20240613Staff Comments.pdf

RECEIVED
Thursday, June 13, 2024 5:27:40 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 TO COMPLETE ) CASE NO. PAC-E-23-17
THE STUDY REVIEW PHASE OF THE )
COSTS AND BENEFITS OF ON-SITE )
CUSTOMER GENERATION ) COMMENTS OF THE
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 June 29, 2023, Rocky Mountain Power, a division of PacifiCorp, ("Company")
requested that Idaho Public Utilities Commission("Commission") approve the study review
phase of the costs and benefits for on-site customer generation.' The Company attached its on-
site generation study ("Study") and requested a timeline for processing the case and a finding
that the Study's scope satisfies Order No. 34753.
' Order No.34753 defined the scope of the Company's study.
STAFF COMMENTS 1 JUNE 13, 2024

On July 31, 2023, the Commission issued a Notice of Application and Notice of
Intervention Deadline. Order No. 35870. The Idaho Irrigation Pumpers Association, Inc.
intervened. Order No. 35884.
After lengthy discussions with Staff, the Company submitted supplemental filings on
February 8, 2024. These filings revised the Company's Study and appendices to make them
more accessible to the public. These filings also amended the appendices to separate the results
from the underlying confidential data, thereby allowing unredacted versions of the appendices.
STAFF ANALYSIS
Staff reviewed the supplemental version of the Company's Study and believes that it
satisfies the Commission's requirements as defined in Order No. 34753. Therefore, Staff
recommends that the Commission acknowledge that the Study complies with its Order.
Additionally, Staff recommends that the Commission order the Company to file a proposal to
establish an export credit rate("ECR") for on-site generators within 6 months of the final order
in this case.
Compliance with Order No. 34753
The Commission's stated purpose for the Study was to "ensure a reasonably
comprehensive study of the issues is conducted in a fair and credible manner." Order No. 34753
at 9. The Commission also directed that the Company "use Attachment A to Staff s revised
comments as the basis of the ordered scope of study." Id. Staff believes the Company's
supplemental Study complies with Order No. 34753.
Staff compared the originally submitted Study to these requirements and determined that
some elements were missing and/or inadequate. The Company and Staff discussed the
shortcomings in October 2023, and the Company agreed to rework its Study.
In February 2024, the Company submitted a supplemental Study addressing the missing
and inadequate items Staff identified. Staff reviewed the supplemental Study and believes that it
satisfies the requirements of the Order.
In addition, the Commission stated that"the study will be one critical component of
Commission review...when it is time to address proposals for new program implementation."
Id. This reflects the Commission's intent that after the Company establishes its Study, the
STAFF COMMENTS 2 JUNE 13, 2024

Company should prepare and submit a new ECR proposal. Staff therefore recommends that the
Commission order the Company to submit a new ECR proposal within six months of the final
order in this case with appropriate data, analysis, and explanation of each program element.
Components Included in the Study
Staff assessed the methods and results of the various components using accuracy,
stability, and transparency as criterion in its evaluation, which is important not only to on-site
generation customers, but also to all other customers who would pay the cost of the exported
power through net power cost recovered through base rates and the Company's Energy Cost
Adjustment Mechanism. Staff believes consideration of these criteria in the Company's ECR
proposal will contribute to striking the most reasonable balance for ratepayers. Staff s review of
the different components of the study include: (1) the netting interval used to determine the
export quantity; (2) the avoided costs and rate design of an ECR; and (3) the size of the Project
Eligibility Cap ("PEC") limiting the amount of capacity on-site generation customers can install.
Netting Interval
The Study examined (1) monthly, (2)hourly, and (3) instantaneous netting periods as
directed. The Company clearly differentiates the netting periods from each other and explores
their impacts in terms of revenue requirement, export payments, bill impacts, and administration
costs.
Staff believes that the Study showed that instantaneous netting provides a more accurate
and transparent structure. Staff also agrees with the Study's observation that the increased
accuracy of instantaneous netting may encourage participating customers to align their
consumption with their system's generation, which would benefit all ratepayers.
ECR Avoided Costs and Rate Design
Staff believes the value of an ECR should utilize principles of avoided cost to ensure that
exported energy from on-site generating customers "sold"to the Company will hold all the
STAFF COMMENTS 3 JUNE 13, 2024

