20170518Comments.pdf

Benjamin J. Otto, ISB No. 8292
Idaho Conservation League
Post Office Box 844
Boise,Idaho 83701
(208) 34s-6933 x t2
botto @idahoconservation. org
Travis Ritchie, CABar# 258084 (pro hac vice)
Sierra Club
2101 Webster Street, Suite 1300
Oakland, CA94612
(4ts) 977-s727
[e-mail]
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS RATES
FOR ELECTRIC SERVICE TO RECOVER
COSTS ASSOCIATED WITH THE NORTH
VALMY PLANT
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. IPC-E-16-24
COMMENTS IN SUPPORT OF
SETTLEMENT
In accordance with Order No. 33763 issued on May 12,2017 by the Idaho Public
Utilities Commission ("Commission"), Idaho Conservation League ("ICL") and Sierra Club
hereby submit the following comments in support of the Settlement Stipulation filed in Docket
IPC-E-16-24 on May 3,2017 (the "Valmy Settlement"). ICL and Sierra Club take no position on
the concurrently filed settlement stipulation in Docket IPC-E-I6-23.
ICL and Sierra Club participated in settlement discussions held at the Commission's
offrces on February 2,2017 and April 12,2017. Those discussions ultimately resulted in the all-
party Valmy Settlement filed in this docket. ICL and Sierra Club support the Valmy Settlement
because it provides a clear path for the near-term retirement of the North Valmy coal plant,
which Idaho Power Company co-owns with NV Energy. The Valmy Settlement also represents a
balanced outcome that allows Idaho Power Company an opportunity to recover undepreciated
plant balances at Valmy in a manner that reduces rate shock without causing excessive
intergenerational inequities.
IPC-E-t6-24
ICL/SC Comments 1
1.1 f:\i 11, ! ,i
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L;
May 18,2017
I. Ioruro Pownn Coup.rNv's Appr,rclrroN
Idaho Power Company's application sought to accelerate depreciation at North Valmy
Power Station ("Valmy") from 203 1 and 2035 at Units I and 2, respectively , to 2025 for both
units. While ICL and Sierra Club supported the proposal to accelerate the depreciation schedule
of Valmy, the Company's proposal as filed did not go far enough given the more limited
expected remaining useful life of the Valmy plant. ICL and Sierra Club's initial analysis of the
application determined that Valmy 1 is likely non-economic on a going-forward basis, and will
almost certainly be non-economic after 2019. Our analysis confirmed the results of Idaho
Power's 2015 IRP where portfolios that closed Valmy 1 in20l9 and Valmy 2 in2025 provided
the least cost, least risk option. This finding has become increasingly self-evident under current
market conditions that strongly disfavor coal generation, and it is now fully acknowledged by the
Company in the most recent draft2}l7 IRP results, which indicate that the preferred portfolio
includes the retirement of Valmy 1 in 2019 and Valmy 2 in2025.In addition, the Company's
most recent analysis, conducted on behalf of Staff in the course of this proceeding, confirms that
retiring Valmy I in2019 provides a net benefit to customers.
II. V,c,LNrv Sprrr,pvrpNT SrrpuLATroN
A. Valmy Retirement
The Valmy Settlement is in the public interest because it more accurately reflects the
likely retirement dates for Valmy I in2019 and2 in2025. The Valmy Settlement commits Idaho
Power Company to use commercially reasonable efforts to negotiate with NV Energy to end coal
buming at Valmy by 2019 and2025.r The commitment sends a clear signal to NV Energy and
regulators in both Idaho and Nevada that Valmy is at the end of its useful life. This signal is
important because the existing operating agreement between NV Energy and Idaho Power
Company does not include a clear end-of-service date for the plant. It is therefore vital to require
the two companies to begin negotiations on an exit from Valmy so that customers are not
subjected to wasteful spending at the plant when lower-cost alternatives are available.
The Valmy Settlement fuither requires Idaho Power Company to use commercially
reasonable efforts to exit Valmy in20l9 and2025 if it is unable to successfully negotiate an end
I Settlement Stipuatlion at 'tf 11.a.
rPC-E-t6-24
ICLISC Comments 2
May 18,2017
to coal operations with NV Energy.2 This provision ensures that Idaho Power Company will
continue to take commercially reasonable efforts to exit the plant, even in the face of
intransigence by NV Energy. Idaho Power must also report on the status of these efforts by the
end of the year.3
Finally, the Valmy Settlement requires ldaho Power to file applications in 2019 and2025
to review whether adjustments are necessary to true-up any forecast-to-actual costs at the end of
each unit's life.a These applications will also serve as a check on Idaho Power's commitment to
either cease burning coal at Valmy or exit the plant by 2019 and2025.
