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HomeMy WebLinkAbout20260604Reply Comments.pdf RECEIVED June 4, 2026 IDAHO PUBLIC UTILITIES COMMISSION _ ROCKY MOUNTAIN 1407 W.North Temple,Suite 330 POWER. Salt Lake City,UT 84116 A DIVISION OF PACIFICORP June 4, 2026 VIA ELECTRONIC DELIVERY Commission Secretary Idaho Public Utilities Commission 11331 W. Chinden Blvd Building 8 Suite 201A Boise, ID 83714 RE: CASE NO. PAC-E-26-01 IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER FOR AUTHORIZATION TO UPDATE THE WIND AND SOLAR INTEGRATION RATE FOR SMALL POWER GENERATION QUALIFYING FACILITIES Attention: Commission Secretary Pursuant to Order No. 36976 in the above referenced matter Rocky Mountain Power hereby respectfully submits its reply comments to the Idaho Public Utilities Commission. Informal inquiries may be directed to Jana Saba, Director of Regulation, at(801) 220-2823. Very truly yours, A 9��cl� Joelle Steward Senior Vice President, Regulation Enclosure Joe Dallas (ISB# 10330) PacifiCorp, Senior Attorney 825 NE Multnomah Street, Suite 2000 Portland, OR 97232 Email:joseph.dallaskpacificorp.com Attorney for Rocky Mountain Power BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION ) OF ROCKY MOUNTAIN POWER FOR ) CASE NO. PAC-E-26-01 AUTHORIZATION TO UPDATE THE ) WIND AND SOLAR INTEGRATION RATE ) ROCKY MOUNTAIN POWER'S FOR SMALL POWER GENERATION ) REPLY COMMENTS QUALIFYING FACILITIES ) Pursuant to Rule 202.01(d) of the Rules of Procedure of the Idaho Public Utilities Commission ("Commission") and the Commission's March 23, 2026, Notice of Modified Procedure, Rocky Mountain Power a division of PacifiCorp (the "Company") submits reply comments for the Commission's consideration. I. BACKGROUND I. On January 16, 2026, the Company applied for Commission authorization to modify the wind and solar integration rates applicable to new power purchase agreements("PPA") associated with small power generation qualifying facilities ("QFs"). 2. On February 9, 2026, Commission Order No. 36931 provided public notice of the Company's Application and the notice of intervention deadline. No petitions to intervene were filed and the Commission subsequently issued Order No. 36976 on March 23, 2026, authorizing the processing of the Application by Modified Procedure with a procedural schedule allowing written comments by May 21, 2026, and Company reply comments by June 4, 2026. Rocky Mountain Power's Reply Comments I 3. On May 21, 2026, Commission Staff("Staff') filed comments with the following recommendation: (1)Approve integration charges identified in Staff's Attachment A to be applied to both published avoided cost rates and PacifiCorp's integrated resource plan ("IRP") based avoided cost rates; (2) Require the Company to file a Flexible Reserve Study ("FRS") within six months after the filing of each IRP going forward; and(3)Require the Company to include certain information in the FRS. II. REPLY TO STAFF COMMENTS 1. Flexible Reserve Study 4. Staff recommends the Commission require the Company to file a case to update the integration charges within six months of the filing of each IRP. If the Company believes a study is not necessary, it shall file for a waiver of the study with evidence supporting its position within two months of filing the IRP. Staff states that this is consistent with a recent Idaho Power requirement. 5. For the past several integration cost update filings, PacifiCorp's has filed analysis conducted as part of the IRP, and values reported within its IRP.1 Because this information and analysis was already completed as part of the IRP, little time was necessary to prepare for the integration cost filing. There is a broader interest in integration costs, beyond their application to QFs in this proceeding, given their impact on system operations and the cost-effectiveness of different resources. This can impact both wind and solar resources which require integration service, as well as dispatchable resources that regulate the balance of load and resources, and provide integration service, making integration costs an important component of long-term planning and the IRP.PacifiCorp intends to continue refining its modeling and assumptions related 'See e.g.,PacifiCorp's 2025 IRP,Volume II:Appendix F(Flexible Reserve Study),Figure F.11. Rocky Mountain Power's Reply Comments 2 to integration in future IRPs and hopes that the representation of integration costs included in the IRP can generally be considered sufficient for QF pricing, without significant modification or additional scenario analysis. 