPC's Weightcd Avcrage Cost of Capital C'WAC€).
Exhibit No. 5A
Case No. IPC-E-I3-16
T. Harvey, IPC
Page 23 of 52
3-10 SAIC Enagy, Environrnc,nt & Intastructure, LLC
Section 4
OPTIONAL ANALYSIS RESULTS
4.1 lntroduction
This setion presenb the resultr of the analycis for each of the six coal units.
Conchrsions and rccommcndatiotu follow in Section 5.
4.2 Summary Results
Table 4-l contains the surmmary r€sults for all sconarios. For cach unit, the option
with the lowast projectod ctrmulative prcsont value powcr costs is highlighted" Dollars
are shown in millions of dollan and discountod to thc year 2013, Table 4-2 contains
the comparison of the coets of thc environmenal compliance upgrades to the
Retirqnent scenarios for each unit, both in dollars and percentage.
Table {-l
Present Va!rc of Porer Cmt by Scenado $An3 U
5AIE,.
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page24 ol 52
f&: 115320il07
ryaa ldEr
lLta l-tu liar.raC0.
qrorir*3 imffDa.Itlar l{iarirlt IU]-
ldilrJarti ltar.d.l!ll- zE5loioffid..r Itt!l.x F'q tryafl l$ltl.*t5rll-g lrr lt{r!q (16.,B (sile1
-il
Ltrvdr', t iadcrltb - EO.t tid E5il $r:I tl'rn Ita,ort*tut
I
t$t lsral tat*
h}ltt,: qr.d.FC{.EOiid6 lSa59l (3rrq
.tK 5!'il It !I lsrt.lt ttu.l.ra ts5t,.s ls.q4 (gl,l.il
r fitr.z lD.tra l$r, - 16 Onvrao ($2541
I
($rr *E*lt rEs tsas Inl).B ttm2l,G t562rJait
(Fot,-r*
li tl{ar* l|ai* llGtr . ,.6 a(idm 1526U.fr {xq.fr l..B Itt{t$st--0ll4 ttr.l (tt l tl.u
hr }l{.t* l,r * (lcil - i0 Gcrrdm ls:all (tlt4 ti ($30.)(sr$l tst Gul (tmt
4
g.t4.a
Section {
Tabh {.2
Present Value Pomnr Cost Deltas by Scenario ($2013 il and %)
The analysis for the North Valmy units indicates trat urder planning Case
assurrptions, the projected cumulative pr6€,!rt value power costs associated with the
Upgrade (In$all DSD scenario is projectod to bc thc least cost option. ThiE hotds true
for the majority of the various cases for thc North Valmy units, widr fte exception of
tbe Low Gas/Planning and High Cafton cases, and ttrc Plaming Gae/High Carbon
case. In these instances, the lower fuel costs associatcd wilh the low gas prices, and
the higher carbon compliance cosb associatod with the high cofton cost assumption,
led to the Natural Gas Conversion cases haviry ttc lowest prcjected cumulative
prcsent value power costs.
The aralysis for the Jim Bridg€r units indicates that for all four Jim Bridger units, &c
projected cumulative prosent value power cosB assooiated with the envircnmental
upgrsdes represeirt the least cost option For all four rmits, similar to the North Valmy
aralysis, tlrcre was one case in which the projected cumulative prescnt value power
costs associated with the Nanual Gas Conversion option represenEd the least cost:
the Low Gas, Iligh Carbon sc€nario.
4.2.1 Jim Bridger Unit 1
The JBI unit was exanrined for three sconarios: Upgrade (hsta[ SCR), Nanrral Gas
Conversion (SCR not instslled), and Retire/Replace with CCCT (SCR not installed).
The planning case results indicate that the projected cumulative prEs€ot value power
costs associatd with the Upgnde option is the least cost option. Ths projected
cumulative prescnt value power costs associatcd with the Upgrade option is lower by
$291 million when compared to tho Retire/Replacc option, and lower by $332 million
when compared to the Natural Gas Conversion option.
Exhibit No.5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 25 of 52
4-2 SA(C Encrgy, Environrncnt & Infrastructurs, LLC
III
. li.'ld.tlci IllrrLO . 13 Cow.{oi 05tCO r mbrAophc (tloSCrN
IJ
e
f,
:
$ro
tle
t!0
ls
,0,
aa'
to
OPTIONAL AI{ALYSIS RESU LTS
Figurc 4-1. Jim BrUgu Lhft 1 Plandq Case - Total Costs
As with all the Jim Bridger units, tbc projectcd cumulative prcseff value power costs
associated with the calres wene gcncrally higher as carton oornpliance costs inor€aged.
Thsre was a similar tsd with regards to gas prices. ThG NG Conve,rcion option was
similar to the Retire/Rcplace option. rilith one excqrtion, tha cumulative prrs€ril
value power coets associatod with the Upgrade option werc projocted to be lower
when compared to thc projectcd cumulative prcseirt value power co$s associatcd with
the NG Conversion and Retir€/R€place options.
