20080926Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
CO MMISSI 0 NER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:NEIL PRICE
DEPUTY ATTORNEY GENERAL
DATE:SEPTEMBER 24, 2008
SUBJECT:APPLICATION OF P ACIFICORP FOR A CERTIFICATE OF PUBLIC
CONVENIENCE AND NECESSITY AUTHORIZING CONSTRUCTION
OF THE POPULUS- TO-TERMINAL 345 KV TRANSMISSION LINE
PROJECT; CASE NO. PAC-08-
On April 18, 2008, PacifiCorp dba Rocky Mountain Power ("PacifiCorp" or "the
Company ) filed an Application for a Certificate of Public Convenience and Necessity
CPCN") pursuant to Idaho Code 99 61-526 through 528 and IDAPA 31.01.01.111 and 112
seeking authorization to construct a 345 kV Transmission Line, a/k/a Populus-Terminal
Transmission Line, to be located in Bannock and Oneida Counties as well as a new substation to
be located in Downey, Idaho ("the Project"
On April 25 , 2008 , PacifiCorp filed an Application for a CPCN, pertaining to the
portion of the Project to be constructed within the State of Utah, with the Utah Public Service
Commission. On September 4, 2008, the Utah Commission issued an Order granting
PacifiCorp s request for a CPCN for the construction and operation of the Project
THE APPLICATION
PacifiCorp is a Utah corporation providing retail electric service to customers in
Utah, Wyoming and Idaho. The Company lists its principal place of business as Salt Lake City,
Utah. Rocky Mountain Power has filed a Certificate of Assumed Business Name with the Idaho
Secretary of State acknowledging PacifiCorp as the Company s "true name.PacifiCorp is
1 In its Order granting the certificate, the Utah Commission noted that no party to the case opposed construction of
the transmission line and concluded that: "public convenience and necessity does or will require the construction
and no evidence has been presented to contradict the testimony of the Company." Utah Docket No. 08-035-42.
DECISION MEMORANDUM
registered with the Idaho Secretary of State and lists CT Corporation System, 1111 West
Jefferson, Suite 530, Boise, Idaho 83702, as its Idaho registered agent for service.
PacifiCorp s Application states that the Project would extend from an existing
substation located southwest of the Salt Lake City International Airport to a new substation in
Downey, Idaho. In the supporting testimony of Mr. John Cupparo, Ms. Sharon Seppi, and Mr.
Bruce Williams, the Company explains that, due to significant retail load growth over the past
decade and anticipated future load growth, it will be unable to continue to provide the
transmission capacity necessary for the delivery of safe, efficient, and reliable electric service to
its customers.
The Company states that the Project is necessary in order to meet load growth, add
significant incremental transmission capacity between southeast Idaho and northern Utah and
strengthen the interconnection to transmission systems feeding Idaho , Wyoming, and the
Northwest in general. The transmission line also fulfills a commitment made by the Company to
increase its transmission capacity by 300 MW from southeast Idaho service territory to northern
Utah, referred to as the "Path C Upgrade." Case No. PAC-05-08.
A new substation (referred to as the "Populus Substation ) will be constructed near
the existing Jim Bridger 345 kV transmission line corridor in southeast Idaho near the town of
Downey. A new double-circuit 345 kV transmission line will be constructed from the Populus
Substation to the existing 345 kV Terminal Substation in Salt Lake City, Utah southwest of the
Salt Lake International Airport. 2 The transmission line will also tie into the existing Ben
Lomond Substation in Box Elder County, Utah. Initially, only a 345 kV substation yard will be
developed at the Populus Substation and the existing Jim Bridger-Borah, Jim Bridger-Kinport
and Ben Lomond-Borah 345 kV lines will be looped in and out of the Populus Substation.
However, the Populus Substation will be configured to facilitate the addition of planned 345 kV
and/or 500 kV transmission lines. The Ben Lomond Substation and Terminal Substation will be
expanded to accommodate the new 345 kV transmission lines and termination points.
PacifiCorp states that the total cost of the Project, including the Utah portion, is
approximately $750 million. The Company estimates that the revenue requirement for Idaho
2 A map showing the route of the transmission line can be found as an exhibit in PacifiCorp s response to data
requests and Staff comments; minor adjustments to the route may occur during final design.
DECISION MEMORANDUM
will be approximately 3%. However, the Company does not request rate recovery at this time.
The Company states that the Project would be operational beginning in 2010.
