20241205Staff Comments (Redacted).pdf

RECEIVED
Thursday, December 5, 2024 10:52:48 AM
IDAHO PUBLIC
UTILITIES COMMISSION
ADAM TRIPLETT
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10221
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 ANNUAL COMPLIANCE ) CASE NO. IPC-E-24-40
FILING TO UPDATE THE LOAD AND GAS )
FORECASTS IN THE INCREMENTAL COST )
INTEGRATED RESOURCE PLAN AVOIDED ) REDACTED COMMENTS OF
COST MODEL ) THE COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Adam Triplett, Deputy Attorney
General, submits the following comments.
BACKGROUND
On October 15, 2024, Idaho Power Company ("Company") filed its annual compliance
filing ("Compliance Filing")to update the load forecast, natural gas forecast, and long-term
contract changes used in the Company's Incremental Cost Integrated Resource Plan ("ICIRP")
avoided cost methodology. The Compliance Filing also updated Peak Hours and Premium Peak
Hours used to calculate capacity payments for energy storage qualifying facilities ("QFs"). As
per Order No. 35294, the effective date for the updates is January 1, 2025.
STAFF COMMENTS 1 DECEMBER 5, 2024

ICIRP avoided cost rates are available to QFs that are above the resource-specific project
eligibility cap for published avoided cost rates under Idaho's implementation of the Public
Utility Regulatory Policies Act of 1978 ("PURPA").
STAFF ANALYSIS
Staff reviewed the Compliance Filing and recommends the following:
1. The proposed load forecast be approved with an effective date of January 1, 2025;
2. The proposed natural gas forecast be rejected, and the average of Avista's and Rocky
Mountain Power's gas forecasts in Table No. I be approved as the Company's gas
forecast to be used for determining the Company's ICIRP-based avoided cost rates
with an effective date of January 1, 2025;
3. The proposed Peak Hours and Premium Peak Hours be used to calculate and pay
capacity payments for energy storage QFs using ICIRP-based avoided cost rates with
an effective date of January 1, 2025; and
4. The proposed Peak Hours be used to calculate and pay capacity payments for energy
storage QFs using Surrogate Avoided Resource ("SAR")-based rates with an effective
date of January 1, 2025.
Load Forecast
Staff believes the proposed 50th-percentile load forecast is reasonable, because it reflects
the expected load under normal conditions and represents the cost of energy that the Company
will likely avoid. Staff also believes the increase of the proposed load forecast compared to last
year's load forecast is reasonable, given the changes in different customer classes.
The Company proposed using the 501h-percentile load forecast in the ICIRP
methodology. Staff believes that it is reasonable to use the 50th-percentile load forecast for the
purpose of determining avoided cost of energy in the ICIRP methodology,because the 50th-
percentile load forecast reflects expected load under normal conditions and represents the cost of
energy that the Company will likely avoid. Using the 70th-percentile load forecast for the
STAFF COMMENTS 2 DECEMBER 5, 2024

purpose of this case would likely overestimate the avoided cost of energy and customers would
no longer be held neutral.'
In addition, Staff compared the proposed load forecast in this case with the approved one
in Case No. IPC-E-23-25. Based on the comparison, Staff believes that the difference between
the two load forecasts is reasonable. Staff also believes the proposed load forecast is reasonable.
Both load forecasts have similar loads from- to-, as shown in Figure No. 1. However,
starting in-, the proposed load forecast is consistently greater than the approved load
forecast by approximately■ average megawatts ("aMW") annually. The difference is due to
two major reasons: (1) additional MW expansion plans of a special contract customer and
(2) commercial and industrial load growth of approximately, aMW to, aMW annually due
to expansion plans and new business development as a result of the growth of population and
economics of the service area. Other customer classes such as residential and irrigation have
little changes. Staff believes these explanations reasonably explains the differences between the
two load forecasts for each class and recommends that the proposed load forecast be approved.
1 The neutrality principle requires PURPA rates be set at the utility's avoided cost. Indep.Energy Producers Ass'n,
Inc.v.Cal.Pub.Utils. Comm'n,36 F.3d 848,858(9th Cir. 1994)."If purchase rates are set at the utility's avoided
cost,consumers are not forced to subsidize QFs because they are paying the same amount they would have paid if
the utility had generated energy itself or purchased energy elsewhere."
STAFF COMMENTS 3 DECEMBER 5, 2024

