20250131Direct J. Ellsworth (Redacted).pdf

RECEIVED
Friday, January 31, 2025
IDAHO PUBLIC
UTILITIES COMMISSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY' S APPLICATION FOR ) CASE NO. IPC-E-25-03
APPROVAL OF THE NORTH VALMY POWER )
PLANT NATURAL GAS CONVERSION )
AGREEMENT WITH NV ENERGY. )
IDAHO POWER COMPANY
DIRECT TESTIMONY
OF
JARED L. ELLSWORTH

1 Q. Please state your name, business address, and
2 present position with Idaho Power Company ("Idaho Power" or
3 "Company") .
4 A. My name is Jared L. Ellsworth and my business
5 address is 1221 West Idaho Street, Boise, Idaho 83702 . I am
6 employed by Idaho Power as the Transmission, Distribution &
7 Resource Planning Director for the Planning, Engineering &
8 Construction Department.
9 Q. Please describe your educational background.
10 A. I graduated in 2004 and 2010 from the
11 University of Idaho in Moscow, Idaho, receiving a Bachelor
12 of Science Degree and Master of Engineering Degree in
13 Electrical Engineering, respectively. I am a licensed
14 professional engineer in the State of Idaho.
15 Q. Please describe your work experience with
16 Idaho Power.
17 A. In 2004, I was hired as a Distribution
18 Planning engineer in the Company' s Delivery Planning
19 department. In 2007, I moved into the System Planning
20 department, where my principal responsibilities included
21 planning for bulk high-voltage transmission and substation
22 projects, generation interconnection projects, and North
23 American Electric Reliability Corporation' s reliability
24 compliance standards . I transitioned into the Transmission
25 Policy & Development group with a similar role, and in
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Idaho Power Company

1 2013, I spent a year cross-training with the Company' s Load
2 Serving Operations group. In 2014, I was promoted to
3 Engineering Leader of the Transmission Policy & Development
4 department and assumed leadership of the System Planning
5 group in 2018 . In early 2020, I was promoted into my
6 current role as the Transmission, Distribution and Resource
7 Planning Director. I am currently responsible for the
8 planning of the Company' s wires and resources to continue
9 to provide customers with cost-effective and reliable
10 electrical service.
11 Q. What is Idaho Power' s request in this case?
12 A. The Company is requesting the Idaho Public
13 Utilities Commission ("Commission") issue an order
14 approving the Natural Gas Conversion Agreement ("Conversion
15 Agreement") between Sierra Pacific Power Company d/b/a NV
16 Energy ("NV Energy") and Idaho Power associated with the
17 North Valmy Power Plant ("Valmy") , included as Exhibit No.
18 5 to Mr. Adelman' s direct testimony. The conversion of both
19 Valmy units from coal-fired operations to natural gas
20 operations is necessary for the Company to continue to
21 provide safe, reliable electric service in 2026 and beyond.
22 Q. What is the purpose of your testimony in this
23 case?
24 A. The purpose of my testimony is to present the
25 need and justification for the conversion of both Valmy
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Idaho Power Company

1 units to natural gas as informed by the 2023 Integrated
2 Resource Plan ("IRP") , and again through a subsequent
3 analysis using updated modeling inputs . I will discuss how
4 the conversion of Valmy Units 1 and 2 from coal to natural
5 gas operations by summer 2026 is the least-cost, least-risk
6 option necessary to continue providing reliable, economic
7 service to customers into the future.
8 I . BACKGROUND
9 Q. What is the goal of the IRP?
10 A. The goal of the IRP is to ensure : (1) Idaho
11 Power' s system has sufficient resources to reliably serve
12 customer demand and flexible capacity needs over a 20-year
13 planning period, (2) the selected resource portfolio
14 balances cost, risk, and environmental concerns, (3)
15 balanced treatment is given to both supply-side resources
16 and demand-side measures, and (4) the public is involved in
17 the planning process in a meaningful way. Idaho Power uses
18 Energy Exemplar' s AURORA' s Long-Term Capacity Expansion
19 ("LTCE") modeling platform to develop portfolios, through
20 the selection of a variety of supply- and demand-side
21 resource options, that are least-cost for a variety of
22 alternative future scenarios while meeting reliability
23 criteria . To verify the top performing portfolios meet the
24 Company' s reliability requirements, Idaho Power utilizes a
25 Loss of Load Expectation ("LOLE") methodology.
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Idaho Power Company

