20141215Schwartz Direct.pdf

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BEFoRE rHE rDAHo puBLIC urILIrIEs coMMlstrdr$tC l5 Pl{ h: 3l*
IN THE MATTER OF THE APPLICATION
OF ROCKY MOUNTAIN POWER FOR
APPROVAL OF THE TRANSACTION TO
CLOSE DEER CREEK MINE AND
FOR A DEFERRED ACCOUNTING
ORDER
ROCKY MOUNTAIN POWER
CASE NO.
DIRECT TESTIMONY OF
SETH SCHWARTZ
REDACTED
pac-p+f,lffi [-sii i iii,r, "i I u ; r i"'
CASE NO. PAC-E-14.10
December 2014
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INTRODUCTION
Please state your name, business address and present position.
My name is Seth Schwartz. My business address is 1901 North Moore Street,
Suite 1200, Arlington, Virginia 22209. My position is hesident, Energy Ventures
Analysis,Inc.
Please state your relationship with PacifiCorp dba Rocky Mountain Power
(the "Company").
I am an independent expert who has been retained as a consultant by the
Company regarding the proposed closure of the Deer Creek mine, including
withdrawal from the 1974 Pension Trust and the contract for replacement coal
supply.
QUALIFICATIONS
Briefly describe your professional experience.
I have been a principal of Energy Ventures Analysis ("EVA") since its founding in
1981. EVA performs market analysis and management consulting for the U.S.
energy markets. We cover markets for coal, natural gas, oil and electric power.
Our clients are participants in the energy market, including producers, consumers,
transporters, investors and regulators. In addition to my corporate responsibilities,
I manage our coal consulting practice, including market studies, publications and
management consulting. Our market studies include analyses of coal supply,
demand and prices. Our consulting projects include management audits of fuel
procurement practices by electric power companies, both regulated and
unregulated. Our management audits have included projects for regulatory
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agencies, interveners, and company management. I have testified as an expert
witness on coal markets and coal procurement practices in front of numerous state
public utility commissions as well as the Federal Energy Regulatory Commission
("FERC"). My current resume is attached at Exhibit No. 8.
Have you previously testified regarding the coal mining operations and coal
procurement practices of PacifiCorp?
Yes. I directed a study of the coal supply operations and fuel procurement
practices of PacifiCorp following the merger of Utah Power & Light and Pacific
Power & Light in l99l on behalf of the seven state public service commissions
and FERC as well as an update, which was performed in 1995. This was a
comprehensive study of the management of the mining operations and coal supply
plan to all of PacifiCorp's coal-fired power stations. I have also testified on behalf
of the Utah Office of Consumers Services in Docket No. 10-035 -124 in2Oll.
Do you have previous experience with the issues related to the multi-
employers pension plan and the National Bituminous Coal Wage Agreement
("NBCWA"X
Yes. I have analyzed the costs and impacts of the NBCWA on the coal industry
and coal mining operations for over 30 years. I testified before the President's
Commission on United Mine Workers of America Retiree Health Benefits (the
"Coal Commission") in 1990, which led to the passage of the Coal Industry
Retiree Benefits Act of 1992.I have also testified in bankruptcy court on behalf of
Patriot Coal Company in 2013 regarding the costs of the NBCWA and the impact
on Patriot's operations and its reorganization plans.
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PURPOSE AND SUMMARY
What is the purpose of your testimony?
My testimony describes the major issues involved in the Company's decision to
close the Deer Creek mine and replace the coal with a new long-term contract
supplied by Bowie Resources ("Bowie"). These issues include the rising costs of
continued operation of the Deer Creek mine as an employer under the NBCWA
and the market for Utah coal, which will replace the coal supply to the Utah
power plants.
What was the benefit to the Company's customers of the Company having its
own captive production of coal to supply the Utah plants?
For many years, the Company has operated its own coal mines in Utah (Deer
Creek and previous mines) to supply the Utah power plants (Huntington, Hunter
and Carbon). The Company was able to operate its own mines at costs similar to
the costs of operation by commercial coal suppliers in the Utah market. Operating
its own mines had a number of benefits to the Company and its customers,
including:
1) Stable supply of coal meeting the plant requirements at reasonable costs;
2) Low coal transportation costs to deliver coal to the Huntington and Hunter
power plants;
3) Reduced exposure to swings in coal prices based on market conditions;
4) Leverage with commercial coal suppliers in negotiating coal purchase
conffacts.
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a.What changes have occurred that no longer make it advantageous for the
Company to maintain its own captive coal mining operations?
In recent years, the value of having captive coal supply for the Utah plants has
declined while the costs of maintaining this captive supply have increased.
Why has the value of a captive coal supply declined?
Historically, the Utah coal market has had limited supply relative to the potential
demand. There was a small number of economic coal mines and a large potential
market, including local power plants as well as shipments to power plants in the
Eastern U.S. and exports to overseas markets. The major change in recent years
has been the decline in demand for Utah coal. Utah coal is no longer demanded in
Eastern markets and several local power plants have announced plans to close in
the near future. As a result, there is now excess supply of coal on the Utah market,
and the concern of potential shortages and price spikes in the commercial market
is much less than in the past.
Why have the costs of maintaining a captive coal supply increased?
The Deer Creek coal mine is approaching the end of its reserve life. As the mine
depletes, the cost ofproduction is expected to rise and the coal quality is expected
to decline. In addition, the costs of continuing to be a signatory employer under
the NBCWA and a participant in the multi-employer pension plan of the United
Mine Workers ofAmerica ("UMWA") have substantially increased in recent years
and have a large risk of increasing much more in the future.
Please describe how your testimony is organized.
First, I discuss the reasons for the increased cost to the Company of its continued
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production and participation in the pension plan and the growing risk of higher
costs in the future. Second, I discuss the changes in the market for Utah coal and
the costs and benefits of purchasing coal from commercial suppliers compared to
continued captive coal production.
INCREASED COST AI\D RISK OF PARTICIPATION IN THE
UMWA 1974 PENSION PLAN AND TRUST
Please describe the UMWA 1974 Pension Plan and Trust.
