20180411Mullins Supplemental Direct-Redacted.pdf

WILLIAMS ·BRADBURY
ATTORNEYS AT LAW RECElVED
2018 f.PR 1 1 PM 2:04
April 11,2018 Bü CISSION
HAND DELIVERED
Ms.Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W.Washington
Boise,ID 83702
Re:IPUC Case No.PAC-E-17-07
Dear Ms.Hanian:
Please find enclosed for filing the original and nine copies of the testimony and
exhibits of Bradly G.Mullins,on behalf of the PacifiCorp Idaho Industrial Customers,in the
above referenced case.
The testimony is filed in three versions:
1.The white "redacted"testimony and exhibits are for the case file.
2.The yellow"confidential"testimony pages and exhibits should held under seal
pursuant to Commission Rule and the Non-Disclosure Agreement between the
Company,Staff and Parties.
3.The pink "highly confidential"version is also held under seal pursuant to
Commission Rule and the Non-Disclosure Agreement between the Company,
Staff and Parties,but is only being provided to the Commission,Commission
Staff and the Company at this time,and is not being provided to other Parties.
It would be my intent to provide the highly confidential [pink]version to other
parties that have signed an NDA,upon their request and notice to the
Company.
Electronic copies have been served pursuant to the attached Notice of Service.
Thank you for your assistance in this matter.Please feel free to give me a call should
you have any questions.
Sincerely,
Ronald L.Williams
RLW
Enclosures
P.O.Box 388 -Boise,ID 83701
Phone:[phone] -www.williamsbradbury.com
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on this iday of April,2018,I causedto be served a true and
correct copy of PIIC's Supplemental Testimony and Exhibits upon the following individuals
in the manner indicated below:
Diane M.Hanian,Secretary Hand Delivery
Idaho Public Utilities Commission US Mail (postage prepaid)
P.O.Box 83702 Facsimile Transmission
472 W.Washington Street Federal Express
Boise,ID 83702-0074 Electronic Transmission
E-Mail:[e-mail]
Ted Weston Hand DeliveryIdahoRegulatoryAffairsManagerUSMail(postage prepaid)Rocky Mountain Power -Facsimile Transmission1407WestNorthTemple,Suite 330 Federal ExpressSaltLakeCity,UT 84116 -N Electronic TransmissionE-Mail:[e-mail]
Yvonne R.Hogle O Hand DeliveryAssistantGeneralCounselUSMail(postage prepaid)Rocky Mountain Power -Facsimile Transmission1407WestNorthTemple,Suite 320 Federal ExpressSaltLakeCity,UT 84116 Electronic TransmissionE-Mail:[e-mail]
Data Request Response Center Hand DeliveryPacifiCorpUSMail(postage prepaid)825 NE Multnomah,Suite 200 -Facsimile TransmissionPortland,OR 97232 Federal ExpressE-Mail:[e-mail] Electronic Transmission
Randall C.Budge Hand Delivery
Racine,Olson,Nye &Budge,Chtd.US Mail (postage prepaid)
201 E.Center Facsimile Transmission
PO Box 1391 Federal Express
Pocatello,ID 83204-1391 Electronic Transmission
E-Mail:[e-mail]
Attorney for Monsanto Company
CERTIFICATE OF MAILING -PIIC SupplementalTestimony Page 1
Brubaker &Associates Hand Delivery16690SwingleyRidgeRoad,#140
Chesterfield,MO 63017 US Mail (postage prepaid)
Facsimile TransmissionE-Mail:[e-mail] Federal [e-mail] Electronic TransmissionMonsanto
Brandon Karpen Hand DeliveryDeputyAttorneyGeneralUSMail(postage prepaid)Idaho Public Utilities Commission Facsimile Transmission472W.Washington (83702)Federal ExpressBoise,ID 83720 ---
.M Electronic TransmissionE-Mail Brandon.karpen puc.idaho.cov
Bradley Mullins Hand Delivery1750SWHarborWay,Suite 450 US Mail (postage prepaid)Portland,OR 97201 ---
.U Facsimile [e-mail] Federal ExpressPIICElectronicTransmission
Jim Duke Hand DeliveryIdahoanFoodsUSMail(postage prepaid)357 Constitution Way --Facsimile TransmissionIdahoFalls,ID 83742 Federal ExpressE-Mail:[e-mail] Electronic TransmissionPIIC
Kyle Williams Hand DeliveryBYUIdahoUSMail(postage prepaid)Email:[e-mail] Facsimile TransmissionPIICFederalExpress
Electronic Transmission
Val Steiner Hand DeliveryNu-West Industries,Inc.US Mail (postage prepaid)Email:[e-mail] Facsimile TransmissionPIICFederalExpress
Electronic Transmission
Eric L.Olsen Hand DeliveryEchoHawk&Olsen,PLLc US Mail (postage prepaid)505 Pershing Ave,Suite 100 Facsimile TransmissionPOBox6119FederalExpressPocatello,ID 83205 Electronic TransmissionE-Mail:[e-mail]
Idaho Irrigation Pumpers Association
CERTIFICATE OF MAILING -PIIC Supplemental Testimony Page 2
Anthony Yankel Hand Delivery12700LakeAvenue,Unit 2505 US Mail (postage prepaid)Lakewood,OH 44107 Facsimile TransmissionE-Mail:[e-mail] Federal ExpressIdahoIrrigationPumpersAssociationElectronicTransmission
Ronald L.Williams
Williams Bradbury,P.C.
Attorneys for PIIC
CERTIFICATE OF MAILING -PIIC Supplemental Testimony Page 3
ECElVEDBEFORETHE
IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of The Application Of Rocky )Case No.PAC-17-E-07
Mountain Power For A Certificate Of Public )
Convenience And Necessity And Binding )
Ratemaking Treatment For New Wind And )
Transmission Facilities )
SUPPLEMENTAL TESTIMONY OF BRADLEY G.MULLINS
ON BEHALF OF THE PACIFICORP IDAHO INDUSTRIAL CUSTOMERS
April 11,2018
REDACTED VERSION
TABLE OF CONTENTS TO THE
DIRECT TESTIMONY OF BRADLEY G.MULLINS
1.Introduction and Summary ............................................................................................l
II.Background..........................................................................................................................5
III.Issues Identified in the RFP Process ....................................................................................8
a.The Generation Interconnection Queue Influenced the Wind RFPSelection........................................................................................................................9
b.More Cost-Effective Solar Resources Were Available Through
the Solar RFP...............................................................................................................l5
c.PacifiCorp Made Last Minute Modeling Changes that Had the
Effect of Favoring UtilityOwnership ...........................................................................17
IV.Other Modeling Flaws ..............................................................................................21
a.PacifiCorp Has Not Considered that Forward Market Prices Have
Declined......................................................................................................................22
b.PacifiCorp IncorrectlyAttributes Wholesale Transmission
Revenues to the Combined Projects ............................................................................27
c.PacifiCorp Improperly Considered the Costs and Benefits of the
Energy Imbalance Market...........................................................................................30
V.PacifiCorp Does Not Have A Need for New Resources.......................................................35
EXHIBIT LIST
Mullins Exhibit No.305:Company Responsesto Data Requests
Mullins Exhibit No.306 (Conf):Impact of Most Recent Load Forecast on Resource Needs
Assessment
Mullins Exhibit No.307:Questions and Answers from May 31,2017 Pre-Bidder's
Conference
Mullins,Di -i
PacifiCorp Idaho Industrial Customers
l I.INTRODUCTION AND SUMMARY
2 Q.ARE YOU THE SAME BRADLEY G.MULLINS THAT FILED DIRECT
3 TESTIMONY IN THIS MATTER?
4 A.Yes.I previously filed testimony on behalf of the PacifiCorp Idaho Industrial Customers
5 ("PIIC").My address has changed to 1750 SW Harbor Way,Suite 450,Portland,Oregon
6 97062.
7 Q.WHAT IS THE PURPOSE OF YOUR SUPPLEMENTAL TESTIMONY?
8 A.I respond to the Supplemental Direct Testimony of Rocky Mountain Power
9 ("PacifiCorp")witnesses Rick Link,Rick Vail and Chad Teply concerning PacifiCorp's
10 proposal to construct 1,311 MW of new wind resources in eastern Wyoming ("Wind
ll Projects")and its proposal to construct a 140 mile high voltage 500 kV transmission line
12 between Aeolis and Jim Bridger,including associated network upgrades,("Transmission
13 Projects").Collectively,I refer to the Wind Projects and Transmission Projects as the
14 "Combined Projects."
15 Q.WHAT WAS THE SCOPE OF YOUR REVIEW?
16 A.In addition to reviewing PacifiCorp's testimony and workpapers,I conducted discovery
17 and reviewed PacifiCorp's response to data requests.Relevant responsesto data requests
l8 can be found in Mullins Exhibit No.305.I also review highly confidential documents
19 relating to the bids received in both the Renewable Request for Proposal ("Wind RFP")
20 issued on September 27,2018 and the Request for Proposal Solar Resources ("Solar
21 RFP")issued on November 15,2017.
Mullins,Supp Di -1
PacifiCorp Idaho Industrial Customers
i
1 Q.PLEASE PROVIDE AN OVERVIEW OF YOUR TESTIMONY?
2 A.The Wind RFP and Solar RFP demonstrate that the cost of energy and capacity from
3 renewable resources has been declining rapidly.Notwithstanding,as discussed in my
4 Direct Testimony,there is no immanent need for new resources.In discovery,PacifiCorp
5 indicated in its most recent load forecast that loads are forecast to decline between 2017
6 and 2036 on both a peak-and energy-basis.'As a result,PacifiCorp is still in a surplus
7 capacity position through 2026,irrespective of how front office transactions are
8 considered in the load and resource balance.
9 And even if one were to conclude that a resource need existed,PacifiCorp's final
10 resource procurement proposal is not the least-cost,nor least-risk,alternativefor taking
l 1 advantage of increasingly low-priced wind and solar resources.Both independent
l2 evaluators acknowledged that there were low cost,lower risk power purchase agreements
13 ("PPAs")available through the Wind RFP,which were disqualified solely based on the
14 generator interconnection queue position of the respective wind sites.Further,
15 PacifiCorp's solar sensitivity studies also demonstrated that the final and best pricing in
16 the ongoing Solar RFP produced greater ratepayer savings than the Combined Projects.
17 Finally,I also continue to disagree with many of the assumptions in PacifiCorp's
l8 benefits study.I have also identified a number of new issues surrounding market prices,
19 transmission revenues,transmission capital assumptions,and energy imbalance market
20 benefits.After adjusting for these factors,my analysis suggest the Combined Projects
21 will not produce a net present value ratepayer benefit,and in fact,will result in a net cost
i See Mullins Exhibit 306 (Conf.).The most recent load forecast was provided in response to PIIC Data
Request 26.
Mullins,Supp Di -2
PacifiCorp Idaho Industrial Customers
1 of $103,956,638 under the medium gas,medium CO2 scenario on a Net Present Value
2 Revenue Requirement ("NPVRR")basis.
3 Q.WHAT IS YOUR RECOMMENDATION?
4 A.As a result of a variety of issues that have been identified with PacifiCorp's final short
5 list,and the process leading up to the selection of those resources,I recommend that the
6 Commission decline to approve PacifiCorp's request for a Certificate of Public
7 Convenience and Necessity ("CPCN").The RFP that ultimately took place was not the
8 competitive RFP process that was described when PacifiCorp first filed this case.
9 My perspective is that,where a range of potentially beneficial alternatives exist,
10 the utility should select the resource option that results in the greatest public good.
11 Choosing a generating resource that is second best,or in this case,not even close to the
12 next best alternative,is not,in my view,an appropriate resources to be granted a CPCN.
13 Further,I continue to recommend that the Commission reject PacifiCorp's
14 proposal for single issue ratemaking through the proposed renewable resource tracking
15 mechanism,as well as its request for preapproval.The conditions surrounding Langley
16 Gulch's ratemaking preapproval were unique,and not appropriatelyapplied in this case.
17 Q.IF THE CPCN IS TO BE GRANTED,ARE THERE CONDITIONS THAT
18 COULD BE IMPOSED TO PROTECT RATEPAYERS?
19 A.Since there are better resource alternatives available at this time,there are no conditions
20 that will ultimately hold ratepayers harmless.Ratepayers will be harmed if PacifiCorp
21 constructs the Combined Projects,and will incur greater harm if PacifiCorp's
22 assumptions prove to be false.Plus,the margins for achieving ratepayer benefits are very
23 thin,even in PacifiCorp's benefits study.Accordingly,if PacifiCorp constructs the
Mullins,Supp Di -3
PacifiCorp Idaho Industrial Customers
1 Combined Projects,PacifiCorp should,at a bare minimum,bear the risk of the underlying
2 economic benefits failing to materialize due to faultyassumptions and forecasts in its
3 benefits study.The followingconditions address some of those risks:
4 l.The collective rate base for of the Wind Projects,inclusive of any allowance
5 for funds used during construction,construction overhead and other
6 expenditures transferred to plant with respect to the Wind Projects,shall be
7 capped for ratemaking purpose at $1,370,237,000,the amount included in
8 PacifiCorp's benefit study presented in PacifiCorp's Supplemental Direct
9 Testimony.
10 2.The collective rate base for the network upgrades associated with the
11 constructing the Wind Projects,inclusive of any allowance for funds used
12 during construction,construction overhead and other expenditures
13 transferred to plant with respect to such network upgrades,shall be capped
14 for ratemaking purposes at $l 10,700,000,the capital assumed in the
15 benefits study presented in PacifiCorp's Supplemental Direct Testimony.