Table 4-3 and Figure 4-2 contain the results for ihe nine JBl casos:
TaUe&3
Jim Bddger unit 1 - Tdal cosrs ilPU ($201310
lrrO!IrOa3
'lrr{l|lfrGr tlril.l
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SAIC Eocgy, Environmqrt & Intastructutr, LI,C. 4-3
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 26 of 52
Flla 3153202007
H$er
Xl$Clttrr
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Fipre &2 JLn BrSgu Unit I All Cases - Tolal Ccts
Section I
4.2.2 Jim Bridger Unit 2
The JB2 unit was 6samined for the same thrce scenarios as Unit 1: Upgrade (InEtall
SCR), Natural Gas Conv€,Bion (SCR not installed), and Retire/Roplace witt CCCT
(SCR not installd).
The planning case results indicate that the lhgradc optioa is fte least cost option The
cumulative prcs€nt value power cost for the Upgrade option is projected to be
$305 million lowor than the Retire/Re,placc sce,nario, and $350 millioa lower than fte
Natual Gas Conv€r$ion option '
*,
st0
rloIEts
.J8t0
a
3zm
to I
Uprr.d.fSCf httrlq rilccotnffJonll{ollCl, rr.Urtn d.c.lilotcil
Figurc 1.3. Jim Brldga Unit 2 Hamiry Case - Total Gosb
As wifr all the Jim Bridgor ,'nits, tho projccted cumulative presemt vatue power costs
associated with the oases were generally higher as carton compliance cost increasod,
and a similar tend is projrcted with regards to higher gas prioes. The projected
Exhibit No. 5A
Case No. IPC-E-1$16
T. Harvey, IPC
Page 27 ol 52
4-4 SAIC Eneqgy, Environment & Iniastnrcture, LLC
OPTIONAL AT{ALYSIS RESULTS
oumulative prescnt value power oosts associatod with the Retire/Replace o'ption were
generally lower than the projeoted crrurulative present value powcr costs arssociated
with the Natural Gas Conversion option, with the exception of two Low Gas cases.
The Upgrade option was forecasted to have thc lowest projccted cunrulative present
value power costs in all but one case, the Low Gas/Iligh Carbon case.
Table 4-4 and Figrre 44 contain the resuls for the JB2 cases:
TaUe 4-4
JIm Brldge Udr 2 - Toral Cosrs iln' $2013 ir)
buCrt
LilCrll.i*t f*Cat tlir*nth6-
,hi.ftlC...a-thfiI lhl*r6.€r )ldr€s
LtfioDllrnht XlllhOlt
tparrhl$rlllfllal
tac CorU.rdor (ilo t0lLInHdlrelcl w.s Sa.ot tt s1@ slosE
(l fft
stm(r dr $ues(rE tl,26r.(t t(iuil3r tri
alc CriorLn.llt!t llrl Itiln tlt 3rqo 3rlc t&a $,r 3S
g1.o
3uq!
3rr0
t tl.oo
!tEI toooS t{o
E soo
30 rrtill||!or83 LouGre Loucl' tL.nh ttrulc Plm*1 lIthcr. Hllt6r fthc..Xoclftc ItilIf l{fhcartor Cr.O. c-.(il Ca.GG ,loortoi ,hmlra lflhorbnc.!.o,tcr toorta.t ,hfirltt Hiafic.lts cs.ct6ct
Cr. orto,t
[--iiiri.o.ql,"'urot ilsry.:g$scr1__: fi;t}.eG;16snr-
Figue ll.4. Jim Bridgr Unit 2 All Cases - Tdal Costs
4.2.3 Jim Bridger Unit 3
All Jim Bridger units were examined for the same three ssenarios: Upgrade (Install
SCR), Natural Gas Conversiou (SCR not installed), and Retire/Replacc with CCCT
(SCR not installed).
The planning case results for JB3 indicate that thc projected qmrulative present value
power costs associated with the Upgrade option is the least cost option. The projected
cumulative present value power costs associated with the Upgrade option is
$446 million lower than thc projected cumulative preseirt value power costs associated
with the Natural Gas Conversion scenario, and $371 million lower than the
Retire/Replaco option-
SAIC Encrry, Envfuonment & hfrastructue, LIC +5
Exhibit No. 5A
Case No. IPC-E-13-'16
T. Harvey, IPC
Page 28 of 52
rih: 315320200?
