20110415Reply Comments.pdf

~~~OUNTAIN
April 15,2011
RECEIVED
io" APR r 5 AM 9= 58
201 South Main, Suite 2300
Salt Lake City, Utah 84111
VI OVERNIGHT DELIVERY
Jean D. Jewell
Commssion Secreta
Idaho Public Utilties Commssion
472 W. Washigton
Boise, il 83702
RE: Rocky Mountain Power's Reply Comments in Case No. PAC-E-IO-o9
IN THE MATTER OF THE APPLICATION OF PACIFICORP DBA ROCKY
MOUNAI POWER REQUESTING APPROVAL OF AMENDMENTS TO THE
REVISED PROTOCOL ALLOCATION METHODOLOGY
Dear Ms. Jewell:
Puruat to the Commssion's Notice of Modfied Proceur issued on Janua 12, 2011, and in
respons to the comments of the Idao Public Utilities Commssion Sta and Monsato
Company received on March 30,2011, Rocky Mounta Power respetfuly submits for fiing an
origi and seven (7) copies of the Company's Reply Comments.
Please contat Danel Solander at [phone] if you have any questions or if I can be of
fuer assistace.
Sincerely,
/\ ./l~ LLvu~~K.La9'
Vice Prsident, Regulation
~~/t//
Enclosurs
cc: Certficate of Servce for Case No. PAC-E-I0-09
R',I:('E1vi:O.,i.VI . 1'1 ,_
Mak C. Moench, Pro Hac Vice
Danel E. Solander, Pro Hac Vice
201 Sout Mai Stret, Suite 2300
Salt Lae City, Uta 84111
Telephone No. [phone]
Facsimle No. [phone]
mark.moench~pacificorp.com
dael.solander~pacificorp.com
lOll APR I 5 AM 9= 58
Paul J. Hickey, Pro Hac Vice
Hickey & Evan, LLP
1800 Cary Avenue, Suite 700
P.O. Box 467
Cheyenne, VV 82003-0467
Telephone No. [phone]
Facsimile No. [phone]
phickey(fhickeyevans.com
Attorneys for
Rocky Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION
IN THE MATTER OF THE APPLICATION )
OF PACIFICORP DBA ROCKY MOUNAI )
POWER REQUESTING APPROVAL OF )
AMNDMENTS TO THE REVISED )PROTOCOL ALLOCATION )METHODOLOGY )
)
CASE NO. PAC-E-IO-9
REPLY COMMNTS OF
ROCKY MOUNTAI POWER
COMES NOW, PacifiCorp dba Rocky Mountan . Power (the "Company") by
and though its attorneys of record, in accordace with the Notice of Modified Procedure
issue on Janua 12, 2011, and in respons to the comments of the Idaho Public
Utilities Commssion sta ("Sta) and Monsato Company ("Monsato") reeived on
March 30, 2011, now respectfly submits the followig reply comments to the Idao
Public Utilities Commssion ("Commssion").
INRODUCTION
On September 15, 2010, the Company filed Case No. PAC-E-1O-09, (the
"Application") with the Idao Public Utiities Commssion, reuestig approval of
amendments to the Revise Protocol allocation methodology.
On Janua 12, 2011, the Commssion issued its Notice of Modified Procedure
and established a deadline for wrtten comments or protests by Wednesday March 30,
2011, and reply comments by Friday April 15, 2011. On Marh 30, 2011, Sta and
Monsto fied comments on ths Application.
COMPAN REPLY COMMNTS
I. Reply to Staff's Comments
The Company would like to express its appreiation for the efforts of the
Commssion and Sta who have worked with the Company and reresentatives from the
other jursdictions to develop allocation methods that allow the Company a reasonable
opportty to recover 100 pecent of its prudently incured costs in all states. The
Company acknowledges Staffs reommendation to adopt 2010 Protocol and expresses
appreiation for Stas acve parcipation and support in the Multi-State Process
("MSP") Stading Commttee and diligent efforts to help develop the 2010 Prtocol
allocation methodology.
