20220228Application.pdf

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Lead Counsel
[e-mail]
February 28,2022
VIA ELECTRONIC FILING
Jan Noriyuki, Secretary
!daho Public Utilities Commission
1'1331W. Chinden Blvd., Bldg 8,
Suite 201-A (83714)
PO Box 83720
Boise, ldaho 83720-0074
Case No. IPC-E-22-05
ln the Matter of the Application for a Determination Validating the North
Valmy Power Plant Balancing Account True-Up
Dear Ms. Noriyuki
Enclosed for electronic filing, pursuant to Order No. 35058, please find ldaho Power
Company's Application in the above matter.
ln addition, attached is the Direct Testimony of Courtney Waites and the Direct
Testimony of Lindsay Barretto filed in support of the Application. Word versions are also
attached for the Reporter.
Also attached is a protective agreement. Exhibit No. 3 to the testimony of Lindsay
Banetto contains confidential information and will be provided separately via encrypted emailto
parties who sign the protective agreement.
lf you have any questions about the attached documents, please do not hesitate to
contact me.
Very truly yours,
AnD Oof,PCompany
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Lisa D. Nordstrom
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Enclosures
CERTIFICATE OF ATTORNEY
ASSERTION THAT INFORMATION CONTAINED IN AN IDAHO PUBLIC UTILITIES
COMMISSION FILING IS PROTECTED FROM PUBLIC INSPECTION
ldaho Power Company's Application for a Determination Validating The North
Valmy Power Plant Balancing Account True-Up
Gase No. IPC-E-22-Os
The undersigned attorney, in accordance with RP 67, believes that Exhibit No. 3
to the testimony of Lindsay Barrefto, related to ldaho Power Company's Application for
a Determination Validating the North Valmy Power Plant Balancing Account True-Up
dated February 28,2022, may contain information that ldaho Power Company or a third
party claims is confidential as described in ldaho Code S 74-101, ef seg., and S 48-801,
ef seq., and as such is exempt from public inspection, examination, or copying.
DATED this 28th day of February 2022
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Lisa D. Nordstrom
Counsel for ldaho Power Company
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR A
DETERM INATION VALIDATI NG THE
NORTH VALMY POWER PLANT
BALANCING ACCOU NT TRUE.UP.
CASE NO. IPC-E-22-05
APPLICATION
ldaho Power Company ("ldaho Power" or "Company"), in accordance with /daho
Code S 61-502, 61-503, and 61-524, as well as RP 052, hereby respectfully makes
application to the ldaho Public Utilities Commission ("Commission") for an order (1)
finding that all actual North Valmy Power Plant ("Valmy") investments during the January
1,2019, through December 31,2021, time period were prudently incurred, (2) validating
that ldaho Power has accurately quantified the Valmy balancing account true-up as a
result of the inclusion of actualcosts through December 31,2021, and updated forecasted
investments through December 31, 2025, and (3) confirming this request satisfies the
annual reporting required by Commission Order No. 34349. Although Order No. 34349
requires the Company's filing to include a rate change effective June 1 , 2022, the
Company is not proposing to adjust customer rates at this time.
ln support of this Application, ldaho Power asserts as follows:
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APPLICATION - 1
I. BACKGROUND
1. Valmy is a coal-fired power plant that consists of two units and is located
near Winnemucca, Nevada. Unit 1 went into service in 1981 and Unit 2 followed in 1985.
ldaho Power owns 50 percent of Valmy. NV Energy is the co-owner of the plant with the
remaining 50 percent ownership and operates the Valmy facility. ldaho Power and NV
Energy (collectively, the "Co-Owners") work jointly to make decisions regarding Valmy.
The plant is connected via a single 345 kilovolt transmission line to the ldaho Power
control area at the Midpoint substation. ldaho Power owns the northbound capacity and
NV Energy owns the southbound capacity of this line. The Company exited coal-fired
operations of Unit 1 December 31, 2019, as accepted by the Commission in Order No.
