20240626Final_Order_No_36243.pdf

Office of the Secretary
Service Date
June 26,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN ) CASE NO. PAC-E-23-24
POWER'S APPLICATION REQUESTING )
AUTHORIZATION TO UPDATE THE )
WIND AND SOLAR INTEGRATION RATE ) ORDER NO. 36243
FOR SMALL POWER GENERATION )
QUALIFYING FACILITIES )
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 the wind and solar qualifying facilities ("QFs") ("Application"). Supporting
workpapers were also filed with the Application. The Company requested that its Application be
processed by modified procedure.
On January 2, 2024, the Commission issued a Notice of Application and Notice of
Intervention Deadline. Order No. 36051. No one intervened.
On March 7, 2024, the Commission issued a Notice of Modified Procedure and set public
comment and Company reply comment deadlines. Order No.36107. Staff filed comments to which
the Company replied.
Having reviewed the record, the Commission enters this Order approving the Company's
Application on the conditions described below.
BACKGROUND
In 2007,the Company requested approval of a utility-specific wind integration adjustment
to the published avoided cost rates. See Case No. PAC-E-07-07. The Commission approved a
stipulation by the parties in that case and "determined that a utility-specific wind integration cost
adjustment to a utility's published avoided costs, among other adjustments, was appropriate."
Application at 2 citing Order No. 30497 at 12. Further, the Company stated the Commission
ordered the Company to file any changes to its wind integration charge as reflected in future
Integrated Resource Plans ("IRP"). Id. citing Order No. 30497 at 13.
The Company represented that on October 8, 2020, the Company filed to update the wind
integration rate and implement a solar integration rate based on the results of the 2019 IRP Flexible
Reserve Study. This was approved in Case No. PAC-E-20-14, Order No. 34966.
ORDER NO. 36243 1

THE APPLICATION
The Company requested authorization to decrease the wind integration rate from $1.25 to
$1.18 per megawatt-hour ("MWh") for wind-powered QFs. The Company also requested
authorization to increase the solar integration rate from$0.96 to $1.40 per MWh for solar-powered
QFs.'
The Company stated the proposed changes are due to the integration costs of the wind and
solar power compared to published avoided cost rates. However, the Company noted that an
exception to this default practice of determining the price occurs when the QF delivers energy to
the Company on a firm hourly schedule as specified in a PPA.
COMMENTS
Staff Comments: Overview
Staff reviewed the Company's Application, focusing on its compliance with Order Nos.
33937 and 34966, analyzing the Company's method, historical data, changes to the preferred
portfolio,treatment of hybrid resources,load assumption,modeled results timeframe,lack of inter-
hour analysis, format of integration charges, and the use of published or IRP-based avoided cost
rates. Staff recommended approving the proposed wind and solar integration charges included in
Tables 1 and 2 of Attachment 1,applying them to both published and IRP-based avoided cost rates,
unless QF developers agree to schedule and deliver output on a firm hourly basis.
Staff reviewed the last Flexible Reserve Study("FRS")and recommended that these seven
changes be implemented in the next 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.
1 The Company specifically requested that the proposed wind and solar integration rate be priced"in 2024 dollars."
Application at 1 and 6.
ORDER NO. 36243 2

Staff Comments at 2.
Company Reply: Overview
The Company agreed with Staff s first four recommendations but noted limitations or
difficulties associated with carrying out Staff s last three recommendations. Staff s seven
recommendations and the Company's position are discussed under the same subject headings.
1. Compliance with Order Nos. 33937 and 34966 and Overall Methodology
Staff Comments
Staff noted Order Nos. 33937 and 34966 require the Company to file a case updating
integration charges after the acknowledgement of the IRP and recommended that the Company
comply with this mandate since it failed to file this update after the 2021 IRP's acknowledgement.
Staff opined that the Company's method for determining integration costs in the proposed
FRS is reasonable but questioned whether capital and fixed O&M costs for regulation reserves
should be included (as these costs were not included in the Company's Application). Despite
believing the Company's proposed method was reasonable for determining the incremental energy
cost to integrate wind and solar, Staff noted the Company's method fails to capture capital and
fixed O&M costs of regulation reserves. Staff stated that the Company plans for certain resources
to meet the forecasted load as well as the planning reserve margin—with the latter including a
regulation reserve for capacity to balance differences among different classes of variability
included in the integration charge. Staff suggested an appropriation of that capacity cost to
integrate wind and solar,and the Company's response did not justify excluding capacity cost. Staff
recommended the Company "explain why capital and fixed O&M cost of regulation reserves
should not be included in wind and solar integration costs" in the next FRS. Id. at 4.
Company Reply
The Company agreed to comply with Order Nos. 33937 and 34966 and will explain why
fixed O&M costs should not be included in the wind and solar integration costs in its next FRS.
z Although Staff made seven recommendations, these suggestions do not perfectly align with the nine subheadings
listed below.Heading number one covers Staff s first and second recommendations whereas no recommendation was
made in heading number three. It also appears that Staff made a recommendation in headings eight and nine that do
not appear on Staffs list of recommendations.
ORDER NO. 36243 3

