20200721Comments.pdf

ROCKY MOUNTAIN
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1407 West North Temple, Suite 330
Salt Lake Ci$, Utah &4116
July 21,2020
VU ELECTRONIC FILING
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
I l33l W. Chinden Blvd.
Building 8 Suite 20lA
Boise,ID 83714
Re:CASE NO. PAC.E-T8.08
IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER
FOR AUTHORIZATION TO CHANGE DERECIATION RATES APPLICABLE
TO ELECTRIC PROPERTY
Attention: Ms. Hanian
Please find enclosed for filing Rocky Mountain Power's comments provided in support of the
Stipulation between the Stipulating Parties in the above-referenced matter.
lnformal inquiries may be directed to Ted Weston, Idaho Regulatory Manager at (801) 220-
2963.
Very tmly yours,
Vice President, Regulation
CC:
Terri Carlock
Dayne Hardie
Ben Otto
Eric Olsen
Randy Budge
Ron Williams
D. Matthew Moscon
Stoel Rives LLP
201 South Main Street, Suite I100
Salt Lake city, utah 841I I
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
Emily Wegener (pro hac vice)
Rocky Mountain Power
1407 WestNorth Temple #320
Salt Lake City, UT 841l6
Telephone : (80 l) 220 -4 526
Email : Emi ly.We gener@pacifi corp.com
Attorneysfor Roclry Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF ROCKY MOUNTAIN POWER FOR
AUTIIORIZATION TO CHAI\IGE
DERECIATION RATES APPLICABLE
TO ELECTRIC PROPERTY
CASE NO. PAC.E.18.O8
RMP COMMENTS SUPPORTING
THE STIPULATION ON
DEPRECIATION RATE CHAI\IGES
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Pursuant to the Notice of Proposed Settlement, Notice of Modified Procedure, and
Notice of Comment Deadlines issued by the Idaho Public Utilities Commission
("Commission") on June 30, 2020, Rocky Mountain Power a division of PacifiCorp
("RMP" or the "Company") hereby submits comments supporting the Stipulation on
Depreciation Rate Changes ("Stipulation") filed on June 15,2020, in the above-captioned
matter.
L PROCEDURAL BACKGROUND
l. On September ll, 2018, Rocky Mountain Power filed an Application
requesting authorization to update depreciation rates effective January 1,2021. As part of
the Application, Rocky Mountain Power filed direct testimony of Nik'ki Kobliha, Steve
I
McDougal, John Spanos, Chad Teply, and Tim Hemstreet.
2. A study recommending updates to the depreciation rates ("Depreciation
Study") for all depreciable plant accounts was filed as Exhibit No. 2 to Mr. Spanos'
testimony. The Depreciation Study as filed would have resulted in an increase in annual
depreciation expense of approximately $14.1 million on an Idaho basis, based on projected
plant balances as of December 31,2020.In addition, the proposed ending of excess reserve
amortizations would have resulted in an increase of approximately $3.2 million on an Idaho
basis. Additionally the incremental rate increase from the 2013 depreciation study
increases the depreciation expense by approximately $2.0 million on an Idaho basis.
Combined, these proposed changes increase Idaho's jurisdictional depreciation expense by
approximately $ I 9.3 million.
3. The Company conducted and filed the depreciation study to meet a
Commission-ordered requirement, and because it is a prudent accounting practice.
Periodically depreciation rates should be updated to recognize additions to investment in
plant assets and to reflect changes in asset characteristics, technology, salvage, removal
costs, life span estimates, and other factors that impact depreciation rate calculations.
4. The Company's last depreciation study was conducted approximately five
years ago. The Commission authorized the Company's current depreciation rates on
November 18,2013, with rates effective January 1,2014.1
5. Order 329102 authorized the creation of a regulatory asset for the Company
to defer the aggregate net increase in Idaho allocated depreciation expense for the period
I In the Matter of the Application of PaciJiCorp DBA RoclE Mountain Power to Change the Depreciation
Rates Applicable to lts Electric Property. Case No. PAC-E-I3-02, Order No. 32926.
2 In the Matter of the Application of PacifiCorp, DBA, RoclE Mountain Power to Initiate Discussions With
Interested Parties on an Alternative Rate Plan Proposal, PAC-E- I 3-04, Order No. 32910.
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beginning on January l, 2014, until the date that the depreciation rates were reflected in
customer rates. The Company has not had a general rate case since that order to include
the incremental depreciation expense in customers' rates.
6. The Company and the Stipulating Parties have jointly engaged in numerous
and significant good faith, arms-length negotiations in an effort to resolve the issues raised
in this case, including meetings with parties in the depreciation proceedings in Oregon,
Utah, Wyoming, and Washington. Several meetings were held between November 2018
and February 2020, which resulted in the Stipulation that was filed with the Commission
onJune 15,2020.