33983 as part of ldaho Powe/s 2017 lntegrated Resource Plan. The Preferred Portfolio
identified in the 2021 lRP, filed in Case No. !PC-E-2143, includes an exitfrom Valmy
Unit 2 in 2025, concluding that the 2025 exit from Valmy provides a more favorable
economic outcome when compared to an earlier exit.
2. \Mth Order No. 33771 in Case No. IPC-E-16-24, and updated with Order
No. 34349 in Case No. IPC-E-19-08, the Commission approved a balancing account
mechanism designed to smooth revenue requirement impacts associated with the
shutdown of Valmy and allow for full recovery of Valmy-related costs near the plant's end-
of-life. !n addition, it more closely aligns the cost recovery period with the remaining
operating life of the plant, resulting in a better matching of cost recovery from customers
who benefit from the plant's operations while mitigating the risk of future customers
bearing the costs of a plant that wil! no longer be providing service. To help mitigate the
rate impact to customers, the Commission approved a Valmy-related revenue
requirement collection through 2028, three years Ionger than ldaho Power's planned
operational life of the plant.
3. The Company's last update to base rates associated with Valmy was
APPLICATION .2
approved with Order No. 34349, in Case No. IPC-E-19-08. The Commission: (1) deemed
al! actual Valmy investments through December 31, 2018, were prudently incurred, (2)
allowed investments at Valmy forecasted through December 31,2025, to be included in
the levelized revenue requirement mechanism, and (3) adjusted customer rates to
recover the associated ldaho jurisdictional incremental annua! levelized revenue
requirement of $1.21 million effective June 1 ,2019. ln addition, Order No. 34349 required
the Company (1) to file annual reports detailing the amounts recorded to the Valmy
balancing account, and (2) to submit a filing no later than February 28,2022, to true-up
the balancing account with forecast-to-actuals, with rates to become effective June 1,
2022.
II. VALMY INVESTMENTS SINCE 2018
4. There have been a number of investments required to operate Valmy in a
safe, efficient, and reliable manner, including investments required to ensure
environmental compliance as well as a number of investments for routine asset
replacement. Exhibit No. 2 to the direct testimony of Ms. Barretto presents ldaho Power's
share of the investments made at Valmy between January 1, 2019, and December 31,
2021, detailing 57 different projects totaling $4.66 million. ln addition, for those projects
forwhich ldaho Power's ownership share is over $20,000, and all investments associated
with Unit 1, the Company has included a project description and investment purpose
classification as to whether the investment was for environmental compliance, safety,
and/or reliability.
5. Of the 40 projects for which a detailed project description and investment
purpose classification was provided, 23 were for continued reliable plant operations, four
were required for environmental compliance, one was for the safe operations of the plant,
and 12 were for a combination of either reliability, environmental compliance, or safety.
At $2.04 million, the investments for reliability purposes are the largest expenditures
APPLICATION - 3
made at Valmy since 2018. However, the largest investment made at Valmy during the
January 1,2019, through December 31,2021, time period, at$1.24 million, was for a
combination of reliability and safety purposes and required the fix of the Unit 2 turbine
high pressure/intermediate pressure section shell steam leaks.
6. While the Parties are cognizant of the approaching end-of-life of Valmy,
there are investments necessary to ensure the plant remains operational in a safe,
efficient, and reliable matter. Because ldaho Power has exited participation in Unit 1
operations, the Company is no longer responsible for capital costs associated with that
unit. However, ldaho Power is still responsible for common facility investments and Unit
2 investments until the Company has exited participation in operation of the unit. The
latest forecast, presented in Confidential Exhibit No. 3 to Ms. Barretto's testimony,
includes the projected spend during the 2022 through 2025 time period.
