20240516Letter to IPC.pdf

RECEIVED
Thursday, May 16, 2024 1:24PM
IDAHO PUBLIC
UTILITIES COMMISSION
Idaho Public Utilities Commission Brad Little,Governor
P.O. Box 83720, Boise, ID 83720-0074 Eric Anderson,President
John R.Hammond,Jr., Commissioner
Edward Lodge,Commissioner
May 16, 2024
Via E-Mail:
Donovan E. Walker Camille Christen
Megan Goicoechea Allen Energy Contracts
Regulatory Dockets 1221 West Idaho Street(83702)
1221 West Idaho Street(83702) P.O. Box 70
P.O. Box 70 Boise, ID 83707
Boise, ID 83707 cchristen(cr�,idahopower.com
dwalkergidahopower.com energycontracts(c-r�,idahopower.com
mgoicoecheaallen(kidahopower.com
dockets(cr�,idahopower.com
UPDATES TO CAPACITY DEFICIENCY USED IN DETERMINING AVOIDED COST
RATES; ORDER NO. 36070 IN CASE NO. IPC-E-23-27.
Background
On October 23, 2023, Idaho Power Company ("Company") applied to the Commission
for approval of its first capacity deficiency period of July 2026 used for its avoided cost
calculations.
On January 29, 2024, the Commission issued Order No. 36070, requiring the Company to
submit a compliance filing that reflects (1)the Company's most recent load forecast along with
an explanation of the difference from the proposed load forecast and(2) exclusion of 14-
megawatt("MW") Western Resource Adequacy Program("WRAP") capacity benefit. Order
No. 36070 at 5. The Commission also required the Company to provide evidence substantiating
its proposed Capacity Benefit Margin("CBM") so that Staff can adequately review the proposed
capacity. Order No. 36070 at 4.
P.O. Box 83720, Boise, Idaho 83720-0074 Telephone:[phone], Fax: [phone]
11331 W.Chinden Blvd., Bldg.8,Suite 201-A, Boise, Idaho 83714

Page 2 of 3
Compliance Filing
On March 27, 2024, the Company filed a Compliance Filing and included three changes.
First, the Company used the most recent load forecast developed in March of 2024. Second, the
Company removed the 14-MW WRAP capacity benefit. Third, the Company removed the
capacity of CBM, even though Order No. 36070 did not require it to do so. As a result of the
changes, the first capacity deficiency period shifted from July 2026 to June 2026.
Staff believes that the three changes made by the Company are reasonable. First, the
difference between the most recent load forecast and the proposed load forecast contained in the
Company's Application was caused by variability in the expected ramp of load growth for some
industrial customers. In the most recent load forecast, the load ramp has been pushed back by
several months for some industrial customers. Compliance Filing at 4. Staff believes that this
load change is reasonable. Second, the Company removed the WRAP capacity benefit to
comply with Order No. 36070. Third, as for CBM, although the Company set aside 330 MW of
import transmission capacity on the Company's transmission system, it does not have
corresponding third-party transmission reservations to the Mid-C market. Compliance Filing at
6. Additionally, continued evaluation showed that last-minute transmission capacity to the Mid-
C market outside of the Company's border has not been consistently available. Id. Staff
believes it is reasonable to remove CBM due to inconsistent transmission availability.
Although Staff agreed with the changes the Company made through its Compliance
Filing, it identified two issues that needed to be further addressed. First, the Company did not
provide each year's deficit amounts, which are required by the Surrogate Avoided Resource
("SAR") Model; instead, the Company only provided a first capacity deficiency period of June
2026. Second, the proposed deficits in the Application only showed annual capacity positions
without distinguishing winter and summer, but the SAR Model requires separate deficit inputs
for winter and summer. On April 4, 2024, Staff contacted the Company regarding these issues.
Supplemental Compliance Filing
On May 2, 2024, the Company filed a Supplemental Compliance Filing to address these
issues and provided updated annual and seasonal capacity positions. The annual capacity
positions were determined by using 0.1 event-days per year Loss of Load Expectation("LOLE")
reliability threshold, while the seasonal capacity positions were determined by applying a 0.05
event-days per year LOLE threshold to summer and winter, respectively. The Company tested
P.O. Box 83720, Boise, Idaho 83720-0074 Telephone:[phone], Fax: [phone]
11331 W.Chinden Blvd., Bldg.8,Suite 201-A, Boise, Idaho 83714

Page 3 of 3
various seasonal LOLE thresholds and it concluded, and Staff agrees, that the 0.05 event-days
per year LOLE seasonal threshold is roughly equivalent to an annual LOLE threshold of 0.1
event-days per year.
Staff believes it is appropriate to use the 0.05 event-days per year LOLE threshold for
both summer and winter, but only for purposes of determining the amounts of deficits required
by the SAR model. The Company's Reliability and Capacity Assessment Tool ("R-CAT")
model is used to determine the annual capacity positions and amounts of deficit. To determine
the deficit in one season(i.e. summer or winter), the Company added resources in the other three
seasons to ensure the seasonal capacity position is based on the risks within the specified season
only. As a result, the Company needed to establish separate and more stringent seasonal LOLE
thresholds to arrive at an equivalent annual deficit position.
SAR Model Updates
Staff made the following changes to the SAR Model:
• Seasonal capacity deficits are entered on Tab "Input—IPCO IRP",which are used by Tab
"Input—Load and Resource". As a result, the avoided cost of capacity will be paid to
new projects starting in the first deficit year of 2026.
• Tab "IPCOStorage(Capacity) is updated to reflect the first deficit year of 2026.
Staff re-calculated avoided cost rates for new contracts to reflect the new capacity deficit
information. Attachment A shows the updated published avoided cost rates for new contracts.1
Please review these attachments and file a response with the Commission by May 22,2024,
stating whether the updates to the SAR model and the calculations were made correctly. Please
contact Yao Yin(yao. in&puc.idaho.gov) if you have any questions.
Sincerely,
�
ll
Adam Triplett
Deputy Attorney General
Enclosures
I:LegaITLECTRICUPC-E-23-27_CapDeflLetter to Idaho Power 5.16.docx
1 Published avoided cost rates for renewal contracts are not affected by the new first capacity deficit date,because
those rates contain capacity payments from the first year of the contract term.
P.O. Box 83720, Boise, Idaho 83720-0074 Telephone:[phone], Fax: [phone]
11331 W.Chinden Blvd., Bldg.8,Suite 201-A, Boise, Idaho 83714