20240828Staff Comments (Redacted).pdf

RECEIVED
Wednesday, August 28, 2024 2:20:10 PM
IDAHO PUBLIC
UTILITIES COMMISSION
CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9810
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY'S APPLICATION FOR A ) CASE NO. IPC-E-24-16
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY FOR THE BOISE BENCH )
BATTERY STORAGE FACILITY ) REDACTED COMMENTS OF
THE COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Chris Burdin, Deputy Attorney General, submits the following
comments.
BACKGROUND
On April 3, 2024, Idaho Power Company("Company") filed an application
("Application") with the Idaho Public Utilities Commission("Commission")requesting an order
granting the Company a Certificate of Public Convenience and Necessity ("CPCN")to acquire
new dispatchable energy storage with 150 megawatts ("MW") of operating capacity.
On April 23, 2024, the Commission issued a Notice of Application and Notice of
Intervention Deadline. Order No. 36152. The Commission granted intervention to Micron
Technology, Inc. and Clean Energy Opportunities for Idaho. Order Nos. 36190 and 36228.
STAFF COMMENTS 1 AUGUST 28, 2024

STAFF ANALYSIS
Staff has reviewed the Company's Application, responses to Production Requests, and
supporting documentation. Staff recommends the Commission:
a. Grant a CPCN for the Boise Bench Battery Energy Storage System(`BESS Project")
project to help meet the 2026 capacity deficit;
b. Establish a soft cap for manufacturer supplied BESS equipment costs, Idaho sales tax,
and Allowance for Funds Used During Construction("AFUDC") as detailed in
Confidential Attachment A;
c. Establish a soft cap on future annual augmentation costs as detailed in Confidential
Attachment A; and
d. Establish a hard cap for the balance of system (`BOS") cost with 5% contingency and
the interconnection costs as detailed in Confidential Attachment A.
Request for Proposal Background
To resolve the 2026 capacity deficit, the Company issued an all-source Request for
Proposal ("RFP") seeking to acquire a combination of energy and capacity resources.
Application at 3. This RFP was subject to the administrative rules of the Public Utility
Commission of Oregon("OPUC"). Id at 4.
The OPUC process involved the OPUC, the public, interested stakeholders, and an
Independent Evaluator("IE"). These parties could review and amend the text of the RFP, the
selection process, and the scoring method before the solicitation was issued. Once the RFP was
issued, stakeholders scrutinized aspects of the Company's decisions during the selection process.
Staff reviewed the IE reports that were issued at various stages of the selection process,
and Staff believes the Company adhered to the approved process, applied the scoring fairly, and
that the final short list("FSL") of proposals was appropriately determined.
Staff was initially concerned that Section 3.1 of the RFP (Eligible Products) omitted
certain resource types, but Staff concluded that the omitted resources were not feasible due to
project time constraints. This conclusion is discussed in greater detail in comments filed by Staff
in Case No. IPC-E-24-12.
Staff believes that the RFP fairly solicited for a wide range of resource alternatives
reasonably achievable within the time constraints of the capacity requirement.
STAFF COMMENTS 2 AUGUST 28, 2024

Need for Capacity
To confirm this requirement, Staff reviewed the results from the Company's Reliability
and Capacity Assessment Tool ("RCAT"). The validity of the RCAT results depends on the
validity of the model's algorithms, inputs, and assumptions. Staff reviewed all three of these
components through production requests and onsite meetings with the Company. Staff is
satisfied that the algorithms, inputs, and assumptions are reasonable, and Staff believes that the
Company's forecast of a 236 MW capacity deficit in 2026 is valid.
Uncertainty of Boise Bench BESS as Least-Cost
The BESS Project is one of three resources the Company selected to meet the 226 MW
projected capacity deficit in 2026 through the 2026 RFP. In addition to the BESS Project, the
Company selected the Powerex Market Purchase Agreement, which is currently being reviewed
by the Commission through Case No. IPC-E-24-12.
Lack of Comparable Alternative Resources in the Company's Selected Portfolios
One of the ways for Staff to determine if the BESS Project is least-cost, is for the
Company to perform a stochastic analysis through AURORA comparing the net present value
over a 20-year period of a model run of the resources the Company selects against other
combinations of short-listed resources that would resolve the deficit.
In its review, Staff discovered a lack of comparable alternatives to the BESS Project
among the Company's combined portfolios. The Company provided a list of eleven different
portfolios that were created using various combinations of the final shortlisted bids of eight
resources. The Company also provided stochastic results of these portfolios to ascertain the
least-cost and least-risk resources. Staff reviewed the Company's stochastic results and
discovered the BESS Project was included within the portfolios that were ranked 3ra, 5tn, and 6t"
in the list of selected least-cost and least-risk portfolios.
According to Staff s review, the Company selected the third ranked portfolio, which also
included a solar resource and the Market Purchase Agreement. Company's Response to
Production Request No. 10—Confidential Attachment. However, through a discussion with the
Company, Staff learned that the Ada County Commission denied the county permit for the solar
STAFF COMMENTS 3 AUGUST 28, 2024