STAFF COMMENTS
Based on its extensive review of PacifiCorp s Application, the Company s 2007 IRP
Idaho statutes pertaining to CPCN issuance and other relevant information, Staff recommends
that the Commission grant PacifiCorp s CPCN request. Staff believes that the Project complies
with the minimum statutory requirements found in Idaho Code 9 61-526: (1) the present or
future public convenience or necessity requires or will require the construction of the Project;
and (2) the Project will not interfere with the line, plant or system of another public utility
Staff noted that the Project is an integral part of the preferred resource portfolio
outlined in the Company s 2007 IRP. PacifiCorp states that, since its IRP filing, its Utah
jurisdictional loads have continued to increase, Requests for Proposals ("RFPs ) continue to
favor lower cost wind resources in Wyoming and transmission between those resources and the
Utah load centers continue to be constrained during peak periods. In addition, the Company
Application states that the Clean and Diversified Energy Advisory Committee of the Western
Governors Association, the Rocky Mountain Area Transmission Study (RMA TS) group and the
S. Department of Energy National Transmission Congestion Study have all identified regional
and west wide benefits to transmission upgrades in this area.
Staff believes that the Company s assertion that additional transmission capacity can
lead to increased flexibility and reliability is generally correct. However, Staff feels that the
benefits of increased reliability are difficult to quantify and that some measure of reliability is
often sacrificed when energy resources are located some distance from primary load centers.
Staff also questioned the wisdom of constructing transmission lines with the anticipation that: (1)
additional resources will be constructed; (2) purchases from lower-cost extra-regional power
markets will be made available; and (3) additional transmission lines will come on line to allow
interconnection.
Thus, Staff believes that the necessity of the Project should be viewed in conjunction
with energy resources that are constructed, underway or planned. PacifiCorp elected to undergo
2 Staff did not address issues relating to the actual siting of the Project. Siting issues fall outside of the jurisdiction
of the Commission and fall within the purview of the individual local governmental agencies where the transmission
lines and substation are located.
DECISION MEMORANDUM
a transmission upgrade as part of its preferred resource portfolio of an additional 2 000 MWs of
renewable resources by 2013 in the Company s 2007 IRP. A significant portion of these
renewable resources will be located in Wyoming. Staff then listed more than 500 MWs of
renewable resources that are either under construction or in the final stage of development. In
response to a Staff data request, PacifiCorp provided four alternatives that it rejected because the
Company did not believe that they would provide sufficient capacity for these new resources.
Staff agreed that the Project was necessary in order for the Company to continue to provide
reliable service from these new resources to growing load centers.
Staff emphasized that it did not evaluate the overall prudency of the Company
resource plan or the construction of the Project which constitutes a good portion of that plan.
Staff goes on to note that recovery of actual costs from Idaho ratepayers will not be assessed
until construction of the Project is completed, full disclosure of Project expenses is provided and
Project utilization is fully quantified.
The Company took several steps to notify landowners adjacent to the transmission
corridor including: (1) an information flyer; (2) open house meetings with Company
representatives; (3) Project specific e-mail and telephone number for customer concerns; and (4)
regular Project updates posted on the Company s website.
The Commission has received 34 comments and complaints from the general public
mostly pertaining to siting and notification issues. PacifiCorp has received nearly an equal
number of communications from Idaho customers relating to the Project.Staff noted that
PacifiCorp responded to one set of complaints from landowners in Oneida and Bannock
Counties by relocating the proposed transmission line corridor to lessen impact on the affected
landowners. Nevertheless, Staff believes that, given the nature and magnitude of the Project, the
public would have benefitted from an earlier notification of the Project's commencement. Also
the Company elected to hold open house meetings during December and January 2007 which
typically are not conducive to public turnout. Staff opined that establishing communication with
local governmental officials as early as possible would also be beneficial because it will allow
these officials to be prepared to more adequately address their constituent's concerns.
In summary, Staff based its recommendation supporting the issuance of a CPCN upon
the following:
DECISION MEMORANDUM
The Project will facilitate transfer of energy from planned and existing
generating resources in Idaho and Wyoming and deliver it to load centers
in Utah.
The Project will improve the reliability of the currently congested
transmission system by increasing transmission capacity and the number
of transmission pathways.
The Project will provide flexibility in accessing the most cost effective
resources and regional markets. It will also provide a platform for adding
additional transmission to increase transfer capacity between east and west
control areas in the future.
The Project will not conflict or affect the operations of any existing
certificated fixed public utility providing retail electric service to the
public.
COMMISSION DECISION
Does the Commission wish to approve PacifiCorp s Application for a Certificate of
Public Convenience and Necessity for the construction of its Populus-Terminal Transmission
Line and Populus Substation in the State of Idaho?
tJ~
Neil Price
M:PAC-O8-np2
DECISION MEMORANDUM