20180302Update Report.pdf

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Salt Lake City, Utah 84114
March 1,2018
VA ELECTRONIC FILING
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 the Application of Rocky Mountain Power for an Order
Authorizing Change in Depreciation Rates Applicable o Electric Property
On November 18, 2013, the Idaho Public Utilities Commission approved an all-party stipulation
in Case No. l3-02. 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 has implemented a reporting system and is hereby
submitting this letter containing the following information, if applicable, on or before March 1 of
every year:
l) Any proposed early steam/gas/wind generation unit retirement
a. Plant name
b. Date placed in service
c. Current net book value
d. Original retirement date
e. Proposed early shutdown date
f. Reason for early shutdown
2) Major steam/gas/wind plant capital additions over $100 million 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
Idaho Public Service Commission
Case No. PAC-E-I3-02
Page 2
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
Accordingly, the Company provides the following information:
1) Any proposed early steam/gas/wind generation unit retirement
The Company does not have definitive plans for early generation unit retirement at
this time; however, the following are generation units that have been identified as
having the potential and are being evaluated for early retirement.
Craig Unit l: The Colorado Department of Public Health and Environment has
submitted a Craig Unit I Regional Haze compliance settlement and the associated
amendment to the Colorado Regional Haze State Implementation Plan ("SIP") to the
U.S. Environmental Protection Agency ("EPA") for review and approval. Once
approved, the SIP allows Craig Unit I to continue with coal-fueled operation
through 2025,with the option of gas conversion available. The Company will update
its economic analysis of Craig Unit I for gas fueling versus unit retirement in future
Integrated Resource Plan ("lRP") cycles. Therefore, there is the potential that Craig
Unit I may be retired on December 31, 2025, vercus converting the unit to be fueled
with natural gas. The Company will likely incorporate accelerated depreciation for
this generation unit into its upcoming 2018 Depreciation Study.
Naughton Unit 3: The Company's 2017 IRP preferred portfolio identified Naughton
Unit 3 for early retirement in alignment with the permit issued by the Wyoming
Department of Environmental Quality and the corresponding Wyoming Regional
Haze State Implementation Plan for the unit, which allow Naughton Unit 3 to
continue with coal-fueled operation through January 30,2019, with the option of gas
conversion available thereafter. With the potential that Naughton Unit 3 may be
retired on January 30,2019, versus converting the unit to be fueled with natural gas,
the Company may incorporate accelerated depreciation for this generation unit into
its upcoming 2018 Depreciation Study. The Company will update its economic
analysis of Naughton Unit 3 for gas fueling versus unit retirement in the 2017IRP
Update.
Jim Bridger Units 1 and 2: The Wyoming RegionalHaze SIP requires installation of
selective catalytic reduction systems on the units by December 31, 2022, and
December 31, 2021, respectively. The Company's 2017 IRP preferred portfolio
identified Jim Bridger Units I and 2 for early retirement at year-end 2028 and year-
end2032 under an alternate environmental compliance scenario assessed in that IRP
cycle. The Company will continue to explore potential alternative environmental
compliance options. With the potential that Jim Bridger Units 1 and2 may be retired
early as an alternate compliance scenario, the Company may incorporate accelerated
depreciation for these generation units into its upcoming 2018 Depreciation Study.
Idaho Public Service Commission
Case No. PAC-E-I3-02
Page 3
There are no new studies responsive to this request.
Questions regarding may be directed to Ted Weston at [phone]
Sincerely,
The Company will also update its economic analysis of Jim Bridger Units I and 2
alternative environmental compliance options, including early retirement, in the
20l7IRP Update.
Cholla Unit 4: The approved Arizona Regional Haze SIP allows Cholla Unit 4 to
operate as a coal-fueled resource until April 30, 2025, with the option to convert
to a natural gas fueled unit thereafter. The Arizona plan was approved by the EPA
on March 16,2017. The Company's2017 IRP preferred portfolio identifies Cholla
Unit 4 for early retirement on December 31,2020, from an economic basis. With the
potential that Cholla Unit 4 may be retired on April 30, 2025, or earlier, versus
converting the unit to be fueled with natural gas, the Company will likely
incorporate accelerated depreciation for this generation unit into its upcoming 2018
Depreciation Study. The Company will continue to evaluate the economics
surrounding alternative environmental compliance options for Cholla Unit 4 in
future IRP cycles, as the decision-making timeline for the resource approaches.
The Company is currently involved in several conversations/negotiations at this time
regarding other potential accelerated retirement decisions that may be driven by
state-by-state energy policies, ongoing Multi-State Protocol negotiations, joint-
owner decisions, andlor economic assessments of individual units that may also be
reflected in the Company's future 2018 Depreciation Study. The other potential
accelerated plant unit retirements have yet to solidify in the respective forums at the
time of this report. The Company will provide an update of any decisions from the
respective forums in the March l,2019letter.
2) Major steam/gas/wind plant capital additions over $100 million that impact the
depreciation of the unit.
There are no major steam/gas/wind plant capital additions responsive to this request.
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.
Vice President, Regulation
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