The UMWA 1974 Pension Plan and Trust (*1974 Pension Trust") is a multi-
employer pension plan established to provide retirement benefits to eligible mine
workers who retire, who become disabled and to the eligible surviving spouses of
mine workers. The UMWA 1950 Pension Trust was merged into the 1974 Pension
Trust in 2007. The 1974 Pension Trust provides pension benefits to retired
members of the UMWA who are eligible based upon their years of signatory
service (work for a company which was a signatory of the NBCWA) regardless of
the identity of their former employer. As a multi-employer plan, eligible retirees
receive benefits from the 1974 Pension Trust based upon their qualifring
signatory service, regardless of whether their former employer is currently in
business or making payments to the 1974 Pension Trust.
Who are the signatory employers?
The signatory employers are companies who have signed the current or previous
National Bituminous Coal Wage Agreement ("NBCWA"). Signatory employers
also include companies who have signed separate agreements with the UMWA
which incorporate the terms of the NBCWA (so-called "me too" agreements) and
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are signatory to the terms of the 1974 Pension Trust agreement.
What is the National Bituminous Coal WageAgreement?
The NBCWA is negotiated between the Bituminous Coal Operators Association
("BCOA") and the United Mine Workers of America ("UMWA"). The NBCWA
govems the terms of employment of the hourly workers of the signatory
companies, including pay, benefits, work rules and retirement benefits. The
current 201 I NBCWA was effective on July l, 201I and will expire December 31,
20t6.
Is Energy West a signatory of the current NBCWA?
No. Energy West has not signed the 20ll NBCWA. The UMWA employees of
Energy West (at the Deer Creek mine and the Hunter Preparation Plant) have been
working without a contract since the last contract expired on January 2,2013.
Is Energy West still required to make contributions to the 1974 Pension
Trust?
Yes. While the last labor contract has expired, Energy West is still required to
contribute to the 1974 Pension Trust. Based upon prior court rulings,' as a
previous signatory to the 1974 Pension Trust documents, Energy West is obligated
to continue to contribute at the rates set by the NBCWA whether or not Energy
West is a signatory to successor NBCWA agreements.
How are contribution rates to the 1974 Pension Trust established?
The contribution rates are established by agreement of the BCOA and the UMWA
in the NBCWA and its successor agreements. Energy West is bound to make
I See Holland v. Freeman United Coal Mining Co,574 F. Supp. 2d ll6 (2008), United States District
Court, District of Columbia, Civil Action Nos. 07-0490 and 07-1050.
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contributions at the rates established in the NBCWA.
What is the current contribution rate to the 1974 Pension trust?
For the term of the 20ll NBCWA (from July l,20ll through December 31,
2016), the contribution rate was fixed at the rate of $5.50 per hour worked for all
UMWA employees employed prior to January l,2012. This is a very substantial
cost to the signatory employers. The standard wage rate for the highest-paid
UMWA employee as of July l,20ll was $25.415 per hour, so the contribution to
the 1974 Pension Trust is over 20 percent of the regular payroll rate.
Why is the contribution rate so expensive?
Because of the nature of the multi-employer plan and the fact that the number of
contributing employers has been declining over time. In a multi-employer plan,
the current employers are not making contributions based upon the cost of
providing pensions to their own curent and future retirees. The pensions for all
eligible UMWA retirees (and surviving spouses) are included in the Trust and the
contributions from current employers are supposed to be set at the level needed to
pay for all of the eligible retirees, not just the individual employer's retirees.
In the case of the coal industry UMWA coal production and employment
has been declining over time. Because the cost of coal production with UMWA
employees has been greater than the cost of production with non-union employees
(due to wage rates, very high benefit costs, and lower productivity due to UMWA
work rules), no new coal mines developed since the 1980s have signed the
NBCWA. As existing UMWA mines have depleted and closed, the number of
active UMWA employees and coal production from UMWA mines has declined.
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Former signatory employers have closed and some have filed bankruptcy. As the
coal production and contributions from signatory employers have declined, the
cost of contributions for the remaining employers has escalated rapidly.
What has happened to the amount of coal production by companies who are
contributing to the 1974 Pension Trust?
Just prior to the passage of the Coal Industry Retiree Benefit Act of 1992 (which
was a Federal law designed to address the funding shortfalls for UMWA retiree
medical benefits), signatory coal production was 285 million tons in 1991.2 The
level of signatory UMWA production had been declining from a peak of 423.7
million tons in 1970, when signatory production was almost 70 percent of total
U.S. coal production. Since the passage of the 1992 Coal Act, signatory coal
production has fallen sharply as companies have closed UMWA coal mines and
have gone out of business. From 1998 to 2013, signatory coal production has
fallen by two-thirds, from 217 to 76 million tons, as shown on Exhibit No. 9.
Signatory coal production is on pace to fall again in 2014, with mine closures
announced in Alabama and West Virginia.
Please provide a history of the contribution rates to the 1974 and 1950
Pension Trusts.
The historical contribution rates from 1975 to 2014 to the 1974 and 1950 Pension
Trusts are shown on Exhibit No. 10. The contribution rates to the 1950 Pension
Trust were set in dollars per ton produced, but the exhibit shows the rates
converted to equivalent dollars per hour worked. The contributions to the 1950
2 US House of Representatives, Committee on Ways and Means, "Development and Implementation of the
Coal Industry retiree Health BenefitAct of 1992", page 130.
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Pension Trust ceased in 1987 after the 1950 Pension Trust was fully funded. The
1950 Pension Trust was merged into the 1974 Trust in 2007 . The contribution rate
to the 1974 Pension Trust was in the range of $0.60 - $1.20 per hour worked
(including the equivalent contribution rate per ton) from the plan inception
through 2001. In the2002 NBCWA, the contribution rate was reduced to zero.
However, a substantial deficit in the Trust required a resumption of contributions
in the 2007 NBCWA at the rate of $2.00 per hour, growing to $5.00 per hour by
the end of the contract. In the 20ll NBCWA, contribution rates were fixed at
S5.50 per hour for the term ofthe contract through the end of20l6.
What has happened to the financial condition of the 1974 Pension Trust?
The financial condition of the 1974 Pension Trust has deteriorated dramatically
since the start of the 2007 NBCWA. At the valuation date of June 30, 2006, the
market value of the assets was $6.0 billion and the present value of the vested
benefits was $7.1 billion, for a deficit of $1.1 billion (the value of the unfunded
vested benefits). However, as shown on Exhibit No. ll, the deficit has
skyrocketed since 2006 to S5.5 billion as of the last valuation date of June 30,
2013.
What are the causes of the large increase in the deficits in the 1974 Pension
Trust?