1 Q. Please explain the Loss of Load Expectation.
2 A. The LOLE is a statistical measure of a
3 system' s resource adequacy, describing the expected number
4 of event-days per year that a system would be unable to
5 meet demand. As utilities continue to add more renewable
6 energy to the electric grid, analyzing the effect variable
7 energy resources have on system reliability has become more
8 critical . The LOLE methodology recognizes that the output
9 of variable energy resources, such as wind and solar,
10 change with time (with their hourly output being dependent
11 on a multitude of factors like weather and environmental
12 conditions) ; it is essential to capture and value that
13 variability.
14 Q. What inputs are derived from the LOLE
15 methodology that are utilized in the AURORA LICE model?
16 A. Idaho Power implements the LOLE methodology
17 through an internally developed Reliability and Capacity
18 Assessment Tool ("RCAT") which is capable of producing
19 inputs such as a Planning Reserve Margin ("PRM") and
20 resource Effective Load Carrying Capability ("ELCC")
21 values . The PRM can be defined as the percentage of
22 expected capacity resources above forecasted peak demand.
23 The ELCC calculation is a reliability-based metric used to
24 assess the capacity contribution of variable and energy-
25 limited resources . The PRM and ELCC values that are
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Idaho Power Company

1 calculated using the LOLE methodology are a direct input to
2 the AURORA LTCE model .
3 Q. How are the PRM and ELCC values utilized?
4 A. Because the AURORA LTCE model and the RCAT are
5 two separate tools, a translation is required between the
6 probabilistic LOLE analysis performed in RCAT and the
7 portfolios produced by the AURORA LTCE model . First, PRM
8 and ELCC values are calculated using the LOLE methodology,
9 which serve as direct inputs to the AURORA LTCE model .
10 After AURORA solves for and produces portfolios, select
11 resource buildouts and their corresponding data are
12 analyzed with the LOLE methodology and tested to ensure
13 they meet the pre-designated reliability hurdle through the
14 calculation of annual capacity positions . It is critical
15 when comparing future resource portfolios that each plan
16 achieves at least a base reliability threshold. Figure 1
17 below illustrates the model consolidation process .
18
19
20
21
22
23
24
25
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Idaho Power Company

1 Figure 1 . Idaho Power' s Reliability Flowchart
UG.Ttl.. ELCC
uhar.eutacr�oaeary I
•
RCAT LOLE LTCE
LOLE Portfolio
RNiaoibty a OpMrty tots (Iola PapactAIM LON-TWM C*-tyE�pinfion
n�T� MT- Reliability Hurdle
PRM L&R
Load
Manning Reurve Margin Gp—ty P—t-
2
3 Q. You indicated the RCAT and AURORA serve
4 different purposes in Idaho Power' s planning process . How
5 is the data exchanged between the two models translated
6 and aligned?
7 A. To better assess the dynamic diversity benefit
8 caused by a changing resource mix, and to synchronize the
9 models, beginning with the 2023 IRP a feedback process was
10 implemented between the AURORA LTCE model and the RCAT.
11 Under the feedback process, the annual capacity positions
12 for an AURORA LTCE main case portfolio buildout were
13 calculated using the RCAT. Once the annual capacity
14 positions were known, the PRM in the AURORA LTCE model was
15 modified in years that had significant resource changes so
16 that both models identified a similar annual capacity
17 position. The feedback loop continued until the main case
18 portfolio was reliable under the LOLE threshold. The
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1 resulting AURORA-produced optimized main case portfolios
2 provide the least-cost, least-risk future resource
3 buildouts .
4 II . VALMY' S POSITION IN IDAHO POWER' S
5 GENERATION PORTFOLIO
6 Q. How did Idaho Power model the Valmy plant as
7 part of the 2023 IRP?
8 A. As part of the existing resource generation
9 inputs into the RCAT, the Valmy plant was modeled as
10 providing 134 MW of coal-fired generation from Unit 2
11 through 2025, in accordance with the existing North Valmy
12 Project Framework Agreement between NV Energy and Idaho
13 Power dated as of February 22, 2019 ("Framework
14 Agreement") . NV Energy and Idaho Power (collectively, the
15 Co-Owners") each have a 50 percent ownership share of the
16 Valmy plant. The Company' s participation in coal-fired
17 operations of Unit 1 ceased at year-end 2019 and, under
18 the Framework Agreement, participation in coal-fired
19 operations of Unit 2 will cease at year-end 2025 . In
20 addition, following discussions and alignment between NV
21 Energy and Idaho Power in early 2023, the Company modeled
22 as a potential future resource, the conversion of both
23 units to natural gas operations in 2026 .
24 Q. Were there any system constraints considered
25 with respect to the conversion of both Valmy units to
26 natural gas?
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Idaho Power Company

