20180529Admitted Exhibit 220.pdf

Monoto Copa Fxhibir NO.220
PACIFICORP-2017 IRP UPDATE CHAPTERl -EXECUTIVE
g CHAPTER 1--EXECUTIVE SUMMARY %Asde
PacifiCorp submitted its 2017 Integrated Resource Plan (IRP)to state regulatorycommissions on
April 4,2017.That plan provides a framework for future actions that PacifiCorp will take to
provide reliable and reasonably priced service for its customers through the least-cost,least-risk
resource portfolio.The 2017 IRP Update reflects resource planning and procurement activitiesthat
have occurred since the 2017 IRP and presents an updated load-and-resource balance and an
updated resource portfolio consistent with changes in the planning environment.The 2017 IRP
Update also provides a status update for the action plan filed with the 2017 IRP in Chapter 10.In
presenting the updated load-and-resource balance and updated resource portfolio,PacifiCorp
shows changes relative to the 2017 IRP which covers the 2017 to 2036 planning horizon.In the
2017 IRP Update PacifiCorp also addresses recommendations and requirements identified by its
state regulatory commissions during the 2017 IRP acknowledgement or acceptance process.
PacifiCorp's long-termplanningprocess involves balanced consideration of cost,risk,uncertainty,
supply reliability/delivery,and long-run public policy goals.The following summarizes the key
highlights of PacifiCorp's 2017 IRP Update:
PacifiCorp's 2017 IRP Update preferred portfolio includes updated cost-and-performance
information for the Energy Vision 2020 projects,which include 1,31l MW of new wind,
O repowering just over 999 MW of existing wind capacity,and the new 140-mile,500
kilovolt (kV)Aeolus-to-Bridger/Anticline transmission line in Wyoming.Collectively,
these resources contribute to meeting the capacity need identified in PacifiCorp's updated
load-and-resource balance and are on track to be in service by the end of 2020.The Energy
Vision 2020 projects continue to be a central feature of the 2017 IRP Update least-cost,
least-risk preferred portfolio and will provide substantial benefits for customers.
-The 1,311 MW of new wind projects were identified through a robust competitive
bidding process.Updated economic analysis of these new wind resources,enabled by
the Aeolus-to-Bridger/Anticline transmission line,shows that they will provide
substantial customer benefits.In additionto creating construction jobs and tax revenue
in the state of Wyoming,the new wind projects will qualifyfor the full value of federal
production tax credits (PTCs)and generate zero-fuel-cost energy.
-The new 500-kv,140-mile Aeolus-to Bridger/Anticline transmission line,which is
needed to strengthen the electric reliability of PacifiCorp's transmission system,will
provide critical voltage support to the Wyoming transmission network,mitigate the
impact of outages on the existing system,enhance the company's ability to comply
with mandated reliabilityand performance standards,and reduce line losses.The new
transmission line will also relieve existing transmission constraints,increase transfer
capability and enable interconnection of new capacity.
-The 999 MW of repowered wind facilities located in Oregon,Washington and
O Wyoming,will provide substantial customer benefits and optimize the existing wind
fleet by using new technologythat increases zero-fuel-cost energy production,reduces
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PACIFICORP-2017 IRP UPDATE CHAPTER 1 -EXECUTIVESUMMARY
O ongoing operating costs by avoidingcapital expenditures related to component failures,
renews the existing wind fleet with new turbines that extend the useful life of the wind
facilities by up to 13 years,requalifies the wind facilities to receive the full value of
PTCs for another 10 years,and improves delivery of wind energy into the transmission
system through enhanced voltage support and power quality.
With reduced loads and lower renewable resource costs,the updated preferred portfolio
contains no new natural gas resources through the 20-year planning horizon.This is the
first time an IRP has not included new fossil-fueled generation as a least-cost,least-risk
resource for PacifiCorp.
Through the end of 2036,the updated preferred portfolio includes over 2,700 MW of new
wind resources,1,860 MW of new solar resources,1,877 MW of incremental energy
efficiency resources,and approximately268 MW of direct-load control resources.
The 2017 IRP Update preferred portfolio continues to assume existing owned coal capacity
will be reduced by 3,650 MW through the end of 2036.
