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HomeMy WebLinkAbout20251021Petition for Reconsideration.pdf RECEIVED OCTOBER 21, 2025 IDAHO PUBLIC JAYME B. SULLIVAN UTILITIES COMMISSION BOISE CITY ATTORNEY Jessica Harrison ISB No. 9768 Deputy City Attorney BOISE CITY ATTORNEY'S OFFICE 150 N. Capitol Blvd. P.O. Box 500 Boise, ID 83701-0500 Telephone: (208) 608-7950 Facsimile: (208) 384-4454 Email: BoiseCityAttomey(ic,,cityofboise.org Attorney for Intervenor BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF IDAHO POWER Case No. IPC-E-25-15 COMPANY'S APPLICATION FOR ITS FIRST ANNUAL UPDATE TO THE EXPORT CREDIT PETITION FOR RATE FOR NON-LEGACY ON-SITE RECONSIDERATION GENERATION CUSTOMERS FROM JUNE 1, 2025 THROUGH MAY 31, 2026, IN COMPLIANCE WITH ORDER NO. 36048 COMES NOW, the city of Boise City ("City" or "City of Boise") hereby respectfully submits this request for reconsideration pursuant to Commission Rule 331 of the Idaho Public Utilities Commission(the "Commission") order on the application of Idaho Power Company(the "Company"). The City requests the Commission grant reconsideration by written briefs and comments. While the City appreciates the intent of Order No. 36785 to mitigate rate impact on customer-generators, the City asserts Commission Order No. 36785 does not fulfill the Commission's stated intent and does not address the underlying issues that caused the need for the Commission to mitigate the export credit rate ("ECR") update. If reconsideration is granted, the City of Boise may expand upon the nature of the arguments included herein, but the City also PETITION FOR RECONSIDERATION - 1 believes this reconsideration request raises questions of law and policy and does not raise issues of fact requiring a hearing. The City appreciates the Commission's recognition that it has a duty to ensure the compensation structure for customer-generators is fair, just, and reasonable. The ECR must be calculated based on a reasonable method and have reasonable results. Though the method may have appeared reasonable at the outset when it was approved by the Commission, that does not mean it can be used to justify an unfair rate nor does its prior approval mean it must be relied on indefinitely. The Commission can and should look at both the resulting rate and the components of the rate calculation to ensure fair results and justifiable assumptions. The City requests the Commission 1) deny the ECR update in this case; 2) direct the Company to update the basis of the avoided energy value component of the ECR; 3) cap future decreases of the ECR at 20%;and 4)once the avoided energy value component of the ECR method is updated, establish an ECR update cadence of 3 or 4 years, which would appropriately balance the need for ECR stability with the desire for updated data and be more similar to rates for consumption. The City of Boise believes these steps would accomplish the stated intent of the Commission expressed in Order No. 36785 and fulfill the Commission's duty to ensure customer rates are fair,just, and reasonable. First, the City of Boise wants to emphasize this is not about subsidizing customer- generators. This is about compensating customer-generators fairly for the electricity they provide to the Company, which then flows to their neighbors. The Company is the sole purchaser (a monopsonist) of the electricity exported to the grid by the customer-generator. In the absence of a market to set the price for the electrons provided by customer-generators to Idaho Power's system, this Commission is tasked with ensuring customer-generators receive a fair price for what the PETITION FOR RECONSIDERATION - 2 customer-generator provides to the grid. Utilities have economic incentives to diminish the value of exports from customer-generators. For one, when customers produce their own electricity, it reduces demand for the utility's product. While the reduced demand produces system benefits, it also reduces the utility's revenue stream. Second, because the utility makes a rate of return on its plant-in-service, the investments made by customer-generators reduce the need for the utility to invest in its own generation and transmission resources, which reduces its opportunity to earn a rate of return. Again, this provides system cost saving benefits but reduces the utility's revenues. These observations of utility fundamentals are in no way intended to malign the Company but are intended to provide context as to why achieving a fair compensation structure for customer- generators is one of the primary challenges facing utility regulators. That being said, the utility incentive structure in regard to customer-generators is not unlike energy efficiency or demand side management, and the Company and the Commission have been able to effectively balance the interests in those areas. There is interest by all parties to maintain lower rates. Affordability is one of the City's primary concerns. The ECR paid to customer-generators is recovered from ratepayers as a power expense through the Power