6. This is administratively efficient given the current magnitude of the integration costs and the scope of their potential application. As an example, the proposed wind and solar integration costs are less than 2 percent of the annual avoided cost price for 2027 under the proposed rates in Case No. PAC-E-26-08, and that percentage falls over time. The present proceeding would impact the integration cost applied to new wind and solar QFs facilities of up to 100 kilowatts ("kW") as there are none in Idaho at present, for a contract term of up to 20 years. For new and renewing wind and solar QFs that are greater than 100 kW, integration costs would apply for a contract term of up to two years,with pricing updated for each two-year term thereafter. Given the current level of integration costs and the small size or short duration of these costs under prospective QF contracts, including resource penetration tiers, modifications to the preferred portfolio, and other adjustments to the IRP results provide little added value. If those additional analyses are required, PacifiCorp agrees that the six-month window for filing an integration cost case would allow time to conduct that analysis. 2. Information to be Provided with Flexible Reserve Study a. Treatment of Capital and Fixed Operations and Maintenance ("O&M") Costs of Regulation Reserves 7. Staff argues that although reserve requirements may not drive additional resource procurement in this study, it is important to understand how the capital and fixed O&M costs of the new resource should be allocated to integration costs. Staff recommends the Company provide evidence to support its position that the new resources in the preferred portfolio are not driven by reserve requirements. Alternatively, Staff states the Company should develop a method to Rocky Mountain Power's Reply Comments 3 determine the capital and O&M cost of the reserves if the Company believes that new resources in the preferred portfolio are driven by reserve requirements. 8. When selecting proxy wind and solar options, PacifiCorp's 2025 IRP did not include an attribution of capital and fixed O&M costs related to integration. To the extent wind and solar QFs contribute to integration requirements in the same manner as non-QF contracts or utility-owned resources, it is reasonable to apply the methodology from PacifiCorp's current planning in its IRP to those QFs. In the 2025 IRP, regulation reserves (which are how integration service is modeled) are held on dispatchable resources that can be deployed when conditions change and the expected resources fall short of load. Under normal conditions, not all resources can be deployed economically, because some dispatchable resources need to be available to respond rapidly, and the regulation reserve requirements input in the model ensure sufficient dispatchable resources are available. Under most stochastic conditions, this remains true, and a supply of dispatchable resources would be maintained. However,under stressed conditions,where there is a risk of loss of load, PacifiCorp would fully deploy its regulation reserves before loss of load could occur. At that point, no matter the quantity of regulation that was forecasted to be necessary, all resources would be deployed to meet load, and no resources would be held back to provide integration service. From that view, integration service would not contribute to incremental resource requirements (and the associated fixed costs). While a loss of load value is one of the inputs used to estimate integration requirements for load,wind, and solar in PacifiCorp's current flexible reserve study, in actual operations PacifiCorp has several factors that reduce the risk of reserve shortfalls below that target.First,the available dispatchable resources may be higher than the required minimum, so PacifiCorp would have more resources available to respond. Second, PacifiCorp would continue to receive forecasts leading up to the time of delivery and Rocky Mountain Power's Reply Comments 4 could begin moving resources with slower ramp rates in anticipation of a forecasted need,resulting in a larger response than the 30-minute ramping capability considered in the flexible reserve study. Third, resources from across the Western Energy Imbalance Market ("WEIM") would be dispatched to help balance PacifiCorp's forecasted shortfall,which could reduce the amount of the shortfall that would need to be met by PacifiCorp directly, beyond the level of WEIM diversity benefits already accounted for in the methodology. 9. While this was a reasonable representation of regulation reserves and integration service for the 2025 IRP, PacifiCorp is exploring modifications in its 2027 IRP to account for its new obligations and processes under the California Independent System Operator's ("CAISO") Extended Day-Ahead Market ("EDAM"), and this topic was addressed in PacifiCorp's June 3-4, 2026 public input meeting.2 As part of EDAM, PacifiCorp must pass a day-ahead resource sufficiency evaluation, which ensures it is bringing enough resources to the market to meet forecasted hourly load plus an additional quantity of flexible resources to account for uncertainty, which is referred to as "Imbalance Reserve Up". The Imbalance Reserve Up product recognizes actual load, wind, and solar vary from day-ahead forecasts, and ensures that sufficient resources are available across the EDAM footprint to respond when actual load is higher than expected and/or actual resources are lower than expected. Participating Balancing Area Authorities ("BAAs") must also meet their other operating reserve requirements (contingency reserves and regulation reserve sufficient to cover variation not addressed by WEIM five-minute-market dispatch). 