16 3.The rate base for the Transmission Projects,inclusive of any allowance for
17 funds used during construction,construction overhead and other
18 expenditures transferred to plant with respect to the Transmission Projects,
19 shall be capped for ratemaking purposes at $679,168,000,the capital
20 assumed the benefits study presented in PacifiCorp's Supplemental Direct
21 Testimony.
22 4.In future ratemaking proceedings,PacifiCorp shall be required to impute an
23 amount of production tax credits reflected in revenue requirement if-as a
24 result of a negative IRS ruling,change in tax law,or other factor-
25 PacifiCorp is ultimately found ineligible to claim inflation adjusted
26 production tax credits,at the full $/MWh rate assumed in PacifiCorp's
27 Supplemental Direct Testimony.
28 5.In all future ratemaking proceedings where a dispatch model is used to
29 forecast power costs,PacifiCorp shall include a 300 MW transmission link
30 between Jim Bridger and Walla Walla,consistent with the EIM benefits
31 assumption made in the benefits study presented in PacifiCorp's
32 Supplemental Direct Testimony.
33 6.In future ratemaking proceedings,PacifiCorp shall be required to impute an
34 additional amount of transmission revenues,if the proportion of
35 transmission revenue requirement allocated to PacifiCorp's merchant
36 function increases as a direct result of the construction of the Combined
37 Projects.
Mullins,Supp Di -4
PacifiCorp Idaho Industrial Customers
l 7.In future ratemaking proceedings,PacifiCorp shall be prohibited from
2 recovering any costs associated with ongoing capital maintenance and
3 capital replacements for the Transmission Projects,since those costs were
4 not considered in the benefits study presented in PacifiCorp's Supplemental
5 Direct Testimony.
6 8.In future ratemaking proceedings,PacifiCorp shall not be allowed to
7 recover any positive net uninstructed imbalance charges incurred through
8 the Energy Imbalance Market ("EIM")associated with the Wind Projects,
9 since those costs were not considered in the benefits study presented in
10 PacifiCorp's Supplemental Direct Testimony.
ll II.BACKGROUND
12 Q.WHAT IS PACIFICORP'S FINAL RESOURCE PROPOSAL?
13 A.PacifiCorp has concluded its evaluation of the bids received in the Wind RFP in February
14 2018,and identified four wind resources,including construction of Gateway sub-segment
15 D2,as its final resource proposal in this case.PacifiCorp received bids from
16 approximately 18 different wind sites.2 Of the 18 sites,14 were located in Wyoming and
17 only four sites were located outside of Wyoming.Most of these sites,however,were
18 disqualified by the Company due to transmission queue position issues,which will be
19 discussed below.Accordingly,other than the Company's benchmark resources,only one
20 independent Wyoming wind project had a low enough queue position to be considered by
21 the Company as having a viable bid.3
22 Q.DID PACIFICORP PERFORM AN UPDATED BENEFITS STUDY BASED UPON
23 ITS FINAL RESOURCE SELECTION?
24 A.Mr.Link performed an updated benefits study which contains numerous adjustments
25 relative to the analysis presented previously in this proceeding,most of which were
2 Utah IE Report,Page 49,Table 10.
3 Oregon IE Report,Page 34.
Mullins,Supp Di -5
PacifiCorp Idaho Industrial Customers
l designed to make the benefits of the Combined Projects appear more attractive.The
2 latest benefits analysis presented in this case was in Mr.Link's Corrected Second
3 Rebuttal and Supplemental Direct testimony.
4 Q.WHAT LEVEL OF BENEFITS DID PACIFICORP PROJECT WITH RESPECT
5 TO THE COMBINED PROJECTS?
6 A.Based upon its nominal revenue requirement studies,PacifiCorp alleges the Combined
7 Projects will result in net present value ratepayers benefit/(cost)of (-)$127,4l6,4l9,
8 $166,548,586,and $499,249,164,in low,medium and high gas price scenarios,
9 respectively.*
10 I disagree with these numbers,and expect the projects to be detrimental to
11 customers.Notwithstanding,even if one were to agree with PacifiCorp's modeling
12 assumptions,the wide range of outcomes shows that the Combined Projects are
13 extraordinarily risky to ratepayers.
14 Q.DOES THE TEMPORAL PROFILE OF THE ALLEGED BENEFITS
15 CONTRIBUTE TO THE OVERALL RISKINESS OF THE PROJECTS?
l 6 A.Yes.It's not just the variability of the alleged benefits that make PacifiCorp's proposal a
17 risky project to ratepayers,but also the distant timing of when those alleged benefits
18 might materialize.The benefits profile alleged by PacifiCorp is very much concentrated
19 toward the end of the study period,as can be noted in Figure 1,below.
4 CORRECTED Link,Di-Second Supp,page 17,line l (CORRECTED Table 3-SS,assuming medium
CO2).
Mullins,Supp Di -6
PacifiCorp Idaho Industrial Customers
FIGURE 1
Nominal,Total-Company Benefits Profile of Wind Projects
by PacifiCorp Gas Price Scenario,Medium CO2 ($000)
600,000
---Lo w
500.000 ---Medilun
400,000 ---High
300,000
200.000
100,000
2(18 2028 a3 -038 2043 2048
(200.000)
NPVRR Low Gas Medium Gas High Gas
2018 -2027 (-)$117,222 (-)$77,960 $65,665
2018 -2037 (-)$134,580 $55,567 $311,190
2018 -2049 (-)$175,689 $112,586 $441,062
2018 -2050 (-)$127,416 $166,549 $499,249
1 Q.WHY IS THERE A LARGE INCREASE IN BENEFITS IN THE FINAL YEAR
2 OF THE STUDY PERIOD?
3 A.The increase at the end of the study period represents a new terminal value assumption
4 that PacifiCorp incorporated into its modeling since filing its Direct Testimony.I discuss
5 that issue further below.However,it is important to point out,with respect to Figure l,
6 that expanding the y-axis makes it more difficult to see the year-to-year savings profile.
7 Q.WHAT DOES FIGURE 1 SHOW?
8 A.In addition to reviewing the timing of the benefits,Figure 1 also details the net present
9 value of the Combined Projects,measured over various timeframes,based on the
10 Company's modeling.As can be seen,even in PacifiCorp's model,the Combined
Mullins,Supp Di -7
PacifiCorp Idaho Industrial Customers
l Projects are expected to increase rates over the first ten years of the study period under a
2 medium gas scenario.Thus,a key question with respect to PacifiCorp's benefits study
3 is,if the Combined Projects are to cause rates to increase over the next ten years,how
4 reliable are the benefits estimates distant time periods of the study period.Quite simply,
5 I do not believe that PacifiCorp should be gambling with such significant sums of
6 ratepayer money on the prospect that those out year benefits might materialize.
7 III.ISSUES IDENTIFIED IN THE RFP PROCESS
8 Q.DID YOU REVIEW THE INDEPENDENT EVALUATOR REPORTS
9 ASSOCIATED WITH THE PROPOSED RESOURCE PROCUREMENT?
10 A.Yes.Two independent evaluators oversaw the Wind RFP process-Merrimack Energy
11 Group,Inc.on behalf of the Utah Public Service Commission and Bates White on behalf
12 of the Oregon Public UtilityCommission.Both identified issues that call into question
13 the reasonableness of PacifiCorp's resource selection in the Wind RFP,as well as issues
14 surrounding the fairness and competitiveness of the Wind RFP.With respect to the Solar
15 RFP process,the independent evaluator was London Economics,who has yet to issue a
16 report with respect to the Solar RFP.London Economics was scheduled to issue that
17 report on March 30,2018,although that report has not been filed with the Utah Public
18 Service Commission as of the time of writing this testimony.
19 Q.DO YOU AGREE WITH THE CONCLUSIONS OF THESE REPORTS?
20 A.I do not.Particularly,I disagree with conclusory statements such as "[t]he [independent
21 evaluator]is of the opinion that PacifiCorp's selection of the final shortlist of projects
22 totaling 1,311 MW was a reasonable selection basedon the constraints identified."'
5 Utah IE Report,Page 81.
Mullins,Supp Di -8
PacifiCorp Idaho Industrial Customers
l From a ratepayer perspective,the constraints identified are too significant to be ignored.
2 I do,however,agree with many of the issues and some of conclusions identified in the
3 respective reports.
4 Q.WHAT ISSUES DID THE INDEPENDENT EVALUATORS IDENTIFY WITH
5 RESPECT TO THE WIND RFP?
6 A.The independent evaluators have documented at least three problems associated with the
7 RFP process.I'll discuss each of these in the sub-sections that follow.First,both
8 independent evaluators expressed concerns,and surprise,with the way PacifiCorp
9 applied the transmission interconnection queue in making its final resource selections.
10 Second,both independent evaluates noted that the bids received in the solar RFP had the
11 potential to be more cost competitive than the Combined Projects.Third,both
12 independent evaluators noted that PacifiCorp adopted last minute modeling changes that
13 had the effect of favoring utility ownership bids.As a result of these problems,I do not
14 agree that the Wind RFP has resulted in the best resource selection for ratepayers.
15 a.The Generation Interconnection Queue Influenced the Wind RFP Selection
16 Q.HOW DID THE GENERATION INTERCONNECTION QUEUE INFLUENCE
17 THE WIND RFP SELECTION?
18 A.PacifiCorp's generation interconnection queue includes over 5,000 MW of generators
19 seeking interconnection behind the TOT 4A cut-plane,in the transmission constrained
20 area where PacifiCorp proposes to build the new Gateway Segment D2.PacifiCorp's
21 transmission business is required to grant generator interconnection request in serial
22 queue order.Late in the process of making the resource selection in the Wind RFP,
23 PacifiCorp took a position that,as a result of the requirement to grant interconnection
24 request in serial queue order,only those wind resources with a sufficientlylow
Mullins,Supp Di -9
PacifiCorp Idaho Industrial Customers
1 interconnection queue position could be selected in the RFP process.This meant that
2 bids with queue positions exceeding the incremental capacity provided through Gateway
3 sub-segment D2 were disqualified,irrespective of whether those resource were lower cost
4 or risk relativeto the Combined Projects.
5 Q.WHEN DID PACIFICORP INFORM THE INDEPENDENT EVALUATORS OF
6 ITS POSITION WITH RESPECT TO THE INTERCONNECTION QUEUE?
7 A.It appears that PacifiCorp's position with respect to the interconnection queue was not
8 communicated to the independent evaluators until January 31,2018,after best and fmal
9 pricing had been received.6 Both independent evaluators had no previous knowledge of
10 PacifiCorp's position,and were surprised when PacifiCorp announced it.
11 Q.WERE THE INDEPENDENT EVALUATORS CONCERNED WITH
12 PACIFICORP'S NEW POSITION ON THE INTERCONNECTION QUEUE?
13 A.Yes.In a phone conference two days later,the independent evaluators "expressed some
14 frustration that the bid selection process ended up being limited to selection of only those
15 projects with favorable queue positions,"and that "[a]ll other proposals submitted were
16 behind the interconnection queue constraint and would have no chance of being
17 selected."
18 Q.HOW WERE THE HIGHER QUEUE RESOURCES DISQUALIFIED?
19 A.The mechanics of this were described in the Oregon IE Report as follows:
20 The net result of these adjustments calls for consideration of the overall
21 context of the RFP.Recall that in its RFP as originally drafted,PacifiCorp
22 proposed to select only projects from the constrained area and offered three
23 benchmark projects.Based on the final [transmission]analysis...only one
24 other third party bid on the shortlist (the [CONF]project)could even
25 compete with these offers.In fact,only one other Wyoming wind offer -
6 Utah IE Report,Page 63-64.
7 Utah IE Report,Page 67.
Mullins,Supp Di -10
PaciftCorp Idaho Industrial Customers
1 the [CONF]wind proposal -had a high enough queue position to be
2 viable.So this entire RFP really boiled down to two viable benchmarks and
3 two third-party offers,meaning a lot of the analysis presented here was of
4 questionable value.
5 To be clear,the remaining viable offers were competitive offers,but were
6 not the best the market could provide based on cost or risk,but [the best]
7 for the [new]transmission constraint issue."a majority of offers are no longer
8 viable without transmission investment...(three redacted)projects are only
9 viable because they are outside the constrained area in Wyoming.Inside the
10 constraint only three projects -(names redacted)-are viable."
ll O.IS PACIFICORP'S APPLICATION OF THE INTERCONNECTION QUEUE
12 CONSISTENT WITH ITS OPENING TESTIMONY?
13 A.No.PacifiCorp did not disclose its position with respect to the application of the
14 interconnection queue when it initially proposed the Wind RFP a year or so ago.
