20250331Direct M. Suess.pdf

BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF COMMISSION )
STAFF'S APPLICATION FOR ) CASE NO. GNR-E-25-01
APPROVAL OF AN OVERSIGHT )
PROCESS FOR THE ACQUISITION )
OF LARGE SUPPLY-SIDE )
ELECTRICAL RESOURCES )
DIRECT TESTIMONY OF MATTHEW E. SUESS
IN SUPPORT OF STAFFS APPLICATION FOR APPROVAL OF AN
OVERSIGHT PROCESS FOR THE ACQUISITION OF LARGE SUPPLY-SIDE
ELECTRICAL RESOURCES
IDAHO PUBLIC UTILITIES COMMISSION
MARCH 31, 2025

1 Q. Please state your name, business address, and
2 present position with the Idaho Public Utilities Commission
3 ("Commission") .
4 A. My name is Matthew E . Suess and my business
5 address is 11331 West Chinden Boulevard, Building 8, Suite
6 201-A, Boise, Idaho, 83714 . I am employed as an engineer
7 for the Commission Staff ("Staff") .
8 Q. Please describe your educational background.
9 A. I graduated in 1989 from the United States Naval
10 Academy in Annapolis, Maryland, receiving a Bachelor of
11 Science Degree in Electrical Engineering. I graduated in
12 1990 from the Naval Nuclear Power Propulsion program in
13 Idaho Falls, Idaho . I graduated in 1996 from San Diego
14 State University in San Diego, California, receiving a
15 Master of Science Degree in Electrical Engineering. I am a
16 licensed professional engineer in the state of Idaho.
17 Q. Please describe your work experience with the
18 Idaho Public Utilities Commission.
19 A. In 2022, I was hired as an engineer for Staff,
20 continuing in that capacity to the present . My principal
21 responsibilities involve reviewing applications from
22 regulated utility companies, analyzing their requests, and
23 preparing comments and recommendations for Commission
24 review.
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1 Q. What is Staff' s request in this case?
2 A. Staff requests that the Commission: (1) rescind
3 Order No . 32745 for Idaho Power to comply with Oregon
4 Request For Proposal ("RFP") guidelines, and (2) direct
5 each Idaho investor-owned electrical utility ("Utility" or
6 "Utilities") (excluding Atlanta Power) serving Idaho
7 customers to apply for and receive Commission approval for
8 each new RFP it issues for the acquisition of large supply-
9 side resources, in accordance with the requirements
10 outlined in Attachment A to the Application.
11 Q. What is the purpose of your testimony in this
12 case?
13 A. The purpose of my testimony is to briefly recount
14 why Staff is submitting this Application, identify Staff' s
15 findings, and explain Staff' s reasoning for its recommended
16 solution.
17 I . BACKGROUND
18 Q. Please explain the Commission Order that led to
19 this Application.
20 A. Idaho Power Company ("IPC") filed Case No . IPC-E-
21 24-12 in 2024, which requested Commission approval of a
22 power purchase agreement to alleviate a future capacity
23 deficit . As part of its Comments, Staff recommended that
24 the Commission direct IPC to file any subsequent RFP
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1 solicitations in Idaho for Commission approval before
2 releasing the RFP to bidders .
3 In Order No . 36309 the Commission directed IPC to work
4 with Staff to develop potential modifications to the RFP
5 process and directed Staff to file a new case with proposed
6 modifications no later than March 31, 2025 .
7 II . IDENTIFYING THE FINDINGS
8 Q. Why did Staff recommend that the Commission
9 change its RFP review process in Case IPC-E-24-12?
10 A. Staff stated that "many fundamental and
11 irreversible decisions are made during the initial RFP
12 development with the OPUC [Oregon Public Utilities
13 Commission] " (emphasis added) '
14 Q. What "fundamental" decisions are made during
15 initial RFP development?
16 A. The RFP establishes which type of resources will
17 be solicited, so specific resource types can be excluded or
18 discouraged at the outset . Also, concurrent with
19 development of the RFP, each Utility develops its Selection
20 Plan, the plan of how bids will be evaluated. This plan
21 defines criteria for eliminating bids, what factors the
22 bids will be scored by, the weight of each scoring factor,
'Case IPC-E-24-12, Staff Comments at 7.
