HomeMy WebLinkAbout20171124Stipulation.pdfROCK Y MOUNTAIN RECE lv ED 1407 W.North Temple,Suite 310POWERSaltLakeCity,Utah 84116
November 24,2017
SSION
VIA OVERNIGHT DELIVERY
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W.Washington
Boise,ID 83702
Attention:Diane Hanian
Commission Secretary
RE:CASE NO.PAC-E-17-06
IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER
FOR BINDING RATEMAKING TREATMENT FOR WIND REPOWERING
Please find enclosed for filing an original and seven (7)copies of a Stipulation in the above-
referenced matter.
Informalinquiries may be directed to Ted Weston,Idaho Regulatory Manager,at (801)220-2963.
Very truly yours,
J R.Stew
Vice President,egulation
Enclosures
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE )
APPLICATION PACIFICORP DBA )CASE NO.PAC-E-17-06
ROCKY MOUNTAIN POWER FOR )
BINDING RATEMAKING )STIPULATION
TREATMENT FOR WIND )REPOWERING )
This stipulation ("Stipulation")is entered into by and among Rocky Mountain Power,a
division of PacifiCorp ("Rocky Mountain Power"or "the Company")and all of the parties of
record in Case No.PAC-E-17-06 including Staff of the Idaho Public Utilities Commission
("Staff"),the Idaho Irrigation Pumpers Association Inc.("HPA"),PacifiCorp Idaho Industrial
Customers ("PIIC")and Monsanto Company ("Monsanto").The Stipulation refers to the
Company,Staff,IIPA,PIIC and Monsanto individuallyas a "Party,"and collectively,as the
"Parties."
I.INTRODUCTION
The terms and conditions of this Stipulationare set forth below.The Parties agree that this
Stipulationrepresents a fair,justand reasonable compromise of all issues raised in this proceeding,
and that this Stipulation is in the public interest.The Parties,therefore,recommend that the Idaho
Public Utilities Commission ("Commission")approve the Stipulation and all of its terms and
conditions.See IDAPA 31.01.01.271,272,and 274.
II.BACKGROUND
1.On July 3,2017,Rocky Mountain Power filed an Application for Binding
Ratemaking Treatment for Wind Repowering ("Application')with the Commission.The
Application requested a Commission determination on the prudence of the Company's plan to
CASE NO.PAC-E-17-06
STIPULATION --Page 1
upgrade or "repower"most of its wind resources,and Commission approval of the Company's
proposed ratemaking treatment for new investment and continued rate recovery of and on the
undepreciated balance of the replaced assets associated with the wind repoweringproject.
2.On July 26,2017,the Commission issued a Notice of Application and Order setting
an intervention deadline of August 8,2017,and directing Staff to develop a procedural schedule
for the processing of the matter.
3.On August 18,2017,the Commission issued a Notice of Scheduling and Notice of
Technical Hearing setting a procedural schedule that included a technical evidentiary hearing on
December 7,2017.
4.To work toward resolving the issues raised in the Application,the Parties met on
October 19,2017,under IDAPA 31.01.01.271 and .272,to engage in settlement discussions.Based
upon these settlement discussions,as a compromise of the Parties'positions in this proceeding,
and for other good and valuable consideration,the Parties have reached a comprehensive
settlement agreement.The Stipulationresolves all outstanding issues in this docket,andthe Parties
believe the Stipulation is in the public interest.
HI.TERMS OF THE STIPULATION
5.The Parties request that the Commission issue an order finding that the Company's
decision to repower the wind facilities identified in the Application is prudent and in the public
interest,based upon the representations of the Company in this matter.
6.The Parties request that the Commission approve the Company's proposed
ratemaking treatment for recovery of the replaced assets,new investment,incremental energy
production,and production tax credits ("PTC")associated with the wind repowering project.
Specifically,the Parties agreethat the Commission should enter an order approvingthe Company's
CASE NO.PAC-E-17-06
STIPULATION -Page 2
proposed Resource Tracking Mechanism ("RTM")as a component of the Energy Cost Adjustment
Mechanism ("ECAM").See Direct Testimony of Jeffrey K.Larsen at 6-16,and Exhibit 12
(describing design and operation of the RTM).The RTM,along with the ECAM,will capture the
costs and benefits of the repowered wind facilities until such time as they are recovered in base
rates.
7.The Parties agree that all liquidateddamages received by the Company under the
contractual agreements with vendors for these fàcilities will be passed onto customers,including,
but not limited to,liquidated damages received due to the repowered equipment not meeting
specified availability,performance,or installation schedule requirements.
