August 22,2017 Executive Secretary Public Service ...
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CONSUMER ADVOCATE DIVISION STATE OF WEST VIRGINIA PUBLIC SERVICE COMMISSION 700 Union Building 723 Kanawha Boulevard, East Charleston, West Virginia 25301 (304) 558-0526 August 22,2017 Ingrid Ferrell Executive Secretary Public Service Commission of West Virginia 201 Brooks Street Charleston, West Virginia 25301 RE: AMERICAN BITUMINOUS POWER PARTNERS, L.P And MONONGAHELA POWER COMPANY CASE NO. 17-0631-E-P (Reopened from 87-0669-E-P) Dear Ms. Ferrell: Please find eiiclosed for filing an original and 12 copies of the Testimony ofEmily S, Medine, prepared on behalf of the Consumer Advocate Division. Copies have been served upon all parties of record. Sincerely, Heather B. Osborii WV Bar No. 9074 Counsel for Coiisumer Advocate cc: All parties of record AN EQUAL OPPORTUNITY EMPLOYER
Transcript of August 22,2017 Executive Secretary Public Service ...
CONSUMER ADVOCATE DIVISION STATE OF WEST VIRGINIA
PUBLIC SERVICE COMMISSION 700 Union Building
723 Kanawha Boulevard, East Charleston, West Virginia 25301
(304) 558-0526
August 22,2017
Ingrid Ferrell Executive Secretary Public Service Commission of West Virginia 201 Brooks Street Charleston, West Virginia 25301
RE: AMERICAN BITUMINOUS POWER PARTNERS, L.P And MONONGAHELA POWER COMPANY CASE NO. 17-063 1-E-P (Reopened from 87-0669-E-P)
Dear Ms. Ferrell:
Please find eiiclosed for filing an original and 12 copies of the Testimony ofEmily S, Medine, prepared on behalf of the Consumer Advocate Division. Copies have been served upon all parties of record.
Sincerely,
Heather B. Osborii WV Bar No. 9074 Counsel for Coiisumer Advocate
cc: All parties of record
AN EQUAL OPPORTUNITY EMPLOYER
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Case No. 17-063 1 -E-P
AMERICAN BITUMINOUS POWER PARTNERS, L.P. and MONONGAHELA POWER COMPANY
TESTIMONY
OF
EMILY S. MEDINE
On Behalf of the
Consumer Advocate Division
Of the
Public Service Commission of West Virginia
Dated: August 22, 20 17
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AMERICAN BITUMINOUS POWER PARTNERS, L.P. and MONONGAHELA POWER COMPANY CASE NO. 17-063 1 -E-P
Direct Testimony of Emily S. Medine
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5 Table of Contents
6 I. ....
7 11. BACKROUND ON GRANT TOWN AND 8 111. JUSTIFICATION FOR THE AMENDMENT 9 IV. OTHER PURPA PROJECTS ......................
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OTHER ISSUES RELATED TO THE VIABILITY OF GRANT TOWN ....__.....
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WHAT IS YOUR NAME AND BUSINESS ADDRESS?
My name is Emily S. Medine. I am employed by Energy Ventures Analysis, Inc.
My business address is 1901 N. Moore Street, Suite 1200, Arlington, VA 22209.
FOR WHOM ARE YOU TESTIFYING IN THIS HEARING?
I am testiflhg on behatf of the Consumer Advocate Division of the Public Service
Commission of West Virginia (CAD).
WHAT IS YOUR EDUCTION AND EXPERIENCE?
My education and experience are set out in Attachment I. I have had considerable
specific experience related to waste coal plants. I negotiated the initial fuel supply
and ash disposal agreements for the Morgantown Energy Associates (MEA) and
Piney Creek plants. I worked with MEA on the first two price reopeners. In
addition, I have worked on engagements related to North Branch and Warrior Run.
WERE THE WASTE COAL PLANTS YOU MENTIONED SIMILAR TO
GRANT TOWN?
Yes. Like the Grant Town plant which is owned and operated by American
Bituminous Power Partners, L.P. (AmBit), these plants are Qualifying Facilities
(QF) under the Public Utility Regulatory Policies Act of 1978 (PURPA).
WHAT IS PURPA?
PURPA was one of five acts included in the 1978 National Energy Act. P U W A
was intended to encourage the conservation of electric energy, increase efficiency,
achieve equitable retail rates, develop hydro, and conserve natural gas. To assist
in achieving these objectives, PURPA established a new class of generating
facility which would receive special rate and regulatory treatment. These
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qualifying €acilities (QFs) fell into two categories: small power producers and
cogeneration. Small power producers are generating facilities of80 MW or less
whose primary energy source is renewable (hydro, wind or solar), biomass, waste,
or geothcrnial resources. A cogelleration facility is a generating facility that
sequentially produces electricity and another form of useful thermal energy.
UNDER PURPA, WHAT OBLIGATIONS DID THE HOST UTILITY
HAVE WITH RESPECT TO QF’S?
As originally implemented. I’URPA permitted a qualifping facility (QF) to sell Its
output (if necded) to an electric utility at the utility’s “avoided cost” at the time of
the contract.
WHAT IS THE PURPOSE OF YOUR TESTIMONEY?
The purpose of my testimony is to provide my expert opinion on the joint petition
by AmBit and Monongahela Power Company (Man Power) for the Approval of an
Amendment to the Electric Purchase Agreement and Associated Ratemaking
Treatment.
WHAT INFORMATION DID YOU REVIEW IN THIS ENGAGEMENT?
I reviewed the Joint Petition, responses to requests for information, the most recent
ENEC audit and Settlement? government data sources including the Department of
Energy and Federal Energy Regulatory Commission, Florida Power & Light
(NextEra) SEC filings, Florida Public Service Commission orders, and industry
periodicals.
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I. SUMMARY
PLEASE DESCRIBE THE PROPOSED AMENDMENT?
AmBit and Mon Power are requesting Commission approval of an amendment
(“Amendment”) to the Electric Energy Purchase Agreement (EEPA) which
increases and restructures Mon Power’s payment obligations
WHAT IS JUSTIFICATION FOR THE AMENDMENT?
A d i t appears to be insolvent and is representing it cannot continue to operate the
Grant Town plant absent higher payments. Ambit and Mon Power have offered
testimony that continuation of the EEPA provides value to the state of West
Virginia.
WHAT IS RECOMMENDATION?
I recommend that the Commission not approve the Amendment. PURPA requires
that EEPA rates be set as the avoided costs of the utility, not based upon its
financial condition of the QF, as though it were a regulated entity. Mon Power’s
avoided costs at the time of the initial contract determined the QF payments and it
is irrelevant whether the operating costs of the Grant Town plant are higher or
lower than what was expected..
WHAT IS THE BASIS FOR YOUR RECOMMENDATION?
My opinion is based upon inultiple factors:
The EEPA, even as amended through the years, was based upon AmBit’s
ability to perform without additional compensation beyond Mon Power’s
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avoided costs. According to the Joint Petition, this has not occurred.
AmBit appears to insolvent. More importantly, it is not clear from
documents provided with the petition that even with the increase, it would
be able to perform.
The Joint Petition fails to acknowledge that for at least the period between
2013 and H1 2016, the payments to AinBit and recovered through the
ENEC significantly exceeded the market price. The Joint Petition speaks
only to the incremental costs in the Amendment above current levels, not
the cumulative costs that are being incurred by ratepayers.
e The Settlement Agreement in Mon Power’s most recent ENEC case (Case
16-1121-E-ENEC) provided for Mon Power to review its PURPA
obligations with an eye to reducing these costs. The Commission should
not provide any relief to AmBit until Mon Power completes the agreed-to
review of all of its PURPA contracts.
e There is precedent that some QF’s have closed because their power
purchase agreements with the host utility do not make continued operations
economically viable or the current power price is above market. AinBit is
in a similar situation.
The Joint Petition fails to recognize that there is value to the West Virginia
economy through the closure of the Grant Town plant through lower rates
to customers and increased generation from other West Virginia utility
power plants.
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11. BACKROUND ON GRANT TOWN AND MON POWER
Q. PLEASE PROVIDE THE BACKGROUND ON THE GRANT TOWN
PLANT?
The Grant Town plant is an 80 MW facility located in Marion County, WV. The
plant is a Qualifying Facility (QF) under the Public Utility Regulatory Policies Act
of 1978 (PUWA) through its use of waste coal. Inasmuch as the Grant Town
plant is a QF, Mon Power was required to purchase its power at Mon Power’s
avoided cost. Following litigation between A d i t and Mon Power with an Order
froin Commission directing Mon Power to negotiate an agreement, Mon Power
and AmBit entered into an EEPA which was approved by the Commission in
1988.
A.
Q. A.
HOW MUCH DID THE GRANT TOWN PROJECT COST?
The original project capital cost was approximately $185 million. It was funded
with $35 million of equity from the original partners and $150 million tax-exempt
Solid Waste Disposal Facility Revenue Bonds issued in 1990 by the County
Commission of Marion County. Construction on the Prqject commenced in 1990
after bond issuance. The plant started operating in 1993.
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22 Q. HAVE THERE BEEN AMENDMENTS TO THE 1988 EEPA?