It has been a combination of an increase in the present value of the vested benefits
and a decline in the market value of the plan assets. The present value of the
vested benefits has increased from $7.1 billion on June 30,2006 to $9.6 billion on
June 30,2013 due to benefit increases and changes in actuarial assumptions,
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principally the lower interest rate used to discount future benefits to a present
value (this change is due to lower interest rates and expected earnings for the plan
assets). The market value of the plan assets has fallen from $6.0 billion on June
30, 2006 to $4. 1 billion on June 30, 2013 due to the decline in the market value of
the plan investments in 2008 and 2009 and the fact that benefit payments have
exceeded contributions and investment earnings.
How do Company contributions to the 1974 Pension Trust compare to the
cost of benefits?
For the most recent year ended June 30, 2013, total contributions were $121.5
million (including $6.2 million of withdrawal payments), while the cost of
benefits paid and plan expenses were $609.6 million. The annual income of the
plan assets is not enough to fund the difference between the employer
contributions and the cost of the benefits. In the most recent year, the earnings and
market appreciation of the plan investments were 5377.1 million, so the value of
the plan assets declined by over $100 million. The decline in the value of the plan
assets would have been even larger except for the fact that the return on plan
assets was $62.4 million greaterthan expected. As the value of the plan assets is
depleted to pay the current benefits, the earnings on the plan assets will decline
further, exacerbating the shortfall.
What is the impact of the funding deficit on the amount of future
contributions by employers like Energy West to the 1974 Pension Trust?
Under the federal Pension Protection Act of 2006 ("PPA"), the actuary for a
multi-employer pension plan must certifo the funded status of a plan annually. For
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the plan year beginning July l,20ll, the actuary for the 1974 Pension Trust
certified that the plan was in 'oseriously endangered status" for the first time. The
PPA requires that BCOA and the UMWA adopt a funding improvement plan to
avoid a funding deficiency for any plan year and improve the plan's funded status
by at least 20 percent over a l5-year period.3 The funding improvement plan was
adopted on May 25, 2012 and was updated on April 26, 2013. The funding
improvement plan will require contributions by participating employers to more
than double in 2017 (after the end of the current NBCWA) to $13.20 per hour and
continue to increase rapidly to a rate of $26.00 per hour by 2022 and remain at
this level thereafter.a The 1974 Pension Tiust's financial condition has further
deteriorated and it is now considered to be in "critical" status for plan year
beginning July l, 2014. Anew "rehabilitation plan" will be required to be adopted
no'laterthan May 2015 which will likely require even higher future contribution
rates.
What would be the likely impact of this required increase in contributions on
the cost of production for the contributing employers?
The required increase would have a substantial increase in costs for the signatory
employers. Production at signatory UMWA mines has already been declining
steadily as shown on Exhibit No. 9. The cost for contributions to the 1974 Pension
Trust at 526.00 per hour worked would equal about $7.00 per ton at the average
UMWA mine. This increase would make more UMWA mines uneconomic and
likely to close.
3 Annual Funding Notice fiom the Trustees of the UNIWA Health and Retirement Funds, October 25,2013.
a This schedule assumes no cuts in benefits. If benefits were cut to the maximum extent permitted by law,
the contribution rate would rise to $24.90 per hour by 2022 instead of $26.00.
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What would be the impact on the financial status of the 1974 Pension Trust if
more UMWA mines were to close?
It is likely that the 1974 Pension Trust would enter what is popularly known as a
"death spiral", where declining production would force the remaining producers
to contribute at even higher hourly rates, which would in turn force more mines to
close. The remaining signatory employers would likely close their UMWA mines
and seek to withdraw from the 1974 Pension Trust.
How can an employer limit its exposure to the future costs of the 1974
Pension Trust?
The only way for a current signatory employer to limit the future financial
obligations to the 1974 Pension Trust is to close its UMWA operations (laying off
all UMWA employees) and withdraw from the Trust. Previous court rulings have
held that the existing signatory employers must continue to make contributions to
the 1974 Pension Trust at the rates established under the NBCWA even if the
employer is no longer a signatory to the agreement.
What happens when an employer withdraws from the 1974 Pension Trust?
Under the terms of the Employee Retirement Income Security Act ("ERISA"), an
employer must pay withdrawal liability equal to its proportionate share of the
unfunded vested benefits as of the last valuation date. The employer's liability is
calculated based upon its share of the contributing hours worked over the
preceding five years times the total unfunded vested benefits.
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What is the withdrawal liability for Energy West if it closes the Deer Creek
mine?
Based upon the last valuation date of June 30, 2013, the Company had an
estimated withdrawal liability of $125,615,617 if it had withdrawn from the 1974
Pension Trust prior to June 30,2014. This valuation is an estimate provided by the
Trustees at the request of Energy West, based upon the unfunded benefits of $5.4
billion and the Company's share of the total signatory hours worked over the last
five years of 2.32 percent. A new valuation of the unfunded vested benefits and
the withdrawal liability as of June 30,2014 has not been prepared by the Trustees
at this time, so the current withdrawal liability is not known for certain.
How would the withdrawal liability be paid?
The withdrawn employer has the obligation to make annual payments equal to the
highest contribution rate (in dollars per hour) over the previous 10 years times the
highest average annual contribution base units (annual signatory hours worked
over the highest 3-year period in the previous 10 years). The withdrawn employer
also has the option to make the withdrawal payment in a lump sum in lieu of the
annual payments. Annual payments would continue indefinitely until the 1974
Pension Trust has satisfied all of its obligations to beneficiaries.
What has happened to the calculation of the withdrawal liability of Energy
West over recent years?
After learning of the funding deficit in September 2010, Energy West has
requested that the Trustees provide a calculation of its withdrawal liability
annually. In that time, the withdrawal liability has increased from $85.9 million to
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$125.6 million, as shown on Exhibit No. 13. The reason for the increase in
liability has been the increase in the unfunded vested benefits in the Trust, as
described earlier. The share of signatory hours worked by Energy West has been
stable over this period.
What is likely to happen to Energy West's withdrawal liability if the
Company delays withdrawal until a future date?
It is highly likely that Energy West's withdrawal liability will continue to rise
significantly.
whv?
The amount of coal produced by other signatory companies is certain to decline as
other companies close uneconomic coal mines. As a result, the share of signatory
hours worked by Energy West will increase, so Energy West's share of the
withdrawal liability will be higher. Furtheq the lower amount of production will
reduce the annual contributions to the Trust, increasing the unfunded deficit.
