20170301Update Report.pdf

ROCKY MOUNTAIN
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March 1,2017
VA OYERNIGHT DELIVERY
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702
Attention Diane Hanian
Commission Secretary
RE:Case No. PAC-E-13-02
In the Matter of Rocky Mountain Power's Application for an Order
Authorizing Changes in Depreciation Rates Applicable to Electric Property
On November 18, 2013, the Idaho Public Utilities Commission approved an all-party stipulation
in Case No. PAC-E-13-02t. Paragraph 28 of the Settlement Stipulation states:
The Stipulating Parties agree the Company will implement a reporting system to
keep the Stipulating Parties and the Utah, Idaho and Wyoming Commissions
informed regarding any matters likely to have implications regarding potential
stranded costs of generating assets. The Company will propose a reporting method
by no later than December 31,2013.
Per this commitment, Rocky Mountain Power submitted a proposal on December 20,2013, to
implement a reporting system that provides information regarding three scenarios which the
Company has identified as having significant implications on the Company's depreciation
expense. Because no party filed comments on the Company's proposal, the Company hereby
submits the filing as originally proposed.
On or before March I of every year, the Company is to file a letter containing the following
information, if applicable.
1) Any proposed early steam generation unit retirement
a. Plant name
b. Date placed in service
c. Current net book value
d. Original retirement date
e. Proposed early shutdown datef. Reason for early shutdown
1407 West North Temple, Suite 310
Salt Lake City, Utah 84116
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t Order No. 32926
Idaho Public Service Commission
Case No. PAC-E-13-02
Page2
2) Major steam plant capital additions over $100 millon that impact the depreciation of
the unit
a. Project name
b. Planned in-service date
c. Planned retirement date
d. Planned addition amount to plant in service
3) Any completed external studies regarding plant decommissioning which result in
significant changes (a change of over 25 percent) to the amount previously projected
in the last approved depreciation rates.
a. Plant site
b. Estimated costs
In compliance with the established reporting system, the Company provides the following
information:
l) Any proposed early steam/gas/wind generation unit retirement.
Not at this time. However, the Company will be evaluating the economics surrounding
alternative environmental compliance options for Cholla Unit 4, Craig Unit l, and
Naughton Unit 3 as decision-making timelines for those resources approach. An
alternate environmental compliance proposal that would allow Cholla Unit 4 to operate
as a coal-fueled resource into second quarter 2025,with the option to convert to a
natural gas fueled unit thereafter, has been preliminarily approved by the U.S.
Environmental Protection Agency ("EPA"). EPA's approval is yet to be published in
the Federal Register. Similarly, an alternate environmental compliance agreement and
amended Colorado state implementation plan that would allow Craig Unit 1 to operate
as a coal-fueled resource through 2025,with an option to convert to a natural gas fueled
unit, has been submitted for Colorado legislature approval during the 2017 legislative
session. EPA's review and final action on the amended Colorado state implementation
plan will follow. With respect to Naughton Unit 3, the Wyoming Department of
Environmental Quality has just closed a public comment period on a permit amendment
that will allow the unit to operate as a coal-fueled resource through 2018, with the
option to convert to a natural gas fueled unit thereafter. The Wyoming state
implementation plan is yet to be amended and submitted to EPA for review and final
action. The Company will be assessing each of those compliance alternatives in
ongoing and future integrated resource plan proceedings with this Commission.
2) Major steam/gas/wind plant capital additions over $100 million that impact the
depreciation of the unit are as follows:
Jim Bridger Unit 4
SCR $vstem
In-service date November 16.2016
Approved depreciable life 2037
Addition to plant in service $116.6m
Note: PacifiCorp only owns 2/3 of the plant
Idaho Public Service Commission
Case No. PAC-E-I3-02
Page 3
3) Any completed external studies regarding plant decommissioning which result in
significant changes (a change of over 25 percent) to the amount previously projected
in the last approved depreciation rates.
A decommissioning study of the Currant Creek combined cycle plant was performed
in 2014; this study, which includes offsetting costs based on salvage, indicates a
significant change (a change of over 25 percent) to the amount previously projected in
the last depreciation rate. However, the net decommissioning cost estimate is highly
dependent on salvage values. Given the uncertainty in future salvage, the Company
does not recommend a change in the depreciation rate for natural gas fueled combined
cycle resources at this time. A copy of the study can be provided upon request.
Questions regarding this filing may be directed to Ted Weston at [phone].
Very truly yours,
Vice President, Regulation