20190412Larkin Corrected Pages.pdf

3Effi*.ID An IDACORP Company
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JULIA A. HILTON
Senior Counsel
ihi [e-mail]
April 12, 2019
VIA HAND DELIVERY
Diane M. Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re Case No. IPC-E-19-08
Recovery of Costs Associated with North Valmy Power Plant - Errata to
Application and Corrected Pages of the Direct Testimony of Matthew T.
Larkin
Dear Ms. Hanian
ln the process of reviewing ldaho Power Company's ("ldaho Power") responses to
discovery, ldaho Public Utilities Commission ("Commission") Staff discovered a
computational error in the workpapers that quantified the estimated $12.2 million
reduction in overall costs associated with the North Valmy Project Framework Agreement
between NV Energy and ldaho Power dated as of February 22,2019, for ldaho Power
customers. Correction of the computational error increases estimated cost savings to
$17 .2 million. Page 5 of the Application and the following pages of the Direct Testimony
of Matthew T. Larkin contain the incorrect estimate of the overall cost reduction:
o Page 3, line 9;o Page 14, line 1;. Page 17, line 9; ando Page 37, line 5.
ldaho Power regrets the confusion that this may cause and assures the
Commission that the change in the Application and testimony has no impact on
conclusions presented by ldaho Power in its original filing. !n fact, the correction of the
computational error increases the estimated benefits to ldaho Power customers.
ln order to reflect this change, enclosed for filing are an original and seven (7)
copies of the Errata to Application and nine (9) copies of the corrected pages 3, 14, 17 ,
and 37 of Mr. Larkin's testimony. Redlined copies of pages 3, 14, 17, and 37 are also
1221 W. ldaho St. (83702)
PO. Box 70
Boise, lD 83707
Diane M. Hanian, Secretary
April 12,2019
Page 2
enclosed for the Commission's reference and convenience. As noted on the Certificates
of Service, the Errata to Application and the corrected pages have been served on the
parties in this case.
lf you have any questions regarding the enclosed errata, corrected pages, or this
matter, please do not hesitate to contact me.
Very truly yours,
A. Hi
JAH:csb
Enclosures
cc: Service List (w/encls.)
('
CERTIFICATE OF SERVICE
I HEREBY CERTIFYthat on the 12th day of Apri! 2019 lserved true and correct
copies of the CORRECTED PAGES 3, 14, 17, AND 37 OF THE DIRECT TESTIMONY
OF MATTHEW T. LARKIN upon the following named parties by the method indicated
below, and addressed to the following:
Commission Staff
Edward Jewell
Deputy Attorney General
ldaho Public Utilities Commission
47 2 W est Wash ington Street (837 02)
P.O. Box 83720
Boise, ldaho 83720-0074
ldaho Gonseruation League
Benjamin J. Otto
ldaho Conservation League
710 North 6th Street
Boise, ldaho 83702
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_FAXX Email [e-mail]
Christa Bearry, Legal
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CERTIFICATE OF SERVICE - 1
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_U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
1 No. 33111,1 in Case No. IPC-E-16-24, Idaho Power has pursued
2 prudent and commercially reasonabl-e efforts to end its
3 participation i-n the operation of Valmy Unit 1 by December
4 3L, 20L9, and Valmy Unit 2 by December 37, 2025. The terms
5 and conditions contained in the Agreement are consistent
6 with the commitments detailed in the settl-ement agreement
7 approved by Order No. 33171 and wil-l- al-l-ow Idaho Power to
8 achleve cost savings benefits for customers of
9 approximately $11.2 mil-lion when compared to operating both
10 units through 2025 under current agreements. In this case,
11 the Company seeks the Commission approval required by the
t2 Agreement and to adjust customer rates to align with the
13 remaining life-cycle costs provlded for by the Agreement.
L4 a. What specific action is the Company requesting
15 of the Commission in this case?
!6 A. The Company is requesting the Commj-ssj-on: (1)
1,1 approve the Agreement; (2) f ind that all actual- Valmy
18 investments through December 3!, 2078, were prudently
79 incurred; (3) aIl-ow investments forecasted through December
20 31, 2025, dt Valmy to be incl-uded in the l-evel-ized revenue
21, requirement mechanism establ-ished by Order No. 33711,; and
22 (4) adjust customer rates to recover the associated
1 In the l"Iatter of the Application of Idaho Power Company for
Authority to Increase Its Rates for Efectric Service to Recover Costs
Associated with the North Valmy Plant, Case No. IPC-E-16-24, Order No
33117 (May 31, 2071).