15 In my opinion,it was not appropriate for PacifiCorp to omit this critical
16 component from all discussion in the period leading up to the issuance of the RFP and
17 onlyto inform parties of its intentions with respect to the interconnection queue after the
18 bidding had been completed.In fact PacifiCorp implied justthe opposite when it made
19 statements regarding its expectation for a robust RFP process,such as the following:
20 "[t]housands of megawatts of Wyoming wind resource capacity are currently seeking
2l interconnection service from PacifiCorp's transmission function,suggesting adequate and
22 increasing wind development activity in Wyoming to support a robust response to the
23 2017R RFP."*If it was PacifiCorp's original intentionto prosecute the interconnection
24 queue through the Wind RFP process,then it had an obligation to indicate so when it
25 filed its opening testimony and when it issued the Wind RFP.
Oregon IE Report at 34-35.
Ut.PSC Docket No.17-035-23,Supplemental Testimony of Rick T.Link lines 296-299.
Mullins,Supp Di -11
PacifiCorp Idaho Industrial Customers
l Q.IS PACIFICORP'S FINAL TREATMENT OF TRANSMISSION COSTS
2 CONSISTENT WITH ITS COMMUNICATIONS TO BIDDERS IN THE PERIOD
3 LEADING UP TO THE ISSUANCE OF THE RFP?
4 A.No.In Q&A's from the May 31,20l7 pre-issuance bidders conference,PacifiCorp
5 affirmativelystated that "[c]osts associated with providing the transmission capacity in
6 order to relieve existing congestion and facilitate the interconnection and integrationof
7 new wind projects will not be assigned to an individual project as part of the RFP
8 evaluation."'°Yet,that is not how PacifiCorp ultimately undertook the RFP.The cost
9 associated with providing transmission capacity for those resource with a high queue
10 position was directly assigned to those resources.As the Utah IE noted "the studies
11 found that bids with a queue position of Q07l3 or greater triggered the requirements for
12 Energy Gateway South.As a result,the SO model could essentially only select the
13 projects that were actually selected based on their position in the queue."
14 Q.WHY DID PACIFICORP NOT DISCLOSE ITS POSITION ON THE
15 INTERCONNECTION QUEUE WHEN IT FILED THE WIND RFP?
16 A.It certainly is possible that PacifiCorp did not realize the queue position would be the
17 deciding factor when it initially conceived the Wind RFP.If true,however,that is
18 simply an indication that PacifiCorp unintentionally designed an uncompetitiveRFP.
19 Whatever the case may be,representations of a robust RFP process have proved to be
20 false.The fact that,in the period leading up to the Wind RFP,PacifiCorp undertook
21 efforts to secure development rights for those resource-which were among the only
22 resources with a low enough queue position to be selected-suggests that PacifiCorp
10 Mullins Exhibit 307.
Utah IE Report at 82.
Mullins,Supp Di -12
PacifiCorp Idaho Industrial Customers
l probably had formed its position on the interconnection queue well before it filed the
2 RFP.
3 Q.DO YOU AGREE WITH PACIFICORP'S POSITION?
4 A.I believe that is fundamentallya legal question and I am not an attorney.However,my
5 understanding of the RFP as represented by PacifiCorp and as I described above,was that
6 all viable Wyoming wind resources would be considered,that the Company's goal was to
7 acquire the lowest cost resources availableto serve load,and that therefore the
8 Company's interconnection queue would not bias the decision making one way or
9 another.Thus,I was under the impression that all Wind RFP bids would be scored or
10 evaluated on the same basis,with the Company being able to then either equalize or
ll mitigate the bidding advantage otherwise available to a bidder with a higher queue
12 position.Such a pro-active step by the Company seems all the more important,where
13 otherwise it seems to have advantaged itself with better queue positions for its own wind
14 resources than for some of the lower cost competitors.
15 Q.WERE THERE MORE COST EFFECTIVE ALTERNATIVES AVAILABLE?
16 A.Since PacifiCorp applied incremental transmission costs to the bids whose queue position
17 exceeded the incremental transmission capacity,the higher queue position resources had
18 no way of being selected by the model.As a result,the degreeto which one of these
19 higher queue resource might be more cost effective than the Combined Projects is not
20 known,assuming the queue were not the limiting factor.Notwithstanding,Table 13 in
21 the Utah independent evaluator's report shows that there were clearly better alternatives.
22 The utility owned Wind Projects had levelized delivered costs ranging from [Highly
23 Confidential][End Highly Confidential],including the
Mullins,Supp Di -13
PacifiCorp Idaho Industrial Customers
l production tax credit benefits.In contrast,there were thousands of megawatts of wind
2 availablethrough PPA agreements with a comparable cost.For example,the [Highly
3 Confidential]
4 [End HighlyConfidential].That wind project,and many others were
5 better alternatives than the benchmark resources,assuming the interconnection queue was
6 not determinative in the selection process.
7 Q.IN WHAT CIRCUMSTANCES DO RATEPAYERS PREFER PPA OPTIONS?
8 A.Build to transfer agreements carry ongoing development risks that are picked up by
9 ratepayers that are not present with a PPA.If PacifiCorp fails to construct the Combined
10 Projects within the proposed budgets,then those projects might not be economical for
ll ratepayers.The same risk is not present with PPA options,however,where another party
12 has guaranteed the costs through a fixed $/MWh payment.Similarly,with PPA options
13 ratepayers do not bear the risk that production tax credits might be unavailable,due to
14 changes in tax laws or failure to meet the IRS safe harbor requirements.The capacity
15 factor risk of PPAs is also lower because if the wind does not materialize at the level
16 forecast,the ultimate payments to the counterparty will decline.
17 At a minimum,due to the existence of these low cost PPA options,it is critical for
18 ratepayers to be insulated from all further development risk associated with the
19 Combined Projects,through the imposition of project-by-project hard cap on all
20 construction cost at the level assumed in PacifiCorp's benefits study.Ensuring the
21 production tax credit benefits materialize is also critical to insulating ratepayers from this
22 development risk.
Mullins,Supp Di -14
PacifiCorp Idaho Industrial Customers
1 Q.IS THE RESULT OF THE WIND RFP GROUNDS TO DENY PACIFICORP'S
2 CPCN PROPOSAL?
3 A.Assuming that the standard requires the public utility to construct plant that achieves the
4 greatest good,yes.In this case,there were potentially better alternatives available,
5 which were summarily disqualified based on their interconnection queue position.As a
6 result,I believe the RFP was deeply flawed,and it is not appropriate to grant a CPCN for
7 a sub-optimal utility plant selected through such a process.
8 b.More Cost-Effective Solar Resources Were Available Throughthe Solar RFP
9 Q.PLEASE PROVIDE SOME BACKGROUND ON THE SOLAR RFP.
10 A.The requirement to conduct a Solar RFP was a condition imposed by the Utah Public
11 Service Commission when approvingthe Wind RFP.Because issuing the Wind RFP
12 was imminent,the Solar RFP is on a slightlydelayed schedule in relation to the Wind
13 RFP.The Company received best and final pricing from solar bidders in mid-February,
14 and finalized the shortlist selection process mid-March.Based upon the concerns of the
15 independent evaluators,PacifiCorp prepared solar sensitivity studies to compare the
16 economics of the Solar RFP short list with the Combined Projects,as discussed in Mr.
17 Link's supplemental.
18 Q.WHAT DID THE INDEPENDENT EVALUATORS SAY WITH RESPECT TO
19 THE SOLAR RFP?
20 A.The Utah independent evaluator concluded that "Since PacifiCorp's solicitation is based
21 solely on the solicitation for system wind resources,it is not possible to determine if other
22 resources would have been included in a final least cost,least risk system portfolio,
Mullins,Supp Di -15
PacifiCorp Idaho Industrial Customers
l potentially displacing one or more wind resources."12 The Oregon independent
2 evaluatorstated that "[i]n all cases the combination of solar and shortlisted resources
3 provided more net benefits.""
4 Q.HOW MUCH SOLAR WAS INCLUDED IN THE FINAL SHORT LIST FOR THE
5 SOLAR RFP?
6 A.Approximately 1,4l9 MW,a significant amount of resources,particularly given the lack
7 of demonstrated resource need.
8 Q.WHAT DID THE SOLAR SENSITIVITY STUDIES SHOW?
9 A.When viewed in PacifiCorp's nominal study,the solar bids are overwhelmingly more
10 cost effective than the new wind.The PVRR(d)of the Combined Projects was just
11 (-)$166,548,587 in the nominal revenue requirement studies presented in Mr.Link's
l2 Supplemental Direct Testimony,under the medium gas,medium CO2 case.In the
13 medium gas,medium CO2 case,however,the solar project,however,produced a
14 PVRR(d)of (-)$424,128,293.Thus,the solar projects produced benefits that were
15 approximately 2.5 times greater than the Combined Projects,when viewed in the medium
16 gas scenario.
17 Q.WERE THE SOLAR SENSITIVITIES BENEFICIAL UNDER THE LOW GAS
18 PRICE SCENARIO?
19 A.Yes.Not only was the solar short list more beneficial,it was also more durable across
20 price policy scenarios.PacifiCorp forecast that ratepayers will recognized benefits even
21 in the low gas,zero carbon price policy scenario.In contrast to the economic loss of
22 $183,651,193 for the Combined Projects in the low gas,zero carbon price policy
12 Utah IE Report,Page 68
13 Oregon IE Report,Page 36.
Mullins,Supp Di -16
PacifiCorp Idaho Industrial Customers
l scenario,the Final Solar short list produced a benefit of $216,524,070.The solar bids
2 were also PPA,and thus,less risky from that perspective as well.
3 Q.DID PACIFICORP'S STUDY IDENTIFY MATERIAL BENEFIT OF
4 ACQUIRINGBOTH THE WIND AND SOLAR PROJECTS?
5 A.No.If both the solar and the new wind is constructed,the PVRR(d)increased to only
6 (-)$435,346,313 in the medium gas price scenario.This means that the incremental
7 benefit of investing $2.2 billion in the Combined Projects was only (-)$11,218,020 in the
8 nominal studies.
9 Q.WHAT DO YOU RECOMMEND WITH RESPECT TO THE SOLAR RFP?
10 A.Given the results the Solar RFP resources,it is appropriate for the Commission not to
l 1 grant the CPCN request because other renewable resources are availablethat produce
12 higher benefits,even in PacifiCorp's studies.Existence of these cost competitive bids is
13 also reason for PacifiCorp to be held accountable for the modeling assumptions that it has
14 made when developingits resource selection.
15 c.PacifiCorp Made Last Minute Modeling Changes that Had the Effect of Favoring Utility
16 Ownership
17 Q.PLEASE DESCRIBE THE MODELING CHANGES THAT PACIFICORP MADE
18 WHEN MAKING THE FINAL SHORTLIST.
19 A.PacifiCorp made at least two fundamental modeling changes late in the RFP process,
20 which had the impact of making the utility ownership bids appear more attractive.First,
21 PacifiCorp changed the way that it considered production tax credits in its "levelized"
22 revenue requirement study by considering those benefits on a nominal,rather than a
23 levelized basis,over a 20 year study period.The change to the treatment of production
24 tax credits did not impact the "nominal"revenue requirement studies.Second,
Mullins,Supp Di -17
PacifiCorp Idaho Industrial Customers
1 PacifiCorp included a new terminal value calculation that increased the relative benefit of
2 the Combined Projects.
3 Q.WHY DO THE NOMINAL AND LEVELIZED STUDIES PRODUCE SUCH
4 DIFFERENT RESULTS?
5 A.Understanding the difference between the "levelized"studies identified in CORRECTED
6 Table 2-SS and the "nominal"studies identitled in CORRECTED Table 3-SS is
7 important when considering PacifiCorp's benefits.In my view,the "levelized"studies
8 are not properly considered levelized study at all,since they includes a mismatch of both
9 levelized and nominal costs.In contrast,the nominal study simply considers all costs on
10 a nominal basis,and is a more straight-forward approach.
ll Q.WHICH STUDY IS MORE APPROPRIATE?