10. Because reserve requirements are part of the EDAM resource sufficiency evaluation, with penalties for non-compliance, PacifiCorp is proposing to treat reserve shortfalls 2 The presentation and meeting recording for each of PacifiCorp's public input meetings is available at: https://www.pacificorp.com/energy/inte grated-resource-plgnlpublic-input-process.html Rocky Mountain Power's Reply Comments 5 similar to energy shortfalls for the 2027 IRP. Portfolios with reserve shortfalls would be assigned an increased requirement as part of the next portfolio selection iteration,resulting in an incremental need for resources that can cover stressed hours where shortfalls would occur. Under this new approach, integration service would contribute to incremental resource requirements and the associated fixed costs. That said, it may be more appropriate to reduce the capacity contribution of wind and solar resources to reflect a value that is net of incremental uncertainty requirements. In any event, however integration is ultimately applied to wind and solar resources in the 2027 IRP, PacifiCorp would recommend maintaining those assumptions for Idaho wind and solar QFs. This might require a modification to capacity contribution inputs,which were last set for resources priced using the Surrogate Avoided Resource ("SAR")methodology in Case No. GNR-E-11-03. b. Data Selection 11. Staff states that the Company did not use the most recent historical data with sufficient duration in this case as required by Order No. 36243, and recommends the Commission direct the Company to use the most recent data in the next study, including the data from the CAISO EDAM. Staff notes that the Company did not use more recent data because of the timing of the EDAM implementation on May 1, 2026, and that the Company intends to develop a more comprehensive update based on new operating practices from EDAM. Staff recommends the Commission direct the Company to use more recent data in its next study. 12. For its 2027 IRP,PacifiCorp intends to use the available data on Imbalance Reserve Up inputs and requirements,though CAISO has only produced values for PacifiCorp's BAAs since February 2026, when parallel operations under EDAM began. Rocky Mountain Power's Reply Comments 6 c. Clarify Avoided Cost Rate Timing 13. Staff requests the Company clarify if it intends to determine integration charges for IRP-based avoided cost rates in the same model that determines the IRP-based avoided cost rates and review the feasibility of meeting the timelines in Electric Service Schedule No.38—Qualifying Facility Avoided Cost Procedures if both rates are determined in the same case. Staff notes it is unclear if the Company intends to determine integration charges on a case-by-case basis using the same model run. 14. Avoided costs under the IRP methodology begin reflecting the IRP at the time it is filed.3 Between IRPs, there are limited updates for contracts, market prices, and load, and there is a separate process for setting capacity deficiency dates. Therefore, PacifiCorp believes it is appropriate to apply integration costs consistent with the most recently filed IRP under the IRP methodology and that additional process approving those values is unnecessary. The 2025 IRP did not include endogenous adjustments to reserve requirements for each portfolio, so applying the reported integration cost values is the most consistent with the IRP methodology at this time. To the extent future IRPs include modeling that dynamically captures changing integration requirements with each resource addition, the appropriate implementation could change. PacifiCorp believes maintaining consistency with each IRP is appropriate. d. Overestimation/Underestimation of Behind-the-Meter Generation 15. Staff raises a recent issue in an Idaho Power integration charge case involving potential overestimation and underestimation of integration charges for behind-the-meter generation. Staff believes this issue may exist in this case and requests the Company review this case for similar issues. 