20120315Notice of Discontinuance.pdf

~~~OUNTAIN RECEIVED
2012 MAR 15 AM 10: 05
201 South Main, Suite 2300
Salt Lake City, Utah 84111
March 14,2012
VI ELECTRONIC FILING
AND OVERNIGHT DELIVERY
Jean D. Jewell
Commission Secreta
Idaho Public Utilities Commission
472 W. Washington
Boise,ID 83702
RE: TO INFORM THE COMMISSION OF ROCKY MOUNTAIN POWER'S
DECISION TO DISCONTINUE OPERATION OF THE LITTLE MOUNTAIN GAS
COMBUSTION TURBINE POWER PLANT LOCATED NEAR OGDEN, UTAH
Dear Ms. Jewell:
The Little Mountan generation plant was comprised of a General Electric Frame 5 gas fired
combustion tubine with a nominal 14 MW winter rating and a 12 MW sumer rating. The full
load heat rate was approximately 16,200 Btu/Wh. The turbine exhaust was used in a waste heat
boiler to produce steam which was purchased by Great Salt Lake Minerals Corporation
("GSLM") for its production operations as the largest producer of sulfate and potash in North
America. Duct burers were used as needed to increase steam production when waste heat from
the Little Mountain combustion turbine was insufficient to meet GSLM steam demand. An
auxilar boiler was also used to provide steam when the tubine was not in service. GSLM has
received steam from the Little Mountain power plant, through various contract extensions, since
1968.
The initial term of the agreement was through August 31, 2006, and the agreement automatically
renewed for successive three-year terms unless either pary gave an eighteen-month notice of
termination. Upon termination, GSLM had the right of first refusal to purchase the auxilar
boiler and air permit for $100. Rocky Mountain Power provided GSLM a notice of termination
of the Steam Supply Agreement on August 24,2010. The effective date ofthe termination was
Februar 28,2012.
After issuance of the termination notice, the paries met to discuss whether GSLM would
exercise its option to purchase the auxilar boiler. GSLM requested that Rocky Mountain Power
provide an indicative offer for extending the existing steam agreement for an additional 6 or 12
month period beyond the February 28,2012, termination date in order to provide GSLM
additional time to assess its options regarding the future of a reliable steam supply. Whle Rocky
Mountain Power was in the process of evaluating the steam supply costs and whether or not to
terminate or renegotiate the steam supply agreement with GSLM, the Little Mountain power
plant experienced a catatrophic electrical fault on August 2, 2011. Because the Company had a
steam sales contract in place with GSLM through February 28,2012, it was necessar to
evaluate the cost of repairing the Little Mountan power plant versus moving a rental boiler to
Idaho Public Utilities Commission
March 14,2012
Page 2
the site for steam production to fulfill the steam sales contract. Furhermore, given the age and
condition of other plant components, there was a concern about the long-term reliability of the
plant. The Company's analysis showed that the boiler rental option resulted as the favorable
alternative to the repair option.
The analysis of the cost options indicated that it was not in the best interest of Rocky Mountain
Power's customers to repair the Little Mountan combustion turbine and retur it to operation.
Generally, the Little Mountain plant reached the end of its depreciation life in 2009.
Discontinued operation of the Little Mountain combustion turbine generation plant will not
adversely affect any other retail or wholesale customer other than GSLM. The discontinuation
of operation of the Little Mountain plant serves the public interest because this facility has
become uneconomic to operate and has suffered a catastrophic failure that is uneconomic to
repair. The Little Mountain facility has reached the end of its useful life. The discontinuation of
the Little Mountan plant and its 12-14 MW generation capacity will have no material effect on
Rocky Mountain Power's generation capacity. Any equipment components that stil have value
wil be sold or reused within the Company's system. Upon retirement of the Little Mountain
facilities, the land that the Little Mountain plant is located on reverts back to GSLM via a
quitclaim deed per original contract terms. The facilties and equipment at the Little Mountain
plant wil either be relocated to other locations within the Company for continued use, sold,
salvaged, transferred to GSLM or disposed of. Site cleanup work will be required to remove
containated soils and foundations.
Rocky Mountain Power has agreed to continue to provide steam to GSLM through July 2012 to
allow GSLM time to install new boilers to meet their long-term steam requirements.
If you have any questions please call Ted Weston at [phone].
Sincerely,
ìtwi~/~
\./ Jeffrey K. Larsen
Vice President, Regulation & Governent Affairs