Loading...
HomeMy WebLinkAbout20240806Reply Comments - Redacted.pdf 0IQAW POWER. DONOVAN WALKER RECEIVED Lead Counsel Tuesday, August 6, 2024 dwalker(Mclahopower.com IDAHO PUBLIC UTILITIES COMMISSION August 6, 2024 VIA ELECTRONIC FILING Commission Secretary Idaho Public Utilities Commission 11331 W. Chinden Blvd., Bldg 8, Suite 201-A (83714) PO Box 83720 Boise, Idaho 83720-0074 Re: Case No. IPC-E-24-12 In the Matter of Idaho Power Company's Application for Approval of a Market Purchase Agreement Dear Commission Secretary: Attached for electronic filing, please find Idaho Power Company's Reply Comments in the above matter. The confidential version will be provided separately via an encrypted email to the parties who sign the protective agreement. Please feel free to contact me directly with any questions you might have about this filing. Very truly yours, Donovan E. Walker DEW:sg Attachment CERTIFICATE OF ATTORNEY ASSERTION THAT INFORMATION CONTAINED IN AN IDAHO PUBLIC UTILITIES COMMISSION FILING IS PROTECTED FROM PUBLIC INSPECTION Application for Approval of a Market Purchase Agreement IPC-E-24-12 The undersigned attorney, in accordance with Commission Rules of Procedure 67, believes that Idaho Power Company's Reply Comments, dated August 6, 2024 contains information that Idaho Power Company and a third party claims are confidential trade secret as described in Idaho Code § 74-101, et seq., and/or § 48-801, et seq. As such, they are protected from public disclosure and exempt from public inspection, examination, or copying. DATED this 6th day of August 2024. 1)"', �� Donovan E. Walker Counsel for Idaho Power Company CERTIFICATE OF ATTORNEY- 1 DONOVAN E. WALKER (ISB No. 5921) Idaho Power Company 1221 West Idaho Street (83702) P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-5317 Facsimile: (208) 388-6936 dwalker(o-)idahopower.com Attorney for Idaho Power Company BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF IDAHO POWER ) COMPANY'S APPLICATION FOR ) CASE NO. IPC-E-24-12 APPROVAL OF A MARKET PURCHASE ) AGREEMENT ) IDAHO POWER COMPANY'S REPLY COMMENTS Idaho Power Company ("Idaho Power" or "Company") respectfully submits these Reply Comments in response to Comments filed by the Idaho Public Utilities Commission ("Commission") Staff ("Staff"), on July 23, 2024. Idaho Power appreciates Commission Staff's support of an order (1) approving the market purchase agreement with Powerex Corp. ("Powerex"), and (2) declaring the payments made to Powerex pursuant to the market purchase agreement will be allowed as prudently incurred for ratemaking purposes with two exceptions. In these Reply Comments, Idaho Power will respond to IDAHO POWER COMPANY'S REPLY COMMENTS - 1 Commission Staff's proposal regarding the competitive resource procurement process and specifically the Request for Proposal ("RFP") process. I. BACKGROUND 1. Idaho Power has been generally resource-sufficient since the addition of the Langley Gulch natural-gas fired power plant almost a decade ago until the filing of the 2021 Integrated Resource Plan. That is, Idaho Power's own generation and transmission resources, along with negotiated purchases under Power Purchase Agreements and mandatory purchases under the Public Utility Regulatory Policies Act of 1978, were sufficient to meet the Company's load growth over that time. However, several dynamic and converging factors, including limited third-party transmission capacity, load growth, and a decline in the peak serving effectiveness of certain supply-side and demand-side resources caused Idaho Power to rapidly move to a near-term capacity deficiency starting in 2023. These dynamic circumstances led the Company to immediately file a request for a Certificate of Public Convenience and Necessity ("CPCN") to acquire resources to be online in 20231, as well as a CPCN to acquire resources to be online in 20242, and a CPCN to acquire resources to be online in 2025.3 Idaho Power expects to acquire additional resources each year thereafter through (at least) 2028.4 2. Under Idaho law, Idaho Power has an obligation to provide adequate, efficient, just, and reasonable service on a nondiscriminatory basis to all those that request it within its service area. Idaho Power has experienced and expects sustained Case No. IPC-E-22-13. 2 Case No. IPC-E-23-05. 3 Case No. IPC-E-23-20. 4 See, OPUC Docket UM 2317, In the Matter of Idaho Power Company, Application for Approval of 2028 All-Source Request for Proposals to Meet 2028 Capacity Resource Need. IDAHO POWER COMPANY'S REPLY COMMENTS -2 load growth, thereby requiring the addition of new resources. To meet its obligation to reliably serve customer load and fill the capacity deficiencies identified in 2026 and 2027, the Company conducted a competitive solicitation through an RFP seeking to acquire a combination of energy and capacity resources with as much as 1,100 megawatts ("MW") of variable energy resources and a minimum of 350 MW of peak capacity to help meet Idaho Power's previously identified capacity needs in 2026 and 2027 ('2026 RFP"). The procurement process resulted in the acquisition of least-cost, least-risk resources necessary to fill the identified 2026 capacity deficiency of 236 MW. 3. The competitive RFP process resulted in a least-cost, least-risk selection of multiple