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HomeMy WebLinkAbout20110225IPC to NIPPC 67-68.pdfLISA D. NORDSTROM Lead Counsel Inordstromcæidahopower.com esIDA~POR~ An IDACORP Company February 25, 2011 VIA HAND DELIVERY Jean D. Jewell, Secretary Idaho Public Utilties Commission 472 West Washington Street P.O. Box 83720 Boise, Idaho 83720-0074 Re: Case No. GNR-E-10-04 IN THE MA ITER OF THE JOINT PETITION OF IDAHO POWER COMPANY, AVISTA CORPORATION, AND PACIFICORP DBA ROCKY MOUNTAIN POWER TO ADDRESS AVOIDED COST ISSUES AND TO ADJUST THE PUBLISHED AVOIDED COST RATE ELIGIBILITY CAP Dear Ms. Jewell: Enclosed for filng please find an original and three (3) copies of Idaho Power Company's Response to the Sixth Production Request ofthe Northwest and Intermountain Power Producers Coalition to the Joint Utilties in the above matter. Very truly yours, ~A/j)Y¿~ Lisa D. Nordstrom LDN:csb Enclosures 1221 W. Idaho St. (83702) P.O. Box 70 Boise, ID 83707 DONOVAN E. WALKER (ISB No. 5921) LISA D. NORDSTROM (ISB No. 5733) Idaho Power Company P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-5317 Facsimile: (208) 388-6936 dwalker(âidahopower.com Inordstrom(âidahopower.com Attorneys for Idaho Power Company Street Address for Express Mail: 1221 West Idaho Street Boise, Idaho 83702 REeF:; zon FEB 25 Pr1 3= 51 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE JOINT PETITION OF IDAHO POWER COMPANY, AVISTA CORPORATION, AND PACIFICORP DBA ROCKY MOUNTAIN POWER TO ADDRESS AVOIDED COST ISSUES AND TO ADJUST THE PUBLISHED AVOIDED COST RATE ELIGIBILITY CAP. ) ) CASE NO. GNR-E-10,.04 ) ) IDAHO POWER COMPANY'S ) RESPONSE TO THE SIXTH ) PRODUCTION REQUEST OF THE ) NORTHWEST AND ) INTERMOUNTAIN POWER ) PRODUCERS COALITION TO THE ) JOINT UTILITIES ) COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and in response to the Sixth Production Request of the Northwest and Intermountain Power Producers Coalition to the Joint Utilties dated February 4, 2011, herewith submits the following information: IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 1 REQUEST NO. 67: Reference the transcript of oral argument before the Idaho Public Utilties Commissions on January 27,2011 at pages 18 -19, wherein Mr. Walker asserted: Idaho Power in its reply comments disclosed that the softare provider for its modeling program, AURORA, had advised us that there may be some kind of modeling problems with that softare for vey (sic) small projects under two megawatts in size and we disclosed that in our reply comments, and prior to that time Idaho Power has not been required to run AURORA on projects that small and in fact, we have not run projects smaller than two megawatts through the AURORA modeling, and for several of the reasons that we've outlined in our documents, we had received no requests from anyone to run AURORA pricing for avoided costs for projects that low either. However, since the time, since January 19th at the time when we filed our reply comments, obviously, we've been working on this issue, we consulted with Avista and found out that Avista routinely runs their AURORA modeling for 100 kilowatt projects as part of their IRP process. Also the Company's analysts also ran several test modelings at 100 kilowatt levels and the Company is confident that the modeling does result in accurate and usable results for projects smaller than two megawatts . . . Also reference ¡d. at page 20, wherein Mr. Walker asserted: Well, first of all, Madam Commissioner, the Company never did state anywhere that the AURORA modeling was flawed, so we object to that characterization . . . (a) Please reconcile the assertion quoted above that the "Company never did state anywhere that the AURORA modeling was flawed" with Idaho Power's Reply Comments at p. 13 stating: If the project is small enough that it does not trigger changes in the base model operations, i.e., it is lost in the rounding to MWs or MWhs, then the base model results could be identical to the modeled results that include the project. This would result in an AURORA pricing of zero. IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 2 While Idaho Power believes using the I RP-based methodology for