Secthn I
The projected cumulative prcscnt value power costs associated with the
Retire/Replace option indicate this is the most expensive option for thc majority of the
crlres, more so ev€n than the Natural Gas Convcrsion option. This is primarily due to
the constuction costs for ths Replaccment CCCT being significantly hig[er thaa the
capital oos$ associEtod with he fuel conversion.
tJ.o --
rro ,
IT
E r.o
t to'
so
to I
ttlan-ltclll|lt H,.IeGo.ru.d.05n, rltrtflf.rfa0btcil
Figwe &5. Jim Bidger Urutt 3 Planniq Cae - Total Costs
Table 4-5 and Figure 4-6 contain the rezults for the JB3 cases:
Table 1-5
Jim Bridger Unit 3 - Tou! Costs NAI $At3 i0
lfl0lr
tilC-
Ifrdl|LdlB-
tlrl{
Cr.Ca
il[rltf.6rtlri.Ltt llrilrtCnGa llrha!It.is!tlrintl|Edre..
UEna.ltoitdjLd
xa G!il.rdolt (XotGi
Edirb&ollrlli $42lm sB6er $56C''tLt:[ar Er 'LI!6
$tflo
<r rm Jt.U tl.{91tr l,9uel
3Lara
ilaCoi-rfi.r.u6 gtSr gL tttz ls trrl gar
The general tmd of higher carbon and hig[er gas prices making the Upgrade option
the most economioal option occun also rrith JB3 and JB4.
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 29 of 52
46 SAIC Encrgy, Envlronment & Infraetructurc, LLC
t10
tua
Et urllllll
lflE ! 1flC.. tar6.r lLmll Dhlra|t ,hnt! tfahor Hlhorr tl|ltc.rIc$cr lhrnl't tlficl.trr Ca.q. Cr.(.3 CdC.. lloo,bgr il.ml,l Hacrt€nt.Orbrt
fi;t *l"rttdffi
tlchr Xrmalr ilieltqr GroOr5qr
rr€Conurnbaototc{ r&trdtDlsllbtcil
F(pre t6. Jim Bddgw Unfr 3 AllCases - Tdal GosB
OPTIOiIAL AiIALYSIS RESU LTS
4.2.1 Jim Bridger Unit {
The projected cumulative present vatue power costs associated with the planning case
rezults forJB4 indicate similar resutts as with JB 3. The projected cumulative prescnt
value power costs associated with the Upgrade option is trc least cost option The
projected cunulative present value power costs associated with the Upgrade option is
$393 million lower than the projected cumulative pr€llent value power costs associated
with tho Natural Gas Conversion option, aud $332 million lcss than fte Retire/Replace
option. The projected relative resulb of dre sensitivities sccnarios for JB4 are similar
to the rclative results for the JB3 sensitivity scenarios.
Ett6daa{,l,}t
tt t0
tlu
t30
llo
S{0o
tao
$
r Upar.d. lScR ln3r.lhdl r ifc Convlfslal [t{o SCQ r n.tlrqr?rC.cr lilo SCQ
Figure 1-7. Jim Brillger Unit { Planning Case - Total Gosts
SAIC Encrry, Environmqnt & Infrasfructure, LLC 4-7
Exhibit No. 5A
Case No. IPC-E-13.16
T. Harvey, IPC
Page 30 of 52
Filc: t151202007
Section 4
As with JB3, the projected cumulativc prcsent value power cosb associated with thc
Retire/Replace option indicate this is the most orponsive option for the majority of the
cases for JB4, more so even than the Natual Gas Conversion o,ption. This is primarily
due to the construction costs for the Replacoment CCCT being signifrcantly higher
ttnn the capial cosb associated with the fuel conversion.
Table 06
Jim Bridgr Unil I - Total Costs t{PV (t2013 M)
l.,G-
tarr6aa
,lnlllt lrOr ,5ilrCr..r
tlrtnll|
hGr
tLnrLl.
llerrllN
h0r tlaiG!
Ldrol!
,arll,|
Ei. C-fir
Il|hCr
LG Cmr..icrlilotclH-rr.'Is,{.€sm 970 $a6 tlrE sI,111
ar fl,$a?
afltr
srI,,
3LAn
514t
Cr t2
gl.SS
a! ut
tI|l lart a'rc 3n a*la em lm 3.t,
3t'lo
tuD
,12t
Et uilIllff
lflO. lryOr l.U(3.. tbml| ?l.'rd4 ll.rn!,| l{ia.c tl|har U.hOo,loq.tar fntlrl llahc.rtdt O.-! C-b A.Or lco.ton llrrrlrt HlfrC.lionO.C]lil i.Or!il fbmtttartfhorboo C..Cr6cr
r $tr5c ISR looLl.dl lf5coavc'rlon(xoscnl rrlfc/n d*.(tsrcil
Flgure f.8. Jim &frlger Unit { All Cases - TotalCosts
4.2.5 North Valmy Unit 1&2
The lWl analysis fupluded an Upgrade casc involving just the DSI installation, and an
Enhanc€d Upgmde case including the installation of SCR ard WFGD systems. NV2
was evaluated for the Enhanced Upgrade case. Both North Valmy units were also
evaluated for a potential Natural Gas Convcrsion scenario, and both were compa.rcd to
a Retire/Replace optioa.