projects to meet the 2026 capacity deficiency of 236 MW, one of which the Company is requesting approval at this time: the Powerex market purchase product. The market purchase agreement, a Confirmation between Powerex Corp. and Idaho Power Company dated March 12, 2024 ("Powerex Agreement"), included as Confidential Exhibit No. 9 to Mr. Hackett's Direct Testimony, describes the sale and purchase of the capacity- based product and firm energy. Under the Powerex Agreement, the Company will have 200 MW firm capacity during the months June through September, hours-ending 0700 — 2200 Pacific Prevailing Time, seven days a week. Commencing on June 1, 2026, the Powerex Agreement has a five-year term that begins when the Boardman to Hemingway transmission line ("1321­1") is placed in service. If B2H is not in service as of June 1, 2026, the agreement allows for a "bridge term" under which Powerex would still sell and Idaho Power would still purchase and receive the capacity with firm energy to be received by the Company via Idaho Power's other firm transmission rights. IDAHO POWER COMPANY'S REPLY COMMENTS - 3 II. IDAHO POWER'S REPLY A. The Commission Should Adopt Staff's Recommendation to approve the Powerex Agreement and Declare the Payments Pursuant to the Market Purchase Agreement are Prudent. 4. In order to comply with its continuing obligation to serve customers, the Company must at times acquire additional resources to meet the identified capacity deficits on its system when the need arises. On September 15, 2022, Idaho Power commenced the competitive bidding process, filing a request with the Public Utility Commission of Oregon ("OPUC") to (1) open a docket for approval of the 2026 RFP, (2) appoint an Independent Evaluator ("IE") to oversee the RFP process, and (3) approve the proposed 2026 RFP scoring and modeling. On December 27, 2022, the OPUC approved the selection of an IE for Idaho Power's 2026 RFP and evaluation of 2026 RFP resources. The OPUC also approved the concurrent discussion of both scoring and modeling methodologies and preparation of the draft 2026 RFP. 5. Idaho Power performed a quantitative and qualitative evaluation with an objective scoring methodology to reasonably evaluate the price and non-price attributes of the 192 bids submitted through the RFP process, ultimately identifying the final shortlist of projects, including six with commercial operation in 2026. As required under the OPUC competitive bidding rules, the OPUC approved Idaho Power's final shortlist on February 22, 2024. Once the most cost-effective 2026 projects were identified, the Company began negotiations with developers for procurement of three resources necessary to meet Idaho Power's 2026 capacity deficit. The request for approval of the Powerex Agreement is the result of those efforts. IDAHO POWER COMPANY'S REPLY COMMENTS -4 6. Idaho Power appreciates Staff's comprehensive analysis of the Company's request in this case and their recommended approval of the Powerex Agreement. Staff performed an extensive review in this proceeding confirming the requirement, the solicitation, the selection and the result. Staff thoroughly reviewed the Company's Reliability and Capacity Assessment Tool utilized to produce Idaho Power's annual capacity position and is "satisfied that the algorithms, inputs, and assumptions are reasonable, and believes that the Company's forecast of a 236 MW capacity deficit in 2026 is valid."5 With respect to the solicitation, Staff believes Idaho Power requested "a wide range of resource alternatives reasonably achievable within the time constraints of the capacity requirement"6 and that the "RFP and selection process were fair and unbiased."7 Finally, Staff indicated the selection of the market purchase with Powerex is "one of the least cost and least risk alternatives necessary to meet the 2026 capacity deficit."" 7. With respect to the Powerex Agreement, Staff believes that most of the terms are reasonable. Staff is concerned however with two of the terms in the agreement, those described in Section 3(c)(i) and Section 19. Under Section 3(c)(i), _, the costs and charges are unknown at this time, presenting an "unknown risk"9 5 Staff Comments, pg. 2. 6 Staff Comments, pg. 3. 7 Id. 8 Staff Comments, pg. 4. 9 Staff Comments, pg. 5. IDAHO POWER COMPANY'S REPLY COMMENTS - 5 to customers. Similarly, under Section 11 . While Idaho Power believes it would not be subject to such costs, Staff believes "the provision presents an unknown expense and risk"10 to customers. Because of these unknown costs and potential risk to customers, Staff recommended the Commission declare that the Section 3(c)(i) and Section 19 expenses be subject to a prudence review when the Company seeks recovery of the costs. Idaho Power supports Staff's recommendation that the Commission declare the payments made under the Powerex Agreement be allowed as prudently incurred with the exception of potential expenses incurred under Section 3(c)(i) and Section 19 which will be subject to a prudence review in a future proceeding, if incurred. B. The Commission Should Direct Idaho Power to Work with Staff to Develop an Idaho Resource Procurement Process to Follow Upon Issuance of a Future RFP 8. The Commission, in Case No. IPC-E-10-03, sought to establish competitive bidding