Each person or group of persons proposing to construct,
repower, or lease a facility and desiring predetermination of ratemaking
principles for costing that facility shall file an application with the
commission. An application may be for one facility or a combination of
facilities necessary to meet the current and future resource needs of the
utility. An application for ratemaking principles must demonstrate that the
utility has considered other sources for long-term electric supply and that the
facility or lease is reasonable when compared to other feasible alternative
sources of supply. At a minimum, an application shall substantially comply with
the following informational requirements to the extent such information is
reasonably available. Any omission of required information on the basis that it
is not reasonably available shall be adequately justified by the applicant. The
commission will consider such omissions on a case-by-case basis and may require
the applicant to provide additional information.
(1)
General information. An
application shall include the following general information:
a. The purpose of the proposed
facility.
b. A complete description
of the current and proposed rights of ownership in the proposed facility and
current or planned purchased power contracts with respect to the proposed
facility.
c. For a baseload
electric power generating facility with a nameplate generating capacity equal
to or greater than 300 megawatts, a combined-cycle electric power generating
facility, or repowering of a facility, a general site description including a
legal description of the site; a map showing the coordinates of the site and
its location with respect to state, county, and other political subdivisions;
and prominent features such as cities, lakes, rivers, and parks within the site
impact area. For an alternative energy production facility, to the extent
feasible, a general site description including a description of the site
location or locations; map(s) showing the coordinates of the site(s) and
location(s) with respect to state, county, and other political subdivisions;
and prominent features such as cities, lakes, rivers and parks within the site
impact area(s).
d. A general
description of the proposed facility, including a description of the expected
principal characteristics of the facility such as the capacity of the proposed
facility in megawatts expressed by the contract maximum generator megawatt
rating, the expected net facility addition to the system in megawatts by net to
the busbar rating, and the portion of the design capacity, in megawatts, of the
proposed facility which is proposed to be available for use by each
participant; the expected number and type of generating units; the primary fuel
source for each such unit; the total hours of operation anticipated seasonally
and annually and output during these hours; the expected capacity factors; a
description of the expected general arrangement of major structures and
equipment to provide the commission with an understanding of the general layout
of the facility; and a projected schedule for the facility's construction and
utilization, including the projected date when a significant site alteration is
proposed to begin and the projected inservice date of the facility. For this
purpose, a group of several similar generating units operated together at the
same location such that segregated records of energy output are not available
shall be considered a single unit.
e. A general description of the raw
materials, including fuel, used by the proposed facility in producing
electricity and of the wastes created in the production process. In addition to
describing the wastes created in the production process, the applicant shall
determine annual expected emissions from the facility and provide a plan for
acquiring allowances sufficient to offset these emissions. The applicant shall
describe all transportation facilities currently operating that will be
available to serve the proposed facility, and any additional transportation
facilities needed to deliver raw materials and to remove wastes.
f. An identification, general description,
and chronology of all material financial and other contractual commitments
undertaken or planned to be undertaken with respect to the proposed
facility.
g. A general map and
description of the primary transportation corridors and the approximate routing
of the rights-of-way in the vicinity of the settled areas, parks, recreational
areas, and scenic areas.
h. A
general analysis of the existing transmission system's capability to reliably
support the proposed additional generation interconnection to the system. In
the alternative, the applicant may provide testimony that (1) it will follow
the interconnection requirements of the local and regional transmission
authorities; (2) it is committed to meeting the pertinent transmission
requirements with respect to the proposed facility; and (3) the applicant
assures the commission that the interconnection of the proposed facility will
not degrade the adequacy, reliability, or operating flexibility of the
transmission system from a regional or local perspective.
i. Identification of the general contractor
for the proposed facility and the method by which the general contractor was
selected. If a general contractor has not yet been selected, the utility shall
identify the process by which the general contractor will be selected and the
anticipated timeline for selecting a general contractor.
j. Identification of the plant operator for
the proposed facility and the method by which the plant operator was selected.
If a plant operator has not yet been selected, the utility shall identify the
process by which a plant operator will be selected and the anticipated timeline
for selecting a plant operator.
(2)
Economic evaluation of proposed
facility. An application shall include an overall economic evaluation
of the proposed facility using conventional capital evaluation techniques and
the proposed ratemaking principles. Material assumptions used in the analysis
shall be disclosed. At a minimum, the evaluation shall include:
a. Net present value calculations. An
application shall include projected annual and total net present value
calculations of projected revenue requirements and capital costs over the
expected life of the proposed facility. If a traditional revenue requirement
analysis does not account for revenue-sharing arrangements, riders, or other
mechanisms that impact Iowa retail customer bills, the utility shall also
provide projected annual and total net present value calculations that show the
impact on amounts that will actually be paid by Iowa retail customers
accounting for such mechanisms. To the extent the utility has projected revenue
deficiencies within the period of analysis, the utility shall also provide the
estimated effect the proposed facility will have on these calculations. In
making these calculations, the utility shall detail the following cost
assumptions:
(1) Installed cost. The utility
shall provide an itemized statement of the estimated total costs to construct
the proposed facility. Such estimated costs shall include, but not be limited
to, the estimated cost of all electric power generating units; all electric
supply lines within the proposed facility site boundary; all electric supply
lines beyond the proposed facility site boundary with a voltage of 69 kilovolts
or higher used for transmitting power from the proposed facility to the point
of junction with the distribution system or with the interconnected primary
transmission system; all appurtenant or miscellaneous structures used and
useful in connection with the proposed facility or any part thereof; all
rights-of-way, lands, or interest in lands the use and occupancy of which are
necessary or appropriate in the maintenance or operation of said facility;
engineering and development; sales taxes; and AFUDC (if applicable). The
estimated costs of all electric power generating units shall include all
estimated costs of transmission and gas interconnection (if applicable).
