20201028Phase II Stipulation Comments.pdf

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October 28,2020
VIA ELECTRONIC DELIWRY
Jan Noriyuki
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd.
Building 8 Suite 20lA
Boise,ID 83714
Re:CASE NO. PAC.E.18.O8
IN TI{E MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER
FOR AUTHORIZATION TO CHANGE DERECIATION RATES APPLICABLE
TO ELECTRIC PROPERTY
Attention: Ms. Noriyuki
Please find enclosed for filing Rocky Mountain Power's comments in support of the Phase II
Stipulation filed in the above-referenced matter addressing decommissioning costs.
Informal inquiries may be directed to Ted Weston, Idaho Regulatory Manager at (801) 220-
2963.
Very truly yours,
"^..D
Vice President, Regulation
CC:
Terri Carlock
Dayne Hardie
Ben Otto
Eric Olsen
Randy Budge
Ron Williams
Emily Wegener
Rocky Mountain Power
1407 WestNorth Temple #320
Salt Lake city, uT 84116
Telephone : [phone]
Email: Emily.Weeener@pacifi corp.com
Attorneyfor Roclry Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMI\flSSION
IN TIIE MATTER OF THE APPLICATION
OF ROCKY MOUNTAIN POWER FOR
AUTHORIZATION TO CHANGE
DEPRECIATION RATES APPLICABLE
TO ELECTRIC PROPERTY
CASE NO. PAC.E-1848
ROCKY MOUNTAIN POWER'S
COMMENTS SUPPORTING THE
PHASE II STIPULATION
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Rocky Mountain Power, a division of PacifiCorp (the "Company"), submits the
following comments on the Phase II Stipulation.
I. PROCEDURAL BACKGROUND
l. On September ll, 2018, Rocky Mountain Power filed an application
requesting Commission approval the Company's proposed changes to its depreciation rates
for electric plant. Included in those depreciation rates was an estimate of decommissioning
costs.
2. Pursuant to Section 4.3.1.1 - Decommissioning Studies, of the 2020
PacifiCorp Inter-Jurisdictional Allocation Protocol, (*2020 Protocol"), the Company
committed to complete a contractor-assisted engineering study of decommissioning costs
for its coal plants.
3. On January 17, 2020 and March 16, 2020, Rocky Mountain Power filed
supplemental information relating to the 2020 Confidential Decommissioning Studies,
(*2020 Decommissioning Studies"). These studies were provided as supplemental filings
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in this and all of PacifiCorp's other applicable depreciation dockets.
4. On June 15,2020, the Company filed a proposed Settlement Stipulation
("Sefflement Stipulation") for Phase I. In the Settlement Stipulation, the parties agreed:
1) Idaho's incremental change in depreciation expense from current rates should be
$13,940,303 annually; 2) the incremental increase would be deferred for one year
beginning January 1,2021through December 31,2021; and 3) the Commission should
establish Phase [I under this docket to facilitate further review of the regulatory treatment
of the 2020 Decommissioning Studies.
5. On August 18,2020, the Commission issued Order No. 34754 approving
the Settlement Stipulation and authorizing Phase II to evaluate incremental
decommissioning costs and ratemaking treafinent alternative s.
6. On September 15, 2020, a technical conference call was held where parties
were able to ask questions about the 2020 Decommissioning Studies and express their
positions. The technical conference was followed by a settlement conference call on
September 22,2020 where the Stipulating Parties reached agreement on treatment of the
incremental decommissioning costs identified in the2020 Decommissioning Studies.
7 . On October 8,2020, the Company filed the Phase II Stipulation signed by
all Parties to the case, with the exception of the Sierra Club. The Phase II Stipulation
addressed the treatment of the incremental decommissioning costs identified in the 2020
Decommissioning Studies.
II. COMMENTS
8. The Company supports the Phase II Stipulation as a fair, just and reasonable
compromise to the issues raised by the Parties and believes it is in the public interest.
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9. As part of the Multi-State Process the Company committed to conduct a
thorough study of decommissioning and site reclamation costs for certain coal-fueled
generation resources.
10. The 2020 Decommissioning Studies were performed by independent
engineering consultant Kiewit Engineering Group Inc., with input from the Company and
independent contractors with direct experience decommissioning coal-fueled facilities and
site reclamation. The studies included review and input from an independent demolition
contractorNorth American Dismantling Corporation and independent hazardous materials
abatement contractors Winter Environmental and ARC Abatement. Two additional
independent demolition contractors, Bierlein Companies, Inc. and Brandenburg lndustrial
Service Company, also reviewed the 2020 Decommissioning Studies results.
11. The scope of work for the 2020 Decommissioning Studies included the
following requirements: (1) provide an owner-informed, overall decommissioning design
basis to be used for all of the generating facilities in the study. The design basis established
the fundamental assumptions for the cost estimates provided in the final 2020
Decommissioning Studies; (2) provide a Class 3 cost estimate to identiff all of the costs
for the decommissioning, demolition, reclamation, and remediation of the Hunter,
Huntington, Dave Johnston, Jim Bridger, Naughton, Wyodak, and Hayden, and Colstrip
generating facilities; (3) provide a narrative report describing the entities involved, process
used to prepare the report, and assumptions; (4) provide a spreadsheet report incorporating
the Association for the Advancement of Cost Engineering ("AACE")l Class 3 cost
estimates inclusive of certain owner provided Asset Retirement Obligation ("ARO") cost
t AACE is a 501(c)(3) non-profit professional association founded in 1956 that offers publications, practice
guides, education, certification and recommended practices for cost estimating.
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estimates as verified by the third-party study provider; and (5) provide cost estimates based
on fourth quarter 2019 dollars.
12. The Stipulating Parties agreed that Idaho's incremental decommissioning
costs based on the 2020 Decommissioning Studies is 52,291,178 per year. The Stipulating
Parties agree that the Company will defer ldaho's incremental change in decommissioning
expense of $2,291,178, for one year beginning January l,2o2l through December 31,
2021. The Company will defer $190,931.50 ($2,291,178 / 12) each month in a regulatory
asset account for recovery in the Company's next general rate case. No carrying charge
will be applied to the regulatory asset during the deferral period.
13. The Stipulating Parties agreed the $2,291,178 deferral will be amortized
over fifteen years beginning with the rate effective date of the Company's next general rate
case. A carrying charge or rate base treatment will be determined in the Company's next
general rate case.
14. The Stipulating Parties agreed that the Company will provide quarterly
updates on the 2020 Decommissioning Studies beginning after the quarter ending
December 31, 2020, until the Company files its next general rate case. The quarterly
updates will report on any actions in other states related to the 2020 Decommissioning
Studies. In addition to the quarterly updates the Stipulating Parties will convene to discuss
alternative rate treatment options before the next general rates case.
COMPAI\Y RECOMMENDATION
The 2020 Decommissioning Studies are the most accurate and current estimate the
Company has of the cost to decommission its coal plants. The Company supports the Phase
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II Stipulation as a reasonable compromise of the issues raised by the Parties and believes
it is a fair, just, and reasonable solution in the interest of Idaho customers.
Respectfully submitted this 28ft day of October,2020.
ROCKY MOUNTAIN POWER
Emily
Rocky Mountain Power
407 WestNorth Temple #320
Salt Lake City, UT 84116
Telephone : (801\ 220-4526
emilv.We gener@pacifi corp.com
Attorneyfor Roclry Mountain Power
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