20240429Staff Comments.pdf

RECEIVED
Monday, April 29, 2024 2:48PM
IDAHO PUBLIC
UTILITIES COMMISSION
CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9810
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 THE APPLICATION )
OF ROCKY MOUNTAIN POWER FOR ) CASE NO. PAC-E-24-01
APPROVAL OF A CAPACITY DEFICIENCY )
PERIOD TO BE USED FOR AVOIDED COST )
CALCULATIONS ) COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Chris Burdin, Deputy Attorney General, submits the following
comments.
BACKGROUND
On January 19, 2024, Rocky Mountain Power, a division of PacifiCorp ("Company"),
filed an application("Application")with the Idaho Public Utilities Commission("Commission")
for approval of the capacity deficiency period determination to be used for Public Utility
Regulatory Policies Act of 1978 ("PURPA") avoided cost rates.
The Company represents that its 2023 Integrated Resource Plan("IRP") includes the
results of the Company's capacity load and resources without resource additions ("L&R") for the
summer and winter seasons. The Company states that the capacity balance is generally highest
STAFF COMMENTS 1 APRIL 29, 2024

for summer peak loads as the Company is expected to be deficient in the summer prior to
becoming deficient in the winter.
The Company represents that after several adjustments, the first capacity deficiency of
1,327 megawatts ("MW") occurs in the summer of 2024, and the first winter capacity deficiency
of 890 MW also occurs in 2024. The Company requests that the Commission authorize the
summer of 2024 as the first capacity deficiency period when capacity payments should be made
to qualified facilities ("QFs")under the Surrogate Avoided Resource ("SAR") and IRP avoided
cost methodologies.
STAFF ANALYSIS
Staff s review focused on compliance with Order No. 35834, the proposed load forecast,
and the proposed resources. Staff recommends that the Commission order the Company to file a
compliance filing incorporating the following:
• Break the "Existing—Demand Response" line item into different components with
clear labels, such as existing Demand Response ("DR")programs, growth of existing
DR programs, approved future DR programs, and growth of approved future DR
programs;
• Use a 79% PURPA renewal rate for other states;
• Include all the contract updates as of the date of the compliance filing;
• Remove all the early coal retirements from the L&R in the compliance filing, if not
done so already; and
• Use the Front Office Transactions ("FOT") limits of 3,326 MW for 2023 through
2027 in the L&R.
Compliance with Order No. 35834
On August 10, 2023, the Commission approved a waiver of the compliance filing ordered
in Order No. 35834, conditioned upon the Company incorporating those compliance items into
the Company's application for its 2023 capacity deficiency case. Order No. 35882 at 2.
The Application in this case addressed all the compliance items specified in Order No.
35834. The Company generally complied with the requirements in the order, albeit with two
exceptions including the method that determines capacity contribution and the inclusion of
STAFF COMMENTS 2 APRIL 29, 2024

projected growth of existing DR programs. Staff s analysis focused on these two exceptions in
addition to the 3% contingency reserve requirement of FOTs and the inclusion of newly
approved DR programs and their projected growth.
Method that Determines Capacity Contribution
In the last filing, the Company used two different methods to determine capacity
contributions for individual resources in the L&R: the method used in the 2021 IRP, and the
method used in the 2021 IRP Update. The former allocated capacity to individual resources on
an hourly basis, while the latter allocated capacity to individual resources based on the top 5%
net load hours. Order No. 35834 required the Company to use the 2021 IRP method because the
2021 IRP Update method was not robustly vetted.
In the Application, the Company used a new method that was also utilized in the 2023
IRP method, which attributes capacity to individual resources based on their availability during
the top 5%net load hours and the top 5%gross load hours. Response to Staff Production
Request No. 10(a). This method is applied to all resources. Application at 8.
Although this treatment does not meet the requirement of using the 2021 IRP method
from Order No. 35834, Staff believes it is reasonable to use the 2023 IRP method for two
reasons. First, the proposed L&R used a consistent method to determine capacity contribution of
all resources. Second, different allocation methods would not have a significant impact on the
capacity deficiency in a given year because the L&R is based on the total capacity achieved by
the portfolio as a whole for the most restrictive hour. Response to Staff Production Request No.
10(b). The most restrictive hour is the hour when the capacity achieved by the portfolio has the
lowest resource availability relative to the load requirement including a planning reserve margin.
Response to Staff Production Request No. 10(a).
3% Contingency Reserves of FOTs
Order No. 35834 allowed the Company to include 3%FOT contingency reserves in the
L&R. At the same time, the order also required the Company to provide clear evidence that
these reserves can be reliably counted upon in the next filing. Staff believes the Company
provided sufficient explanation for the 3% contingency reserve associated with the FOTs and
STAFF COMMENTS 3 APRIL 29, 2024