4.2.6 North Valmy Unit 1
The planning case results for tWl indioate that thc projected cumulative prosent value
power costs associat€d with the Upgrade (DSI Installed) option is the least cost option.
The projected cumulative pr€sent value power cosb associated with the Retirement
Exhibit No. 5A
Case No. IPC-E-I$16
T. Harvey, IPC
Page 31 of52
+8 SAIC Energy, Environrncnt & Infrastrucunc, LLC
OPnOilAL AI{ALYSIS RESULIS
option is lower by $138 million when corpared to thc 2015 Nsfiral Gas Comversion
option, and lower by $76 million whcn compored to thE 2015 Retfu/Replaoc option.
loo
t0
lD
lH
'rt0fl t,oIil
to I I
.lrFtrtlHhd.dl
rlfil?€BncEro.gfIIBq
r &t tlc C6trtlqr 0tc&r I wmq
rHrf,lsdllf*
.loll l*./Irho 0a0n t
Ffuure l-9. ltloth Valmy Udt 1 Phnning Case - Total Costs
The NVl malysis results indicatc that for the majority of oases, thc Upgndc @SI
Installd) case is fte least cost option. The Low GaslPlanning Case Carbon, Low
Cas/tligh Carbon, and Planning Case Gas/High Carbon oases indicate that rmdor low
fuel cost conditions, s1 6 hi8h catbon compliance oost condition, the Natrral Gas
Convcrsion options would lilcsly rcsult in tho lowest cumulativc pr€s€Nlt value powcr
costs.
Table &7.ibfi Valmy Unit 1 - Tota! Coss iln ($2013 Ml
SAIC Enary, Environmcnt & hfrastructure, LI,C 4-9
Exhibit No.5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 32 of 52
tr6a tdar
,f-.t IrOt er!1l
C-a C!
ni*rar 5r?l.rt ,li*a
bar aliar Iti6rtln-l |lahar
UIEIEryU&lLCryLilloittI Wr60Aalr Cmnkr{r.$r I Wlo!
t|fr 5,lr s
*A,9.!
taa6
50.
S.sr
tmt3rtallal
trrSafi95
$t!r,
P6rt89
$5,
3L6I$Tgt$
ttE,
Tcs
S&o
Slrt
llll$e
t1€
tDs6taHtma tlila. E$ n drl(!ta.!..el rilt,l.f.. |il.$ra rlta!,s,s-
Fib: ,t5U020O7
I
lLnLl
Cr.CrrItljrC.Acr
Ia-
EI
tuo
ttoo
tE
to. .
t.
tD,
$'Irdl
L*C.r LdO.r lffCr i.ina.l tlilll|tlooltct ILmft Hllhc.lter Cr{I. Cr.L
I
lllltO..
HlhC.rto.r
Ithl.l lthG.rXoolbo.l tLmll|CDOrtct
a
O..Oilql l{oo.tci llrmtc
! Iottt cfitf,rbr ltaotcr r wEol a lult6 GcurQlc.t
*rl utEq .lor!rari,lrI!!(m$tl
Figurel.l0. ilorth Valmy Urt't 1 All Cases -Total Costs
Seclion I
4.2.1 ttlorth Valmy Unit 2
The planning oase rpsults for NV2 indicate &at ttre projected cumulative present valrrc
power cosb associatcd with the Retire/Replace option is the least cost oprtioq though
the costs associated with thc Naaual Gas Conversion option are v€ry similar. The
p,ojected cumulative proscnt valuo powcr costs associated with the Retirc/Rcplace
option are lower by $2 million when coryared to tbe Natunal Gas Conversion option,
and lower by $66 million when comparcd to tlre Enhanced Upgrade option.
Ito6aiul}t-
iu
3.o
ta.o
tao
t?o
r ilG Coc'.rlon (fto SCi l Wxigl .krbncodlhfndr r n t'rfi.pLG.llrto 5(I 0 $nGD]
Flgue {.11. lthth Valmy Unit 2 Planning Case - ToUl Costs
Thc NV2 analysis results indicate that for fte majority of cases, the Natural Gas
Conversion case is the least cost option. The Planning Case Gas/Low Carbon, and
Plauning Case Gas/Planning Case Carbon cases indicate thar under plannrng case fuel
cost conditions and low and ptanniqg case carbon compliance cost conditions, the
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 33 of 52
+10 SAIC Energr, Environment & InfraSructure, LLC
OPNONAL ANALYSIS RESULTS
Retirc/Replace option would likely result in the lowest cunulative present value
power costs.
Table &8.