3 Order No. 32697,at 22(noting that"all other variables and assumptions utilized within the IRP Methodology remain fixed between IRP filings(every two years)"). Rocky Mountain Power's Reply Comments 7 16. PacifiCorp's current export credit rates reflect integration costs from PacifiCorp's 2023 IRP, specifically values for calendar year 2025. PacifiCorp's next export credit rate filing will occur by July 1,2028, and will reflect a 3-year average of export credit values,reflecting data from 2025-2027, i.e. the current approved data for 2025 and updated data for 2026 and 2027. PacifiCorp is open to addressing this issue in more detail as part of its next export credit rate update (i.e. by July 2028). Behind-the-meter generation is not forecasted in the same way as utility-scale resources, so it is not possible to calculate integration requirements for behind-the-meter resources based on errors between forecasted and actual generation. Instead, PacifiCorp could perform additional analysis to quantify the similarities and differences between utility-scale resources assessed in the FRS and behind-the-meter generation. Based on current information, which indicates customer exports exhibit more intra-hour volatility than the utility-scale solar used to develop integration costs, this would likely result in a slight increase in integration cost rates applied to customer exports. PacifiCorp does not believe a comprehensive analysis is necessarily warranted, given solar integration costs are low, projected to decline through time, and would be updated in the export credit rate annually. This topic could be revisited if the geographic diversity of customer exports increases in the future, resulting in lower volatility relative to utility scale solar. As discussed further in the next section, to the extent additional analysis is warranted, PacifiCorp recommends that it be provided as part of its next export credit update, which is due in July 2028, rather than as part of the 2027 IRP. e. Proxy Resource for Behind-the-Meter Generation 14. Staff states that: (1) the Company currently does not apply wind and solar reserve requirements to behind-the-meter resources; (2) existing behind-the-meter resource capacity is captured in the load and is subject to load reserve requirements; and (3) increases in behind-the- Rocky Mountain Power's Reply Comments 8 meter resources can be subject to wind and solar reserve requirements instead of load reserve requirements based on their capacity instead of their hourly generation forecasts. Staff believes more clarity is needed on this topic. Thus, Staff recommends that the Commission direct the Company, in its next study, to examine whether behind-the-meter generation should be presented through a proxy due to lack of data to be subject to wind and solar reserve requirements and whether existing behind-the-meter resources and increases in behind-the-meter resources should be treated differently. 15. The distributed generation forecast developed for the 2027 IRP grows from approximately one gigawatt of resources today to approximately two gigawatts of behind-the- meter resources by 2040, of which approximately 99 percent is solar and/or battery storage, with the remaining capacity totaling approximately 25 megawatt ("MW"), which consists of various technologies, including wind, hydro, and fueled resources like micro turbines and reciprocating engines.4 With that in mind,PacifiCorp does not believe there are sufficient behind-the-meter wind resources to justify conducting separate analysis as part of the FRS for use in its 2027 IRP or as a separate analysis of customer exports. While the scale of behind-the-meter solar generation is sufficient to warrant additional analysis, PacifiCorp recommends that this analysis be provided as part of its next export credit update,which is due in July 2028,rather than as part of the 2027 IRP. The inputs to the 2027 IRP are being locked down in the next few months, ahead of the release of indicative portfolios using those inputs scheduled for October 2026 and a draft 2027 IRP in November 2026.As previously discussed, PacifiCorp plans to incorporate data from EDAM in its 4 See presentation for PacifiCorp's 2027 IRP Public Input Meeting#7.June 3-4,2026. Slide 101 (Cumulative Results by Scenario by Technology). Available at: https://www.pacificorp.com/content/dam/pcorp/documents/eg/pacificop2/energy/integrated-resource-plan/2027- ip2/PacifiCorp 2027 IRP_PIM 7.pd£For discussion of behind-the-meter generating technologies,see PacifiCorp's 2025 IRP,Volume II,Appendix L(Distributed Generation Study).Available at: hLtps://www.pacificorp.com/content/dam/pcorp/documents/enipacificorp/energy/integrated-resource-plan/2025- irp/2025_IRP_Vol 2.pd Rocky Mountain Power's Reply Comments 9 2027 IRP, but the data from EDAM operations is going to be limited and is a result of new processes and data sources, making future refinements likely for both the EDAM processes themselves as well as for PacifiCorp's forecast of requirements for use in its IRP. In addition, the energy cost component in the export credit rate is based on historical actual export volumes and WEIM pricing in each interval. Comparing actual export volumes with EDAM uncertainty requirements for CY2026 and 2027 may also be informative in a way that is unlike the forecasted future requirements developed for use in the IRR As a result, it is reasonable to wait to conduct additional analysis of customer exports, particularly when the next export credit update is more than two years in the future. f. Penetration Levels 16. Staff recommends that the Commission direct the Company to determine reasonable penetration levels in the next study that reflects the actual trend on the Company's system and explore whether a tiered structure of integration charges based on different penetration ranges should be developed. 