20120503Application.pdf

ROCKY MOUNTAIN RECEVD POWER
ADIVfSION OEFACFICORP 201 South Main, Suite 2300 2012 MAY 3 AM 10 314 Salt Lake City, Utah 84111
r '' rL'u- - May 3, 2012 DAu LmuTEs COMM1StO
VIA OVERNIGHTDELIVERY
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702
RE: Case No. PAC-E-12-07
APPLICATION OF ROCKY MOUNTAIN POWER FOR A DEFERRED
ACCOUNTING ORDER REGARDING COSTS INCURRED FOR NAUGHTON
UNIT 3 SELECTIVE CATALYTIC REDUCTION SYSTEM, PULSE JET
FABRIC FILTER SYSTEM AND RELATED ENVIRONMENTAL UPGRADES
Dear Ms. Jewell:
Enclosed for filing are an original and seven (7) copies of Rocky Mountain Power's
("Company") Application for an accounting order authorizing the Company to record a
regulatory asset associated with the development, design, engineering and initial procurement
costs incurred to meet state and federal emission requirements at Naughton Unit 3, including
costs associated with a Selective Catalytic Reduction System (SCR), Pulse Jet Fabric Filter
System (PJFF) and related environmental upgrades.
Communications regarding discovery matters, including data requests issued to Rocky Mountain
Power, should be addressed to the following:
By E-mail (preferred):
By regular mail:
[e-mail]
Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 2000
Portland, OR 97232
with copies to: Ted Weston
Idaho Regulatory Affairs Manager
Rocky Mountain Power
201 South Main Street Suite 2300
Salt Lake City, Utah 84111
E-mail: [e-mail]
Idaho Public Utilities Commission
May 3, 2012
Page 2
Information inquiries related to this report should be directed to Ted Weston, [phone].
Very truly yours,
ley K. Lars'i
Vice President, Regulation and Government Affairs
Enclosures
Mark C. Moench
Yvonne R. Hogle (Pro Hac Vice)
201 South Main, Suite 2300
Salt Lake City, Utah 84111
Telephone: [phone]
FAX: [phone]
Email: yvonne.hog1e(pacificorp.corn
[e-mail]
Attorneys for Rocky Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
)
In the Matter of the Application of Rocky ) CASE NO. PAC-E-12-07
Mountain Power for a Deferred Accounting )
Order Regarding Costs Incurred for Naughton )
Unit 3 Selective Catalytic Reduction System, ) APPLICATION FOR
Pulse Jet Fabric Filter System and Related ) ACCOUNTING ORDER
Environmental Upgrades )
)
)
Rocky Mountain Power, a division of PacifiCorp, ("Rocky Mountain Power" or
the "Company"), applies to the Idaho Public Utilities Commission ("Commission") for an
accounting order authorizing the Company to record a regulatory asset associated with
the development, design, engineering and initial procurement costs incurred to meet state
and federal emission requirements at Naughton Unit 3, including costs associated with a
Selective Catalytic Reduction System ("SCR"), Pulse Jet Fabric Filter System ("PJFF")
and related environmental upgrades in accordance with Idaho Code § 6 1-524 and the
Rules of Procedure 52 of the Commission In support of this Application, Rocky
Mountain Power states as follows:
1 Rocky Mountain Power is authorized to do and is doing business in the
state of Idaho The Company provides retail electric service to approximately 72,000
customers in the state of Idaho and is subject to the jurisdiction of the Commission
1
2.Rocky Mountain Power files this application pursuant to Idaho Code § 61-
524, which authorizes the Commission to prescribe the accounting to be used by public
utilities subject to its jurisdiction.