Natural Gas Forecast
Staff recommends that the proposed natural gas forecast for the period 2025 through
2045 be rejected, because (1)the Company's near-term forecast is significantly different than
Avista's and Rocky Mountain Power's forecasts, and(2) the Company's near-term forecast does
not align with the pattern in the gas forwards market. Instead, Staff recommends that the average
of Avista's and Rocky Mountain Power's forecasts be approved to be used in the Company's
ICIRP methodology.
Comparison of Three Utilities
Staff compared Henry Hub forecasts filed by the Company, Avista, and Rocky Mountain
Power in their annual update filings and discovered that the Company's forecast is significantly
different than the forecasts of other two utilities in the near term, especially with a peak in.
. See Figure No. 2. Because ICIRP-based PURPA contracts are limited to
two years, the near-term forecast is a critical timeframe.
The Company explained that the peak in
. See response to Staff Production Request No. 2. However,
such assumed fundamental changes are not reflected in Avista's and Rocky Mountain Power's
forecasts.
STAFF COMMENTS 4 DECEMBER 5, 2024

Comparison to Forwards Market
Staff also pulled Henry Hub contract prices for January, June, and December of-
that are settled in the past 12 months in the forwards market. None of the prices are close to
. See Figure Nos. 3, 4, and 5. This further supports Staff s belief that the
Company's near-term forecast is not reasonable. Therefore, Staff recommends that the proposed
natural gas forecast be rejected.
Natural Gas Jan 2026
NGF26 (U.S.:Nymex)
DEC )an Feb Apr may Jul' Jul Aug Sep 011 N."
Figure No. 3: Henry Hub Forwards Prices for January of 20262
Natural Gas Jun 2026
NGM26 (U.S.:Nymex)
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Figure No. 4: Henry Hub Forwards Prices for June of 20263
2 Data retrieved on November 27,2024,from https://www.wsj.com/market-data/quotes/futures/NGF26
3 Data retrieved on November 27,2024,from hitps://www.wsi.com/market-data/quotes/futures/NGM26
STAFF COMMENTS 5 DECEMBER 5, 2024

Natural Gas Dec 2026
NGZ26 (U.S.:Nymex)
Figure No. 5: Henry Hub Forwards Prices for December of 20264
Average ofAvista's and Rocky Mountain Power's Forecasts
Because the Company's gas forecast is not reasonable, Staff proposes using the average
of Avista's and Rocky Mountain Power's forecasts as the Company's forecast to be used for
determining the Company's ICIRP-based avoided cost rates. See Table No. 1. Therefore, Staff
recommends that the average values in Table No. 1 be approved.
Table No. 1: Average of Avista's and Rocky Mountain Power's Forecasts
PAC's Henry Hub Forecast(PAC-E-24-12) Avista's Henry Hub Forecast(AVU-E-24-10) Average
2025 3.39 3.51 3.45
2026 3.65 3.82 3.73
2027 3.76 3.93 3.84
2028 4.52 3.99 4.25
2029 5.26 4.00 4.63
2030 5.34 4.10 4.72
2031 5.38 4.28 4.83
2032 5.4 4.52 4.96
2033 5.53 4.78 5.15
2034 5.65 4.95 5.30
2035 5.91 5.23 5.57
2036 6.11 5.40 5.76
2037 6.44 5.65 6.05
2038 6.77 5.86 6.31
2039 7.12 5.93 6.53
2040 7.52 6.36 6.94
2041 7.87 6.72 7.30
2042 8.34 6.89 7.61
2043 8.79 1 7.16 1 7.98
a Data retrieved on November 27,2024,from hitps://www.wsi.com/market-data/quotes/futures/NGZ26
STAFF COMMENTS 6 DECEMBER 5, 2024