Estimated facility costs shall be expressed in absolute terms and in dollars
per kilowatt. The absolute and per-kilowatt estimated construction costs shall
be adjusted by the expected rate of inflation from the time the estimated
construction costs are calculated to the time the proposed facility is
scheduled for operation.
(2) Fixed
expenses. For each year of the proposed facility's expected life from the time
of application to the end of the proposed facility's expected life, the utility
shall file projected expense factors for fixed operation and maintenance costs;
property, income, and other taxes; and straight-line and tax depreciation
rights.
(3) Variable expenses. For
each year of the proposed facility's expected life from the scheduled time of
operation to the end of the proposed facility's expected life, the utility
shall file expected variable operation and maintenance costs including the cost
of fuel and emission allowances. These expected costs shall be reported in
absolute terms and on a kWh basis assuming expected annual capacity factors for
the proposed facility.
b.
Cost of capital. The utility shall provide its projected costs of capital for
the proposed facility for each year of the proposed facility's expected life
from the time of application to the end of the proposed facility's expected
life. Material assumptions used in the projections shall be provided, including
but not limited to capital structure, cost of preferred stock, cost of debt,
and cost of equity.
c. Cash flows.
The utility shall provide the estimated maximum, minimum and expected cash
inflows and outflows associated with the proposed facility in each year from
the date of the application throughout the proposed facility's expected
life.
(3)
Risk
mitigation factors. At a minimum, the following information regarding
contractual risk mitigation factors shall be included in an application:
a. Construction risk mitigation factors. The
utility shall provide a general description of the contractual standards that
the general contractor, if not the utility, must comply with to mitigate
construction risks, including but not limited to cost overruns, labor
shortages, failure to meet deadlines, and the need for replacement power if
operational deadlines are not met. If the facility will be leased by the
utility, the utility shall identify the above factors for both the lessor and
the general contractor constructing the facility. The general description shall
include all remedies, financial and otherwise, available to the utility for
noncompliance with the construction standards and schedules.
b. Operational risk mitigation factors. The
utility shall provide a general description of the contractual standards that
the general contractor or the plant operator, if not the utility, must comply
with to mitigate operational risks of the facility, including but not limited
to low-availability factor and higher-than-expected operation and maintenance
costs. The general description shall include a list of all contractual
inspections the general contractor must meet before the utility leases or takes
ownership of the facility and all remedies, financial and otherwise, available
to the utility for noncompliance with the operating standards. If the utility
leases the facility from an affiliate, the lease shall contain specific
performance standards that the affiliate must meet to avoid financial
consequences.
(4)
Noncost factors. The utility shall include in its application
a comparison of the proposed facility with other feasible sources of supply
related to the following noncost factors:
a.
Economic impact to the state and community where the facility is proposed to be
located, including job creation, taxes, and use of state resources.
b. Environmental impact to the state and
community where the facility is proposed to be located.
c. Electric supply reliability and security
in the state.
d. Fuel diversity and
use of nontraditional supply sources such as alternate energy and
conservation.
e. Efficiency and
control technologies.
(5)
Filing requirements for proposed ratemaking principles. Each
ratemaking principle proposed shall be supported as described in this subrule.
Proposed ratemaking principles not envisioned by these rules shall be supported
by sufficient evidence to justify the use of such principles in costing the
facility for regulated retail rate recovery.
a.
Cost of equity. Proposals
for establishing the cost of equity shall be supported with analyses which
demonstrate the reasonableness of the proposed equity rate for the proposed
facility. If sufficient information is available, the analyses shall include a
comparison with similar facilities built in the region in recent
years.
b.
Depreciable
life. Proposals for establishing the depreciable life of the facility
shall be supported by commission precedent for the depreciable lives of similar
facilities, the manufacturer's opinion of depreciable life, the applicant's
general depreciation study or analysis, or an engineering study of the
depreciable life of the type of facility proposed.
c.
Jurisdictional
allocations. Proposals for allocating the cost or output of the
proposed facility among jurisdictions shall be supported by jurisdictional
allocation studies or recent commission-ordered or -approved allocations for
the applicant.
(6)
Additional application requirements for leasing arrangements.
The following additional information shall be filed when a utility is proposing
an arrangement in which the utility leases a facility from an affiliate or an
independent third party:
a. Identification of
the method used in selecting the affiliate or independent third party to build
the facility (competitive solicitation, sole source, etc.).
b. A copy of the lease agreement.
c. A detailed description of the lease
agreement, including but not limited to the following:
(1) Commitment of capacity from the proposed
facility to the utility under the lease agreement.
(2) Description of the final disposition of
the leased facility at the end of the lease arrangement, including any options
available to the utility and the terms of those options.
(3) Identification of the party responsible
for operating, dispatching, and maintaining the facility.
(4) Identification of the party responsible
for the cost of capital improvements, renewals and replacements, environmental
compliance, taxes, and all other future costs associated with the
facility.
(5) Identification of the
party responsible for contracting capacity from the proposed
facility.
(6) Identification of the
party benefitting from revenues received through contracted capacity and
opportunity sales.
d. If
the lessor is an affiliate, a detailed description of the affiliate, including
the affiliate's corporate structure and the utility's ownership stake in the
affiliate, if any.
e. If the lessor
is an affiliate, identification of utility assets transferred to the affiliate
for use by the proposed facility and the cost at which those assets were
transferred.
f. If the lessor is an
affiliate, identification of any financial benefits and cost savings, including
any tax advantages, accruing to the utility from leasing an affiliate-owned
facility versus building a facility itself.