Finally, it is possible that some of the other signatory companies will be unable to
continue to make contributions or withdrawal payments due to their weak
financial condition, which would leave a greater share of the liability with Energy
West.
What is likely to happen to Energy West's withdrawal payment obligation if
it delays withdrawal until after 2016?
If Energy West withdraws prior to 2017, the highest contribution rate which
would be multiplied by the annual hours worked would be $5.50 per hour. Based
on the latest funding improvement plan, the contribution rate will increase to at
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least $13.20 per hour, which would more than double the annual withdrawal
payment. The annual payment obligation is likely to increase significantly in2017
after the 2011 NBCWA expires.
Why do you expect coal production by other UMWA mines to decline in the
future?
Several large UMWA mines have already closed in2014 in Alabama, Virginia and
West Virginia. Producers have provided WARN Acts notices at a number of other
mines and these are likely to close in the near future. Weak prices for
metallurgibal coal have jeopardized the viability of several other large mines
which have disproportionately more employees, due to difficult mining
conditions. Further, the remaining mines will become much less economic when
the large increase in contributions to the 1974 Pension Trust starts in2017.
Who are the signatory coal producers contributing to the 1974 Pension
Trust?
I have calculated the signatory coal production by parent company in2013, which
is presented in Exhibit No. 14. The largest coal producer was Consol Energy (its
subsidiaries Consolidation Coal and McElroy Coal). Consol sold these mines in
late 2013 to Murray Energy, the parent company of Ohio Valley Resources,
another signatory producer. The combination makes Murray Energy the largest
signatory producer, with over 45 percent of all of the 2013 production, all from
six highly-productive mines. Excluding Energy West, there were only six other
signatory coal producers in 2013.
s The WorkerAdjusfinent and Retraining Notification Act, which requires 60 days advance notice prior to
layoffs which exceed 50 employees.
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Who is the secondJargest signatory coal producer?
The second-largest signatory producer was Patriot Coal (including its subsidiaries
Eastern Associated Coal, Highland Mining and others). Patriot filed for Chapter
I I bankruptcy in 2012, citing high operating costs and long-term liabilities,
especially associated with the NBCWA. Patriot emerged from Chapter I I in late
2013, but has continued to lose money. ln2014, Patriot has closed or idled two of
its remaining UMWA mines and given WARN notice at another mine. In its
bankruptcy, Patriot announced that it had reached an agreement with the UMWA
to limit its future contributions, although the terms were not made public.
What is the financial condition of the other signatory coal producers?
The next-largest signatory coal producers were subsidiaries of Walter Energy and
Alpha Natural Resources. ln 2014, Walter closed the large North River UMWA
mine. Walter is highly-leveraged due to a large acquisition of Western Coal in
20ll at the peak of the metallurgical coal market and is now in precarious
financial condition. Walter's debt has been trading at about 50 percent of its face
value and its common stock has fallen to only five percent of its peak value in
2011. Alpha also incurred alarge debt in a20ll acquisition of Massey Energy
and its common stock is also just five percent of its peak value in 201 l. Alpha has
announced the closure of its remaining signatory Virginia mines at Dickenson-
Russell Coal Company and has stopped development at its large Emerald mine.
The next-largest producer, Cliffs Natural Resources, has two UMWA mines, both
producing metallurgical coal, and has reported losses at these mines since they
were purchased in 2007. Cliffs has recently announced its intention to sell these
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mines and exit the coal business. Finally, Mechel idled all of the UMWA mines at
its Bluestone Coal subsidiary this year. Mechel has also announced its intention to
sell its coal mines and its credit rating has fallen to a point where bankruptcy is
likely.
Based on these conditions, what do you expect is likely to happen if Energy
West continues to operate the Deer Creek mine?
It is likely that the cost of operating the Deer Creek mine will increase
significantly after 2016 asthe contribution rates to the 1974 Pension Trust are
increased. Further, there is a significant possibility of a national strike by the
UMWA in2017 in an affempt to spur Congress to provide funding for the Pension
Trust. Finally, when the Deer Creek mine is closed after depletion of its coal
reserves, Energy West's withdrawal liability is expected to be much higher due to
the increased contribution rates under the Funding Improvement Plan.
Is it possible that some events in the future will cause the cost to Energy West
to decline?
Unforeseen events are always possible. The UMWA is actively lobbying Congress
to provide federal funding for the 1974 Pension Trust. This does not appear likely
given the budget deficit and is not an event the Company can count on. The value
of the Trust's investment assets could increase faster than projected by the
actuaries, however, this is unlikely given the current deficit which is depleting the
assets.
Schwartz, Di - 17
Rocky Mountain Power
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Why should the Company withdraw now instead of waiting for Congress to
fund the delicits in the 1974 Pension Trust?
It would be very risky for the Company to hope that Congress will bail out the
1974 Pension Trust, as any federal action is uncertain. What is certain isthatthe
cost to the Company will continue to rise if it does not withdraw from the Trust.
The Market for Utah Coal and the New Coal Supply
Contract to Replace Deer Creek
If the Company does not continue to produce coal at Deer Creek, how will it
supply its Utah coal-fueled power plants?
The Company has the choice of producing its own captive coal or supplying the
Utah plants from coal purchased in the commercial market. Thus, the decisions
facing the Company are whether to operate or close the Deer Creek mine and, if it
is closed, whether to replace the coal on the commercial market under a new long-
term contract at the present time or to purchase coal on the short-term market in
the future. The factors to consider in these decisions include the expected cost of
purchasing coal relative to producing coal, the current and expected future coal
market conditions, and the reliability of supply of coal at a quality which can be
consumed by the Utah plants.
Please provide an overview of the Utah coal market.
The Utah coal market is part of the broader Rockies coal region, which includes
coal produced in the states of Utah and Colorado as well as parts of Wyoming,
Montana and New Mexico. This region includes coals produced in various coal
basins, with some degree of overlapping sales among the coal basins in these
Schwartz, Di - 18
Rocky Mountain Power
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states. Utah coal is produced in several different coal fields (including active
operations in the Wasatch Plateau, Book Cliffs and Alton coal fields) which
compete with each other in the marketplace.
Where is Utah coal sold?
