20241108Final_Order_No_36386.pdf

Office of the Secretary
Service Date
November 8,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER ) CASE NO. IPC-E-24-16
COMPANY'S APPLICATION FOR A )
CERTIFICATE OF PUBLIC CONVENIENCE ) ORDER NO. 36386
AND NECESSITY FOR THE BOISE BENCH )
BATTERY STORAGE FACILITY )
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. The
Company has identified this resource as a Company-owned battery energy storage system(`BESS
Project") at the Boise Bench station.
The Company represented that it has an obligation to provide adequate, efficient,just, and
reasonable service on a nondiscriminatory basis to all those that request it within its certificated
service territory. Application at 7.
The Company represented that it must acquire the additional dispatchable resources with
150 MW of operating capacity to meet identified capacity deficits on its system to comply with its
continuing obligation to serve customers. Id. at 8.
The Company represented that it is not requesting binding ratemaking treatment for the
BESS providing the 150 MW of operating capacity in this case. Id. at 9.
The Company requested that the Commission find that the Company has met the
requirements of Idaho Code § 61-526 and issue an order granting a CPCN to acquire the energy
storage with 150 MW of operating capacity necessary to meet the identified capacity deficiencies
in 2026.Id.
The Company represented that it intends to finance the BESS Project with a combination
of available cash and operating cash flow, available credit facilities and borrowing and debt
issuances, and future equity infusions by IDACORP. Id. at 10.
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
ORDER NO. 36386 1

Technology, Inc. ("Micron") and Clean Energy Opportunities for Idaho ("CEO"). Order Nos.
36228 and 36190.
STAFF COMMENTS
The Commission Staff ("Staff') reviewed the Company's Application, responses to
Production Requests, and supporting documentation. Staff believed that the Request for Proposals
("RFP") fairly solicited a wide range of resource alternatives reasonably achievable within the
time constraints of the capacity requirement, and that the Company's forecast of a 236 MW
capacity deficit in 2026 was valid. However, Staff was concerned with: (1)the lack of comparable
alternative resources in the Company's selected portfolios; (2) the lack of comparable alternative
resources in the final shortlist; (3) augmentation costs; and(4) future recovery. Staff Comments at
1-4.
With respect to the portfolio, the Company selected the third ranked portfolio, which also
included a solar resource and a market purchase agreement with Powerex; however, Staff learned
that the Ada County Commission denied the county permit for the solar resource.Id. Because the
third selected resource is not feasible and the Company did not select another, Staff believed 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.Id. at 4.
With respect to the shortlist, 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. Id. at 4. Due to the lack of availability of comparable BESS resources in the RFP
shortlist, Staff could not verify that the BESS Project is the least-cost resource, and Staff believed
it was appropriate to set a cap for the cost of the BESS Project, especially as the other bids were
from third-party developers and would have likely been contractually held to their cost estimates.
Id. Staff believed that a cost cap would reflect the same level of accountability to the Company's
cost estimate. Id.
Staff had several concerns with the cost and form that augmentation may take for BESS
resources. Id. at 5. Staff was concerned that by using a separate estimate for augmentation costs,
the Company may have under- or over-represented the cost of augmentation relative to what was
provided in a project bid. Id. Additionally, Staff was concerned that the modular nature of BESS
resources could allow the Company to continually augment its battery systems above what is
ORDER NO. 36386 2

needed to offset degradation outside of a traditional RFP process.Id. at 6. Staff recommended that
the Commission set a soft cap for future augmentation costs. Id.
Based on Staff s lack of confidence of the BESS Project being the least-cost resource, Staff
recommended that the Commission set cost caps for future cost recovery of the BESS Project.Id.
These cost caps are for total project costs excluding any Investment Tax Credit offsets and, if
approved, the Commission would evaluate the actual cost of the project relative to the respective
caps when the Company seeks recovery in future rate proceedings. Id.
Soft Cap on Estimated Costs
Specifically, Staff recommended a soft cap that includes the manufacturer supplied BESS
equipment costs, Idaho sales tax, and Allowance for Funds Used During Construction
("AFUDC"), to provide a maximum amount of recovery that the Company should be allowed to
recover,unless it can provide compelling evidence otherwise. Id. at 6-7. Staff s calculation of the
soft cap was provided in Confidential Attachment A to Staff s Comments. Staff also recommended
that the Commission order a soft cap on future augmentation costs for the BESS Project at
$1,980,000 annually. Id.
Hard Can on Estimated Costs
Staff evaluated the Company's cost estimate for the BESS Project and Staff believed the
estimate was created with the Company's in-house expertise with implementing BESS resources
on the system.Id. at 7. Staff believed 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 balance of system(`BOS") cost with 5% contingency and
the interconnection costs. Id. Staffs hard cap calculation is provided in Confidential Attachment
A to Staff s Comments.
Due to Staffs 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.Id.
Ultimately, Staff recommended that the Commission:
1. Grant a CPCN for the BESS Project to help meet the 2026 capacity deficit;
2. Establish a soft cap for manufacturer supplied BESS equipment costs, Idaho sales tax,
and AFUDC, as detailed in Confidential Attachment A to Staffs Comments;
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3. Establish a soft cap on future annual augmentation costs, as detailed in Confidential
Attachment A to Staff s Comments; and
4. Establish a hard cap for the BOS cost with 5% contingency and the interconnection
costs, as detailed in Confidential Attachment A to Staff s Comments.
INTERVENOR COMMENTS
CEO Comments
CEO supported the use of batteries and did not oppose the Company's request for a CPCN
to install the 150 MW BESS Project. CEO Comments at 1. CEO believed that BESS Project offers
a supply-side resource for time-shifting loads, and CEO was concerned with future affordability
of utility-supplied electricity. CEO asked that the Company be encouraged to further explore
opportunities for demand-side load shifting. Id.
COMPANY REPLY COMMENTS
The Company agreed with the recommendation that the Commission grant the company a
CPCN for the BESS Project. Company Reply Comments at 4. However, the Company disagreed
with Staffs other recommendations. Id. The Company represented that it completed a robust
competitive resource procurement process for identifying the least-cost, least-risk, 2026 resource
acquisitions which included the BESS Project.Id. at 5.
With respect to Staffs concern that the BESS Project was not the least-cost resource, the
Company believed that Staff misunderstood the process the Company used to determine the least-
cost resource. Id. at 6. The Company indicated that a key component missing from Staffs
interpretation of the stochastic results is the two step nature of the process.Id. at 7. The Company
stated that the final cost ranking of projects as detailed in Figure 39 of the Closing Report was
determined first by how many times each project was selected by the Long-Term Capacity
Expansion ("LTCE"), and by the relative cost among portfolios in which each resource was
selected.Id. Based on that analysis,the Company represented that the BESS Project was identified
as a least-cost resource as part of the AURORA LTCE modeling, and as a least-cost resource
necessary to meet the 2026 capacity deficiency.Id. at 8.
With respect to Staffs concern that there were no comparable alternative projects
considered, the Company believed that Staff s conclusion did not consider the evaluation
performed to determine the Final Short List ("FSL"), which was outlined in the 2026 RFP and
described in detail in the Closing Report. Id. at 9. The Company explained that once the pricing
ORDER NO. 36386 4