7. On January 17, 2020, Rocky Mountain Power filed supplemental
information relating to a January 15,2020 Confidential Decommissioning Study that it
commissioned. Then on March 16, 2020, Rocky Mountain Power filed supplemental
information relating to a March 15,2020 Confidential Colstrip Decommissioning Study
(together the " 2020 Decommissioning Studie s").
8. In June 2020 the Company was able to reach an agreement with all the
Parties to this case other than the Sierra Club, and on June 15,2020, the Company filed the
Stipulation with the Commission.
II. CORRECTION TO STIPULATION
9. While preparing comments the Company identified an error in the
Stipulation. The first sentence of Paragraph l7 of the Stipulation states:
The Stipulating Parties agree that the Company will defer the change in
depreciation expense from current rates, a total of $13,940,303, for one
year through December 31,2020.
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That sentence should read:
The Stipulating Parties agree that the Company will defer the change in
depreciation expense from curent rates, a total of $13 ,940,303, for one
year through December 31,2021.
10. If the Commission approves the Stipulation the new depreciation rates
would not be effective until January 1,2021. During calendar year 2021the incremental
depreciation expense from the new depreciation rates will increase expense approximately
$13,940,303 on an Idaho allocated basis. This is the depreciation expense Stipulating
Parties agreed to support defenal of in the Stipulation. In the haste of all the signing Parties
to prepare and file this Stipulation with the Commission no one identified or corrected this
typo.
I 1. The Company is providing a replacement page as Attachment I that corrects
the date in the Stipulation, and respectfully requests that the Commission replace page 7 of
the Stipulation with Attachment l. With that correction the Company supports the
Stipulation as filed and recommends that the Commission approve the depreciation rates
provided with the Stipulation as Attachment 3 - Consolidated Depreciation Rates.
III. RECOMMENDAPPROVINGSTIPULATION
12. The Stipulating Parties agree that the Depreciation Study should be
approved, subject to the adjustments agreed to by the Parties. These adjustments total
approximately $86.6 million on a total Company basis and were summarized in the
Stipulation and included in Table l.
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TABLE 1
13. The largest adjustment was removal of the Cholla plant from the
Depreciation Study, resulting in a reduction to the amount requested in the Application of
approximately $71.8 million, total Company. The next largest adjustment to the study is
attributed to changes to the transmission rates, totaling approximately $12.1 million, total
Company, which was driven by the agreement to extend the lives between two to five years
for all but two of the transmission FERC accounts along with decreasing the net salvage
values for most of the accounts. The Stipulating Parties also recommended changing the
Iowa curves for three distribution FERC accounts, resulting in an estimated reduction to
Idaho's distribution depreciation expense of approximately $225,000.
14. Minor adjustments were also made to the rate for FERC account 331 -
Hydro Structures due to changing the net salvage from negative 30 percent to negative
25 percent which decreased total Company annual depreciation expense by approximately
$33,000. The Iowa curve for FERC account 343 - Prime Movers was changed from 50-40
to Rl-50, reducing total Company depreciation expense approximately $71,000. These
reductions were partially offset by including the Naughton Unit No. 3 gas conversion in
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Totrl Comprny Dcptrdruon
REl'!SED
PROPOSED
DIFFERETCE
EXISTING PROPOSEO REVISED
PROPOSEDDclcrip0on
A B c (c-A)
245p23,fil
29,943,661
163,1 12 .102
130,435,713
23,248,951
82,950,370
r 0,153,988
78.491,062
19,414,887
30,467,68r
203,786,985
139.796,277
21,881 ,003
83,@8,150
,0,163,756
79,683,914
24,0&1,5@
348,028,372
30,434,825
203.t 15 ,719
127,733,460
21,0't5,097
80,819,816
9,938,755
79,683,914
23,994,765
102, 105,005
491,164
40,603,617
(2,102,253
(2.233.854
(2,130,554
(5r 5,233
1,'t92,852
4,579,879
12,432
Transm rss ion
eneral Plant
ion - Wyoming
ion - Utah
ion - ldaho
ion - PP Stales
Ch.lrom
tot 1,012,07t,708
the Depreciation Study, which increased total Company depreciation expense by
approximately $748,000.
15. The Stipulating Parties agreed to remove Cholla Unit 4 from electric plant
in-service as of December 31, 2020. On July 2,2020 the Company filed an application
requesting deferral of the unrecovered plant balances, decommissioning, and other closing
costs for parties' review and Commission approval. 3
16. When the Depreciation Study was prepared, the Company hadn't made the
decision to convert Naughton Unit 3 from a coal-fired generation unit to a gas-fueled
generation unit. After the filing, the Company finalized the decision to proceed with the
gas conversion of Naughton Unit 3. The Stipulating Parties agreed to include the costs of
the gas conversion in the Depreciation Study, which increases annual depreciation expense
by approximately $748,000.
17. The total Company and ldaho jurisdictional impacts of the stipulated
changes relative to existing depreciation rates are shown in Attachment 2 filed with the
Stipulation and summarized in Table 2 below.
