20240808Final_Order_No_36286.pdf

Office of the Secretary
Service Date
August 8,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN ) CASE NO. PAC-E-23-17
POWER'S APPLICATION TO COMPLETE )
THE STUDY REVIEW PHASE OF THE ) ORDER NO. 36286
COSTS AND BENEFITS OF ON-SITE )
CUSTOMER GENERATION )
On June 29, 2023, Rocky Mountain Power, a division of PacifiCorp, ("Company")
requested the Idaho Public Utilities Commission("Commission") approve the study review phase
of the costs and benefits for on-site customer generation ("Application"). The Company attached
its on-site generation study ("Initial Study") and appendices and requested a timeline for
processing the case as well as a finding that the Initial Study's scope satisfied Order No. 34753.
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.
On February 8, 2024, the Company filed a "Study Supplement" (the "Study") and
appendices that the Company stated replaced the Initial Study and appendices in their entirety.
These filings also separated the results from the calculations included in the Study, so the results
are no longer redacted—thus increasing the transparency of the Company's filings.
On April 23, 2024, the Commission issued a Notice of Modified Procedure, Notice of
Virtual Public Workshop, and Notice of Customer Hearing. Order No. 36160. Eight members of
the public and Staff filed comments to which the Company replied.
The Commission held a customer hearing in Idaho Falls on June 17, 2024. No customers
attended the hearing.
Having reviewed the record, the Commission enters this Order, subject to the conditions
set forth below, acknowledging that the Study satisfies the Commission's requirements in Order
No. 34753.
BACKGROUND
Commission Order No. 29260 established a net metering program for the Company's
Idaho customers through Schedule 135. The program would compensate customers for any net
ORDER NO. 36286 1

