20190227Update Report.pdf

ROCKY MOUNTAIN
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February 26,2019
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1407 W North Temple, Suite 310
Salt Lake City, Utah 84114
.iDlLitlVA OVERNIGHT DELIVERY
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, lD 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 the above-captioned case. Paragraph2S of the 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.
Pursuant to this agreement, the Company implemented an annual reporting process and is hereby
submitting this letter with the following information, if applicable, on or before March I 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-13-02
Page2
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
On September I I , 2018, Rocky Mountain Power filed Case No. PAC-E-18-08 with the
Commission requesting authorization to change depreciation rates applicable to the
Company's depreciable electric plant effective January 1,2021. Accordingly, the Company
provides the following information:
1) Any proposed early steam/gas/wind generation unit retirement:
Steam:
The testimony of Company witness Mr. Chad A. Teply in the depreciation study proceeding
describes the process used to develop estimated economic lives for the thermal generation
resources in the 2018 depreciation study. Pages 2-10 of Mr. Teply's testimony provide an
overview of the considerations involved and the recommended changes to the depreciable
lives of these thermal generation unit resources based on the assessment of the major factors
and changes since the 2013 depreciation study. The depreciation study recommends
shortening the lives of seven steam generation units:
o Cholla Unit 4 - depreciable life shortened by 17 years from 2042 to 2025. The net
book value as of December 3 I ,2020 is projected to be $280.0 million;
o Colstrip Units 3 and4 - depreciable lives shortened by 19 years from2046to2027,
the net book value of these two units as of December 31,2020 is projected to be
$117.5 million;
o Craig Unit I - depreciable life shortened by 9 years from2034to2025, the net book
value as of December 31,2020 is projected to be $21 .6 million;
. Craig Unit 2 - depreciable life shortened by 8 years from 2034 to 2026, the net book
value as of December 31, 2020 is projected to be $60.4 million plus $27.4 million
shared common plant;
. Jim Bridger Unit I - depreciable life shortened by 9 years from 2037 to 2028, the net
book value as of December 3l ,2020 is projected to be $96.5 million;
. Jim Bridger Unit2 - depreciable life shortened by 5 years from2037 to 2032, the net
book value as of December 3l ,2020 is projected to be $123.4 million;
Attachment Al lists the plant name, in-service date, current depreciable life, and proposed
depreciable life. Mr. Teply's testimony provides an explanation of and reasons for the
proposed changes to the depreciable lives of these units.
I Case No. PAC-E-18-08, Exhibit No. 5
Idaho Public Service Commission
Case No. PAC-E-13-02
Page 3
Gas:
The Company is not recommending any change to the depreciable lives of its gas combustion
turbine plants.
Wind:
Wind facilities continue to be depreciated over 30 years. However, the Company is in the
process of repowering many of its existing wind facilities and proposed extending their
depreciable lives to provide a 30-year life for the equipment upgrades. This will result in an
extension to the wind facilities current depreciable lives of l0 to 2l years, depending on the
facility. The proposed depreciable lives for these repowered wind facilities are provided in
Attachment B.2
2) Major steam/gas/wind plant capital additions over $100 million that impact the
depreciation of the unit.
ln2017, the Company filed two cases3 with the Idaho Public Utilities Commission; the first
was to repower most of its existing wind fleet, and the second case was to acquire new wind
facilities. The capital investment for these two projects will be added to electric plant in-
service in 2019 and 2020. The impact on depreciation expense associated with this
investment is included in the pending depreciation study. There are no major steam or gas
plant capital additions responsive to this request.
3) Any completed external studies regarding plant decommissioning which result
in signilicant changes (a change of over 25 percent) to the amount previously
projected in the last approved depreciation rates.
ln preparation for the 2018 depreciation study, the Company performed decommissioning
cost studies on a selection of its thermal generation resources considered reasonable proxy
resources for extrapolation across the fleet. It then hired a third-party engineering firm to
complete a baseline analysis for the decommissioning studies. In the 2018 depreciation study,
the Company proposed replacing the previously approved decommissioning cost of $40 per
kilowatt for all coal-fueled plants with plant-by-plant decommissioning costs, provided as
Attachment Ca. In the depreciating study the Company also proposed replacing the
previously approved decommissioning cost of $15 per kilowatt for all natural gas-fueled
plants with an updated decommissioning cost estimate of $ l0 per kilowatt.
2 Case No. PAC-E-18-08, Exhibit No. 7.
3 Case No. PAC-E-17-06 and Case No. PAC-E-18-07
a Case No. PAC-E-18-08, Exhibit No. 6.
