20150904Corrected Pages Mahlum Direct Redacted.pdf

3Iffi*.
An TDACORP Companv
LISA D. NORDSTROM
Lead Counsel
I nordstrom@idah opower.com
September 4,2015
LDN:csb
Enclosures
cc: Service List - dencls.
Very truly yours,
afl:.Pq*
Lisa D. Nordstroft
ril ! i Ol'l'r..ir,i i
l
- ll I r,l I
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Gommission
472 West Washington Street
Boise, ldaho 83702
Re: Gase No. IPC-E-15-17
Long Term Program Contract with Siemens Energy, !nc. - Corrected Pages
to the Direct Testimony of Trevor Mahlum
Dear Ms. Jewell:
During the course of preparing discovery responses in the above matter, ldaho
Power Company believes a clarification sentence is needed on page 7 of the Direct
Testimony of Trevor Mahlum. With the addition of the clarification sentence, the pagination
also changed on pages 8 and 9 of Mr. Mahlum's testimony. Moreover, the hash marks on
page 9 were not needed anymore and were removed. However, the removalof the hash
marks has not been indicated in the redlined copies provided as this would require
repagination of all subsequent pages to indicate the removal.
To reflect the addition of the clarification sentence, enclosed are nine (9) copies
each of corrected redacted pages 7-9 of Mr. Mahlum's testimony in redlined and clean
format. Copies of the redacted pages have been marked and enclosed for the Reporter.
ln addition, enclosed are eight (8) copies of corrected confidential pages 8 and 9 to Mr.
Mahlum's testimony. Please handle the confidential information in accordance with the
Protective Agreement issued in this matter.
lf you have any questions regarding the enclosed conected pages or this matter,
please do not hesitate to contact me.
M7*r2--
122'l W. ldaho St. (83702)
PO. Box 70
Boise, lD 83707
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 4h day of September 2015 I served a true and
conect copy of CORREGTED PAGES 7-9 OF THE DIRECT TESTIMONY OF TREVOR
MAHLUM upon the following named parties bythe method indicated below, and addressed
to the following:
Gommission Staff
Karl T. Klein
Deputy Attomey General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
lndustrial Customers of ldaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27h Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
X Hand Delivered
U.S. Mai!
Ovemight Mail
FAXX Email [e-mail]
_Hand DeliveredX U.S. Mail
_Ovemight Mail
FAX
Email [e-mail]
oreo@richardsonadams. com
Hand DeliveredX U.S. Mail
_Ovemight Mai!
_FAXX Email [e-mail]
Christa Bearry, Lega! Assistant
CERTIFICATE OF SERVICE
1
2
3
4
5
6
7
I
9
10
11
72
13
L4
15
t6
L1
18
19
20
27
22
23
24
25
process. Those third-party proposals were analyzed by both
the Company and the contracted professional and it was
determined that there are currently no other third-party
maintenance providers that could provide servj-ces
equivalent to those provided under the LTP Contract with
Siemens. Idaho Power did issue a request for proposal for
services for the Bennett Mountain and Danskin plants only
to evaluate the possibilj-ty of a hybrid approach to
maintenance of the Company's gas plants through a
combination of a long-term service agreement as well as
continued sel-f-management of the Langley Gulch power plant.
The responses were evaluated and resulted in the
recommendation for the Company to proceed with a l-ong-term
maintenance contract with Siemens. Because Si-emens is the
OEM for all of the Company's gas plants and is the industry
leader in gas plant maintenance, the only available
alternative to the LTP Contract with Siemens would be the
continuati-on of a Company-managed maintenance program with
technical support and parts purchased from Sj-emens.
o.Prior to the executj-on of this agreement, was
a LTP Contract with Siemens an option?
A.Yes. However, when Idaho Power operated only
the Danskin and Bennett Mountaj-n plant SCCTs, an LTP
Contract was not an economical al-ternative because of the
limited frequency of maj-ntenance outages for those plants.
CoRRECTED REDACTED - MAHLUM, DI 7
Idaho Power Company
1
2
3
4
5
6
7
8
9
10
11
12
13
23
24
25
SCCT outages are based on the number of start-ups so
multiple years exist between scheduled outages at the
Danskin and Bennett Mountain plants. Until the addition of
the Langley Gulch CCCT, contracting for gas plant
maintenance servj-ces with Siemens at each outage lnterval
has been the most cost-effectj-ve approach. With the
construction of Langley Gu1ch, a baseload CCCT whose
maj-ntenance is based upon run-time hours, the Company
antici-pates more frequent gas plant maintenance actj-vities
to exist going forward. With this in mind, Idaho Power
began evaluating and negotiating an agreement with Siemens
for a LTP.
o.Is there a difference i-n cost to Idaho Power
o.Pl-ease describe the LTP Contract the Company
is requesting approval of in this proceeding.
A.Under the LTP Contract, Siemens will provide
26 scheduled maintenance on all three combustj-on turbines,
CoRRECTED REDACTED - MAHLUM, Dr 8
Idaho Power Company
74 between the self-management option and a LTP Contract?
15 A.Yes. The LTP Contract will provide a lower
16 priced alternative to the maj-ntenance of the Company's gas
l7 plants; Idaho Power estimates the cost to continue with
18 self-management wou1d be approximately over
79 the l-ife of the contract while the LTP Contract would cost
20 approximately $over the comparable time
21, period, a savings of over the life of the
22 agreement.