Cost Adjustment ("PCA"). So, while it is true that paying customer- generators more for their exports will show up in customer bills through the PCA, that does not justify paying customer-generators an unfair price for the electricity they produce. Staff Comments note that an increase of about$4 million to$5 million in ECR payments would result in an increase of less than 1% of annual net power supply expense. Staff Comments at 11. And this does not take into account the potential for the Company to defer or forego certain investments in energy generation because of the benefits customer-generators provide in lowering demand and supplying generation. Staff Comments reflect total on-peak exports from customer-generators has increased PETITION FOR RECONSIDERATION - 3 from 6,255 MWh to 13,924 MWh. Staff Comments at 5. This is energy produced by generation assets that are not in rate base. The Company has been clear that it is in the middle of generational investments in its system to keep pace with increased demand, and rate increases have been and will continue to be necessary for the Company to recover its costs to keep pace with the increased demand. Fairly compensating customer-generators has a relatively minimal impact on the PCA, whereas discouraging customer-generators will cause more investments to go into rate base, adding additional upward rate pressure on ratepayers. Underpaying customer-generators may provide near-term cost savings but can have negative long-term impacts. In addition to reducing the upward pressure on rate base by lowering demand and deferring or eliminating the need for large generation or transmission investments, customer-generators help spread the risk of producing, transmitting, and distributing electricity. The utility industry today faces significant challenges such as supply chain constraints, strong inflationary pressures, long wait times for equipment, opposition to siting generation,transmission, distribution infrastructure, wildfire risk, regulatory lag to recover major investments, unprecedented load growth, and more. These challenges to the utility industry are currently more pronounced than similar challenges faced by other industries. Customer-generators fit within an all-of-the-above energy strategy and help mitigate the risk of the utility becoming capacity constrained, help reduce the need for frequent rate cases and rate increases, help reduce the need for acrimonious siting disputes, and can reduce procurement and rate recovery pinch points. The lower system costs and reduced risk benefit all customers. Utility regulation is complex and requires a multitude of trade-offs to reach a fair outcome. This complexity is highlighted by customer-generators and their unique relationship with the grid PETITION FOR RECONSIDERATION - 4 compared to the traditional captive ratepayer. Public comments and party comments indicate a resounding sentiment that the compensation proposed for customer-generators does not capture the full benefit the customer-generators provide to the grid. Though sometimes difficult to pinpoint why it feels unfair or how it became unfair due to the complexity of the myriad engineering, accounting, and policy issues involved, the result, as reflected in the proposed ECR update in this case, is unfair and in need of mitigation. The City appreciates the Commission's acknowledgement in Order No. 36785 that implementation of the ECR method approved in Order No. 36048 resulted in export rates that need to be mitigated, but the City requests the Commission address the reason why the resulting ECR was unfair and implement policy tools that mitigate against drastic price swings going forward. First, to address the method component most responsible for the large swing,the City requests the Commission direct the Company to provide additional options for determining the avoided energy value. Staff comments state a primary driver of the lower energy prices in the ECR calculation is because of lower market prices. "This decrease is primarily driven by the lower ELAP prices in 2024, especially in the spring, but also during the fall. . . . Because demand is low, this is also when the Company's system experiences the most exported power, contributing to lower ELAP prices and thus lower export credit rates." Staff Comments at 4. Using regional wholesale market prices as a proxy for avoided energy costs undervalues the benefits provided by customer- generators, is likely to fluctuate dramatically, and does not reflect how the energy produced by the customer-generator is consumed on the Company's system.The electrons produced by a customer- generator likely do not leave the distribution line on which they are produced and are consumed by their neighbors. PETITION FOR RECONSIDERATION - 5 The City recommends the Commission deny this application and direct the Company to update the avoided energy value component of the ECR prior to filing its next update. The Commission maintains a surrogate avoided resource ("SAR") avoided cost rate for qualifying