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