20130409Application.pdf

ROCKY MOUNTAIN
POWER
A ENVISION OFPAcFIcORP 2013 OR 9 Mi 10 142 201 South Main, Suite 2300
Salt Lake City, Utah 84111
April 9, 2013 IDiH-i
JTRiTIET
VIA OVERNIGHT DELIVERY
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702
Re: CASE NO. PAC-E-13-06
IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER
FOR AUTHORITY TO SELL THE ST. ANTHONY HYDROELECTRIC
GENERATION PLANT LOCATED IN FREEMONT COUNTY, IDAHO
Dear Ms. Jewell:
Enclosed for filing in the above mentioned matter are seven (7) copies of Rocky Mountain
Power's application for approval of the sale of the St. Anthony hydroelectric generation plant.
Very truly yours,
[,&qo t
Jeffrey K. arsen
Vice President, Regulation & Government Affairs
Enclosures
Mark C. Moench (ISB# 8946)
Daniel B. Solander (ISB# 8930)
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
Telephone: [phone]
Fax: [phone]
E-mail: [e-mail]
[e-mail]
Attorneys for Roc/g' Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF ROCKY MOUNTAIN POWER FOR ) CASE NO. PAC-E-13-06
AUTHORITY TO SELL THE ST. ANTHONY )
HYDROELECTRIC GENERATION PLANT ) APPLICATION
LOCATED IN FREEMONT COUNTY, IDAHO )
APPLICATION TO SELL THE
ST. ANTHONY HYDROELECTRIC PLANT
Comes now PacifiCorp, dba Rocky Mountain Power ("Rocky Mountain Power" or the
"Company"), hereby respectfully makes Application to the Idaho Public Utilities
Commission ("Commission") pursuant to Idaho Code § 61-328, requesting authorization
to discontinue operations associated with and to sell the St. Anthony hydroelectric power
plant located within the city limits of St. Anthony, Idaho. The St. Anthony development
shares a FERC License with the nearby Ashton development. Rocky Mountain Power
respectfully requests Commission consideration of this Application and timely approval.
In support of this Application Rocky Mountain Power states as follows:
1. Rocky Mountain Power is a public utility in the state of Idaho subject to
the jurisdiction of the Commission with regard to its public utility operations, retail rates,
service, and accounting practices. The Company also provides retail electric service
under the name Rocky Mountain Power in the states of Utah and Wyoming and under the
name Pacific Power in the states of Oregon, Washington, and California.
2.Rocky Mountain Power files this application pursuant to Idaho Code § 61-
328 requiring Commission authorization for the sale of utility property located in the
state of Idaho.
3.Informal inquiries related to this Application should be directed to Ted
Weston, Idaho Regulatory Affairs Manager, at [phone]. Formal correspondence
and requests for additional information regarding this matter should be addressed to:
By E-mail (preferred): datarequest(pacificorp.com
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
SLC, Utah 84111
Telephone [phone]
E-mail: [e-mail]
Daniel E. Solander
Senior Counsel
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
Telephone [phone]
E-mail: [e-mail]
BACKGROUND
4.The St. Anthony hydroelectric plant consists of a one-unit powerhouse
located within the city limits of St. Anthony, Idaho. Water is diverted from the Henry's
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Fork of the Snake River to the St. Anthony hydroelectric plant. The St. Anthony turbine
was commissioned in 1915, and is a submerged double horizontal K-style reaction
turbine manufactured by James Leffel & Company. The turbine is direct-coupled to a
General Electric horizontally supported generator, also commissioned in 1915, rated at
625 kilovolt-amperes (kVA). The turbine is rated at 750 horsepower (HP) under a net
effective head of 14 feet and 150 revolutions per minute (rpm). The head works of the St.
Anthony hydroelectric plant continue to meet the Company's obligation to deliver water
to Egin Bench Canals, Inc., however, the generator is currently not operating for power
generation purpose since a failure in 2002 in which the jackshaft that connects the two
turbine units failed, shearing the connecting bolts between the jackshaft and turbines,
damaging keyways on the turbines and fracturing the bearing housing of the jackshaft.
5. The water right for the St. Anthony hydroelectric plant is Idaho water right
number 21-12914. The water right is for 700 cubic feet per second (cfs), non-
consumptive use for hydro power generation. The priority of the water right is December
20, 1912. In June of 2007, the Company was granted an extension of time from the Idaho
Department of Water Resources to resume beneficial use of this water right. The
extension expired December 31, 2012, however on March 12, 2012, the Idaho
Department of Water Resources accepted Rocky Mountain Power's application to place
the right in the Water Supply Bank. The water right will remain valid in the Water
Supply Bank until June 30, 2017. If this Application is approved, the water right will be
withdrawn from the bank and transferred to the new owner at an appropriate time to
resume operation of the hydro plant. Egin Bench Canals, Inc. diverts 423 cfs at the same
point of diversion as the Company's 700 cfs. These combined water rights
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equal 1,123 cfs and are the only water rights diverted at this point in the Henry's Fork of
the Snake River.
6.Rocky Mountain Power evaluated a minimum alternative for returning the
St. Anthony hydroelectric plant to service. This alternative has an investment requirement
as shown in Confidential Exhibit No. 1 under "Alternative 2". This alternative includes
repair of the jackshaft assembly and turbines and alignment of the four shafts. The
wooden flume feeding water to the turbine would also need to be replaced. This
alternative along with other future investment requirements and operation and
maintenance expenses has a net cost to benefit unfavorable for customers. Please refer to
Confidential Exhibit No. 1.
7.Rocky Mountain Power also evaluated a more costly alternative intended
to increase levels of generation through increased efficiency. This alternative has an
investment requirement as shown in Confidential Exhibit No. 1 under "Alternative 1".