that the 3%FOT contingency reserves can be reliably counted upon in order to meet the BAL-
002-WECC-3 requirement.
The Company explained that each balancing authority area(`BAA")transmission system
operator within the Western Interconnect is required to maintain contingency reserves equal to
3% of its load plus 3% of its generation. Appendix F: Flexible Reserve Study of 2023 IRP; also
North American Electric Reliability Corporation website
https://www.nerc.com/pa/Stand/Reliability%20Standards/BAL-002-WECC-3.pdf. If the
Company purchases power from a counterparty whose generation resources are located in
another BAA, the 3% contingency reserve associated with the generation is the counterparty's
responsibility. Because the Company does not have to provide 3% contingency reserve for the
FOTs compared to the energy it generates itself, the capacity value of the FOTs is effectively 3%
higher than the capacity value of the Company's resources. Application at 4 and 5.
Projected Growth of Existing DR
In Case No. PAC-E-22-14, the Company stated that it included the projected growth of
existing DR programs in"New Demand Response"in the L&R. However, the Commission
could not find"New Demand Response" in the L&R, and Order No. 35834 required the
Company to include growth in existing DR programs that is clearly labeled. In the proposed
L&R in this case, the projected growth of the existing DR programs is still not clearly identified.
The Company includes growth in existing DR programs in"Planned and approved DR",
which is contained in the "Existing—Demand Response"line item in the L&R. 1st Revised
Response to Staff Production Request No. 4; 1" Supplemental Response to Staff Production
Request No. 5. In order to comply with Order No. 35834, Staff recommends that the Company
break"Existing—Demand Response" line item into different components with clear labels, such
as existing DR programs, growth of existing DR programs, approved future DR programs, and
growth of approved future DR programs in an updated L&R in a compliance filing.
Approved Future DR
Order No. 35834 ordered the Company to address the issue of unapproved DR programs
and asked the Company to only include approved future DR programs in the L&R. The
Company included approved future DR programs and their projected growth in the "Existing—
STAFF COMMENTS 4 APRIL 29, 2024

Demand Response" line of the L&R. 1st Supplemental Response to Staff Production Request
No. 5. Although the requirement of Order No. 35834 is met, Staff recommends, as stated above,
that the Company break"Existing—Demand Response" line item in the compliance filing into
different components with clear labels, such as existing DR programs, growth of existing DR
programs, approved future DR programs, and growth of approved future DR programs.
Load Forecast
Staff reviewed the proposed load forecast and believes the forecast is reasonable. The
Commission requires utilities to use the latest most up-to-date information to determine the
capacity deficiency used for calculating avoided cost rates as was done in previous cases. Order
Nos. 33958, 34918, and 35415. The proposed load forecast is the Company's most recent
forecast. Response to Staff Production Request No. 1.
Proposed Resources
Staffs review of proposed resources to be included in the L&R was focused on the
following areas: PURPA contract renewals, contract updates, coal plant retirements, and FOT
limits.
PURPA Contract Renewals
The Company assumed 100%renewals of PURPA contracts in the State of Idaho, which
complies with Order Nos. 34918 and 35834. However, for PURPA projects located outside of
Idaho, the Company assumed PURPA contracts expire at the end of their current contracts, even
though the 2023 IRP assumed a 79%probability of renewal in all states. Application at 5 and 6.
Staff believes that it is reasonable to apply the 79%renewal rate to other states, while assuming
100%renewal in Idaho. Therefore, Staff recommends that the Company use the 79%renewal
rate for other states in the L&R and provide an update in a compliance filing.
Contract Updates
The resources included in the proposed L&R are based on the resource information as of
December 31, 2023. Application at 8. Since then, there have been additional contract changes
such as two solar contracts in Oregon. Response to Staff Production Request No. 8. Staff
STAFF COMMENTS 5 APRIL 29, 2024