Customers in all six jursdictions served by the Compay have received
signficant beefits from the operaon of its system on an integrte basis that ha
achieved a least cost, least risk resource portolio. Ths benefit is demonstrated by the
Company's ranng among one of the lowest cost energy providers in the nation.
2
The Company believes Sta ha appropriately outlined the basic reguatory
objectives tht should be considered when reviewig and adopting a jursdictional cost
alloction methodology:
. The protocl should lead to alloctions tht are fai to PacifiCorp's Idaho
ratepayers and to the Company's customers in each of the other states
served by PacifiCorp.
. The protocol, when followed should provide PacifCorp with the
opportty to recver all of its prudently incured costs.
. Explicit jursdctional allocation methodologies predomiately bas on
a consensus methodology, is prefered to foster investor confdence and
thus the abilty to attt caita at a reonable cost.
. Admstrtion of the alloctions protocol should be reasonably
transparnt, simple to understad, and not be overly burdensome to
adster.
. The allocations should lead neither to undue revenue requient
volatilty nor gross unpredictability.
. The method should allow for stas to independently purue their energy
policies.
1
The Company believes the 2010 Protocol addresses each of these objectives.
Although Sta comments highighted several potential impacts of inconsistent
alloction methodologies,2 the Compay remai concerned with respect to the recent
accptace by the Commssion of Stas recommendation to unateraly adopt a
2
Staff Comments, page 4.
Order No. 29708, page 7 and Staff Comments, page 2.
3
system-wide allocation of the costs and benefits of the Idaho Irgation Load Control
Progr. Notwthtading these concer, the Company is commtted to work with
Sta and other members of the MSP Stadig Commttee to address the alocation of
ths program and other Class 1 demand-side maement ("DSM") progrs, as agreed
to in item number thrteen of the Stipulation between the Paries in Cas No. PAC-E-ll-
06:
"The Paries agree to support effort by the Company and the Idao Sta to
encoure the Multi-State Prcess ("MSP") Stadig Commttee to propose a
resolution at the next MSP Commssioner' Foru on the issue of system
allocation of the costs for the Idao Dispatchable Irgation Load Contrl Credit
Rider Program. If the system allocation of Progr costs is not accepted by the
states of Uta Oregon and Wyoming by June 1, 2012, then the Company may
seek Program modifications and/or cost recovery before the Idao Commission,
including but not limted to inclusion in a genera rate cas filing or a request for
deferr accountig treatment.,,3
Impact Studies
The Company supports Stas belief that more thorough analysis of the
alternative studies such as strctu separtion, go-it-alone, market price sensitivity and
growt impact stdies are warted and would provide paes with better inormtion
to evaluate the ful impat of futu chages. In anticipation of the expirtion of the
2010 Protocol afer December 31,2016, the Company agrees to engage in discussions
staing in 2013 with other interested persons and, as appropriate, in conjunction with
the MSP Stadig Commtte and applicable workgrups regardig appropriate
alloction options for 2017 and beyond. As pa of these discussions, the Company, in
consultation with the other staeholders, will pedorm cost causation stdies related to
classification and allocation of costs, and a comprehensive evaluation of the costs and
3 PAC-E-ii-06 Stipulation page 5.
4
benefits of stctu separation and other allocation options such as the Rolled-In
allocation methodology.
Reportg Requirements
Sta recommended that the Commssion requie futue Idao filings to include
calculations of the Company's Idao revenue requiment under the 2010 Protocol,
Revised Protocol, and the Rolled-In method. The Company does not object to
including in general rate cases and anua results of operations fiings with the Idaho
Commssion made thoug December 31, 2016, a calculation of the Company's Idaho
revenue requiement under each of the th methods identified.
ll. Reply to Monsanto's Comments
The Company's reply comments will address the followig issues raised by
Monsato:
. The "Uta Issue";
. Load Growt;
. Futue Tranmission and Generation Investments; and
. Treatment of Interrptible loads.
