20240514Staff Comments.pdf

RECEIVED
Tuesday, May 14, 2024 10:18:16 AM
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 IDAHO POWER )
COMPANY'S APPLICATION FOR ITS ) CASE NO. IPC-E-24-15
ANNUAL UPDATE TO MARGINAL PRICING )
USED IN CERTAIN SCHEDULES )
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 April 1, 2024, Idaho Power Company("Company") filed an application
("Application") with the Idaho Public Utilities Commission("Commission") to update the
marginal cost-based energy prices in Schedule No. 20, Speculative High-Density Load
("Schedule 20"), and Schedule No. 34, Lamb Weston Special Contract("Schedule 34").
The Company represents that the resulting annual and time-differentiated marginal costs
are included as Attachment 3 to the Application, and that to the extent that service is provided
under Schedule 20 or Block 2 of Schedule 34, all associated energy sales will be tracked in the
Power Cost Adjustment and included as an offset to power supply expenses.
STAFF COMMENTS I MAY 14, 2024

STAFF ANALYSIS
The Company proposed to update the marginal energy price component of Schedule 20
and Schedule 34 with an effective date of June 1, 2024. Staff s review of the proposal focused
on the overall methodology that determined the marginal cost of energy, the incremental load on
the margin used to determine the marginal cost of energy, the appropriateness of using a 50t'
percentile load forecast, the Schedule 20 time-of-use period, and the effective date of the updated
rates.
Staff recommends approval of the updated marginal cost component of Schedule 20 and
Schedule 34 with an effective date of June 1, 2024. Staff also recommends approval of the tariff
updates of Schedule 20 and Schedule 34 contained in Attachment No. 1 of the Application.
Overall Methodology
The Commission ordered the Company to evaluate and compare methods for determining
a marginal cost of energy for Schedule 20 customers. Order No. 35428 at 7. The Company and
Staff met and developed five principles' to guide the determination of the marginal cost of
energy. Staff believes the overall methodology used in this case reflects the principles, which
are included in Attachment 2 of the Application. The methodology is also consistent with the
method used to determine the marginal cost of energy for Lamb Weston in Case No. IPC-E-23-
18 and for Schedule 20 in Case No. IPC-E-23-11. Based on its review of the Company's
proposal, Staff believes that the overall methodology is reasonable.
The Company used an AURORA-based modeling method to determine the marginal cost
of energy for a forward test year from April 2024 through March 2025. The model simulated the
hourly operation of the Company's power supply system over expected streamflow conditions
for the test year. First, base case net power supply expenses were quantified, and then the model
was run with 15 megawatts ("MW") of load added across all hours. The difference in power
1 The principles include: 1.The resources used in a model for determining marginal cost should be based on the
resources that are highly likely to exist during the rate period. 2.The amount of incremental load used to determine
the marginal cost rate should reflect the amount of incremental load for the portion of load that will be priced at
marginal cost. 3. The marginal cost rates should have enough granularity to reflect time difference(e.g. seasonality,
time of day)value of marginal cost within the Company's system to provide accurate price signals. 4.If the
marginal cost rates are based on a forecast,due to the lack of Marginal Costs being trued-up in the PCA,they should
be updated often enough that they reflect current conditions or find a way to true up the marginal cost to actual
marginal cost. 5.If market costs are used,cost of transmission transaction and wheeling costs should be included.
STAFF COMMENTS 2 MAY 14, 2024

supply expenses between the base run and the base-plus-15-MW run was divided by the
difference in megawatt-hours to produce a marginal cost of energy.
Incremental Load
The 15-MW incremental load used in the base-plus-15-MW model run was based on
Lamb Weston's expected incremental load alone without considering any potential Schedule 20
loads. Response to Staff Production Request No. 1. Because this treatment aligns with how
Schedule 20 rates were determined in Case No. IPC-E-23-11 and also because the Company
currently does not have any customers taking service under Schedule 20, Staff believes this
treatment is acceptable. The Company stated that it plans to continue its investigation of
methodologies for calculating marginal cost rates for current and future customers and will
engage with Staff to determine the best method(s) moving forward. Id. Staff agrees with this
plan.
501h Percentile of Load
The load input for the AURORA model was based on a 50th percentile energy load
forecast. Staff believes the 50th percentile level is a reasonable expectation for load forecasts
when AURORA model runs are used for rate-making purposes, because it reflects normal
expected weather conditions.
Time-of-Use Period
In determining the proposed seasonalized on-peak, mid-peak, and off-peak Schedule 20
rates, the Company used the currently approved time-of-use period for the authorized Schedule
20. Staff believes it is reasonable to use the currently authorized time-of-use period because the
recently approved period still reflects the Company's current risk hours.
Effective Date
The Company proposes that the updated marginal cost component of Schedule 20 and
Schedule 34 become effective on June 1, 2024. Staff believes this is a reasonable effective date
because it is consistent with Lamb Weston's annual June 1 update approved in Order No. 35929
and the proposed update schedule for Schedule 20 in Case No. IPC-E-23-11.
STAFF COMMENTS 3 MAY 14, 2024

STAFF RECOMMENDATION
Staff recommends the Commission approve the updated marginal cost component of
Schedule 20 and Schedule 34 with an effective date of June 1, 2024. Staff also recommends the
Commission approve the tariff updates of Schedule 20 and Schedule 34, as filed, that are
contained in Attachment No. 1 of the Application.
Respectfully submitted this 14th day of May 2024.
i
Chris Burdin
Deputy Attorney General
Technical Staff. Yao Yin
I:\Utility\UMISC\COMMENTS\IPC-E-24-15 Comments.docx
STAFF COMMENTS 4 MAY 14, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS DAY OF MAY 2024, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE NO. IPC-E-
24-15, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
MEGAN GOICOECHEA ALLEN MATTHEW T. LARKIN
IDAHO POWER COMPANY CONNIE ASCHENBRENNER
PO BOX 70 IDAHO POWER COMPANY
BOISE ID 83707-0070 PO BOX 70
E-MAIL: BOISE ID 83707-0070
mgoicoecheaallen(&idahopower.com E-MAIL: mlarkinnidahopower.com
dockets 0midahopower.com caschenbrenner(cyidahopower.com
PATRICIA JORDAN ECRETARY
CERTIFICATE OF SERVICE