resource. As a result, the solar resource became infeasible to implement within the time
constraints to meet the 2026 capacity deficit. Because the third selected resource is not feasible
and the Company has not selected another, Staff believes the Company has not been able to
definitively show that the BESS Project, in combination with the final set of resources needed to
resolve the deficit, is least-cost.
Lack of Comparable Alternative Resources in the Final Shortlist Bids
Staff reviewed the Company's final shortlisted bids and was not able to identify a suitable
alternative to the BESS Project from the RFP to make a useful comparison. The shortlist
consisted of eight resources of different categories that the Company identified, and the BESS
Project was ranked 41h among them. Confidential Exhibit No. 7. Staff attempted to compare the
5th ranked shortlisted resource, a 200 MW solar photovoltaic plus 100 MW BESS to the
standalone Boise Bench BESS; however, they are not mutually comparable.1
Additionally, there were two BESS proposals that were not on the Company's short list
because they were determined to be infeasible due to Available Transmission Capacity
constraints on some of the Company's transmission paths that reduces their standalone Effective
Load Carrying Capability. Company's Response to Production Request No. 30. Without
consideration of interconnection cost,both projects had a lower levelized costs of capacity
("LCOC"): (1) the 200 MW BESS proposal from
at M/kW/Month, and(2)the 100 MW BESS proposal from
at =/kW/Month compared to the Boise Bench BESS Project with a
LCOC of=/kW/Month.
Due to the lack of availability of comparable BESS resources in the RFP shortlist, Staff
could not verify that the Boise Bench BESS is the least-cost resource. Staff believes it is
appropriate to set a cap for the cost of the BESS Project, especially as the other bids were from
3rd party developers and would have likely been contractually held to their cost estimates. Staff
believes that a cost cap would reflect the same level of accountability to the Company's cost
estimate.
'In the Company's response to Production Request No. 31,it stated,"It is important to note that Project 4 is a
combined solar and BESS project which is a different product type than a standalone BESS product and therefore
not comparable on a LCOC basis."
STAFF COMMENTS 4 AUGUST 28, 2024

In addition, Staff could not identify a comparable alternative resource in the final short-
listed bids to make a direct cost comparison to determine whether it is least-cost. Given these
circumstances, Staff is not confident in concluding the BESS Project as being the least-cost
resource. However, Staff recognizes there is a system capacity deficiency in June 2026, and it
understands the need for this project to contribute towards alleviating the projected deficiency.
Therefore, Staff recommends the Commission grant a CPCN for the Boise Bench BESS project.
The BESS Evaluation
Overbuild
In response to Production Request No. 2, the Company explains that the 2026 RFP
required all BESS project bids to include an overbuild such that the BESS resource can maintain
its nominal capacity for the first two years of operation. Staff believes that this requirement was
reasonable as all BESS resources should include some overbuild to prevent immediate need for
augmentation. Given that the overbuild was required by the Company's RFP for all BESS
projects, Staff believes that the overbuild costs included in the Boise Bench BESS bid were
appropriately evaluated against its competing bids.
Augmentation
Unlike overbuild costs, evaluation of BESS bids in the RFP did not include any cost for
future augmentation of the BESS resource. In response to Production Request No. 23, the
Company states that the Idaho Power Evaluation Team applied a uniform augmentation adder to
all BESS projects for evaluation purposes. Staff believes the Company's method of applying
augmentation costs over time is reasonable as it reflects a variable degradation of the resource's
performance, however, Staff has several concerns with the cost and form that the augmentation
may take.
The Company's Evaluation Team estimated augmentation cost at $1.1 0/kW-month. For
the BESS Project, the augmentation adder totals $1.98 million per year or approximately $40
million over the life of the project. Staff notes that the augmentation adder is less than the
augmentation estimates provided by the initial Boise Bench BESS Bid. The selected BESS
Project bid included augmentation estimates totaling . Confidential Response to
Production Request No. 1-Exhibit P at 10. Staff is concerned that by using a separate estimate
STAFF COMMENTS 5 AUGUST 28, 2024