Contract Updates
Contract updates are incorporated into the ICIRP model on a continuous basis, but the
annual filing provides an opportunity for the Commission to review and monitor these updates.
Staff believes the contract updates included in the Application are correct.
Peak and Premium Peak Hours
Based on the Company's analysis, the Peak Hours and Premium Peak Hours used to
calculate and pay capacity payments for energy storage QFs remain the same as last year's Peak
Hours and Premium Peak Hours from Case No. IPC-E-23-25. Although Staff has concerns
about the percentiles of load forecasts used in the analysis, Staff believes the resulting Peak
Hours and Premium Peak Hours are reasonable. Therefore, Staff recommends approval of the
proposed Peak Hours and Premium Peak Hours to be used to calculate and pay capacity
payments for energy storage QFs using ICIRP-based avoided cost rates. Staff also recommends
approval of the Peak Hours be used to calculate and pay capacity payments for energy storage
QFs using SAR-based rates.
The proposed Peak Hours for July in 2025 are 1:00 pm to 10:00 pm; the proposed Peak
Hours for August in 2025 are 3:00 pm to 8:00 pm. The proposed Premium Peak Hours for July
are 5:00 pm through 10:00 pm; the proposed Premium Peak Hours for August are 5:00 pm
through 8:00 pm. The ICIRP-based energy storage avoided cost rates distinguish Peak Hours
and Premium Peak Hours, where the Premium Peak Hour rates are 20%higher than the Peak
Hour rates. See Order No. 35644 at 5. The SAR-based energy storage capacity payments are
paid for generation during Peak Hours without any premium, which are calculated by dividing
the annual capacity value of a Combined Cycle Combustion Turbine plant by the total number of
Peak Hours in a year. Because the total number of Peak Hours in a year does not change, the
SAR model does not need to be updated and the avoided cost of capacity for energy storage will
not change.
However, Staff has concerns over the inconsistent percentiles of load forecasts used by
the Company in its analysis, and Staff believes it is reasonable to use the 70th percentile of load
forecasts for the forecasted 2025 average hourly load forecast in the analysis. Because the
highest-load hours (top 5% of load) are the same whether the 50th percentile or the 70th percentile
is used, Staff believes the resulting Peak Hours and Premium Peak Hours are reasonable.
STAFF COMMENTS 7 DECEMBER 5, 2024

The Company Used Inconsistent Percentiles ofLoad Forecasts
Staff has concerns over the inconsistent percentiles of load forecasts used in the
Company's analysis. The Company analyzed four datasets to determine the Peak Hours and the
Premium Peak Hours: (1) forecasted 2025 average hourly load, (2) actual 2024 load net solar, (3)
actual 2024 average Western Energy Imbalance Market Locational Marginal Prices, and(4)the
Loss of Load Probability("LOLP") data from the 2023 Integrated Resource Plan("IRP'Ts
Preferred Portfolio. However, the forecasted 2025 average hourly load is based on the 501h
percentile of load forecasts, whereas the LOLP data from the 2023 IRP is based on the 70th
percentile of load forecasts. Staff believes the Company should use a consistent percentile in the
analysis to make results comparable.
Staff' Proposes Using 70 Percentile ofLoad Forecasts for This Case
Staff proposes using the 701h percentile of load forecasts for determining the Peak Hours
and the Premium Peak Hours in this case for two reasons. First, Staff believes the Company
should use the same percentile from its reliability analysis, and the most recent reliability
analysis conducted by the Company used the 70th percentile. Appendix C of 2023 IRP. Second,
the Company has provided additional evidence supporting the 701h percentile based on Load and
Resource Year 2024 and Year 2026.
1. Use of the Percentile from Reliability Analysis
In the 2023 IRP, the Company used the 70th percentile of load forecasts to determine
resources' Effective Load Carrying Capability contribution to the overall system reliability
during the Company's high-risk hours. Appendix C of 2023 IRP at 90.
Similarly, the purpose of determining Peak Hours and Premium Peak Hours is to identify
the timeframes when energy storage QFs should be paid for avoided cost of capacity based on
their contribution to the Company's reliability so that the reliability benefits the QFs bring are
aligned with the capacity payments they receive. Therefore, Staff believes the Company should
use the percentile from its reliability analysis.
2. Additional Evidence based on Year 2024 and Year 2026
Staffs comments for Case No. IPC-E-23-23 suggested that the Company meet with Staff
early in the next IRP cycle to discuss methods to determine and verify the percentile of load that
is appropriate to meet its reliability target in the next IRP. On June 17, 2024, the Company met
STAFF COMMENTS 8 DECEMBER 5, 2024