In accordance with action items in the 2017 IRP action plan,PacifiCorp completed unit-
specific coal studies in the 2017 IRP Update for NaughtonUnit 3,Cholla Unit 4,Dave
Johnston Unit 3,and Jim Bridger Units 1 and 2.Consistent with the findings from these
studies,the 2017 IRP Update continues to assume no incremental selective catalytic
reduction (SCR)emission-reduction systems will be needed to satisfy regional haze
O compliance obligations.PacifiCorp continues to assume Cholla Unit 4 retires at the end of
2020,Dave Johnston Unit 3 retires at the end of 2027,and Jim Bridger Units 1 and 2 retire
at the end of 2028 and 2032,respectively.The 2017 IRP Update assumes Naughton Unit
3 retires end of January 2019,shifted one month from the 2017 IRP that assumedretirement
at the end of 2018.
On March 28,2017,President Trump issued an Executive Order directing the U.S.
Environmental Protection Agency (EPA)to review the Clean Power Plan (CPP)and,if
appropriate,suspend,revise,or rescind the CPP,as well as related rules and agency actions.
On October 10,2017,the EPA issued a proposal to repeal the CPP and the EPA will take
comments on the proposed repeal until April 26,2018.In addition,the EPA published in
the Federal Register an Advance Notice of Proposed Rulemaking December 28,2017,
seeking public input on,without committing to,a potential replacement rule.The public
comment period for the Advance Notice of Proposed Rulemaking concluded February 26,
2018.PacifiCorp will continue to follow activities related to the CPP;however,the
company has not included the CPP in its assumptions for the 2017 IRP Update.Rather,the
2017 IRP Update includes a medium CO2 priCC RSsumption starting in 2030 to reflect
possible regulatory changes in the future.
On December 22,2017,President Trump signed into law H.R.1 (Tax Reform Act)which
generally impacts PacifiCorp for tax years beginning in 2018 and going forward.The Tax
Reform Act reduced the federal corporate income tax rate from a top rate of 35 percent to
an across-the-board federal corporate income tax rate of 21 percent.The Tax Reform Act
O left intact the federal tax credit rules and phase-outs for wind and solar facilities as enacted
in the 2015 tax extender legislation.Public utility property will no longer be eligible for
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PACIFICORP-2017 IRP UPDATE CHAPTER1-EXECUTIVESUMMARY
O bonus depreciation for property placed in service after September 27,2017,unless it was
subject to a written binding contract on September 27,2017.PacifiCorp's 2017 IRP Update
accounts for the Tax Reform Act,and updated economic analysis of Energy Vision 2020
projects are greater than originally estimated in the 2017 IRP despite the reduction in
federal corporate income tax rate.
As shown in Figure 1.1 PacifiCorp's most recent coincident system peak load forecast,is
down relativeto the 20 17 IRP.On average,across the first ten years of the planning period,
the coincidentsystem peak is down by roughly 424 MW relativeto the 2017 IRP reflecting
a less favorable outlook for the industrial segment and the adoption of more efficient
appliances by residential customers.
Figure 1.1--System Coincident Peak Load
11,500
10,000 ------O =
9,500
9,000
-+-2017 IRP -111-2017 IRP Update
Figure 1.2 shows that forecasted natural gas and energy prices have declined from those in
the 2017 IRP through about the 2030-2031 time frame.Domestic gas price forecasts
continue to be driven down by growth in unconventional shale-gas plays.This in turn
(combined with lower forecasted regional loads)impacts forward market power prices.
O
3
PACIFICORP-2017 IRP UPDATE CHAPTER1-EXECUTIVESUMMARY
Figure 1.2 --Power and Natural Gas Price Co nparisons (Nominal)
Henry Hub Natural Gas Prices yogo Average Mid-C/Palo Verde Flat Electric Prices
7 00 60 00
6 00 s *
50 00
4000
3000300m--E ..
2 00 2 20 00
1 00 10 00
000 000
-2017 lRP_Upd (Dec 2017)-20\7 IRP (Oct 20L6)-20L7 IRP Upd (Dec 2017)--2017 IRP (Oct 2016)
Figure 1.3 summarizes the 2017 IRP Update capacity load-and-resource balance,before acquiring
new resources and making firm market purchases,alongside the load-and-resource balance from
the 2017 IRP.The load-and-resource balance capacity need has decreased by an average of 408
MW,relative to the 2017 IRP,reflecting a lower load forecast and an increase in qualifying facility
contracts.The capacity need in both the 2017 IRP and the 2017 IRP Update increases at the end
O of January 2019 due to the assumed early retirement of Naughton Unit 3 and at the end of 2020
due to the assumed early retirement of Cholla Unit 4.The 2017 IRP Update load-and-resource
balance continues to show a capacity need throughout the planningperiod,but this need has been
reduced relative to the 2017 IRP by 204 MW in 2018 rising to 539 MW by 2027.