any project above 100 kW is the right answer, there are some limitations to modeling projects below a certain size. To remedy this situation, Idaho Power proposes to work with Staff to reach an appropriate solution (b) Please identify the "Company's analysts" who "also ran several test modelings" and provide the models they ran along with all supporting work papers. (c) For Avista, please identify the individuals at the company who were "consulted with" by Idaho Power, the dates of said consultations and provide a summary of the consultations. Please provide copies of all information, studies or models provide (sic) to Idaho Power regarding AURORA and its abilty to estimate avoided costs for projects larger than 100 kW. (d) For Idaho Power please identify the individuals at the company who "ran several test modelings" and provide a copy of the results of the test modelings along with supporting work papers. (e) For Idaho Power, please identify the individuals at the company who "consulted with" Avista, the dates of said consultations and provide a summary of the consultations. Please provide copies of all information, studies or models provide (sic) to Idaho Power by Avista regarding AURORA and its abilty to estimate avoided costs for projects larger than 100 kW. (f) For Avista and Idaho Power, please provide copies of and supporting work papers for the three most recent iterations of Avista's "routin(e) . . . runs (of) their AURORA modeling for 100 kilowatt projects as part of their IRP process." IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 3 (g) Has Idaho Power had any communications "with Staff to reach an appropriate solution"? If so, please summarize those communications, identify and provide copies of any documents exchanged as part of those communications. (h) For Idaho Power, please provide all additional evidence supporting the claim in Mr. Walter's (sic) oral argument that AURORA yields accurate results for QF projects smaller than 2 MW. RESPONSE TO REQUEST NO. 67: (a) The quoted language in Northwest and Intermountain Power Producers Coalition's ("NIPPC") Request No. 67(a) from Idaho Power's Reply Comments does not state that the AURORAmpCI ("AURORA") modeling was flawed; thus, NIPPC's request to "reconcile" the statements is unclear, as the two statements are consistent with each other. (b) Richard Pagoaga, Senior Power Supply Planning Analyst; Tom Noll, Senior Power Supply Planning Analyst; and Philp DeVol, Power Supply Planning Leader, were involved with running AURORA test models. Attached is a table summary of the analysis showing the AURORA avoided cost of energy results run at 100 kilowatts ("kW"), 2 megawatts ("MW"), 1 0 MW, and 80 MW. This table shows only the avoided cost of energy modeled by AURORA, and does not contain the avoided cost of capacity component, which is added to the value of the energy in determining the total avoided cost rate. As can be seen in the table, the avoided cost of energy modeled at 100 kW did not give consistent annual results, just as disclosed by Idaho Power in its Comments. However, Idaho Power is confident that AURORA can be utilized to appropriately determine an avoided cost of energy for any potential PURPA generation IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 4 project. From Idaho Power's review of the "base case vs. study case" approach, on a per megawatt-hour ("MWh") basis, a project's avoided cost of energy can be assumed to be comparable independent of nameplate capacity. Modeling suggests that the avoided cost of energy for same type resources with identical operating characteristics is comparable on a per MWh basis for projects sized from 10 MW to 80 MW. The Company believes the avoided cost of energy on a per MWh basis determined for a 10 average megawatt ("aMW") project could be applied to all projects of the same type producing less than 1 0 aMW. (c) As this question is directed to Avista only, please see Avista's response to NIPPC's Request No. 67(c). (d) Please see the Company's Response to NIPPC's Request No. 67(b) above. (e) Richard Pagoaga, Senior Power Supply Planning Analyst; Tom Noll, Senior Power Supply Planning Analyst; and