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1 the methods by which bid prices will be compared, and other
2 details . This Selection Plan can be designed to favor
3 different solutions by scoring bids using criteria and
4 weighting such as cost, carbon emissions, implementation
5 timing, etc. The Utilities are expected to adhere to this
6 Selection Plan throughout the selection process .
7 Q. Why are these "irreversible" decisions?
8 A. In the IPC-E-24-12 case, the entire RFP
9 solicitation process took approximately 17 months from when
10 Idaho Power filed its initial application with the Oregon
11 Public Utilities Commission ("OPUC") in September 2022,
12 until the final selection list was approved in February
13 2024 .2 If a particular resource was omitted or excluded at
14 the outset of the process, it is not feasible to require
15 that the entire process be redone . Likewise, if the
16 Selection Plan was designed to obtain something other than
17 the least-cost least-risk solution, it is not feasible to
18 change the Selection Plan at the end of the process without
19 redoing the entire solicitation from the beginning. Given
20 the current situation of imminent capacity deficits, it is
21 simply not realistic to start the solicitation over from
22 the beginning.
2 IPC-E-24-12,Hackett Direct at 6,43.
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1 Q. Why not continue relying on other states to
2 ensure the RFP includes all feasible resources and the
3 Selection Plan is designed to identify the least-cost
4 least-risk solutions?
5 A. In the past decade, other states have enacted
6 legislation that requires or incentivizes the reduction of
7 carbon emissions, especially for electric power generation.
8 This includes Oregon and Washington, who each regulate
9 utilities that also serve Idaho . These states may
10 influence RFP solicitations that prioritize carbon-
11 reduction resources over resources that are least-cost and
12 least-risk.
13 Q. Can the Utilities be relied on to include all
14 feasible resources and design the Selection Plan to
15 identify the least-cost least-risk solutions?
16 A. Although Staff believes the Utilities make good-
17 faith efforts to pursue these solutions, they may have
18 other competing incentives . For example, a Utility may
19 have its own carbon-reduction goals and therefore choose to
20 limit the RFP resource options accordingly. Or it might
21 design a Selection Plan that is weighted in favor of
22 carbon-reduction solutions . Each Utility also has
23 incentive to build and own its own resource, versus
24 contract a resource through a power purchase agreement;
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1 therefore, it might design a Selection Plan that favors
2 self-ownership. It was this specific concern that
3 triggered the need for Case No. GNR-E-08-03, a request to
4 investigate competitive bidding requirements as mentioned
5 in the background section of the Application in this case .
6 Q. Did Staff identify any other concerns about the
7 RFP review process?
8 A. Yes . Even if the RFP is open to all resources,
9 and the Selection Plan is designed to identify the least-
10 cost least-risk solutions, the implementation of the
11 Selection Plan can be manipulated. For example, the
12 scoring algorithm usually includes subjective factors such
13 as contractor experience, financing arrangements, and/or
14 development schedule . The RFP evaluation team can score a
15 favored project higher and a disfavored project lower, even
16 if the submissions are substantially the same .
17 Many states have chosen to mitigate this risk by
18 requiring a third-party Independent Evaluator ("IE") to
19 review all the bids and compare its scores with the
20 Utility' s and to reconcile any differences .
21 Q. Did Staff observe anything in its review of Idaho
22 Power' s OPUC-approved RFP to support its concerns?
23 A. Yes . Staff observed that the original RFP was
24 predominantly oriented toward carbon-free resources .
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1 Section 3 . 1 of the RFP listed the eligible types of
2 resources the company would consider from bidders . Five of
3 the six discrete resource types were carbon-free . The
4 single carbon-based resource was `Gas-fired Convertible to
5 Hydrogen (G2H) ' . The RFP also solicited two types of
6 market purchases for a total of eight types .3
7 It is also worth noting that Staff believed the
8 requirement for a gas resource to be convertible to
9 hydrogen imposed a special burden on the sole carbon-based
10 option.
11 Q. Were all other resource types excluded?
12 A. Technically, no . Section 3 . 2 included a
13 paragraph that "IPC may also accept other Products that
14 meet the ownership and electrical functionality criteria
15 outlined in the Product Tables . " Id at 16 . However, Staff
16 believed that specifically listing eight resource types
17 while relegating all other resource types as alternatives
18 was a strong signal to potential bidders that the eight
19 resource types were preferred.
