HomeMy WebLinkAbout20140620Decision Memo.pdfDECISION MEMORANDUM 1
DECISION MEMORANDUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: NEIL PRICE
DEPUTY ATTORNEY GENERAL
DATE: JUNE 20, 2014
SUBJECT: IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER
FOR ADVANCE AUTHORIZATION TO TRANSFER SPARE
TRANSFORMERS PURSUANT TO A SHARING AGREEMENT, CASE NO.
PAC-E-14-02
On May 23, 2014, PacifiCorp dba Rocky Mountain Power (“Rocky Mountain” or
“Company”) filed an Application with the Idaho Public Utilities Commission (“Commission”)
requesting advance authorization to transfer spare transformers to other participating utility companies,
if required, pursuant to a sharing agreement.
APPLICATION
In its Application, Rocky Mountain outlined the history behind the FERC-approved Spare
Transformer Equipment (“STEP”) Program. The Company says that STEP is a coordinated approach
to increase the electric power industry’s inventory of spare transformers and streamline the process of
transferring those transformers to affected utilities in the event of a transmission outage caused by a
terrorist attack. STEP requires each participating utility to sell its spare transformers if requested to
any other participating utility that suffers a “triggering event.” A “triggering event” is defined as “an
act or coordinated acts of deliberate, documented terrorism, as defined in the Homeland Security Act
of 2002 . . .”
According to the Company, the STEP sharing agreement was negotiated among more than
50 utilities and provides each participating utility with legally enforceable rights to access readily
available spare transformers that have been committed to STEP. Rocky Mountain believes that if a
triggering event occurs; participating STEP utilities possess self-executing and legally enforceable
rights to acquire spare transformers from participating STEP utilities.
DECISION MEMORANDUM 2
Rocky Mountain entered into its STEP agreement on December 6, 2013, with other
participating utility companies across the United States. However, the Company’s status as a full
participating member of STEP is contingent upon relevant state regulatory approvals.
Based on preliminary information provided by the Edison Electric Institute (EEI), the
Company believes that its obligation under the sharing agreement will be two spare transformers. The
first transformer is rated as a 500-230 kV and 193 MVA, the second transformer is rated at 345-138
kV and 141 MVA. This obligation is subject to adjustment as determined by a commitment formula
found in the sharing agreement. The commitment of the two transformers does not prohibit the
Company from utilizing the equipment for its own needs so long as the spare transformers are replaced
within 18 months.
The Company has evaluated the risk of having to sell a spare transformer to another STEP
participating utility and believes that the combination of committing existing spare transformers and
the low probability of a triggering event result in an acceptable risk. The Company claims that it takes
steps to maintain the safety and security of its substations and it does not believe it is reasonable or
economically feasible to amass a spare transformer inventory large enough to allow full system
restoration following a worst case scenario terrorist attack. The Company alleges that its customers
will benefit from the increased access to available spare transformers in the event that the Company
experiences a triggering event without the added costs of significant increases in its spare transformer
inventory.
The purchase price for transformer(s) transferred to a utility experiencing a triggering event
is defined in the sharing agreement. STEP utilities must pay an annual fee of approximately $5,000 to
participate in the transformer exchange program. The Company does not request any ratemaking
treatment for fees or any new inventory required by the terms of the agreement.
COMMISSION DECISION
Does the Commission wish to process Rocky Mountain’s Application through Modified
Procedure with a 21-day comment period?
M:PAC-E-14-02_np