Randy Allphin, Senior Power Supply Energy Contracts Coordinator, from Idaho Power consulted with Clint Kalich and Mr. Gall from Avista regarding the use of AURORA modeling for projects smaller than 2 MW. The first such consultation was on January 21, 2010, with a second consultation on January 26, 2010. Idaho Power described how it used AURORA to calculate the avoided cost of energy for PURPA projects and Avista described how it used 100 kW resources in AURORA for its Integrated Resource Plan ("IRP") modeling. There were no materials provided or exchanged. IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 5 (f) Idaho Power was not provided with nor does it possess copies of, and/or supporting work papers for, the three most recent iterations of Avista's runs of their AURORA modeling for 100 kW projects as part of their IRP process. (g) No. (h) There are two methods in the AURORA electric market model to value the avoided cost of energy using the IRP methodology. First, there is the "mark-to-market" approach where the hourly market price calculated in AURORA is multiplied by the PURPA project's hourly generation to derive the avoided cost of energy. Second, there is the "base case vs. study case" approach (the method Idaho Power currently uses) where, in the study case, AURORA is used to simulate how the energy received from the proposed PURPA project would displace the cost of other resources in the preferred portolio from Idaho Power's IRP. The total cost of the study case is then compared to the total cost of the preferred portolio from the IRP (the base case), with the difference being the gross avoided cost of energy. On an annual basis, the gross avoided cost of energy is divided by the forecasted annual generation from the proposed PURPA project in order to derive an annual avoided cost for the energy. A capacity (fixed) cost credit using a combined cycle combustion turbine as a surrogate resource is then added and any applicable deductions are subtracted to calculate an adjusted avoided cost for each year of the contract. The fixed cost credit is based upon the PURPA project's capacity factor during the July hours from 3:00 p.m. to 7:00 p.m. For intermittent and variable wind and solar PURPA projects, the 90 percent exceedance capacity factor from these respective existing projects in Idaho Power's service territory is used. Finally, the stream of avoided costs is uniformly escalated and then discounted using IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 6 Idaho Power's weighted average cost of capital to establish a levelized avoided cost rate for the proposed PURPA project. Idaho Power is confident that AURORA can be utilzed to appropriately determine an avoided cost of energy for any potential PURPA generation project. From Idaho Power's review of the "base case vs. study case" approach, on a per MWh basis, a project's avoided cost of energy can be assumed to be comparable independent of nameplate capacity. Modeling suggests that the avoided cost of energy for same type resources with identical operating characteristics is comparable on a per MWh basis for projects sized from 10 MW to 80 MW. The Company believes the avoided cost of energy on a per MWh basis determined for a 10 aMW project could be applied to all projects of the same type producing less than 10 aMW. The response to this Request was prepared by Richard Pagoaga, Senior Power Supply Planning Analyst, Idaho Power Company, in consultation with Donovan E. Walker, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 7 REQUEST NO. 68: Please reference the transcript of Counsel for Avista's oral argument before the Idaho Public Utilties Commission on January 27,2011 at page 29 wherein Mr. Andrea stated: I do want to address just really quickly Idaho Power's concerns about the AURORA program working for two megawatts or less. As Mr. Walker noted, Idaho Power has worked with Avista over the past week or so to work on that issue and I think they've come to the conclusion that they're comfortable that it does in fact work. (a) Please identify the personnel at Avista who "worked" with Idaho Power in the two weeks prior to oral argument. Please