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According to the Joint Petition there have been four: one in October 1989, one in
August 2007, one in April 2006, and one in October 2016. The 2016 Order
according to the Joint Petition stated that the Commission “had jurisdiction to
consider the amendments to the EEPA that had been agreed upon by the Joint
Petitioners for purposes of determining Mon Power’s entitlement to pass through
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the amended rates to its retail customer but dismissed the 20 15 Petition without
prejudice because the evidence submitted was insufficient to allow the
Commission to ensure that the negotiated EEPA rate would result in rates and
charges for utility services that are “just and reasonable, . , . and based primarily
on the costs of providing those services”. W. Va. Code §24-1-1(a)(4).4
See, 2016 Order at Conclusion of Law 6 Id. at Conclusion of Law 14.”
HOW ARE PAYMENTS MADE TO AMBIT?
AmBit is paid a fixed capacity rate and a variable energy rate for Grant Town
based on three proxy coal plants operated by First Energy (Harrison, Pleasants,
and Fort Martin). In addition, as a PURF’A facility it generates approximately
640,000 Renewable Energy Credits annually which Mon Power has the right to
use or sell.
HOW ARE THE COSTS OF GRANT TOWN RECOVERED IN RATES?
Mon Power recovers its expenses under the EEPA through the Expanded Net
Energy Cost (ENEC) rider as purchased power expenses.
ARE THE PAYMENTS TO GRANT TOWN SUFFICIENT TO COVER
GRANT TOWN’S COSTS?
No. According to the Petition, “AmBit is in financial difficulty as a direct result
of increased operating costs and lower than projected energy revenues. It defaulted
on the principal payments that support the Revenue Bonds in 2013, 2014, 2015,
and 2016, and will likely default in 201 7. In order to make the annual payments on
the Revenue Bonds, AmBit has, since 2013, utilized a Letter of Credit which
carries a balance of $16,400,000 as of March 31, 2017 and is owed by AinBit to
its creditor banks. After the final payment of $4,400,000 and retirement of the
Revenue Bonds on October 1, 2017, the balance owed to the creditor banks is
estimated to be approximately $1 8,500,000. Further, AmBit has, since February
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3.5 Year
L GrantTown (19.27) (12.22) (12.40) (12.69) (56.58) 2014 2015 H12016 Total
Million $ 2013
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2013 been unable to pay lease rent on the property it occupies in Marion County
due to insufficient cash flows. As of March 31, 2017, AmBit's Lessor claims that
A d i t owes it approximately $4,300,000 in lease payments (plus interest),
although AinBit disputes that amount."'
Q. IS THE DIFFERENCE BETWEEN THE PAYMENTS UNDER THE EEPA
AND THE MARKET PRICE OF POWER RECORDED AS REVENUE (IF
POSITIVE) OR AN EXPENSE (IF NEGATIVE)?
A. Yes.
Q. IN RECENT YEARS, HAVE PAYMENTS TO GRANT TOWN THROUGH
THE ENEC GENERATED REVENUE OR EXPENSES FOR MON
POWER?
In the 2016 audit of Mon Power's ENEC on behalf of the CAD2, the testimony of
the auditor provided the following exchange:
Q.
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DO THE PURPA PROJECTS GENERATE REVENUE OR EXPENSES FOR MON POWER?
Collectively, the projects have been a significant expense to Mon Power. For the last 3.5 years, the total losses related to the projects, as shown in Exhibit 16, excekded $1 12.4 million.
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Exhibit 16. Net Revenue (Expense) of PURPA Projects
IHannibal I 5.38 I 3.02 I (8.09)1 (7.32)) (7.01)l wvu 1 (15.11)[ (10.65)[ (13.70)l (9.36)[ (48.82) Total (29.00)r (19.85)r (34.19)[ (29.37)[ (112.41)
' Paragraph 15 ofthe Petition 'Case No. 16-1 121-E-ENEC
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Q. ARE YOU SAYING THAT THE PAYMENTS RECOVERED THROUGH
THE ENEC FOR GRANT TOWN EXCEEDED THE MARKET PRICE OF
POWER?
Yes . The payments to Grant Town which were recovered through the ENEC
exceeded the market price of power by over $56 million for the three and a half-
year period.
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Q, DO AMBIT AND MON POWER ACKNOWLEDGE THE PRICE FOR
GRANT TOWN POWER HAS BEEN ABOVE THE MARKET PRICE?
Yes in multiple places. For example, in response to WVEUG Question No. 39
which asked whether Mon Power believes that the AmBit facility (the Grant Town
Project) is competitive in the PJM wholesale market?” Mon Power responded
Mon Power has formed no belief on what is “competitive.” Competitiveness of
the Grant Project prospectively will be dependent on the future market value of
power. The project to date as compared to the PJM market has generally
resulted in a net expense on a monthly b a ~ i s . ” ~ (emphasis added)
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Q. DID THE ENEC AUDITOR MAKE ANY RECOMMENDATIONS
RELATED TO MON POWER’S PURPA PLANTS?
Yes as shown below the auditor questioned whether Mon Power should take
action to limit the future expenses of the PURPA projects that flowed through the
ENEC.
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Q. A.
DO YOU HAVE A SPECIFIC RECOMMENDATION?
Yes. Prior to the filing of the next ENEC, Mon Power should prepare a thorough review of the PURF’A projects and provide a recommended course of action for reducing this liability.
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DO YOU KNOW IF MON POWER AGREED TO DO THIS?
Yes. There was a Settleinent in Case No. 16-1 121-E-ENEC. The Settlement
language states that Mon Power agrees to continue to review PURPA obligations
and to evaluate if there is any ability to reduce associated expenses.” (emphasis
added)
HAS MON POWER PERFORMED THIS STUDY?
There is no evidence that it has.
WILL THE CHANGES IN THE PROPOSED AMENDMENT INCREASE
OR DECREASE THE EXPENSES RELATED TO GRANT TOWN?
My opinion is that the Proposed Ainendinent is likely to increase the expenses
incurred by Mon Power related to continued operations of the Grant Town plant.
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111. JUSTIFICATION FOR THE AMENDMENT
AMBIT HAS A NUMBER OF JUSTIFCATIONS FOR THE
AMENDMENT. ONE ARGUMENT IS THAT THE AMENDMENT IS
CONSISTENT WITH WHAT IS INTENDED UNDER PURPA AS THE
AMENDMENT SIMPLY COMPENSATES AMBIT WITH THE
INTENDED AVOIDED COSTS AT THE TIME THE EEPA WAS
NEGOTIATED. DO YOU AGREE?
A. In the petition AinBit states that it “believes that the levelized avoided cost
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originally approved by the Commission in the 1987 Order was estimated to be
$53.22 through 2027 and $53.82 through 2036. Under the proposed amendment,
the levelized avoided cost is estimated to be $51.58 through 2027 and $52.46
through 2036.” I do not agree there is any obligation for A d i t compensation to
be adjusted for this reason. To my knowledge, there is nothing in PURPA that
requires the EEPA to be “trued up” to a 1987 forecast.. If there were a legal
argument to support the requested adjustment or “true up”, there is no question it
would have been made. Of course, the opposite is true as well. When Mon
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Power’s avoided costs declined it had no legal right to ask AinBit to renegotiate
the EEPA downward.
THE PETITION ALSO ARGUES AN AMENDMENT TO THE EEPA IS IN
ORDER BECAUSE OF THE ASSOCIATED ENVIRONMENTAL AND
ECONOMIC BENEFITS OF CONTINUED OPERATION OF GRANT
TOWN. DID PURPA OBLIGATE A UTILITY TO PAY ABOVE AVOIDED
COSTS TO COVER ENVIRONMENTAL PROBLEMS ASSOCIATED
WITH WASTE COAL IMPOUNDMENTS OR LOCAL ECONOMIC
ACTIVITY?
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Not in my experience
DID THE ECONOMIC ANALYSIS REFLECT ANY BENEFITS
ASSOCIATED WITH HIGHER GENERATION FROM WEST VIRGINIA
UTILITY POWER PLANTS IF THE GRANT TOWN PLANT WAS
CLOSED?
No.
DID THE ECONOMIC ANALYSIS CONSIDER THE BENEFITS
ASSOCIATED THE LOWER ELECTRICITY RATES WITHOUT GRANT
TOWN?
No.
DID THE ENVIRONMENTAL ANALYSIS REFLECT ANY BENEFITS
ASSOCIATED WITH LOWER CARBON EMISSIONS?
Waste coal-fired fluidized bed boilers small power generators have higher C02
emissions per kilowatt-hour because such facilities are less efficient than
pulverized-coal fired power plants, which m a n s inore coal is burned per
megawatt-hour of electricity generation, thereby increasing emissions.
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IV. OTHER PURPA PROJECTS
WHAT ROLE WAS AVAILABLE FOR COAL IN QF’S?
A sinall power producer using priinarily waste coal could qualify as a QF under
PURPA. A cogeneration facility using coal could qualify as a QF provided it met
the efficiency standards set out in PURPA.
WERE WASTE COAL QF’S BUILT IN A CERTAIN GEOGRAPHIC
AREAS?
Yes. Waste coal by definition has low heating value, i.e., low Btu’s. As a result,
waste coal QF’s are always built reasonably proximate to sources of waste coal
because it is too expensive to transport low quality product any distance.
ARE YOU AWARE OF ANY WASTE COAL PLANTS THAT HAVE BEEN
RETIRED?
Yes.
PLEASE PROVIDE SOME EXAMPLES.
The Piney Creek Power Plant was a 33 MW waste coal QF located in Clarion,
Pennsylvania. Construction started in 1990; operations in 1992. Piney Creek had a
25-year contract with the host utility. The first 20 years was at a fixed rate. The
contract provided for market rates in the last five years of the agreement.