I
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PACIFICORP-2017 IRP UPDATE CHAPTER1 -EXECUTIVESUMMARY
Figure 1.3 -Capacity Position Comparison
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
(1,200)=2017 IRP
2017 IRP Uµdate
Table 1.1 reports the 2017 IRP Update preferred portfolio and differences relative to the 2017 IRP
preferred portfolio.The table shows the resource mix that achieves a 13-percent planning reserve
margin in each reported year.As compared to the 2017 IRP preferred portfolio,changes in the
resource mix reflect updates to Energy Vision 2020 new wind resources and a reduced load
forecast that result in removal of the need for a new natural gas simple cycle combustion turbine
(SCCT)and combined cycle combustion turbine (CCCT)and reduced reliance on higher risk
market transactions throughout the 20-year planning horizon.As was the case in the 2017 IRP
preferred portfolio,PacifiCorp continues to plan to meet its customers'needs largely through the
acquisition of cost-effective Energy Vision 2020 resources,energy efficiency (Class 2 demand-
side management (DSM))resources,and front-office transactions (FOTs),over the next ten years.
O
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PACIFICORP-20 17 IRP UPDATE CHAPTER4 -LOAD-AND-RESOURCEBALANCE UPDATE
CHAPTER 4 -LOAD-AND-RESOURCE BALANCE
UPDATE
This chapter presents an update to PacifiCorp's load-and-resource balance.Updates to
PacifiCorp's long-term load forecasts (both energy and coincident peak load)for each state and
the system as a whole are summarized in the Appendix.Updates to PacifiCorp's load forecast,
resources,and capacity position are presented and summarized in this chapter.
The 2017 IRP Update relies on PacifiCorp's August 2017 load forecast.Figure 4.1 compares
PacifiCorp's most recent load forecast to the forecast used for the 2017 IRP.Figure 4.2 compares
PacifiCorp's most recent coincident system peak load forecast to the forecast used for the 2017
IRP.Considering that PaciflCorp analyzes incremental energy efficiency and direct-load control
programs as demand-side resource options in its IRP,both figures exclude incremental energy
efficiency savings and direct-loadcontrol capacity included in the updated resource portfolio.The
compounded average annual growth rate (CAGR)for system load is 0.55 percent over the period
2018 through 2027.The CAGR for system coincident peak is 0.54 percent over the period 2018
through 2027.
Figure 4.1-Forecasted Annual Load (GWh)
68,000
62,000
58,000
56,000 -
54,000 i
52,000
50,000 --
-+-2017 IRP -e-2017 IRP Update
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PACIFICORP-20 17 IRP UPDATE CHAPTER5 -MODELINGAND ASSUMPTIONSUPDATE
Figure 5.2 -Henry Hub Natural Gas Prices (Nominal)
8.00
7.00
6.00
5.00 ...
4.00
E 3.00 ---
2.00
1.00
0.00
--2017 IRP_Upd(Dec 2017)--2017 IRP (Oct 2016)
Power Market Prices
The natural gas fundamentals forecast described above is a key input to the Aurora model,and
O consequently,the gas curve shape is reflected in wholesale electricity prices.Figure 5.3 and Figure
5.4 compare the average annual flat and heavy-load-hourelectricity prices for the Palo Verde
market hub from the October 2016 and December 2017 OFPCs;Figure 5.5 and Figure 5.6 show
the comparison for the Mid-Columbia market hub.
