20240813Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: YAO YIN, UTILITIES ANALYST II
CHRIS BURDIN,DEPUTY ATTORNEY GENERAL
DATE: AUGUST 13, 2024
RE: IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN
POWER FOR APPROVAL OF A CAPACITY DEFICIENCY PERIOD TO
BE USED FOR AVOIDED COST CALCULATIONS; CASE NO. PAC-E-
24-01.
BACKGROUND
On January 19, 2024, Rocky Mountain Power("Company") applied to the Commission
for approval of its first capacity deficiency period in the summer of 2024 used for its avoided
cost calculations.
On April 29, 2024, Staff submitted comments which included five recommendations. On
May 13, 2024, the Company submitted a compliance filing through Reply Comments, reflecting
Staff s recommendations except for Staff s recommendation regarding early coal retirements.
The compliance filing shows a first capacity deficiency period in the summer of 2025.
On July 2, 2024, the Commission issued Order No. 36246, requiring the Company to
submit an updated compliance filing that only included early retirements evaluated and approved
by the Commission.
On July 23, 2024, the Company filed an updated compliance filing with the following
changes:
• If the 2018 depreciation study (Case No. PAC-E-18-08)had an earlier retirement date
than the Company's 2023 Integrated Resource Plan("IRP"), the later retirement date
was used. By this principle, the Company moved the retirement date of Hayden 1
from 2029 to 2031 and moved the retirement date of Hayden 2 from 2028 to 2031.
DECISION MEMORANDUM 1 AUGUST 13, 2024

• The Company changed the retirement dates for Huntington 1 and Huntington 2 from
2043 to 2037 based on the depreciation study.
STAFF REVIEW
The purpose of this memo is to provide Staff s analysis and recommendations (1)
regarding the Company's updated compliance filing for determining its first capacity deficiency
period; and(2) to update the Company's published avoided cost rates through the Surrogate
Avoided Resource ("SAR") Model utilizing the updated capacity deficit date.
Capacity Deficit Date in Updated Compliance Filing
Based on the updated compliance filing, the first capacity deficiency period occurs in the
summer of 2025, which Staff believes is reasonable.
In prior capacity deficiency cases, the Commission decided not to include early
retirements in a Load and Resource Balance ("L&R") for determining the first capacity
deficiency period for avoided cost rates, unless and until it evaluates and approves an early
retirement date. Order Nos. 34918 and 34981. Further, the Commission maintained this position
in Order No. 36246 in this case. Staff believes the proper method to obtain Commission
approval should be through a separate filing that specifically addresses early retirement(s).
Staff does not believe retirement dates from an IRP provide authorization of plant
retirement dates,because the Commission has made clear that an acknowledged IRP, its
conclusions, and results do not provide a determination of prudence. Order Nos. 35977, 36233,
and 36072. For example, Order No. 35977 states that:
The Commission does not approve the 2023 IRP, or any resource acquisitions
referenced in it, endorse any particular element in it, opine on the Company's
prudence in selecting the 2023 IRP's preferred resource portfolio, nor allow or
approve any form of cost recovery. The appropriate place to determine the
prudency of the Company's decisions to follow or not follow the 2023 IRP, and
the validation of predicted performance under the 2023 IRP, is a general rate case
or other proceeding where the issue is noticed.
Similarly, Staff does not believe using the retirement dates in a depreciation case meets
the Commission's intent since the assumed useful life of a plant for depreciation and capital cost
recovery purposes may not reflect when a plant is planned to be taken out of service.
DECISION MEMORANDUM 2 AUGUST 13, 2024

However, because the changed retirement dates of the aforementioned plants do not
change the first capacity deficiency period that is projected to occur in the summer of 2025, and
because the retirement dates will only have impacts on the L&R starting in 2028, Staff believes it
is reasonable to accept the deficiency data contained in the updated compliance filing for
purposes of updating the SAR Model.
Update of Published Avoided Cost Rates
On July 31, 2024, Staff updated the SAR Model and the published avoided cost rates
using the first capacity deficiency period of the summer of the 2025 and sent both the SAR
Model and the updated avoided cost rates to the Company for verification.
On August 6, 2024, the Company filed a letter with the Commission, agreeing with
Staffs updates.
STAFF RECOMMENDATION
Staff recommends the Commission approve the following with an effective date based on
when a final order is issued:
• The first capacity deficiency period of the summer of 2025 identified in the updated
compliance filing;
• The updated published avoided cost rates and updated SAR Model filed by Staff on
July 31, 2024.
COMMISSION DECISION
Does the Commission wish to approve the following with an effective date based on
when a final order is issued:
• The first capacity deficiency period of the summer of 2025 identified in the updated
compliance filing;
• The updated published avoided cost rates and updated SAR Model filed by Staff on
July 31, 2024?
"-? I * " M
Yao Ym Chris Burdin
Utilities Analyst II Deputy Attorney General
DECISION MEMORANDUM 3 AUGUST 13, 2024