also identify the personnel from Idaho Power who they worked with. (b) Please provide all documentation related to the work referenced in Mr. Andrea's statement, including AURORA model runs, work papers and correspondence. RESPONSE TO REQUEST NO. 68: (a) & (b)As this question is directed to Avista only, please see Avista's responses to NIPPC's Requests Nos. 68(a) and (b). The response to this Request was prepared by Donovan E. Walker, Lead Counsel, Idaho Power Company. DATED at Boise, Idaho, this 25th day of February 2011. DONOVAN E. W Attorney for Idah IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 8 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 25th day of February 2011 I served a true and correct copy of the IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO JOINT UTILITIES upon the following named parties by the method indicated below, and addressed to the following: Commission Staff Donald L. Howell, II Kristine A. Sasser Deputy Attorneys General Idaho Public Utilties Commission 472 West Washington P.O. Box 83720 Boise, Idaho 83720-0074 -2 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email don.howell(âpuc.idaho.gov kris.sasser(âpuc.idaho.gov Avista Corporation Michael G. Andrea Clint Kalich . Avista Corporation 1411 East Mission Avenue - MSC-23 P.O. Box 3727 Spokane, Washington 99220-3727 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email michael.andrea(âavistacorp.com clint. kalich(âavistacorp. com PacifiCorp d/b/a Rocky Mountain Power Daniel E. So lander J. Ted Weston Rocky Mountain Power 201 South Main Street, Suite 2300 Salt Lake City, Utah 84111 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email daniel.solander(âpacificorp.com ted. weston(âpacificorp.com Kenneth Kaufmann LOVINGER KAUFMANN, LLP 825 NE Multnomah, Suite 925 Portland, Oregon 97232 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email kaufmann(âlklaw.com Bruce Griswold PacifiCorp 825 NE Multnomah Portland, Oregon 97232 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email bruce.griswold(âpacifiCorp.com IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 9 Exergy, Grand View Solar, J. R. Simplot, Northwest and Intermountain Power Producers Coalition, & Board of Commissioners of Adams County, Idaho Peter J. Richardson Gregory M. Adams RICHARDSON & O'LEARY, PLLC 515 North 27th Street P.O. Box 7218 Boise, Idaho 83702 Exergy Development Group James Carkulis, Managing Member Exergy Development Group of Idaho, LLC 802 West Bannock Street, Suite 1200 Boise, Idaho 83702 Grand View Solar II Robert A. Paul Grand View Solar II 15960 Vista Circle Desert Hot Springs, California 92241 J.R. Simplot Company Don Sturtevant, Energy Director J.R. Simplot Company One Capital Center 999 Main Street P.O. Box 27 Boise, Idaho 83707-0027 Northwest and Intermountain Power Producers Coalition Robert D. Kahn, Executive Director Northwest and Intermountain Power Producers Coalition 1117 Minor Avenue, Suite 300 Seattle, Washington 98101 Renewable Energy Coalition Thomas H. Nelson, Attorney P.O. Box 1211 Welches, Oregon 97067-1211 Hand Delivered -2 U.S. Mail _ Overnight Mail--FAX _Email peter(ârichardsonandoleary.com gregcærichardsonandoleary.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email jcarkuliscæexergydevelopment.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email robertapaul08cægmail.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email don.sturtevantcæsimplot.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email rkahncænippc.org Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email nelsoncæthnelson.com IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES -10 John R. Lowe, Consultant Renewable Energy Coalition 12050 SW Tremont Street Portland, Oregon 97225 Cedar Creek Wind, LLC, & Dynamis Energy, LLC Ronald L. Wiliams WILLIAMS BRADBURY, P.C. 1015 West Hays Street Boise, Idaho 83702 Cedar Creek Wind, LLC Scott Montgomery, President Cedar Creek Wind, LLC 668 Rockwood Drive North Salt Lake, Utah 84054 Dana Zentz, Vice President Summit Power Group, Inc. 2006 East Westminster Spokane, Washington 99223 Dynamis Energy, LLC Wade Thomas, General Counsel Dynamis Energy, LLC 776 East Riverside Drive, Suite 15 Eagle, Idaho 83616 Idaho Windfarms, LLC Glenn Ikemoto Margaret Rueger Idaho Windfarms, LLC 672 Blair Avenue Piedmont, California 94611 Interconnect Solar Development, LLC R. Greg Ferney MIMURA LAW OFFICES, PLLC 2176 East Franklin Road, Suite 120 Meridian, Idaho 83642 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email jravenesanmarcoscæyahoo.