12 A.While I do not agree with many of the assumptions that went into the nominal studies,the
13 nominal studies are a more appropriate way to consider the alleged benefits of the
14 Combined Projects.Use of levelized costs might be appropriate when considering the
15 cost of multiple different resources in a capital expansion model and where the study
16 period does not align with the useful life of a resource.In this case,however,PacifiCorp
17 has made a very specific resource proposal,so there is no reason to levelize the costs of
18 the Combined Projects in order to consider the potential for benefits,other than
19 frontloading nominal benefits that may not be received until the end of the Wind
20 Project's useful life.
21 Q.DO YOU AGREE WITH PACIFICORP'S PROPOSAL TO CONSIDER THE
22 PRODUCTION TAX CREDITS ON A NOMINAL BASIS?
23 A.Conceptually,I don't necessarily disagree that it is appropriate to consider productiontax
24 credits on a nominal basis.Notwithstanding,if those benefits are considered on a
Mullins,Supp Di -18
PacifiCorp Idaho Industrial Customers
1 nominal basis,then then all costs other than production costs,including the cost of the
2 transmission should be considered on a nominal basis.In performing its levelization
3 analysis,the Company performs a bizarre methodology for its transmission investment,
4 which has the effect simply ignoring a great deal of the costs that ratepayers will be
5 responsible for with respect to the transmission investment.If production tax credits are
6 to be considered on a nominal basis,its is more appropriate to consider all costs and
7 benefits not associated with production plant on a nominal basis,rather than mismatching
8 incongruous levelized and nominalization assumptions in the same study.
9 Q.DO YOU AGREE WITH PACIFICORP'S TERMINAL VALUE ASSUMPTION?
10 A.I do not necessarily disagree that there might be some longer term value with respect to a
11 utilityowned wind site,in contrast to a power purchase agreement.Notwithstanding,if a
12 longer-term terminal value is to be considered included,the Company needs to consider
13 all of the ongoing capital maintenance and investment that is required with respect to the
14 Combined Projects in order to achieve that terminal value.
15 Q.DOES PACIFICORP'S ANALYSIS INCLUDE ALL ONGOING CAPITAL
16 MAINTENANCE?
17 A.No.While there was some consideration of capital maintenance with respect to the Wind
18 Projects,in response to PllC Data Request 24,PacifiCorp stated that its analyses did not
19 consider the ongoing capital maintenance and replacements of the Transmission Projects.
20 Since the ongoing capital was not considered,I do not believe it is appropriate to include
21 a terminal value component in the benefits study PacifiCorp presented.Or in the
22 alternative,the ongoing capital investment in the Transmission Projects needs to be
23 included.The terminal value calculations also do not consider the cost of the
Mullins,Supp Di -19
PacifiCorp Idaho Industrial Customers
l Transmission Projects after the 30 year study period,which also need to be considered in
2 the economic analysis.
3 Q.WHAT WAS THE IMPACT OF THE TERMINAL VALUE ASSUMPTION?
4 A.As can be seen in Figure 1,above,the impact of the terminal year revenue requirement
5 ranges from $48.3 million to $58.2 million.
6 Q.HOW DOES THAT COMPARE TO THE COST OF CONGOING CAPITAL
7 MAINTENANCE FOR THE TRANSMISSION PROJECTS?
8 A.The ongoing capital cost of the transmission investment is significant in the study period.
9 PacifiCorp is correct that the rate of replacements associated with the Transmission
10 Projects will be low in the early years of the study period.To address this concern,I
11 estimated replacement costs in the study period assuming a rate of retirement
12 corresponding to a 60-R3 survivor curve,which is the current curve used for Account
13 356,conductors and devices.I also assumed a cost of replacement equal to 100 percent
14 of the original cost of the investment with no adjustment for inflation.I input the
15 resultant capital schedule into PacifiCorp's model and the result was a reduction to the
16 PVRR benefits of approximately $91,951,462 in the 30 year study period.
17 In the terminal period,the increasing level of capital investment will eventually
l 8 overtake depreciation expense with respect to the Transmission Projects.Based upon the
19 capital schedule described above,including those terminal costs,further reduces the
20 PVRR in the medium gas case by $18,296,839.
21
22
Mullins,Supp Di -20
PacifiCorp Idaho Industrial Customers
I
i
1 IV.OTHER MODELING FLAWS
2 Q.IN YOUR DIRECT TESTIMONY,YOU IDENTIFIED A NUMBER OF
3 PROBLEMATIC ASSUMPTIONS IN PACIFICORP'S ANALYSIS.DO THOSE
4 PROBLEMS PERSIST IN THE MODELING USED TO JUSTIFY THE RFP
5 SHORT-LIST RESOURCES?
6 A.Yes.The RFP selection process continues to be based on a number of unreasonable
7 assumptions,which were identified in my direct testimony.In its Rebuttal Testimony,
8 filed on December 12,2017,PacifiCorp discussed many of these assumptions,but its
9 testimony on the matter not persuasive.In fact,economic benefits studies presented in
10 PacifiCorp's final economic screens in the latest PacifiCorp update contained even more
11 problematic assumptions.
l2 Q.WHAT IS THE IMPACT OF THESE PROBLEMATIC MODELING
l3 ASSUMPTIONS?
14 A.Table 1 below details the impact of the problematic modeling adjustments that I have
15 identified,including the issue related to ongoing transmission capital investment costs,
16 discussed above.
Mullins,Supp Di -21
PacifiCorp Idaho Industrial Customers
TABLE 1
Impact of Contested Modeling Adjustments
Nominal PYRR(d)$
Company Purported Net Benefits /(Cost)166,548,587
Modeling Adjustments:
Ongoing Transmission Capital (90.175,4%)
OATT Transmission Revenues (25.674,149)
EIM Unistructed Imbalance (22.925,985)
EIM 300 MW Link (43.416,002)
Total Modeling Adjustments (182,191,632)
Combined Project Net Benefits /(Cost)(Before Market Change)(15,643,045)
Approx Impact of Declining Market Prices (88,313,593)
CombinedProject Net Benefits I (Cost)After Market Adjustment (103,956,638)
1 a.PacifiCorp Has Not Considered that Forward Market Prices Have Declined
2 Q.HAS PACIFICORP ADEQUATELY RESPONDED TO CHANGING MARKET
3 CONDITIONS?
4 A.No.While PacifiCorp has made a number of modeling changes to improve the overall
5 economics of its project,it has ignored changing circumstances surrounding market
6 prices,a key driver of the economic case for its proposal.Forward market price
7 projections have declined dramatically relativeto the forward prices included in
8 PacifiCorp's economic analysis.
9 Q.HOW DOES PACIFICORP DEVELOP ITS LONG-TERM OFPC?
10 A.The forecasting methodology PacifiCorp uses was described in detail in PacifiCorp's
11 response to UAE Data Request 3.2.14 Effectively,there are three parts to PacifiCorp's
12 forecast methodology.The first 72 months of the forecast use market forwards based on
14 Mullins Exhibit 306
Mullins,Supp Di -22
PacifiCorp Idaho Industrial Customers
l quotes from brokers.This initial 72 months is often referred to as the short-term portion
2 of the OFPC.The subsequent 12 months (months 73 through 84)are a transition period
3 that interpolate between market forwards and a third-party fundamentals based forecast.
4 Beginning in month 85,the OFPC relies on a third-party forecast that PacifiCorp receives
5 in one of its ongoing subscription services for multi-client,off-the-shelf fundamentals-
6 based forecasts.The part of the curve that relies on a third-party forecast is often referred
7 to as the long-term portion of the OFPC.
8 Q.WHAT IS THE TENOR OF THE FORWARD PRICE CURVE PACIFICORP
9 USED IN ITS ECONOMIC ANALYSIS?
10 A.In response to PIIC Data Request 37,PacifiCorp noted that the economic analyses
11 presented in the Corrected Second Supplemental Direct Testimony of Mr.Link used
12 PacifiCorp's December 2017 Official Forward Price Curve ("OFPC")."That OFPC was
13 issued on January 2,2018.Notwithstanding,the long-term portion of the December
14 20l7 OFPC was based on a long-term natural gas forecast dated of November 21,2017
15 as noted in PacifiCorp's responseto UAE Data Request 3.2 in Docket No.17-035-40.16
16 Thus,the long-term market price projections did not consider the effects of tax reform or
17 the reduction in forward market prices that occurred in late 2017.
18 Q.HOW HAVE MARKET PRICES CHANGED RELATIVE TO DECEMBER 2017
19 OFPC?
20 A.While spot prices remained relatively flat,large price reductions were observed in the
21 forward periods in December 2017.In PacifiCorp's December 20l7 OFPC,these
22 reductions were noted in the short-term portion of the OFPC which were based on broker
15 Id.
l 6 Id.
Mullins,Supp Di -23
PacifiCorp Idaho Industrial Customers
l quotes as of January 2,2018.For example,the forward market prices for calendar year
2 2022 declined by approximately35%in PacifiCorp's December 2017 OFPC,relativeto
3 the June 2017 curve used in PacifiCorp's prior economic benefits analysis.
4 Notwithstanding,similar reductions were not observed in the long-term portion of
5 the OFPC.The third party forecast was from November2017,prior to the passage of the
6 Tax Cuts and Jobs Act,and can be observed in Figure 2,below.
FIGURE 2
Rolling 12 Mo Average Henry Hub Forward Price $/MMBtu
Source:PacifiCorp Non-Confidential Official Forward Price Curve
7.00
6.75 -June 2017 OFPC
6.50 -December 2017 OFPC
6.25
6.00
5.75
5.50
5.25
5.00
4.75 Blende
4.50
4.25 Forward Subscription
4.00 Market Forecast
Prices3.75
3.50
3.25
3.00
2.75
2.50
7 As can be seen in Figure 2,forward prices are basically flat for the first six years
8 of the price curve,but then rapidly increase by around 50%in the transition period.The
9 reason for the rapid increase is possibly due to the fact that the long-term portion of the
10 curve was based on a stale forecast.
Mullins,Supp Di -24
PacifiCorp Idaho Industrial Customers
l Q.HAS PACIFICORP RECEIVED MORE RECENT THIRD-PARTY FORECASTS?
2 A.Yes.In PIIC Data Request 38,PIIC requested that PacifiCorp provided the long-term
3 natural gas price forecasts that PacifiCorp has received through at third-party subscription
4 service over the period January l,2018 through the present.The most recent price
5 forecast of ,as well as the prices from
6 PacifiCorp's December 2017 OFPC can be seen in Figure 3,below.
CONFIDENTIAL FIGURE 3
Henry Hub Forward Price $/MMBtu
PacifiCorp December 20l8 OFPC versus most recent third-party forecast.
7 As can be seen from the figure,the more recent projections,are more in line with
8 current market forward prices,and conforms better with actual market prices.
9 Q.WHAT IS THE IMPACT OF DECLINING MARKET PRICES ON
10 PACIFICORP'S PROPOSAL?
11 A.I took the $/MWh difference between the long-term prices included in the December
12 2017 OFPC and the February 20l8 prices detailed in Confidential Figure 3.To estimate
13 the expected change in power prices as a result of declining gas prices,I then multiplied
Mullins,Supp Di -25
PacifiCorp Idaho Industrial Customers
l that difference by the ratio of Palo Verde electric prices to Henry Hub gas prices in the
2 December 2017 OFPC.Finally,I multiplied the Palo Verde power price delta by the
3 amount of generation from the Wind Projects to estimate the economic impact of the
4 lower curve.The result was a present value revenue requirement reduction to the net
5 benefits calculation of $358,817,934.
6 Such an adjustment would imply a net cost associated with the Wind Projects that
7 is lower than the low market,zero CO2 scenario.Accordingly,I also performed an
8 analysis that interpolated between the low and medium gas price scenario based upon the
9 degree to which the February prices tended towards the low gas,zero CO2 scenario.
10 Based on that analysis,I determined that prices were approximately25%closer to the
11 low gas,zero CO2 scenario,implying an impact of $88,313,593 associated with the
12 lower curve.Since the system will redispatch around the lower market prices,I view this
13 value to be a more reasonable estimate of the lower expected forward prices.
14 These market adjustments are appropriatelyapplied even before considering the
15 largely academic issue of whether a risk premium is embedded in forward prices.Mr.
16 Link is entitled to his opinion,but based on my experience,market prices have
17 consistently been lower than the utilities'long term forecasts.And,the data presented in
18 my Direct Testimony is evidence of that fact.Whether it's a risk premium,or just bad
19 forecasting,the historical data is a reason to place greater weight on the low gas price
20 scenarios.Since consideration of a risk premium would render the projects more
21 uneconomical to ratepayers,I did not consider that adjustment in Table 1,above.
Mullins,Supp Di -26
PacifiCorp Idaho Industrial Customers
l b.PacifiCorp Incorrectly Attributes Wholesale Transmission Revenues to the Combined
2 Proiects
3 Q.DOES PACIFICORP'S FINAL BENEFITS STUDY CONTINUE TO INCLUDE
4 FAULTY ASSUMPTIONS WITH RESPECT TO WHOLESALE TRANSMISSION
5 REVENUES?
6 A.Yes.As noted in my Direct Testimony,PacifiCorp continues to assume that 12%of the
7 Transmission Projects,and 12%of the associated network upgrades will be funded by
8 PacifiCorp's Open Access Transmission Tariff ("OATT")customers.The 12%amount
9 is based on the portion of transmission revenue requirement that has historically been
10 funded by OATT customers.PacifiCorp has assumed that the portion of transmission
11 revenue requirement allocated to retail customers will not increase as a result of
12 constructing the Combined Projects.