According to Piney Creek General Manager Kendall Reed, “(w) had a 25-year
contract with a utility, and the first 20 years of that contract was at a fixed rate that
escalated. When we hit the end of the 20th year, that price dropped to a market
energy base rate index, and that’s what happened to this plant and a lot of them.
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When you get to that point, the energy pricing is low. The energy pricing for ours
when we hit that date on December of 2012 was lower than when the contact was
written back in 1988. We were just upside down with energy pricing and also
facing environmental issues.” The plant was closed in 2013. Reported efforts to
sell the plant for future operations failed. The plant was sold in auction and
dissembled and r e l ~ c a t e d . ~
Another waste coal QF which was retired was the 74 MW North Branch plant that
was located in Bayard, West Virginia. It was located next to a coal mine which
was owned at the time by Island Creek Coal Company that supplied Virginia
Power’s Mount Storm power plant. North Branch started operations in 1992.
North Branch was owned by North Branch Partners (NE3 Partners) which sold the
plant to Virginia Power within a few years. The plant operated intermittently
thereafter until it was put in cold storage in 2010. The plant was closed in 2 0 l l 5
WERE COAL-FIRED COGENERATION QF’S BUILT IN A CERTAIN
GEOGRAPHIC AREAS?
No. Coal-fired cogeneration plants were located throughout the U.S. but primarily
in areas with good access to coal.
WERE THERE ALSO RETIREMENTS OF COAL-FIRED
COGENERATION FACILITIES?
Yes.
CAN YOU PROVIDE EXAMPLES OF THOSE?
l1ttp:/lwww.exploreclarion.com/20 l4103104lpiney-creek-power-plant-purchased-at-auctio~i1
h~u://law.iustia.comlcases/federal~au~ellate-cou~s/F3/35/971/605200/
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Yes. In 2016, Florida Power & Light closed the Cedar Bay cogeneration plant in
Florida that it had acquired the year before with the intention of closing. Ff-’&L
had been obligated to purchase power froin the plant under a I998 PPA.
According to IT&I,; the I’L’A had become uneconomic so FP&L bought the plants
fiom its current owner with the intention of‘ closing. FI’&L estimated the buy-out
would produce $70 million in savings to customers. The Florida Public Service
Commission Order authorizing the buy-out is provided in Attachment Ill.
In 2016, FP&L bought a second power plant, Jndiantown cogeneration plant i n
Florida, with the same plan in mind. FP&I.. had been obligated to purchase power
from lndiantown under a 1991 I’PA. As W&L reportcd it could generate
electricity at a much lower cost, FP&L sought permission fiom the Florida Public
Service Commission Ibr the buy-out estimated to be about $450 inilijon which was
still expected to result in net $129 millioii in savings for customers. The Florida
Public Service Coininksion Order authorizing the buy-out is provided in
Attachment JV .
DO YOU BELIEVE THERE ARE PARALLELS WITH AMBIT THAT
SHOULD BE CONSIDERED?
Yes. The Grant Town plant, like these other plants, is no longer economic. Mon
Power ratepayers have been paying higher costs to AinBit for Grant Town through
the ENEC. As acknowledged in the Petition, the Amendment would further
increase customer costs. While there may be no need to buyout the EEPA with
AmE3it given the Grant Town plant appears to insolvent, there would still be value
to Mon Power and its customers in terminating the EEPA with a nominal payment
to assist in plant closure costs and long-term water treatment.
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1 V. OTHER ISSUES RELATED T O THE VIABILITY OF AMBIT
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SUPPLY TO THE GRANT TOWN PLANT?
Luinmus Consultants, which was retained by AmBit to perform an operational
review of Grant Town, produced a report which is submitted with the Petition in
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this Case. The Luminus report provided the following summary of expected 2017
waste fuel coal expense.' Based upon the information in Exhibit 4-1, the weighted
average all in cost is $2.24 per MMBtu.
Exhibit 4-1: Sources of Fuel for Grant Town
(a5 received basis)
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Other Sources of Supply
CG = Coarse Gob, NCM =Nan Commercial Mineral. PPR = Prep Plant Rejects, Silt = Fine Gob
WHAT IS INCLUDED IN ALL-IN COSTS?
Direct Testimony of John P. Mustonen, Exhibit JPM-2 6
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According to Lummus, in addition to the delivered fuel prices, the all-in costs
include limestone and ash disposal.
DO YOU HAVE AN ESTXMATE OF THE JUST THE FUEL COSTS?
Yes. I estimated just the fuel costs by subtracting the limestone and ash disposal
costs as provided in Ambit Response 1-1, Attachment A, shown below.
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tons aarrackviiie CG 100752 Farmineton CG io9ao FaiminPton Silt 44982
LP Mineral NCM 130215 Arch- Sentinel PPR 6800 Humphrey Sil t 97982
A ~ B I I R C L P O ~ S ~ 1.1. nnachment A 7/31/2017
b d e f Siran Slron Slron $/Ton Snm $15.94 $2.50 53.50 S2.W $G.M $8.50 52.50 $4.70 $2.00 $4.75 54.37 52.50 54.01 $2.00 55.19
$19.35 53.50 $4.84 $2.00 56.68
$19.83 $2.50 $7.36 $2.00 $1.52 $9.35 $z.so $9.00 $2.00 16.ao
e h 5ourcer $PO" w o n mine refuse site
mine refuse site $1.99 $0.00 $2.00 $0.00 mine reiuse S i l C
$1.40 $0.00 mine refuse site
activeitrip mine $1.92 $0.00 active underground mine $1.69 $0.00 mine refuse site
$1.92 $0.00
me annUai tonnage of waste coal used to derive the W . i n Cost SjMMBTu" The projected annual FOB mine EMI in $/ton of the waste coal lexciuiive of loading and handiing) Caiculation The prqened annual cost in $/ton of loading and handling of the waste coal The projened annual cost In $/ton of trucking the waste foal IO the plant.
The projected annuai LOR of limestone in $/ton of waste cos1 me prolected annual cost of ash dirporai In $/tan of waste coal Any othci fuci-rciated cost in S/tm that is not not provided for in thc above items
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e me projected annual cost in $/ton of handiin%/prorersing the waste cod (if different and in addition to the Lost in ( L) above
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9 Q. WHAT ARE THE FUEL COSTS UNDER THE WASTE COAL
10 AGREEMENTS USING THIS METHODLOGY?
11 A. As shown below, the average cost per MMBtu is $1.66 per MMBtu
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HOW DOES THE DELIVERED PRICE OF WASTE COMPARE TO MON
POWER’S FUEL COSTS AT ITS OTHER COAL PLANTS?
Mon Power reports its delivered fuel prices for Harrison and Fort Martin on EIA
Form 923. The Q1 2017 results, shown below, are an average delivered cost of
fuel to these two units to be $2.23 per MMBtu.
6
7
8
9
10
11
12
13
14
15
16
Q. A.
DOES THIS MEAN THAT THE WASTE COAL IS CHEAPER?
No. The heat rate for the Grant Town plant is high as shown below in an exhibit
from the Luininus report. Heat rates reflect the amount of Btu’s needed to
generate one kilowatt-hour of coal. Therefore, the higher the heat rate, the less
efficient the plant.
went above 14,000 Btuilb in 2015.
The heat rate in all years was greater than 13,000 Btuilb but
Exhibit 3-1: Grant Town Performance and Operating Data
The heat rate for Harrison and Fort Martin in 2016 was 10,204 Btu/lb and 10,179
Btuilb, re~pectively.~ The waste coal costs for Grant Town adjusted for the heat
’ EVA database
19
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Q.
A.
Q. A.
Q.
A.
Q.
rate difference produces a $2.1 6 per MMBtu price. This price does not include the
higher limestone and ash costs associated with the waste coal which in my opinion
more than eliminate any cost advantage of waste coal. The higher cost for
limestone is doe to siinilar sulfur contents which much lower heat content for the
waste coal. The higher solid waste disposal is due to both the higher ash content
of the waste coal combined with the higher limestone utilization.
WHAT CONCLUSIONS DID LUMMUS REACH ABOUT THE
OPERATIONS OF THE PLANT?
Luininus found that “the plant is performing and operating well, with what appears
to be a well-managed, cost-effective O&M program appropriately focused on
maintaining safe, reliable long-term operation in accordance with the EEPA.”’
HOW DOES LUMMUS’ FINDINGS AFFECT YOUR OPINION?
Based upon Lummus’ findings, there appears to be little opportunity for
operational improvements. In other words, Grant Town is unlikely to become an
economic source of power.
HOW DOES THE PJM CAPACITY AUCTION RESULTS AFFECT THE
ECONOMICS OF GRANT TOWN?
Mon Power pays AmBit a capacity payment for the Grant Town plant. Mon
Power in turn is compensated by PJM for capacity. If the PJM capacity payment
is less than the capacity payment to Grant Town, this is a direct incremental cost to
customers as these costs would flow through the ENEC if the Amendment is
approved by the Commission.
WERE THE MAY 2017 PJM CAPACITY AUCTION RESULTS
REFLECTED IN THE ECONOMICS OF GRANT TOWN?
