20240328Staff Comments.pdf

RECEIVED
Thursday,March 28,2024 3:48 PM
IDAHO PUBLIC
UTILITIES COMMISSION
MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11714
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN )
POWER'S APPLICATION REQUESTING ) CASE NO. PAC-E-23-24
AUTHORIZATION TO UPDATE THE WIND )
AND SOLAR INTEGRATION RATE FOR )
SMALL POWER GENERATION ) COMMENTS OF THE
QUALIFYING FACILITIES ) COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Michael Duval, Deputy Attorney General, submits the following
comments.
BACKGROUND
On November 29, 2023, Rocky Mountain Power, a division of PacifiCorp ("Company")
applied to the Idaho Public Utilities Commission("Commission") for authority to adjust the
wind and solar integration rate applicable to new power purchase agreements ("PPAs")between
the Company and wind and solar qualifying facilities ("QFs") ("Application").
The Company requests that the Commission issue an order approving the wind
integration rate to be decreased from $1.25 to $1.18 per megawatt hour("MWh"), in 2024
dollars, and the solar integration rate increased from $0.96 to $1.40 per MWh, in 2024 dollars,
which will be applied against published avoided cost rates, except where the QF developer
STAFF COMMENTS 1 MARCH 28, 2024

agrees to schedule and deliver, via a transmission provider, energy output to the Company on a
firm hourly basis. Application at 1.
STAFF ANALYSIS
Staff reviewed the Application and its supporting workpapers focusing its analysis on the
proposal's compliance with Order Nos. 33937 and 34966. Specifically, Staff reviewed the
overall methodology, the historical data in 2018 and 2019, the changes to the preferred portfolio,
the treatment of hybrid wind and hybrid solar, the load assumption used in scaling portfolio
diversity benefits, the time range of modeled results, the lack of inter-hour analysis, the format of
integration charges, and the use of integration charges against published avoided cost rates
versus Integrated Resource Plan-based("IRP-based") avoided cost rates.
Staff recommends approval of the proposed wind and solar integration charges contained
in Table No. 1 and Table No. 2. Staff also recommends application of the wind and solar
integration charges against both published avoided cost rates and IRP-based avoided cost rates
unless QF developers agree in their PPAs to schedule and deliver, via a transmission provider,
the output to the Company on a firm hourly schedule. Finally, Staff recommends the Company
perform the following in the next Flexible Reserve Study("FRS"):
1. Consistently file a case to update integration charges after the acknowledgement of
each IRP to comply with Order Nos. 33937 and 34966;
2. Explain why capital and fixed operation and maintenance ("O&M") cost of regulation
reserves should not be included in wind and solar integration costs supported by
quantifiable evidence;
3. Use the most recent data that meet reasonably sufficient duration of operations;
4. Determine with quantifiable evidence whether hybrid wind or hybrid solar should be
treated differently than wind or solar alone;
5. Quantify the effect of holding load constant in scaling portfolio diversity benefits;
6. Create at least 25 years of modeled results so that non-levelized rates are all generated
under the same method; and
7. Determine with supporting quantifiable evidence whether integration costs should
include inter-hour integration costs included in prior studies.
STAFF COMMENTS 2 MARCH 28, 2024

Order Nos. 33937 and 34966
The Commission requires the Company to update integration charges after the
acknowledgement of each IRP. Order Nos. 33937 at 5 and 34966 at 5. The Company did not
file a case to update integration charges after the acknowledgement of the 2021 IRP. Staff
recommends the Company consistently comply with the Commission Orders.
Overall Methodology
Staff believes the overall methodology used to determine integration cost in the proposed
FRS is reasonable; however, Staff questions whether the capital and fixed O&M cost of reserves
should be included. The calculation of wind and solar integration charges is based on the
amount of regulation reserve necessary to accommodate changes in load and generation to
maintain Area Control Error within mandatory parameters established by the BAL-001-2
standard. The Company's overall methodology includes four steps described below and is
illustrated in Attachment 1 of these comments.
1. The Company determined the amount of regulation reserves required for each class of
variation(wind, solar, load, and non-variable energy resources) on a standalone basis for
each hour during the historical period of 2018 and 2019. Because the variation of the
different classes can cancel each other and because of the Company's participation in the
Energy Imbalance Market(`BIM"), the total amount of reserves required for each class
on a standalone basis was adjusted for the diversity benefits from the Company's
resources and from the EIM.
2. The Company then developed a 20-year future baseline of regulation reserves based on
the 2023 IRP preferred portfolio by scaling from the historical data in step 1.
3. After determining a future portfolio baseline, the Company constructed two separate
cases: a Wind Reserve Case and a Solar Reserve Case by adding five Megawatts ("MW")
of incremental wind to the future baseline and by adding five MW of incremental solar to
the future baseline.
4. By calculating the difference in regulation reserve cost for each of the two cases relative
to the future baseline established in step 2, the Company was able to calculate the
'Non-variable energy resources refer to all non-dispatchable resources that arc not wind or solar,such as run-of-
river hydro projects. See Response to Staff Production Request No.2.
STAFF COMMENTS 3 MARCH 28, 2024