The largest market for Utah coal is at power plants and industrial customers
located in Utah or nearby states (including Nevada, California and Idaho) where
Utah coal has a transportation advantage over other potentially competitive
sources of coal. Utah coal used to be sold to Eastern coal markets but those sales
have virtually disappeared.
Why have sales to markets in the Eastern U.S. declined?
In part, because of lower demand for coal in the Eastern U.S., but also because
Utah coal has become less competitive over time with other sources of similar-
quality coal (bituminous, low-sulfur) delivered to Eastern customers, such as
Rockies coal from the states of Colorado and Montana as well as coal from
Appalachia. Sales of Utah coal to Eastern power plants have fallen from 3.8
million tons in 2008 to near zero (5,152 tons) in 2013.
What are the other markets for Utah coal mines?
The major market for Utah coal is at local power plants and industrial customers.
In 2013, sales of Utah coal to power plants in Utah, Nevada and Califomia were
13.2 million tons, down from 18.2 million tons in 2008. PacifiCorp purchased 7.3
million tons for its Utah plants in 2013. The other major markets are the large
Intermountain Power Project ("IPP") power plant in Utah, the North Valmy and
Reid Gardner power plants in Nevada, several cogeneration plants in California,
Schwartz, Di - 19
Rocky Mountain Power
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and a number of industrial customers in Utah, Nevada, California, and Idaho. In
2013, Utah coal sales to these other power plants were about 5.9 million tons
(including 5.2 million to IPA) and sales to industrial consumers were 2.6 million
tons. In addition, some Utah coal (about 0.7 million tons in 2013) is exported to
overseas markets through ports in California.
What is likely to happen to demand for Utah coal at these other local
markets?
The demand for Utah coal will decline at other local power plants because most of
these plants have announced dates when they will close. The Reid Gardner power
plant will close units 1-3 at the end of 2014 and the remaining unit at the end of
20lT.PacifrCorp will close the Carbon power plant in 2015. NV Energy's most
recent Integrated Resource Plan, filed in 2013, reflects retirement dates for the
North Valmy units in 2021 and 2025.6 A[ of the plants in California have
announced they will stop burning coal by the end of 2015. Finally, IPP has
announced it will stop burning coal after its contracts with the Califomia
participants expire in 2027. At that point PacifiCorp is likely to be the only
consumer of Utah coal in power plants, along with the industrial customers and
the export market.
Why has Utah coal become less competitive with other sources of similar
coal?
Principally due to the depletion of coal mines in Utah over time and the increasing
costs to mine the remaining coal reserves. Utah coal production grew in the 1970s
and 1980s with the development of new mines to supply growing markets at local
6 }.Mnergy Northem Service Territory 201 3 Integrated Resource Plan, Volume ll, page 144.
Schwartz, Di -20
Rocky Mountain Power
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power plants, Eastern customers for low-sulfur bituminous coal and exports to
Asia. Production from these mines peaked in 1996 at close to 28 million tons per
year. Production remained fairly steady over the next decade, but has declined
since then as lower-cost coal reserves at the older mines were depleted. As shown
on Exhibit No. 15, total Utah coal production has declined significantly over the
last 8 years, falling from 26.0 million tons in 2006 to 16.6 million tons in 2013.
What has happened to coal production by mine in the state of Utah?
Utah coal production by mine for the years 2006 - 2013 is shown on Exhibit No.
15. The Aberdeen, Crandall Canyon and Bear Canyon #3 mines have depleted and
closed. The Emery and Horizon mines have been closed for economic reasons.
Production has declined at the large Sufco, Dugout Canyon, West Ridge and Deer
Creek mines due to depletion of reserves and more difficult mining conditions.
Two new mines have been developed to partially replace the decline from existing
mines: the Lila Canyon mine and the Coal Hollow mine in southern Utah (which
is the only surface mine in Utah).
What is the outlook for Utah coal supply?
The supply of Utah coal will continue to decline. Two of the large remaining coal
mines, West Ridge and Deer Creek, are facing depletion and closure in the near
future. West Ridge is expected to close in 2016. Deer Creek would deplete all of
its remaining reserves in 2019, but is being closed earlier. Arch Coal, the former
owner of Canyon Fuels (which was sold to Bowie Resources in 2013), reported
limited reserve life at both the Dugout Canyon and Skyline mines, although these
lives could be extended with new coal leases. While Murray Energy is planning to
Schwartz, Di -21
Rocky Mountain Power
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replace the depleting West Ridge mine with the Lila Canyon mine, the closure of
the Deer Creek mine will significantly reduce the supply of Utah coal.
How much coal does PacifiCorp need to supply its Utah power plants?
Historically, PacifiCorp has consumed between 7.1 and 8.4 million tons per year
of Utah coal at its Hunter, Huntington and Carbon power plants (this includes the
coal consumed at the Hunter plant for the share not owned by PacifiCorp). With
the closure of the Carbon power plant in 2015, the projected coal requirements for
the Hunter and Huntington plants is projected to be about 7.3 million tons per
year.
With the closure of the Deer Creek mine, what will be the likely sources of
coal to supply the Hunter and Huntington power plants?
The Hunter and Huntington plants can only deliver coal by truck and are not
located near a railroad. The economics of coal transportation make truck delivery
over long distances expensive, and the economic sources of coal for these plants
will likely be limited to the five nearby coal mines which can deliver coal by
truck within a radius of less than 70 miles. These mines are the Sufco, Skyline
and Dugout Canyon mines owned by Bowie Resources, the Castle Valley mine
owned by Rhino Energy, and the Lila Canyon mine owned by Murray Energy
(which is replacing the depleting West Ridge mine). These mines are likely to
produce 13 - 15 million tons per year through 2018, with about half of the coal
supplying the PacifiCorp power plants.
What is the outlook for Utah coal supply after 2019?
The supply of Utah coal is uncertain after 2019. Based upon the current assigned
Schwartz, Di -22
Rocky Mountain Power
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reserves, the Skyline and Dugout Canyon mines would likely be closed in this
time period. While Bowie has announced plans to lease additional coal reserves
and maintain production, these plans could change based upon market conditions
and the ability to obtain these coal leases. It is possible that Utah coal supply
could be significantly smaller in this time period.
What is likely to happen to the market price of Utah coal after the Deer
Creek mine is closed?
The Deer Creek mine has supplied a large share of the Utah market, producing l5
percent - 20 percent of total Utah coal over recent years. The closure of the Deer
Creek mine will result in PacifiCorp replacing about 2.6 million tons per year
from other Utah coal suppliers (3.2 million tons of production less the reduced
demand due to closing the Carbon plant). This is likely to result in an increase in
the market price for Utah coal in the near term.