Company's customers harmless.' Staff believes the costs included for consideration in the study
align with the principles of avoided cost and with the Commission's Order—including the cost
of energy, capacity, risk, transmission and distribution, line losses, and environment. The
Company also included information regarding the cost of integrating variable resources as a
discount to the ECR. Staff recommends that when the Company files its proposed ECR, it
should balance: (1) the accuracy of the costs avoided in the Company's system; (2)transparency
of the rate design and included avoided costs; and (3)maintaining rate stability. Staffs review
for each of the potential avoided costs follows below.
Avoided Energy Value
Avoided Energy Value is the most significant component in an ECR—often contributing
70 percent or more of an overall ECR value, based on the Study.
First, Staff believes an export-weighted average of the Energy Imbalance Market
("EIM")hourly prices is the most accurate method for valuing energy since the EIM is a real-
time market price for non-firm energy. Also,because the pricing information is publicly
available, it maximizes transparency. Because the EIM is a backward-looking measure, Staff
also believes the Company should consider how often to update the energy value to maintain
accuracy.
Second, the Company only presented a flat energy rate for the avoided energy value in its
Study. The Company discussed the pros and cons of time differentiated rates; however, the
Company did not provide any supporting data that one could use to inform a potential proposal.
Staff believes that the ECR should be time and/or seasonally differentiated with respect
to the value of energy if it differs significantly depending on the time of day or season—thus
ensuring a more accurate price signal. However, Staff also believes the Company should
consider the amount of complication and understandability of how it develops the rate design to
maintain transparency.
z Indep. Energy Producers Ass'n, Inc. v. Cal. Pub. Utils. Comm'n, 36 F.3d 848, 858(9th Cir. 1994)("If purchase
rates are set at the utility's avoided cost,consumers are not forced to subsidize QFs because they are paying the
same amount they would have paid if the utility had generated energy itself or purchased energy elsewhere.")
STAFF COMMENTS 4 JUNE 13, 2024

Avoided Capacity Value
Based on the Study, avoided capacity value is the second most consequential component
in an ECR. Staff believes the Company should consider: (1) using the capacity factor("CF")
method over the top 100 peaking event method due to its added accuracy without sacrificing
transparency and rate stability; (2) designing the rate such that avoided capacity value is
compensated during those times of the day when the Company avoids the cost of capacity; (3)
include an adjustment for the Company's deficit date but only if it can be calculated for the class;
and (4) updating the ECR after each IRP.
Of the two capacity value determination methods explored by the Company in its Study,
Staff believes the CF method is the most accurate. However, Staff believes the accuracy of the
CF method depends on which year the Company uses to calculate the Loss of Load Probability
("LOLP") values. In the Study, the Company used LOLP values calculated for its hypothetical
system in 2030. Staff believes it would be more accurate to use LOLP values calculated for the
Company's system closer to the present year.
Second, Staff believes the Company should consider a rate design such that avoided
capacity value is compensated during those times of the day when the Company avoids the cost
of capacity. The true value of avoided capacity occurs during the Company's on-peak periods;
therefore, it is more accurate to allocate the avoided capacity value during times of the day that
drive the need for future capacity. Because customers have varying consumption patterns and
can shift their consumption patterns to export more energy during these peak periods, a time-
based rate would incentivize these customers to help the Company to avoid future capacity
investments—which is a benefit to all customers.
Third, Staff believes that avoided capacity value should be determined and paid
uniformly to all on-site generators without taking into consideration when individual customers
began avoiding capacity cost in the system based on the deficit date of the system and the
customer's on-line date. This is because the roster of on-site generation customers will
continuously change—as will the overall system capacity deficit. Staff believes it would be
administratively complicated and burdensome to track which customer systems contributed to
alleviating the capacity deficit and which customer systems did not. Furthermore, the additional
complication would detract from the transparency of the rate design and could raise questions of
rate discrimination. A more practical approach could consider adjusting the value of capacity
STAFF COMMENTS 5 JUNE 13, 2024

