20071030Notice of Filing Erratum.pdf

John R. Hammond, Jr., ISB No. 5470
FISHER PUSCH & ALDERMAN LLP
U S Bank Plaza, 5th Floor
101 South Capitol Boulevard
O. Box 1308
Boise, Idaho 83701
Telephone: [phone]
Fax: [phone]
Email: irh(Q),fpa-Iaw.com.com
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Justin Lee Brown
Admitted Pro Hac Vice
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
Telephone: [phone]
Fax: [phone]
Email: iustin.brown~pacificorp.com
Katherine McDowell
Admitted Pro Hac Vice
McDowell & Rackner PC
520 SW 6th Ave. Suite 830
Portland, Oregon 97204
Telephone: [phone]
Fax: [phone]
Email: Katherine(CV,mcd-law.com
Attorneys for Rocky Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF P ACIFICORP DBA ROCKY MOUNTAIN
POWER FOR APPROVAL OF CHANGES TO
ITS ELECTRIC SERVICE SCHEDULES
CASE NO. P AC-O7-
NOTICE OF FILING
ERRATUM
Rocky Mountain Power hereby submits notice of filing an erratum to the prefiled
rebuttal testimony of Paul Clements that was submitted to the Idaho Public Utilities
Commission for filing October 25 , 2007. Shortly after filing the rebuttal testimony, Rocky
Mountain Power was notified that it may be implied from Mr. Clements' rebuttal testimony
NOTICE OF FILING ERRATUM -
that the company s proposed methodologies for valuing the Monsanto curtailment value in
this proceeding were used and agreed to by the parties to establish Monsanto s existing
curtailment value. This is not the case.
Accordingly, enclosed herewith as Exhibit A are the applicable revised pages of Paul
Clements ' prefiled rebuttal testimony that reflect the following clarifications:
Page 3, line 5 ofthe original filing was changed to replace the comma following the
word "models" with the words "the Company" and to replace the word "set" with the words
support and justify"
Page 5 , line 23 ofthe original filing was changed to replace the words "determine
with the words "support and justify"
Page line 17 of the original filing was changed to replace the words "setting" with
the words "supporting and justifying
RESPECTFULLY SUBMITTED this 30th day of October, 2007.
ROCKY MOUNTAIN POWER
Jo . Hammond, Jr., ISB No. 5470
IS R PUSCH & ALDERMAN LLP
Bank Plaza, 5th Floor
101 South Capitol Boulevard
O. Box 1308
Boise, Idaho 83701
[phone]
[phone] facsimile
irh~battfisher.com
L--J
NOTICE OF FILING ERRATUM - 2
NOTICE OF FILING ERRATUM - 3
Justin Lee Brown
Admitted Pro Hac Vice
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
Telephone: [phone]
Fax: [phone]
Email: iustin.brown(CV,pacificorp.com
Katherine McDowell
Admitted Pro Hac Vice
McDowell & Rackner PC
520 SW 6th Ave. Suite 830
Portland, Oregon 97204
Telephone: [phone]
Fax: [phone]
Email: Katherine~mcd-Iaw .com
Attorneys for Rocky Mountain Power
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 30th day of October, 2007, a true and correct copy
of the foregoing document was served by first-class mail, postage prepaid, and addressed to;
by fax transmission to; by overnight delivery to; or by personally delivering to or leaving
with a person in charge of the office as indicated below:
Jean Jewell, Commission Secretary
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, Idaho. 83720-0074
Email: iean.iewell~puc.idaho.gov
J u.S. Mail
J Facsimile
J Overnight Delivery
IX) Hand Delivery
( J Email
Neil Price
Deputy Attorney General
Idaho Public Utilities Commission
P. O. Box 83720
Boise, ill 83720-0074
neil. Plice~puc.idaho. gov
J U.S. Mail
J Facsimile
( J Overnight Delivery
I)CJ Hand Delivery
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Data Request Response Center
PacifiCorp
825 N. E. Multnomah, Suite 2000
Portland, OR 97232
e-mail: datarequest~pacificorp.com
J u.S. Mail
J Facsimile
( J Overnight Delivery
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fxj Email
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington (83702)
O. Box 83720
Boise, ill 83720-0074
scott. woodburv~puc. idaho. gov
Attorney for Commission Staff
J u.S. Mail
J Facsimile
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James R. Smith
Monsanto Company
O. Box 816
Soda Springs, ill 83276
E-mail: iim.smith~monsanto.com
J u.S. Mail
J Facsimile
( J Overnight Delivery
( J Hand Delivery
LX) Email Only
NOTICE OF FILING ERRATUM - 4
Randall C. Budge
Racine, Olson, Nye, Budge
& Bailey, Chtd.
O. Box 1391
Pocatello, Idaho 83204- 1391
Email: rcb0J,racinelaw.net
Attorneys for Monsanto Company
J U.S. Mail
J Facsimile
J Overnight Delivery
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.lXJ Email
Maurice Brubaker
Katie Iverson
Brubaker & Associates
17244 W. Cordova Court
Surprise, AZ 85387
Email: mbrubaker~consultbai.com
ki verson~consul tbai. co
Consultant for Monsanto Company
J u.S. Mail
J Facsimile
( J Overnight Delivery
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(X) Email
Eric L. Olsen
Racine, Olson, Nye, Budge
& Bailey, Chtd.
201 E. Center
O. Box 1391
Pocatello, Idaho 83204-1391
Email: elo0J,racinelaw.net
Attorneys for Idaho Irrigation Pumpers Association, Inc.