Does your company (EVA) prepare a regular forecast of coal market prices?
Yes, EVA has been preparing forecasts of U.S. coal market prices for over 30
years. We publish regular forecasts of U.S. coal supply, demand and prices for
short-term (3 years) and long-term (25 years) markets. Many participants in the
U.S. coal markets subscribe to our price forecasts, including power companies,
coal producers, coal transportation companies and investors in the coal industry.
We call our coal market forecast reports "COALCAST".
How frequently do you publish your COALCAST forecast of coal market
prices?
We publish our forecast of long-term coal prices once per year in September. We
Schwartz, Di - 23
Rocky Mountain Power
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publish our forecast of short-term market prices quarterly.
Have you provided your forecast of Utah coal market prices to PacifiCorp
for its use in this analysis?
Yes. PacifiCorp has been a subscriber to our coal market price forecasts for a
number of years and we provided our latest forecast of Utah coal prices to
PacifiCorp in early September. This is the same forecast of market prices which
we publish for use by all of our subscribers.
What is your forecast of Utah coal prices?
Our forecast of Utah coal prices is for coal with a heat content of 11,800 Btu per
pound loaded FOB rail in the area of Price, Utah. The 2014 long-term forecast is
shown on Exhibit No. 16. We estimate current market prices to be $37 - $38 per
ton. We project that these prices will increase to over $42 per ton by 2016 due to
closures of Utah coal mines (Deer Creek and West Ridge). We project that Utah
coal prices will continue to rise over time, reaching $46 per ton by 2020 and
reaching $50 per tonby 2024.
Are these prices delivered to the Hunter and Huntington power plants?
No, this is a forecast of market prices in the area of Price, Utah. To determine the
projected market price delivered to the Hunter and Huntington power plants, one
would need to add an estimate of the transportation costs from these mines to each
power plant.
Why do you project that Utah coal prices will continue to increase in the
future?
The reasons for the increase in Utah coal prices in our forecast are mining cost
Schwartz, Di - 24
Rocky Mountain Power
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increases due to inflation in factor costs (labor, supplies, etc.) and depletion of
reserves requiring more diffrcult mining conditions.
Has EVA considered the potential impact of new regulations on carbon
dioxide emissions from existing power plants?
The prospect for regulation of carbon dioxide emissions from existing power
plants is uncertain. The Environmental Protection Agency ("EPA") has proposed
new regulations called the "Clean Power Plan", which are scheduled to take effect
beginning in 2020. EPA's public comment period closed on December 1,2014,
and plans to issue final rules in June 2015. Following the final rules, each state
will have to prepare a State Implementation Plan ("SIP") for approval by EPA.
The proposed regulations are already subject to litigation challenging EPA's
statutory authority to implement the broad scope of the regulations, which would
affect not just emissions from existing power plants, but also the dispatch of these
plants, construction of renewable energy power plants and energy efficiency
programs. Given the uncertainty, EVA has prepared an alternate case forecast of
coal prices which would model the impacts of EPA's proposed rules on coal
markets.
What is the projected impact of the proposed new carbon dioxide regulations
on EVCs forecast of Utah coal markets and prices?
Because many of the power plants using Utah coal are scheduled to retire by 2020
anyway without the new regulations, they are projected to have a modest impact
on the market for Utah coal. EVA projects that the principal impact will be the
acceleration of the projected retirement of the Intermountain power plant from
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Rocky Mountain Power
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2027 to 2020. EVA forecasts that this would result in a lower market price for
Utah coal during this time period, but that the impacts will disappear by 2026.
The comparison between the forecast of Utah coal prices under the No Carbon
Case and the Carbon Case is shown on Exhibit No. 17.
In your opinion, is it prudent for PacifiCorp to enter into a long-term
contract for Utah coal to replace the supply from the Deer Creek mine prior
to closing the mine?
Yes. The closure of mines in Utah, including the Deer Creek mine (whether
closed now or in 2019), will reduce the supply of coal in the Utah market and is
likely to result in higher coal market prices. If PacifiCorp were to wait to purchase
replacement coal until after closing the mine, it is likely that the Company would
pay higher prices for coal at that time.
As you are projecting there will be ample supply of Utah coal due to other
demand declining, why is it important for PaciliCorp to have a significant
portion of its coal purchased under long-term contract rather than just
purchase the coal on the market under short-term purchases?
After the closure of the Deer Creek mine, there will be only three producers of
Utah coal: Bowie Resources, Murray Energy and Rhino Energy. Without the
Deer Creek mine, PacifiCorp would not be able to supply its coal demand without
purchasing large volumes from Bowie. This would give Bowie the ability to price
discriminate and charge PacifiCorp a higher price than the prevailing market price
for Utah coal to other customers. By committing all of its coal requirements at the
Huntington plant under a new long-term contract with Bowie at fixed prices,
Schwartz, Di -26
Rocky Mountain Power
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PacifiCorp will continue to have competition among the remaining Utah coal
producers to supply the Hunter plant, preventing Bowie from being able to
exercise market power and charge higher prices.
What will be the impact of closing the Deer Creek mine on the coal price for
the Hunter plant after its existing long-term contract expires after 2019?
The Deer Creek mine was scheduled to deplete and close by 2019 in any event.
Thus, closing the mine earlier will not affect the market price for the Hunter plant
after2019.
Have you reviewed the Huntington CSA between PacifiCorp and Bowie
Resource Partners for the purchase of coal for the Huntington power plant?
Yes.
Please summarize the principal terms of the new coal supply contract.
The new coal supply contract with Bowie is to supply the coal requirements of the
Huntington power plant, with a minimum of I tons per year and a
maximum of I tons per year. The term of the contract is for l5 years from
2015 through2029. The coal prices are fixed for every year of the contract, with
the price for the first f tons per year starting at $I per ton delivered to
Huntington in 2015, increasing in fixed amounts to reach SI per ton in the
last year of the contract. The price for all coal in any year in excess of I
tons is discounted at a price of I per ton below the price for the trst f
tons. The source of coal can be from Bowie's mines as well as from third-party
sources. The average coal quality specifications are
Schwartz, Di -27
Rocky Mountain Power
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How does the new Bowie contract price compare to your forecast of Utah
market prices?