The "Utah Issue"
What Monsto refers to as the Uta issue relates to the fact tht the Uta results
under the Revised Protocol were not materializig as expeted when the Uta
Commission adopted the Revised Protocol in 2005. However, Idao Sta and the
Commssion have expressed simlar views and a shaed conce. For example ths
Commssion's Febru 28, 2005, Order approvig Revised Protocol stted:
"The Commssion notes tht sooner or later a merged company should be treated
as one integrated company and not six separate jursdictiona entities. We note of
5
signficance tht the Company dispatches resources on a company or system-
wide basis. Ths method of resource utilization, we believe seemigly argues for
a Rolled- In approach as to allocation of costs.'.4
Load Growth
Monsanto's assertion tht "approximately 60 percent of the load is attbutable to
two customers, Monsto and the Irgators, neither of which have experience any load
growt for thrt (30) plus years nor are expected to grow in the futu" is simply not
accurte. The Company has approxiely 5,000 irgation cusomers in its Idaho
service terrtory whose load ha grown frm approxiately 300,000 megawatt-hour in
1984 to a high of almost 700,000 megawatt-hours in 2007. Over ths same time peod
Idaho load ha grown frm two millon megawatt-hours to over thee millon megawatt-
hours, a 64 percent increas over 23 year. The Compay has ben contacted by and is
curntly workig with a large industral cusomer with plan to locate in Idao tht will
add 40 megawatt of additiona load. Monsato recently anounced plan to add a
thermal optizer to scrub emission output at its Soda Sprigs plant which will most
likely increase energy consumption. Contr to Monsanto's assertion, Idao is
curently the second fasest growig jursdcton in the Company's servce terrtory.
Although Monsato discounts the load growt studies perormed for the MSP
Stading Commttee, the facts contiue to demonstrte that the load-based dync
allocaton methodology that is being caed forward into the 2010 Protocol
appropriately assign costs bas on the jursdctional demand and use placed on the
system.
Future Transmission and Generation Investments
4 Order No. 29708, page 10.
6
Monsto's comments rase issues related to the advisabilty and drvers of
futue investment in trsmission and generation resources. However, ths Application
is not the foru to determe the prudency of investent decisions. As noted by ths
Commssion in its Orer approvig Revised Protocol, "(t)he Revised Protocol does not
prejudge issues of prudence, rate spread, rate design or cost recovery. Each stte
Commission continues to estblish fair, just and reasonable rates."s
Interrptible Loads
With respet to Monsto's comments on ths topic, the Company fiy
believes that ths is not the appropriate venue for Monsanto to re-litigate the last rate
case. As mentioned previously, in the last case Sta recommended tht the costs of the
Class 1 DSM Idao Irrgation Load Contrl Program should be trted as a system
resoure (Option 2 in Appendix D of the Revised Protocol and the 2010 Protocol) which
is consistent with Monsanto's curent treatment. In that same case Monsanto proposed
situ treatment of its own curlment resource (Option 1 in Appendix D of the Revised
Protocol and the 2010 Protocol). The Commssion's order adopte system treatment for
both the Irgation Load Contrl Progr and Monsto's curlment.
RECOMMNDATIONS OR CONCLUSION
The Company, along with representatives from each of its jursdictions and the
MSP Stadig Commttee, has worked dilgently to develop the 2010 Prtocol
allocaton methodology. The Company appreciates the effort of ths Commssion and
Staff who have worked to develop an allocation method that reaches a reasonable
compromise for all pares involved and appreciates and accepts Stas recommendation
to adopt the 2010 Protocol.
5
Order No. 29708, pae 10.
7
The Company will work with Sta to encourge the MSP Stadig Commttee
to propose a resolution at the next MSP Commssioner' Foru on the issue of system
alloction of the costs for the Idao Irgaton Load Control Progr.
