20250612Staff Comments.pdf

RECEIVED
June 12, 2025
ADAM TRIPLETT IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
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 APPLICATION TO MODIFY ) CASE NO. IPC-E-25-02
ITS ENERGY RISK MANAGEMENT )
STANDARDS )
COMMENTS OF 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 January 31, 2025, Idaho Power Company("Company") applied for authority to
modify its Energy Risk Management Standards ("ERMS"). The ERMS implement the
Company's Energy Risk Management Policy, which together make up Idaho Power's Energy
Risk Management Program. Application at 2. The ERMS defines "a systematic methodology to
identify, quantify, and manage the market-driven risks associated with the Company's
operations."Id. The current Energy Risk Management Program was approved by the
Commission in Final Order No. 29102.
STAFF COMMENTS I JUNE 12, 2025

According to the Company, the ERMS is used"to evaluate the prudence of prospective
power supply transactions satisfying customer load for recovery in customer rates." Id. at 7.
On March 12, 2025, the Commission issued a Notice of Application and Notice of
Intervention Deadline, setting a deadline for interested parties to intervene. Order No. 36499.
No parties petitioned to intervene.
On April 23, 2025, the Commission issued a Notice of Modified Procedure, setting a
June 12, 2025,public comment deadline and a Company reply deadline of June 26, 2025. Order
No. 36570.
STAFF ANALYSIS
Staff believes the Company's proposed updates to the ERMS are reasonable and likely to
benefit ratepayers. Therefore, Staff recommends that the Commission approve the changes to
the ERMS, as filed. However, although these changes are likely to result in better power price
stability, Staff does not believe that Commission approval and unquestioning use of these
standards are proof of prudent power supply cost. Staff believes it is important for the Company
to use these standards but with consideration of the circumstances of the current and future
power purchasing environment as decisions are made.
Case for Change
Staff reviewed the Company's Application and confidential attachments, finding them to
be informative regarding the history of the ERMS, the development of the current program, and
the reasons for the proposed changes. Staff met twice with the Company to discuss the current
system and the proposed changes in more detail. Due to the complexity of the ERMS, the direct
meetings were helpful for Staff to understand the reasons for the changes.
The Company asserts that it needs to update the standards because they"were created in
a period when hydro and coal generation comprised a larger proportion of Idaho Power's overall
load serving capacity and the Company had significantly less reliance on natural gas markets
compared to today." Application at 4. Since the ERMS were first authorized, coal-fired
generation capacity in the Company's system has decreased approximately 665 megawatts
("MW"), while gas-fired generation has increased approximately 1,300 MW. Id.
STAFF COMMENTS 2 JUNE 12, 2025

Staff believes that in the past, large volumes of coal generation served as a natural hedge
against market electricity prices. The price of the Company's coal supplies has historically been
more stable, relative to natural gas and electricity prices,because coal supplies were captured
either through vertically-integrated mine-mouth plants, or through long-term coal contracts.
Because of the Company's load growth, and the retirement or conversion of coal resources, the
Company faces an increased reliance on market purchases to serve load. Staff agrees that this
results in a larger volume of hedging transactions. Staff also agrees that lengthening the time
window to incrementally transact these hedges will reduce price risk. Staff verified that under
the current ERMS, the Company's hedging transactions are currently conducted within a limited
timeframe. See Company's response to Production Request No. 1, confidential attachment.
Furthermore, the Company states that natural gas market contract terms are spanning
years and trades are occurring multiple years into the future. Application at 5. Given that 90
percent of financial hedges are natural gas, without changes to the Company's ERMS, the
Company will not be able to access these offerings, which currently trade with much less price
volatility. Id. Staff believes this places the Company at a competitive disadvantage to other
purchasers of natural gas and electricity, who are not limited by these time horizon requirements.
Staff is aware of other regulated utilities that secure longer-term contracts and that conduct trades
further into the future, which justifies the Company's proposed changes.
Changes to Tier Two
In view of these circumstances, the Company proposes to change its Tier Two
volumetric limit by"expanding the time window..., establishing both deficit and surplus
positions using a base-case hydro forecast, and instituting a stair-step approach to filling or
reducing those positions over time." Id. at 6. In meetings with the Company, Staff reviewed
several operational examples of these changes and agree they are reasonable and are likely to
reduce risk and improve the Company's hedging outcomes. Staff is also aware that other
regulated utilities apply similar mechanisms in their own risk management systems. Therefore,
Staff believes that the Company's proposed changes to its Tier Two rules are reasonable and
likely to benefit ratepayers.
STAFF COMMENTS 3 JUNE 12, 2025

Changes to Tier One
The Company is also making changes to its Tier One, High Price Limit, so that the limit
works in conjunction with the changes and the new framework incorporated into Tier Two. Staff
reviewed the proposed changes, the rationale for the changes, and agrees that the updates to Tier
One are reasonable
The Tier One limits are designed to manage the financial exposure to run-away pricing.
The limits are based on low water and high price scenarios and hedges triggered when forward
market prices exceed the limit. Id. at 5. Staff was consulted on the changes during the 2024 Fall
Customer Advisory Group ("CAG") meeting and in a separate meeting with the Company on
April 21, 2025, and agrees that the changes should limit financial exposure to high power prices
and are integrated with the changes proposed for Tier Two.
Changes to Tier Three
The Tier Three, Floor Price Limit, addresses the risk of participation when a potential
decline in electricity and/or natural gas prices is less than a risk of a potential price increase.
Hedges would be triggered when market forward prices drop below these limits through an
expanded evaluation time window. Again, proposed changes to the calculation and application
of these limits were designed to integrate with changes to Tier Two. The Company believes that
these changes would allow it access to a wider variety of products with more stable prices. Id. at
6. Staff verified the Tier Three method through response to Production Request No. 2,
presentations made during the Company's 2024 fall CAG meeting, and the April 21, 2025,
meeting between Staff and the Company and agrees that the changes are reasonable.
STAFF RECOMMENDATION
Staff recommends:
1. The Commission approve the Company's update to the ERMS as filed.
2. The Commission clarify that although the ERMS provides a framework and procedural
guidelines for the Company's power supply transactions, the final determination of
prudence occurs when the Company seeks recovery.
STAFF COMMENTS 4 JUNE 12, 2025

Respectfully submitted this 12th day of June 2025.
Adam Triplett
Deputy Attorney General
Technical Staff. Matt Suess, Joe Terry, James Chandler, Kimberly Loskot
1:\Utility\UMISC\COMMENTS\IPC-E-25-02 Comments.doex
STAFF COMMENTS 5 JUNE 12, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS /l DAY OF JUNE 2025,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-25-02, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
MEGAN GOICOECHEA ALLEN MATTHEW T. LARKIN
IDAHO POWER COMPANY TIMOTHY E. TATUM
PO BOX 70 JESSI BRADY
BOISE ID 83707-0070 IDAHO POWER COMPANY
E-MAIL: PO BOX 70
mgoicoecheaallenaidahopower.com BOISE ID 83707-0070
dockets Cajdahopower.com E-MAIL:
mlarkin 6 idahopower.com
ttatum c idahopower.com
jbrady,c idahopower.com
a,
PATRICIA JORDA , SECRETARY
CERTIFICATE OF SERVICE