HomeMy WebLinkAbout20120523notice_of_application.pdfOffice of the Secretary
Service Date
May 23,2012
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 APPLICATION
_________________________________________________________________________________________
)
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 Company requests that
the Application be processed by Modified Procedure.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that 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.
YOU ARE FURTHER NOTIFIED that 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.
YOU ARE FURTHER NOTIFIED that,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
NOTICE OF APPLICATION 1
demonstrate attainment of the 1-hour 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.
YOU ARE FURTHER NOTIFIED that 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.
YOU ARE FURTHER NOTIFIED that 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.
YOU ARE FURTHER NOTIFIED that 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.
YOU ARE FURTHER NOTIFIED that 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
NOTICE OF APPLICATION
amortization of the newly created regulatory asset 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 (SO)
allocation factor for the calendar year prior to the date the plant is removed from service.
YOU ARE FURTHER NOTIFIED that 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.
YOU ARE FURTHER NOTIFIED that 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.
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 by clicking on “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,et seq.
NOTICE OF APPLICATION 3
ATTEST:
2J /(
Than D.Jewe(ij
Ebmmission Secretary
0:PAC-E-I 2-O8ks
DATED at Boise,Idaho this 23 day of May 2012.
MACK A.
il k
MARSHA H.SMITH,COMMISSIONER
NOTICE OF APPLICATION 4