recommends including all contract updates, including contract additions 1 and terminations, in an
updated L&R as of the date of compliance filing.
Coal Plant Retirements
The proposed L&R removed uncommitted early coal plant retirements, such as Hunter
Unit 1, Hunter Unit 2, Hunter Unit 3, Huntington Unit 1, and Huntington Unit 2. Response to
Staff Production Request No. 13. However, for plants where the Company has a minority
ownership share, the Company used the expected closure date identified in consultation with
other owners. Response to Staff Production Request No. 13. Staff believes that, if the expected
closure date identified in consultation with other owners is an early retirement date, which has
not been evaluated and approved by the Commission, the early retirement date should not be
used in the L&R.
Order No. 34918 states:
Together, the thermal resources represent a significant part of the Company's resource
stack. Unless and until this Commission evaluates and approves an early retirement date,
these resources are part of the Company's resource stack... It is appropriate for this
process to scrutinize resource retirements which the Commission has not yet evaluated or
approved. The decision of whether or when these units will be retired is uncertain.
Under such circumstances, it would not be fair,just, or reasonable to approve a capacity
deficit date that is unconfirmed and would operate to the detriment of ratepayers. Order
No. 34918 at 6.
Staff believes that this principle should be applied to all of the Company's coal plants, regardless
of ownership. Therefore, Staff recommends that the Company remove all the early coal plant
retirements from the L&R in the compliance filing, if not done so already.
FOT Limits
FOTs are assumed firm proxy resources that represent the Company's procurement
activities made on an ongoing forward basis to address the Company's short positions. FOT
procurements can be made years, quarters, or months in advance. 2023 IRP at 125. Staff
discovered that the Company did not distinguish short-term and long-term FOT limits in the
' Contract additions should only include contracts with regulatory certainty. Specifically,contracts that require pre-
approval have been approved,and contracts that do not require pre-approval have been executed and are eligible for
recovery.
STAFF COMMENTS 6 APRIL 29, 2024

proposed L&R. The Company assumed 1,000 MW FOT limits in the winter and 500 MW FOT
limits in the summer(before 3% contingency reserves are added), for the entire planning horizon
from 2024 through 2042. Application at 7. However, the 2023 IRP distinguished short-term and
long-term FOT limits, because "historical trends supported higher purchases in the first few
years." 2023 IRP at 125. Table No. 1 below shows the FOT limits from the 2023 IRP. Given
historical trends, Staff recommends that the Company use the FOT limits of 3,326 MW for 2023
through 2027 in the compliance filing.
Table No. 1. FOT Limits from 2023 IRP
FOT Limits in 2023 IRP
Long-term
Market Hub Short-term (2028-2042)
(2023-2027) Summer Winter
Mid-Columbia 1979 500 350
California Oregon Border 424 0 250
Nevada Oregon Border 200 0 100
4 Corners 398 0 0
Mona 325 0 300
Total (MW) 3326 500 1000
STAFF RECOMMENDATION
Staff recommends that the Commission order the Company to file a compliance filing
incorporating the following:
• Break the "Existing—Demand Response" line item into different components with
clear labels, such as existing DR programs, growth of existing DR programs,
approved future DR programs, and growth of approved future DR programs;
• Use a 79% PURPA renewal rate for other states;
• Include all the contract updates as of the date of the compliance filing;
• Remove all the early coal retirements from the L&R in the compliance filing, if not
done so already; and
STAFF COMMENTS 7 APRIL 29, 2024

• Use the FOT limits of 3,326 MW for 2023 through 2027 in the L&R.
Respectfully submitted this 29th day of April 2024.
- "--A,-
Chris Burdin
Deputy Attorney General
Technical Staff: Yao Yin
I:\Utility\UMISC\COMMENTS\PAC-E-24-01 Comments.docx
STAFF COMMENTS 8 APRIL 29, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS , DAY OF APRIL 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-24-01, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
MARK ALDER RON SCHEIRER
ROCKY MOUNTAIN POWER ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330 825 NE MULTNOMAH ST STE 600
SALT LAKE CITY, UT 84116 PORTLAND OR 97232
E-MAIL: [e-mail] E-MAIL: [e-mail]
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
datarequest pacificoM.com
PATRICIA JORDA , SECRETARY
CERTIFICATE OF SERVICE