17. PacifiCorp does not believe modeling of resource penetration levels and tiered integration charges will meaningfully improve the accuracy of avoided costs. PacifiCorp does not currently have any contracts with wind or solar resources eligible for rates under the SAR methodology (i.e. up to 100 kW) and its existing contracts with larger wind QFs in Idaho will continue for more than five years, before being subject to updated pricing every two years thereafter. While wind and solar penetration levels are not certain, the forecast in an IRP is reasonable, including assumptions about the likelihood of expiring QF contracts being renewed. Importantly,wind and solar penetration levels are based on the total quantity of these resources in a portfolio and not just the level of QF additions. For example, while Table No. 2 in Staff's Rocky Mountain Power's Reply Comments 10 Comments shows small quantities of wind and solar QFs added from 2022-2025, in that same time period,PacifiCorp added approximately 1.4 gigawatts of non-QF solar resources and 1.6 gigawatts of non-QF wind resources.As a result, tiers of integration costs based on assumed levels of Idaho QF additions may be rendered obsolete by other changes, including QF additions in other states, changes in QF renewals, or changes in contracted non-QF resources. The aggregate potential capacity from wind and solar resources up to 100 kW is likely to be de minimus given the scale of PacifiCorp's portfolio, with similarly de minimus impacts on integration. While integration cost impacts could change more significantly as a result of QFs priced using the IRP methodology, pricing under the IRP methodology is updated every two years, so it would be repeatedly updated to incorporate more current information. To the extent future IRPs incorporate tiered integration cost requirements, PacifiCorp is not opposed to using those techniques for wind and solar QFs in Idaho but does not believe integration cost tiers should be developed exclusively for Idaho QFs at this time. g. QFs Renewals in Preferred Portfolio 18. Staff states that although the preferred portfolio in this study does not assume new QF developments, it assumes that 75 percent of existing QF capacity will be renewed at the end of their current contract term. Staff believes that the assumption of QF renewals will result in inaccurate integration charges because of a discrepancy between the QF position used to determine integration charges(i.e.within the five-MW range above the preferred portfolio for each balancing area) and the actual QF position in the Company's system (i.e. potentially within the preferred portfolio because it may fill the space of assumed renewed QFs). Therefore, Staff recommends that the Commission direct the Company to determine whether QF renewals should be excluded from the preferred portfolio in the next study. Rocky Mountain Power's Reply Comments I I 19. PacifiCorp believes that the treatment of QFs in IRP modeling is better addressed as part of its IRP public input process and/or as part of the Commission's review of an IRP after it is completed, rather than as an auxiliary assumption in integration cost proceedings. In addition, in the absence of the assumed renewals, it is possible that additional proxy resources of the same type would have been selected, resulting in a comparable overall level of wind and solar, and a comparable level of wind and solar integration requirements. h. Reliability Targets for Energy Supply and Reserve Shortfalls 20. Staff recommends that the Commission direct the Company to determine, in the next study,whether the reliability targets for energy supply shortfalls and reserve shortfalls should be set at a level where the resulting total loss of load does not exceed the industry threshold every year throughout the planning horizon. 21. PacifiCorp's development of integration inputs based on EDAM and associated changes in the treatment of reserve shortfalls for resource selection may result in a better alignment of the combined impacts of energy and reserve shortfalls for the 2027 IRP, helping to address Staff's concerns related to integration costs. More broadly, PacifiCorp's 2025 IRP did not allow for a precise targeting of specific loss of load metrics, as stochastic analysis was conducted at the end of the portfolio development process, at which point there was limited opportunity for further portfolio changes. Correcting the loss of load level in a completed portfolio based on stochastic results is also difficult, as a 100 MW change in resources representing less than 1 percent of PacifiCorp's peak load could significantly change the frequency of loss of load events in a given year, and would also impact the frequency of loss of load events in later years,potentially requiring offsetting resource