CoRRECTED LARKTN, Df 3
Idaho Power Company
1 costs for Idaho Power customers of approximately $11.2
2 million, as compared to prior plans to operate both Valmy
3 units through 2025. The option to cease participation in
4 one or more Valmy units does not exj-st under the current
5 Existing North Valmy Agreements. The Agreement cfarifies
6 the respective rights and obligations of each Party with
7 respect to the continued operation, exit or retirement, and
B decommissioning of the Valmy plant or the units thereof.
9 The newly-structured payment obligations set forth in the
10 framework of the Agreement provide a financial benefit to
11 customers because incremental capital improvements
L2 associated with an exited unit cease/ common facility costs
13 are reduced as a result of Idaho Power's new capacity
14 share, and variable operating cost savings are experienced.
15 The Agreement provides a l-evel- of certainty
L6 regarding the amount of fixed non-fuel O&M costs in the
71 future and generates an annual levelized revenue
18 requirement savings to customers of nearly $189,000.
19 Approval of the Agreement 1s in the best interest of Idaho
20 Power and its customers.
2L O. Pl-ease provide a general overview of the
22 purpose of the Agreement.
23 A. The Parties entered into the Agreement because
24 the Existing North Valmy Agreements do not provide for a
25 mechanism by which either Party can cease participation in
CoRRECTED LARKTN, Df L4
Idaho Power Company
7
2
3
4
5
6
1
8
9
Unit 7, Idaho Power wil-l-no longer be responsible for fees
the unit.associated with exiting
O. Has Idaho Power quantified the
anticipates achieving assuming execution of
cost savings lt
the Agreement?
A. Yes. When compared to costs associated wlth
the Existj-ng North Valmy Agreements and Idaho Power's
contractual payment obligations associated wlth both units
through December 31, 2025, the Company estimates savings of
over $11 .2 million by entering into the Agreement. These
costs are detailed in Mr. Harvey's testimony. Because the
balanclng account mechanism approved by the Commission with
Order No. 33111 ensures customers pay no more or no less
than actual Valmy-related costs, these cost savings wil-l
serve as a direct benefit to customers.
Irr. THE VAIDf:r LE\ZELIZED RE\rENt E REQUIREMENT MECHAITTSM
10
72
13
t4
11
15
16 O. Please provlde an overview of the Company's
77 balancing account mechanism associated with the Val-my plant
18 and approved with Order No. 33117.
79 A. The bal-ancing account mechanism approved in
20 Case No. IPC-E-76-24 is designed to smooth revenue
2l requirement i-mpacts associated with the shutdown of Valmy
22 and allow for ful-l recovery of Valmy-related costs near the
23 plant's end-of-1ife. In addition, it more closely aligns
24 the cost recovery period with the remaining operating l-ife
25 of the pIant, resulti-ng j-n a better matching of cost
CoRRECTED LARKTN, Dr 11
Idaho Power Company
1
2
3
4
5
6
1
a
9
The terms and conditions contained in the Agreement are
consistent
Stipulat j-on
Idaho Power
with the commitments detail-ed in the Settlement
approved by
to achieve
Order No. 337'71 and wil-l al-low
the cost savings benefits for
10
customers of approximately $I1.2 million.
The Company seeks the Commission approval required
by the Agreement and to adjust customer raLes to align with
the remaining life-cycle costs provided for by the
Agreement. The update to the Valmy l-evelized revenue
requirement incl-udes only those Valmy-rel-ated investments
necessary for environmental compliance, and the continued
safe, reliable, and economic operation of the plant and the
costs updated by the Agreement. Idaho Power seeks approval
of an adjustment of $1.21 mil-l-ion to the Company's Idaho
jurisdictional revenue requirement to take place on June 7,
20L9, which equates to an overaff increase of 0.11 percent.
O. Does this complete your testimony?
A. Yes, it does.
11
t2
13
74
15
t6
7't
1B
19
20
27
22
23
24
CoRRECTED LARKTN, Dr 31
Idaho Power Company
25
1
aL
3
4
5
6
1
B
9
No. 337'1L,1 in Case No. IPC-E-16-24, Idaho Power has pursued
prudent and commercially reasonabl-e efforts to end its
participation in the operation of Valmy Unj-t 1 by December
31, 2019, and Valmy Unit 2 by December 31, 2025. The terms
and conditions contained in the Agreement are consistent
with the commitments detalled in the settl-ement agreement
Power toapproved by Order No.
achieve cost savings
approximately $1,21 .2
33711 and wil-l al-l-ow Idaho
10 units through 2025 under current
11 the Company seeks the Commissi-on
12 Agreement and to adjust customer
benefits for customers of
mil-l-ion when compared to operating both
agreements. fn this case,
approval required by the
rates to align with the
by the Agreement.13 remaining 11fe-cycJ-e costs provided for
74 O. What specific action is the Company requesting
15 of the Commi-ssion in this case?
