20120319Comments.pdf

Randall C. Budge, ISB No. 1949
Thomas J. Budge, ISB No. 7465
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
P.O. Box 1391; 201 E. Center
Pocatello, Idaho 83204-1391
Telephone: [phone]
Fax: [phone]
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20'2 Mf\R 19 AM 9: 05
Attorneys for Intervenor Monsanto Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF ROCKY)
MOUNTAIN POWER FOR AUTHORITY TO )
INCREASE RATES BY $2.6 MILLION TO RECOVER )
DEFERRD NET POWER COSTS THROUGH THE )
ENERGY COST ADJUSTMENT MECHANISM )
)
Case No. PAC-E-12-03
MONSANTO COMMENTS
INTRODUCTION
Comes now Intervenor Monsanto Company ("Monsanto"), by and through counsel, and
submits these comments with regard to the Application of Rocky Mountain Power (the
"Company" or "RMP") to increase rates by $2.6 milion to recover deferred net power costs
through the Energy Cost Adjustment Mechanisms ("ECAM"). Since this is the first period
where both Monsanto and Agrium are subject to the ECAM, it is importt that both the
revenues requested and the determination of Monsanto's share of ECAM be reviewed
thoroughly. These comments will explain Monsanto's issues of concern and provide corrections
to the fiing we ask the Company to consider making. If these issues can be adequately resolved
among all paries to this case, including the Staff of the Idaho Public Utilities Commission
("Commission"), then Monsanto is willng to enter into a stipulation with all paries to expedite
MONSANTO COMMENTS - 1
the outcome of this case. However, if agreement is not attained, then Monsanto respectfully
requests the Commission set a hearing, take testimony and decide the issues presented.
MONSANTO ISSUES
1. Losses In Base Load and Actual Load
RMP has applied an extraordinarily higher transmission loss factor to Monsanto and
Agrium's Base Load sales than was applied to their Actual Load sales. Specifically, RMP
applied a loss factor of approximately 9.885% to Monsanto and Agrium Base Loads, but then
applied a loss factor of 4.543% to Actual sales at meter. This huge discrepancy in losses causes
the Base Loads to be arbitrarly higher which unfairly raises the Load Change Adjustment
Revenues attributable to Monsanto and Agrum. This difference is fuher is exacerbated if the
4.543% loss factor is corrected downward to 3.605% for the Januar through November 2011
months.
Monsanto believes the extraordinarly high discrepancy between the transmission loss
factors for Actual and Base Loads staring in Janua 2011 was inadvertent by RMP. A review
of their work papers filed in this case shows that for the colum marked "PAC-E-08-07" for
"Dec 08", the Company used a transmission loss factor of 4.543% for both the Actul Loads and
the Base Loads. i Monsanto believes that RMP should continue to use similar transmission
losses for both Actual and Base Loads for the Januar through December 2010 time period.
Monsanto proposes a 3.605% transmission loss factor be used to determine sales at input
for both Monsanto and Agrium Base Loads and Actual Loads for the months of Januar through
i See RM's electronic fiing of Exhibit 1 spreadsheet entitled, "Exhibit l_ID ECAM (DeclO-Novl l)CONF.xlsx"
and in paricular, the sheets "ID Actual Loads" and "ID Base Loads".
MONSANTO COMMENTS - 2
November 2011. This was the transmission loss factor presented in Case No. PAC-E-1O-07.
With this correction, Monsanto and Agrium's Load Differentials reflect a more exact difference
between Base Loads and Actual Loads, without the distortion caused by radically different loss
factors. The deferral impact of setting losses for transmission at 3.605% for both Base Load and
Actual Load is as follows:
TABLE 1.