SAIC Enerry, Envhonmcnt & Infrastructure, LLC 4-ll
Exhibit No.5A
Case No. IPC-E-I3-16
T. Harvey, IPC
Page 34 of 52
tbrth valmy unit 2 -Totd cosrs ilPv $2m3 u
ttror lor Oaatlrnt3 lr6r tlrltNCr.Or
rrml
Gtta 6tffr.[A.drtGT'O rthcr llurartlltht ,tlr€t
La Glirdr lloLllwtoa
'Ele trilJ,,I*taa ur!- tSat rt rI,00 har.rd 3r-55lf teaf,a $L fro
Ldrll&.ar 3rD llc a5 fi ,il a
lhltlror lflror ilaiartLooilon ?lflw lfriortarCnC..tcr
31,0lmfrt
Efil.rlh
lor6u Ls6.. t rcrs tlrml| irmlC tbilltilooltdl ?hmllt Hlahcrtar Cr.G.s fr.rot C..etcrrctoo xoc.lt!.r.gm**
"E r.,rc..luDar.da lEllqrflpar.ltfo$ifwrcol
Figure l-12. t{orfi Valmy UnI 2 All Cases - Total Costs
Fihr !1532021x)?
Section 5
CONCLUSIONS
There are a variety of factors causing the increasing number ofcoal-fired gcneration
retirement studies and actual retiremenb, including a significant docrease in natural
gas priccs, increasingly stringent environmental rcstrictions, and steadily increasing
amounts of renewable generation. In IPC's case, the potential envircnmental
rcstrictions and their associated significant investments required for compliance are of
particular concem. Complicating factors for the total system and espccially for the
North Valmy units is the combination of recent wind insallations and the traditionally
heavy spring hydro generation; these two frctors have combined to result in a
significant decrease of North Vatny generation in the March to June months of recent
ycars.
Another challange facing coal generation owners is the possibility of some form of
carbon/greenhouse gas ("GHG") regulation in the future. This possibility leads to
substantial uncertainty when attempting to forecast the future of rry asse! and
coal-fired assets in particular. A recent sUrdyl by the Deutsche Bank Group identified
that, evelr though natural gas is widely viewed as a less-carbon intensive dternative to
coal as a power sector fuel, when considering the entire life cyclas of both coal and
natural gas, it is possible that the natural gas GHG advantage would either be reduced
or eliminated. The shldy discusses how shale gas productiorq with its associated
hydraulic fracturhg, leads to increased GHG e'missions relative to conventional
natural gas production. The Deut$che Bank Group r€port ultimately concluded that, on
averag€, nahrral gas-fued electricity generation does in fact emit significantly less
GHGs than coal, on a source to use basis. Howover, the Re,port highlights the fact that
methanc is still a conc€m as a GHG, and requires further attention. For IPC's
purposes, this is significant as it underscores the importance ofcousidering the issucs
of carbon and GHG when evaluating coal-fired rcsources, even though the momentum
for some fomr of uational carbon/GHG legislation has cooled recently.
SAIC was retained by IPC to conduct this study which addresses these concerns when
evaluating the upgrade inveshne,nts required to keep tlrc North Valmy and Jim Bridger
plants in environmental compliance with recent and pending EPA environmsntal
requirements. In collaboration with IPC, we identified a methodology which
incorporates the uncertainties IPC is facing, particulady with respect to natural gas
pricing and possible GHG regulations. This section provides SAIC's planning level
conclusions regarding the economics of those upgrade investments relative to simply
retiring the plants and replacing them with natural gas-fired generation. IPC should
consider conducting additional detailed analysis to evaluate the most promising
altematives considered in this preliminary shrdy. Such studies should consider both
annual and curnulative projected present value power costs, production costing
simulation with and without the various proposed altenrative conversionslretirement
scenarios and ssnsitivity cases and a rerriew ofthe O&M expenses under scenarios and
I Comparing t,ife-Cyclc Greenhouse Gas Emissions from Nahral Gas and Coal
5AIE,.
Exhibit No. 5A
Cas'e No. IPC-E-13-16
T. Harvey, IPC
Page 36 of 52
Filc: I t51202007
Section 5
sensitivity cases where a major shift in the operation of generation resorrrces might be
expected.
5.1.1 North Valmy
The planning case ruults for NVI indioate that the projected cumulative present value
polver costs associated with the Upgrade (DSI Installed) option is the least cost option.
The Upgrade option has the lowest projected prssent value power costs, with the
diffcrsnce betwcen the Upgrade option and the Natural Gas Conversion and
Retire/Replacc options rarying between $76 and $138 million.
The NV2 analysis indicated that tho Natural Gas Conversion option is projected to
have the lowest projected cumulative present value power costs. In the case of IrlV2,
the Natral Gas Conversion option and the Retire/Replace options are both very
gimilsr in terms of present value power costs.