20 Q. Did Staff identify any other concerns that are
21 relevant, but outside the RFP review process?
3 Case IPC-E-24-12,Exhibit 4 at 13-14.
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1 A. Yes . Staff observed that many resource types are
2 effectively excluded from consideration because they cannot
3 be delivered in the timeframe needed by the Company. For
4 example, IPC is forecasting exceptionally large load growth
5 beginning in 2026 and therefore needs resources that can
6 come online in 2026 or 2027 . Even though Idaho Power
7 started its RFP review process in 2022, it took two years
8 to complete the regulatory reviews required by Oregon and
9 Idaho . This left only 2 years for a resource to be
10 constructed and placed in service . Staff believes that
11 this time-of-delivery constraint effectively precludes
12 resources that have longer development timelines such as a
13 thermal plant or a nuclear plant .
14 Q. Does Staff have any recommendations for this
15 issue?
16 A. Yes, two . First, both the Company and the
17 regulators need to shorten the RFP review and approval
18 process as much as possible . Second, each Company needs to
19 identify capacity deficits sooner, allowing more time for
20 long lead-time solutions .
21 Q. Please summarize the problems of the current RFP
22 review process and why Staff made its recommendation to
23 change the RFP process .
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1 A. In summary, the Commission currently relies on
2 other states and each Utility to ensure the RFP and
3 Selection Plan are properly designed to identify the least-
4 cost least-risk resources . The Commission' s first review
5 of the RFP, the Selection Plan, and the resulting resource
6 selection comes at the end of a 12-18-month RFP process .
7 If the Commission finds that the RFP and Selection Plan are
8 unsatisfactory, it has no recourse without major
9 operational impacts .
10 Because other states and Utilities may not share the
11 Commission' s primary objective of acquiring the least-cost
12 least-risk resource, Staff recommends changing the RFP
13 review process to better protect the interests of Idaho
14 ratepayers .
15 III . DEVELOPING THE SOLUTION
16 Q. What actions has Staff taken after receiving the
17 Commission' s Order?
18 A. Staff held multiple internal meetings and met
19 twice with IPC. After Staff determined that this process
20 should include all the Utilities, not just IPC, Staff met
21 with Avista and PacifiCorp to learn their thoughts and
22 concerns about the issue . Staff also researched the RFP
23 processes of other adjacent states .
24 Q. What did Staff conclude?
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1 A. Fundamentally, Staff concluded that Idaho should
2 establish its own RFP oversight process and not rely on
3 other states or the Utilities to protect Idaho ratepayers'
4 interests . Also, Staff concluded the best time to exercise
5 this oversight is at the beginning of the RFP process
6 rather than the end.
7 Q. What parts of the RFP process need oversight?
8 A. Staff identified three parts of the RFP process
9 that should be reviewed: 1) the terms of the RFP should be
10 reviewed before the solicitation is released, especially to
11 ensure it is open to all feasible resource-types; 2) the
12 Selection Plan should be reviewed before it is released to
13 ensure it will identify the least-cost least-risk solution;
14 and 3) the Utility' s execution of the Selection Plan should
15 be reviewed for fairness and transparency.
16 Q. Did Staff consider anything else?
17 A. Yes . In its internal meetings, Staff recognized
18 the importance of balancing the need for additional
19 oversight against the delays that such oversight will
20 incur. With this principle in mind, Staff developed three
21 broad categories of issues it considered: 1) applicability
22 factors; 2) the proposed process; and 3) other
23 considerations .
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1 Q. Please explain the applicability factors that
2 Staff considered.
3 A. Staff considered for whom and in what
4 circumstances this RFP review process should apply.
5 First, Staff concluded that the RFP review process
6 should only be applied to electric utilities and not to gas
7 or water utilities at this time . Primarily this
8 recommendation is based on the fiscal size of the
9 acquisitions . The cost of electric resources is typically
10 an order of magnitude greater than for gas or water
11 utilities . Staff also wanted to avoid a broader base of
12 applicability because of the additional complexity it would
13 bring. If future experience reveals a need to apply this
14 process to other utility types, it can be addressed at that
15 time .
16 Second, Staff agreed that this oversight process
17 should only apply to significant acquisitions . Staff
18 referred to the thresholds set by other states and found
19 that they fell with a narrow band between 80 and 100
20 megawatts ("MW") and between 5-year and 10-year durations .
