Idaho Public Utilities Commission
Case No. IPC-E-09-03, Order No. 30751
March 24, 2009
Contact: Gene Fadness (208) 334-0339, 890-2712
PUC begins process of consideration for new gas plant
The Idaho Public Utilities Commission is scheduling an April 14 pre-hearing conference regarding Idaho Power Company’s application for a certificate to build a 330-megawatt natural gas-fired power plant four miles south of New Plymouth.
Idaho Power claims the proposed Langley Gulch Power Plant is needed to meet growing demand from customers.
According to Idaho Power, the plant will cost $427.4 million. If the commission issues the certificate before Sept. 1, construction would begin during the summer of 2010 and the plant would be commercially operational by December, 2012.
The pre-hearing conference, which begins at 10 a.m. on April 14 in the commission hearing room at 472 W. Washington St. in Boise, will identify the intervening parties in the case and determine how the case will be handled.
Parties who wish to intervene in the case for the purpose of presenting evidence and cross-examining witnesses must file a petition to intervene with the commission by no later than April 1. To date, intervenors include the company, commission staff and the Industrial Customers of Idaho Power. The commission will later establish a comment period for the general public and set dates for possible workshops and/or hearings.
Idaho Power proposes to build the plant on 137 acres of undeveloped range land adjacent to Interstate 84, immediately southwest of Exit 9 in rural Payette County.
The company’s long-range plan to meet customer growth, called an Integrated Resource Plan, initially called for a coal-fired resource, but with rising concerns about climate change, the company revised its plan to call for a natural gas-fired baseload resource. The company initiated a bid process, reviewed by an independent third party. It received five valid proposals that represented 13 possible gas-fired sources, including purchase agreements from other plant owners. Idaho Power claims building its own plant will have a revenue requirement impact of about $108 million lower than the next least expensive proposal.
To improve its chances at receiving financing at the lowest possible rate, Idaho Power is asking the commission to 1) allow the company to receive funds for Construction Work in Progress (CWIP) while the project is being built or 2) receive preapproved ratemaking treatment under the process outlined in Senate Bill 1123, now before the Legislature.
Under the CWIP option, Idaho Power would submit annual filings reporting annual construction expense. After a PUC staff audit, approved expenses would be included in customer rates. Idaho Power asserts that CWIP allows customers to help fund construction while the plant is being built, thus avoiding financing costs. It would also reduce rate shock for customers, the company says, by smoothing the rate increase over the construction period rather than a one-time increase at construction’s end.
If CWIP is not approved, Idaho Power wants to receive ratemaking assurances ahead of time, as envisioned in Senate Bill 1123. Those assurances include statements within the order granting the certificate that: 1) the commission concurs with the need and size of the plant, 2) that it accepts the project cost commitment estimate, 3) that it will allow Idaho Power to seek recovery of expenses above the estimate if those expenses are justified by the commission, 4) that cost recovery from customers can begin when the plant begins full commercial operation and 5) that the return on equity the company earns from the investment would be the authorized rate of return in place at the time the project becomes operational.
Idaho Power maintains that without either CWIP or the preapproved ratemaking process, it will be difficult to receive financing given the current condition in the capital markets. The company says its balance sheet is weakened due to drought conditions during six of the last seven years and much higher capital expenditures since 2006 to meet the demands of customer growth. From 2006 to 2008, construction expenditure averaged $250 million annually. During the same period, cash received from company operations averaged $190 million.
Transmission costs are estimated to be about $25.4 million and will include construction of a new 18-mile 138-kV line from the plant to the Caldwell-Willis line, three miles from Caldwell Substation. Building generation on the west side of the Treasure Valley will improve reliability in the Caldwell-Ontario area, the company said. The plant should also make it easier for Idaho Power to accommodate intermittent resources like wind or solar because a natural gas baseload plant is able to change generation quickly to maintain system balance.
The proposed plant would require a labor force of up to 120 during the two years of construction and employ 18 full-time once it is operational.
According to the company, the plant will use the best available control technology to keep emissions low and is designed for zero surface wastewater discharge. The plant would be outside the potential air quality “non-attainment” areas of Ada and Canyon counties. Idaho Power states that plant noise will be less than that created by the adjacent interstate highway. The plant would be water-cooled using secured surface-water rights on the Snake River.
Idaho Power’s application and accompanying testimony is available on the commission’s Web site at www.puc.idaho.gov. Click on the electric icon, then on “Open Electric Cases,” and scroll down to Case No. IPC-E-09-03.