facilities that produce 100 kW or less using solar, which is a category nearly all customer- generators fit within. Additionally, there is an avoided energy value for energy efficiency and demand side management. An avoided cost of energy derived by looking at the marginal cost of energy calculated using the dispatch of the Company's entire generation portfolio should also be considered. Using regional wholesale market prices reduces the ECR value and increases the rate variability, and alternative methods of valuation should be implemented. The Commission's intent in Order No. 36785 appears to be based on gradualism for rate changes. In that vein, a cap of 20% reduction to future changes to the ECR would better achieve the Commission's goal of reducing rate variability,though it would still be in excess of what would typically be considered gradual for standard electricity rates,which do not fluctuate annually based on model input updates. A cap on the ECR increase is not necessary because of the numerous and difficult to quantify benefits customer-generators provide to the system. Also, granting the 40% reduction in the avoided energy value of the ECR and then locking that price in for 3 years does not uncomplicate the investment decision for potential on-site generators. A one-time three-year suspension of updates delays clarification and does not provide an ongoing framework to ensure fair compensation and reduce rate variability. In sum, the City appreciates the Commission's, the Company's, the parties' and the public's continued interest in developing and honing a compensation structure for customer- generators that fairly balances the interests of all involved. The City believes Order No. 36785 was a valuable acknowledgement from the Commission of its role in ensuring the ECR is fair for PETITION FOR RECONSIDERATION - 6 customer-generators, but requests further refinement of the policy framework to set up long-term success. DATED this 21 st day of October 2025. Jes i a Harrison Deputy City Attorney PETITION FOR RECONSIDERATION - 7 CERTIFICATE OF SERVICE I hereby certify that I have on this 21st day of October 2025, served the foregoing documents on all parties of record as follows: Commission Staff ❑ U.S. Mail Monica Barrios-Sanchez ❑ Personal Delivery Commission Secretary ❑ Facsimile Idaho Public Utilities Commission 0 Electronic Means w/Consent 11331 W. Chinden Blvd., Ste. 201-A ❑ Other: Boise, ID 83714 secretgakpuc.Idaho.gov Commission Staff ❑ U.S. Mail Erika K. Melanson ❑ Personal Delivery Deputy Attorney General ❑ Facsimile Idaho Public Utilities Commission 0 Electronic Means w/Consent 11331 W. Chinden Blvd., Ste. 201-A ❑ Other: Boise, ID 83714 Erika.melanson&puc.idaho.gov Idaho Power Company ❑ U.S. Mail Megan Goicoechea Allen ❑ Personal Delivery Donovan Walker ❑ Facsimile Connie Aschenbrenner 0 Electronic Means w/Consent Mary Alice Taylor ❑ Other: Regulatory Dockets Idaho Power Company 1221 West Idaho Street(83702) PO Box 70 Boise, ID 83707 mgoicoeacheaallengidahopower.com dwalker&idahopower.com caschenbrenner@idahol2ower.com mtgylor&idahopower.com dockets(&,idahopower.com Clean Energy Opportunities for Idaho Courtney White ❑ U.S. Mail Mike Heckler ❑ Personal Delivery Clean Energy Opportunities for Idaho Inc. ❑ Facsimile 3778 Plantation River Dr., Suite 102 Q Electronic Means w/Consent Boise, ID 83703 ❑ Other: mike(d),cleanenergyopportunities.com courtney&cleanenerg_yopportunities.com PETITION FOR RECONSIDERATION - 8 Clean Energy Opportunities for Idaho ❑ U.S. Mail Kelsey Jae ❑ Personal Delivery 920 N Clover Drive ❑ Facsimile Boise, ID 83703 0 Electronic Means w/Consent kelsey&kelseyjae.com ❑ Other: Individual Intervenor ❑ U.S. Mail Martha Bibb ❑ Personal Delivery 810 CD Olena Dr ❑ Facsimile Hailey, ID 83333 Q Electronic Means w/Consent marthasbibb(kgmail.com ❑ Other: Individual Intervenor ❑ U.S. Mail Kevin Dickey ❑ Personal Delivery PO Box 337 ❑ Facsimile Emmett, ID 83617 Q Electronic Means w/Consent Bellefourche0l(kgmail.com ❑ Other: Individual Intervenor ❑ U.S. Mail Scott Pinizzotto ❑ Personal Delivery PO Box 6902 ❑ Facsimile Ketchum, ID 83340 0 Electronic Means w/Consent spinizzotto(kgmail.com ❑ Other: Sierra Club and Vote Solar ❑ U.S. Mail Rose Monahan ❑ Personal Delivery Sierra Club ❑ Facsimile 2101 Webster Street, Ste 1300 Q Electronic Means w/Consent Oakland, CA 94612 ❑ Other: rose.monahangsierraclub.org Sierra Club and Vote Solar ❑ U.S. Mail Gregory Adams ❑ Personal Delivery Richardson Adams LLC ❑ Facsimile 515 N 27t' Street 0 Electronic Means w/Consent Boise, ID 83702 ❑ Other: re richardsonadams.com Vote Solar ❑ U.S. Mail Kate Bowman ❑ Personal Delivery Vote Solar ❑ Facsimile 299 S Main Street 0 Electronic Means w/Consent Suite 1300, PMB 93601 ❑ Other: Salt Lake City, UT 84111 kbowman(kvotesolar.oriz PETITION FOR RECONSIDERATION - 9 Idahome Energy ❑ U.S. Mail Tyler Grange ❑ Personal Delivery 6149 Meeker Place ❑ Facsimile Boise, ID 83713 0 Electronic Means w/Consent tyler&idahomeenergy com ❑ Other: Michelle Steel, Paralegal PETITION FOR RECONSIDERATION - 10