1
2
3
4
5
6
7
I
9
10
11
72
13
t4
15
16
!7
18
19
20
2L
22
23
24
25
including program parts or repairs, shippi-ng, services,
labor, engineering services, and program management
services. Program parts consist of the major combustion
turbine parts provided by Siemens, including the locking
hardware used to affix the parts, the parts installed in
the combustion turbine upon the effective date, all- initial
spare parts, and all parts changed durlng the length of the
contract ("Program Parts"). Some of these Program Parts
are the l-atest technology Idaho Power woul-d not otherwise
have access to and their superiority eliminates the need
for two combustor inspectlon outages at Langley Gulch.
Moreover, they are available under the LTP Contract at a !
I dj-scount f rom the list price.
Siemens wil-l- al-so perform unscheduled maintenance on
all three combustion turbi-nes to the extent such work is
not covered by Siemens' other warranties under the
contract. Leveraging Siemens' pool of regional j-nventory,
outage resources, and technical- expertlse will result in
l-ower overall costs to Idaho Power and its customers.
o.Aside from lower costs over the life of the
contract, how does the LTP Contract differ from the
Company' s current sel-f-managed maintenance practice?
A.The following chart provides a high 1eve1
comparison of fdaho Power's current maintenance practices
compared to offerings under the LTP Contract:
CoRRECTED REDACTED - MAHLUM, Dr 9
Idaho Power Company
1
2
3
4
5
6
7
I
9
10
11
72
13
74
15
76
t7
18
19
20
2L
22
23
24
25
process. Those third-party proposals were analyzed by both
the Company and the contracted professional and it was
determined that there are currentl-y no other third-party
maintenance providers that could provj-de services
equivalent to those provided under the LTP Contract with
Siemens Idaho Power did issue a request for proposal for
services for the Bennett Mountain and Danskin plants only
to evaluate the possibility of a hybrid approach to
maintenance of the Company's gas plants through a
combination of a long-term service agreement as wel-l- as
continued sel-f-management of the Langley Gulch power plant.
The responses were evaluated and resul-ted in the
reconrmendation for the Company to proceed with a long-term
maintenance contract with Siemens. Because Siemens is the
OEM for all of the Company's gas plants and is the industry
Ieader in gas plant maintenance, the only available
alternative to the LTP Contract with Siemens would be the
continuation of a Company-managed maintenance program with
technical support and parts purchased from Siemens.
o.Prior to the execution of this agreement, was
a LTP Contract with Siemens an option?
A. Yes. However, when Idaho Power operated only
the Danskin and Bennett Mountain plant SCCTs, an LTP
Contract was not an economical alternative because of the
Iimited frequency of maintenance outages for those plants.
CoRRECTED REDACTED - MAHLUM, Dr 7
Idaho Power Company
I
2
3
4
5
6
1
8
9
10
11
72
13
t4
15
76
77
18
19
20
2t
22
23
24
25
26
SCCT outages are based on the number of start-ups so
multiple years exist between scheduled outages at the
Danskin and Bennett Mountain plants. Until the addition of
the Langley Gulch CCCT, contracting for gas plant
maintenance servj-ces with Sj-emens at each outage interval
has been the most cost-effectj-ve approach. With the
construction of Langley Gulch, a baseload CCCT whose
maintenance is based upon run-time hours, the Company
anticipates more frequent gas pJ-ant mai-ntenance activitj-es
to exist going forward. With this in mind, Idaho Power
began eval-uating and negotiating an agreement with Siemens
for a LTP.
O.Is there a difference in cost to Idaho Power
between the self-management option and a LTP Contract?
A.Yes. The LTP Contract will- provide a lower
priced al-ternative to the maintenance of the Company's gas
plants; Idaho Power estimates the cost to continue with
self-management woul-d be approximately over
the life of the contract whil-e the LTP Contract would cost
approximatel-y $over the comparable time
period, a savings of
agreement.
o.
is requesting
over the life of the
the Company
A.
PIease describe the LTP Contract
approval of in this proceeding.
Under the LTP Contract, Siemens
scheduled maintenance on all three combustion
CORRECTED REDACTED .
wilI provj-de
turbines,
MAHLUM, Dr 8
Power CompanyIdaho
1
2
3
4
5
6
7
I
9
10
11
72
13
14
15
76
t7
18
19
20
21-
22
23
24
25
including program parts or repairs, shipping, services,
Iabor, engineering servj-ces, and program management
services. Program parts consist of the major combustion
turbine parts provided by Siemens, including the locking
hardware used to affix the parts, the parts install-ed in
the combustion turbine upon the effective date, al-1 initial-
spare parts, and all parts changed durj-ng the length of the
contract ("Program Parts"). Some of these Program Parts
are the latest technology Idaho Power would not otherwise
have access to and their superJ-ority eliminates the need
for two combustor inspection outages at Langley Gulch.
Moreover, they are availabl-e under the LTP Contract at a !
I discount from the rist price.
Siemens wil-l- also perform unscheduled maintenance on
all three combustion turbines to the extent such work is
not covered by Siemens' other warranties under the
contract. Leveraging Siemens' pool of regional inventory,
outage resources, and technical expertise wil-I result in
lower overal-I costs to Idaho Power and its customers.
O. Aside from lower costs over the life of the
contract, how does the LTP Contract differ from the
Company's current self-managed maintenance practice?
A.The following chart provides a high l-evel-
comparison of ldaho Power's current maintenance practices
compared to offerings under the LTP Contract:
CoRRECTED REDACTED - MAHLUM, Dr 9
Idaho Power Company