Taken together, these provisions provide more certainty to Idaho Power and its customers
that the Company will chart a path to end reliance on the Valmy coal plant, which is an
increasingly uneconomic resource compared to other generation alternatives. This outcome is in
the public interest because it will ultimately lead to lower cost and cleaner energy for Idaho
customers.
B. Depreciation Schedule
ICL and Sierra Club support the Valmy Settlement because of the provisions, discussed
above, that provide a clear path for the retirement of Valmy I in20l9 and2in2025. The Valmy
Settlement Agreement also provides balance to ratepayers by setting a schedule to fully
depreciate plant balances at Valmy by 2028.5
ICL and Sierra Club generally support the alignment of depreciation schedules with the
expected end-of-life for a particular asset. In the case of coal plants, this treatment ensures that
utilities are not faced with unnecessary disincentives that could prevent the retirement of a coal
plant after it has become uneconomic to customers. Aligning the depreciation schedule with
estimated retirement dates also protects ratepayers by minimizing the risk of intertemporal cost
shifting between current ratepayers who are continuing to receive power from the plant, and
future ratepayers who may otherwise be required to pay off undepreciated assets after the plant
has stopped providing power.
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IPC-E-L6-24
ICLISC Comments J
May 18,2017
The Valmy Settlement appropriately balances these competing interests by (l) ensuring a
clear end date for Valmy Unit I in20l9 and Unit 2 in2025, (2) mitigating rate shock by
moderately extending the depreciation schedule out to 2028, and (3) avoiding excessive
intergenerational inequities by accelerating the depreciation schedules from its current 2031 and
2034 schedule.
ICL and Sierra Club appreciate the efforts of Idaho Power, Staffand intervenors to work
together to find a mutually agreeable solution that balances these competing interests. As a result
of these efforts, ICL and Sierra Club believe that the Valmy Settlement represents a balanced
approach to the end-of-life for the Valmy plant that will serve the public interest.
Dated this 18th day of May 2017
Re spectfu lly submitted,
t//-),4tu-
Benjamin J. Otto
Attorney for ldaho Conservation League
/s/ Travis Ritchie
Travis Ritchie
Attorneyfor Sieta Club
tPC-E-t6-24
ICL/SC Comments 4
May 18,2017
CERTIFICATE OF SERVICE
I hereby certifu that on this 18th day of May 2017,1 delivered true and correct copies of
the foregoing IDAHO CONSERVATION LEAGUE AND SIERRA CLUB COMMENTS IN
SUPPORT OF THE SETTLEMENT to the following persons via the method of service noted:
Hand delivery:
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
427 W. Washington St.
Boise,ID 83702-5983
(Original and seven copies provided)
Benjamin J. Otto
Electronic Mail:
Idaho Power
Lisa D. Nordstrom
Matt Larkin
Idaho Power Company
P.O. Box 70
Boise,Idaho 83707
lnordstrom@idahopower. com
mlarkin@idahopower. com
dockets@idahopower. com
IIPA
Eric l. Olsen
ECHOHAWK & OLSEN, PLLC
505 Preshing Ave., Suite 100
Pocatello,Idaho 83205
[e-mail]
Anthony Yankel
12700 Blake Avenue, Unit 2505
Lakewood, Ohio 44107
[e-mail]
MICRON
Pete Bennett
Micron Technology, Inc.
8000 South Federal Way
Boise,Idaho 83707
[e-mail]
tPC-E-t6-24
Certificate of Service
Thorvald A. Nelson
Frederick J. Schmidt
Emanuel T. Cocian
Brian T. Hansen
Holland & Hart, LLP
6380 Fiddlers Green Circle, STE. 500
Greenwood Village, CO 80111
tnelson@ho llandhart. com
fschmidt@hollandhart. com
etcocian@hollandhart. com
bhansen@hol landhart. com
[e-mail]
[e-mail]
kmtrease@hollandhart. com
ICIP
Peter J. Richardson
Richardson Adams, PLLC
515 N.27th St
Boise,lD 83702
peter@richardsonadams. com
Dr. Don Reading
6070 Hill Road
Boise,ID 83703
dreading @mindspring. com
DOE
Steven Porter
Office of the General Counsel
I 000 Independence Ave., SW
Washington D.C. 20585
[e-mail]. gov