Idaho Public Service Commission
Case No. PAC-E-13-02
Page 4
Questions regarding this report may be directed to Ted Weston at [phone]
Sincerely,
Vice President,
Rodry ltlountain Pover
Exhitrit l,lo.5 Page I of 1
Case No. PAC-E-18"08
Wlurese ChadA. Teply
Estimated Plant Retirement Lives. Steam and Gas
Gurrunt
DGprechbb Llfic
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Op€rrdorlr Dett
Currttt
End of
D.prr(rrtlon Year
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Rccoflm.ndod -
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Steam
Cholla4 r 98t 6t 2M2 44 2025 07)
62 2046 2027 fl9)Colstrie3 l9E4 43
Colsrip-4 t 986 60 2046 4l 2027 09)
54 2014 45 2025 (9)Craig-l l9E0
Craie-2 t979 55 2034 47 2026 (t)
68 2027 6t 2027Davc Johtrstoo-l 1959
Davc Johngton-2 1960 67 2027 67 2027
63 2027D"nq Jshnston-3 r96/-63 2027
Dave Johosto!-4 l9?2 55 2027 55 2027
Haydco-1 r965 65 2030 55 2030
tvt6 54 2030 54 2030llaydeo-2
Hunlsr-l 1978 64 2M2 u 2042
62 2042 62 2M2Hunter-2 I 980
I lunlcr-3 1983 59 2M2 59 2042
59 2036 59 2036fluntington-l t977
Huntiu&ton-2 1974 62 2036 62 2036
63 2037 54 2028 (9)linr Bridgcr-l 1974
Iim Bridgcr-2 tn5 62 2037 57 2032 (5)
6l 2037 6t 2017Iio Bridgcr-3 1976
Iim Bridgcr4 1979 58 2037 58 201?
66 2029 66 2029llaugbton-l I 963
Naughtoa-2 1968 61 2029 6l 2029
5E 2029 5E 2029Naughton-3*t91t
Wyodak-l l97E 6t 2039 6l 2039
8l 2032 8l 2032Gadsby-l @ankine)1951
Gadsby-2 (Ranhne)t9s2 80 2032 EO 2032
77 2032 77 20!2Gadsby-3 (Rankiue)t955
Blundell I (Geotherual)t984 53 2037 53 20!7
llundell 2 (Gcothermal)2007 2037 10 2037
Grr
Curraot Crcek (CCCT)2005 40 2M5
N 2041Ctehalis (CCCT)2003
Hcrmieton t (CCCT)t996 40 2036 lr,
40 2036 .tu 2Ui6Hcrmisbn2 (CCCI)1996
Lakc Sidc I (CCCT)2007 40 2047 44 20/7
4 2054 N 2054Lale Sidc 2 (CCCT)2014
30 2032 2032(iad$y4 (CI)2C02 30
( iedsby-s (cT)2002 30 2032 30 2032
30 2032 30 2032tradeby-6 (CT)2002
' To b€ rctircd in 2019
Roc*y Mountrein Po/YBr
Exhibit No. 7 Pa6,a 2 ot 2
Case No. PAC-E-18-08
Wihe6s: Tlmofiy J. Homstreet
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Rocky lVlorntaan Pourel
Exhibit No.6 Page I of I
Case No. PAC-E-1&08
WiUrcss: Chad A. TeflyEstimated Decommissioning Costs
Values in 2017 Dollan
coAt
NATURAT GAS
GEOTHERMAT
Generating Facilfi 6rand Total S/rw
Cholla 4 5 20,328,470 5L.45
Cholla S 20,328,470
DaveJohnston 1 5 3,630,0s8 34.25
Dave Johnston 2 3,630,0s8 34.25
Dave Johnston 3 s 7,s34,083 34.25
Dave Johnston 4 s 11,301,125 34.25
Dave Johnston 26,09s,324 34.25
Hunter 1 18,059,921 43.19
Hunter 2 s 11,618,067 43.L9
Hunter 3 s 20,343,737 43.19
Hunter s 50,021,719 43,19
Huntington 1 s 20.327.323 44.29
Huntlngton 2 t9,928,748 M.29
Huntington s 40,256,071 44.29
lim Brldger 1 S 13,171,5E4 37.21
Jam BridSer 2 S 13,370,026 37.27
lim Bridger 3 i L2,973,142 37.27
jrm Brldger 4 s t3,r46,779 37.21
Iim Bridger s 52,661,s31 37.27
Naughton 1 ; L5,249,2O2 97.75
Naughton 2 i 19,648,0U 97.75
Naughton 3 5 27,370,363 97.75
Naughton s 62,267,s77 97.75
Wyodak 5 7,L38,204 26.il
Wyodak 7,t38,204 26.64
Colstrip 3 s 6,342,s13 85.77
Colstrlp 4 s 6,y2,513 85.77
colstrip 3/4 t2,685,O25 85,77
Cralg 1 i 7,078,477 t2.37
Craig 2 s 1,020,8s6 12.37
Craig s 2,0?9,327 12.37
Hayden 1 ; 203,384 4.5t
Hayden 2 i 14&938 4.51
Hayden s 352,322 4.51
Fleet 46.14
Gencratlng Faciliw Grand fotal $/rw
Currant Creek s 6,426,778 S rr.es
Gadsby 1, 2 and 3 s 9,289,95s s 39.12
Chehalls 5 3,294,7Lt S s.ss
Lake Side S 7,62L,573 S 6.34
Hermiston s 4,727,878 $ tt.tz
Gadsby 4, 5, and 6 s 1,209,209 S ro.oz
Generatlng Faclllty Grard Totel $/hn
Blundell 1 (Geothermal)5 s,346,476 s 232.46
Blundell 2 (Geothermall i 1,392,81s s 139.28
Blundell 5 6,739,297 $ 204.22