20120921notice_of_modified_procedure_order_no_32648.pdf

Office of the Secretary
Service Date
September 21,2012
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF PACIFICORP DBA ROCKY MOUNTAIN )CASE NO.PAC-E-12-08
POWER FOR A DEFERRED ACCOUNTING )
ORDER.)NOTICE OF
)MODIFIED PROCEDURE
)
)ORDER NO.32648
__________________________________________________________________________________
)
On May 3,2012,PacifiCorp dba Rocky Mountain Power filed an Application with
the Commission seeking a deferred accounting order authorizing the creation of a regulatory
asset associated with the remaining book value of its Carbon plant.The Commission issued a
Notice of Application on May 23,2012.
THE APPLICATION
Rocky Mountain Power requests a deferred accounting order authorizing the
Company to transfer the remaining plant balances from electric plant in service and accumulated
depreciation and establish a regulatory asset to recover these costs when the Carbon plant is
retired.The Company anticipates retiring the Carbon plant in early 2015 to comply with recently
finalized Environmental Protection Agency (EPA)standards.The Company would amortize the
regulatory asset through 2020 —the current assumed life of the plant.
Rocky Mountain Power anticipates that once the plant is retired,the Company will
book the net plant balance to be recovered to the regulatory asset account,along with any other
associated costs.Rocky Mountain Power maintains that the costs associated with alternatives to
comply with the EPA’s recently finalized Mercury and Air Toxics Standards (MATS)are not
expected to be cost-effective.The current emissions profiles of the Carbon units do not meet
MATS limits for all pollutants regulated under that rule.The Carbon units have not been,and
cannot economically be,retrofitted with scrubbers,baghouses,or other significant emissions
control equipment investments that would foster the Carbon plant’s ability to comply.
In addition to the MATS rules,Rocky Mountain Power has considered other
regulations in its long-term planning decisions for the Carbon plant,including National Ambient
Air Quality Standards (NAAQS)and long-term Regional Haze Rule planning.The Company
anticipates that the Carbon plant will not be able to demonstrate attainment of the 1-hour
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32648 1
nitrogen oxides or 1-hour sulfur dioxide NAAQS,as would be expected to be required under any
major plant modification permitting process,primarily due to the unique geographic location of
the plant.The Carbon plant is located in the mouth of a canyon with no room to install
significant environmental retrofits.
The Company states that it previously assessed converting the Carbon plant to
natural gas as a fuel resource.However,a conversion would not achieve an acceptable
emissions profile for long-term environmental compliance.Rocky Mountain Power’s economic
analysis also showed that it was not a viable least-cost option,after accounting for risk and
uncertainty.
Rocky Mountain Power maintains that it continues to assess compliance solutions,
including assessing whether emerging technologies could save the Carbon plant from
decommissioning.The Company states that it will continue to assess the commercial viability
and cost of emerging technologies,as well as the ability of said technologies to support
compliance with other emissions regulations such as NAAQS and long-term Regional Haze Rule
planning to which Carbon would be subject.However,Rocky Mountain Power does not expect
to identify a least-cost option,accounting for risk and uncertainty,other than retiring the Carbon
plant.
The Company states that retiring Carbon may pose a complication with potential
transmission system impacts.Depending on the impacts,the Company may need to request an
extension of the initial April 2015 compliance deadline for the Carbon plant.If there is a need
for requesting an extended compliance schedule,Rocky Mountain Power will work within the
conditions included in the MATS regulations and seek administrative guidance to request an
appropriate compliance extension.
The Company reports that,as of December 31,2011,the Carbon plant had a net book
value of approximately $55 million,with a depreciable life running through 2020.Rocky
Mountain Power reports its annual depreciation expense at approximately $3.7 million.The
Company requests that the Commission approve the transfer of the remaining plant balances for
the Carbon plant from FERC Account 101 (Electric Plant in Service)and FERC Account 108
(Accumulated Depreciation)and record a regulatory asset for the net amount in FERC Account
182.3 (Other Regulatory Assets)on the date the plant is removed from service.The Company
also requests that the Commission approve the amortization of the newly created regulatory asset
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32648 2
beginning with the transfer date over the remaining depreciable life of the Carbon plant,or 2020.
Rocky Mountain Power states that Idaho’s share of the regulatory asset would be established
based on the system generation (SG)allocation factor for the calendar year prior to the date the
plant is removed from service.
Rocky Mountain Power maintains that the transfer of the net plant balance of the
Carbon plant to a regulatory asset with amortization of the regulatory asset over the remaining
depreciable life of the plant will result in the continuation of equivalent levels of rate base and
annual expense and have minimal impact on customer rates.
The Company currently estimates the cost of decommissioning the facility and
remediating the site to be approximately $57 million.The Company states that it will be refining
that estimate over the coming months as its compliance assessment continues.Rocky Mountain
Power maintains that it will file a recommendation for amortization and recovery of these costs
in a future general rate case or other proceeding.
NOTICE OF MODIFIED PROCEDURE
YOU ARE HEREBY NOTIFIED that the Commission has determined that the
public interest may not require a formal evidentiary hearing in this matter and will proceed under
Modified Procedure pursuant to the Commission’s Rules of Procedure 201 through 204,IDAPA
31.01.01.201 through .204.The Commission notes that Modified Procedure (with written
comments)has proven to be an effective means for obtaining public input and participation in
cases of this nature.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or opposition with the Commission no later
than sixty (60)days from the date of this Order.The comment must contain a statement of
reasons supporting the comment.Persons desiring a hearing must specifically request a hearing
in their written comments.Written comments concerning this Application shall be mailed to the
Commission and Rocky Mountain at the addresses reflected below:
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32648 3
Commission Secretary Yvonne R.Hogle
Idaho Public Utilities Commission Ted Weston
P0 Box 83720 Rocky Mountain Power
Boise.ID 83720-0074 201 South Main.Suite 2300
Salt Lake City.UT 84111
Street Address for Express Mail:E-mail:vvonne.hogle.d,pacificorp.com
472 W.Washington Street ted.weston1pacificorp.com
Boise.ID 83702-5918
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission’s home page located at www,puc.idaho.gov.Click the “Comments and Questions”
icon,and complete the form,using the case number as it appears on the front of this document.
These comments must also be sent to Rocky Mountain at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests arc
received within the time limit set,the Commission will consider this matter on its merits and
enter its Order without a formal hearing.If written comments are received within the time limit
set,the Commission will consider them and,in its discretion,may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Application,supporting workpapers,and
exhibits have been filed with the Commission and are available for public inspection during
regular business hours at the Commission offices.The Application and workpapers are also
available on the Commission’s web site at www.puc.idaho.gov under “File Room”and then
“Electric Cases.”
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be held
pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code §61-118,61-119,61-307,61-502,and 61-623.The Commission may enter any
final Order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 31.01.01.000,ci seq.
ORDER
IT IS HEREBY ORDERED that Rocky Mountain Power’s Application seeking a
deferred accounting order authorizing the creation of a regulatory asset associated with the
remaining book value of its Carbon plant be processed by Modified Procedure.Persons
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32648 4
interested in submitting written comments in this matter must do so no later than sixty (60)days
from the date of this Order.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 2 /
day of September 2012.
I
ATTEST:
/1 1
Jean D Jewell
Commission Scretary
O:PACE-I 2-08ks2
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32648
MACK A.REDFORD,MILkSSIONER
ARSHA H.SMITH,COMMISSIONER
PRESIDENT
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