76 A. The Company is requesting the Commission: (1)
71 approve the Agreement; (2) find that all actual Valmy
18 investments through December 31, 2078, were prudently
79 incurred; (3) allow investments forecasted through December
20 31, 2025, dt Val-my to be included in the levelized revenue
2l requirement mechanism establ-ished by Order No. 33711; and
22 (4) adjust customer rates to recover the associated
\ In the l,Iatter of the Application of ldaho Power Company for
Authority to Increase fts Rates for ELectric Service to Recover Costs
Associated with the North Valny Plant, Case No. IPC-E-16-24, Order No.
33771 (May 31 , 2011) .
CoRRECTED LARKTN, Df 3
Idaho Power Company
1 costs for Idaho Power customers of approximately $721.2
2 mil-l-ion, ds compared to prior plans to operate both Valmy
3 units through 2025. The optJ-on to cease participation in
4 one or more Valmy units does not exist under the current
5 Existing North Valmy Agreements. The Agreement clarifies
6 the respective rights and obligations of each Party with
7 respect to the contj-nued operation, exi-t or retirement, and
8 decommissioning of the Val-my plant or the units thereof.
9 The newly-structured payment obligations set forth in the
10 framework of the Agreement provide a financial- benefit to
11 customers because incremental- capital improvements
!2 associated with an exited unit cease, common facility costs
13 are reduced as a resuft of Idaho Power's new capacity
74 share, and varlable operating cost savings are experj-enced.
15 The Agreement provides a l-evel of certainty
t6 regarding the amount of fixed non-fuel- O&M costs in the
l1 future and generates an annual- l-evelized revenue
18 requirement savings to customers of nearly $189r000.
19 Approval of the Agreement is in the best interest of Idaho
20 Power and its customers.
27 O. Please provide a general
22 purpose of the Agreement.
23 A. The Parties entered into
overview of the
the Agreement because
24 the Existing North Valmy Agreements
mechanism by which either Party can
do not provide for a
cease partlcipation in
CoRRECTED LARKIN, Dr 74
Idaho Power Company
25
1
2
3
4
5
6
1
8
9
Unit 1-, Idaho Power wil-l-
11
costs are
balanc j-ng
Order No.72
13 than actual Valmy-related
!4 serve as a direct benefit
cost savings it
the Agreement?
Yes. When compared to costs associated wlth
North Valmy Agreements and Idaho Power's
payment obligations associated with both units
2025, the Company estimates savings of
by entering into the Agreement. These
no longer be responsj-bIe for fees
the unit.
costs,
to customers
associated with exiting
O. Has Idaho Power quantified the
anticipates achieving assumi-ng execution of
A.
the Exj-sting
contractual
through December 37,
over $L21.2 mill-ion
10 detail-ed in Mr. Harvey's testimony. Because the
account mechanism approved by the Commission with
33711 ensures customers pay no more or no less
these cost savings will
15 III. THE VAIM:T LE\IELIZED REVENT'E REQUIRE},IENT MECTTAIIISM
Please provide an overview ofL6
t1
18
I9
20
2t
ZZ
23
24
o.
balancing account
and approved with
A. The
mechanism assoclated with
the Company's
the Valmy plant
Order No. 33111.
balancing account mechanism approved l_n
Case No. IPC-E-16-24 is designed to smooth revenue
requi-rement impacts associated with the shutdown of Valmy
and al-Iow for fuII recovery of Valmy-related costs near the
plant's end-of-life. fn addition, it more closely aligns
the cost recovery period with the remaining operating l-ife
of the plant, resulting in a better matching of cost
CORRECTED LARKIN, DI
Idaho Power
t7
Company
4tr,
1
2
3
4
5
6
1
I
9
The terms and conditions contained in the Agreement are
consistent
Stipulation
Idaho Power
approved by
to achieve
with the commitments detail-ed in the Settlement
10
the cost savings benefits for
customers of approximately $72't.2 miIlion.
The Company seeks the Commission approval required
by the Agreement and to adjust customer rates to align with
the remaining life-cycIe costs provided for by the
Agreement. The update to the Valmy l-evelized revenue
requirement incl-udes only those Valmy-related investments
necessary for environmental compliance, and the contj-nued
safe, relj-ab1e, and economic operation of the plant and the
costs updated by the Agreement. Idaho Power seeks approval
of an ad3ustment of $L.21 million to the Company's Idaho
jurisdictional- revenue requi-rement to take place on June 1,,
2019, which equates to an overal-l- increase of 0.11 percent.
O. Does this complete your testimony?
A. Yes, it does.
Order No. 33111 and wil-l- al-l-ow
CORRECTED LARKIN, DI
Idaho Power
11
72
13
74
15
t6
t1
18
79
20
2t
23
24
25
31
Company