1 A. Yes . Idaho Power used AURORA' s LICE model to
2 determine the best Valmy operating option specific to the
3 Company' s system, subject to the following constraints,
4 AURORA could: (1) allow for the exit of Unit 2 at the end
5 of 2025, or (2) convert to natural gas in 2026 . Further,
6 if the conversion of Unit 2 to natural gas is selected,
7 then the conversion of Unit 1 becomes available to the
8 model and it can either select to (1) remain out of Unit 1
9 operations, or (2) participate in the conversion to
10 natural gas operations . Finally, in the event AURORA
11 selected any conversion to natural gas option, the Company
12 evaluated, as part of the LTCE modeling, early retirement
13 dates of the converted gas units in addition to natural
14 gas operations through the 20-year planning period.
15 Q. What were the results of the AURORA modeling
16 with respect to Valmy and the potential conversion to
17 natural gas operations?
18 A. The results of the AURORA modeling indicated
19 that the conversion of Valmy Units 1 and 2 to natural gas
20 in 2026 is economical and the units will continue to
21 economically run through the 20-year plan, ultimately
22 leading to their inclusion in the 2023 IRP Preferred
23 Portfolio . As can be seen in Table 1 below, the results of
24 the AURORA hourly simulations, comparing how the
25 portfolios perform throughout the 20-year planning period,
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Idaho Power Company

1 including different transmission and Valmy conversion
2 assumptions, indicate the 2023 IRP Preferred Portfolio, is
3 approximately $49 million more cost-effective on a net
4 present value ("NPV") basis than the portfolio that
5 includes the conversion to natural gas of only Valmy Unit
6 2, and $78 million more cost-effective on an NPV basis
7 than a portfolio that considers Idaho Power' s exit in
8 participation of all Valmy operations at year-end 2025 .
9 Table 1 . 2023 IRP Main Cases .l
Portfolio NPV years 2024-2043($x 1,000,000)
Preferred Portfolio(Valmy 1&2) $9,746
Valmy 2 $9,795
Without Valmy $9,824
Nov2026 B2H Valmy 1&2 $9,767
Nov2026 B2H Valmy 2 $9,880
Nov2026 B2H Without Valmy $10,192
Without 62H $10,582
Without GWW Phases $10,326
GWW Phase 1 Only $10,263
10 GWW Phases 1&2 Only $9,759
11 Table 1 indicates the Valmy 1 and 2 portfolio best
12 minimizes both cost and risk.
13 Q. Did the Company perform any additional
14 analyses to verify the 2023 IRP AURORA modeling was
15 performing as expected?
16 A. Yes . Idaho Power performed model validation
17 and verification testing to ensure the selection of the
18 2023 IRP Preferred Portfolio was optimal and the model
1 2023 IRP, page 136.
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Idaho Power Company

1 used in its selection is performing as expected. This
2 process includes a series of tests designed to show that
3 the resources selected by the model are optimized
4 correctly. That is, by forcing the model to make different
5 resource selections than the optimized output through the
6 development of additional portfolios, it verifies that the
7 forced resource election is suboptimal . This additional
8 analysis allows for robust testing of both key decisions,
9 like those concerning a potential gas conversion of the
10 Valmy units, as well as to test the selection of new
11 resources . A high-level diagram of several tests performed
12 is shown in Figure 2 below.
13 Figure 2 . Model Validation and Verification Tests
Validation and
Verification
New Resource Natural Gas
Selections Conversions
® : .:-Conversions
14
15 Q. What were the results of the 2023 IRP AURORA
16 modeling validation and verification testing as it relates
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Idaho Power Company

1 to Valmy?
2 A. Given the importance of the Valmy conversion,
3 the Company developed individual optimized portfolios
4 assuming each of: (1) Valmy Units 1 and 2 converted to
5 natural gas in 2026, (2) only Valmy Unit 2 converted to
6 natural gas in 2026, and (3) neither unit converted to
7 natural gas and Idaho Power exited Valmy Unit 2 in 2026 .
8 The development of those portfolios showed $78 million in
9 benefits by converting both units to natural gas . In
10 addition to that analysis, the Company also evaluated an
11 early exit of natural gas operations at Valmy, post-
12 conversion to natural gas, in the 2030/2031 timeframe . As
13 can be seen in Table 2 below, the Valmy 1 & 2 Early Exit
14 portfolio is approximately $57 million higher cost on an
15 NPV basis . This demonstrates that the decision to convert
16 Valmy Units 1 and 2 to natural gas operations is the
17 optimal decision for both the near-term and the long-term.
18 Table 2 . 2023 IRP Validation and Verification Tests .2
Portfolio NPV years 2024-2043($x 1,000,000)
Preferred Portfolio(Valmy 1&2) $9,746
V&V Without Bridger 3&4 $9,945
V&V Valmy 1&2 Early Exit $9,803
V&V Wind+30%Cost $10,397
V&V Nuclear $10,013
V&V Energy Efficiency $10,042
V&V Demand Response $9,816
19
2 2023 IRP, page 137.
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Idaho Power Company