21 Staff recommends the high end of this band (100 MW and 10-
22 year duration) in order to minimize the regulatory burden.
23 Third, Staff agreed that the RFP oversight should only
24 apply to the acquisition of generation and storage
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1 resources, while omitting transmission resources .
2 Transmission resources are essentially homogenous in type,
3 so selection bias risk is greatly reduced. This
4 distinction is consistent with other states .
5 Fourth, Staff thinks that the oversight should apply
6 only if a Utility intends to recover the investment costs
7 from Idaho ratepayers . If a Utility pursues the
8 acquisition of a resource in another state and intends to
9 situs-assign the cost of that resource, then no oversight
10 by the Commission is necessary.
11 IV. STAFF' S PROPOSED PROCESS
12 Q. Please explain Staff' s proposed process .
13 A. Any time a Utility seeks to acquire a generation
14 or storage resource of at least 100 MW and 10-year
15 duration, and subject to Idaho recovery, it should submit
16 its RFP, Selection Plan, and other acquisition documents in
17 an application to the Commission for approval . Approval
18 must be obtained before the RFP is released to bidders .
19 This proposed process is described in Attachment A to the
20 Application.
21 Q. Please explain Staff' s other considerations in
22 its proposed process .
23 A. Staff had three additional considerations outside
24 of the standard process : 1) if or when an IE should be
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1 required; 2) whether filing timelines should be
2 established; and 3) if a waiver process for emergencies is
3 needed.
4 As stated in the Application, Staff recommends that an
5 IE not be automatically required but merely considered
6 during the initial RFP review. In most cases, other states
7 will already require an IE in a Utility' s RFP process, so I
8 believe Idaho can leverage that IE' s oversight . In the
9 rare case that another state does not require an IE, and
10 Idaho deems one necessary, the Commission can prescribe one
11 as part of its RFP review. I believe that not
12 automatically requiring an IE will reduce regulatory burden
13 and cost .
14 As stated in the Application in this case, Staff
15 believes that it is sufficient to allow a Utility to
16 request an effective date, rather than prescribing
17 timelines in this process . By not adding any time
18 requirements, Staff believes it will allow each Utility to
19 drive the timeline it needs, while also allowing
20 flexibility to conform to other states' s processes .
21 Following discussions with the Utilities, they each
22 expressed interest in a waiver process for time-sensitive
23 situations, and for unique economic opportunities . In the
24 Application, Staff proposed a waiver process for (1)
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1 emergency time-sensitive situations and (2) economic
2 opportunities outside the RFP process, as outlined on page
3 5 .
4 Other states have an emergency waiver process in
5 place, and Staff agrees that it is important to have that
6 option in Idaho . The most likely emergency would be the
7 discovery of a near-term capacity deficit, and the normal
8 RFP process would unacceptably delay the Utility' s ability
9 to reliably serve customers . In these situations, Staff
10 proposes allowing the Utility to defer filing a case and to
11 release the RFP as soon as possible . However, the Utility
12 is expected to file an application soon afterwards with
13 justification for the emergency, as well as the usual RFP
14 information, for belated approval . This waiver process
15 would not relieve the Utility from the requirement to issue
16 an RFP and the expectation of it generating a least-cost
17 least-risk resource .
18 In Staff' s discussions with the Utilities, they also
19 expressed interest for the process to allow for unique
20 economic resource opportunities that become available to
21 the Utility outside of the normal RFP process . Staff
22 agrees that it is reasonable to allow for this possibility,
23 as long as the benefit to Idaho ratepayers can be clearly
24 established. These opportunities fall in line with Idaho' s
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1 interest as an economic regulator and securing a least-cost
2 least-risk resource . Therefore, Staff' s proposed process
3 allows for the Utility to file to seek review and approval
4 of an economic resource opportunity.
5 IV. CONCLUSION
6 Q. Please summarize your testimony.
7 A. Idaho currently relies on the Utilities and other
8 states to ensure that large resource acquisitions
9 prioritize the least-cost least-risk solution. Because the
10 Utilities and other states have other incentives that may
11 compete with the least-cost least-risk priority, Idaho
12 should revise its RFP review process to incorporate
13 oversight early in the RFP process .
14 Q. Does this complete your testimony?
15 A. Yes, it does .
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