with Staff and provided additional evidence supporting the 701h percentile. Staff believes this
additional analysis justifies the reasonableness of the 70th percentile.
The Company first developed six 2024 forecasts based on the 70th percentile of load and
the weather patterns of six test years. Then the Company determined the capacity position for
each of the 2024 forecasts to meet a 0.1 event-days per year Loss of Load Expectation("LOLE")
threshold. Lastly, the Company used each capacity position to run against a variety of
percentiles (loth, 301h, 50th, 70th, and 951h),because actual percentiles in reality could vary from
year to year. The result showed that the 701h percentile scenario produced an average of LOLE
across all percentiles of 0.0965 event-days per year, which is very close to the Company's
reliability goal of 0.1 event-days per year. See Table No. 2. This indicates that resources
selected under the 70th percentile can generally survive various percentile conditions and meet an
average LOLE threshold of 0.1 event-days per year.
Table No. 2: LOLE in 701h Percentile Scenario
Resource Need&LOLE for load Forecast Comparison using Current RCAT
LOLE with 70th Percentile Load Forecast RCAT Perfect Generation
Corresponding
loth Percentile 30th Percentile 50th Percentile Tom Percentile 95th Percent
70th RCAT Gen
z
Test Year 1 -30 0.0154 0.0308 0. 3515 0.0991 0.Tr52
a
c Test Year 2 -104 0.0156 0.0320 0.TM 0.0997 0.3032
N
TestYear3 28 0.0148 0.0.305001. 0.0999 0.2976
TestYear4 -71 00175 0.1CRS1105n 0.0991 0.3039
TestYearS 32 0.0162 0.1Cii60574 0.11" 0.2674 Average LOLE of
TestYear6 M 0.0161 0.0337ffm 0.0993 0.2401 All Percentiles
Average -11 0.0159 0.03260568 0.0995 0.2779 0.0965
11MW
Capacity Length
Next, the Company developed six 2024 forecasts based on the 501h percentile of load and
the weather patterns of six test years and repeated the steps earlier. The result showed that the
50th percentile scenario produced an average of LOLE across all percentiles of 0.1650 event-days
per year, which is far from the Company's reliability goal of 0.1 event-days per year. See Table
No. 3.
STAFF COMMENTS 9 DECEMBER 5, 2024

Table No.3: LOLE in 5011 Percentile Scenario
Resource Need&LOLE for Load Forecast Comparison using Current RCAT
LOLE with 50th Percentile Load Forecast RCAT Perfect Generation
Corresponding
loth Percentile sOth Percentile 50th Percentile 70Ih Percentile ­tr Percent
50th RCAT Gen
e
Test Year -98 O.Om 0.0`.,/0 0.1993 0.1162 0.4490
•
~ Test Year -10 CILUM 0.1f,71 0.09179 0.1133 0.5095
0
N
Test Year 88 0.0775 0.0457 0.0997 0.1143 (15116
Test Year -175 0.IMI% (HUX) 11"") 0.169.3 t14915
Test Years _Y5 ULM ku!)W 0.119% L1698 0.4441 Average LOLE of
Test Year 83 0.0273 Urm 0.U996 0.16/8 0.3%4 All Percentiles
Average 63 0.0285 OASIS 0.0995 0.1714 0.4681 1 0.1650
68 M W
Capacity Length
The Company also tested 2026 forecasts with the same method, and it showed a similar
result that the 701h percentile scenario produced an average of LOLE across all percentiles close
to the Company's reliability goal of 0.1 event-days per year. Because both 2024 forecasts and
2026 forecasts validated the 70th percentile, Staff believes it is reasonable to use 701h percentile to
determine the Peak Hours and Premium Peak Hours for the 2025 forecast in this case.
Same Highest-Load Hours under 50`'Percentile and 70`'Percentile
When the Company used the 70th percentile of load forecasts in the forecasted 2025
average hourly load, the highest-load hours (top 5% of load) remain the same as those identified
under the 501h percentile. See response to Staff Production Request No. 5. Therefore, despite the
concerns over the 50th percentile, Staff believes the resulting Peak Hours and Premium Peak
Hours are reasonable.
STAFF RECOMMENDATION
Staff recommends the following:
1. The proposed load forecast be approved with an effective date of January 1, 2025;
2. The proposed natural gas forecast be rejected, and the average of Avista's and Rocky
Mountain Power's gas forecasts in Table No. 1 be approved as the Company's gas
forecast to be used for determining the Company's ICIRP-based avoided cost rates
with an effective date of January 1, 2025;
STAFF COMMENTS 10 DECEMBER 5, 2024

3. The proposed Peak Hours and Premium Peak Hours be used to calculate and pay
capacity payments for energy storage QFs using ICIRP-based avoided cost rates with
an effective date of January 1, 2025; and
4. The proposed Peak Hours be used to calculate and pay capacity payments for energy
storage QFs using SAR-based rates with an effective date of January 1, 2025.
Respectfully submitted this 5th day of December 2024.
Adam Triplet
Deputy Attorney General
Technical Staff. Yao Yin
Seungjae Lee
I:\Utility\UMISC\COMMENMIPC-E-24-40 Comments Redacted.docx
STAFF COMMENTS 11 DECEMBER 5, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 5� DAY OF DECEMBER 2024,
SERVED THE FOREGOING REDACTED COMMENTS OF THE COMMISSION STAFF,
IN CASE NO. IPC-E-24-40, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
MEGAN GOICOECHEA ALLEN
DONOVAN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL:
m go icoecheaal l en(i�idahopower.com
dwalkera,idahopower.com
dockets(a-)idahopower.com
PATRICIA JORDA4SECC�XZAY
, RY
CERTIFICATE OF SERVICE