PacifiCorp on July 23 said that it is proceeding with plans to expand its wind energy production after receiving the final two state approvals needed to move forward with its Energy Vision 2020 initiative.
The company noted that its Energy Vision 2020 initiative adds new wind projects in Wyoming that will provide a total 1,150 MW of new wind energy capacity, add a new 140-mile high-voltage transmission line in Wyoming, as well as repower 900 MW of existing wind resources in Wyoming and Washington.
A favorable order from the Idaho Public Utilities Commission on July 20 followed approval from the Utah Public Service Commission on June 22, the company said, adding that Wyoming regulators issued conditional certificates of public convenience and necessity in April. Oregon and Washington regulators have signaled support for the Energy Vision 2020 initiative as part of PacifiCorp’s 2017 Integrated Resource Plan, the company said.
The new wind projects will increase the amount of owned and contracted wind capacity on PacifiCorp’s system by more than 60% and will add enough new wind energy to power more than 400,000 average homes by 2020, according to the company. The repowering projects will upgrade the company’s existing wind fleet with longer blades and newer technology that will boost output by more than 25% and extend the life of the wind turbines, PacifiCorp said.
The company said that it estimates its total investment for the Energy Vision 2020 projects will be just over $3bn, which is a reduction from the initial $3.5bn cost estimate when the projects were first announced in April 2017. The lower cost estimate is due to changes in project scope and reduced project costs realized through a competitive procurement process, PacifiCorp noted, adding that completing the projects by 2020 will allow customers to realize the full benefit of production tax credits (PTCs), as well as provide a net savings for customers over the life of the projects.
According to the July 20 order by Idaho regulators, for instance, Rocky Mountain Power, a division of PacifiCorp, in July 2017 applied for a commission order granting certificates of public convenience and necessity (CPCN) to build or acquire four new Wyoming wind projects with a total combined capacity of 860 MW.
As PacifiCorp noted in its statement, Pacific Power is the company’s division that serves customers in Oregon, Washington, and California.
The company also requested CPCNs for associated transmission facilities, portions of which are part of the company’s Gateway West transmission project, the July 20 order noted, adding that the proposed transmission lines would require the company to add about 180 miles of line.
In addition, the company requested binding ratemaking treatment for the investment in the combined wind and transmission projects.
In its application, the company proposed to invest about $2bn for the construction, or acquisition, of the four large-scale wind facilities and the construction of, or modifications to, several transmission facilities, the order added.
According to the company, the lines would alleviate transmission system congestion and improve the company’s ability to manage the intermittent load produced by the new wind turbines.
In the company’s application, the order added, the wind projects originally consisted of three nominal 250-MW facilities in Wyoming – Ekola Flats, TB Flats I, and TB Flats II – and a fourth nominal 110-MW facility – McFadden Ridge II.
The proposed transmission projects included:
- The 140-mile Aeolus-to-Anticline 500-kV line, which includes construction of the new Aeolus and Anticline substations
- The five-mile Anticline to Jim Bridger 345-kV line, which includes modifications at the existing Jim Bridger substation to allow termination of the new 345-kV line
- Installation of a voltage control device at the Latham substation
- A new 16-mile, 230-kV transmission line parallel to an existing 230-kV line from the existing Shirley Basin substation to the proposed Aeolus substation, including modifications to the Shirley Basin substation
- The reconstruction of four miles of an existing 230-kV transmission line between the proposed Aeolus substation and the Freezeout substation, including modifications as required at the Freezeout substation
- The reconstruction of 14 miles of an existing 230-kV transmission line between the Freezeout substation and the Standpipe substation, including modifications as required at the Freezeout and Standpipe substations
The order also noted that the company in May filed a settlement stipulation that it had entered into with regulatory staff. The stipulation stated, in part, that:
- The commission should grant a CPCN and binding ratemaking treatment for a 140-mile Aeolus-to-Bridger/Anticline 500-kV transmission line; three new Wyoming wind resources: Ekola Flats, TB Flats I, and II, and Cedar Springs, totaling 1,150 MW; as well as related network upgrades
- The company would track new investment, energy production, and PTCs associated with the stipulated projects through an Energy Cost Adjustment Mechanism (ECAM) component called the Resource Tracking Mechanism (RTM), which would capture the stipulated projects’ costs and benefits until they are recovered in base rates through a general rate case
The order said that while available front-office transactions (FOTs) appear sufficient to serve the company’s current load for nearly the next decade, the commission finds that evidence shows that the future need for new generation facilities is most efficiently, effectively and reasonably met with the proposed projects – as modified in the order – because the economic benefit captured through the PTCs is in the public interest.
The order added, “[W]e find that the facts presented in this case – displacing FOTs with the combined projects – is fair, just and reasonable because the costs passed on to the utility’s customers will likely be demonstrably less. Consequently, we find the combined projects are in the public interest.”
Discussing ratemaking treatment, the order noted that the company and staff agreed that the RTM calculation will use a 9.2% pre-tax rate of return on investment, which equates to an after-tax return on investment of 6.96%. Following the next general rate case, the return on the net plant balance will be consistent with the rate of return authorized by the commission in that case. The order added that the company and staff reserved all rights to challenge the rate of return in future rate cases.
The company and staff agreed that the company will maintain a cap on the annual total cost of the stipulated projects not to exceed the annual project benefits in the ECAM and RTM, the order said. In other words, costs that are passed on to customers through the RTM will be capped at the level of benefits flowing through the ECAM, the order said, adding that any costs above the cap will be deferred and the company can request recovery in its next general rate case.
“We find it fair and reasonable to approve the stipulated ratemaking treatment, including the RTM as a component of the ECAM, to capture the costs and benefits of the combined projects until they can be incorporated into base rates,” the commission said in its order.
The commission also said that it conditions its acceptance of the stipulation upon the setting of an overall capital cost cap at the project estimate.
“There is little dispute that the combined projects are being proposed based on an economic benefit that can be realized through the value of PTCs” the order said. “The time within which the company can capture this benefit is limited. The company has presented substantial and competent evidence that seizing this opportunity will result in a better outcome for its customers. However, because the justification is economic in nature, as opposed to purely reliable and safe service, we find that the risk inherent in this business decision should not be entirely borne by the ratepayers. A cost cap reduces ratepayer risk and compels the company to rely on its models that predict benefits. We find this fairly balances risk between the company and its customers.”
PacifiCorp said in its statement that the Industrial Siting Division of the Wyoming Department of Environmental Quality on June 22 approved the permit for the TB Flats project.
Oregon, Washington and California, do not have statutes that allow commissions to provide similar regulatory review prior to construction of major projects, the company said, adding that in those states, the full review and prudency determinations will come later when the company seeks permission to recover project costs.
Pending acquisition of remaining rights of way, receipt of permits, and execution of final contracts, construction on the projects is expected to start in 2019, PacifiCorp said. The majority of the repowering projects are planned to be complete in 2019, with the remainder in 2020, the company said, adding that completion of the new wind and transmission projects also will occur in 2020.