integration cost of wind and for solar associated with the increase of output from the
incremental five MW of wind and solar capacity.
Although this method provides a reasonable method for determining the incremental
energy cost to integrate wind and solar through the Company's production cost models, it does
not capture any capital and fixed O&M costs of regulation reserves. See Response to Production
Request No. 38.
The Company plans resources to meet its forecasted load plus a planning reserve margin
("PRM") in its integrated resource plans. The PRM includes an amount of regulation reserve
resource capacity used to balance the different classes of variability considered in the integration
charge. Thus, Staff believes an allocation of that capacity cost to integrate wind and solar should
be included. When asked why the proposed integration charges did not include any cost of
capacity, Staff believes the Company's response did not provide sufficient evidence why
capacity cost was not included. See Response to Production Request No. 39. Staff recommends
that the Company explain why capital and fixed O&M cost of regulation reserves should not be
included in wind and solar integration costs supported by quantifiable evidence in the next FRS.
Historical Data in 2018 and 2019
Staff believes that it is acceptable to use historical data in 2018 and 2019 in the FRS,
even though the Company increased its wind and solar capacity in 2021. However, Staff
recommends that the Company use the most recent data that meets a reasonably sufficient
duration of operations in future studies.
The reason why the Company used the historical data in 2018 and 2019 was because it
did not have time to collect and assess more recent data—which included data associated with
the new wind and solar capacity added in 2021. FRS at 125. In addition, even if the Company
collected the data, that data would not have sufficient duration to be used for the FRS. See
Response to Staff s Production Request No. 3.
Changes to Preferred Portfolio
Since the development of the preferred portfolio used in the FRS, there have been several
contract changes such as three solar contracts. See Response to Staffs Production Request No.
26(a). However, given the modest level of changes, the Company does not expect regulation
STAFF COMMENTS 4 MARCH 28, 2024

reserve requirements to change significantly. See Response to Staff s Production Request No.
26(b). Staff believes that it is acceptable to use the proposed preferred portfolio.
Hybrid Wind or Hybrid Solar
In the FRS, storage paired with either wind or solar resources are treated the same as
wind or solar without storage. See Response to Staffs Production Request No. 30. In addition,
wind and solar can be paired with existing thermal resources, when there is "Surplus
Interconnection." See First Supplemental Response to Staff s Production Request No. 17(1).
Staff recommends that the Company quantify and determine whether hybrid wind or
hybrid solar should be treated differently than wind or solar alone in the next FRS because the
former may require different levels of regulation reserve than the latter.
Load Assumption Used in Scaling Portfolio Diversity Benefits
Portfolio diversity benefits exist because forecast errors in each class tend not to occur
simultaneously or will occur in offsetting directions. FRS at 145. When the FRS scaled
portfolio diversity benefits from the historical data, the study scaled the benefits to a wide variety
of wind and solar capacity combinations—while holding the load constant. The Company stated
that not holding the load constant would result in a significant number of studies required. See
Response to Staffs Production Request No. 35(f). However, the FRS did not explain why load
should be held constant, and the Company did not provide evidence to support why excluding it
in the scaling process was reasonable. Staff recommends that the Company quantify and
determine whether load should be held constant in the next study.
Time Range of Modeled Results
The time range of modeled results ended in 2042beyond which integration charges
were escalated at an inflation rate. See Response to Staff s Production Request No. 37. Staff
believes it is acceptable in this case to generate integration charges using an inflation rate after
2042. However, Staff recommends that the Company create at least 25 years of modeled results
in the next FRS so that non-levelized rates, which are used to calculate levelized rates for six
different online years, are all generated under the same method.
STAFF COMMENTS 5 MARCH 28, 2024

