20120601Staff to REC 1-3.pdf

RECEIVED
KRISTINE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
P0 BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 6618
Street Address for Express Mail:
472 W WASHINGTON
BOISE ID 83702-5918
Attorney for the Commission Staff
2012 JUN-i AMII: 13
PL,LL L'
'-
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION'S
REVIEW OF PURPA QF CONTRACT
PROVISIONS INCLUDING THE
SURROGATE AVOIDED RESOURCE (SAR)
AND INTEGRATED RESOURCE PLANNING
(IRP) METHODOLOGIES FOR
CALCULATING PUBLISHED AVOIDED
COST RATES.
CASE NO. GNR-E-11-03
COMMISSION STAFF'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE RENEWABLE ENERGY
COALITION
The Staff of the Idaho Public Utilities Commission, by and through its attorney of record,
Kristine A. Sasser, Deputy Attorney General, responds as follows to the Renewable Energy
Coalition's First Production Request to Commission Staff.
REQUEST NO. 1: As shown on Staff Exhibit No. 303, Staff witness McHugh calculates
SAR based avoided cost rates for Idaho Power, Avista and PacifiCorp, for "Baseload, Canal Drop,
Fixed PV Solar, and Wind" resources, based on "Staff's understanding of the utilities' positions,"
but which calculations also include Staff's proposed changes to the SAR model. (Reference
McHugh testimony, page 12). Based on this same "understanding of the utilities' positions," and
using the same Staff proposed changes to the SAR methodology, please make the same
STAFF'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE RENEWABLE
ENERGY COALITION 1 JUNE 1, 2012
computation for each of the three utilities for a run-of-river hydro facility? For purposes of making
this calculation, assume the surrogate run of river hydro unit is a 10 aMW generating station with
an assumed monthly generation regime identical to that of Idaho Power's Swan Falls Generating
station, as shown in Idaho Power's 2011 IRP Appendix C (data), starting on page 96.
http://www.idahoiower.com/pdfs/AboutUsfPlarmingForFuture/irp/20 11/2011 IRPAnnendixCTechnicalAt,pendix.pdf
As part of this response, please explain the basis for the capacity value you have included for each
utility, and provide all workpapers supporting the development of Exhibit 303 for all types of
resources modeled.
RESPONSE TO REQUEST NO. 1: It is not clear to Staff whether REC is requesting
Staff to re-run the SAR model using a run-of-river hydro facility as the surrogate or whether REC
is requesting Staff to calculate avoided cost rates for a run-of-river hydro QF. Staff assumes that
REC is not requesting Staff to re-run SAR model using a run-of-river hydro facility as the
surrogate. Pursuant to Commission Order Nos. 25882 (PacifiCorp), 25883 (Avista), and 25884
(Idaho Power), the surrogate used to calculate the published rates under the SAR methodology is a
combined cycle combustion turbine (CCCT). Staff is unable to re-run the SAR model using a run-
of-river hydro facility as the surrogate without making assumptions on numerous factors including
plant cost, plant life, O&M costs, capacity factor and various escalation rates. At this time, Staff is
not prepared to make the necessary assumptions because no party in this case has proposed a
change to the SAR resource.
The remainder of this response assumes that REC is requesting Staff to calculate avoided
cost rates for a run-of-river QF. Based on the information contained in Idaho Power's IRP, Staff
computes a capacity factor of 71%, a summer on-peak capacity factor of 53%, and a winter on-
peak capacity factor of 83%. See the Excel spreadsheet titled "Response to REC" for the
supporting calculations. These capacity factors would apply to all utilities. The levelized rates for
a 20-year contract with an online date of January 2013 are:
STAFF'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE RENEWABLE
ENERGY COALITION 2 JUNE 1, 2012
• Avista - $48.31
• Idaho Power-$56.09
PacifiCorp..$58.85
To calculate the above rates, one simply needs to substitute the capacity factors into the table titled
"Resource On-Peak Capacity Contributions" in the worksheet titled "New Data" in the workbook
"Updated Avoided Cost Model.xlsm." The worksheet "Avoid New" calculates the values.
Specifically, refer to cells D20 and AP27.