13 Q.WHAT DID PACIFICORP SAY IN REBUTTAL TESTIMONY ON THIS ISSUE?
14 A.Very little.Mr.Vail provided a high-level description of PacifiCorp Transmission's
15 transmission revenue requirement ("ATRR"),and then goes on to state that "[t]he 12
16 percent figure represents the current level of ATRR funded by OATT customers."
17 Q.DO YOU AGREE?
18 A.I do not dispute that the 12%figure represents the current level of ATRR funded by
19 OATT customers.I do,however,disagree with PacifiCorp's assumption that the 12%
20 figure will remain constant after the Combined Projects are placed into service.As a
21 result of the way transmission costs get allocated,that percentage will decline as a result
22 of constructing the Combined Projects.Mr.Vail never responded to the concern that the
23 percentage will decline.
17 Supplemental Direct and Rebuttal Testimony of Rick Vail,Page 27,Line 13-16.
Mullins,Supp Di -27
PacifiCorp Idaho Industrial Customers
l Q.IS MR.VAIL CORRECT THAT THE PORTION OF TRANSMISSION
2 REVENUE REQUIREMENT FUNDED BY RETAIL CUSTOMERS WILL NOT
3 INCREASE?
4 A.No.Mr.Vail's description of PacifiCorp's formula rate overlooks the way that costs get
5 allocated between point to point and network integration transmission customers.
6 Because the Combined Projects displace resources delivered through point to point
7 transmission,the allocation of transmission revenue requirement to PacifiCorp's
8 merchant function will increase as a direct result of the construction of the Combined
9 Projects.Thus,the 12%figure cited in Mr.Vail's testimony will decline,making the
10 Combined Projects less beneficial.
11 If PacifiCorp constructs the wind projects,that will have the effect of increasing
12 the load served by network resources and reducing the loads served by front office
13 transactions through point-to-point transmission.While PacifiCorp's network service
14 load will increase,resulting in an increase in allocated cost,PacifiCorp still has to pay for
15 the full capacity of its point-to-point transmission that it uses to deliver front office
16 transactions to load,irrespective of whether it actually acquires those front office
17 transactions.PacifiCorp indicated that it has no intention of terminating any point-to-
18 point transmission as a result of constructing the Combined Projects,accordingly its
19 allocation will increase.
20 Q.DID MR.VAIL ADEQUATELY RESPOND TO THE RISK THAT THE
21 TRANSMISSION PROJECTS WILL BE DIRECT ASSIGNED TO PACIFICORP
22 MERCHANT?
23 A.No he did not.Further,there continues to be a real risk that third party OATT customers
24 will not be willingto pay for the cost of any of the Transmission Projects,and that the
Mullins,Supp Di -28
PacifiCorp Idaho Industrial Customers
1 costs of the economic investment will be directly assigned to PacifiCorp's merchant
2 function.
3 Q.WHAT IS THE IMPACT OF DECLINING THIRD-PARTY REVENUES?
4 A.They are a key component to PacifiCorp's benefits study.And the impact of the Wind
5 Projects on PacifiCorp Merchant's share of transmission revenue requirement is easily
6 determined under the scenario that the Wind Projects are constructed.Based upon
7 projected 2017 net revenue requirement of $438,765,673,construction of the
8 Transmission Projects-
9 will produce an approximate 17.7%transmission rate increase.As a result of the Wind
10 Projects,however,the network load of PacifiCorp's merchant function will increase by
l 1 approximately450 MW/mo,the average energy produced by the Wind Projects,with no
12 corresponding reduction to the point to point transmission used deliver front office
13 transactions.As a result,the total billing determinants will increase from 13,875 to
14 14,325 on a 12 CP basis,but PacifiCorp's share of the billing determinants will also
15 increase by about 450 MW.Based on these values,I estimate that the portion of revenue
16 requirement funded by OATT customers would decline from the 12%value to
17 approximately l l.62%.While the 0.38%difference may seem small,the impacts are
18 material on the overall benefits alleged by PacifiCorp,since it applies to overall revenue
19 requirement.Based on overall transmission revenue requirements of approximately
20 $516,629,044,the difference equates to approximately $1,9634,190 million per year,
21 which over a 30 year study period results in an additional present value cost of
22 $25,674,149.
Mullins,Supp Di -29
PacifiCorp Idaho Industrial Customers
1 Q.IF THE PROJECT IS TO BE APPROVED,WHAT CONDITIONS MIGHT BE
2 IMPOSED TO PROTECT AGAINST THIS RISK?
3 A.PacifiCorp is in control of the assumptions that it is using in its benefits study.To the
4 extent that an assumption is based on a plain misapplication of how the costs get
5 allocated under the formula rate,or based on PacifiCorp's failure to recognize the risk of
6 the Transmission Projects being directly assigned to PacifiCorp's merchant function,it is
7 appropriate to apply a condition to protect against such risk.Given the magnitude of the
8 transmission rate increase involved,I find it probable that OATT customers will contest
9 rolling in the Transmission Projects,since the have been justified plainly on economic
10 benefits realizable by retail customers.From my perspective,a condition,as identified in
11 my summary,requiring PacifiCorp to include transmission revenues in future rate cases
12 in a manner consistent with its assumption in this proceeding would protect ratepayers
13 against these risks.
14 c.PacifiCorp Improperly Considered the Costs and Benefits of the Energy Imbalance
15 Market.
16 Q.PLEASE DESCRIBE THE EIM BENEFIT ASSUMPTION INCLUDED IN
17 PACIFICORP'S MODELING
18 A.In response to PIIC Data Request 21,PacifiCorp confirmed that the economic analyses in
19 the Supplemental Direct Testimony of Rick T.Link included a modeling assumption it
20 refers to as an "Energy Imbalance Market ("EIM")Benefit.""In both the System
2l Optimizer and PaR models,the transmission topology"includes a new 300 MW
22 transmission link between Jim Bridger and Walla Walla.This new transmission link
Mullins Exhibit 305
For an illustration of the transmission topology used in the IRP see PacifiCorp,2017 Integrated Resource
Plan,Page 147,Figure 7.2.
Mullins,Supp Di -30
PacifiCorp Idaho Industrial Customers
l does not exist today and PacifiCorp has no plans to build it.Notwithstanding,PacifiCorp
2 believes that this incremental 300 MW of transmission capability will be made available
3 when Idaho Power joins the EIM.Within its models,this assumption has the effect of
4 reducing congestion out of Wyoming at Bridger (the terminating end of the proposed
5 Gateway sub-segment D2)and increasing the purported economic benefits of the short
6 list resources identified in the Supplemental Direct Testimony of Rick T.Link.
7 Q.DID YOU EXPRESS CONCERNS WITH THIS 300 MW LINK IN YOUR
8 DIRECT TESTIMONY?
9 A.In Direct Testimony,I testified that the EIM does not operate in a way that allows a
10 utilityto effectuate firm transmission of electricity,as PacifiCorp has modeled with
l 1 respect to its EIM benefit adjustment.20 In contrast,my view was that the EIM is likely
l2 to result in a net cost to Wyoming wind resources,since those resource will be subject to
13 uninstructed imbalance charges,which PacifiCorp acknowledged was not considered in
14 its economic analysis.21
15 Q.HOW DID THE COMPANY RESPOND?
l 6 A.In Rebuttal Testimony,PacifiCorp never actually responded to the propriety of the new
17 300 MW transmission link between the Jim Bridger and Walla Walla.Mr.Link
18 apparently disagreed with the way I characterized the Supplemental GRID studies that
19 were prepared as a part of the 2017 IRP.22 He noted that the GRID model studies were
20 only used in the 20l7 IRP,and not in subsequent analyses presented in this docket.23 L
20 Direct Testimony of Bradley G.Mullins,page 28,line l -page 29,line 2.
21 Id.
22 Rebuttal Testimony of Rick Link,page 27,line 19 -page 28,line 1.
23 Id
Mullins,Supp Di -31
PacifiCorp Idaho Industrial Customers
l however,acknowledged that PacifiCorp only used the Supplemental GRID studies in the
2 2017 IRP,and that PacifiCorp had since incorporated the adjustments into the SO and
3 PaR models.24 The only reason that the Supplemental GRID studies were considered was
4 due to the fact that,as can be noted in PacifiCorp's response to PIIC Data Request 21,
5 PacifiCorp has been unwillingto isolate the impact of the 300 MW link between Jim
6 Bridger and Walla Walla in economic studies performed using the SO and PaR models.25
7 Since PacifiCorp has been unresponsive,the Supplemental GRID studies are the best
8 information availableestimating the economic impact of the new,300 MW transmission
9 link between Jim Bridger and Walla Walla included in PacifiCorp's economic analyses.
10 Further,in response to the argument that the EIM is likely to represent an
11 additional ancillary service cost through the imposition of instructed imbalance charges,
12 Mr.Vail testified that "there is no basis to assume that uninstructed imbalance will result
13 in a net cost and,in fact,the expectation is that over time there will be no net impact
14 associated with uninstructed imbalance"26 Mr.Vail,however,did not provide any
15 supporting data-such as actual uninstructed imbalance charges for existing Wyoming
16 wind resources-to support his claim that the uninstructed imbalance of Wyoming wind
17 resources will net to zero.
18 Q.DID PACIFICORP'S CONFIRM THAT IT DID NOT CONSIDER ANY
19 UNINSTRUCTED IMBALANCE CHARGES IN ITS BENEFITS STUDY?
20 A.Yes.Mr.Vail's Supplemental Direct Rebuttal Testimony confirmed that the economic
21 studies presented in the Supplemental Direct Testimony of Mr.Link did not consider any
24 Direct Testimony of Bradley G.Mullins,page 6,lines 7 -10.
25 See Attachment A,page 14.
26 Rebuttal Testimony of Rick Vail,page 23,lines 12 -14.
Mullins,Supp Di -32
PacifiCorp Idaho Industrial Customers
l ancillary services costs associated with acquiring EIM imbalance services applicable to
2 the Wind RFP short list wind resources.
3 Q.WHAT DID PACIFICORP'S RESPONSE TO PIIC DATA REQUEST 34 SHOW?
4 A.It showed that Mr.Vail was wrong.The uninstructed imbalance has tended to be positive
5 for wind resource currently located in the transmission constrained area of Wyoming.
6 Confidential Table 2,below,shows the historical values.
CONFIDENTIAL TABLE 2
Uninstructed Imbalance Costs for Wind Prolects
Average Monthly Imbalance Cost $
TOTAL
2015 26,712
2016 30,533
2017 22,949
Average 26,731
Annual 320,778
Capacity (MW)238
$/MW-yr Imbalance Costs 1,35l
Wind Projects Capacity 13l1
Estimated Annual Imbalance Cost of Wind Projects 1,770,692
7 Based on the actual experience of wind resource located in eastern Wyoming,I
8 estimate that the annual imbalance costs associated with the l,31l MW Wind Projects
9 will be material.I estimate that on an annual basis that cost will be $1,770,692,as
10 detailed in Confidential Table 2,above.
Mullins,Supp Di -33
PacifiCorp Idaho Industrial Customers
l Q.BASED ON THIS HISTORICAL DATA,HOW MUCH INSTRUCTED
2 IMBALANCE TO YOU EXPECT FOR THE WIND PROJECTS?
3 A.Based on the average $/MWh of these historical levels,incorporatingthese imbalance
4 charges will reduce the benefits of the Combined Projects by approximately$22,925,985
5 over the 30-year study period.
6 Q.WHAT IS THE IMPACT OF THE 300 MW TRANSMISSION LINK?
7 A.I also continue to disagree with the 300 MW transmission link that PacifiCorp has
8 included in its economic analysis.Inclusion of a firm 300 MW transmission link is not
9 consistent with the operation of the EIM,which does not provide a utility with firm
10 transmission rights,as assumed in PacifiCorp's analysis.In Mullins Exhibit No.305,in
11 response to PIIC Data Request 31,PacifiCorp confirmed that "use the EIM to achieve
12 new,firm transmission rights on another EIM participants'system,"as modeled with
13 respect to the 300 MW transmission link.Based on the supplemental GRID studies,
14 presented in the IRP,grossed up for the higher level of wind PacifiCorp has proposed
15 through the final short list,I estimate the impact of this 300 MW link to be an
16 approximate $43,416,002 reduction to the net present value revenue requirement benefits
17 PacifiCorp has alleged.
18 Q.IF THE PROJECT IS TO BE APPROVED,WHAT CONDITIONS MIGHT BE
19 IMPOSED TO PROTECT AGAINST THESE FAULTY ASSUMPTIONS?
20 A.With respect to the uninstructed imbalance,there are plain costs that have been ignored,
2l so it is not appropriate to provide PacifiCorp with any claim to be able to recover those
22 amounts in the future.Applying conditions,requiring PacifiCorp to take on the risk of
23 these assumptions in future ratemaking proceedings is therefore appropriate,both with
Mullins,Supp Di -34
PacifiCorp Idaho Industrial Customers
l respect to instructed imbalance costs and the 300 MW transmission link,as detailed in
2 my summary above.