exported energy with a credit if the energy generated exceeded the energy the customer was
supplied during each billing period.
In June 2019,in Case No PAC-E-19-08,the Company petitioned the Commission to make
several substantive modifications to its net metering program.
In October 2019, in Case No. IPC-E-18-15, Idaho Power Company and Staff jointly
submitted a settlement requesting changes to Idaho Power Company's net metering program,
which the Commission rejected for its lack of a comprehensive study on system impacts and the
compensation structure for excess generation. The Commission directed Idaho Power Company
to file a study of the costs and benefits of distributed on-site generation. Based on the
Commission's instruction to Idaho Power Company in Case No. IPC-E-18-15, the Company
modified its Application in Case No. PAC-E-19-08, and Staff eventually recommended the
Company complete a study consistent with the Commission's direction to Idaho Power Company.
The Commission ordered the Company to complete a study of on-site generation and directed the
Company to design a study, consistent with the Commission's directives, that evaluated the
appropriate export credit rate ("ECR"). Order No. 34753.
THE APPLICATION
The Company requested the Commission provide direction and process allowing the
Company to complete the study review phase for the Commission's acknowledgment. The
Company attached its Initial Study to its Application.
The Company stated that the Initial Study covered 33 required items. The Initial Study
evaluates various valuations of on-site generation, and examines the methods, inputs and
assumptions, components of the ECR, integration costs, and implementation issues. The Initial
Study also discussed potential ECR options and considerations for the Commission and
stakeholders but did not endorse a specific ECR approach.
The Company provided an overview of the 2,200 on-site customer generation customers
in its Idaho service territory, and the potential impact the Company's proposed approaches may
have on those customers.
The Company requested that the Commission(1) establish a formal process for the public
and other parties to comment on its study, and (2) issue an order acknowledging that the Initial
Study complied with previous Commission directives as defined in Order No. 34753. The
Company provided notice of the case to customers through media outlets and bill inserts.
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The information in the Initial Study was improved upon in the February 8,2024, Study and
appendices, which replaced the Initial Study and appendices in their entirety. The Study provides
greater detail relative to the lessons learned from Idaho Power Company's parallel process and
improved the thoroughness, transparency, and readability of the data presented.
COMMENTS
1. Staffs Comments
Staff noted the Commission's standards for an ECR study were established in Order No.
34753 noting that it had reviewed the Company's Study and believed that "some elements were
missing and/or inadequate." Staff Comments at 2. Accordingly, Staff asked that the Company
update and resubmit the Study and that the format should be easier to understand for the general
public—which the Company did. Staff believed that the Study complied with the Commission's
direction in Order No. 34753 and recommended that the Commission order the Company to submit
a proposed ECR within six months of the publication of the final order in this case.
Staff noted that it specifically reviewed the Study's netting interval, the proposed rate
design, and the scope and design of a Project Eligibility Cap ("PEC").
Netting Interval
Staff assessed the components analyzed in the Study and identified which options it
believed would provide the optimal mix of accuracy, stability, and transparency to ensure on-site
generation and conventional customers are treated equitably when establishing the Company's
ECR. Staff stated that the Study adequately examined monthly, hourly, and instantaneous netting
periods. Staff believed that the instantaneous netting period was the most transparent and accurate
option.
ECR Avoided Costs and Rate Design
Staff explained its belief that payment received by on-site generators should be balanced
in a way to not harm the Company's customers (including its non-generating customers). Staff
believed that the Company had provided valuable information in conformity with Commission
mandates. Staff also stated that,when the Company files its ECR(if so ordered), it should balance
the accuracy of avoided costs with a transparent rate design and an ability to maintain rate stability.
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Avoided Energy Value
Staff opined that the Avoided Energy Value is the most important part of an ECR—
potentially contributing more than 70% of its overall value. Staff recommended using export-
weighted Energy Imbalance Market ("EIM") prices. Staff also suggested that time and seasonal
price differentiation may be appropriate but must be balanced with understandability in ECR
design.
Avoided Capacity Value
The Avoided Capacity Value is the second most consequential aspect of the ECR according
to the Study. Staff stated that that the Company should consider using the capacity factor method,
design a rate that compensates the Company's avoided capacity costs, include certain adjustments
related to the deficit date, and adjust the ECR in accordance with the most current Integrated
Resource Plan("IRP").
Staff believed that the Capacity Factor method for determining capacity value was the most
accurate. Additionally, Staff noted that the Loss of Load Probability values method could be more
accurate for calculating the value closer to the current year.
Staff stated that the Company should create a rate that is accurately tailored to avoided
capacity relative to on-peak periods. Staff also stated that this should be uniform for all self-
generating customers.
Avoided Risk Value
The Company calculated avoided risk value through statistical analysis of various factors.
The Study estimated that this value was approximately 3.9% of the energy value. The Company
integrated this avoided risk value in its analysis. Staff argued avoided risk applies only to predicted
prices—not actual EIM prices. Accordingly, Staff asserted that using EIM pricing would eliminate
this value, which Staff believed would improve ECR accuracy and transparency.
Avoided Transmission and Distribution Value and Avoided Line Loss Value
Avoided Transmission and Distribution ("T&D") value contributes minimally (less than
10%) to an ECR. The Company used T&D values from its IRP, which Staff considers accurate.
However, as these values change with each new IRP, Staff recommended updating them and the
ORDER NO. 36286 4