8.The Parties agree that,under the ECAM's existing sharing bands,90 percent of the
net power cost ("NPC")benefits associated with the incremental energy production from each
repowered wind facility will be credited to customers and 10 percent will be assigned to the
Company.The Parties agree that the RTM will pass that 10 percent of the NPC benefits of the
wind repowering project,that would otherwise be assigned to the Company through the ECAM,
back to customers.Thus,customers will receive 100 percent of the benefit of the incremental
energy produced by the repowered fàcilities.The Parties further agree that 100 percent of the full
gross-up pre-tax value of all the PTCs generated by each repowered facility will be credited to
customers through the existing ECAM,consistent with the current treatment of PTCs.The Parties
further agree that there will be no return on any deferred tax assets that may be created as a result
of the Company's inabilityto contemporaneously monetize PTCs to full value.The Cotnpany will
begin deferring the costs and benefits associated with the wind repowering activity for each
repowered wind facility in the first month following its in-service date,until those costs and
CASE NO.PAC-E-17-06
STIPULATION -Page 3
benefits are includedin base rates through a general rate case.The parties agree that a 10.4 percent
pretax rate of return on investment will be utilized in the RTM calculation.This equatesto an after
tax return on investment of 6.45 percent.Following the next general rate case or federal tax rate
changecase,the retum on the net plant balance will be consistent with the rate of retum authorized
by the Commission in that case.The parties reserve all rights to challenge the rate of retum in
future rate cases.
9.The Parties agree that the Company will maintain a cap in the RTM until the next
general rate case,and evaluate the need and use of the RTM,including the cap,in the next general
rate case.In any event,continuationof a cap would not exceed the eligibility timeframe for PTCs.
Additionally,Parties agree that any annual surcharge to customers from the RTM will be matched
to the annual credit that results from the benefits derivedfrom wind repowering that flow through
the Company's ECAM,and that there will be no incremental surcharge through the RTM beyond
any such credited amounts untilthe re-evaluationin the next general rate case.The evaluationof
the continued need and use of the cap for the RTM in the next general rate case will consider
whether the Company would recover the prudently-incurredcosts of the repoweringproject.
10.The Parties agree that the Company will bear a)the risks related to any portion of
the wind repowering project that does not qualifyfor PTCs due to completion delays beyond the
timelines associated withthe five-percent safeharbor,and (b)any unexpected loss of PTC benefits
for not qualifyingunder the 80/20 test requirements,that are within the Company's control.
11.In each ECAM filing until base net power costs are reset either in the next general
rate case or in another appropriate proceeding,the Company will report the net power cost and
PTC benefits associated with the wind repowering project and Parties'support of this Stipulation
CASE NO.PAC-E-17-06
STIPULATION--Page 4
does not waive their right to contest these costs or benefits when the Company seeks recovery of
such items in the Company's next ECAM or general rate case.
12.The Parties agree that,at the time the assets replaced by repowering are removed
from service,the Company will record the unrecovered investment in replaced wind equipment in
accumulated depreciation reserve.The Company's accounting system will be able to report the
balance of these assets as they are depreciated.The Parties acknowledge that until the Company
performs its next depreciation study and implements the rates from that study,no depreciation will
occur on the replaced assets.The Company will track the depreciation expense associated with
the new assets and compare that amount to the depreciation expense associated with the replaced
assets that is currently recovered through retail rates.The net depreciation expense will be
included in the RTM as described in the direct testimony of Jeffrey K.Larsen at pages 9-10 and
Exhibit 11.Parties may make proposals regarding the recovery period of these replaced assets in
the Company's next depreciation study,but agree not to contest the inclusion of unamortized
balances as a component of rate base in the Company's next general rate case.
13.The Parties agree that the Company will file a report on the dispositionof the assets
replaced by repoweringand the salvage valueor other customer benefits realized and,if applicable,
credited to the accumulated depreciationreserve,at the time of the Company's first general rate
case after repowering,or its application for approval of the ECAM filed in 2021,whichever is
earlier.As a component of the report,the Company will detail the adjustments recorded to
accumulated depreciation reserve for each facility.
14.The Parties agree that the Company must demonstrate in its report,referenced in
paragraph 13 above,that it has acted in good faith to timelydispose of the replaced assets and
CASE NO.PAC-E-17-06
STIPULATION-Page 5
maximize the salvage value or other customer benefits from the replaced assets.Failure of the
Company to act in good faith may affect cost recovery and return on remaining replaced assets.
The Company will include and track actual salvage value realized through the sale and disposition
of repowered replaced assets in the RTM.