The North Valmy ""alysis also irdicated that the Upgrade option for NVI and thc
Enhanced Upgrade option for NV2 have the lowest projected cumulative present value
powcr costs in nearly all of the High Gas scenarios, the exception being the High
GaYHigh Carton case for NV2.
The potential for some type of carbon compliance regulations have a lesser impact on
the rclative costs and benefits betweeh the various North Valmy scenrios, due to the
lower generation dispatch forecasts used in the analysis. The lowest projecrcd
cumulative present value power cosB over the Sardy Period for all the scenarios and
cases are the Natural Gas Conversion options under the Low Gas, High Carbon cases.
These results indicate that the ecouomic decisions regarding North Vatmy I are more
sensitive to gas price increases than potential carbon compliance costs.
The differcnces between the Upgrade and Natural Gas Conversion options relative to
the Retire/Replace option in the Planning Case, and the lower prcjected sumulative
present value power costs for those options in the High Gas cases indicates that IPC
should carefully consider its options regarding Nor0r Valmy. Natural gas prices are
currently so low tlnt in rnany areas of the U.S., gas-fircd generation is economically
displacing coal-fued generation for increasing periods of time. These low prices,
combined with the current and pending envirorunental compliance regulations, make
nrany coal-fired gencrati4g plants less cost effective relative to gas-fired generation.
However, SAIC beliwes that IPC should consider the High Gas cases when making
any decisions regrding the North Valmy plant. This study indicates that under
Plaming Case conditions, upgrading NVI and retfuing NV2 and rcplacrng it with a
combined-cycte plant are the most cost effective options; these results also hold in the
event that gas prioes rise, although the NV2 Enhanced Upgrade oase is cost cffective
under high gas prices as well. These indications offer an opportunity to IPC to
consider retaining the North Valmy units as coal-fired eo help tPC mitigate potential
fuhrre gas price increases. The potential value of these units would decrease in the
went of sigrrifioant carbon compliance costs, however.
Because the relative differences beween the projected cumulative present value power
costs for the Upgrade, Retire/Replace, and Natural Gas Conversion options for North
Exhibit No. 5A
Case No. IPC-E-I3-16
T. Harvey, IPC
Page 37 of 52
5-2 SAIC Enerry, Envirorunent & Infrastructure, LLC
CONCLUSIONS
Valmy are relatively srnall, in SAIC's opinion IPC should consider further analysis on
North Valmy before making a final decision. SAIC has ide'ntified that the North
Valmy options are materially sensitive to posu'ble carbon compliance costs.
5.1.2 Jim Bridger
Thc analysis of the cost effectiveness of the Upgrade options for the Jim Bridger units
results in more definitive conclusions than with the North Valmy units.
Under the Planning Case assumptions regarding natural gas pricing and potential
carbon compliance costs, the Jim Bridger Upgrade options have the lowest projected
cumulative pr€scnt value power costs over the Study Period for all four units. For all
Jim Bridger options and for all the gas and carbon cost assurnptions, the Natural Gas
Conversion options and the Retire/Replaco options are relatively similar to each other,
differing mainly by the increased fuel costs in the Nahral Gas Conversion cases due
to a higher heat rate than the ge,neric CCCT in the Retire/Replace option. This is
offset by the increased capital expendihrres associated with constructing the new
cccr.
5.1.3 Conclusions
IPC decided to conduct a shrdy which examines the costs of euvironmental upgrades
required for compliaoce as currently proposed, aod to provide conclusions rcgarding
the economic feasibility of the environmental compliance upgrades and the retirement
options for the six units at the North Valmy Generating Station and the Jim Bridger
Planr
Based upon the principat considerations and assumptions summarized in Appendix A,
and upon the studies and analyses as summarized and discussed in this Report, which
Report should be read in its e,rrtirety in conjunction with the following, wc provide the
following conclusions:
The North Valmy Upgrade and Retire/Replace options for NVI and NV2,
respectively, are projected to have the lowest projecrcd cumulative prcsent value
power costs over the Study Period of the options studied herein for the North Valmy
units, but the costs for the Natural Gas Conversion case for NV2 are extremely close
to the Retfu/Re,place option. Furthermore, the High Gas case is pmjected to indicate
that maintaining the North Valmy on coal fuel offers a potential opportunity for IPC to
mitigate potential gas price increases. In SAIC's opinion, the difference between the
projected costs of retirc,meirt and replacing the North Vahny units, combined with tha
potential benefit of continuing to burn coal at the North Valmy plant in the event of
higher natural gas prices, result in the need for further analysis of the North Valmy
optious.