I have evaluated the new Bowie contract price and compared it to our forecast of
Utah coal market prices on a delivered basis to the Huntington power plant at the
rurn" I per pound heat content. To adjust EVA s market price forecast to
an equivalent basis, I have added the typical transportation cost from the Savage
Coal Terminal to the Huntington power plant, which is estimated to be about
$I per ton in 2014, escalating through 2029. I adjusted the market price
forecast on a delivered basis to equal the same heat content of f per
pound. I did not make a further adjustment for the fact that the Bowie contract is
for lower-sulfur coal than EVA's forecast (1.0 percent sulfur).
For the Bowie contract, I used the delivered price stated in the contract, with the
contract volumes and transportation cost adjustment as projected by the Company.
What was the result of your analysis?
The projected delivered market price compared to the fixed prices under the
Bowie contract are shown on Exhibit No. 18. The 2015 delivered price of the
Bowie contract starts at $I per ton, which is very similar to our forecast of
delivered coal prices. EVA's projection of Utah coal prices is that they
escalate at a much faster rate than the very low price escalation rate fixed in
Bowiecontract-annualescalationratethrough2o2gplustruck
transportation adjustments). As a result, we project that the new Bowie contract
price will be significantly below the market price over the term of the contract.
Schwartz, Di - 28
Rocky Mountain Power
a.
A.
will
the
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a.Based upon your review, do you believe it was prudent for the Company to
enter into the new long-term coal contract with Bowie?
Yes.
whv?
The new contract provides a secure supply of local Utah coal which will meet the
full requirements of the Huntington power plant and replace the coal which would
have been supplied by the Deer Creek mine. The initial delivered price is at the
current market price for similar coal and the price escalation terms over the life of
the contract are very favorable to PacifiCorp and well below our forecast of future
coal market prices. The coal quality is attractive, as it is very low sulfur, which
will reduce plant operating costs. PacifiCorp has included provisions in the Bowie
contract which would protect it against being obligated to continue to purchase
coal in the event that new government laws, rules or regulations affected the
a.
A.
ability to consume at least I tons per year of coal at the Huntington power
plant.
Does this conclude your direct testimony?
Yes, it does.
Schwartz, Dl-29
Rocky Mountain Power
Redacted
Case No. PAC-E-14-10
Exhibit No. 8
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOLINTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
Resume of Seth Schwartz
December 2014
Rocky Mountain Power
Exhibit No. I Page 1 of 2
Case No. PAC-E-14-10
Wtness: Seth Schwartz
RESUME OF SETH SCHWARTZ
EDUCATIONAL BACKGROUND
B.S.E.
PROFESSIONAL EXPERIENCE
Current Position
Seth Schwartz is the President and co-founder of Energy Ventures Analysis. Mr. Schwartz directs EVA's
coal and power practice and manages the COALCAST Report Service. The types of projects in which he
is involved are described below:
Fuel Procurement
Assists utilities, industries and independent power producers in developing fuel procurement
strategies, analyzing coal and gas markets, and in negotiating long-term fuel contracts.
Fuel Procurement Audits
Audits utility fuel procurement practices, system dispatch, and off-system sales on behalf of all
three sides of the regulatory triangle, i.e., public utility commissions, rate case intervenors, and
utility management.
Coal Analyses
Directs EVA analyses of coal supply and demand, including studies of utility, industrial, export,
and metallurgical markets and evaluations of coal production, productivity and mining costs.
Natural Gas Analyses
Evaluates natural gas markets, especially in the utility and industrial sectors, and analyzes gas
supply and transportation by pipeline companies.
Expert kstimon\t
Testifies in fuel contract disputes and rate cases, including arbitration, litigation and regulatory
proceedings, regarding prevailing market prices, industry practice in the use of contract terms and
conditions, market conditions surrounding the initial contracts, and damages resulting from
contract breach.
Ac quis iti ons and Div e s titure s
Assists companies in acquisitions and sales of reserves and producing properties, both in
consulting and brokering activities. Prepares independent assessments of property values for
financing institutions.
Prior Experience
Before founding Energy Ventures Analysis, Mr. Schwartz was a Project Manager at Energy and
Environmental Analysis, Inc. Mr. Schwartz directed several sizable quick-response support contracts for
the Department of Energy and the Environmental Protection Agency. These included environmental and
financial analyses for DOE's Coal Loan Guarantee Program, analyses of air pollution control costs for
electric utilities for EPA's Offrce of Environmental Engineering and Technology, Energy Processes
Division, and technical and economic analysis of coal production and consumptions for DOE's Advanced
Environmental Control Technology Program.
Rod<y Mountain Pouer
Exhibit No. I Page 2 ot 2
,i,ii3ill;!fi";'"l,frH
Publications
Crerar, D.A., Susak, N.J., Borcsik, M., and Schwartz, S., "Solubility of the BufferAssemblage Pyrite +
Pyrrhotite + Magnetite in NaCl Solutions from 200o to 350o", Geochimica et Cosmochimica Acta
(42)1427-1437, 1978.
Case No. PAC-E-14-10
Exhibit No. 9
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTATN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
Coal Production by Signatory Mines
December 2014
Rocky Mountain Power
Exhibit No. 9 Page 1 of 1
Case No. PAC-E-14-10
Wtness: Seth SchwarE
Coa! Production by Signatory Mines
llltn n r
I,ttOF6OIOF{Nft'tOO()OOF{F{F{F{oooooooooNNNNNNNNN
mm tons
250
100
N(nslooooooNNN
Source: U.S. Energy Information Administration Form EIA-7A and Mine Safety and
Health Administration Form 7000-2, analyzed by EVA.