avoidance for the deficit date based on an average for the class with regular updates as the deficit
date changes.
Finally, Staff believes the avoided capacity value should be redetermined after the
Company files its Integrated Resource Plan("IRP"). Staff believes the Company should update
these values and the ECR after each new IRP is filed. However, this should be done in a separate
filing seeking Commission authorization as the Commission only provides acknowledgment of
the Company's IRPs.
Avoided Risk Value
The Study explained how the Company performs statistical analysis of variations in load,
hydro generation, market prices, and gas prices to determine an avoided risk value in its IRP.
Based on the 2021 IRP, this value was about 3.9 percent of the energy value, and the Company
incorporated this avoided risk value into its Study.
However, Staff believes that avoided risk value only exists if the energy value is based on
predicted prices. If the Company decides to use recent actual EIM prices, the value of avoided
risk would not be applicable—which would improve the accuracy and transparency of an ECR.
Staff believes that this is another reason for the Company to use EIM pricing for determining the
value of energy.
Avoided Transmission and Distribution Value
The Study shows that avoided transmission and distribution("T&D") value is a relatively
minor component of an ECR, typically contributing ten percent or less to the overall value.
The Company utilized the avoided transmission value and an avoided distribution value
from the Company's most recent IRP. Staff believes that the IRP is the Company's best and
most accurate source to determine these values for the Company's system. However, because
these values will change with each iteration of the IRP, Staff believes these values and the ECR
should be updated after each new IRP is filed, but these should be filed in a separate filing
seeking Commission authorization—since the Commission only provides acknowledgment of
the Company's IRPs.
STAFF COMMENTS 6 JUNE 13, 2024

Avoided Line Loss Value
According to the Study, avoided line loss value is a minor component of the ECR—
typically contributing less than ten percent of the overall value.
The Company determines system-wide line loss percentages via a specialized study. The
line losses are separately determined for the transmission system, the primary distribution
system, and the secondary distribution system. Staff believes that it is reasonably accurate to
assume that most energy exporters avoid transmission and primary distribution losses—but not
secondary distribution losses. Therefore, it would be both accurate and transparent for the
Company to calculate avoided line losses using only transmission and primary distribution
losses.
Because line loss percentages are relatively stable, the Company infrequently conducts a
line loss study. Therefore, Staff believes it is reasonable for the Company to update this
component of the ECR only after it performs a new line loss study; this should also be done in
conjunction with a routine filing that updates the ECR after it is implemented.
Environmental Value
As part of its Order for this Study, the Commission directed that the Study should
examine avoided environmental costs and other benefits.
The Study concluded that the value of"global warming harm reduction is difficult to
quantify." Study at 32. The Study also asserted that"the administrative costs would exceed any
revenues generated from Renewable Energy Credit("REC") sales." Study at 33.
Because the Commission has also stated in other ECR cases that the only types of costs
that a utility should consider are those that are quantifiable and shown to affect rates,' Staff
believes that the same principle would apply to a future Company ECR filing. If so, Staff
believes that REC sales are the only environmental feature that currently has a quantifiable
potential. The Company should address this consideration.
s Order Nos. 35284,35631.
STAFF COMMENTS 7 JUNE 13, 2024

Integration Cost
The Company must carry resources in reserve to regulate the non-firm nature of
customer-exported energy. This cost of integrating exports into the Company's system results in
a minor reduction to an ECR.
In its study, the Company presented two options to quantify the integration costs: (1) the
integration costs determined in the most recently published IRP; and(2) the integration costs
currently approved by the Commission for use with qualified facility ("QF")pricing. The
authorized integration cost for QFs comes from the reserve studies in the IRP and is only updated
if there is a meaningful change between IRPs. Staff believes the QF authorized integration rates
should be used because it would eliminate duplication of filings. However, the Company should
consider the timing of the QF integration cost filing with updates to an ECR.
Project Eligibility Cap
Staff believes that the Study addressed Commission Order No. 34753 by providing an
evaluation of existing PECs by considering caps set at 100 percent of demand and 125 percent of
demand for each class.
25-kilowatt PEC
For the residential class, the Study compares the generic 25-kilowatt ("kW") PEC to the
typical residential maximum peak load of 8.4 kW for Schedule 1 customers and 11.5 kW for
Schedule 36 customers. In both cases, the generic 25 kW cap is greater than 125 percent of
demand. The Study presents the 25 kW PEC as administratively simple, easy to understand, and
discourages gaming. In contrast, the Study presents a demand-based PEC as administratively
burdensome and frustrating for customers. Staff agrees that a demand-based cap would be
difficult for the Company to implement across the comparatively large residential sector, could
delay installations for customers without adequate data, and is not likely to provide a benefit
beyond the generic PEC.
100-kilowatt PEC
For the 100 kW PEC for non-residential customers, the Study presents that the pros and
cons are consistent with those from the residential sector. However, a 100 kW cap may be too
small for a large energy user to completely offset demand. The Study suggests that large users
STAFF COMMENTS 8 JUNE 13, 2024