Correction of Transmission Losses
Tarff Customers
Monsanto (I)
Agrium (I)
$722,655
($659,725)
($49,805)
(I) Prior to thee-year amortization
2. Treatment of Replacement Energy
Monsanto is concerned with how the Company handles Monsanto "replacement energy"
in the ECAM calculations. As background, when Monsanto opts to buy-though an economic
curilment hour rather than physically curtail its 67 MW electrc phosphorous fuace, that
energy is labeled as "replacement energy" as it "replaces" what would have been curled in that
hour. This energy is sometimes also referred to as "buy through". The cost of acquiring the buy-
though energy is a pass-though directly to Monsanto and is priced at an independent third-pary
index market price adjusted by a set of hourly load shaping scalars which Monsanto pays fully
on its monthly invoice. The price for replacement energy is intended to recover all Company
expenses incured to deliver replacement energy, and thus replacement energy should not be
subject to the ECAM.
In fact, RMP's supporting work papers do show the Company removed the replacement
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energy from Monsanto Base Load, however, RMP failed to remove replacement energy from
Monsanto Actual Load on line 7 in the month of November 2011. In that month, Monsanto
purchased 9,021 MWh (at meter) of replacement energy which should have been excluded from
the actual sales for puroses of determining the ECAM? The deferral impact of removing
replacement energy from Monsanto's November 2011 actual sales is as follows:
TABLE 2.
Correction of Actual Loads
for Replacement Energy
Tarff Customers
Monsanto (I)
Agrium (I)
($647)
($13,821)
($45)
(I) Pror to thee-year amortization
3. Wind Integration Costs for Wholesale Wheeling Customers
PacifiCorp failed to make an adjustment to remove wind integration costs for wholesale
wheeling customers from the ECAM adjusted actual NPC. For example, pages 28 and 29 of
Order No. 32196 from Case No. PAC-E-10-07 include several pertinent paragraphs discussing
wind integration costs:
Monsanto contends fuher that RMP should not be allowed to recover wholesale
wheeling customer wind integration costs from retail customers though the
ECAM. The Company has included wholesale wheeling customer wind
integration costs in NPC, Monsanto contends, because PacifiCorp failed to
request an adjustment to its Open Access Transmission Tarff (OATT) so that
2 In the Company's work papers, Actual Tarff Customer Load is calculated as a residual or fall out (Total Load less
Monsanto less Agrur). Thus, if replacement energy is removed Monsanto's line, it reappears in the Tarff
Customers Loads simply as a mathematical result. Consequently, Monsanto has removed the replacement energy
(plus losses) from the November 201 1 Actual Total Idaho Jursdictional Load to avoid this mathematical error. This
same tye of residual treatment is also found in the Company's work papers for the Tarff Customer Base Load and
should be examined as to its appropriateness, The $722,655 impact shown in Table 1 above for Tarff Customers
would decrease to $582,829 if replacement energy is removed from the Total Base Load..
MONSANTO COMMENTS - 4
these costs can be recovered from wholesale wheeling customers. These costs,
Monsanto contends, are not the responsibility of Idaho customers and should be
removed from NPC. (page 28)
* ********** ********** **** *
PUC proposes to remove the inter-hour wind integration costs associated with
integrating non-owned wind projects that are interconnected to the Company's
transmission system because the Company does not have a transmission tariff to
recover the costs from those customers. (page 29)
At page 30 of the Order, the Commission finding states: "We find also that the responsibility for
recovery of wind integration costs from wholesale transmission customers resides with the
Company."
According to the RMP's March 9, 2012 Response to Monsanto Data Request 5, the
Company's latest calculated rate for 2013 is $3.87 per MWh. Monsanto proposes to use this rate
in lieu of the $6.50 rate proposed by PacifiCorp in Case No. PAC-E-10-07. The deferral impact
of removing wholesale customer wind integration costs using the Company's latest wind
integration rate of$3.87 per MWh is as follows:
TABLE 3.
Correction of Wind Integration Costs
Tarff Customers
Monsanto (1)
Agrium (1)
($126,785)
($88,772)
($6,805)
(I) Prior to thee-year amortization
4. Liquidated Damages
The Company's accounting for liquidated damage payments/settlements received from
contractors for performance issues durng planed outages creates a mismatch between costs and
MONSANTO COMMENTS - 5
benefits because of timing differences between Company and customer recovery periods. To
correct this problem payments/settlements should be removed from ECAM adjusted actual NPC.