O
56
PACIFICORP-2017 IRP UPDATE CHAPTER5 -MODELING AND ASSUMPTIONSUPDATE
Figure 5.5 -Average Annual Flat Mid-Columbia Electricity Prices (Nominal)
70.00
60.00
3 50.00 ,....**
40.00
30.00 ,/
20.00
10.00
0.00
---2017 IRP Upd (Dec 2017)--2017 IRP (Oct 2016)
Figure 5.6 -Average Annual Heavy Load Hour Mid-Columbia Electricity Prices (Nominal,
70.00
60.00 -"""
=50.00 -
40.00
30.00 ,,..-*
oX 20.00
10.00
0.00
---2017 IRP Upd (Dec 2017)--2017 IRP (Oct 2016)
Corbpa bioxtde Emission Policy
On March 28,2017,President Trump issued an Executive order directing the U.S.Environmental
Protection Agency (EPA)to review the Clean Power Plan (CPP)and,if appropriate,suspend,
revise,or rescind the CPP,as well as related rules and agency actions.On October 10,2017,EPA
O issued a proposal to repeal the CPP and the public comment period on EPA's proposal closed April
26,2018.In addition,EPA published an Advance Notice of Proposed Rulemaking in the Federal
58
PACIFICORP-2017 IRP UPDATE CHAPTER7-ENERGY VISION 2020 UPDATE
O for the updated performance estimates discussed above,customer benefits for all price-policy
scenarios would improve by approximately$6 million for every dollar assigned to the incremental
RECs that will be generated from the repowered facilities through 2036.Benefits for all price-
policy scenarios would improve by approximately $12 million for every dollar assigned to the
incremental RECs that will be generated from the repowered facilities through 2050.Quantifying
the potential upside associatedwith incremental REC revenues is intended to simply communicate
that the net benefits from the repowering project could improve if the incremental RECs can be
monetized in the market.Moreover,as noted earlier,none of the economic analyses account for
the capacity value of the repowered wind facilities in the period when they would have otherwise
hit the end of their depreciable lives (i.e.,beyond 2036).
Analysis conducted in the 2017 IRP covered a wide range of studies,including regional haze cases,
price-policy cases and sensitivities.Wyoming wind was consistently selected in the optimized
portfolios of nearly all cases,up to the maximum capacity of Wyoming wind capable of
interconnecting to the transmission system without incremental investment in Energy Gateway
transmission infrastructure.Based on these results,PacifiCorp further analyzed Energy Gateway
sensitivities.This analysis showed that the combination of new wind and new transmission
resulted in the least-cost,least-risk combinationof resources to meet load and resource needs over
the 20-year planning horizon.Enabled by the transmission projects described later in this chapter,
and based on the results of PacifiCorp's 2017R RFP,1,311 MW of new wind resources will be
placed in service by the end of 2020,creating substantial benefits for customers.
Wind Projects
Extension of federal PTCs created a time-limited opportunityfor PacifiCorp to acquire significant
cost-effective,zero-fuel cost wind resources,generating PTCs from the Wind Projects that will
help meet projected capacity needs and provide substantial benefits for customers.The additional
capacity from the Wind Projects will reduce reliance on more costly and less certain resources,in
particular uncommitted front office transactions (market purchases)over the near term and defer
the need for higher-cost resource alternatives over the long term.While not valued as part of this
analysis,the new wind energy will also produce additional RECs,further increasing the value of
these new resources.
To achieve the full customer benefits of the PTCs,PacifiCorp must develop the Wind Projects
with the Transmission Projects and bring them into service together.The Wind Projects are not
economic without the Transmission Projects,which are needed to relieve existing congestion and
to interconnect new PTC-eligible wind facilities in high-wind areas of Wyoming.The
Transmission Projects are not economic without incremental cost-effective wind facilities
producing zero-fuel-cost energy and PTCs.
2017R REP
The 2017 IRP Update preferred portfolio relies on the extensive analysis conducted in the
Company's 2017R RFP,and advances PacifiCorp's commitment to low-cost energy with plans to
O
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PACIFICORP-20 17 IRP UPDATE CHAPTER7 -ENERGYVISION 2020 UPDATE
O Table 7.9 -Nominal Revenue Requirement PVRR(d)(Benefit)/Cost of the
Low Gas,Zero CO2 184
Low Gas,Medium CO2 127
Low Gas,High CO2 (147)
Medium Gas,Zero CO2 (92)
Medium Gas,Medium CO2 (167)
Medium Gas,High CO2 (304)
High Gas,Zero CO2 (448)
High Gas,Medium CO2 (499)
High Gas,High CO2 (635)
When system costs and benefits from the Combined Projects are extended out through 2050,
covering the full depreciable life of the owned-windprojects included in the updated 2017R RFP
final shortlist,the Combined Projects reduce customer costs in seven out of nine price-policy
scenarios.
In those price-policy scenarios showing net benefits,customer net benefits range from $92 million
in the medium natural gas,zero CO2price-policy scenario to $635 million in the high natural gas,
high CO2 price-policy scenario.Under the central price-policy scenario,when applying medium
natural gas,medium CO2 price-policy assumptions,the PVRR(d)benefits of the Combined
O Projects are $167 million.The Combined Projects provide significant customer benefits in all
price-policy scenarios,and the net benefits are unfavorableonly when low natural-gas prices are
paired with zero or medium CO2 prices.These results continue to show that upside benefits far
outweigh downside risks.