Direct Testimony of John P. Mustonen 8
20
1 A.
2 3 4 5 6 7 8 9
10 11 12 13
14
15
16
17
18
19
20
21
22
23
24 Q.
25 A.
26
27
28
29
No as was pointed out in Question No. 28 from WVEUG:
QUESTION NO. 28: Reference the Direct Testimony of Ethan Conner-Ross, Exhibit ECR- 1. Please provide a reconciliation between the $305/mW-day capacity price assumed for 2020 in the forecast shown in Table 1.1 and the $76.53/mW- day capacity price set in the recent 202012021 PJM Base Residual Auction ("BRA") for the Allegheny Power Systems ("APS") zone. RESPONSE NO. 28: Forecasts included in the report were based on data available at the time the analysis was conducted. As stated in testimony, the analysis uses price projections submitted by Appalachian Power to the Virginia State Commission Corporation at a hearing in April 2016.9
The large disconnect between the results of the May 2017 auction and the capacity
price assumed for 2020 in Ambit's proposal challenges AmBit's economic
conclusions as to the benefits with the Amendment. Assuming a $225 difference
in MW-day capacity prices, the additional cost of retaining an EEPA for the Grant
Town plant is more than $6 million per year. Future PJM capacity payments are
highly uncertain, One possible (some would argue likely) scenario is that capacity
payments remain at the level of the 20 17 auction which would result in continued
expenses of this magnitude throughout the balance of the EEPA which are not
reflected in the pro forma economics.
DOES THIS CONCLUDE YOUR TESTIMONY?
Yes. I recommend the Commission deny Ambit's proposed Amendment. It is not
based upon avoided costs and is burdensome to ratepayers. I reserve the right to
supplement this testimony if additional information becomes available.
Attachment V 9
2 1
ATTACH
1
2
3
4 5
6 7 8 9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46
Attachment I
RESUME OF EMILY S. MEDINE
EDUCATIONAL BACKGROUND M.P.A. Woodrow Wilson School of Public and International Affairs, Princeton
B.A. University, 1978 Geography, Clark University, 1976 (magna cum laude, Phi Beta Kappa)
PROFESSIONAL EXPERIENCE
Current Position Emily Medine, a Principal, has been with Energy Ventures Analysis since 1987. Her experience includes forecasting, bankruptcy support, market strategy development, fuel procurement audits, fuel procurement, acquisition and investment analyses, and strategic studies. She has also provided expert testimony on utility fuel procurement practices and coal contract disputes. The types of projects in which she is involved are described below:
Fuel Procurement Ms. Medine develops and implements fuel procurement strategies for US. and foreign coal consumers. Fuel procurement assistance has ranged from determining an appropriate strategy to soliciting bids and negotiating purchase agreements. In the last five years, Ms. Medine has advised several international coal consumers of their fuel procurement activities. Ms. Medine continues to advise numerous US. and international coal consumers on their coal and petroleum coke procurements.
Forecasting Ms. Medine develops forecasts of U.S. and global solid fuel demand and prices for alternative coal types, coke and market segments. These forecasts are provided t o individual clients and are documented in various FUELCAST/COALCAST reports.
Bankruptcy Support Ms. Medine was an advisor to the Horizon Natural Resource companies which operated as a debtor-in-possession in the development of a plan to accomplish reclamation on al l permits not sold and transferred as part of the plan of reorganization. For a period of 15 months, Ms. Medine served as Executive Vice President of Centennial Resources, Inc., a debtor-in-possession, as part of EVA’S contract to manage this company post-petition. In this capacity, she managed . the day-to-day operations of the company as well as serving as the liaison between the company, state and county regulatory agencies, the bankruptcy court, and the lenders. This assignment ended upon the filing of Centennial’s plan of reorganization. Ms. Medine has also served as the advisor to secured lenders in another coal industry bankruptcy. In this capacity, she reviewed and developed independent financial forecasts and operating plans of the debtor- in-possession. Most recently, Ms. Medine supported the Department of Justice in a major US. coal bankruptcy.
22
1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51
Acquisition and Investment Ms. Medine was the agent for Lexington Coal Company in the sale of i ts assets in Indiana and Illinois. As part of this engagement, Ms. Medine was responsible for the sale of three mines to Peabody Energy. Ms. Medine also routinely evaluates the economics of potential projects or acquisitions for producers, developers, and industrials. For coal projects, this includes market and financial forecasts. In addition to the above, Ms. Medine has completed the sale of multiple mine assets. Ms. Medine was an advisor to and on the board of The Elk Horn Coal Company until i ts sale to Rhino Energy in June 2011. Ms. Medine managed the sale of a small Central Appalachian producer in 2015.
Forecasting Ms. Medine develops forecasts of US. and global solid fuel demand and prices for alternative coal types, coke and market segments. These forecasts are provided to individual clients and are documented in various FUELCAST/COALCAST reports.
Fuel Procurement Audits Ms. Medine manages and performs fuel procurement audits on behalf of regulatory commissions, utility management, and third-party interveners. She has performed over 25 audits of utilities regulated by the Public Utilities Commission of Ohio and testified in a number of proceedings. She also managed two major audits of the fuel procurement practices of PacifiCorp. Recent audits include Appalachian Power (2006, 2007, 2014, and 2015) and Monongahela Power (2007 and 2015) on behalf of the Consumer Advocate of the State of West Virginia, Tucson Electric Power on behalf of the Arizona Corporation Commission in 2007/2008 and 2012, AEP Ohio on behalf of the Ohio’s Consumer Counsel, and AEP Ohio (2009,2010,2011, 2012, 2013 and 2014) and Dayton Power & Light (2010, 2011, 2012, 2013, 2014, and 2015) on behalf of the staff of the Public Utilities Commission of Ohio.
Market Strategy Development Ms. Medine assists clients in the development of marketing strategies on behalf of coal suppliers and transporters. She has helped to identify the high value markets and strategies for obtaining these accounts.
Expert Testimony and Presentations Ms. Medine prepares analyses and testimony in support o f clients involved in regulatory and legal proceedings. She provides testimony in commission hearings on fuel procurement issues and arbitration proceedings on contract disputes and damages. Ms. Medine regularly speaks at industry meetings.
Prior Exuerience Prior to joining EVA, Ms. Medine held various positions a t CONSOL including Assistant District Sales Manager - Chicago Sales Office and Strategic Studies Coordinator. Prior to CONSOL, Ms. Medine was a Project Manager a t Energy and Environmental Analysis, Inc. where she directed two large government studies. For the Environmental Protection Agency, Ms. Medine directed an evaluation of the energy, environmental and economic impacts of New Source Performance Standards on Industrial Boilers. For the Department of Energy, Ms. Medine directed an evaluation o f the financial impacts of requiring utilities with coal capable boilers to reconvert to coal. Ms. Medine worked as a Research Assistant at Brookhaven National Laboratory while she attended graduate school.
23
ATTACH
1 Attachment I i
WVEUG'S SECOND REQUEST FOR INFORMATION TO AMERICAN BITUMINOUS POWER PARTNERS, L.P.
AND MONONGAHELA POWER COMPANY CASE NO. 17-063-E-P
Prepared By: Robert B. Reeplng
To Testify: Robert B. Reeping
Date Prepared: July 24,2017
QUESTION NO. 39:
Reference the Direct Testimony of Robert B. Reeping, page 8. lines 3-9.
a.
b.
C.
d.
e.
1.
g.
h.
Did Mon Power offer any proposed changes to the "proposed EEPA amendments" identified by AmBlt in the context of the meetings between AmBit and Mon Power?
Did Mon Power propose alternatives to the "proposed EEPA amendments" identified by Mon Power?
Did Mon Power attempt to negotiate any changes to the "proposed EEPA amendments," and if so. what changes were negotiated?
Did Mon Power consider acquiring the facility from AmBit, and if not, why not?
Does Mon Power believe that the AmBit facility (the Grant Town Project) is economic?
Does Mon Power believe that the AmEit facility (the-Grant Town Project) is competitive in the PJM wholesale market?
Are the proposed EEPA amendments fhe product of almk length negotiation?
is Mon Power wllling to share the fisk of PJM market prices being lower than the pricing reflected in the proposed EEPA amendments?
CONTINUED ON NEXT PAGE
2
3
24
1
WVEUG'S SECOND REQUEST FOR INFORMATION TO AMERICAN BITUMINOUS POWER PARTNERS, L.P.
AND MONONGAHELA POWER COMPANY CASE NO. 17-0631-E-P
RESPONSE NO. 39:
a. See Response 9 herein
b. See Response 8 herein.
c. See Response 9 herein.
d. Yes.
e. The question is vague in that no definition of "economlc' is provided
f Mon Power has formed no belief on what is "competitive." Competitiveness of the Grant Town Project prospectively will be dependent on the future value of power. The project to date as compared to the PJM market has generally resulted in a net expense on monthly basis.
g. Yes.
h. No.
2 QUESTION NO. 9:
Relerence the Direct Testimony 01 Kenneth Niemann, page 11, line 14 thmugh page 22, llne I.
Did Mon Power provide any proposed changes or adjustments in detenninlng "the appropriate methodology for the amended Purchase Price?
b. Did Mon Power provide any cauntar or alternative proposals in determining "the appmpriate methodology lor the amended Purchase Price?" If so, please detail those munter-proposals or alternatives.
a.
RESPONSE NO. 9:
a. Mon Power reviewed, asked for clarification, and discussed the methodology for the Purchase Prlce with AmBlt, however, no changes or adjustments were made to AmBil's proposed methodology.
b. See Response 9.a. above.