15.The Company will include the actual costs and benefits it incurs for repowering in
the RTM,and parties will have the opportunity to verify these costs and benefits as part of the
annual audit of the ECAM deferred balance.Althoughthe Parties agree that the Commission
should find that the Company's decision to repower its wind facilities is prudent and in the public
interest,the Parties agree that a party may challenge the prudence of actual costs and benefits
incurred in implementing the wind repoweringprojectwhen the Company seeks recovery of those
costs in a later proceeding.The Parties agreethat the Company will include the costs and benefits
that are tracked in the RTM in its quarterly ECAM filing updates beginning after the in-service
date of the first facility to complete repowering.
16.If there is a material change in circumstance,such as changes to federal tax laws,
change in the projected costs or benefits,or for some other reason,the Parties agree that the
Company will make a filing with the Commission to allow for additional review and a
determination of whether the Company should proceed with the implementation of the wind
repowering project under the terms and conditions of this Stipulation.
17.The Parties agree to reconvene and to reconsider and amend the terms and
conditions of this Stipulation if the Company executes and obtains approval of a settlement
agreement with parties in either Utah Docket No.17-035-39 or Wyoming Docket 20000-519-EA-
17 and those settlement agreements include more favorableterms and conditions for customers,
CASE NO.PAC-E-17-06
STIPULATION--Page 6
recognizingthat differences exist in current regulatorytreatment or mechanisms between the states
that will impact any settlement structure achieved in other states,than those set forth in this
Stipulation including,without limitation,a lower overallrate of return on the new investment.If
after reconvening,the overall the terms of a settlement agreement reached and approved in either
Utah or Wyoming is more favorable than the agreement reached herein,the Company will file
with the Commission to align the overall outcome of this Stipulationwith the other states.
IV.GENERAL PROVISIONS
18.The Parties agree that this Stipulationrepresents a compromise of the positions of
the Parties on all issues in this proceeding.Other than the above-referenced positions and any
testimony filed in support of the approval of this Stipulation,and except to the extent necessary
for a Party to explain before the Commission its own statements and positions regarding this
Stipulation,all negotiations relating to this Stipulation are not admissible as evidence in this or
any other proceeding.
19.The Parties submit this Stipulation to the Commission and recommend approval in
its entirety under IDAPA 31.01.01.274.The Parties will support this Stipulation before the
Commission,and no Party may appeal any portion of this Stipulationor Order approvingthe same.
If this Stipulation is challenged by any person not a party to the Stipulation,the Parties to this
Stipulation reserve the right to cross-examine witnesses and present a case as they deem
appropriate to respond fully to the issues presented,including the right to raise issues that are
incorporated in the settlement embodied in this Stipulation.Notwithstanding this reservation of
rights,the Parties to this Stipulation agree that they will continue to support the Commission's
adoptionof the terms of this Stipulation.
CASE NO.PAC-E-17-06
STIPULATION -Page 7
20.If the Commission rejects any part or all of this Stipulation,or imposes any
additional material conditionson approval of this Stipulation,each Party reserves the right,upon
written notice to the Commission and the other Parties to this proceeding,within 15 days of the
date of such action by the Commission,to withdraw from this Stipulation.In such case,no Party
will be boundor prejudicedby the terms of this Stipulation,and each Party will be entitled to seek
reconsideration of the Commission's order,file testimony as it chooses,cross-examine witnesses,
and do all other things necessary to present a case as it deems appropriate.
21.The Parties agreethat this Stipulationis in the public interest and that all of its terms
and conditions are fair,justand reasonable.
22.No Party will be bound,benefited or prejudiced by any position asserted in the
negotiationof this Stipulation,except to the extent expressly stated herein,nor will this Stipulation
be construed as a waiver of the rights of any Party unless such rights are expressly waived herein.
Execution of this Stipulation will not be deemed to constitute an acknowledgment by any Party of
the validity or invalidity of any particular method,theory or principle of regulation or cost
recovery.No Party will be deemed to have agreed that any method,theory or principle of
regulationor cost recovery employed in arriving at this Stipulation is appropriate for resolvingany
issues in any other proceeding in the future.No findings of fact or conclusions of law other than
those stated herein will be deemed to be implicit in this Stipulation.
23.The obligationsofthe Parties under this Stipulationare subject to the Commission's
approval of this Stipulation in accordance with its terms and conditions and,if judicial review is
sought,upon such approvalbeing upheld on appeal by a court of competent jurisdiction.