Lack of Inter-hour Analysis
Staff recommends the Company quantify inter-hour integration costs in the next
integration cost study and then determine whether the costs are significant enough to be
included.
The proposed FRS is focused on intra-hour integration costs without considering inter-
hour integration costs. The 2017 FRS considered inter-hour integration costs using day-ahead
system balancing costs associated with committing generation resources against a forecast of
load and wind generation and dispatching resources against actual load and wind conditions as
they occur in real-time. See Response to Staff's Production Request No. 25(a). When
committed resources are not used in real-time, or when committed resources are used but are less
optimized, additional inter-hour costs may incur. See Response to Staff s Production Request
No. 25(a). Because the inter-hour integration costs were minimal in the 2017 FRS, the Company
stopped the inter-hour analysis in the 2019 FRS. See Response to Staffs Production Request
No. 25(b).
However, Staff compared the inter-hour system balancing cost of wind and solar to the
total integration charges in the 2017 FRS which included both intra-hour and inter-hour
integration costs. The inter-hour system balancing cost of wind and solar was $0.14/MWh,
which was 24.56% of the total wind integration charge ($0.57/MWh) and 23.33% of the total
solar integration charge ($0.60/MWh). Staff does not believe this amount of inter-hour
integration cost was insignificant enough to be excluded from integration studies. At a
minimum, Staff believes the inter-hour costs should be quantified in the next FRS before
deciding to exclude it.
Format of Integration Charges
The Company requested that the Commission issue an order approving the wind
integration rate of$1.18 per MWh (in 2024 dollars) for wind-powered QFs and the solar
integration rate of$1.40 per MWh (in 2024 dollars) for solar-powered QFs. Application at 6.
Meanwhile, the Company also proposed 20-year levelized and non-levelized integration costs for
wind and solar. See Table No. 1 and Table No. 2.
STAFF COMMENTS 6 MARCH 28, 2024

Staff believes the format of integration charges should be aligned with the format of
avoided cost rates. Therefore, Staff recommends the integration charges in Table No. 1 and
Table No. 2.
Table No. 1: Wind Integration Charges
Non-Levelized Rates Levelized Rates Online Year
Year $/MWh Contract Length 2024 2025 2026 2027 2028 2029
2024 2.03 1 $2.03 $5.64 $3.51 $2.26 $0.45 $0.36
2025 5.64 2 $3.76 $4.61 $2.91 $1.39 $0.41 $0.31
2026 3.51 3 $3.68 $3.89 $2.1S $1.07 $0.36 $0.30
2027 2.26 4 $3.37 $3.13 $1.76 $0.89 $0.34 $0.28
2028 0.45 5 $2.87 $2.66 $1.50 $0.79 $0.32 $0.26
2029 0.36 6 $2.S3 $2.33 $1.33 $0.71 $0.30 $0.24
2030 0.27 7 $2.28 $2.10 $1.21 $0.64 $0.28 $0.24
2031 0.27 8 $2.09 $1.92 $1.11 $0.60 $0.28 $0.26
2032 0.21 9 $1.94 $1.78 $1.03 $0.57 $0.28 $0.25
2033 0.14 10 $1.81 $1.66 $0.98 $0.56 $0.28 $0.26
2034 0.14 11 $1.71 $1.S8 $0.94 $0.54 $0.28 $0.26
2035 0.26 12 $1.63 $1.52 $0.90 $0.53 $0.29 $0.27
2036 0.39 13 $1.58 $1.46 $0.87 $0.52 $0.29 $0.29
2037 0.24 14 $1.52 $1.41 $0.85 $0.51 $0.30 $0.31
2038 0.29 15 $1.48 $1.37 $0.83 $0.52 $0.32 $0.33
2039 0.34 16 $1.44 $1.34 $0.83 $0.53 $0.34 $0.34
2040 0.36 17 $1.41 $1.32 $0.83 $0.54 $0.36 $0.36
2041 0.67 18 $1.39 $1.30 $0.83 $0.54 $0.37 $0.37
2042 0.81 19 $1.37 $1.29 $0.83 $0.55 $0.38 $0.39
2043 0.83 20 $1.36 $1.28 $0.83 $0.56 $0.39 $0.40
2044 0.84 21
2045 0.86 22
2046 0.88 23
2047 0.90 24
2048 0.91 1 25
STAFF COMMENTS 7 MARCH 28, 2024