25
ATTACHMENT 1 1 1
1 At tachment 111
2
3
FPSC Order on Cedar Bay
26
FILED SEP 23,2015 DOCUMENT NO. 05994-1 5 FPSC - COMMISSION CLERK
BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION
DOCKET NO. 150075-E1 ORDER NO. PSC-15-0401-AS-E1 ISSUED: September 23,2015
The following Commissioners participated in the disposition of this matter:
LISA POLAK EDGAR RONALD A. BRISE JIMMY PATRONIS
FINAL ORDER APPROVING SETTLEMENT AGREEMENT BETWEEN FLORIDA POWER & LIGHT COMPANY AND THE OFFICE OF PUBLIC COUNSEL
BY THE COMMISSION:
On March 6,2015, pursuant to Section 366.06, Florida Statutes (F.S.), Florida Power & Light Company (FPL) filed its Petition for approval of arrangement to mitigate impact of unfavorable Cedar Bay power purchase obligation. Specifically, FPL seeks approval of a Purchase and Sale Agreement with CBAS Power Holdings, LLC, to assume ownership of the Cedar Bay generating facility through a stock purchase and terminate its existing Power Purchase Agreement (PPA) with Cedar Bay Generating Company, Limited Partnership.
On July 24, 2015, FPL and the Office of Public Counsel (OPC) filed a joint motion for approval of a settlement agreement (motion). The Settlement Agreement was attached and filed with the motion. A duly noticed administrative hearing on the issues in this docket was held on July 28 and 29, 2015. At the hearing, the testimony of witnesses was heard and evidence was introduced into the record. The Florida Industrial Power Users Group (FIPUG) did not sign the settlement agreement and objected to the motion being considered during the July 28 and 29 hearing. A special Commission agenda conference was scheduled for oral argument on the motion on August 27,2015. On July 31,2015, FIPUG filed its objections to the motion. FIPUG and staff were authorized to request information from FPL on the provisions of the Settlement Agreement through data requests. The parties filed post hearing briefs on the motion on August 13, 2015. We heard argument of counsel on the Settlement Agreement at the special agenda conference on August 27,2015.
We have jurisdiction pursuant to Chapter 366, Florida Statutes, including Sections 366.04, 366.041, 366.05, 366.06, 366.07, and 120.57, F.S., and Rules 28-106.301 and 28- 106.302, Florida Administrative Code.
ORDER NO. PSC-15-0401-AS-E1 DOCKET NO. 150075-E1 PAGE 2
A review of the testimony and exhibits shows that the terms of the Settlement Agreement are supported by the record of the hearing in this proceeding. We find there is convincing, credible evidence that the $520.5 million purchase price, plus $326.9 million for income tax gross up, serves to mitigate the impact on customers of the Cedar Bay power purchase obligation, and is reasonable, cost-effective, and prudent. The Settlement Agreement shifts part of the recovery of the Cedar Bay purchase price to base rates, specifically, $85 million of the regulatory asset will be recovered through existing base rates until the next test year for a general rate proceeding. At that time, the unamortized amount will be recovered through the capacity cost recovery clause which will result in customer savings in 2015 and 2016. The Settlement Agreement puts limits on FPL's recovery of railcar lease and ground lease payments. This will provide additional protection for customers against unanticipated costs under those leases after the Cedar Bay facility is retired.
We also find that there is an environmental benefit to the transaction in that air emissions as a result of the facility's reduced operation and early retirement will be reduced. Further, to ensure additional protections for customers, the Settlement Agreement requires FPL to double the amount of additional coverage limits in a longer term for the environmental liability insurance. This will serve to mitigate customer risk in the event of environmental liability costs that FPL may be assessed.
Based upon the Petition, our review of the Settlement Agreement, the evidence on the record, briefs of the parties, and oral argument at the special agenda conference, and for the reasons stated above, we find that the Settlement Agreement is reasonable for all parties, creates customer savings, includes additional protections for customers, and avoids the long-term costs of the PPA. Thus, our approval of the Settlement Agreement is in the public interest. The Settlement Agreement resolves all the issues in this docket. Accordingly, we approve the Settlement Agreement which is attached to this Order as Exhibit A and made a part hereof.
Based on the foregoing, it is
ORDERED by the Florida Public Service Commission that the attached Settlement Agreement is approved. It is further
ORDERED that this docket shall be closed if no appeal is timely filed.
ORDER NO. PSC-15-040i-AS-E1 DOCKET NO 150075-El PAGE 3
By ORDER of the Florida Public Service Commission this 23rd day of September. 2015.
Commission Clerk Florida Public Service Commission 2540 Sliuniard Oak Boulevard Tallahassec, Florida 32399
www.floridapsc.com
Copies furnished: A copy of this document is provided to thc partics of record at the time of issuancc and, if applicablc, interested persons.
(850) 413-6770
MFB
NOTICE OF FUIYIIIER PROCEEDINGS OR JUDICIAL REVIEW
The Florida Public Service Commission is required by Section 120.569(1), Florida Statutes, to notify parties of any administrative hearing or judicial review of Commission orders that is available under Sections 120.57 or 120.68, Florida Statutes, as well as the procedures and time limits that apply. This notice should noi be construed to mean all requests for an administrative hearing or judicial review will be granted or result in the relief sought.
Any party adversely affected by the Commission's final action in this matter may request: 1) reconsideration of the decision by filing a motion o r reconsideration with the Office of Commission Clerk, 2540 Shimiard Oak Boulevard, Tallahassee, Florida 32399-0850, within fifteen (15) days ofthe issuance of this order in the form prescribed by Rule 25-22.060, Florida Administrative Code; or 2) judicial review by the Florida Supreme Court in the case of an electric, gas or telephone utility or tlie First District Courl of Appeal in the case of a water and/or wastewaler utility by filing a notice 'of appeal with the Office of Coniinission Clerk, and filing a copy of the notice of appeal and the filing fee with the appropriate court. This filing must be coinpleted within thirty (30) days after the issuance of this order, pursuant to Rule 9.1 10, Florida Rules of Appellate Procedure. The notice of appeal must be in tlie form specified in Rule 9.900(a), Florida Rules of Appellate Procedure.
ORDERNO. PSC-15-0401-AS-El DOCKETNO. 150075-El PAGE 4
BEFORE THE FLOIIIDA I’UBLIC SERVICE COILIMISSION
Uocket No: 1SOU7S-fl
Date: July 21,2015 mitigste iinpsct of uiitavorable Cedar buy
STIPUIATION AND SETTLEMENT
WMEREAS, Florida Power & Lid11 Coin~lariy (“FPL” or the “Company”) nud thc Office
of Public Counsel (.OPC3 liuvc signed this Stipulation md Settleiuenl [tiic “Agiecii~eni”; unless
the crmiesi clenrly requires otlierwvise, the lcrili “Pnrly“ or “Ponies” menns n signotory to this
Agyecinent); and
W H E W , on Maroh 6, 2015, FPL petilioned tllc Florido Public Service Comuission
(.FPSC” vi “Connnission“) for approval of ali orraagenieiii by wvliicl~ FPL would be ablc to
mitigate the impact on its cusiomers oY an uiifnvorable Cedar Buy power purch~$e obligaioii (the
“Cedai. Buy Petition”). FPL entered imo ii Purchase niitl Sale Agrec~nonl (“PSA”) with CBAS
Power Holdings, LLC (‘CBAS Power Hoitliiigs”) under wliich FPL, contingent 011 FPSC
opprovid, would prry CBAS Power tIolfmgs $520.5 million and h i oxchange would assume
ownership oftbe Cedar Buy generatin8 faciliiy YCeda: Bay Facilitp or the “Facility“) llirougli R
stock purcliase of CBAS Power, Inc. (TRAS’; lliis t1“ansuciion wili be,refeened l o as tlic “Ccdnr
Bay Trnnsnctio~i”); and
\VI-IEREAS, the Cedw Bay Facility i s n 250 iiregnwslt coal-fired qualifling GO.
geneiation plant located in Jncksomilic, Florida that sclls elcctricily to FPL undei a Power
Purchssc Agi‘ecnicnt (“PI’A”) bclwecs PPL nnd Cedar Bay Geliewilig Coinpuny (“Cedar Buy
Genco“). The 1:11cility also sells stenin tu an i ir l jaueii l Iincrbourd facility. The Ccdar Bay
Exhibit A
ORDER NO. PSC-15-0401-AS-E1 DOCKET NO. 150075-E1 PAGE 5
Tiansaclion will allow FPL to terminate the existing unfavorable PPA, which is projected lo
pmducc $70 million in savings for FPL customers on a cumulative present value menue
requirements ("CPVRR") basis ($1 56 million nominal savings), and
WHEREAS, the Cedar Bay Petition and accompanying twlimony ood exhiiiis deserik
FPL's proposed accounting for *e acquisition of CBAS and recovery of costs assooiated with
the Cedar Bay Transction: and
WHEREAS, the Cedar Bay Petition asks the Commission to determine that entering the
PSA was prudent and to approve tww principal elements of the proposed accounting treatment
for Uie PSA (a) estnblislnnent of regulatory ~LWAS far the purchase price of $520.5 million and
M w c i a t e d income tax gross up ofb326.9 million, and @) recovery lluough the Capacity Cost
Recovery Clause YCCR Clause") of (i) mortimtion of the regulatory asseb over the remaining
PPA period, until December 2024, and (ii) a relum of the unamorlized balance of the purchase
price regulatory w e t calculated at FPL's weighted aveinge cost of capital "(WACC'? that is
used foradjuslmwt clause proceedings; and
WHE.REAS, the Patties have Wcd voluminouS prepared testimony with accompanying
exhibits Md conducted extensive discovery thmugh interrogatories, requesls for productions of
documents, and depositions; and
WHEREAS, !he Parties have uudeaaken to m l v e the issues in this pmeeding
expeditiously in order to allow FPL lo begin realizing benefits for i b customem by terminating
the unfavorable PPA as quickly as possible;
NOW THEREFORE, in consideration of the foregoing and the covenants
contained herein. the Parties henby slipulate and agree:
Exhibit A
ORDER NO. PSC-15-0401-AS-E1 DOCKET NO. 150075-E1 PAGE 6
Exhibit A
1.