III. THE VALMY BALANCING ACCOUNT TRUE.UP AND RECOMMENDED
RATEMAKING TREATMENT
7. There are four types of costs the Company records to the balancing
account: (1) the accelerated depreciation associated with existing Valmy plant
investments, (2) the return on the undepreciated capital investments at Valmy, (3) non-
fuel operations and maintenance ("O&M") reductions, and (4) decommissioning costs
related to the Valmy shutdown. Under the balancing account approach, the Company
replaces the base rate revenue recovery associated with ldaho Powe/s existing
investment in Valmy with a levelized revenue requirement and tracks it in the Valmy
balancing account. Order No. 34349 approved an ldaho jurisdictiona! levelized revenue
requirement of $29.90 million, including all Valmy-related plant investments as of
December 31,2018, projected additions to the Valmy plant through 2025, current and
future non-fuel O&M savings through December 31, 2025, and projected
decommission ing costs.
APPLICATION - 4
8. Updating the levelized revenue requirement based on the Valmy balancing
account true-up with plant investment balances and actual O&M savings through
December 31, 2021, as well as the forecast of investments and O&M savings through
December 31,2025, results in an annual levelized revenue requirement of $31 .68 million
on an ldaho jurisdictional basis, including $32.28 million associated with existing
investments, $2.86 million related to incremental investments, $1.10 million in
decommissioning costs, $4.45 million in non-fuelO&M savings, and a load variance over-
collection of $101,318. As detailed in Exhibit No. 1 to the direct testimony of Mr. Larkin,
the incrementalincrease to the ldaho jurisdictional levelized revenue requirement is $1.78
million.
9. Because the true-up of the Valmy balancing account reflects an increase of
$1.78 million in the levelized revenue requirement, and because any such differences are
tracked through the Valmy balancing account, the Company requests that the
Commission validate its quantification of the Valmy balancing account true-up and
recommends that the difference in the annual revenue requirement remain in the
balancing account to offset potential future refunds or add to future positive differences.
ldaho Power will continue to file the Valmy Levelized Revenue Requirement Balancing
Account annual reports following year-end 2022, keeping the Commission apprised of
changes to the Valmy levelized revenue requirement as a result of forecast-to-actuals
updates.
10. ldaho Power is not requesting to adjust base rates at this time. However, if
the Commission determines that a June 1, 2022, rate change is appropriate, the
Company's filing includes a quantification of the necessary rate change resulting from the
updated incremental annual levelized revenue requirement.
APPLICATION - 5
IV. MODIFIED PROCEDURE
11. The Company believes that a hearing is not necessary to consider the
issues presented herein, and respectfully requests that this Application be processed
under Modified Procedure; i.e., by written submissions rather than by hearing. RP 201,
ef seg. lf, however, the Commission determines that a technical hearing is required, the
Company stands ready to present its testimony and support the Application in such
hearing.
V. COMMUNICATIONS AND SERVICE OF PROCEEDINGS
12. Service of pleadings, exhibits, orders, and other documents relating to this
proceeding should be served on the following:
Lisa D. Nordstrom
ldaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
lnordstrom@ida hopower.com
dockets@idahopower. com
Matt Larkin
Idaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
mla rkin@ida hopower.com
VI. REQUEST FOR RELIEF
13. ldaho Power respectfully requests the Commission issue an order (1)
finding that all actual Valmy investments during the January 1,2019, through December
31, 2021, time period were prudently incurred, (2) validating that Idaho Power has
accurately quantified the Valmy balancing account true-up as a result of the inclusion of
actual costs through December 31,2021, and updated forecasted investments through
December 31,2025, and (3) confirming this request satisfies the annua! reporting
required by Commission Order No. 34349. Although Order No. 34349 requires the
Company's filing to include a rate change effective June 1 , 2022, the Company is not
proposing to adjust customer rates at this time.
APPLICATION - 6
DATED at Boise, ldaho, this 28h day of February 2022.
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LISA D. NORDSTROM
Attomeyfor ldaho Power Company
APPLICATION .7