3.Communications regarding this filing should be addressed to:
Ted Weston
Idaho Regulatory Affairs Manager
Rocky Mountain Power
201 South Main Street Suite 2300
Salt Lake City, Utah 84111
E-mail: [e-mail]
Yvonne R. logic
Senior Counsel
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
E-mail: yvonne.hogle(pacificorp.com
In addition, Rocky Mountain Power requests that all data requests regarding this
application should be sent in Microsoft Word or plain text format to the following:
By email (preferred): [e-mail]
By regular mail: Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 2000
Portland, Oregon 97232
Informal questions may be directed to Ted Weston, Idaho Regulatory Affairs
Manager at [phone].
4.Rocky Mountain Power worked with state, tribal and federal agencies
through the Western Regional Air Partnership initiated in 1999, to develop and
implement regional planning processes to improve visibility in national parks and
wilderness areas in the western United States The Company's early efforts with state
2
agencies of Utah and Wyoming led to the development of the Company's Comprehensive
Air Initiative ("CA!") The CM was designed to reduce power plant emissions in
accordance with regional haze and other air quality regulations that would require
emission reductions, while maintaining a reasonable balance with the interests of
customers and the obligation to serve their current and reasonably projected demands
5 While environmental regulations across the United States continue to
evolve, the specific environmental requirements for the Naughton Unit 3 SCR and PJFF
projects are the following:
• U S Environmental Protection Agency ("EPA") Clean Air Act ("CAA")
regional haze rules codified at 40 Code of Federal Regulations ("CFR")
51.300-309;
• The state of Wyoming's 40 CFR 51.309(g) January 7, 2011, regional haze
state implementation plan ("SIP"),
• The state of Wyoming's corresponding best available retrofit technology
("BART") analysis, determination, decision and permit MD-6042 dated
December 31, 2009;
• Amended BART permit MD-6042A dated December 23, 2010; and
• BART Appeal Settlement Agreement dated November 2, 2010. BART
permit MD-6042A establishes an emissions control compliance and a SCR
and PJFF systems installation deadline of December 31, 2014.
6 The Company initiated evaluation of emissions control equipment and
engineering assessments specific to Naughton Unit 3 in November 2003, with various
updates and additional reviews completed since that time. These assessments were
3
necessary to analyze and reduce the risk associated with long-term system performance
and operation and maintenance requirements associated with compliance, project scope,
definition and procurement. These tasks were started early in the environmental
compliance process because they were critical to establishing a well-defined and timely
environmental compliance plan and to mitigate SCR and PJFF systems development and
execution risk.
7.To implement the state of Wyoming SIP obligations in accordance with
the Environmental Quality Act WS 35-11-101, air quality standards and regulations were
promulgated by the Wyoming Environmental Quality Council The regulations require
that each emission source in Wyoming subject to BART requirements needed to submit a
BART application by December 15, 2006 Although the Company was granted an
extension to submit its application on January 12, 2007, this state of Wyoming
requirement initiated the Company's compliance planning activities associated with
Naughton Unit 3 and its other BART eligible facilities in the state of Wyoming. The
details of the Company's compliance planning activities are discussed at length in the
Company's Certificate of Public Convenience and Necessity ("CPCN") Application in
Wyoming Docket No. 20000-400-EA-1 1.
8.In 2010, the Company began execution of the critical path schedule
including development of detailed project procurement specifications and initiation of a
competitive request for proposals process for the multi-year SCR and PJFF engineenng,
procurement and construction ("EPC") contracting process To maintain the project
critical path schedule supporting the mandated regional haze compliance deadline of
December 31, 2014, while proceeding through the CPCN process that was initiated in
4
September 2011 as a result of the rate case settlement in Wyoming Docket No. 20000-
384-EA-10, the Company negotiated and entered into a limited notice to proceed
("LNTP") EPC contract on December 1, 2011.
9. Activities completed within the LNTP period included detailed
engineering and design of time-critical systems, development of equipment procurement
specifications, development of preliminary 3-dimensional modeling of the project,
development of project execution deliverables and procedures, site subsurface
assessments, site geotechnical investigations and preliminary foundation design activities.
