Idaho Public Utilities Commission staff filed Oct. 11 testimony supporting an Idaho Power application for approval to install new selective catalytic reduction (SCR) NOx control equipment on the coal-fired Jim Bridger Units 3 and 4 in Wyoming.
The company had applied on July 1 for a certificate of public convenience and necessity for this project, needed to comply with the U.S. Environmental Protection Agency’s regional haze rule. Idaho Power owns one-third of the Jim Bridger plant and the adjacent coal mining operations, with the other two thirds of each controlled by PacifiCorp.
Mike Louis, a Utilities Analyst at the commission, wrote he believes the company’s decision to move forward with the emission control investment project for Jim Bridger Units 3 and 4 is prudent. However, he only recommended authorization of $81.4m in direct project costs of the $117.9m requested in the company’s application based on provisions for binding ratemaking treatment under Idaho code.
In compliance with Clean Air Act Regional Haze (RH) rules, the Wyoming Department of Environmental Quality (WDEQ) through its State Implementation Plan (SIP) requires the company to install SCR emission controls by December 2015 on Jim Bridger Unit 3 and by December 2016 on Unit 4. Because the SIP is enforceable by the state of Wyoming, the company must discontinue operation or install the necessary controls by the dates stipulated in the SIP to continue operation.
The company relies on 174 MW and 177 MW of net dependable baseload capacity from Units 3 and 4, respectively.
Louis said his lower cost approval figure excludes uncertain project costs, which he said should be excluded for two reasons.
- First, excluding uncertain amounts incents the company to continue to find cost-effective ways of implementing a project once it is underway. Pre-approval of budgeted amounts that are set using “liberal estimating methods” or that include slack from contingency amounts allow project managers to spend up to the amount of their authorized budget without regard for potential savings, he added.
- Second, excluding uncertain amounts protects against recovery of a full pre-approved amount if actual costs are less.
Consequently, he recommended that the commission conservatively set pre-approved project costs to assure costs are reasonably incurred in all cost item categories throughout project development.
As for whether approval of this lower dollar amount will harm Idaho Power’s ability to finance the SCR project, Louis wrote: “Because Idaho Power is using a combination of internally generated funds and capital from its overall construction program budget and is not required to secure financing specifically for this project, the need for binding ratemaking treatment to secure favorable financing is reduced.”
The Jim Bridger plant consists of four units and is the “workhorse” of ldaho Power’s thermal fleet, the utility told the commission. After adjustment for scheduled maintenance periods and estimated forced outages, the annual energy generating capability of ldaho Power’s share of Jim Bridger is about 625 MW average. Of ldaho Power’s entire thermal generation fleet, it has the lowest dispatch cost and the lowest installed cost of nameplate capacity to operate.