24.The Parties agree to waive their rights to testify at the technical heating scheduled
for December 7,2017,and respectfully request that this Application and associated Stipulationbe
CASE NO.PAC-E-17-06
STIPULATION -Page 8
processed under Modified Procedure,i.e.,by written submissions rather than by hearing.RP 201
et.seq.In accordance with RP 121(d).If however the Commission determines that a technical
hearing is necessary the Parties stand ready to present testimony in support of this Stipulation.
CASE NO.PAC-E-17-06
STIPULATION -Page 9
Respectfully submitted this 21 day of November,2017.
Rocky Mountain Power PacifiCorp Idaho Industrial Customers
By
IdahoPublic Utilities Commission Staff Monsanto Company
By BY
Idaho Irrigation Pumpers Association Inc.
By
CASE NO.PAC-E-17-06
STIPULATION--Page 10
Respectfully submitted this 21"day of November,2017.
Rocky Mountain Power PacifiCorp Idaho Industrial Customers
Idaho Public Utilities Commission StatT Monsanto Company
BY By
Idaho Irrigation Pumpers Association Inc.
CASE NO.PAC-E-17-06
STIPULATION-Page 10
Respectfully submitted this 21"day of November,2017.
Idaho Industrial Customers
Idaho Public Utilides com n Staff MonsantoCompany
Idaho Irrigation Pumpers Association Inc.
BY
CASE NO.PAC-E-17-06
STIPULATION-Page 10
Respectfully submitted this 21 day of November,2017.
Rocky MountainPower PacifiCorp Idaho Industrial Customers
By
Idaho Public Utilities Commission Staff MonsantoCompany
By By Ú *
Idaho Irrigation Pumpers Association Inc.
BY
CASE NO.PAC-E-17-06
ST1PULATION -Page 10
Respectfidly submitted this 21 day of November,2017.
Rocky Mountain Power PaciñCorp Idaho Industrial Customers
By
Idaho PubHe UtRities Commission Staff MonsantoCompany
By By
CASE NO.PAC-E-17-06
STIPULATION-Page 10
CERTIFICATE OF SERVICE
I hereby certify that on this 24*of November,2017,I caused to be served,via e-rnail a
true and correct copy of Rocky MountainPower's Stipulation in Case No.PAC-E-17-06 to the
following:
Service List
IDAHO IRRIGATION PUMPERS ASSOCIATION INC.
Eric L.Olsen Anthony Yankel
ECHO HAWK &OLSEN,PLLC 12700 Lake Avenue,Unit 2505
505 Pershing Ave.,Ste.100 Lakewood,Ohio 44107
P.O.Box 6119 E-mail:tonv vankel.net
Pocatello,Idaho 83205
E-mail:elo@echohawk.com
MONSANTO COMPANY
Randall C.Budge Brubaker &Associates
Racine,Olson,Nye &Budge,Chartered 16690 Swingley Ridge Rd.,#140
P.O.Box 1391;201 E.Center Chesterfield,MO 63017
Pocatello,Idaho 83204-1391 E-mail:bcollins consultbai.com
E-mail:reb à racinelaw.net kiversonEconsultbai.com
IDAHO INDUSTRIAL CONSUMERS
Ronald L.Williams Jim Duke
Williams Bradbury,P.C.Idahoan Foods
P.O.Box 388 E-mail:iduke idahoan.com
Boise ID,83701
E-mail:ron williamsbradburv.com
Kyle Williams Val Steiner
BYU Idaho Nu-West Industries,Inc.
E-mail:williamsk bvui.edu E-mail:val.steineriaerium.com
Bradley Mullins
333 SW Taylor,Suite 400
Portland,OR 97204
E-mail:brmullins mwanalvtics.com
COMISSION STAFF
Brandon Karpen
Deputy AttorneyGeneral
Idaho Public Utilities Commission
472 W.Washington (83702)
PO Box 83720
Boise,ID 83720-0074
E-mail:brandon.karpen puc.idaho.cov
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PACIFICORP,DBA ROCKY MOUNTAIN POTVER
Ted Weston Yvonne Hogle
PacifiCorp,dba Rocky MountainPower PacifiCorp,dba Rocky MountainPower
1407 West North Temple 1407 West North Temple
Suite 330 Suite 320
Salt Lake City,UT 84116 Salt Lake City,UT 84116
E-mail:ted.westonúspacificorp.com E-mail:vvonne.hoe1eúbpacificorp.com
Data Request Response Center
PacifiCorp
825 NE Multnomah,Suite 2000
Portland,OR 97232
E-mail:datarequestGioacificorp.com
Dated this 24*day of November,2017.
Kaley McNay
Senior Coordinator,Regulatory Operations
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