It should be noted that the capacity factors shown in the worksheet "New Data" were
calculated by Avista witness Kalich. The graph shown in Exhibit 303 can be found in the Excel
file "exhibit 303.xlsx."
This response was prepared by Dr. Cathleen M. McHugh. She is also the sponsor.
REQUEST NO. 2: As shown on Staff Exhibit No. 304, Staff witness Sterling calculates
IRP based avoided cost rates for Idaho Power, Avista and PacifiCorp, for "Baseload, Canal Drop,
Fixed PV Solar, and Wind" resources, based on "Staff's understanding of the utilities' results," but
which calculations also include Staff's proposed changes to the IRP model. (Reference Sterling
testimony, pages 19 - 20). Based on this same "understanding of the utilities' results" and using
the same Staff proposed changes to the IRP methodology, please make the same computation for
each of the three utilities for a run-of-river hydro facility? For purposes of making this calculation,
assume the surrogate run of river hydro unit is Idaho Power's Swan Falls Generating station, as
shown in Idaho Power's 2011 IRP Appendix C (data), starting on page 96.
htt://www.idahopower.com/pdfs/AboutUs/p1anningForF'uture/irp/2o 11/2011 IRPAppendixCTechnica1Apiendix.pdf
STAFF'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE RENEWABLE
ENERGY COALITION 3 JUNE 1, 2012
As part of this response, please explain the basis for the capacity value you have included for each
utility, and provide all workpapers supporting the development of Exhibit 304 for all types of
resources modeled.
RESPONSE TO REQUEST NO. 2: The IRP-based avoided cost rates shown in Staff
Exhibit No. 304 were calculated by the utilities, not by Staff. Staff simply compiled the results
calculated by the utilities and displayed them for reference in Exhibit No. 304.
IRP-based avoided cost computations must be performed by each utility using data and
assumptions from its IRP along with project-specific data for the project being modeled. Staff
does not initially perform these computations. Instead, Staff reviews the analysis completed by the
utility, including input data, assumptions, and results. Consequently, for this request, each utility
would need to make the computations.
This response was prepared by Rick Sterling, Engineering Supervisor. Mr. Sterling will be the
sponsor at hearing.
REQUEST NO. 3: Please explain the factors that lead to different results, as between
Staff Exhibit 303 and Staff Exhibit 304, for all five types of resources and for all three utilities?
RESPONSE TO REQUEST NO. 3: Staff Exhibit No. 303 is based on the Staff-
recommended SAR methodology while Staff Exhibit No. 304 is based on the Staff-recommended
IRP methodology. Staff has not investigated which factors drive the differences between the two
methodologies.
This response was prepared by Dr. Cathleen M. McHugh. She will sponsor answers to questions
on the SAR methodology. Rick Sterling will sponsor answers to questions on the IRP
methodology.
STAFF'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE RENEWABLE
ENERGY COALITION 4 JUNE 1, 2012
DATED at Boise, Idaho, this day of June 2012.
Kri tine A. Sasser
Deputy Attorney General
Technical Staff: Rick Sterling
Cathleen McHugh
i:umise/prodreqresponse/gnrel I .3ksrcm staff response to rec I' pr.doc
STAFF'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE RENEWABLE
ENERGY COALITION 5 JUNE 1, 2012
Comparison of Proposed SAR Methodology Rates
Levelized Rates for 20-yr Contract Term, January 2013 Online Date
$120
C!) til
tIj
11
C-s I
D $60 Cri a)
N
a)
a) -I $40
$20
NIP
Deductions to account for integration and for transmission costs and losses are induded for all utilities.