Table No. 2: Solar Integraion Charges
Non-Levelized Rates Levelized Rates Online Year
Year $/MWh Contract Length 2024 2025 2026 2027 2028 2029
2024 1.92 1 $1.92 $3.85 $4.80 $3.48 $0.64 $0.67
2025 3.85 2 $2.85 $4.30 $4.17 $2.12 $0.65 $0.72
2026 4.80 3 $3.45 $4.05 $3.08 $1.67 $0.69 $0.71
2027 3.48 4 $3.46 $3.29 $2.54 $1.47 $0.69 $0.71
2028 0.64 5 $2.98 $2.85 $2.24 $1.34 $0.70 $0.67
2029 0.67 6 $2.66 $2.56 $2.03 $1.26 $0.67 $0.64
2030 0.77 7 $2.45 $2.35 $1.88 $1.17 $0.64 $0.63
2031 0.70 8 $2.28 $2.20 $1.75 $1.10 $0.63 $0.65
2032 0.72 9 $2.16 $2.06 $1.64 $1.06 $0.65 $0.63
2033 0.46 10 $2.04 $1.95 $1.57 $1.04 $0.63 $0.62
2034 0.43 11 $1.94 $1.87 $1.53 $1.00 $0.62 $0.62
2035 0.58 12 $1.87 $1.81 $1.47 $0.98 $0.62 $0.62
2036 0.81 13 $1.82 $1.75 $1.42 $0.96 $0.63 $0.65
2037 0.45 14 $1.77 $1.70 $1.39 $0.95 $0.65 $0.68
2038 0.49 15 $1.72 $1.65 $1.36 $0.96 $0.67 $0.70
2039 0.59 16 $1.68 $1.62 $1.36 $0.97 $0.69 $0.72
2040 0.70 17 $1.65 $1.61 $1.35 $0.98 $0.71 $0.74
2041 1.16 18 $1.64 $1.60 $1.35 $0.99 $0.73 $0.76
2042 1.30 19 $1.63 $1.59 $1.35 $1.00 $0.75 $0.78
2043 1.32 20 $1.62 $1.59 $1.35 $1.01 $0.76 $0.79
2044 1.35 21
2045 1.38 22
2046 1.40 23
2047 1.43 24
2048 1.46 25
Published Avoided Cost Rates Versus IRP-based Avoided Cost Rates
The Company proposed the use of integration charges against published avoided cost
rates only. Application at 6. However, in practice, the Company uses the same integration
charges in the IRP-based methodology. See Response to Staff s Production Request No. 22.
Therefore, Staff recommends that integration charges contained in Table No. 1 and Table No. 2
be used to discount both published avoided cost rates and IRP-based avoided cost rates.
STAFF RECOMMENDATION
Staff recommends approval of the proposed wind and solar integration charges contained
in Table No. 1 and Table No. 2. Staff also recommends application of the wind and solar
integration charges against both published avoided cost rates and IRP-based avoided cost rates-
unless QFs developers agree in their PPAs to schedule and deliver(via a transmission provider)
the output to the Company on a firm hourly schedule. Finally, Staff recommends the Company
perform the following in the next FRS:
STAFF COMMENTS 8 MARCH 28, 2024

1. Consistently file a case to update integration charges after the acknowledgement of
each IRP to comply with Order Nos. 33937 and 34966;
2. Explain why capital and fixed operation and maintenance cost of regulation reserves
should not be included in wind and solar integration costs supported by quantifiable
evidence;
3. Use the most recent data that meet reasonably sufficient duration of operations;
4. Determine with quantifiable evidence whether hybrid wind or hybrid solar should be
treated differently than wind or solar alone;
5. Quantify the effect of holding load constant in scaling portfolio diversity benefits;
6. Create at least 25 years of modeled results so that non-levelized rates are all generated
under the same method; and
7. Determine with supporting quantifiable evidence whether integration costs should
include inter-hour integration costs included in prior studies.
Respectfully submitted this 28th day of March 2024.
Michael Duval
Deputy Attorney General
Technical Staff. Yao Yin
C\Utility\UMISC\COMNMNTS\PAC-E-23-24 Comments.docx
STAFF COMMENTS 9 MARCH 28, 2024

Attachment 1
amount of regulation total standalone portfolio diversity EIM diversity benefits
Step 1: reserve based on historical regulation reserve based benefits based on based on historical
data on historical data historical data data
amount of regulation total standalone portfolio diversity EIM diversity benefits
Step 2: reserve based on preferred regulation reserve benefits through through scaling
portfolio through scaling scaling
amount of regulation total standalone portfolio diversity
EIM diversity benefits
reserve of Wind Reserve = regulation reserve benefits through M through scaling
Case based on(preferred through scaling scaling
portfolio+5 MW of wind)
Step 3:
amount of regulation total standalone portfolio diversity
reserve of Solar Reserve EIM diversity benefits
regulation reserve benefits through M through scaling
Case based on (preferred through scaling scaling
portfolio+5 MW of solar)
wind amount of regulation
reserve of Wind Reserve amount of regulation � marginal
integration incremental
Case based on
g � referred � reserve based on preferred regulation
charge (p portfolio reserve price wind output
portfolio+5 MW of wind)
Step 4:
solar amount of regulation
amount of regulation marginal
integration reserve of Solar Reserve incremental
g � Case based on (preferred reserve based on preferred regulation � solar output
charge portfolio reserve price
portfolio+5 MW of wind)
Attachment 1
PAC-E-23-24
Staff Comments
March 28,2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 28TH DAY OF MARCH 2O24,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-23-24, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
MARK ALDER JOE DALLAS
ROCKY MOUNTAIN POWER ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330 825 NE MULTNOMAH ST
SALT LAKE CITY UT 84116 STE 2000
E-MAIL: [e-mail] PORTLAND OR 97232
E-MAIL: joseph.dallas(4pacificorp.com
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
[e-mail]
PATRICIA JORDAN
CERTIFICATE OF SERVICE