20180817Cross Petition for Reconsideration.pdf

It RACINE OLSON RandallC. Budge
[e-mail] E I VED
?0rB fit,c I 7 Pt{ h: 3 t
.,
August 17,2018
Diane Hanian, Commission Secretary
ldaho Public Utilities Commission
PO Box 83720
Boise, Idaho 83720-007 4
[e-mail]
Hand Delivered
Re: IPUC Case No. PAC-E-17-07
Dear Ms. Hanian
Enclosed you will find the original and seven (7) copies of Monsanfo's Response
to Rocky Mountain Power's Petition and Cross-Petition for Reconsideration. Please file
the same with the Commission's records. lf you have any questions, please don't
hesitate to call.
Thank you
Sincerely,
h,1"4 4DGE
c"
RANDALL C. BU
RCB:ts
Enclosuresc: Service List
2O1 E. Center St. I P.O Box'1391 I Pocatello, lD 83204
P: (2OB) 232-6101 I F: (2O8) 232-6109 I racinelaw.net Offices in Boise, Pocatello, and ldaho Falls
Randall C. Budge (ISB: #1949)
T.J. Budge (ISB: #7465)
RACINE OLSON NYE & BUDGE, Chtd.
P. O. Box 1391
Pocatello, Idaho 83204-L391
Telephone: [phone]
Fax: [phone]
Attorneys for Monsanto Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
RECE'VED
I0l0 .AUG I 7 pl{ tr; 3 I
U
s$toht
IN THE MATTER OF THE
APPLICATION OF ROCKY
MOUNTAIN POWER FOR
CERTIFICATES OF PUBLIC
CONVENIENCE AND NECESSITY
AND BINDING RATEMAKING
TREATMENT FOR WIND AND
TRANSMISSION FACILITIES
CASE NO. PAC-E-17-07
MONSANTO'S RESPONSE TO
ROCKY MOTJNTAIN POWER'S
PETITION AND CROSS.
PETITION FOR
RECONSIDERATION
)
)
)
)
)
)
)
)
)
I. INTRODUCTION
lntervenor Monsanto Company ("Monsanto"), pursuant to Idaho Code $ 61-625, Rules
326 and33l-33 of the Idaho Public Utilities Commission ("Commission") Rules of
Procedure (I.D.A.P.A. 31.01.01.326 and 31.01.01.331-333), hereby submits this response to
Rocky Mountain Power's Petitionfor Clarification or, in the Alternative, Reconsideration of
Order No. 34104 ("Company's Petition"). cross-petitions for reconsideration of and,
Given the Company's apparent confusion or misinterpretation of the "overall project
cost cap" condition in the Final Order No. 34104, dated July 20,2018, issued in Case No.
PAC-E-17-07 ("Order"), Monsanto concurs it is appropriate for the Commission to clariff
that the overall project cost cap set at the Company's project estimate is in fact a "hard cap"
which does in fact preclude future recovery from customers of any excess costs. [f the
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION A]\D CROSS.
PETITION FOR RECONSIDERATION - Page I
Commission denies the Company's Petition, Monsanto is satisfied with the Order which
includes the hard cap condition.
In the event the Commission grants the Company's Petition, Monsanto cross-
petitions for reconsideration of the Order and respectfully requests denial of the Certificates
of Public Convenience and Necessity ("CPCN") for the Company's proposed wind and
transmission projects ("Combined Projects") and rejection of the Company and Commission
Staff s Stipulation for the following reasons: (l) the combined projects are discretionary,
uneconomical and pose unacceptable risks to customers; (2) the combined projects are not
proposed to meet immediate generation resource needs, instead are pursued as an opporfunity
for the Company to invest capital and earn a rate of return; (3) the Combined Projects are not
least cost and least risk resources, with the solar PPA providing considerably greater net
benefits with less risk because there is no transmission component and no capital costs; and
(4) making large capital commitments now for unneeded resources will cause an immediate
and unnecessary rate increases to customers; and, further forego the opportunity to pursue
more economic generation technologies in the future when an actual need for new generation
resources may arise.
Monsanto requests its response to the Company's Petition and cross-petition be
decided by written briefs. Monsanto does not seek additional evidentiary proceedings to
resolve these petitions.
II. BACKGROUND
The Company's Petition provides background information which is accurate and
need not be reiterated. It should be added that Intervenors Monsanto, PacifiCorp Idaho
Industrial Customers ("P[C") and ldaho Irrigation Pumpers Association ("IIPA") all
presented evidence that the Combined Projects should be denied as unnecessary,
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AND CROSS.