Contractor performance issues result in the Company incurng replacement power costs
for generation lost due to a delay in placing generation online after an outage. These
replacement power costs are recovered by the Company through the anual ECAM deferraL.
However, the payments received by the Company during the ECAM test year were either
credited to plant or O&M contract costs. Consequently, customers recover the benefit of the
payments recorded to plant over the remaining life of the plant and do not ever recover the
benefit of payments credited to O&M because there is not a mechanism to pass O&M credits
back to customers.
Durng the ECAM test year the Company received $945,000 of payments/settlements for
contractor performance issues. According to RMP's March 14, 2012 Response to Monsanto
Data Request 2, the detail of these payments/settlements is as follows:
. $300,000 for Huntington Unit 1 ($ 150,000 credited to plant in service in July
2011, $150,000 was used as settlement ofa Jim Bridger capital project payment).
. $345,000 was recorded on July 6, 2011 for Wyodak Unit 1 ($276,000 was
credited to capital projects and $69,000 was credited to O&M contract costs).
· $300,000 for Bridger Unit 3 ($150,000 was recorded to plant in service on August
18,2011 and the remaining $150,000 will be reflected as a reduction in prices for
the yet to be established 2012 Bridger Unit 4 boiler overhauL.
The deferral impact of crediting liquidated damage payments/settlements to ECAM
adjusted actual NPC.
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TABLE 4.
Correction of Liquidated Damage
Payments/Settlements
Tariff Customers
Monsanto (I)
Agrium (I)
($49,482)
($20,603)
($1,507)
(I) Prior to three-year amortization
The total deferral impact from all four of these corrections is presented in the following
table:
TABLE 5.
Total Impact of Corrections
Tariff Customers (1)
Monsanto (2)
Agrium (2)
$544,674
($781,206)
($58,089)
(I) No adjustment to Base Load residual calculation. If
Base Load is corrected, this would decrease to $404,849.
(2) Prior to thee-year amortization
CONCLUSION
Monsanto requests that the Company and Staff review issues and proposed corrections presented
above and determine if they can be accepted by stipulation of the paries to permit the
Company's ECAM rate adjustments to be implemented on April 1, 2012 as proposed.
Othewise, Monsanto respectfully requests the Commission set a hearng, take testimony and
decide the issues presented.
MONSANTO COMMENTS - 7
DATED this 17th day of March, 2012.
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
By ~ t'£4~
RANDALL C. BUÓGE
MONSANTO COMMENTS - 8
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on this 1 ih day of March 2012, I served a true, correct and
complete copy of the foregoing document, to each of the following, via the method so indicated:
Jean D. Jewell, Secretary (original and 7)
Idaho Public Utilities Commission
P.O. Box 83720
Boise, ID 83720-0074
E-mail: jjewell(Ðpuc.state.id.us Hand-Delivered 3-19-12
Ted Weston
Rocky Mountain Power
201 South Main, Suite 2300
Salt Lake City, Utah 84111
ted. westoncgacificorp.com
E-Mail
Yvonne Hogle
Rocky Mountain Power
201 South Main, Suite 2300
Salt Lake city, Utah 84111
yvonne.hogle(ipacificorp.com
E-Mail
Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 2000
Portland, Oregon 97232
Fax: [phone]
dataequestcgacificorp.com E-Mail
Neil Price, Deputy AG
Idaho Public Utilities Commission
P.O. Box 83720; 472 W. Washington
Boise ID 83720-0074
Neil.price(ipuc.idaho. gov E-Mail
Maurce Brubaker
Katie Iverson
Brubaker & Associates, Inc.
1215 Fern Ridge Parkway, Suite 208
St. Louis, MO 63141
mbrubaker(iconsultbai.com
kiverson(iconsultbai.com
E-Mail
James R. Smith
MONSANTO COMMENTS - 9
Monsanto Company
P.O. Box 816
Soda Springs, Idaho 83276
j im.r.smith(imonsanto .com E-Mail
Mark Widmer
Northwest Energy Consulting, LLC
27388 S.W. Ladd Hil Rd.
Sherwood, Oregon 97140
nweciionlinenw.coin EMail~ t.ßd
MONSANTO COMMENTS - 10