2. Historical Data in 2018 and 2019
Staff Comments
The Company used historical data from 2018 and 2019 for the FRS due to time constraints,
without considering capacity from the wind and solar installed in 2021. Going forward Staff
recommended using the most recent data with sufficient duration for future studies.
Company Reply
The Company agreed to follow Staff s recommendation of using the most recent,
reasonably available data in its upcoming 2025 IRP FRS. However, the Company stated that the
data could become outdated between the FRS conducted during the IRP process and the filing of
the next case based on the FRS (which happens after the acknowledgement of the IRP).
3. Changes to Preferred Portfolio
Staff Comments
Staff noted that since developing the preferred portfolio, there have been several contract
changes. The Company believed that the modest changes are not expected to significantly alter
regulation reserve requirements and that using the proposed preferred portfolio is acceptable.
4. Hybrid Wind or Hybrid Solar
Staff Comments
In the FRS, wind and solar with storage (also known as hybrid wind and hybrid solar) are
evaluated just like wind and solar alone. However, Staff recommended the Company evaluate if
hybrid wind and hybrid solar should be evaluated differently than wind and solar alone in the next
FRS—as hybrid resources may require different levels of regulation reserve.
Company Reply
The Company stated that it will explain the implications of operating parameters of battery
storage in hybrid resources will be addressed in the FRS for the 2025 IRP.However,the Company
stated that the impacts of hybrid resources on integration needs depends on the contract structure—
in particular whether the Company has "dispatch control over the battery resource." Reply
Comments at 3.
5. Load Assumption Used in Scaling Portfolio Diversity Benefits
Staff Comments
Staff stated that portfolio diversity benefits occur "because forecast errors in each class
tend not to occur simultaneously" or often offset each other. Staff Comments at 5. The "study
ORDER NO. 36243 4

scaled the benefits to a wide variety of wind and solar capacity combinations—while holding the
load constant." Id. However, Staff believed that the Company did not adequately justify holding
the load constant, and the Company did not provide evidence to justify the exclusion of varying
loads in the scaling process. Staff recommended determining(with quantifiable evidence)whether
the load should be constant in the subsequent FRS.
Company Reply
The Company plans to reexamine the calculation of regulation reserve requirements and
diversity benefits for the FRS for the 2025 IRP and does not know whether Staff s fifth
recommendation will be pertinent to the resulting methodology. "The Company is considering a
range of modeling enhancements for the 2025 IRP,including impacts related to weather conditions
that drive variation in load, wind, and solar." Reply Comments at 4. The Company stated that it
would attempt to determine how holding load constant on portfolio diversity benefits would affect
the calculation. The Company suggested parties review and provide feedback on the 2025 IRP
public input process results to help the IRP analysis before filing.
6. Time Range of Modeled Results
Staff Comments
Staff stated that the modeled results concluded in 2042—after which integration charges
rose based on inflation rate. Staff believed that using an inflation rate after 2042 was acceptable
but recommended creating at least 25 years of modeled results in the next FRS. That way, rates
will be generated using the same method.
Company Reply
The Company stated that the computing power and the time of calculation limit the study's
horizon—forcing a trade-off between the number of years and granularity. Extending the horizon
would likely reduce granularity in each year modeled.Additionally,the Company argued that data
accuracy and availability decrease over longer periods, so "modeled results may not be
significantly more accurate than"the extrapolated results.Id. at 5. However,the Company further
stated that"to the extent that additional years are modeled as part of the IRP, the Company agrees
to use all available years of modeling results to inform the integration cost."Id.
ORDER NO. 36243 5

