20120503Application.pdf

'VROCKY MOUNTAIN
POWER RECEW
ADIVISIONOFPACIFICORP -
MAI 201 South Main, Suite 2300
Salt Lake City, Utah 84111
-
May 3,2012
VIA OVERNIGHTDELIVERY
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702
RE: Case No. PAC-E-12-08
In the Matter of the Application of Rocky Mountain Power for a Deferred
Accounting Order
Dear Ms. Jewell:
Enclosed for filing are an original and seven (7) copies of Rocky Mountain Power's
("Company") Application for a deferred accounting order authorizing the Company to establish a
regulatory asset to recover the net remaining book balance of the Carbon Plant, and to include
the regulatory asset in rate base when the plant is retired.
Communications regarding discovery matters, including data requests issued to Rocky Mountain
Power, should be addressed to the following:
By E-mail (preferred): [e-mail]
By regular 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
Information inquiries related to this report should be directed to Ted Weston, [phone]
Very truly yours,
J freyK La en
Vice President, Regulation and Government Affairs
Enclosures
Mark C. Moench
Yvonne R. Hogle (Pro Hac Vice)
Rocky Mountain Power
201 South Main Street Suite 2300
Salt Lake City, Utah 84111
Telephone: [phone]
Facsimile: [phone]
yvonne.hogle(pacificorD.com
Attorneys for Rocky Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
) IN THE MATTER OF THE APPLICATION ) CASE NO. PAC-E-12-08
OF ROCKY MOUNTAIN POWER FOR A )
DEFERRED ACCOUNTING ORDER )
AUTHIORIZING THE CREATION OF A ) APPLICATION
REGULATORY ASSET ASSOCIATED )
WITH THE REMIANING BOOK VALUE OF )
THE CARBON PLANT. )
Rocky Mountain Power, a division of PacifiCorp, ("Rocky Mountain Power" or the
"Company"), hereby applies to the Idaho Public Utilities Commission ("Commission") for an
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 would amortize the
regulatory asset through 2020, the current assumed life of the plant. The Company
anticipates retiring the Carbon plant in early 2015 to comply with recently finalized EPA
standards. It is anticipated that once the plant is retired, Rocky Mountain Power will book the
net plant balance to be recovered to the regulatory asset account, along with any other
associated costs. Amortization of these costs would begin in 2015, after the plant is closed,
and would be collected through 2020, the depreciable life of the asset
Page 1 - APPLICATION FOR ACCOUNTING ORDER
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.
2.Rocky Mountain Power files this application pursuant to Idaho Code § 61-524
and RP 52, which authorizes the Commission to prescribe the accounting to be used by
public utilities subject to its jurisdiction
3.Communications regarding this Application 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. Hogle
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 be addressed to:
By email (preferred) datareguest(nacificorp.com
[e-mail]
By regular mail Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 2000
Portland, OR 97232
Informal inquiries related to this application may be directed to Ted Weston,
[phone]
4 The Company is filing this Application because the costs associated with
Page 2 - APPLICATION FOR ACCOUNTING ORDER
alternatives to comply with the Environmental Protection Agency's ("EPA") 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.
5.In addition to the MATS rules, Rocky Mountain Power must consider other
regulations in its long-term planning decisions for the Carbon plant. These other regulations
include 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 nitrogen oxides ("NOx") or 1-hour sulfur dioxide
("S02") 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.
6.As another compliance alternative, the Company previously assessed
converting the Carbon plant to natural gas as a fuel resource; however, doing so would not
achieve an acceptable emissions profile for long-term environmental compliance. Moreover,
our economic analysis showed it was not a viable least cost option, after accounting for risk
and uncertainty. Even if economically it made sense, converting the Carbon units to natural
gas may not achieve an acceptable emissions profile for long-term environmental
compliance.
Page 3 - APPLICATION FOR ACCOUNTING ORDER
7. Nevertheless, the Company continues to assess compliance solutions,
including assessing whether emerging technologies could save the Carbon plant from
decommissioning. For example, the Company is reviewing dry sorbent injection into the
combustion processes, to determine if this would assist in achieving MATS compliance.
Assuming the testing provides positive results for MATS regulated emissions, the Company
will continue to assess the commercial viability and cost of such 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.
8 Despite the Company's continued assessment of the options mentioned above,
the Company does not expect to identify a least-cost option, accounting for risk and
uncertainty, other than retiring the Carbon plant.
9.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 the Company finds, there is a
need for requesting an extended compliance schedule, the Company will work within the
conditions included in the MATS regulations and seek administrative guidance to request an
appropriate compliance extension.
10.As of December 31, 2011, the Carbon plant had a net book value of
approximately $55 million, with a depreciable life running through 2020. Annual
depreciation expense is approximately $3.7 million.
11.The Company requests the Commission approve the transfer of the remaining
Page 4 - APPLICATION FOR ACCOUNTING ORDER
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 the Commission approve the amortization of the
newly created regulatory asset beginning with the transfer date over the remaining
depreciable life of the Carbon plant, or 2020. Idaho's share of the regulatory asset will be
established based on the system generation (SG) allocation factor for the calendar year prior
to the date the plant is removed from service.
12.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.
13.The Company currently estimates the cost of decommissioning the facility and
remediating the site to be approximately $57 million. The Company will be refining that
estimate over the coming months as its compliance assessment continues. The Company will
file, in a future general rate case or other proceeding, a recommendation for amortization and
recovery of those costs.
14.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 etseq.
Page 5 - APPLICATION FOR ACCOUNTING ORDER
WHEREFORE, Rocky Mountain Power respectfully requests that in accordance with
Idaho Code § 61-524, the Commission issue an order authorizing the Company to establish a
regulatory asset to recover the remaining net book balance of the Carbon plant, and to
include the regulatory asset in rate base when the plant is retired
DATED May 3,2012.
Respectfully submitted,
M dam
Mark C. Moench
Yvonne R Hogle (Pro Hac Vice)
Attorneys for Rocky Mountain Power
Page 6 - APPLICATION FOR ACCOUNTING ORDER