The Jim Bridger upgrade options are projected to have the lowest projected
cumulative preselrt value power costs over the Study Period, of the Jim Bridger
altematives studied herein, including the Retire/Replace alternative. SAIC examined
the Jim Bridger upgrade, natural gas convercion, and retirement nnd re,plaoement
alternatives under a variety of market conditions, and with the limited exceptions
SAIC Energr, Environment & Infrastructure, LLC 5-3
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 38 of 52
rilc 3153202007
Sec|ion 5
uotod, tbs upgrade options are projcoted to be the mogt cost effective. Based ou our
results and thc assurrptions describcd above, in SAIC's opinion tho investncnt in
cnvircnmootal compliancc upgrades r,c rcasomble ard pnrdent Should my maErial
change oacur to thc upgrade capital costs or fuel prica projections prior to installing
the upgrades, SAIC bolicves that IPC should reevaluote the upgrados at that time.
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 39 of 52
54 SAIC Enogy, Environmcnt & tnfrastnrcture, LLC
Appendix A
ldaho Power Company Principle Considerations and
Assumptions
In the preparation of the preliminary projected power plant cosB, wc have made
certain assumptions with respect to conditions that may occur in thc futurc. While we
believe these assumptions are reasonable for tlre purpose of this analysis, they are
dependent upon future events and actual conditions rnay differ tom those assumed.
In addition" we have used and relied upon certain information and assumptions
provided to us by othem including ldatro Power Company C'IPC"). While we believe
the sources to be reliable, we have not independently verified the information and
offor no assurancos with respect thereto. To the extent that actual future conditions
differ frorn those assumed herein or provided to us by others, the acttral results will
vary &om those forecast. The principal considerations and assurrptions made by us in
preparing the preliminary projected power plant costs over fte study period beginniug
on January l,2Al3 are summarized below.
A.1 GlobalAssumptions
l.
2.
3.
The study period for the analysis is the 2O-year period from January l,
2013 to Decernber 31, 2032 ('Study Period").
Annual inflation rate of 3.0 percent ovcr the Shrdy Pcriod.
Pressnt value power cost werc discounted to the year 2013 at an annual
dissount factor of 6.77 percent which is equivalent to IPC's weighted
avsrage cost ofcapital
We have assumed that ttre IPC generation rmits will operate and be
available over the Study Period as projecterl by IPC.
SO2 emissions allowances were assumed at a cost of $0.50 per ton tn2012,
escalating annually Lt 2-5%.
A.2 Generation Unit Assumptions
IPC provided the projected annual €nergy generation disparch (MWh) for
each of the six North Vatmy and Jim Bridger generation units, which was
modified by IPC for each sensitivity case (High and Low Gas and High and
Low Carbon Costs). The generation dispatch was not modified for the
scenarios assuming (i) environmental upgrades, (iii) fuel switching or (iii)
unit retiremenUreplacement,
Each generation unit was considered independently, without consideration
of the IPC systom impacts or interactions.
5.
l.
2.
5AIE,.
Exhibit No. 5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page 40 of 52
Fil6: 31532@007
Appendir A
Table A-l below provides assumptions for eaoh unit including size, heat
rate, SOz emissions rate and start costs,
Iable A-1
Gercrating Udt Assumptiors
For each sc€nario and for cach sensitivity, SAIC used the annual
generation forecast for each unit provided by PC. Table A26 providcs thc
annual gooc,ration forocast for each unit aod each sensitivity. Note: The
fuel switching socnsrios includd a 6 month outage in the year that thc fuel
syifshing occurred; for those sccnarios, the generation forccast was
decreased by 50% for thosc uoits in the given year.
Projccted fixed costs for the North Valmy and Jim Bridger units were
provided by IPC and as$me the following:
a. Base fixed O&M end capital improvements cosb, inclusive of
AzuDC, for each of the units was based on each unit's currcnt
configuration
b. Incremental environmental upgrade O&I\4 and capital costs, inclusive
of AFUDC, for each of the units werc expens€s in the year of
irstallation.
c. Projected costs included in the analysis reflectod IPC's share of the
total cosB, and do not r€flcct the total costs projeoted for each unil
IPC is responsiblo for 33 pcrceqt ofJim Bridger costs, and 50 percent
of North Valmy cos6.
d. Tables A3 tbrough A22 provide the assumed Fixed O&M, Variable
O&M, and Capital Cost projcctions for all scenarios.
Tho Retirement and Replacement scenarios assume the grven unit would be
retired on Decemben 3l of the indicatcd r€tirelnqrt year, and replaced with
a natural gas fired oombined cycle combustion turbine unit. For the
purposes of this analysis, the assurption is that the new CCCT would be
sited in a region with access to the Sumas hub natural gas pricing, with
additional gas transportation charges and capacity to a generic ldaho City
gatc. Additionally, tho assumptioo is that the unit would bc sized to
exactly roplace the megawatts C'l\,f\lr') for the given uuit. Tho replacement
5.
Exhibit No.5A
Case No. IPC-E-13-16
T. Harvey, IPC
Page41 of52
Unit Size (IIIU Avsrgo HeatR8t.