2.
FPL's entering into the PSA is reasonable, wsl-effective, and prudent.
kcept ns set foah in Paragraph 3 below, FPL's proposed accounting for the Cednr Bay
Transaction aod recovery of costs associated with the Cedar Bay Trnnsnctioii should be
approved.
The Pa& a p e to the following changes to FPL's proposed accounting and cost
recovery for the Cedar Bay Transaction:
(a) FPL muy recover the 5520.5 million PSA purchase price as a regulatory asset (the
"Purchase Price Regulatory Asset'?), but rill apporlion recovery bchveen the CCR Clause
and base rates as follows:
3.
(i) $85 million of the Purchase Price Regulatory Asset (the "Base Regulntory
&et") will be initially recovered through base rates. Until the next test year for a
general base rate proceeding (or the equivalent), the Base Regulstory Asset will
remain in the baserate rate base and be amortized under FPL's proposed nineyeor
amortization schedule, with the unamortized amounts &forded rate setting lreatment
based on applicable Commission law or policy as determined on the facts nnd
circumstances of the future base lute case(%). if any. At the time of the next test year,
the unamortized balance of the Base Regulatory AssM will bc moved from the base-
rate mte base to the CCR Claw. for recovery beginning Jaouary I of that test year
and continue to be recovered there until fully nmortized.
(ii) The remaining $435.5 millioii of the Purchase Price Regulntory Asset will be
.recovered ihrough the CCR Clause as pmposed in the Cedar Bay Petition
ORDER NO. PSC-15-0401-AS-E1 DOCKET NO. 150075-E1 PAGE 7
Exhibit A
(b) FPL may conlinue to use amortization of the Reserve Amount BS defined and
permitted under the stipulalion and seltlenient that was sppmved in Order No. PSC-13-
0023-S-El (the '2012 Senlemenr Ageement"); pmvided, however. that FPL will rcduce
the Reserve Amount avnilable for amorli7ation by the base revenue requirement of the
$85 million mnsfened from CCR to base-rates rate base. This base revenue requirement
for the fifteen m o n h remaining before the 2012 Scttlment Agreement tenoinafcs &e..
Octobn 2015 through December 2016) is Miinned 10 be $30 million. Accordingly. FPL
will limit its amortization of the Reserve Amount thmugh the krm of the 2012 Settlement
Agreement to $370 million, unless it otherwise needs to usc up to the full $400 million IO
maintain a return on equity C'ROE'') at the bonom of its allowed ROE mnge as
established under the2012 Senlment Agreement.
(c) la order 10 pmvido additional protection for FPL customers concerning potential
envimmental liabilities arising fmm the Cedar Bay Transaction. FPL agrees to the
following:
(i) FPL will double lhe existing envimnmentsl liability insurance polloy
coverage limit purchased m cormeclion With the Cedar Bay Transaction fmm $20
million to $40 million and will recover the additional premium for the increased
limit in base rates.
(ii) FPL will maintain the aivironmcntal liability insurance coversge limit at the
$40 million level until January 2020; provided, that a Pruty may pelition the
Commission no later tllan July 1. 2019 for the sole and exclusive purpose of
demonmling that a substantial and significant change in circumstances exists
b t q u i r e s environniental liability insurance coverage to ranain in e f fm far the
ORDER NO. PSC-15-0401-AS-E1 DOCKET NO. 150075-E1 PAGE 8
Cedar Bay Transaction (at no more than the $40 million level) for an additional
term to be p r o p e d by the petitioning party, with the premium for any additional
coverage that the Commission directs FPL to obtnin to be recoverable in full
Uuough the CCR Clause. The issue@) in any such proceeding shall be limited to
whether asubstantinl and significant change in circumstances exists to justify an
extennion of the current term of the environmental liability coverage beyond
January 2020, and, if so, the appropriate term for an extension of the coverage.
FPL will haw the right to oppose any such pmposal, and the Commission shall
enter a final order in any such pmceeding by Deeembcr 31,2019.
(iii) FPL will hold customers harmless for any envimmnlal cleanup liabilities
not ultimately covered by insurance or indemnification pmvisions that might arise
fmm FPL actions that the Commission determines to be imprudent in wnnection
with FPL’s ownership of the Facility and/or occupancy ofthe Facility site and the
accompanying asoumption of the Facility ground lease.
(d) The payments under the rail cnr lease for the Facility \ill be recovered through
the Fuel and Purchased Power Cost Recovery Clause (the “Fuel Clause”). as proposed by
FPL; pmvided, however, that recovery after closure of the Facility will be limited to the
lesser of the actual net payments (nfter crediting sublease revenues) or SO% of the h e
amount of the lease pnyments at the exisling or renegotiated rail car lease rate.
(e) The payments under the ground lease for the Facility will be recovered in base
rates as proposed by FPL; provided, however, that recovery afler closure of the Facility
will bc at the lesser of nctual net lease payments (after crediting niblease revenues) or
Exhibit A
5
ORDER NO. PSC-15-0401-AS-E1 DOCKET NO, 150075-E1 PAGE 9
50% of the face amount of the lease payments at the existing or renegotiated gmund lease
mte.
No Party will assert in any proceeding before the Commission that this Agreement or any
of the Iemis in thc Agreement shall have any precedential value becsusc all Parties ogre
that tire temu of the Agreement are specific to the facts and circumstances of this case.
The Parties' agteement to the terms in the Agreement shell be without prejudice to any
Party's ability to advocate a differeat gosition in future pmeeedingr not involving the
A w m c n l . The Parties further expressly a g m that no individual provision, by imlf,
necessarily repmnts a position of any party in a future proceeding nor shall any Party
represent in any fulun forum thst another Party endorses a specific provision of this
Agreema11 because of that Party's signature herein. It is the intent ofthe Parties to this
Agreement that the Commission's approval of all the terms and provisions of this
Agreement is an express recognition that no individual term or provision, by itself,
necessarily represents a position, in isolation, of any Party or that a psrcy to this
Agreement endorses a specific provision, in isolation, of this Agreement because of that
Party's signature herein. Without limiting the generality of this disclaimer, OPC states
that for purporw OF this settlement only, it takes no position on, and thus will not object
to, the application of n WACC rnte to the unamortized purchare price investment to be
recovered h u g h the CCR Clause or recovery of the wsts of a long-term mil car lease in
the Fuel Clause.
Approval of this Agreement in its entirely will resolve all mattem in Dockcl No. 150075-
E1 pursuant to and in accordance with Section 120.57(4), Florida Statutes. This docket
will be closed effective on the date the Comniission Order approving this Agreement is
4.
5.
Exhibit A
6
ORDER NO. PSC-IS-0401-AS-E1 DOCKET NO. 150075-E1 PAGE 10
final, and no Paw shall seek appellate review of any order issued in this Docket.
The provisions of this Agreement are contingent on approval of this Agreement in its
eutirety by the Commission without modification. The Paties further agree thst they will
support this Agreement and will not request or support any order. relief, outcome, or
result in conflict with the terms of lhis Agreement in any administrative or judicial
pmcecdiig relating Io, reviewing, or chalknging the enablishmmt, approval, sdoption.
or implementation of this A!gYment or the subject matter hereof
This Agreement may be executed in countepart originals, slid 8 facsimile of an original
signature shall be deemed an original. Any penon or entity that executes 8 signature
page to this Agreement shall become and be deemed a Party with h e full range of rights
and responsibilities pmvided hereunder, notwithptanding that such person or entity is not
listed m the fnt recital above and executes the signature page subsequent to the date of
this Agreement, it being expmsly understood that the addition of any such additional
Parly(ies) shall not disturb or diminish the benefits of this Agreement to any c m u t
6.
7.
Paw.
8. This Agreement will become effective on the date the Commission Order appmving this
Agreement is final.
Exhibit A
7
ORDER NO. PSC-15-0401-AS-E1 DOCKET NO. 150075-E1 PAGE 11
Exhibit A
In Witness Whereof lhc Partics evideiicc IIicir aocqitaiicc aiid sgreenienr wilh Ihc
provisioiis of this Agreeinent by their siBiiature.
Plonda Powcl& Light Company 700 Universe BQuieYard Julio Buuch, FL 33408
By:
The Officc ofl’ublic Counsel J R Kelly, bquim
ATTACHMENT IV
1 Attachment IV
2 FPSC Order on lndiantown
3
27
FILED NOV 02,2016 DOCUMENT NO. 08618-16 FPSC - COMMISSION CLERK
BEFORE THE FLORIDA PUBLIC SERVICE COMMISSlON
In re: Petition for approval of a purchase and sale agreement between Florida Power & Light Company and Calypso Energy Holdings, LLC, for the ownership of the lndiantown Cogeneration LP and related power purchase agreement.
DOCKET NO. 160 154-E1 ORDER NO. PSC-16-0506-FOF-El ISSUED: November 2,2016
The following Commissioners participated in the disposition of this matter:
LISA POLAK EDGAR RONALD A. BRISE JIMMY PATRONIS
APPEARANCES:
BRYAN S. ANDERSON, WILLIAM P. COX, and JOEL BAKER, ESQUIRES, 700 Universe Boulevard, Juno Beach, Florida 33408 On behalf of Florida Power & Light Comuany.