PETITION FOR RECONSIDERATION - Page 2
discretionary, uneconomical and posing unacceptable risks to customers. Monsanto, PIIC and
IIPA also asserted and presented substantial testimony and evidence of multiple conditions
that should be imposed if the requested CPCN were approved, including a hard cap on the
recovery of all capital costs. PIIC also asserted that the hard cap should apply separately to
the cost estimates for transmission and the wind projects, a position Monsanto also
supported.
III. LEGAL STAI\DARI)
In response to the Company's Petition, any other corporation or person may cross-
petition for reconsideration in response to any issues raised in the petition for
reconsideration.l A cross-petitions for reconsideration must set forth specifically the ground
or grounds why the cross-petitioner contends that the order or any issue decided in the order
is unreasonable, unlawful, erroneous or not in conformance with the law, and a statement of
the nature and quantity of evidence or argument that the cross-petitioner will offer if
reconsideration is granted.2
ry. ARGUMENT
A. The Commission should clarify that the overall project cost cap set at the
Company's project estimate is a "hard cap", that precludes any recovery of costs
from customers above the project estimate.
It is disingenuous for the Company that to somehow argue that the "overall cost cap"
imposed by the Commission was not intended to be "hard cap". The absence of a hard cap on
capital costs was a fundamental reason why Monsanto, PIIC and IIPA refused to participate
in the Stipulation. The Stipulation provided for a so-called "soft cap" on actual capital costs
included in the ECAM and RTM, because any costs above the cap were deferred as a
I Idaho Code g 61-626(l), Rule 331, IPUC Rules ofProcedure.
2 Rule 331.03.
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AND CROSS-
PETITION FOR RECONSIDERATION - Page 3
regulatory asset, thus providing an opportunity for the Company to demonstrate prudency
and additional amounts set in the next general rate case.3 The unresolved issue of an overall
cap was clearly unresolved pursuant to paragraph l6 of the Stipulation which states: "the
stipulating parties reserve all rights to argue in this case for or against an overall capital cost
cap for construction of the stipulated projects. Aside from the Intervenors' testimony that the
requested CPCN should be denied, the central issue hotly contested at the hearing focused
upon the need for a hard cap on capital costs. Staff and Intervenors advocated for a cap on
capital costs to reduce the project risks which the Company opposed. This was clearly
acknowledged when the Commission stated in the Order:
"We recognize the Interyenors' opposition to both the proposed projects and
the settlement terms. The thorough argument and analysis of the issues
assisted in our ultimate decision to impose an overall cost cap set at the
Company's overall project cost estimate."a
There can be no doubt whatsoever in the minds of Staff, Intervenors and most likely
the Company, that the "overall cost cap" imposed by the Commission was intended to be a
"hard cap" that shifted to the Company the inherit risk of its business decision to construct
forcing the Company's to stand by its overall project cost estimates. lndeed, there should be
no doubt regarding the Commissions intent to impose a hard cap when the Commission
explained: "a cost cap reduces ratepayer risk and compels the Company to rely on its models
that predict benefits. We find this fairly balances risk between the Company and its
customers."5
Notwithstanding, because the Company appears to be either confused or uncertain
what was intended, it is necessary and appropriate for the Commission to clarify that the
3 Stipulation, Par. 13, 14.
a Order, Page 13.
5 Order, Page 13.
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AND CROSS.
PETITION FOR RECONSIDERATION - Page 4
overall cost cap set at the Company's overall project estimate is indeed a "hard cap" which
precludes the Company from later seeking cost recovery in a general rate case if the
Company's estimate is exceeded. Since the justification of the project is economic not
necessity, the Company is thus afforded the opportunity to decide before construction
commences whether to rely upon its project cost estimates, bear the risks if they are exceeded
proceed with the project; or, choose not to construct if the Company believes the cost
estimates represented in its filings are not reasonable or reliable. Certainly, this decision and
the associated risks belong with the Company, not the customers.
While the hard cost cap has the desired effect of helping balance the risks, it by no
means eliminates significant risks that remain with customers. The customers will still face
rate increases. The Company has stated that the estimated $2 Billion cost will increase rates
by about 19% in202l,the expected first full year of operation. Additionally, if the wind
blows less than projected the projected benefits will be diminished. Further, the projected
future benefits will be lost if gas and carbon prices remain at current low levels or continue to
decline.
As the margins are razor thin, the hard cap merely provides customers an increased
possibility of net benefits. At the same time the Company is guaranteed a return on its huge
capital investments.
B. The Commission should grant reconsideration, deny the Company's CPCN and
reject the Stipulation.