can apply to become a QF, but Staff believes the QF process is designed for customers whose
primary purpose is to generate energy for profit and may not be optimal for on-site generators
whose primary purpose is to offset load. The Study did not estimate the typical maximum peak
load of its non-residential customers. Staff believes there may be customers limited by the 100
kW cap. Staff notes that the number of non-residential on-site generation customers is much
lower than residential on-site generation customers; thus the administrative burden impact on the
Company might be less than a residential customer. Staff believes the Company should quantify
the impact, and reconsider the 100 kW cap for non-residential customers, if warranted, when the
Company files to implement an ECR. Therefore, Staff recommends that the Company present in
its ECR filing detailed analysis and justification using Advanced Metering Infrastructure
("AMI") data to support the Company's decision regarding the 100 kW non-residential customer
cap.
Other Considerations
Staff evaluated the other considerations in the Study, and believes the information
provided complies with Order No. 34753. Sections 10.0 and 11.0 in the Study discussed
accounting, credit conversion, and credit expiration considerations. If the Company files to
implement an ECR, the Company should define and distinguish between kilowatt-hour credits
and net-billing financial credits. Ambiguous references to "credits"may create confusion. Staff
also recommends that the Company clearly distinguish which policies will apply to legacy
systems and which policies will apply to non-legacy systems.
PUBLIC INPUT
Public Workshop
Staff held a virtual public workshop on April 30, 2024, beginning at 6:00 pm. One
customer attended and asked no questions.
Customer Comments
As of June 13, 2024, eight members of the public have submitted comments. All
comments were similar in composition—often using the exact same wording. The verbatim
STAFF COMMENTS 9 JUNE 13, 2024

objection in every comment is that the Study underestimates the value of solar by intentionally
excluding measurable environmental and related benefits that impact customer rates.
Public Hearing
The Commission has scheduled a customer hearing for Monday, June 17, 2024, from
5:00 pm to 8:00 pm in the South Room at the Idaho Falls Activity Center, 1575 N. Skyline
Drive, in Idaho Falls.
STAFF RECOMMENDATION
Staff recommends the Commission:
1. Acknowledge that the Supplemental Study complies with Order No. 34753;
2. Direct the Company to submit a proposed ECR within six months of the final order
for this case; and
3. Direct the Company to include in the ECR filing detailed analysis and justification
using AMI data to support the Company's decision regarding the 100 kW non-
residential customer cap.
Respectfully submitted this 13th day of June 2024.
Michael Duval
Deputy Attorney General
Technical Staff. Matt Suess, Jason Talford, Travis Culbertson
I:\Utility\UMISC\COMMENTS\PAC-E-23-17 Comments.doex
STAFF COMMENTS 10 JUNE 13, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS I /*Y'OF JUNE 2024, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE NO.
PAC-E-23-17, 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: mark.alder(a�pacificorp.com PORTLAND OR 97232
E-MAIL: joseph.dallasgpacificorp.com
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
datarequestgpacificorp.com
ERIC L OLSEN LANCE KAUFMAN PhD
ECHO HAWK& OLSEN PLLC 2623 NW BLUEBELL PLACE
PO BOX 6119 CORVALLIS OR 97330
POCATELLO ID 83205 E-MAIL: lancegae isg insi hg t.com
E-MAIL: elogechohawk.com
PAR IA JORDAN, C ETARY
CERTIFICATE OF SERVICE