3 V.PACIFICORP DOES NOT HAVE A NEED FOR NEW RESOURCES
4 Q.ARE THE WIND PROJECTS,AND ASSOCIATED TRANSMISSION,
5 NECESSARY TO PROVIDE ELECTRICAL SERVICES TO IDAHO
6 CUSTOMERS?
7 A.No.Central to this case is whether the constructing combined projects are necessary to
8 provide electrical services to Idaho customers.As noted in my Direct Testimony,
9 nothing presented in this case demonstrates that the combine projects are necessary utility
10 investments.To the contrary,the most resource needs assessment presented on page 9l
11 and 92 of PacifiCorp's 2017 IRP do not show any capacity for the entirety of the ten year
12 period of analysis.
13 Q.HOW DID PACIFICORP RESPOND?
14 A.PacifiCorp argues that because it has yet to execute the front office transactions,that
15 those should not be considered in its resource need.I disagree.Having access to
16 bilateral market is very valuable,and it is not prudent for PacifiCorp to disregard that
17 market access when considering its resource adequacy.Just because the prices are
18 uncertain does not mean that the market should be excluded when considering the
19 adequacy of existing resources.
20 Q.HAS PACIFICORP UPDATED ITS LOAD FORECAST SINCE THE 2017 IRP?
21 A.Yes.In responseto PIIC Data Request 26,PacifiCorp provided its most recent load
22 forecast.PacifiCorp did not,however,identify the tenor of that load forecast.
23 Notwithstanding,the load forecast has declined dramatically since the issuance of the
Mullins,Supp Di -35
PacifiCorp Idaho Industrial Customers
1 2017 IRP.In 2026,peak loads are forecast to be down by approximately 14%or 1,525
2 MW,relative to the 2017 IRP.This can be observed in Table 3,below.
CONFIDENTIAL TABLE 3
Impact of Most Recent Load Forecast (Coincident Peak,MW)
Year Delta %
2017 (341)-3%
2018 (528)-5%
2019 (692)-7%
2020 (845)-8%
2021 (98 1)-9%
2022 (1,095)-10%
2023 (l,l91)-l 1%
2024 (1,301)-12%
2025 (1,429)-13%
2026 (1,525)-14%
3 Q.HOW DOES THIS DECLINING LOAD IMPACT PACIFICORP'S RESOURCE
4 NEEDS?
5 A.In Mullins Exhibit No.306 (Conf),I update the results of PacifiCorp's resource needs
6 assessment in Table 5.14 from the 2017 IRP,changing nothing but the load forecast to be
7 consistent with PIIC Data Request 26.That exhibit shows,that even before considering
8 front office transactions,PacifiCorp is forecast to be in a capacity surplus position of 526
9 MW in 2026.With front office transactions that surplus position grows to 2,196 MW.
10 Thus,with the declining load forecast,PacifiCorp's concerns about whether front office
11 transactions should be considered in evaluating resource needs is moot.
12 Q.WHAT DOES THAT MEAN WITH RESPECT TO PACIFICORP'S RESOURCE
13 PROPOSAL?
14 A.Ratepayers are already in a tenuous position of having more resources than needed,and
15 building the Combined Projects will only exacerbate that problem.
Mullins,Supp Di -36
PacifiCorp Idaho Industrial Customers
l Q.HAS THE COMPANY PREPARED AN UPDATED RESOURCE NEED
2 ASSESSMENT WHEN CONSIDERING THE RFP RESOURCES?
3 A.In PIIC Data Request 21,PacifiCorp was requested to confirm that it has not performed
4 an updated resource needs assessment when selecting the RFP resources.In its response,
5 the Company stated that it has not performed an updated needs assessment.Finally,
6 PacifiCorp noted that it planned to issue an IRP update on March 31.
7 Q.DID PACIFICORP FILE ITS IRP UPDATE ON MARCH 31,2018?
8 A.No.Accordingly,the only resource needs assessment available is from the 20l7 IRP and
9 that assessment did not show any resource needs in the first ten years of the study period.
10 And,in fact,after updating for the most recent load forecast,it is apparent that
l 1 PacifiCorp's resource length will grow to uncomfortable levels,even without considering
l2 the Wind Projects.Accordingly,I continue to recommend that the CPCN request be
13 denied on the basis that there has not been a clearly demonstrated resource need,with or
14 without wholesale market transactions.
15 Q.DOES THIS CONCLUDE YOUR SUPPLEMENTAL DIRECT TESTIMONY?
16 A.Yes.
Mullins,Supp Di -37
PacifiCorp Idaho Industrial Customers
Ronald L.Williams,ISB No.3034
P.O.Box 388,802 W.Bannock Street,Suite 900
Boise,ID 83702
Telephone:[phone]
Email:[e-mail]
Attorneys for PacifiCorp Idaho Industrial Customers
BEFORE THE IDAHO PUBLIC UTILITES COMMISSION
IN THE MATTER OF THE APPLICATION OF )ROCKY MOUNTAIN POWER FOR )CERTIFICATES OF PUBLIC CONVENIENCE )Case No.PAC-E-17-07
AND NECESSITY AND BINDING )
RATEMAKING TREATMENT FOR WIND )
AND TRANSMISSION FACILITIES )
EXHIBIT 305
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 56 Set Data Request 21
PIIC Data Request 21
Reference the Second Supplemental Direct Testimony of Rick T.Link at 1:6-10.
Please confirm that PacifiCorp did not prepare an updated resource needs
assessment when developingthe referenced economic analysis?Please provide an
explanationfor PacifiCorp's response.
Response to PIIC Data Request 21
The Company assumes that "resource needs assessment"refers to the Company's
2017 Integrated Resource Plan (IRP)Volume I,Chapter 5 (Load and Resource
Balance).Based on the foregoingassumption,the Company responds as follows:
No,the Company did not prepare an updated needs assessment relevant to the
second supplemental direct testimony filing.Resource need is an endogenous
consideration of every System Optimizer model (SO model)and Planning and
Risk (PaR)model run,in which the models are identifying the optimal least-cost,
least-risk means to meet all system requirements.To the extent that the Company
has updated loads,prices,resources parameters,etc.,"resource need"has been
automaticallyupdated in the models.
The Company will include an updated load and resource balance assessment in its
2017 IRP Update,to be filed with the Idaho Public Utilities Commission of Utah
(IPUC)on March 31,2018.
Recordholder:Randy Baker
Sponsor:Rick Link
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PllCp.1of21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 23
PIIC Data Request 23
Reference the Second Supplemental Direct Testimony of Rick T.Link at 3:When
preparing the nominal and levelized revenue requirement calculations,what
assumptions did PacifiCorp make with respect to the terminationof the Power
Purchase Agreement (PPA)portion of Cedar Springs facility (i.e.did PacifiCorp
assume that the PPA portion would be renewed,and if so,at what price)?
I
I Response to PIIC Data Request 23
The Company assumed the contract terminates at the termination date.The
Company did not assume the automatic renewal of power purchase agreements
(PPA)in the second supplemental direct testimony filing.This is consistent with
the treatment of contracts,including PPAs and qualifying facilities (QF),in the
2017 Integrated Resource Plan (IRP).
Recordholder:Randy Baker
Sponsor:Rick Link
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.2 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 24
PIIC Data Request 24
Reference the Second Supplemental Direct Testimony of Rick T.Link at 1:6-10:
Do PacifiCorp's nominal or levelizedrevenue requirement analyses consider the
impacts of ongoing capital additions to,and replacements of,the proposed
Aeolus-to-Bridger/Anticline D.2 transmission facilities?If no,please explain
whythe cost of those ongoing capital additions and replacements have been
excluded?
Response to PIIC Data Request 24
PacifiCorp's revenue requirement analyses does not consider any ongoing capital
additions or replacements for the proposed Aeolus-to-Bridger/Anticline D.2
transmission facilities.The Company does not project the need for incremental
post-construction capital additions or replacements across the transmission system
caused by the Aeolus-to-Bridger/Anticline transmission line.PacifiCorp's
economic analysis does includes operation and maintenance (O&M)costs of $1
million per year in 2017 dollars.
Recordholder:Mark Paul
Sponsor:Rick Link
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PllC
p.3 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 56 Set Data Request 25
PIIC Data Request 25
Please provide a copy of PacifiCorp's most recently completed depreciation
study,along with the final rates by FERC account and sub-account that have been
approved by the Idaho Public Utilities Commission.
Response to PIIC Data Request 25
Please refer to Attachment PIIC 25-1,which provides the most recent
depreciation study filed with the Idaho Public Utilities Commission (IPUC)on
January 22,2013;Case PAC-E-13-02.
Please refer to Attachment PIIC 25-2,which provides a copy of the stipulation
associated with that filing which provides the final rates approved by the IPUC.
Recordholder:Cary Boyle
Sponsor:To Be Determined
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PilC
p.4 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 26
PHC Data Request 26
Please provide PacifiCorp's most recently completed long-term load forecast,
with hourlyloads,and including all time periods considered in the forecast.
Response to PHC Data Request 26
Please refer to Confidential Attachment PIIC 26,which provides the most
recently completed hourly,system-level long-term load forecast.
Confidential information is provided subject to the terms and conditions of the
protective agreement in this proceeding.
Recordholder:Lee Elder
Sponsor:To Be Determined
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.5 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 56'Set Data Request 29
PIIC Data Request 29
Reference the Rebuttal Testimony of Rick T.Link at 27:17-28:1:Mr.Link states
that "[t]he GRID studies and assumptions referred to by Mr.Mullins were used in
the 2017 IRP,but not in the economic analysis included in this case".
(a)Does PacifiCorp agree that,in preparing the economic analyses identified in
the Second Supplemental Direct Testimony of Rick T.Link,it has
incorporated the adjustments underlying the referenced supplemental GRID
studies into the System Optimizer and Planning and Risk models?
(b)On what basis,if any,does PacifiCorp conclude that the impacts of the
adjustments underlying the supplemental GRID studies have changed
materially after being incorporated into System Optimizer and Planning and
Risk models?Please provide all studies showing what PacifiCorp believes the
impact of those adjustments to be when incorporated into the System
Optimizer and Planning and Risk models.
(c)Does PacifiCorp's economic analysis identified in the Second Supplemental
Direct Testimony of Rick T.Link still include an assumption where the
transfer capabilitybetween Jim Bridger and Walla Walla is increased by 300
MW corresponding to growing participation in the Energy Imbalance Market
(EIM)?If yes,please provide PacifiCorp's best estimate of the impact of this
assumption on the medium gas and medium CO2 scenario.If no,please
explain.
(d)Does PacifiCorp's economic analysis identified in the Second Supplemental
Direct Testimony of Rick T.Link still include an assumption where the
Wyoming loads are reduced to account for purported line loss benefits of the
Transmission projects?If yes,please provide PacifiCorp's best estimate of the
impact of this assumption on the medium gas and medium CO2 scenario.If
no,please explain?
(e)Does PacifiCorp's economic analysis identified in the Second Supplemental
Direct Testimony of Rick T.Link still include an assumption to account for
reduced de-rates associated with constructing Gateway segment D2?If yes,
please provide PacifiCorp's best estimate of the impact of this assumption on
the medium gas and medium CO2 scenario.If no,please explain.
Response to PIIC Data Request 29
(a)PacifiCorp does not agree.The line loss,reliability and energy imbalance
market (EIM)assumptions adopted in the 2017 Integrated Resource Plan
(IRP)were previously evaluated in the Generation and RegulationInitiative
Decision Tool (GRID).In the 2017 IRP,PacifiCorp applied the results from
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.6 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 29
these GRID studies into the portfolio costs used to analyze the new wind and
transmission projects.In the economic analysis presented in this proceeding,
including the economic analysis summarized in the Company's second
supplemental direct testimony filing,these assumptions were subsequently
incorporated in the System Optimizer model (SO model)and the Planning and
Risk (PaR)model.Consequently,no results from GRID have been used in the
Company's economic analysis presented in this case.
(b)PacifiCorp has not isolated the incremental impact of referenced assumptions
in the SO model and PaR model.Please refer to the followingsupporting
materials:
EIM Benefit
PacifiCorp's estimate of a 300 megawatt (MW)increase in transfer capability
was based on historical experience with adjacent entities that havejoined the
energy imbalance market (EIM)since 2014.Please refer to Attachment PIIC
29-1,which provides the transmission intertie connectivity volumes as of
December 2017.In each case that an entity has joined the EIM,total
transmission connectivity to PacifiCorp has been greater than or equal to 300
MW.Idaho Power Company (IPC)has not yet finalized its transmission
availability to the market,however,it is in each entity's best interest to make
its transmission availableto the market to maximize EIM benefits.
Line Loss Benefit
Please refer to Confidential Attachment PIIC 29-2.which provides
calculations supporting the 11.6 average megawatts (aMW)referenced value.