When the Company became aware that the environmental improvements at Naughton
Unit 3 were no longer economically supported as described in the rebuttal testimony filed
by the Company on April 9, 2012, in Wyoming Docket No. 20000-400-EA-1 1, the
Company suspended EPC contract LNTP activities as of the end of February 2012. Total
Naughton Unit 3 environmental compliance project permitting, development,
engineering, and site assessment activities costs incurred to date are $7,914,547.69 as
detailed in Attachment 1. The Company prudently incurred the costs detailed in
Attachment 1, which were necessary at the time incurred to meet the time sensitive
schedules prescribed by the state and federal requirements noted in section 5 of this
Application.
10. The Company requests Commission approval to transfer $7,914,547.69
out of FERC Account 107 (Construction Work in Progress) and record a regulatory asset
in FERC Account 182.3 (Other Regulatory Assets). Idaho's share of the regulatory asset
will be established based on the system generation ("SG") allocation factor, resulting in
approximately $479,000 allocated to Idaho.
11.Rocky Mountain Power is not requesting a final decision on rate recovery through
this Application. The Company would address rate recovery of the Regulatory Asset in
its next general rate case and would propose amortization begin in that test period.
12.Rocky Mountain Power 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, in accordance
with RP 201 et seq.
WHEREFORE, Rocky Mountain Power respectfully requests an accounting order
authorizing it to record a regulatory asset to FERC Account 182.3 (Other Regulatory
Assets).
DATED: May 3, 2012
Respectfully submitted,
WL £ WI-Mfi
Mark C. Moench
Yvonne R. Hogle (Pro Hac Vice)
Attorneys for Rocky Mountain Power
rol
ATTACHMENT 1
WBS ption Description Prudency Category Incurred Cost Year(s)
To Date Cost Posted
/INTLAB Internal project labor Other Owner's Costs $396,635.99 2009-2012
/CONSULT Owner's engineering Project Development $955,062.48 2009-2012 consultant contracts and Engineermg
/DRYASH Dry ash system study Related Environmental $144,809.27 2010-2012 Control Plan Costs
/LANDF Landfill siting study Related Environmental $148,981.98 2011-2012 Control Plan Costs
/DPERMIT WDEQ AQD Regional Haze SIP and $6314.14 2011-2012 permitting fees BART Requirements
/OTHER Travel expenses, Other Owner's Costs $6,218.24 2010-2012 printing, mail
/RMPINTC RMP interconnection elopment $59,832.22 2011-2012 EEngmeenng
. Subtotal, project $1,717,854.32
' development phase
Project Development
/BHDEVTR PJFF system studies and Engineering, $408,999.60 2011-2012
Regional Haze SIP and (b)
BART Requirements
IEPC EPC contract EPC Contract Costs $5,181,555.74 2011-2012
/OEIMPL Owner's engineering Other Owner's Costs $103,854.72 2011-2012
- consultant contract
IRESDLBRI Internal project labor Other Owner's Costs $224,225.55 2011-2012
/PLTLBRI Plant labor, training and Other Owner's Costs $4,633.16 2011-2012 startup assistance
Travel expenses, other Owner's Costs $7,266.95 2011-2012 printing, mail
/BARTSTY2 BART study Regional Haze SIP and $96,011.82 2011-2012 BART Requirements
/RIvIP1NTC2 lIMP interconnection Project Development $131,198.38 2011-2012 and Engmeermg
/CAPSURCH Capital surcharge Other Owner's Costs $38,947.45 2011-2012
Subtotal, project
implementation phase $6,196,693.37
Total incurred cost to
date $7,914,547.69
(a)Costs posted in SAP project systems with settlement to April 12, 2012.
(b)Costs transferred by journal voucher from PJFF development WBS SNAU/2008/C/C06, NAU U3 SO2 and PM
Emissions Control Upgrade. Costs were originally posted to SAP in 2007-2011 and pointed to SNAU/2008/C/C06.