TABLE 2
Descrlpdon Allocaton
Factor Total Change Allocated
3 In the Matter of the Application of Roclgt Mountain Powerfor Authority to Increases lts Rates and
Charges in ldaho and Approval ofProposed Electric Service Schedules and Regulation& Case No. PAC-E-
20-03.
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UT toWY
SG
SG
SG
SG
VVY
UT
ID
(71,084,060)
(32ass1
(71,265)
(12,m,817)
(865,906)
(2,278,334)
(225,0O1)
(10,7y,346)
(4,e62)
(10,762)
(1,821,se6)
(86s,s06)
(4,421
ydo
(?2s,N1
Various
Various 01 1
(227e,3U)
- ldaho
(30,924,523)
(14,29/.')
(31,004)
(5,247,827)
Other
Transmission
Distributim - Wyorning
Distributim - utah
Distribution - PP States
General Plant
Cha
18. The Depreciation Study included plant-specific estimates of
decommissioning costs supported by Mr. Teply's direct testimony. As part of an agreement
reached with parties in the 2020 PacifrCorp Inter-Jurisdictional Allocation Protocol, the
Company committed to have an independent third party complete a decommissioning study
by January 15,2020.
19. Pursuant to Section 4.3.1.1, Decommissioning Studies, of the 2020
PacifiCorp Inter-Jurisdictional Allocation Protocol, the Company provided the results of
the contractor-assisted engineering study of decommissioning costs for the Jim Bridger,
Dave Johnston, Hunter, Huntington, Naughton, Wyodak, and Hayden coal plants as a
supplemental filing in all states with applicable depreciation dockets.
20. On January 16, 2020, the confidential decommissioning study ("2020
Decommissioning Study"), was filed in all of the pending depreciation dockets in Rocky
Mountain Power's jurisdictions. On March 16,2020, the decommissioning cost study for
Colstrip was also filed with the same parties.
21. The Stipulating Parties request that the Commission establish Phase II in
this proceeding, and establish a scheduling conference to facilitate further review of the
regulatory treatment of the 2020 Decommissioning Studies. The Stipulating Parties will
make all reasonable efforts to complete Phase II in time to allow the Commission to issue
a final order before December 31,2020.
22. The parties have agreed that if terms reached with other parties concerning
depreciation rates vary from the terms of the Stipulation, the Stipulating Parties will meet
and discuss the different terms and one or more Stipulating Party may request that the
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Commission revisit the Stipulation to incorporate such term if it is more favorable to
customers.
rv. REQUEST FOR RELIEF
Rocky Mountain Power respectfully requests that the Commission issue an order
approving: (l) the terms and conditions of the Stipulation with the correction noted above;
(2) the depreciation rates provided as Attachment 3 to the Stipulation; (3) new depreciation
ratestobecomeeffectiveJanuary 1,2021;(4)defenalof$l3,940,303duringcalendaryear
2021; and (5) notiffing parties of a scheduling conference for Phase 2 of this proceeding
to provide additional time to further review and determine the regulatory treatment of the
incremental decommissioning costs included in the 2020 Decommissioning Study.
DATED this 2l$ day of JuIy,2020.
Respectfu lly submitted,
ROCKY MOUNTAIN POWER
Emily Wegener Qtro hac vice)
1407 West North Temple, Suite 320
salt Lake city, utah 841l6
Telephone No. [phone]
Mobile No. [phone]
Email: [e-mail]
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ATTACHMENT 1
Stipulation Replacement Page
with those in the Application, excluding the resolution of the Phase II issue identified
below.
17. The Stipulating Parties agree that the Company will defer the change in
depreciation expense from current rates, a total of $13,940,303, for one year through
December 31,2021. This amount is comprised of the Idaho jurisdictional allocation of
$8.7 million for the Depreciation Study, $3.2 million of excess reserve amortizations in
rates that end as of the effective date of the Depreciation Study, and $2.0 million for the
incremental increase from the 2013 depreciation study not yet reflected in rates. The
Company will defer $1,161,692 ($13,940,303 I 12) each month in a regulatory asset
account for recovery to be determined in the Company's next general rate case. No
carrying charge will be applied to the regulatory asset during the deferral period until the
next general rate case. A carrying charge or rate base treatment and the amortization period
will be determined in the Company's next general rate case. The depreciation expense
tracked in the RTM will be calculated using the depreciation rates provided in Case No.
PAC-E-13-02, Order No.32926, to eliminate any double counting. The Company will stop
defening incremental depreciation expense from PAC-E-13-02 currently recovered in the
ECAM effective December 31,2020, because this incremental depreciation expense is
included in the $13,940,303 referenced above.
18. The Stipulating Parties request that the Commission establish Phase II in
this proceeding, and establish a scheduling conference to facilitate further review of the
regulatory treatment of the 2020 Decommissioning Studies. The Stipulating Parties will
make all reasonable efforts to complete Phase II in time to allow the Commission to issue
a final order before December 31,2020.
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