DANIELLE M. ROTH, Associate Public Counsel, PATRICIA A. CHRISTENSEN, Associate Public Counsel, and CHARLES J. REWINKLE, ESQUIRES, Deputy Public Counsel, on behalf of Office of Public Counsel, c/o the Florida Legislature, 1 I 1 West Madison Street, Room 812, Tallahassee, Florida 32399- 1400 On behalf of the Citizens of the State of Florida
JON C. MOYLE, JR. and KAREN A. PUTNAM, ESQUIRES, Moyle Law Firm, P.A., 11 8 North Gadsden Street, Tallahassee, Florida 32301 On behalf of Florida Industrial Power Users Grouus
WALT L. TRIERWEILER, ESQUIRE, Senior Attorney, Florida Public Service Commission, 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399-0850 On behalf of the Florida Public Service Commission (Staff).
MARY ANNE HELTON, ESQUIRE, Deputy General Counsel, Florida Public Service Commission, 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399- 0850 Advisor to the Florida Public Service Commission.
KEITH HETRICK, ESQUIRE, General Counsel, Florida Public Service Commission, 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399-0850 Florida Public Service Commission General Counsel.
ORDER NO. PSC-16-0506-FOF-E1 DOCKET NO. 160 154-El PAGE 2
FINAL ORDER APPROVING THE PURCHASE AND SALE AGREEMENT FOR THE OWNERSHIP OF THE INDIANTOWN COGENERATION LP AND
PARTIAL SETTLEMENT AGWEMENT
BY THE COMMISSION:
BACKGROUND
Pursuant to Rule 28-106.201, Florida Administrative Code (F.A.C.), the Florida Public Service Commission (Commission) set a hearing in response to Florida Power & Light Company’s (FPL) petition for approval of a purchase and sale agreement between FPL and Calypso Energy Holdings, LLC (Calypso), for the ownership of the Indiantown Cogeneration LP and related power purchase agreement (PPA).
FPL filed its petition in this docket on June 20, 2016, for approval of a transaction to acquire the ownership interests in the facility and associated land as well as the acquisition of the purchased power agreement. In this petition, FPL seeks approval to establish a regulatory asset of $451.5 million for the investment and recover the costs through the Capacity Cost Recovery Clause. FPL intends to retire the facility at the end of 201 8. The Office of Public Counsel (OPC) and Florida Industrial Power Users Group (FIPUG) were granted intervention in this docket.
On September, 20, 2016, a joint partial stipulation (Stipulation) between FPL, OPC, and FIPUG was filed to address the conduct of the hearing. The parties agreed to the admissibility of the prefiled testimony and exhibits of the four FPL witnesses, stipulated to staffs comprehensive exhibit list, and waived cross examination and post-hearing briefs. FPL and OPC agreed to the accounting treatment, proper rate of return, and accounting entries of the proposed agreement between FPL and Calypso concerning the lndiantown Cogeneration LP. FIPUG did not oppose the Stipulation. On October 4, 2016, an administrative hearing was held to address the Stipulation and other matters pending in this docket, upon which a bench vote was held. This order addresses our vote on this matter. We have jurisdiction pursuant to Section 366.06, Florida Statutes (F.S.).
DECISION
The evidence in the record supports a finding that the transaction is cost-effective and will produce $129 million in savings for FPL customers on a cumulative net present value revenue requirement basis. These estimated savings are based on using the company’s base line fuel projections. FPL proposes to amortize the regulatory asset over the remaining life of the purchased power agreement (9 years). Using the current authorized return on equity for FPL (10.5 percent), the transaction would produce $148 million in savings, with system savings in the first year.
ORDER NO. PSC-16-0506-FOF-E1 DOCKET NO. 160154-E1 PAGE 3
The current lndiantown Cogeneration Facility L.P. (ICL) transaction would be the best option available for customers after the evaluation of several alternative measures to mitigate the PPA’s impacts.
Fair Value
The evidence in the record contains an evaluation by Duff & Phelps which determined the fair value of the PPA was approximately 450 million, representing the value that it would bring to the owner of the facility, who is entitled to continue selling to FPL under the terms of the PPA. This value assumed the unit would perform at historic levels and therefore be eligible for full capacity and energy payments under the existing PPA.
Prudent, Fair and Reasonable Price
The purchase price was determined by negotiations between independent, unrelated parties. The fairness and reasonableness of the transaction is supported by the record which addressed the fair value based on US generally accepted accounting principles of the assets to be acquired and liabilities assumed by FPL.
Reasonable Measures to Mitigate Future PPA Impacts to Ratepayers
FPL determined that the current ICL transaction would be the best option available for customers after the evaluation of several alternate measures to mitigate the PPA’s impacts. According to FPL, it was critical to get out from under the unfavorable PPA. The former owner was not interested in alternatives short of a full buy out. Other options were considered but this was the only option that the owner agreed to pursue.
Operational Regulatory Risks
Historically the ICL facility has been a well-run facility and is currently in compliance with regulatory measures set forth by the DEP and EPA. The record indicates no additional rule regulation compliance programs or projects are anticipated. The transaction allows for FPL to dispatch the facility when economically viable, control the number of starts, and minimize run times. The reduction in dispatch is expected to go from 24 percent a year to 5 percent, which will reduce the amount of C02 released from the facility by approximately 657,000 tons per year.
Cost Effectiveness
The transaction is cost effective over a wide range of scenarios and should provide material benefits to FPL’s customers over the remaining life of the PPA. FPL’s system reliability should not be negatively impacted as FPL will have dispatch control of the ICL facility. We find that the transaction is cost effective with a ROE range of 9.5 to 11.5 percent. Applying FPL’s current approved ROE of 10.5 percent, system savings will accrue in year one and total savings of $148 million over the 9 year life of the regulatory asset.
ORDER NO. PSC-16-0506-FOF-E1 DOCKET NO. 160154-E1 PAGE 4
The Proper Accounting Treatment for this Transaction
According to the Stipulation, the non-fuel costs of operating the ICL Facility shall be recorded in base rate accounts. No amount shall be recorded as plant in service for the ICL Facility because the Facility has no economic value. FPL will record land for $8.5 million, a rail car lease liability of $9.0 million, and an asset retirement obligation of $9.9 million for the future dismantlement of the Facility. FPL shall establish a regulatory asset for the ICL investment of $451.5 million.
The Proper Rate of Return
According to the Stipulation, the proper rate of return is FPL ‘s overall WACC approved by this Commission that is used for clause investments. We approved this treatment for the Cedar Bay Transaction, a recent transaction substantially similar to the ICL Transaction, in Order No. PSC-15-0401-AS-El issued September 23, 2015, in Docket No. 160075-EI, Petition for approval of arrangement to mitigate impact of unfavorable Cedar Bay power purchase obligation, by Florida Power & Light Company.
FPL’s Requirement to Record the ICL Transaction
According to the Stipulation, FPL is required to file with this Commission, the actual accounting entries to record the ICL transaction for both FPL and the subsidiary Indiantown within six months of the ICL transaction being consummated.
Approval of the Settlement
Based upon a review of the Stipulation, the evidence on the record and for the reasons stated above, this Commission finds that the Stipulation is a reasonable resolution of this matter for all parties. We find that the Stipulation creates customer savings, includes additional protections for customers, achieves environmental benefits, and avoids the long-term costs of the PPA. Thus, our approval of the Stipulation is in the public interest. Accordingly, we approve the Stipulation which is attached to this Order as Exhibit A and made a part hereof.
Conclusion
The record supports a finding that the purchase and sale agreement entered into by FPL and Calypso avoids the negative impact of the PAA, creates customer savings, includes additional protections for customers, achieves environmental benefits and avoids the long-term costs of the PPA. Those issues not resolved by the Stipulation, as discussed above, are supported by substantial competent evidence and are in the public interest.
Based on the foregoing, it is
ORDERED by the Florida Public Service Commission that the stipulations, findings, and rulings set forth in the body of this Order are hereby approved. It is further
ORDER NO, PSC-I 6-0.506-FOF-El DOCKET NO. 160154-E1 PAGE 5
ORDERED that the Joint Partial Settlement Agreement is approved. It is further
ORDERED that the purchase and sale agrement between Florida Power and Light Company and Calypso Energy Holdings, LLC is approved. I t is further
ORDERED that the docket shall be closed.
By ORDER of the Florida Public Service Commission this 2nd day of November, 2016
Commission Clerk Florida Public Service Commission 2540 Shuniard Oak Boulevard Tallahassee, Florida 32399
www. floridapsc.com (850) 413-6770
A copy of this document is provided to the parties of record at the time of issuance and, if applicable, interested persons.
WLT
NOTICE OF FURTHER PROCEEDINGS OR JUDICIAL REVIEW
The Florida Public Service Commission is required by Section 120.569(1), Florida Statutes, to notify parties of any administrative hearing or judicial rcview of Commission orders lhat is available undei Sections 120.57 or 120.68, Florida Statutes, as well as the procedures and time limits that apply. This notice should not be construed to incan all requests for an administrative hearing 01 judicial review will be granted or result in the relief'sought.