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email roncæwilliamsbradbury.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email scottcæwesternenergy.us Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email dzentzcæsummitpower.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email wthomascædynamisenergy.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email glennicæEnvisionWind.com MargaretcæEnvisionWind .com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email gregcæmimuralaw.com IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 11 Bil Piske, Manager Interconnect Solar Development, LLC 1303 East Carter Boise, Idaho 83706 Intermountain Wind LLC Dean J. Miler McDEVITT & MILLER LLP 420 West Bannock Street P.O. Box 2564 Boise, Idaho 83701 Paul Martin Intermountain Wind LLC P.O. Box 353 Boulder, Colorado 80306 North Side Canal Company and Twin Falls Canal Company Shelley M. Davis BARKER ROSHOLT & SIMPSON, LLP 1010 West Jefferson Street, Suite 102 P.O. Box 2139 Boise, Idaho 83701-2139 Brian Olmstead, General Manager Twin Falls Canal Company P.O. Box 326 Twin Falls, Idaho 83303 Ted Diehl, General Manager North Side Canal Company 921 North Lincoln Street Jerome, Idaho 83338 Board of Commissioners of Adams County, Idaho Bil Brown, Chair Board of Commissioners of Adams County, Idaho P.O. Box 48 Council, Idaho 83612 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email bilpiskecæcableone.net Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email joecæmcdevitt-miler.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email paulmartincæintermountainwind.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email smdcæidahowaters.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email olmsteadcætfcanal.com Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email nscanaicæcableone.net Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email bdbrowncæfrontiernet.net IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES - 12 Birch Power Company Ted S. Sorenson, P.E. Birch Power Company 5203 South 11 th East Idaho Falls, Idaho 83404 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email tedcætsorenson.net Blue Ribbon Energy LLC M. J. Humphries Blue Ribbon Energy LLC 4515 South Ammon Road Ammon, Idaho 83406 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email blueribbonenergycægmail.com Arron F. Jepson Blue Ribbon Energy LLC 10660 South 540 East Sandy, Utah 84070 Hand Delivered U.S. Mail _ Overnight Mail FAX -2 Email arronesgcæaol.com £i2i¡~1kDonovan E. WaÎr. ~ IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH PRODUCTION REQUEST OF THE NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALITION TO THE JOINT UTILITIES -13 BEFORE THE \ IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. GNR-E-10-04 IDAHO POWER COMPANY RESPONSE TO NIPPC'S REQUEST NO. 67 Avoided Cost of Energy Modeled in AURORA (Biomass Project) Annual average $/MWh, non-/evelized, using Idaho Power's IRP methodology 1'(ll.tCi2012 $140.14 $42.54 $33.43 $36.90 2013 $281.06 $52.30 $49.34 $39.64 2014 $940.06 $11.06 $38.67 $40.33 2015 $724.27 $17.82 $48.20 $41.41 2016 ($5.42) $35.54 $39.88 $41.75 2017 $1,308.52 $128.33 $52.57 $44.30 2018 $765.88 $80.47 $51.98 $44.27 2019 $69.57 $33.47 $46.31 $45.32 2020 $84.01 $49.86 $47.14 $47.22 2021 $166.71 $67.83 $46.95 $48.18 2022 $201.75 $63.21 $42.16 $48.79 2023 $726.17 $102.83 $63.55 $54.23 2024 $320.91 $110.42 $63.37 $55.92 2025 ($302.05) $38.38 $55.79 $56.30 2026 ($60.21) $47.76 $55.28 $58.38 2027 $218.70 $27.12 $70.38 $58.60 2028 $1,275.93 $77.44 $57.81 $62.93 2029 ($1,093.74) $38.59 $61.88 $61.58 Average ($/MWh)$320.12 $56.94 $51.37 $49.22 Note: This analysis does not include the avoided cost of capacity, which is added to the value of the energy in determining the total avoided cost rate.