ECR after each new IRP is filed. Staff stated that these updates should be filed separately from the
IRP for Commission authorization. Due to the stability of the line loss percentage, Staff suggested
that updating the line loss portion of the ECR should only be done in conjunction with a new,albeit
regular, line loss study.
Environmental Value and Integration Cost
Staff stated that the Company should focus its analysis of the ECR's environmental value
to only values with quantifiable costs—specifically Renewable Energy Credits.
Regarding the integration costs, Staff stated that the authorized integration cost for
qualifying facilities ("QF")was preferable to obtaining this information from the most recent IRP.
Eligibility Caps
For residential generators, Staff believed that a 25-kilowatt ("kW") PEC is preferable to a
PEC based on 125% of demand because a 25-kilowatt PEC is simpler to administrate and more
difficult for self-generators to game. Staff suggested that 100 kW may be too low for the non-
residential PEC, despite acknowledging costs and benefits of the proposed PEC.1 Therefore, Staff
recommended that the Company include a robust analysis, including Advanced Metering
Infrastructure data, in its forthcoming proposed ECR filing. Staff stated the Company's filing
should discuss and support whether the Company considers 100-kW to be the appropriate cap for
non-residential generators.
Other Considerations and Public Outreach
Staff stated that the Company should provide greater clarity regarding the differences
between kWh credits and net-billing financial credits in its suggested ECR filing. Staff also
suggested that the Company further distinguish which policies would apply to customers who are
grandfathered into a preexisting ECR versus those who are not.
2. Public Comments
Eight public comments were received in this case ("Public Comments"). These comments
were all similar in that they expressed concerns about the Company's studies—saying that
'While larger generators can operate as a QF,Staff noted that the QF process was designed for entities whose primary
purpose was generation.
ORDER NO. 36286 5

information excluded or downplayed the environmental benefits of solar. The Public Comments
expressed displeasure at both the ECR that the Company implemented in Utah as well as Idaho
Power Company's ECR. For these reasons, the Public Comments requested that the Commission
reject the Company's studies.
3. Company Reply Comments
The Company stated that it would evaluate the justification for the 100-kW non-residential
PEC as recommended by Staff. The Company summarized Staff s suggestions regarding the
Avoided Energy Values, Avoided Capacity Values, and Other Avoided Costs. The Company did
not dispute the value of Staff s suggestions for these matters, but believed that the ECR filing,
rather than this case, would be the best place to fully address and incorporate those concerns. The
Company agreed to file its ECR filing within six months of the Commission's Final Order in this
case.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-501, -502, and
-503. Idaho Code § 61-501 authorizes the Commission to "supervise and regulate every public
utility in the state and to do all things necessary to carry out the spirit and intent of the [Public
Utilities Law]." Idaho Code §§ 61-502 and -503 empower the Commission 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.
We have reviewed the record in this case,including all comments. Our review of the record
focused on ensuring compliance with our directive in Case No. PAC-E-19-08 to conduct an on-
site generation study based on the directives given in Order No. 34753. The Commission notes
that the Company worked with Staff to incorporate the lessons learned from Idaho Power
Company's similar process into the Company's Study. See Case No. IPC-E-22-22. Based on our
review, we find the evidence supports acknowledgment that the Company's Study complies with
the requirements of Order No. 34753.
The Commission orders the Company to file a case with the Company's proposed ECR
within six months of the publication of this Order. The Commission notes that the Company must
incorporate the several items suggested in Staffs Comments into its proposed ECR. Relatedly,the
ORDER NO. 36286 6

Commission finds that it is reasonable and necessary for the Company to include a detailed
analysis discussing the pros and cons of using a 100-kW non-residential customer cap. Lastly, the
Commission orders the Company include such an analysis using relevant Advanced Metering
Infrastructure ("AMI") data to support its findings and proposal.
ORDER
IT IS HEREBY ORDERED that the Company's Study and appendices filed on February
8, 2024, is acknowledged as complying with Order No. 34753.
IT IS FURTHER ORDERED that the Company shall file a new case requesting changes
to the structure and design of its proposed ECR within six months of the publication of this Order.
This filing must include a robust analysis discussing the pros and cons of using a 100-kW non-
residential customer cap using appropriate AMI data as discussed above.
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 8th day of
August 2024.
ER NDE SON, PRESIDENT
/j, ;4
JO R. HHAAMMOND JR., COMMISSIONER
G
EDWARD LODGE, COI`2VUSSIONER
ATTEST:
Mon' ios aAA
Commission Secretary
I:\Legal\ELECTRIC\PAC-E-23-17_On-Site Gen\orders\PACE2317_Final_md.docx
ORDER NO. 36286 7