Any party adversely affected by the Commission's final action in this matter may request: I) reconsideration of the decision by filing a motion for reconsideration with the Office of Commission Clerk, 2540 Shinnard Oak Boulevard, Talliihasscc, Florida 32399-0850, within fifteen (15) days of the issuance ofthis order in the form prescribed by Rule 25-22.060, Florida Administrative Code; or 2) judicial revkew by the Florida Supreme Court 111 the case of an
ORDER NO. PSC-16-0506-FOF-E1 DOCKET NO. 160 154-E1 PAGE 6
electric, gas or telephone utility or the First District Court of Appeal in the case of a water and/or wastewater utility by filing a notice of appeal with the Office of Commission Clerk, and filing a copy of the notice of appeal and the filing fee with the appropriate court. This filing must be completed within thirty (30) days after the issuance of this order, pursuant to Rule 9.1 10, Florida Rules of Appellate Procedure. The notice of appeal must be in the form specified in Rule 9.900(a), Florida Rules of Appellate Procedure.
,ORDER NO. PSC-I 6-0506-FOF-E1 DOCKETNO. 160154-E1 PAGE I
hi le. Petition Cor approval of a purchase and sale agieement between FloridaPuwei & Light Company and Calypso Energy Moldings, LLC, for Uit ownership of the Indiantown Cogeneration 1P and ielaleri piirchas-c power agreeiiient. .
ATTACHMENT A
DocketNo l60154-EI
Dale. Septcmbor 20,2016
BERMZE TIJE FLORIDA PUBLIC SERVICE COMMISSION
WHElUiAS, Florida Power & Light Company ( W L ” or the “Company”), the Florida
Industrial Power IJsers Omup (WPLIW), and the OlEw of Public Counsel ~OPC!“) hwe
sigued this Joint I’uclial Stipulation (thc “Joint Partial Stipulatioii” or “Agrecment“; unless the
wnlwt claarly reqnircs otherwise, the term “l’arly” or “Pnrties” means a signatory tu this
Agreement); and
WHERBAS, ihc Parlies have underlaken to resolve the issues expeditiously aid to agree
to u stxcdined heariiy prows in this docket;
NOW THERIIFOKR, in consideration of thc foregoing and the wvenants
contained hcrciii, the Palties hereby stipulate nnd agree as follows:
1. The I’ariic.8 agrw tu thc followiy streamlined hwing process in this docket in lieti of
conducting *I formal evidentiary hearing uiider Section 120.57(1), Fla. Sm, as noticed by thc
Commission for October 3-4.2016:
A.
B.
The Parties agree to waive opening slatenieiits;
PIPUG and OI’C agiw to waive their rights to cross-examinntion of the fourlTL
witiiesses who prc-filed direct testimony iii this docket;
ORDER NO. PSC-16-0506-FOF-E1 DOCKET NO. 160154-E1 PAGE 8
C . The Ptxlio.8 stipwlate to thc admissibility of the pre-filed testimony and exhibits of
tho four FPL w i t n w a whv pre-filed dimd testimo3y on Juirc 20,2016 in this docket wid ibe
Con~preliensive Exhibit Lis1 to bc presented by tile Commission Staff at the pmlwaring
confcrcnce on Seplemkr 20,2016;
D. The Porlim slipulate to~thr: vxcusnl of the four FPL wimmses.who prc-fllcd direct
tcstimonyftom tht: October 34,2016 evidentiary henring in this dockcl;
E.
1:.
The I'arlius agrec lo waivc tho right to file posl hcariig brief3 in his docket;
Tho Parlies do nut objacl lo the excusal u i l T U G from Ihe Octubcr 3-4, 2016
hearing in this docket; and
G. The Pluties do not object to a bench decision by the Commission with mi om1
recommendation from Cammission Statrat lhe October 3-4, 2016 hcahg in this docket, b a d
on the evidentiay mconl developed up l o the date oftlx hmring.
2.
ISSUE: PPL and OPC agrec to stipulated positions on h u e s G,7, and 9 iiithis docket ns foilom:
If the Conmission approves WL's proposcd ICL Transaotiun, what is flit proper accautiting treatment rot the knnsuotion?
smPuL.um I~OS~~II 'ION:
FPL hm demon.v/rmd lhul Ihc propw oecounling lreulincni fur Ihe ICL Trmvuciion should be n,sfollows:
( I ) The non-fuel co,ws of upcrutiirg the ICL Focilily shazild be recorded in buss rule uccounu.
(2) J P L should no1 record m y umounl uspiunt in ,service for Ihc ICL I'bcilily bemuse the Fuciliry hu.r no economic vuluc. Hoiiwer, IVL will record landjbv $8.5 nrillion, u rail cur Ieri.va liubili!v af $2 0 milliutr, und on ussef retirement oblignlion of $9.Y million .fur /he fuirrre dismunflemenl of the Filciiiiy.
2
ORDER NO. PSC-16-0506-FOF-E1 DOCKET NO. 1601 54-El PAGE 9
(3) FI’L should establish u regularmy m.sol jor the ICL invoslmenr of $451.5 miilion
-7; If the Commission nppmver WL’Y proposcd ICL Transnctioii, what is tho propoyer iatcoficlum?
STIPULATl3D POSITION.
IJ2h6 Commlssion qpprows lhe 1171, Itansaclion, $hen./liepruper rulwfrewrn ins IIPL’S ovnoll WACC upproved by tho Commissiun (ha/ is used fur ciowe invmlmentx Tho Commission appmved this lrcatmenf far ihg Cedar Bay Ikonsuction, a recon1 tronsudion subsiunliully siinilor fo the ICL T~av.suclion, in Order. No, IsSC-I5-04Ol-AS-l%L
Should FPL be rcquircd to file, wilh Uic Commission, the uctual accounting entries to record lhc ICL transaction for both FPL and tlie subsidiary Indianlnwii within six month ofthc ICL transaction being cunsvmmtiledl
&$JJ&&
STIPULATED PosrrmN: Yes, Siich a requiremen/ i , ~ reasamble und aIiproi>riaic.
3. This A!gmcnt may he signed in my tiumber of counterpnrls, eaoh of which i s an
original and dl ofwhich token toyether Fomi one singlc document.
4. This Agteement will become offwtivc vi1 the datellie Commission Order npproving this
Agrocment is fial
3
ORDER NO. PSC-16-0506-FOF-E1 DOCKET NO. 160 154-E1 PAGE 10
hl Witness Whcicol, tlie P a r k s cvideuce their accopmw and argeement withihc provisions of
this Agreeiiient by ~ I I YipuNrc.
FlolidaPower & Light Company 700 Univcm Boulevurd Juno Bwh, FI, 33408
Florida lnduslnal Tower IJhers Group 11 8 North Gndsden Shtct Tallahussee, Florida 32301
By: Jon C. Moyle, JI
The Office ofl'ublic Counsel J.R. Kclly, Esquim The FloriduLegislaturc 111 West Madison Strcet, Room 812 Tnllahasscc, FL 32399
ORDER NO. PSC-16-0506-FOF-E1 DOCKET NO. 160154-E1 PAGE 1 1
In Witness Whcrwf, the Ynnics cvidpnca thcir Ficceptnnce and ngecmcnt with the provisions of
this Agreement by thcir sn!gnture.
Florida Powor &Light Compniiy 700 UnivelseBoulcvard Juno Bench, FL33408
By: Kcnnclh A. IIofaUm
Florida Induslrinl Power USCIS Grovp 118 North Gndsden Streel Talltihassee, Floridn 32301
The OfficeofPublic Counsel J.R. Kelly, Esquirc The FloridaLcgtalarure 1 I1 WestMndisonStiset, Room812 Tnllnhnsaee, FL 32399
By: J.R. Kelly
4
ORDER NO. PSC-16-0506-FOF-E1 DOCKETNO. 160154-E1 PAGE 12
In Witness Whereof, the Patiies evidence their acceptwce and agrement with the grovisious of
thjs Agnmmt by their signahwe.
PlwidaPower & Light Company 700 Universe Boulevard Jwu, Baath, FL 33408
By: Kenneth A. Hoffmm
Florida lndustrinf Power Users Ckoup I 18 North Ddsden Street Tallahansee, Florida 32301
By: Jon C. Moylc, Jr.
The Office of PQblio Counsel J.R Kelly, Esquire The Florida Legislature 111 WeslMadBon Stnet,Room 812 Tallahassee, FL 3239%
BY
4
ATTACHMENT V
1 Attachment V
WVEUG'S SECOND REQUEST FOR INFORMATION TO AMERICAN BITUMINOUS POWER PARTNERS. L.P.
AND MONONGAHELA POWER COMPANY CASE NO. 17-0631-E-P
Prepared By: Ethan A. Conner-Ross, Director Econsult Solutions, Inc.
To Testify: Ethan A. Conner-Ross
Date Prepared: July 24, 201 7
QUESTION NO. 20:
Reference the Direct Testimony of Ethan Conner-Ross, Exhiblt ECR-1. Please provide a reconciliation between the $305/mWday capacity price assumed for 2020 in the forecast shown in Table 1.1 and the $76.53/mW-day capacity price set in the recent 202012021 PJM Base Residual Auction ("BRA") for the Allegheny Power Systems ("APS") zone.
RESPONSE NO. 28:
Forecasts included In the report were based on data avallable at the time the analysis was conducted. As stated in testimony, the analysis uses price projections submitted by Appalachian Power to the Virginia State Commission Corporation at a hearing in April 201 6.
2
28
CERTIFICATE OF SERVICE
1, Heather B. Osborn, counsel for the Consumer Advocatc Division of the Public Service
Commission of West Virginia, (CAD), hereby certify that I have served a copy of the foregoing
Testimony qfEmily S. Medine upon all parties of record by First Class, U.S. Mail, postage pre-
paid.
Counsel for Consumer Advocate WVSB 9074
Dated: August 22.20 17