(mmBt{rUIl0
S02 Emisslm Bh
(lbstnnBtd
Stlrt Co6t(l)
llorfiV*rwthltl 1n I 0.0015 12,610
Nor$ V*nv Un[2 137 I 0,1511 12,010
Jm &Hoer Unt I 175 I 0.15 15,760
Jim Brldoer Unit 2 175 r 0.2705 15,760
Jlm &Usor Unit 3 175 I 0,a03 15,760
Jim &idoer Unft4 175 I 0.001 15,760
A-2 SAIC Encrgy, Ilnvironmant & Infraetructurc, LLC
ldaho Pow Company Princiile Comiderations ard Aszumptions
CCCT nnits have an assumed heat rate of 6,990 Btu&Wb, an assumed
2,616 mmBhr start fucl requirement, and an assumed SOz emission rate of
.001 lBs/mmBtu. Replacement rmit capital costs, inclusive of AFUDC,
were amortized at an annrul rrrte of 6.77 perc€nt over tte rernaining years
of thc Study Period beginning ors year prior to the assumed replacerrent.
Table A1 below provides the retirenrent years for each unit of the study,
and thcir rcplaccme,nt units' sizc and total cryital costs. Annual O&lvI and
capital costs are provided in the Retire and Replace scenario tables for each
unit in Tables A-3 through A-22,
Table A-2
7. No transmission costs and losses were assu[red.
Replacernnt Unit CapihlCosts rnd Size
Unlt RgkmemDd.Rcplacement Cepitrl Cost(llotddi,tWl
Size(1ff0
Norfi Valmy Unit 1 201s 1,161 122
Nofi ValmY Unit 1 2018 1,596 1U
Norfi Valnv Unit 2 201E 1,596 137
Jim Bridgsr Unlt 1 20n 1,7S6 175
Jim BridgsrUnit 2 2021 1,74 115
Jim Bridqer Unit 3 2015 1,461 175
Jin Bddger Uit 4 20t6 1,5(x 175
A.3 FuelAssumptions
We have assumed projected coal and natural gas costs in $/TvIMBTu and over the
Study Period based on infonnation provided by IPC. Table A-23 provides projected
coal prices by unit, and Table A-24 provides projected natural gas prices.
A.4 Carbon Compliance Cost Assumptions
The base carbon compliance cost assumption was provided by IPC staffand rspresents
IPC's view of likely carbon legislation. The aszumption is that there would bc a
projected carton compliance cost, expressed in terms of $lTvIWlu applied to the coal
fired generation. Table A-25 provides projected carbon compliance costs in $/IvIWh
for both coal fired generation and gas fired generation.
SAIC Encrgy, Environmcnt & Infrastruchre, LLC A-3
Exhibit No. 5A
Gase No. IPC-E-'|3-16
T. Harvey, IPC
Page 42 ol 52
Fik !1t320m07
Appendix A
The projections of olectric power and energy rquireme,nts are based on the
assumptions that the State of Idaho will continuo to oxporiooce ccononric conditions
mmparable to trose of receirt yean and that no signifiganl changcs will ocour in the
electric utility indwtry ttrough the ycar 2032. [hre to unccrtainties causcd by variable
facbrs, suoh 8s changes in costs, technology, legislation and regulation, the
considerations and assumptions set forth herein could be affectd. For insbnce, the
considcrations and assumptions could be affecrcd by rogulatory, technological and ftrel
cost changes leading to significant changes in the cosB of electic pow€r aad energy.
In part because of evolving chaages affcoting thc elcotric utility industry, potcntial
adverse developnnents in thes€, and potentially other, ar€as cannot bo prodicted or
determined at this timc.
Exhibit No. 5A
Case No. IPC-E-1$16
T. Harvey, IPC
Page 43 of 52
A-4 SAIC Enorgy, Environment & Lrfrasinrcturc, LLC
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 27th day of September 20131 served a true and
correct copy of the within and foregoing Redacted Exhibit 5A, upon the following named
parties by the method indicated below, and addressed to the following:
Gommission Staff
Kristine A. Sasser
Deputy Attomey General
Idaho Public Utilities Commission
47 2 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
Industrial Customers of Idaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
ldaho Gonservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street
Boise, ldaho 83702
Snake River Alliance
Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, ldaho 83701
Hand Delivered
U.S. Mail
Overnight Mail
FAXX Email [e-mail]
Hand Delivered
U.S. Mail
Overnight Mail
FAX
Email [e-mail]
[e-mail]
Hand Delivered
U.S. Mail
Overnight Mail
FAXX Email [e-mail]
_Hand Delivered
U.S. Mail
Overnight Mail
FAX
Email [e-mail]
Hand Delivered
U.S. Mail
Overnight Mail
FAX
Emai! [e-mail]
CERTIFICATE OF SERVICE
Ken Miller, Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
Boise, Idaho 83701
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Ovemight Mail
FAX
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CERTIFICATE OF SERVICE