0
6OrOF{ororoo(rtoooF{F{NN
Case No. PAC-E-14-10
Exhibit No. l0
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
UMWA Pension Trusts Unfunded Vested benefits
December 2014
Rocky Mountain Porer
Exhibit No. 10 Page 1 of 1
Case No. PAC-E-14-'10
lMtness: Seth Schwart
S/hour UMWA Pension Trusts Contribution Rates
s6.oo
r 1950 Plan
Ss.oo r 1974 Plan
rn F Crl F{ fn ]n N CD t'{ ft1 l,l N (') r{ .!' t4 b ON i\ N o0 q, o oo o or or g) cr! o! C) o O Q ea,r a,r a, ot gl ol (n ot ot (,t cn crl o) o o e q o- r{ r{ Fl Fl r{ r{ F{ F{ Fl r{ F{ F{ N N N (\l N
Source: National Bituminous Coal WageAgreements: 1974 -2012
54.oo
Sg.oo
::,::rll rlililllllllll
d aY)
ooNN
Case No. PAC-E-14-10
Exhibit No. I I
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
1974 Trust Unfunded Vested Benefits
December 2014
Rocky Mountain Porver
Exhibit No. 11 Page 1 of 1
Case No. PAC-E-14-10
Whess: Seth Schwaft
billions
s6.0
ss.0
s4.0
Sg.o
s2.0
tr., I
Jun-06
tl
Jun-07 Jun-08
L974 Trust Unfunded Vested Benefits
Jun-09 Jun-10 Jun-ll Jun-12 Jun-13
Source: Mercer, Actuarial Valuation Reports of the UMWA 1974 Pension Plan
Case No. PAC-E-14-10
Exhibit No. l2
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
2013 Signatory Coal Production
December 2014
Rod<y Mountain Porer
Exhibit No. 12Page 1 ot 1
Case No. PAC-E-14-10
Wtness: Seth Schwaftz
2O13 Signatory Coa! Production
Parent Gompany 1OOO Tons
Consol Energy 29,174
Patriot Coal 11,749
Alpha Natural Resources 9,721
Walter Energy 9,468
Munay Energy 5,550Clifis 4,6UPacificorp 2,810
Mechel Bluestone 1,A29
Drummond 1,329
76,3{5
Case No. PAC-E-14-10
ExhibitNo. l3
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILTTIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
Energy West Withdrawal Liability
December 2014
Rocky Mountain Porver
Exhibit No. 13 Page 1 of 1
Case No. PAC-E-14-10
Wtness: Seth Schwartz
Energy West Withdrawal Liability
million
S14o
s120
sloo
$ao
Seo
s40
$20
SO
Jun-09 Jun-10 Jun-11 Jun-12 Jun-13
Source: Letters to Energy West from the UMWA Health and Retirement Funds: 2010 -
2014
Case No. PAC-E-I4-10
ExhibitNo. l4
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
Utah Coal Production by Mine
December 2014
Company
Alton Coal
America West
Mine
Coal Hollow
Horizon
Bowie/Canyon Fuel Dugout Canyon U
Bowie/Canyon Fuel Skyline
Bowie/Canyon Fuel Sufco
U
U
Consol Energy
Hiawatha Coal
Murray Energy
Murray Energy
Murray Energy
Murray Energy
Murray Energy
Murray Energy
Pacificorp
Rhino Energy
Emery Mine U
Bear Canyon #3 U
Crandall Canyon U
So Crandall Canyon U
Lila Canyon U
Aberdeen
Pinnacle U
West Ridge U
DeerCreek U
Castle Valley tl4 U
Rocky Mountain Power
Exhibit No. 14 Page 1 of 1
Case No. PAC-E-14-'10
Wtness: Seth SchwarE
Utah Coal Production by Mine (1000 tons)
256 233 229 t94 272 370 210
4,387 3,826 4,t45 3,29t 2,461 2,395 1,516 551
1,il7 2,533 3,L20 2,718 e805 2,948 L,894 2,729
7,W 6,7L2 6,% 6,74 6,398 6,498 16s0 1960
1,054 1,025 1,050 1,238 999 4
27
505 N2
759
72 156 304 257
2,W9 1,@5 242
8-
3,022 4,255 3,80:' 3,063 3,326 3,566 2,@ 2,629
3,748 3,685 3,878 3,833 2,9y 3,L43 3,295 2,810
Type 2m6
s
509 588 946 633 - 572 W7 876
26,018 U,g? A,fis 21,718 L9,28 20,051 t6,U7 16,568
Source: Mine Safety and Health Administration Form 7000-2 data,2006 - 2013
Case No. PAC-E-14-10
Exhibit No. 15
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
Utah Coal Production
December 2014
Rocky Mountain Power
Exhibit No. 15 Page 1 of 1
Case No. PAC-E-14-10
Wtness: Seth SchwarE
Utah Coal Production
llllr
2@9 20rC 2011 2012 1013
1OOOtons
3S,000
25,000
2e.00CI
15.0@
10.m0
5,C00
2E06 2007 2m8
Source: Mine Safety and Health Administration Form 7000-2 data,2006 - 2013
Case No. PAC-E-14-10
Exhibit No. l6
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
VA Forecast of Utah Coal Market Prices
December 2014
Rod<y Momtain Porer
Extribit No. 16 Page 1 of 1
Case No. PAC€-i+10
\Mhess: Seth Sdulartz
RIA Fsacastof WahGoal Mrrh Pdcas
Source: Energy Ventures Analysis, COALCAST Long-Term Forecast Report
October 2014
$/lon
s70.{n
s55.(p
s60.(I,
s55.0
s50.$
s45.{n
s{O.{X'
s35.m
s9,.fl,
S25.m
s20.(p 9958*RtQ&RSStShmFI FI FI FI FI R FI FI FI R FI FI R FI
Case No. PAC-E-14-10
Exhibit No. l7
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOTINTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
EVA Forecast of Utah Coal Market Prices (No Carbon)
December 2014
Rocky Mountain Poner
E:thiUt No. 17 Page'l of 'l
Case No. PAC€-i+10
Whess: SG[hSctnirartr
$/r., EltA FonGEGtof t tdtc.otl Mrrbt Prim
9uttr --- -
sss-m ---
-l{ofntognCere
-Crtank
szs-m
s20-0 s5=HsRftSnFnHf,nmsRAARRftBRRRRRRRfiIR
Souce: Energy Ventures Analysis, COALCAST Long-Term
October 2014
Forecast Report,
Case No. PAC-E-I4-10
ExhibitNo. l8
Witness: Seth Schwartz
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Seth Schwartz
Forecast of Bowie Contract and Market Prices
December 2014
Rod<y Mountain Porer
E:dribit No. 18 Page I of 1
Case No. PAC-E-1+l0
Wness: Seth Schvrailz
Forccast of Bowle f.ontrect and Marftct Prlccs
s60.fi,
s S50.d)tg snt.*
€ s46.oo
E.g s44.00o s4200
s40.00
201520162m72018201920202o,2120222V23S242052026m272A2Am29
Source: EVA analysis of Utah market prices delivered to Huntington and the
Bowie contract