guidelines for the RFP process. In 2013, the Commission closed Case No. IPC- E-10-03 without establishing Idaho-specific resource procurement guidelines, but rather directing Idaho Power to follow the RFP guidelines applicable to its Oregon service area. Idaho Power acknowledges the OPUC competitive bidding process is thorough, but both the Company and Staff agree the process is too lengthy,11 especially during times of rapid changes in Idaho Power's capacity deficiency. In addition to the length of the RFP process, Staff identified two additional systemic flaws in the current process that should 10 Id. 11 Staff Comments, pg. 7. IDAHO POWER COMPANY'S REPLY COMMENTS - 6 be addressed in a future RFP process, suggesting that: (1) to get ahead of the capacity deficits, the Company should issue RFPs early enough to allow for long lead time projects to be considered, and (2) many fundamental and irreversible decisions are made during the initial RFP development and the Commission should be involved during this stage of the process. "Accordingly, Staff recommends that the Commission direct the Company to file a parallel case with the Idaho Commission whenever OPUC policy requires oversight."12 9. As Staff is aware, Idaho Power too wanted to ensure the RFP was issued early enough to allow for long lead time projects to be considered, and when the concern was raised by Staff, the Company proposed in Oregon Docket UM 2317 to allow bids in the 2028 RFP for resources or market purchases delivered after 2028. Further, Idaho Power developed Exhibit R to the 2028 RFP that detailed different eligibility requirements for resources with an in-service date beyond 2028, specifically indicating the bidding resource was not required to be in the generator interconnection queue, providing long lead time resources the opportunity to bid. In July 2024, the evaluation of the 2029 bids was incorporated into the Docket UM 2317 schedule. Staff's engagement in the current RFP process has helped shape the 2028 RFP currently in front of the OPUC for approval. 10. While Idaho Power is not, in principle, opposed to Staff's recommendation, the Company believes that directing it to file a case for review and approval of any RFP the OPUC requires to be filed is premature. Idaho Power is concerned about layering on another process to the already lengthy OPUC competitive bidding process. Therefore, to ensure a parallel process would not create duplicative efforts or conflicting timelines, the 12 Id. IDAHO POWER COMPANY'S REPLY COMMENTS - 7 Company believes further discussions with Staff are warranted to develop a more comprehensive Idaho resource procurement process. Because the current schedule in Docket UM 2317 envisions the final shortlist for 2029 bids will be determined in June 2025, there is ample time for Idaho Power and Staff to flesh out a process for future RFP- related cases. During this time, a parallel Idaho competitive bidding process schedule that details Staff's expectations on how the Company could address the identified systemic flaws could be developed. This detailed Idaho competitive bidding process could then be applied to RFPs issued subsequent to Idaho Power's current 2028 RFP. III. CONCLUSION 11. Idaho Power appreciates the opportunity to respond to Staff's comments filed in this case and for Staff's thorough review of the 2026 capacity deficiency, the 2026 RFP process, and the resulting Powerex Agreement. The Company respectfully requests the Commission (1) accept Staff's recommendation to approve the Powerex Agreement, (2) declare the payments made to Powerex will be allowed as prudently incurred with the exception of potential expenses under Sections 3(c)(i) and 19 of the market purchase agreement, which will be subject to a prudence review in a future proceeding, if incurred, and (3) modify Staff's proposal to direct the Company to file an Idaho case for the review and approval of any RFP that the OPUC requires to be filed by instead directing the Company to work with Staff to develop an Idaho resource procurement process prior to the issuance of a future RFP. IDAHO POWER COMPANY'S REPLY COMMENTS - 8 DATED at Boise, Idaho, this 6t" day of August, 2024. DONOVAN E. WALKER Attorney for Idaho Power Company IDAHO POWER COMPANY'S REPLY COMMENTS - 9 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 6t" day of August 2024 1 served a true and correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following named parties by the method indicated below, and addressed to the following: Commission Staff Hand Delivered Chris Burdin U.S. Mail Deputy Attorney General Overnight Mail Idaho Public Utilities Commission FAX 11331 W. Chinden Blvd., Bldg No. 8, X EMAIL: chris.burdin(@puc.idaho.gov Suite 201-A (83714) FTP Site PO Box 83720 Boise, ID 83720-0074 Northwest and Intermountain Power Hand Delivered Producers Coalition U.S. Mail Gregory M. Adams Overnight Mail Peter J. Richardson FAX Richardson Adams, PLLC X EMAIL: greg(a)richardsonadams.com 515 N. 27th Street peter(@richardsonadams.com Boise, Idaho 83702 FTP Site Irion Sanger Hand Delivered Sanger Law, PC U.S. Mail 4031 SE Hawthorne Blvd. Overnight Mail Portland, Oregon 97214 FAX X EMAIL: irion(a-)sanger-law.com FTP Site Stacy Gust Regulatory Administrative Assistant IDAHO POWER COMPANY'S REPLY COMMENTS - 10