1 Q. You indicated the 2023 IRP Preferred Portfolio
2 included the conversion to natural gas operations of both
3 units at Valmy in 2026 . Were there any near-term
4 actionable items associated with this component of the
5 Preferred Portfolio?
6 A. Yes . The Near-Term Action Plan identifies key
7 milestones to successfully position Idaho Power to provide
8 reliable, economic, and environmentally sound service to
9 customers into the future . One of those items, included in
10 the Near-Term Action Plan for the years 2024 through 2028,
11 and identified as a 2023 IRP decision for acknowledgement
12 by the Commission, included the conversion of Valmy Units
13 1 and 2 from coal to natural gas operations by summer
14 2026 . On June 18, 2024, with Order No. 36233, the
15 Commission acknowledged the 2023 IRP, including the
16 Preferred Portfolio and the near-term action plan.
17 III . VALMY GAS CONVERSION ANALYSIS
18 Q. Following acknowledgement of the 2023 IRP, has
19 Idaho Power taken any actions regarding the Company' s
20 commitment to convert Valmy Units 1 and 2 to natural gas
21 operations by summer 2026?
22 A. Yes . Following acknowledgement of the 2023
23 IRP by the Commission, as well as NV Energy' s support from
24 the Public Utilities Commission of Nevada, the Co-Owners
25 collaborated to develop the terms necessary for the
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1 conversion to natural gas operations at Valmy including
2 the allocation of costs, rights to output from the units,
3 and maintenance and operation of Valmy in accordance with
4 the existing Valmy ownership and operation agreements . The
5 terms are memorialized in the Conversion Agreement,
6 included as Exhibit No. 5 and discussed in greater detail
7 by Company Witness Mr. Adelman, which serves to amend the
8 existing Valmy ownership and operation agreements and
9 allow for Idaho Power' s continued participation in the
10 Valmy units once converted to natural gas .
11 Q. Do the cost responsibilities agreed upon in
12 the Conversion Agreement differ from those used for
13 modeling of the potential conversion of Valmy to natural
14 gas operations as part of the 2023 IRP?
15 A. Yes . While the cost responsibilities for Valmy
16 modeled as part of the 2023 IRP remained primarily
17 unchanged, the forecasted capital cost associated with the
18 conversion to natural gas operations and the estimated
19 transport costs changed.
20 Q. Would the updated costs impact the results of
21 the 2023 IRP modeling?
22 A. Yes, any update to an input in AURORA has the
23 potential to impact the modeling results . Following
24 consensus to the terms outlined in the Conversion
25 Agreement, to ensure the updates did not change the
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Idaho Power Company