and non-pricing scores were developed, the first phase of the initial shortlist creation involved a
ranking methodology, and that those technology-specific rankings were used by the Company to
develop its narrowed down initial shortlist. Id. The Company represented that the BESS Project
was the only standalone BESS resource that was more cost-effective than resources of other
technology groups;thus,the BESS Project moved forward to the FSL in place of other higher-cost
battery projects. Id. at 9-10.
The Company disagreed with all of Staffs recommendations on caps. Id. at 10. The
Company reiterated that it was not requesting binding ratemaking treatment in this case, and that
the Company will make a future filing to address, and justify, all costs associated with the BESS
Project,not just those costs over any potential caps.Id. The Company stated that Staff s conclusion
that the BESS Project is not least-cost is unfounded.Id.
With respect to the hard cap, the Company believed that implementing a hard cap on the
estimated BOS and interconnection costs is inappropriate because it is premature to recommend a
hard cap on costs that are merely estimates at this point in the procurement process. Id. at 10-11.
With respect to the soft caps, the Company emphasized that proposing any sort of cost cap on
future unknown costs was inappropriate due to the myriad factors that could impact not only the
cost of BESS augmentation, but other components of the prudent decision-making process. Id. at
12.
The Company requested that the Commission (1) accept Staffs recommendation to grant
the Company a CPCN to acquire new dispatchable energy storage with 150 MW operating
capacity,and(2)reject Staffs proposed establishment of cost caps,or in the alternative,implement
a soft cap that only applies to those costs necessary to ensure the BESS Project is operational on
June 1, 2026.Id. at 14.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the Company's Application and the issues in this
case under Title 61 of the Idaho Code including Idaho Code §§ 61-301 through 303. The
Commission is empowered to investigate rates, charges,rules,regulations,practices, and contracts
of all public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provisions of law, and to fix the same by order. Idaho Code
§§ 61-501 through 503.
ORDER NO. 36386 5

Public utilities shall "furnish, provide and maintain such service, instrumentalities,
equipment and facilities as shall promote the health,safety,comfort and convenience of its patrons,
employees and the public, and as shall be in all respects adequate, efficient,just and reasonable."
Idaho Code § 61-302.
Before constructing "a line, plant, or system," a public utility providing electrical service
must obtain a CPCN from the Commission establishing that the "public convenience and
necessity" requires it. Idaho Code § 61-526. Pursuant to Idaho Commission Rule of Procedure
112, existing utilities applying for the issuance a CPCN under Idaho Code § 61-526 must submit
any relevant data including: (1) a Statement and Explanation; (2) a Description of Construction or
Expansion; (3) a Map; (4) a Financial Statement and Construction Timelines; and (5) Cost
Estimates and Revenue Requirements.
Having reviewed the Application,the record,the comments of the parties,and all submitted
materials, the Commission finds that the Company has satisfied the requirements for a CPCN to
acquire 150 MW of dispatchable energy storage to meet an identified capacity deficiency in 2026.
See Idaho Code § 61-526; Rule 112.
With respect to Staff s concerns, the Commission does not find that caps on recovery are
necessary now. The Company represents that it will justify all costs when it seeks recovery for the
BESS Project, and the Commission expects the Company to exercise the utmost due diligence in
selecting resources, managing costs, and providing service to its Idaho customers. When the
Company requests recovery for the BESS Project, the Commission will consider all facets of the
project including scope, cost justification, and the Company's procurement process, to determine
the prudence of the Company's decisions.
ORDER
IT IS HEREBY ORDERED that the Company's Application for a Certificate of Public
Convenience and Necessity for the acquisition of 150 MW of dispatchable energy storage to meet
an identified capacity deficiency in 2026 is granted.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date upon this Order regarding 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.
ORDER NO. 36386 6

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this 8th day of
November 2024.
6:-d'
ERIC ANDERSON, PRESIDENT
N R. HAMMOND JR., COMMISSIONER
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EDWARD LODG , C MIS-SIONER
ATTEST:
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Commission Secret( e
I:\Lega1\ELECTRIC\IPC-E-24-16_BBB storag6orders\IPCE2416_FO_cb.docx
ORDER NO. 36386 7