7. Inter-hour Analysis
Staff'Comments
The Company should quantify inter-hour integration costs in its next FRS and then
determine "whether the costs are significant enough to be included." Staff Comments at 6.
"Because the inter-hour integration costs were minimal in the 2017 FRS, the Company stopped
the inter-hour analysis in the 2019 FRS." Id. However, Staff believed the inter-hour costs in the
2017 FRS (at 24.56% and 23.33% of total wind and solar integration charges respectively) were
not insignificant enough to be excluded. "At a minimum, Staff believes the inter-hour costs should
be quantified in the next FRS before deciding to exclude it."Id.
Company Reply
The Company expected reduced inter-hour integration costs from participating in the
California ISO ("CAISO") Enhanced Day-ahead Market ("EDAM") due to optimized unit
commitment across a larger market footprint. However, the Company stated that quantifying the
impact on the wind and solar integration costs is challenging given EDAM's development stage
and differing assumptions from the Company's IRP. The Company aimed to look again at system
impacts but stated that it may not "be able to develop an appropriate methodology to quantify the
results for wind and solar in the FRS for the 2025 IRP."Reply Comments at 5.
8. Format of Integration Charges
Staff Comments
The Company sought approval for the wind and solar QF integration rates of$1.18 and
$1.40 per MWh(in 2024 dollars),respectively. The Company also recommended 20-year levelized
and non-levelized integration costs. Staff recommended aligning integration charges with avoided
cost rates. Therefore, Staff recommended using charges found in Table Nos. 1 and 2 in Attachment
No. 1.
9. Published Avoided Cost Rates Versus IRP-based Avoided Cost Rates
Staff Comments
The Company suggested using integration charges only against published avoided cost
rates, but functionally, they also apply them in IRP-based method. Staff advised using the
integration charges from Table Nos. 1 and 2 to discount published as well as IRP-based avoided
cost rates.
ORDER NO. 36243 6

COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-502 and 61-
503. The Commission is statutorily authorized to investigate rates, charges, rules, regulations,
practices, and contracts of public utilities and to determine whether they are just, reasonable,
preferential, discriminatory, or in violation of any provision of law, and to fix the same by order.
Idaho Code §§ 61-502 and 61-503. In addition, the Commission has authority under PURPA and
Federal Energy Regulatory Commission ("FERC") regulations to set avoided costs, to order
electric utilities to enter fixed-term obligations for the purchase of energy from qualified facilities
and to implement FERC rules. The Commission may enter any final order consistent with its
authority under Title 61 and PURPA.
The Commission here reiterates that the Company needs to comply with Commission
Order Nos. 33937 and 34966 and file a case updating integration charges after the
acknowledgement of each IRP. The Commission also notes that, in its next FRS, the Company
must elaborate as to why capital and fixed O&M cost of regulation reserves should be excluded in
the wind and solar integration costs. The Company must use quantifiable evidence—thus ensuring
the Commission has the best options before it. Specifically, the Company must use the latest data
that meets the sufficient duration of operations for its next FRS (i.e.the length of operations should
be long enough to assess). The next FRS should also determine whether hybrid wind or hybrid
solar should receive different treatment than wind or solar alone. This will allow the Commission
to better understand how the inclusion or exclusion of specific resources impacts the appropriate
levels of regulation reserve. The Company should also determine the effect of holding load
constant in scaling portfolio diversity benefits. If such is pertinent, this should be implemented
with the new method developed in the next FRS.
The Commission understands value of Staff s recommendation that the Company model
at least 25 years results relative to using an inflation rate after 2042. The Commission also
understands the Company's concern regarding the reduction of granularity. Accordingly, the
Commission directs the Company to work with Staff in modeling and obtaining sufficiently useful
results to allow modeled results for additional online-years. The next FRS should also evaluate the
usefulness of integration costs including inter-hour integration costs and whether such is justified.
ORDER NO. 36243 7

With each of these items in mind, the Commission finds it fair just and reasonable to
approve the integration charges contained in Table No. 1 and Table No. 2 of Attachment No. 1—
thus discounting both published avoided cost rates and IRP-based avoided cost rates.
ORDER
IT IS HEREBY ORDERED that the Company shall comply with Commission Order Nos.
33937 and 34966 and file updates to integration charges upon acknowledgement of each IRP.
IT IS FURTHER ORDERED that the Company will include those items discussed by the
Commission above in its next FRS—supported by sufficient and quantifiable evidence.
IT IS FURTHER ORDERED that the integration charges contained in Table No. 1 and
Table No. 2 of Attachment No. 1 are approved; both published avoided cost rates and IRP-based
avoided cost rates are discounted accordingly.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order about any matter
decided in this Order. Within seven (7) days after any person has petitioned for reconsideration,
any other person may cross-petition for reconsideration.Idaho Code § 61-626.
DONE by order of the Idaho Public Utilities Commission at Boise, Idaho this 26th day of
June 2024.
ERIC ANDERSON, PRESIDENT
HN R. HAMMOND JR., COMMISSIONER
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Grp
EDWARD LODGE, CO ISSIONER
ATTEST:
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Commission Secretary
I:\Legal\ELECTRIC\PAC-E-23-24_Wind_Solar_Int\orders\PACE2324_Final_md.docx
ORDER NO. 36243 8

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 $2.15 $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 $2.53 $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 $1.58 $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
ATTACHMENT NO. 1 TO ORDER NO. 36243
CASE NO. PAC-E-23-24
Page 1 of 2

Table No. 2: Solar Integraion Charles
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 S $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 O.S9 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
ATTACHMENT NO. 1 TO ORDER NO. 36243
CASE NO. PAC-E-23-24
Page 2 of 2