The Company commts to contiue to work with the MSP Stadig Commtte
to monitor and address any allocation issues and perform alternative stdies such as
strctul separation, go-it-alone, market price sensitivity and growth impact studies to
provide pares with better inormtion to evauate the ful imact of futu chages.
In anticipation of the expirtion of the use of the 2010 Prtocl afer December
31, 2016, the Company agres to engage in discussions sting in 2013 with other
interested persons and, as appropriate, in conjunction with the MSP Stading Commttee
and applicale workgroups regarding appropriate alocaon options for 2017 and
beyond. As par of these discussions, the Compay, in consultation with the other
staeholders, will perform cost causation studies related to classification and allocation
of costs, and a comprehensive evaluation of the costs and benefits of stctual
separtion and other alocation options such as the Rolled-In alloction methodology.
If the Commssion approves ths Application the Company commts that though
2016 all futue anua results of operations or general rate cases will be fied with
calculations of the Company's Idao results of operations using the 2010 Protocol,
Revise Protocol, and Rolled-In methods.
WHREFORE, Rocky Mounta Power respetfly requests that the
Commssion approve 2010 Protocol as the authorized method of allocatig system costs
to each jursdiction.
Respectfly submitt this 15th day of April, 2011.
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ROCKY MOUNAI POWER,
¡i 1;1' i IV! / l
/ ?~IA ¡; ( vY?~ fA /iLl& 1
Mark C. Moench, Pro Hac vi/:~ / J
Danel E. Solander, Pro Hac Vice
201 South Mai Street, Suite 2300
Salt Lae City, Uta 84111
Telephone No. [phone]
Facsimle No. [phone]
mark.moench~pacifcorp.com
daniel.solander(fpacificorp.com
Paul J. Hickey, Pro Hac Vice
Hickey & Evan, LLP
1800 Carey Avenue, Suite 700
P.O. Box 467
Cheyenne, VV 82003-0467
Telephone No. [phone]
Facsimle No. [phone]
phickey(ßhickeyevans.com
Attorneys for
Rocky Mountain Power
9
CERTIFICATE OF SERVICE
I hereby certify that on ths 15th day of April, 2011, I caused to be sered, via E-mal, a
tre and correct copy of Rocky Mountain Power's Comments in PAC-E-I0-09 to the
followig:
Eric L. Olsen
Raine, Olson, Nye, Budge & Bailey,
Charere
201 E. Center
P.O. Box 1391
Pocello, il 83204-1391
E-Mail: elo(fracinelaw.net
Anthony Yanel
29814 Lake Road
Bay Vilage, Ohio 44140
E-mail: tony(fyankeLnet
James R. Smith (E-mail only)
Monsanto Company
P.O. Box 816
Soda Sprigs, Idaho 83276
E-Mail: jim.r.smith(fmonsanto.com
Scott Woodbur
Deputy Attorney General
Idaho Public Utilties Commssion
472 W. Washigton (83702)
POBox 83720
Boise, il 83720-0074
E-Mail: scott.woodbur(fuc.idaho.gov
Radal C. Budge
Racine, Olson, Nye, Budge & Bailey,
Charered
201 E. Center
P.O. Box 1391
Pocatello, ID 83204-1391
E-Mail: rcb(fracinelaw.net
Maurce Brubaker (E-mail only)
Brubaker & Associates
PO Box 412000
St. Louis, MO 63414-2000
E-Mail: mbrubaker(fconsultbai.com
Gar Kajander
Energy Procurement
Monsato Company
800 N. Lindberg BLVD., Mailzone C2NF
St. Louis, MO 63167
E-mail: gary.r.kajander(fmonsanto.com
PacifiCorp/dba Rocky Mounta Power
ted. weston(fpacificorp.com
mark.moench(fpacificorp.com
Daniel.solander(facificorp.com
dataequest(fpacificorp.com
l: fJ c r(" -KaeYMCN~ ~
Coorditor, Admstrtive Serices
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