If the Company's Petition is granted Monsanto's cross-petition for reconsideration
should also be granted. Monsanto, PIIC, IIPA and Staffpresented substantial, competent and
persuasive evidence that the combined projects are: (l) are unnecessary, discretionary,
uneconomical and pose unacceptable risks to customers; (2\ are not proposed to meet
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AND CROSS.
PETITION FOR RECONSIDERATION - Page 5
immediate generation resource needs, instead an opportunity for the Company to invest
capital and earn a rate of retum; (3) are neither least cost nor least risk resources, with the
solar PPA providing considerably greater net benefits with less risk because there is no
transmission component and no capital costs; and (4) making large capital commitments now
for unneeded resources will cause immediate and unnecessary rate increases to customers;
and, further, forego the opportunity to pursue more economic generation technologies in the
future when an actual need for new generation resources may arise.
It is undisputed that the Combined Projects being are being pursued by the Company
for economic reasons not as a necessity to meet current capacity needs which first arise in
2028. Further, that market resources are readily available to meet any periodic short-term
capacity deficits until such time that new capacity needs may arise. The Company's direct
testimony from Witness Link admits that "the load and resource balance developed for the
2017 IRP shows that PacifiCorp would not require incremental system capacity to meet its
l3oh plannins reserve margin until 2028. . ."6 This was also admitted by the Company's
President and CEO Cindy Crane and Staff Witnesses Keller, Eldredge and Lewis on cross-
examination.T
The combined projects failed to meet the statutory requirement for the issuance of a
CPCN. Idaho Code $ 6l-566 sets for the statutory requirement as follows:
,,61.526, CERTIFICATE OF CONVENIENCE AND NECESSITY.
No...electric corporation...shall henceforth begin the construction...without
first having obtained from the Commission a certificate that the present or
future public convenience and necessity will require such construction..."
There being no present necessity for new capacity, the Combined Projects should be
denied and the Staff-Company Stipulation rejected.
6 Confidential Link, Di-6, L. 6-8.
7 See Monsanto Cross-Examination of Witnesses Crane, Keller, Eldredge and Lewis.
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AI\ID CROSS-
PETITION FOR RECONSIDERATION -Page 6
The Company's benefit/cost analysis for the Combined Projects reflects an adverse
net cost increase to customers in two of the nine price-policy scenarios (low gas, zero CO2
and low gas, medium COz). This coupled with the undisputed fact that the project costs are
front loaded and the benefits back loaded pose significant and unreasonable risks to
customers. While the hard cost cap eliminates the risk of capital cost ovemrns, customers will
still see increased rates if the current low gas/carbon prices remain or if they continue to
decline. Furthermore, even with the hard cost cap the estimated $2 Billion project costs
would increase rates by about 1.9% in202l, the expected first full year of operation with any
benefits spread over 30 years, between 2020 and 2050, as recognized by the Commission in
the Order.s With low gas prices, customers are worse off in the near term 2021 throtghz1z3,
have nominal benefits for the years2024-2030 and are worse off every year thereafter.e
Moreover, constructing new capacity resources at tremendous capital costs foregoes the
opportunity to pursue future generation resources at lower cost utilizing developing
technologies.l0 The risks to customers is not warranted for a purely economic project where
no necessity exists, by reason of which the CPCN should be denied.
The Combined Projects violate the fundamental ratemaking principal of acquiring
least cost least risk resources. The evidence presented is convincing and undisputed that the
solar PPA option is the least cost and provides the greatest net benefit.rr Staffalso testified
that "the solar projects are lower risk than the Combined Projects," and "have lower capital
project expense than the Combined Projects; the construction of a new transmission line,
8 Order, Page 2. Monsanto does not have available a transcript as it did not anticipate the Company's
Petition. The short seven day period to cross-petition and respond does not afford an opportunity to acquire
and utilize a transcript. For that reason, Monsanto's citations are to the testimony and exhibits as filed and
the record generally with respect to cross-examination with the right to supplement this Petition and
Response as may be necessary to site the transcript.
e Monsanto Witness N. Phillips, Di, P. I l-12.
r0 Monsanto Witness N. Phillips, Di, P. 21, L. l-6.
rr Monsanto Witness N. Phillips, Di-Supp, P,20,L.6-20.