Potential Wind Projects Upside
The PVRR(d)results presented in Table 7.8 andTable 7.9 do not reflect the potential value of
RECs generated by the incremental energy output from the Wind Projects.Accounting for the
performance estimates from these wind facilities,customer benefits for all price-policy scenarios
would improve by approximately $34 million for every dollar assigned to the incremental RECs
that will be generated from the winning bids through 2036.When calculated from expected wind
generation through 2050,customer benefits would increase by approximately $43 million in all
price-policy scenarios.Quantifying the potential upside associatedwith incremental REC revenues
is simply intended to communicate that the net benefits from the winning bids could improve if
the incremental RECs can be monetized in the market.
Also,projects with large wind turbines are expected to require less O&M costs because there are
fewer turbines on a given site.The default O&M assumptions applied to BTA and benchmark-
EPC bids in the updated economic analysis are based on the company's experience in operating
and maintaining the existingfleet ofowned-wind facilities,and do not reflect expected cost savings
associated with operating and maintaining wind facilities proposing to use larger wind turbines.
Three of the winning bids--InvenergyWind Development's Uinta project,the company's TB Flats
O I &II project,and the company's Ekola Flats project--willuse larger equipment for a portion of
the wind turbines at each facility.If the O&M cost elements applicable to the larger-turbine
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PACIFICORP-2017 IRP UPDATE CHAPTER8 -PORTFoLlo DEVELOPMENT
CHAPTER 8 --PORTFOLIO DEVELOPMENT
Introduction
PacifiCorpused the System Optimizer (SO)model to develop an updated preferred portfolio based
on inputs and assumptions updated since the 2017 Integrated Resource Plan (IRP)was filed April
4,2017.This updated resource portfolio is consistent with PacifiCorp's most recent load-and-
resource balance as described in Chapter 4.This chapter presents the 2017 IRP Update preferred
portfolio and a comparison of changes relative to the 2017 IRP preferred portfolio.This chapter
also includes a sensitivity comparing the 2017 IRP Update preferred portfolio to the fall 2017
business plan.
The 2017 IRP Update focuses on changesthat occurred after PacifiCorp filed its 2017 IRP.These
include updates to load forecasts,changes in existing resources,any additions to PacifiCorp's
contracts with other entities,and changes to Energy Vision 2020 resources.
Table 8.1 summarizes the annual capacity in the 2017 IRP Update relative to the 2017 IRP
preferred portfolio for the 10-year period 2018 through 2027.Consistent with the change in
PacifiCorp's load-and-resource balance,the reduction in peak loads decreases the need to add new
resources relative the 2017 IRP.The reduction in load reduces front-office transaction (FOT)and
O demand-side management (DSM)resources.An additional 211 MW of new wind is added as part
of Energy Vision 2020 new wind resources described in Chapter 7.The level of summer FOTs in
2027 is 493 MW,which is lower than in the 2017 IRP and below the assumed 1,575-MW FOT
limit.PacifiCorp has not updated its FOT limits for the 2017 IRP Update but will review its FOT
limits during the 2019 IRP public process.The updated portfolio does not include any natural gas
resources through the 20-year planning horizon.Table 8.2 (summer)and Table 8.3 (winter)
summarizes the 2017 IRP Update load and resource balance,inclusive of incremental resources,
for 2018-2036,and Table 8.4 presents the 2017 IRP Update preferred portfolio through 2036.
Class 2 DSM selections in the 2017 IRP Update were updated to reflect more current information
on actual and projected acquisitions in the near-term (2018-2020)and the value of Class 2 DSM
resources to the system.For 2018-2020,Oregon and Washington projections were modified to
reflect current Energy Trust of Oregon projections and the approved "Demand Side Management
2018-2019 Business Plan"filed with the Washington Utilities and Transportation Commission(WUTC).I For Utah,2018-2020 projections match the 2017 IRP preferred portfolio selections.
2018-2020 projections for California align with forecasted achievements in 2018 and the 2017 IRP
preferred portfolio selections for 2019 and 2020.For 2018-2020 Wyoming Class 2 DSM was
updated to reflect proposed targets currently under review by the Wyoming Public Service
Commission.From 2021 on,the SO model optimized Class 2 DSM selections to reflect the
updated load-and-resource balance,and the associated value of Class 2 DSM in relation to other
resource alternatives over the medium and long term.
I Washington Utilities and Transportation Commission,Docket UE-171092,Order 01,January 12,2018.
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