J U.S. Mail
J Facsimile
J Overnight Delivery
J Hand Delivery
DC! Email
Anthony Yankel
29814 Lake Road
Bay Village, OH 44140
E-mail: tonv~yanke1.net
Consultant for Idaho Irrigation Pumpers
Association, Inc.
( J U.S. Mail
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D(I Email
Idaho Irrigation Pumpers
Association, Inc.
c/o Lynn Tominaga
O. Box 2624
Boise, ill 83701-2624
E-mail: lynn tominaga((j),hotmai1.com
( J U.S. Mail
( J Facsimile
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DQ Email
Tim Buller
Agrium, Inc.
3010 Conda Road
Soda Springs, Idaho 83276
E-mail: tbul1er~agrium.com
( J U.S. Mail
J Facsimile
( J Overnight Delivery
( J Hand Delivery
Email
NOTICE OF FILING ERRATUM - 5
Conley E. Ward
Michael C. Creamer
Givens Pursley LLP
608 W. Bannock Street
P. O. Box 2720
Boise, ill 83701-2720
E-mail: cew0J,givenspursley.com
Attorneys for Agrium, Inc.
Dennis Peseau, PhD
Utility Resources, Inc.
1500 Liberty Street S, Ste. 250
Salem, OR 97302
E-mail: dpeseau~excite.com
Consultant for Agrium, Inc.
Brad M. Purdy
Attorney at Law
2019 N. 17th Street
Boise, ill 83702
Email: bmpurdv~hotmail. com
Attorneys for Community Action
Partnership Association of Idaho
Kevin B. Homer, Esq.
1565 South Boulevard
Idaho Falls, ill 83404
Email: kbh0J,khomerlaw.com
Attorney for Timothy Shurtz
Tim Shurtz
411 S. Main
Firth, Idaho 83236
Email: tim~idahosupreme.com
NOTICE OF FILING ERRATUM - 6
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Email
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EXHIBIT A
five times more for its curtailment products than Monsanto pays in its tariff rate.
Monsanto s current curtailment contract is significantly more generous than the
Company s most recent comparable contract.
The Company s front office model and GRID model used for the curtailment
valuation are robust models the Company used to support and justify the current
approved contract price for Monsanto. In addition, the GRID model is used to
set power costs in this case, which include an operating reserve component.
The parties have similar value ranges for the economic curtailment component of
the Monsanto curtailment contract, a value generally tied to market prices.
The operating reserve component of the Monsanto curtailment contract should be
set considering the Company s current resource portfolio, rather than
manipulating the model results as Monsanto suggests to artificially select specific
coal units.
Contrary to Staff s approach, operating reserves cannot be accurately valued
using a proxy derived from market price increases. This is because the value of
operating reserves is not necessarily tied solely to electric market prices. Using
Staff s approach for economic curtailment and system integrity, but the
Company s updated front office model value for operating reserves, produces a
value for the interruptible products in line with the Company s updated value.
. Monsanto s peaker valuation approach incorrectly assumes both that Monsanto
curtailment product is similar to a simple cycle turbine unit and that the Company
needs such a unit in its resource portfolio. Adjustments to this valuation
approach are necessary to account for differences in the Monsanto product and a
Clements, Di-Reb - 3
Rocky Mountain Power
Please summarize the interruptible products offered by Monsanto and their
relative value in Monsanto s current contract.
The current Monsanto contract provides three products:
1. Operating Reserves. Monsanto provides 95 megawatts of operating
reserves available for 188 hours per calendar year. The Company holds operating
reserves to respond to unit outages and maintain reliability. In the current
contract, the operating reserve product accounts for about 55 percent of the total
value of the interruptible products.
2. Economic Curtailment. Monsanto provides 67 megawatts of economic
curtailment available for 800 hours per calendar year. This product allows the
Company to curtail Monsanto s load on a two hour notice for any reason. In the
current contract, the economic curtailment product accounts for about 40 percent
of the total value of the interruptible products.
3. System Integrity. Monsanto provides 162 megawatts of system
integrity available 12 hours per calendar year. The product allows the Company
to curtail Monsanto following a double contingency event, which is two or more
overlapping forced outages of large Company generating assets within 48 hours.
In the current contract, the system integrity product accounts for less than 5
percent of the total value of the interruptible products.
Please summarize the valuation methodologies proposed by the various
parties in this docket.
The Company has used the same methodologies in this case that it used to support
and justify the value set forth in the existing agreement with Monsanto, executed
Clements, Di-Reb - 5
Rocky Mountain Power
Mountain Power s service territory. The specific details of the curtailment
products offered by this customer differ only slightly from those offered by
Monsanto. The price for this contract was based upon the same valuation models
the Company used in Monsanto s current contract and in this case.
The other customer s credit is based on a value of$4.16 per kilowatt
month for operating reserves and $61.71 per megawatt hour for economic
curtailment. Extrapolating these values to the number of megawatts and hours of
operating reserves and economic curtailment products Monsanto offers equates to
, an equivalent value of$8.1 million per year, $4.3 million less than Monsanto
current contract price of $12.4 million.
The Company s Valuation Models
Do you agree with Monsanto s contention that the Company s models are not
the most appropriate method to determine the value of Monsanto
interruptible product?
No. The Company s front office model and GRID model are robust models
which the Company has used for several years for a range of commercial and
regulatory purposes, including supporting and justifying the value of Monsanto
current contract. There seems to be general support for the result these models
produce for the economic curtailment component, with Monsanto acknowledging
that the economic curtailment component of the Company s models "could
possibly provide one reference point for valuation." (Iverson Direct Testimony, p.
36, Ins. 9-10). Monsanto s criticisms are limited to the operating reserve and
system integrity valuations produced by the Company s models.
Clements, Di-Reb - 11
Rocky Mountain Power