This alternative includes a complete modernization of the plant and conveyance
structures to provide sustained and reliable service. This alternative, along with other
future capital and, operation and maintenance expenses has a net cost to benefit that is
unfavorable for customers. Please refer to Confidential Exhibit No. 1.
8.Rocky Mountain Power also evaluated a decommissioning alternative.
The estimated cost to decommission the plant is shown as "Alternative 3" in Confidential
Exhibit No. 1. Under this scenario, the Company would incur ongoing operation costs of
the dam and water conveyance structures. This alternative has a net cost to benefit
unfavorable for customers.
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9. Balancing costs and risks of the aforementioned analyses, Rocky
Mountain Power also evaluated a sale on an "As Is" basis. A potential sale could
represent a lower cost and better cost/risk balanced option than investing in or
decommissioning the facility. To solicit offers from the market, the Company issued a
request for proposals ("UP").
10.The Company prepared a RFP sales package which was distributed
directly to 31 parties that expressed interest in acquiring the development. Of the 31
parties that requested and received the initial RFP sales package, 13 completed the non-
disclosure agreement and were given access to confidential operation records and
accounting information. Six parties provided letters of interest. Three of the six parties
submitted conforming offers with varying levels of contingencies. Please refer to
I Confidential Exhibit No. 2 for a summary of participation and an analysis of offers
received.
11.Based on the bids received from the RFP, the sale alternative will result in
I a sale below remaining book value of the facility, akin to the decommissioning
alternative.
12.The bid from the RFP with the best balance between cost and risk was
from bidder 3, see Confidential Exhibit No. 2. The transaction proposed by bidder 3 has
minimal contingencies and includes a requirement that Rocky Mountain Power enter into
a power purchase agreement ("PPA") at avoided cost rates. An Agreement of Purchase
and Sale that is made effective subject to regulatory approval of this application has been
negotiated and executed with bidder #3. See Confidential Exhibit No. 3 for a copy of the
Agreement of Purchase and Sale.
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13. Rocky Mountain Power's analysis of the alternatives indicates it is in the
best interest of the Company's customers to sell the St. Anthony hydroelectric
development. The least cost and least risk option is to sell the facility. Absent selling the
facility the Company would review the cost/risk balance of pursuing the more costly
decommissioning alternative.
14.If the Application is approved, the sale of the St. Anthony hydroelectric
plant will be accounted for by removing from the Company's books the original book
value of the sold assets with a credit to FERC account 101, Electric Plant in Service. In
addition, the Accumulated Provision for Depreciation in FERC account
108 and Accumulated Deferred Income Tax Reserve in FERC account 282 will be
debited to eliminate the balances associated with the plant. The exact book value of the
transactions in the various FERC accounts will not be known until equipment sales are
closed. Since this is a FERC licensed project the Company will reflect this sale as
prescribed by FERC. Net proceeds will be included in FERC account 108 Accumulated
Provision for Depreciation as part of the Ashton-St. Anthony licensed project. This
practice of group depreciation accounting is consistent with past practices and approvals.
For example, a similar treatment of book value occurred after the decommissioning of the
Cove Development on the Bear River in Idaho. After decommissioning, the Cove
Development's remaining book value was applied to the Grace Development that it
shared a common FERC operating license with. The St. Anthony sale was not included
in the depreciation study currently pending before the Commission.
15.The sale of the St. Anthony hydroelectric plant serves the public interest
because it represents the best balance of cost and risk for customers. Discontinuation of
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operation associated with the St. Anthony hydroelectric generation plant by Rocky
Mountain Power will not adversely affect retail or wholesale customers The
discontinuation of the St Anthony hydroelectric plant's approximate 0.625 megawatt
("MW") generation capacity will have no material effect on Rocky Mountain Power's
generation capacity which is comprised of approximately 10,579 MW 1 Historical annual
energy production from St. Anthony was less than 5,000 MWh per year.
16 The Company believes that Bidder #3 has the financial ability and intent
to operate and maintain the St Anthony plant in the public interest as demonstrated by
the bidder contingency that Rocky Mountain Power enters into a PPA at avoided cost
rates.
17. Rocky Mountain is presently unaware of any adverse impact to another
utility or customers that would result from the sale of the St Anthony hydroelectric plant
18 In addition to Idaho, Rocky Mountain Power is required by Wyoming
regulations to file an application with the Wyoming Public Utility Commission to sell the
St. Anthony hydroelectric plant. A filling is also required in Oregon within 60 days of
closing.
19 Rocky Mountain Power believes that a technical 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 et seq.
WHEREFORE, based upon the foregoing, Rocky Mountain Power respectfully
requests that the Idaho Public Utilities Commission issue an Order (1) authorizing that
httD://www.Dacificorp.com/content/dam/pacificorp/doc/About Us/Company Overview/PC FACTSHEET
_2013 Fweb.pdf
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this matter may be processed by Modified Procedure, and (2) approve the Company's
Application to discontinue operations associated with the St Anthony hydroelectric
generation plant and dispose of the facilities as described in this Application Rocky
Mountain Power respectfully requests timely Commission consideration and approval of
this Application such that the Company will have the necessary time to close the sale as
soon as possible following all required regulatory approvals
Dated this 9th day of April, 2013
ROCKY MOUNTAIN POWER
7Q 7(L
Mark Moench
Daniel E Solander
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
Telephone [phone]
Fax [phone]
E-mail mark moench@pacificori, corn
daniel solander@pacificorp corn
Attorneys for Rocky Mountain Power
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ATTACHMENT A IS CONFIDENTIAL
AND IS PROVIDED UNDER SEPARATE COVER