for augmentation costs, the Company may have under- or over-represented the cost of
augmentation relative to what is provided in a given project bid.
Additionally, the Company states that augmentation can be accomplished through an
augmentation agreement with the battery manufacturer or by adding additional battery segments.
Notably, these additional segments could be at the existing facility or at another location on the
Company's system. Staff is concerned that the modular nature of BESS resources could allow
the Company to continually augment its battery systems above what is needed to offset
degradation outside of a traditional RFP process. Therefore, Staff recommends the Commission
set a soft cap for future augmentation costs.
Cost Caps and Future Recovery
As part of the Company's initial bid to the 2026 RFP, the Company provided a
breakdown of the estimated cost of the proposed BESS. As part of the RFP process,projects
selected in the initial shortlist were able to update the cost estimates. The Company provided an
updated September 2023 cost estimate for the BESS Project in its response to Production
Request No. 4. Staff notes that the Company's updated bid cost estimate was less than the initial
bid's cost and excluded future augmentation costs and long-term service agreement costs for
operational and maintenance services.
Based on Staff s lack of confidence of the BESS Project being the least-cost resource,
Staff recommends the Commission set the future cost recovery of the BESS with cost caps.
These cost caps are for total project costs excluding any Investment Tax Credits ("ITCs") offsets.
If approved, the Commission will evaluate the actual cost of the project relative to the respective
caps when the Company seeks recovery in future rate proceedings.
Soft Cap on Estimated Costs
Based on its analysis of the Company's estimated implementation costs, Staff
understands the cost estimation is not based on a specific battery equipment provider as the
Company is currently in the process of negotiating with several battery suppliers. Company's
Response to Production Request Nos. I and 6. Staff recommends a soft cap that includes the
manufacturer supplied BESS equipment costs, Idaho sales tax, and AFUDC. Staffs calculation
of the soft cap is provided in Confidential Attachment A. The purpose of the soft cap is to
STAFF COMMENTS 6 AUGUST 28, 2024

provide a maximum amount of recovery that the Company should be allowed to recover, unless
it can provide compelling evidence otherwise.
Regarding Staff s concerns for the augmentation costs, Staff recommends that the
Commission order a soft cap on future augmentation costs for the Boise Bench resource at
$1,980,000 annually. If the Company does exceed the soft cap, the Company should provide
ample support for any augmentation that is greater than what is needed to offset the effects of
degradation and/or augmentation to offset the degradation of a different BESS resource on the
Company's system.
Hard Cap on Estimated Costs
Staff evaluated the Company's cost estimate for the BESS Project and believes the
estimate was created with the Company's in-house expertise with implementing BESS resources
on the system, which ultimately won amongst the other bids. Staff believes that because the
Company is the most knowledgeable about the specifics of its system and there is no uncertainty
with contracted material prices, a hard cap should be established on the remaining BOS cost with
5% contingency and the interconnection costs. Staffs hard cap calculation is provided in
Confidential Attachment A. A hard cap is the maximum amount that the Company should be
allowed to recover. Any additional costs above the hard cap could make the resource not cost
effective, therefore making the resource not least-cost. Due to Staff s lack of confidence of the
BESS Project being the least-cost resource and to hold the Company accountable to its cost
estimate for its bid, Staff believes that a hard cap is necessary to protect customers.
STAFF RECOMMENDATION
Staff recommends the Commission:
a. Grant a CPCN for the BESS Project to help meet the 2026 capacity deficit;
b. Establish a soft cap for manufacturer supplied BESS equipment costs, Idaho sales tax,
and AFUDC as detailed in Confidential Attachment A;
c. Establish a soft cap on future annual augmentation costs as detailed in Confidential
Attachment A; and
STAFF COMMENTS 7 AUGUST 28, 2024

d. Establish a hard cap for the BOS cost with 5% contingency and the interconnection
costs as detailed in Confidential Attachment A.
Respectfully submitted this 28th day of August 2024.
&,A IiA
Chris Burdin
Deputy Attorney General
Technical Staff. Kimberly Loskot
Shubhra Deb Paul
Jason Talford
Matt Suess
I:\Utdity\UMISC\COMMENrrS\EPC-E-24-16 Commeris-Redacted.docx
STAFF COMMENTS 8 AUGUST 28, 2024

STAFF COMMENTS 9 AUGUST 28, 2024

CERTIFICATE OF SERVICE
1) ey
I HEREBY CERTIFY THAT I HAVE THIS b DAY OF AUGUST 2024,
SERVED THE FOREGOING REDACTED COMMENTS OF THE COMMISSION
STAFF IN CASE NO. IPC-E-24-16, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
DONOVAN E WALKER TIM TATUM
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
E-MAIL: dwalkergidahopower.com E-MAIL: ttatum(a�idahopower.com
do ckets gidahopower.com
AUSTIN RUESCHHOFF JIM SWIER
THORVALD A NELSON MICRON TECHNOLOGY INC
AUSTIN W JENSEN 8000 S FEDERAL WAY
HOLLAND &HART LLP BOISE ID 83707
555 17TH ST STE 3200 E-MAIL: jswiernmicron.com
DENVER CO 80202
E-MAIL: darueschhoff(cjhollandhart.com
tnelson(a,hollandhart.com
awj ensenghollandhart.com
aclee(cr�,hollandhart.com
mamcmillen&hollandhart.com
KELSEY JAE COURTNEY WHITE
LAW FOR CONSCIOUS LEADERSHIP MIKE HECKLER
920 N CLOVER DR CLEAN ENERGY OPPORTUNITIES
BOISE ID 83703 3778 PLANTATION RIVER DR
E-MAIL: kelseygkelseyjae.com STE 102
BOISE ID 83703
E-MAIL:
courtneykcleanenergyopportunities.com
mike(cz,cleanenergyopportunities.com
i
PATRICIA JORD , SECRETARY
CERTIFICATE OF SERVICE