1 economics of the Valmy conversion, Idaho Power performed
2 an additional AURORA analysis . Beginning with the 2023 IRP
3 inputs, which was the information known at the time the
4 decision to convert the units was made, the Company made
5 changes to three inputs : (1) the capital costs associated
6 with the conversion were revised to reflect the most
7 recent forecast, (2) the transport costs were updated to
8 reflect the latest estimate, and (3) the Boardman to
9 Hemingway transmission line ("B2H") in-service date was
10 moved to November 2027 to reflect the latest construction
11 schedule associated with completion of the line.
12 Q. With the change in the B2H in-service date,
13 did Idaho Power consider how the optimized portfolios that
14 were the result of the LTCE modeling performed for the
15 2023 IRP may change?
16 A. Yes . With the update of a November 2027 B2H
17 in-service date, the Company reran the LTCE modeling
18 within AURORA for the Valmy-related portfolios, identified
19 as the November 2027 B2H with Valmy 1 and 2 portfolio, the
20 November 2027 B2H with Valmy 2 portfolio, and the November
21 2027 B2H without Valmy portfolio, to identify how the
22 optimized portfolios would change . It is important to note
23 that the November 2027 B2H without Valmy portfolio was not
24 able to meet the Company' s reliability thresholds .
25 Next, the portfolios were run through the AURORA
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1 hourly simulation to compute the portfolio cost over the
2 20-year planning period. The results indicated the
3 conversion of Valmy to natural gas operations in 2026
4 continues to be more cost-effective than the portfolio
5 that assumes the Company exits from Valmy in 2025, by more
6 than $880 million on a NPV basis over the 20-year planning
7 period. Table 3 summarizes the results of the AURORA
8 hourly simulations using the three updated inputs .
9 Table 3. 2023 IRP Valmy Cases - Updated.
Portfolio NPV year 2024-2043($x 1,000,000)
Nov 2027 62H Valmy 1 and 2 $10,220
Nov 2027 62H Valmy 2 $11,108
Nov 2027 132H No Valmy* $11,105
10 *Note:This portfolio does not meet the Company's reliability thresholds.
11 The delay in B2H' s in-service further supports Valmy' s
12 conversion to natural gas in 2026 as the least-cost,
13 least-risk resource alternative necessary to continue to
14 provide reliable electric service beyond 2025 .
15 Q. Did Idaho Power analyze how varying carbon
16 or natural gas prices may impact the cost-effectiveness of
17 the Valmy gas conversion?
18 A. Yes . Through the stochastic analysis
19 performed in the 2023 IRP, Idaho Power analyzed the Valmy
20 natural gas conversion under a broad array of carbon and
21 natural gas price expectations . As discussed previously,
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1 the results of the 2023 IRP indicated that conversion of
2 both Valmy units represented the least-cost, least-risk
3 option.
4 Q. Did Idaho Power confirm that the results of
5 this analysis would remain materially unchanged given more
6 recent assumptions for carbon and natural gas prices?
7 A. Yes . With respect to carbon prices, the
8 forecast utilized for 2023 IRP modeling has not changed
9 therefore there would be no impact to the analyses
10 performed. With respect to natural gas prices, the Company
11 can confirm that an updated natural gas price forecast
12 would have no material impact on the Valmy analysis
13 because the most recent natural gas price forecast is well
14 within the range of the stochastic variable spread
15 assessed in the 2023 IRP.
16 Confidential Figure 3 below is a graph showing the
17 2023 IRP planning case average annual price in the black
18 dashed line, the updated natural gas price forecast in the
19 red line, and the remaining-colored lines show the 60
20 different stochastic iterations for Henry Hub gas prices .
21
22
23
24
25
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1
2
1
1
5 indicating an
6 updated natural gas price forecast would not have a
7 material effect on the results of the Valmy analysis .
8 After adjusting the capital costs, transport costs,
9 and B2H online date described above, the supplemental
10 Valmy analysis concludes the conversion to natural gas in
11 2026 is necessary to continue to provide reliable electric
12 service beyond 2025 .
13 IV. CONCLUSION
14 Q. Please summarize your testimony.
15 A. The 2023 IRP identified the conversion of both
16 Valmy units to natural gas in 2026 as the least-cost,
17 least-risk option necessary to continue providing reliable,
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Idaho Power Company

1 economic service to customers after 2025 . Subsequently,
2 Idaho Power and NV Energy collaborated and developed the
3 terms for the gas conversion that would allow for the
4 Company' s continued participation in Valmy operations,
5 memorialized in the Conversion Agreement. Using the costs
6 agreed upon in the Conversion Agreement, as well as other
7 input updates, Idaho Power performed a subsequent analysis
8 that further supported the conversion to natural gas
9 operations at Valmy in 2026 as a cost-effective resource
10 addition.
11 Q. Does this complete your testimony?
12 A. Yes, it does .
13
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Idaho Power Company

1 DECLARATION OF JARED L. ELLSWORTH
2 I, Jared L. Ellsworth, declare under penalty of
3 perjury under the laws of the state of Idaho:
4 1 . My name is Jared L. Ellsworth. I am employed
5 by Idaho Power Company as the Transmission, Distribution &
6 Resource Planning Director for the Planning, Engineering &
7 Construction Department.
8 2 . On behalf of Idaho Power, I present this
9 pre-filed direct testimony in this matter.
10 3 . To the best of my knowledge, my pre-filed
11 direct testimony is true and accurate.
12 I hereby declare that the above statement is true to
13 the best of my knowledge and belief, and that I understand
14 it is made for use as evidence before the Idaho Public
15 Utilities Commission and is subject to penalty for perjury.
16 SIGNED this 31st day of January 2025, at Boise,
17 Idaho .
18
19 Signed:
20 Jared L. Ellsworth
21
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Idaho Power Company