Reliability Benefit
Please refer to Confidential Attachment PIIC 29-3,which provides
calculations supporting the 36.5 average megawatts (aMW)referenced value.
(c)Yes.Please refer to the Company's response to subpart (b)above.
(d)Yes.Please refer to the Company's response to subpart (b)above.
(e)Yes.Please refer to the Company's response to subpart (b)above.
Confidential information is providedsubject to the terms and conditions of the
protective agreement in this proceeding.
Recordholder:Randy Baker
Sponsor:Rick Link
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PilC
p.7 of 21
PAC-E-17-07 /Rocky Mountain Power
March 29,2018
PIIC 5th Set Data Request 30 -1"Supplemental
PIIC Data Request 30
Is PacifiCorp required to submit independently balanced EIM Base Schedules for
PACE and PACW balancing area pursuant to the CAISO's EIM tariff or
PacifiCorp Transmission's EIM tariff?If yes,please provide a citation to the tariff
corresponding to the requirement.If no,please explainhow the EIM base
schedules are determined for the respective balancing areas.
16*Supplemental Confidential Response to PIIC Data Request 30
Further to the Company's responseto PIIC Data Request 30 dated March 19,
2018,and pursuant to the PacifiCorp Idaho Industrial Customers'(PIIC)Motion
to Compel dated March 26,2018,PacifiCorp continues to object to this request as
not reasonably calculated to lead to the discovery of relevant or admissible
evidence.Without waiving this objection,PacifiCorp responds as follows:
PacifiCorp submits a balanced schedule for both of its balancing authority areas
(BAA)separately,but these schedules consider the resource positions in both the
PacifiCorp East (PACE)and PacifiCo West (PACW)BAAs.For example,
which is in the PACW BAA,into the PACE BAA to
facilitate energy transfers for economic or reliability purposes.Similarly,
PacifiCorp will schedule energy or reserves to the PACW BAA from resources in
the PACE BAA if it is economic or for reliability reasons.The final balanced
schedules that are submitted for the PACE and PACW BAAs are "independently"
balanced,but they use resources across both BAAs.
Confidential information is provided subject to the terms and conditions of the
protective agreement in this proceeding.
Recordholder:Kelcey Brown
Sponsor:To Be Determined
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.8 of 21
PAC-E-17-07 /Rocky Mountain Power
March 29,2018
PIIC 5th Set Data Request 31 -16'Supplemental
PIIC Data Request 31
Does the EIM provide PacifiCorp with the ability to schedule firm energy
between balancing areas in an amount exceeding the firm transmission rights that
PacifiCorp possesses between the two balancing areas?If yes,please explain,
with references to specific tariff provision,how transfers of such firm energy
transfers may be accomplished.
1"Supplemental Response to PIIC Data Request 31
Further to the Company's response to PIIC Data Request 31 dated March 19,
2018,and pursuant to the PacifiCorp Idaho Industrial Customers'(PIIC)Motion
to Compel dated March 26,2018,PacifiCorp continues to object to this request as
not reasonably calculated to lead to the discovery of relevant or admissible
evidence.Without waiving this objection,PacifiCorp responds as follows:
No.
Based on information received in PIIC's brief in support of its Motion to Compel,
the Company clarifies that the economic analysis in this docket does not assume
that additional 300 megawatts (MW)of transmission capability that will be
availablewhen Idaho Power Company (IPC)joins the energy imbalance market
(EIM)is "firm"transmission,nor does PacifiCorp assert that it can "use the EIM
to achieve new,firm transmission rights on another EIM participants'system[.]"
Recordholder:Kelcey Brown
Sponsor:To Be Determined
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.9 of 21
PAC-E-17-07 /Rocky Mountain Power
March 29,2018
PIIC 5th Set Data Request 34 -1"Supplemental
PIIC Data Request 34
Please provide uninstructed imbalance charges for the followingwind facilities on
a monthly basis (or the greatest level of granularityavailable)over the period
January 1,2015 through June 30,2017:
(a)Glenrock.
(b)Glenrock III.
(c)Foote Creek.
(d)McFadden Ridge.
(e)Seven Mile Wind.
(f)Seven Mile II Wind.
(g)Top of the World Wind.
(h)Dunlap Wind.
(i)High Plains Wind.
(j)Mountain Wind I.
(k)Mountain Wind II.
(l)Rock River I.
(m)Rolling Hills Wind
16'Supplemental Response to PIIC Data Request 34
Further to the Company's responseto PIIC Data Request 34 dated March 19,
2018,and pursuant to the PacifiCorp Idaho Industrial Customers'(PIIC)Motion
to Compel dated March 26,2018,PacifiCorp continues to object to this request as
not reasonably calculated to lead to the discovery of relevant or admissible
evidence.Without waiving this objection,PacifiCorp responds as follows:
Consistent with PIIC's Motion to Compel narrowing the scope of the request to
PIIC Data Request 34 subparts (d)and (h),please refer to Confidential
Attachment PIIC 34 ll Supplemental,which provides the requested information
for subparts (d)and (h)above.
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.10 of 21
PAC-E-17-07 /Rocky Mountain Power
March 29,2018
PIIC 5*Set Data Request 34 -1"Supplemental
Confidential information is provided subject to the terms and conditions of the
protective agreement in this proceeding.
Recordholder:Ray Zacharia
Sponsor:To Be Determined
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PllC
p.11 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 37
PIIC Data Request 37
Please identify the date that PacifiCorp issued the forward price curve used in the
revenue requirement analyses in the Second Supplemental Direct Testimony of
Rick T.Link.
Response to PIIC Data Request 37
The Company's December 2017 Official Forward Price Curve (OFPC),used in
the revenue requirement analyses in the second supplemental direct testimony of
Company witness,Rick T.Link,was issued January 2,2018.
Accompanyingscenarios,used in revenue requirement analyses,were based on
projections issued by third-parties in late December 2017 and early January 2018.
Recordholder:Connie Clonch
Sponsor:Rick Link
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.12 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5"Set Data Request 38
PIIC Data Request 38
Please identify and provide all long-term natural gas price forecasts that
PacifiCorp has received through a third-party subscription service over the period
January 1,2018 through the present.
Response to PIIC Data Request 38
PacifiCorp receives long-term natural gas price forecasts from two third-party
subscription services for approximately30 hubs across North America,most of
which are not applicable to this proceeding.As such,please refer to Confidential
Attachment PIIC 38,which provides the long-term natural gas price forecasts,
relevant to this proceeding,received by PacifiCorp through third-party
subscription services since January 1,2018.Note:the provided third-party
information is proprietary information and is provided with the pennission of the
third-party vendors,and is subject to the confidentiality protections noted below.
Confidential information is provided subject to the terms and conditions of the
protective agreement in this proceeding.
Recordholder:Connie Clonch
Sponsor:Rick Link
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PilC
p.13 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 39
PIIC Data Request 39
Reference the Rebuttal Testimony of Rick V.Vail at 27:15-16:Mr.Vail states
that "[t]he 12 percent figure represents the current level of ATRR funded by
OATT customers".
(a)Please confirm that PacifiCorp assumed that the proportion of ATRR funded
by retail customers will not increase as a result of acquiring the Wind Projects
and Transmission Projects?If no,please explain.
(b)Please explain how PacifiCorp Transmission ATRR costs are allocated
between Network Integration Transmission Service and Point-to-Point
transmission customers?
(c)Please identify billing determinants used for Network Integration
Transmission Service and Point-to-Point transmission customers,and explain
whythe billingdeterminants are appropriatelyused for the respective
services?
(d)Please identify the transmission service PacifiCorp plans to use with respect to
the Wind Projects (i.e.Network Integration Transmission Service or Point-to-
Point Transmission Services).
(e)Pursuant to its OATT,is PacifiCorp allowed to designate front office
transactions as a network resource?If no,please explain why not,and identify
the transmission service used to deliver front office transactions to load?
(f)Does PacifiCorp intend to terminate any Point-to-Point transmission rights,in
the event that the Transmission Projects and Wind Projects are constructed?If
yes,please identify each reservation,which PacifiCorp intends to terminate.
(g)Please explain how PacifiCorp loads served by Point-to-Point transmission are
considered in the determination of PacifiCorp's MonthlyNetwork Load for
purposes of PacifiCorp's Network IntegrationTransmission Services.
(h)Does PacifiCorp agree that its MonthlyNetwork Load will increase if the
Transmission Projects and Wind Projects are constructed due to the fact that a
greater portion of its load will be served by Network Resources (i.e.the Wind
Projects),rather than through Point-to-Point transmission (i.e.Front Office
Transactions).If no,please explain.
(i)Does PacifiCorp agree that,if its MonthlyNetwork Load were to increase as a
result of constructing the Transmission Projects and Wind Projects,and
assuming no changes to reserved Point-to-Point transmission rights,that the
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.14 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 56'Set Data Request 39
proportion of ATRR funded by retail customers would also increase?If no,
please explain.
Response to PIIC Data Request 39
The Company objects to these requests as overly broad and not reasonably
calculated to lead to the discovery of admissible or relevant evidence.Without
waiving these objections,the Company responds as follows:
(a)The analysis assumes that the added cost of transmission is allocated based on
estimates of the current allocation between retail and third-party customers.
The cost of transmission is allocated between customers based on peak
coincident loads,long-term point-to-point (PTP)contract capacity,and short-
term reservations purchased.The allocation of transmission depends on the
future mix of loads and long-term and short-term capacity.Therefore,the
additionalwind generation added in Wyoming does not directly correlate to
additionaltransmission costs.These resources could be added and designated
as additional network resources and optimized in real-time as part of the
energy imbalance market (EIM).Therefore,no determination has been made
that additional generation results in additional transmission cost.
(b)Transmission costs are allocated to transmission customers based on the
customer's relative share of peak loads,long-term PTP capacity,as well as
short-term reservations purchased on the Open Access Same-Time
Information System (OASIS).A transmission customer with network
integrationtransmission service is assessed transmission charges based upon
the customer's load at time of the system's coincident peak.
(c)The billing determinant for network service is transmission customer network
load grossed up for stated losses in PacifiCorp's Open Access Transmission
Tariff (OATT).Long-term PTP transmission capacity is assessed on customer
contract capacity plus the capacity loss factor as stated in PacifiCorp's OATT.
These billing determinants are appropriate because they are comparable and
represent the utilization of the transmission system.
(d)Network IntegrationTransmission Service (NITS).
(e)PacifiCorp may designate front office transactions (FOT)as a network
resources provided they meet the designation requirements of the OATT.
(f)No.
(g)This question appearsto assume that PacifiCorp's merchant function is
utilizingon-system resources under PTP contracts to serve load in other
balancing authority areas (BAA).In this case,PacifiCorp is allocated a share
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PilC
p.15 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC Sth Set Data Request 39
of PacifiCorp's transmission cost based on the capacity of these long-term
PTP contract rights.PacifiCorp also pays third-party transmission service
providers for load service outside of PacifiCorp's transmission system.
(h)No.Construction of the Transmission Projects and Wind Projects by itself and
designating the resources as network resources does not alone increase
PacifiCorp's MonthlyNetwork Load.The total cost of transmission is
dependent on retail consumption and the relative share of any increase or
decreasein load compared to third-party transmission use.In addition,if
energy is required to serve load through importing energy into PacifiCorp's
BAAs then the cost of that transmission would include both the utilization of
PacifiCorp's transmission as well as any third-party transmission necessary to
wheel the energy to serve load.
(i)No.Construction of the Transmission Projects and Wind Projects would not
alone indicate or lead to an increase in PacifiCorp's MonthlyNetwork Load.
As described in responses to other subparts,the cost of transmission is based
on system loads and reservations of long-term and short-term PTP
transmission.
Recordholder:Eric Arzola /Rachelle Richards /Ernie Knudsen /Zachary
Kanner
Sponsor:Rick Vail
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PllC
p.16 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 40
PIIC Data Request 40
Please provide an explanation for any assumptions PacifiCorp has made with
respect to the terminal value of the Wind Projects in the economic analyses
identified in Second Supplemental Direct Testimony of Rick T.Link.
Response to PIIC Data Request 40
Please refer to page 17,lines 1 to 23,and page 18,lines 1 to 9 of the supplemental
direct testimony of Company witness,Rick T.Link for a description of terminal
value.Components of terminal value include:development rights;transmission
assets (i.e.,network upgrades);and non-transmission infrastructure (i.e.,roads).
The first two components were modeled using a 62-year life,the third was
modeled using a 45-year life.For each month starting from the commercial
operation date of an asset,the remaining life of each component,after
depreciation,is revalued at inflation (assumed at 2.2 percent per year).The
terminal value of the project is the sum of the three components,after
depreciation and revaluation,at the retirement date of the generation asset.The
calculation is in the "Terminal Value Calculation"worksheet of each of the
Company's financial models.