changes to be identified. In addition, achieving a specific level of reliability is difficult when a portfolio has a large quantity of energy storage, wind, and solar resources, as the Rocky Mountain Power's Reply Comments 12 results may over- or under-shoot the target in ways that are not apparent without rerunning the entire stochastic analysis. Identifying the most cost-effective capacity resource is also difficult, particularly when the long-term portfolio expansion model has limited ability to differentiate the reliability benefits of available options.To be considered in an IRP,portfolios should be reasonably close to the desired level of reliability, but this is primarily for comparability among different candidate portfolios to avoid discarding resource options from an expensive portfolio that was overly reliable relative to other candidates. While PacifiCorp is seeking methods to streamline its portfolio development processes for the 2027 IRP,there is always a tradeoff between precision and time. i. Downward Regulation Reserves 22. Staff states that the proposed integration charges are determined based on upward regulation reserve requirements only,without downward regulation reserve requirements,because the Company can curtail non-QF wind and solar resources. Staff expresses concern that there are costs associated with the curtailment provisions of the non-QF wind and solar contracts and whether these costs should be reflected in the FRS study. Staff is also concerned whether there are any costs of backing down other dispatchable resources for QF wind and solar projects and whether these costs should be reflected in the FRS study.Therefore,Staff recommends that the Commission direct the Company to address the cost issues associated with downward reserves in the next study. 23. PacifiCorp generally has sufficient downward ramping capability among its portfolio of resources, so it does not need to hold additional downward ramping capability on fast- ramping resources. Unlike upward ramping capability, which is capacity that is not currently generating but can be called upon at short notice, downward ramping capability represents resources that are already generating but can be backed down at short notice.PacifiCorp's portfolio Rocky Mountain Power's Reply Comments 13 wind and solar resources includes non-QF power purchase agreements and owned resources, which participate in the WEIM and can reduce their output in response to market signals or system requirements. WEIM automatically identifies the most cost-effective dispatch and can backdown wind and solar resources in economic order based on their variable cost(i.e. their market bid), for example, resources without production tax credits would be backed down ahead of resources that are earning production tax credits. Because wind and solar resources can generally adjust their output rapidly there is less need to spread downward ramping capability across multiple resources, unlike upward ramping capability held on steam units that respond more slowly.Finally,a resource with downward ramping capability generates unless it has been called upon to reduce output to compensate for changing system conditions, so resource dispatch is not automatically impacted, unlike upward ramping capability which prevents a resource from generating with the capacity holding reserves. III. REQUEST FOR RELIEF PacifiCorp supports two of Staff's recommendations, with certain caveats, and recommends that the Commission: 1. Approve integration charges identified in Staff's Attachment A to be applied to published avoided cost rates. (a) PacifiCorp requests that the Commission affirm the use of the integration costs and/or methodology in IRP-based avoided cost rates from an IRP starting at the time the IRP is filed, consistent with most other IRP assumptions;At this time integration charges would be applied at rates identical to those shown in Staff's Attachment A. Rocky Mountain Power's Reply Comments 14 2. Require the Company to file a FRS within six months after the filing of each IRP going forward; (a) Consistent with Staff's suggestion, if the Company believes additional analysis beyond that conducted for the IRP is unnecessary, it would file the FRS from the IRP within two months of the IRP filing; With regard to the data and process for topics to be included in the FRS, PacifiCorp recommends that the Commission: 1. Direct that analysis of integration costs for behind-the-meter generation be included in PacifiCorp's next export credit update filing, to be made by July 1, 2028. 2. Direct that other topics the Commission believes are sufficiently relevant to long-term planning be addressed as part of PacifiCorp's IRP. DATED this 4t'day of June, 2026. Respectfully submitted, ROCKY MOUNTAIN POWER Joe Dallas (ISB# 10330) PacifiCorp,Assistant General Counsel 825 NE Multnomah Street, Suite 2000 Portland, OR 97232 Email:joseph.dallas&pacificorp.com Attorney for Rocky Mountain Power Rocky Mountain Power's Reply Comments 15