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AI\[D CROSS-
PETITION FOR RECONSIDERATION - Page 7
which has high cost-ovemrn potential, is not required; and all solar bids are PPAs so the
developer takes on the risks of the projects."12 This was not disputed by the Company which
admitted that its modeling program supported pursuing both wind and solar projects going
forward.13 The solar PPA option compared to the Combined Projects is significantly less
risky because there is no transmission cost risk and because it does not require capital
expendifures because the solar resource would be acquired through PPAs, with customers
only paying for power and energy actually produces.la
Based on the foregoing, Monsanto respectfully submits that the Commission should
reconsider and deny the CPCN
V. CONCLUSION
For the reasons stated above, given the Company's apparent confusion and
misunderstanding, the Commission should clarify that the overall cost cap is in fact a hard
cap which precludes the Company from seeking regulatory recovery in the next general rate
case if the overall project estimate is exceeded.
Should the Commission grant the Company's Petition, the Commission should also
grant Monsanto's Cross-Petition for Reconsideration of the Order, reject the Stipulation and
deny the CPCN because the projects are unnecessary, discretionary, uneconomical and pose
unacceptable risks to customers. If the reconsideration is denied and the CPCN granted,
DATED this 17th day of August, 2018.
12 Transcript at 1776.
13 Transcript at 366-70.
la Monsanto Witness N. Phillips, Di-Supp, P . 21, L. 3-1
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AND CROSS-
PETITION FOR RECONSIDERATION - Page 8
RACINE OLSON NYE & BUDGE, Chtd.
By:Lffi
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on lTth day of August, 2018, I caused to be served a true
and correct copy of the foregoing document upon the following individuals in the manner
indicated below:
D, ,R
Diane M. Hanian, Secretary
Idaho Public Utilities Commission
P.O. Box 83702
472 W. Washington Street
Boise, ID 83702-0074
E-Mail: diane.holtfa)puc. idaho. gov
Ted Weston
Idaho Regulatory Affairs Manager
Rocky Mountain Power
1407 West North Temple, Suite 330
Salt Lake city, uT 84116
E-Mail: ted.weston(dpacifi corp.com
Yvonne R. Hogle
Assistant General Counsel
Rocky Mountain Power
1407 West North Temple, Suite 320
Salt Lake city, uT 84116
E-Mail: yvonne.hogleG)pacificorp.com
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
Electronic Transmission
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
Electronic Transmission
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
Electronic Transmission
xtrtrtrx
trtrtrtrx
trtr
Data Request Response Center
Pacificorp
825 NE Multnomah, Suite 2000
Portland, OR97232
E-mail: datarequest(rDpacifi com.com
[l Electronic Transmission
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AND CROSS-
PETITION FOR RECONSIDERATION - Page 9
Brubaker & Associates
16690 Swingley Ridge Road, #140
Chesterfield, MO 63017
E-Mail: [e-mail]
[e-mail]
Monsanto Company
Brandon Karpen
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington (837 02\
P.O. Box 83720
Boise, Idaho 83720-0074
Email: [e-mail]
Commission Staff
Ronald L. Williams
Williams Bradbury, P.C.
1015 W. Hays St.
Boise, Idaho 83702
Email: ron(Dwilliamsbradbury.com
PICC
Bradley Mullins
333 SW Taylor, Suite 400
Portland, OR97204
Email: brmullins(iDmwanallrtics.com
PICC
Jim Duke
Idahoan Foods
357 Constitution Way
Idaho Falls, lD 83742
E-Mail: iduke(Didahoan.com
PIIC
Kyle Williams
BYU Idaho
Email : wi lliamsk(a)byui. edu
PIIC
Val Steiner
Nu-West lndustries, Inc.
Email: Val. Steiner@,itafos.com
PIIC
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
Electronic Transmission
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
Electronic Transmission
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
[l Electronic Transmission
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
I Electronic Transmission
! Hand Delivery
n US Mail (postage prepaid)
Facsimile Transmission
Federal Express
I Electronic Transmission
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
Electronic Transmission
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
Electronic Transmission
nnntrx
trntrtrx
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AND CROSS.
PETITION FOR RECONSIDERATION - Page 10
Eric L. Olsen
Echo Hawk & Olsen PLLC
505 Pershing Ave., Suite 100
P.O. Box 6l l9
Pocatello, Idaho 83205
Email: [e-mail]
IIPA
Anthony Yankel
12700 Lake Avenue, Unit 2505
Lakewood, OH44107
Email: tonv(rDyankel.net
IIPA
f] Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
Electronic Transmission
Hand Delivery
US Mail (postage prepaid)
Facsimile Transmission
Federal Express
Electronic Transmission
trtrtrx
RANDALL C.E
MONSANTO'S RESPONSE TO ROCKY MOUNTAIN POWER'S PETITION AND CROSS.
PETITION FOR RECONSIDERATION - Page l1