Due to the ongoingnature of the 2017 Renewable Request for Proposals (2017R
RFP),the financial models associated with the 2017R RFP that contain the
derivation of inputs used in the system optimizer (SO model (SO model)and
planning and risk (PaR)model are considered commercially sensitive and highly
confidential.The Company does not typicallypermit access to commercially
sensitive 2017R RFP documentation until the RFP has been concluded.Please
contact Ted Weston at [phone] or Yvonne Hogle at [phone] to
make arrangements for review.
Recordholder:Randy Baker
Sponsor:Rick Link
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.17 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 51'Set Data Request 41
PIIC Data Request 41
To the extent that terminal values were included in the economic analysis
identified in Second Supplemental Direct Testimony of Rick T.Link,please
provide a narrative explanation of the methodologyused to develop the terminal
value and provide work papers supporting the calculation of the terminal value
amount for each Wind Project included in the short list.
Response to PIIC Data Request 41
Please refer to the response to the Company's responseto PIIC Data Request 40.
Recordholder:Randy Baker
Sponsor:Rick Link
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PilC
p.18 of 21
PAC-E-17-07 /Rocky Mountain Power
March 19,2018
PIIC 5th Set Data Request 42
PIIC Data Request 42
Has PacifiCorp identified any terminal costs,such as decommissioning costs,
associated with the Wind Projects or Transmission Projects?If yes,please explain
how those additionalterminal costs are considered in PacifiCorp's analysis.
Response to PIIC Data Request 42
PacifiCorp's analysis includes removal (or decommissioning)costs associated
with wind and transmission assets.Wind assets have an expected life of 30 years
with removal costs assumed at $65 per kilowatt ($/kW).Transmission assets have
an expected life of 62 years with removal costs of 16 percent of original cost
based on the Company's most recent depreciation study.Removal costs are
recovered from customers on a straight-line basis over the life of the asset.Please
refer to the confidential work papers supporting the second supplemental direct
testimony of Company witness.Rick T.Link,specifically folder "Transmission",
file "Energy Gateway GM 2017 03 13 21%US Tax".
Recordholder:Alex Lee
Sponsor:Rick Link
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PIIC
p.19 of 21
17-035-40 /Rocky Mountain Power
January l1,2018
UAE Data Request 3.2
UAE Data Request 3.2
Regarding PacifiCorp's Official Forward Price Curve (OFPC)issued in the 4th quarter of
2017 on or around December 29,2017:
(a)Please provide a copy of the referenced price curve for gas and power markets where
PacifiCorp transacts and for all years where a forecast was developed.
(b)Please provide a description of how the long-term natural gas price forecast (i.e.
prices developed by 3rd party consultants used in the OFPC for periods extending
beyond 72 months)was developed in the referenced OFPC.
(c)Please describe any changesto the long-term natural gas forecasting methodologythat
occurred in developingthe referenced OFPC,relative to the OFPC that was used in
the August 31,2017 Supplemental Testimony of Rick T.Link in Docket No 17-035-
23
(d)Please provide any memoranda or documentation in PacifiCorp's possession
describing the methodologies the 3rd party consultants used to develop PacifiCorp's
long-term natural gas price forecast in the referenced OFPC.
(e)Please state when the long-term natural gas price forecasts used in the referenced
OFPC were developed by the 3rd party consultants.
(f)Please identify whether the long-term price forecasts used to develop the referenced
OFPC include the impact of the passage of the Tax Reform Bill.
Response to UAE Data Request 3.2
The Company understands that the term "referenced OFPC"used throughoutthis request
is intended to reference the Company's December 2017 official forward price curve
(OFPC).Based on this understanding,the Company responds as follows:
(a)Please refer to Attachment UAE 3.2-1,which provides the Company's December
2017 OFPC.
(b)The December 29,2017 OFPC was developed using 72 months of market forwards
followed by 12 months (months 73 through 84)of a forwards-fundamentals blend that
transitions to a pure fundamentals-based forecast starting in month 85.Blended prices
for months 73 through 84 are calculated as an average of the preceding year's forward
prices with the followingyear's fundamentals prices on a month-by-monthbasis.
The fundamentals-based portion of the OPFC,starting month 85,was developed by
an expert third-party forecasting service and published in nominal dollars using
PacifiCorp inflation indices.The expert third-party fundamentals forecast was
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PllC
p.20 of 21
17-035-40 /Rocky Mountain Power
January l1,2018
UAE Data Request 3.2
supplied as part of the Company's ongoing subscription to receive multi-client "off-
the-shelf"fundamentals-based forecasts on a regular basis.
(c)The long-term natural gas forecasting methodology used by PacifiCorp to develop the
December 29,2017 OFPC is unchanged relative to the OFPC that was used in the
August 31,2017 Supplemental Testimony of Company witness,Rick T.Link in
Docket 17-035-23.
(d)Please refer to Confidential Attachment UAE 3.2-2.
(e)The long-term natural gas price forecast used in the December 2017 OFPC was
produced by an expert third-party forecasting service,as part of its multi-client
subscription service,on November 21,2017.
(f)The impact of the Tax Reform Bill is not explicitlyreflected in the gas price forecast,
which was issued before the Tax Reform Bill was passed or signed,used in the
December 2017 OFPC.
Confidential information is provided subject to Public Service Commission of Utah Rule
746-1-602 and 746-1-603.
Exhibit No.305
Case No.PAC-E-17-07
B.Mullins,PilC
p.21 of 21
Ronald L.Williams,ISB No.3034
P.O.Box 388,802 W.Bannock Street,Suite 900
Boise,ID 83702
Telephone:[phone]
Email:[e-mail]
Attorneys for PacifiCorp Idaho Industrial Customers
BEFORE THE IDAHO PUBLIC UTILITES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
ROCKY MOUNTAIN POWER FOR )
CERTIFICATES OF PUBLIC CONVENIENCE )Case No.PAC-E-17-07
AND NECESSITY AND BINDING )
RATEMAKING TREATMENT FOR WIND )
AND TRANSMISSIONFACILITIES )
CONFIDENTIAL
EXHIBIT 306
Ronald L.Williams,ISB No.3034
P.O.Box 388,802 W.Bannock Street,Suite 900
Boise,ID 83702
Telephone:[phone]
Email:[e-mail]
Attorneys for PacifiCorp Idaho Industrial Customers
BEFORE THE IDAHO PUBLIC UTILITES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
ROCKY MOUNTAIN POWER FOR )CERTIFICATES OF PUBLIC CONVENIENCE )Case No.PAC-E-17-07
AND NECESSITY AND BINDING )
RATEMAKING TREATMENT FOR WIND )
AND TRANSMISSION FACILITIES )
EXHIBIT 307
PacifiCorp 2017R RFP Pre-Issuance Bidders'Conference
Questions and Answers
The following are questions and answers resulting from the PacifiCorp 2017R RFP Pre-Issuance
Bidders'Conference held in Salt Lake City,Utah on Wednesday,May 31,2017.
For additional questions,please submit them to the 2017R RFP mailbox at:
RFP [e-mail]
Additional information regarding the 2017R RFP is provided at the follow link which will be
updated throughoutthe 2017R RFP process:
www.pacificorp.com/sup/rfps/2017-rfp.html
Question and Answers:
Will there be a RFP for solicitation for the Oregon IE?If so,where can the RFP be located?
The RFP for the Oregon IE was filed with the Oregon Commission on June 1,
2017.Information regarding this RFP is provided at
http://www.pacificorp.com/sup/rfps/2017-rfp-or-eval.html.
Can you provide a list of attendees to this Pre-Issuance Bidders'Conference?
A list of attendeesis providedat www.pacificorp.com/sup/rfps/2017-rfp.html.
We are very interested in being a part of this project as a subcontractor offering survey and
materials testing.We assume that these tasks would be contractor responsibilities.If there has
been a list of contractors and subcontractors created for this project we would like to be added to
or told how to get on that list so that we can stay informed during the bidding process.
The 2017R RFP will be for new wind resources that will be submitted by companies that
are developingwind projects in Wyoming and seeking to sell the power out of the project
or the asset itself to PacifiCorp.The 20l7R RFP is not a RFP for professional or
construction services to a project to be constructed.The bidders may be issuing their
own RFP for engineering,procurement and construction (EPC)services.
For more information on the Energy Gateway West sub-segment D2 process and
vendor/contractor information,please use the followinglink:
http://www.gatewaywestproject.com/.
Exhibit No.307
Case No.PAC-E-17-07
B.Mullins,PllC
p.1 of 4
Can you please confirm if projects must be located in Wyoming,Oregon,or Utah?
We do not plan to have the requirement that project(s)be physically located in any
specific state(s).We will be requiring that proposed projects must be capable of
interconnecting with the PacifiCorp's Wyoming transmission system inclusive of the
Energy Gateway West sub-segment D2 transmission line running from Aeolus to
Bridger/Anticline,or be able to deliver energy and capacity into PacifiCorp's Wyoming
transmission system.
Can you please clarify as to why the RFP must be approved by the Utah and Oregon PUCs?
PacifiCorp is filing the RFP with the Public UtilityCommission of Oregon (Oregon
Commission)according to requirements under OPUC Orders No.04-046 and 14-
149.PacifiCorp is filing the RFP with the Utah Public Service Commission (Utah
Commission)according to requirements under Utah's Energy Resource Procurement Act,
Title 54,Chapter 17 and UPSC Rules R746-420.These rules,from both states,came out
of state legislation concerning procurement of large resources and or length of term of a
power purchase agreement.
Will PacifiCorp consider resources other than wind?
Under the 2017R RFP PacifiCorp is seeking wind resources.
With respect to transmission cost associated with the Gateway D2 segment,is this considered a
sunk cost or is that part of the evaluation?
The transmission costs associated with Gateway D2 segment are not assigned to a
specific project as part of the bid evaluation.
How will we evaluate transmission costs distinguished by project location?
For the costs of the project itself,the transmission cost,other than Direct Assigned costs
as identified in the interconnection studies,is not assigned to any specific project.Costs
associated with providing the transmission capacity in order to relieveexisting
congestion and facilitate the interconnection and integration of new wind projects will not
be assigned to an individual project as part of the RFP evaluation.
Under what financial metrics will the benchmark resources be evaluated?
The financial metrics used for the benchmark resources and RFP bids will be same.
These metrics will be vetted and validated by the independent evaluators as part of the
draft 2017R RFP review process and be used consistently throughoutthe RFP.
What is the timing of the self-build EPC RFP?
Exhibit No.307
Case No.PAC-E-17-07
B.Mullins,PIICp.2of4
As part of the 2017 R RFP,the benchmark resource team will be developingand
implementing their procurement schedule separately.Currently,this process is expected
to be managed on somewhat the same schedule as the 2017 R RFP taking into account
that benchmarks must be submitted one week prior to the other bids.
Is the wind be targeted as part of the 2017R RFP exclusive of the wind repowering sought under
the IRP preferred portfolio?
The targeted wind resources under the 20l7R RFP are in addition to the wind repowering
capacity described in PacifiCorp's 2017 IRP preferred portfolio.
Can you explain the difference between final shortlist and winning bids as referenced in the
2017R RFP proposed schedule?
The final shortlist will be those bids PacifiCorp has selected for contract negotiation and
will be proposing to the Utah Commission to initiate process of executing agreements.
Will only Wyoming sites be considered?
No,however PacifiCorp will require demonstration that the project can be delivered to
our Wyoming transmission system on a firm basis.
Will there be a separate transmission EPC RFP for the new transmission line?
Procurement efforts associated with new transmission line will be a separateproject
driven under the direction of and managed by the PacifiCorp transmission function.
For more information on the Energy Gateway West sub-segment D2 process and
vendor/contractor information,please use the followinglink:
http://www.gatewaywestproject.com/.
Will the Commission approved 14%wind capacity factor be applied in this RFP,and how will
that impact PacifiCorp's capacity position in the future?
In PacifiCorp's 2017 Integrated Resource Plan (IRP)the summer peak capacity
contribution for wind in PacifiCorp's east balancing authority area was determined to be
15.8%.This capacity contribution value is currently being proposed for application in
evaluatingthe RFP bids and benchmark resources,subject to adjustments attributed to the
project specific wind shape.
What is the timing of the new transmission line?
The new 140-mile,500 kV transmission line is projected to be completed by December
31,2020.This effort will be coordinated and managed by the PacifiCorp transmission
function.
Exhibit No.307
Case No.PAC-E-17-07
B.Mullins,PIICp.3of4
For more information on the Energy Gateway West sub-segment D2 process and
vendor/contractor information,please use the followinglink:
http://www.gatewaywestproject.com/.
Will the benchmark resources be self-builds or an asset purchases?
The benchmark resources will be submitted as self-build.
Will the benchmarks be limited to the 860 MW as stated in this presentation?
The benchmark resources listed in the presentation are what are currently being proposed
and may change prior to final submittal into the 2017R RFP.
Does PacifiCorp plan to consider their purchases of safe harbor wind turbine equipment for the
benchmarks as a sunk cost?
PacifiCorp would not consider the purchases of safe harbor wind turbine equipment as a
sunk cost.
Exhibit No.307
Case No.PAC-E-17-07
B.Mullins,PilCp.4of4