Swan Falls
Actual data taken from Idaho Power IRP
Nameplate capacity (MWh) 25
WZ1
M W 17.74
c
a
tor 0.7096
Average megawatt, 50th percentile water, 50th percentile load
Jan Feb Mar Apr May Jun
2011 21.3 22.3 20 22 20.1 19.6
2012 21.3 22.3 19.9 21.9 20.1 19.6
2013 21.3 22.2 19.9 21.9 20.1 19.5
2014 21.2 22.1 19.8 21.8 20 19.5
2015 21.1 21.8 19.7 21.7 19.9 19.4
2016 21 21.9 19.6 21.6 19.8 19.3
2017 20.9 21.8 19.5 21.5 19.7 19.2
2018 20.8 21.7 19.4 21.4 19.6 19.1
2019 20.4 21.5 19.3 21.3 19.5 19
2020 20.4 21.4 19.2 21.3 19.4 18.9
2021 20.3 21.4 19.1 21.2 19.4 18.9
2022 20.3 21.3 19.1 21.2 19.3 18.9
2023 20.3 21.3 19 21.2 19.3 18.9
2024 20.3 21.3 19 21.2 19.3 18.9
2025 20.3 21.3 19 21.2 19.3 18.9
2026 20.3 21.3 19 21.2 19.3 18.9
2027 20.3 21.3 19 21.2 19.3 18.9
2028 20.3 21.3 19 21.2 19.3 18.9
2029 20.3 21.3 19 21.2 19.3 18.9
2030 20.3 21.3 19 21.2 19.3 18.9
aMw 20.6" 216 193 POP 196 191
Peak capacity factor 0.8254
Surrogate run of river project
Assumed capacity for model (aMW) 10
1. Per RECs request, assume the surrogate has monthly generation regime identical to Swan Falls (above)
ftnaaecapaft
atm above)
Adjusted
Jan Feb Mar Apr May Jun
2011 12.00648 12.57017 11.27369 12.40106 11.33006 11.04822
2012 12.00648 12.57017 11.21732 12.34469 11.33006 11.04822
2013 12.00648 12.5138 11.21732 12.34469 11.33006 10.99185
2014 11.95011 12.45743 11.16096 12.28832 11.27369 10.99185
2015 11.89375 12.28832 11.10459 12.23196 11.21732 10.93548
2016 11.83738 12.34469 11.04822 12.17559 11.16096 10.87911
2017 11.78101 12.28832 10.99185 12.11922 11.10459 10.82274
2018 11.72464 12.23196 10.93548 12.06285 11.04822 10.76638
2019 11.49917 12.11922 10.87911 12.00648 10.99185 10.71001
Staff Response to REC 1St PR
Case No. GNR-E-1 1-3
SEE ELECTRONIC FILE Staff Response to REC 1st PR
6/01/12 Page 1 of 4
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Average
11.49917
11.4428
11.4428
11.4428
11.4428
11.4428
11.4428
11.4428
11.4428
11.4428
11.4428
11.63163
12.06285
12.06285
12.00648
12.00648
12.00648
12.00648
12.00648
12.00648
12.00648
12.00648
12.00648
10.82274 12.00648
10.76638 11.95011
10.76638 11.95011
10.71001 11.95011
10.71001 11.95011
10.71001 11.95011
10.71001 11.95011
10.71001 11.95011
10.71001 11.95011
10.71001 11.95011
10.71001 11.95011
10.93548
10.93548
10.87911
10.87911
10.87911
10.87911
10.87911
10.87911
10.87911
10.87911
10.87911
10.65364
10.65364
10.65364
10.65364
10.65364
10.65364
10.65364
10.65364
10.65364
10.65364
10.65364
Assumptions
1.Peak summer load occurs in July
2.Peak winter load occurs in Jan
Staff Response to REC 1st PR
Case No. GNR-E-1 1-3
Staff Response to REC Vt PR
6/01/12 Page 2of4
Jul Aug Sep Oct Nov Dec aMw
13.6 14.1 14.8 16.4 16.3 19.7 18.4
13.5 14.2 14.8 16.4 16.3 19.6 18.3
13.5 14.2 14.7 16.4 16.3 19.6 18.3
13.4 14.1 14.7 16.4 16.2 19.3 18.2
13.4 14 14.6 16.3 16.1 18.9 18.1
13.3 12.5 14.6 16.2 16.2 19.9 18.0
13.2 12.5 14.5 16.2 16.1 19.5 17.9
13.1 12.4 14.4 16.1 16 19.2 17.8
13.1 12.3 14.3 16.1 15.9 18.9 17.6
13 12.3 14.3 16 15.9 18.7 17.6
13 12.2 14.2 15.9 15.8 18.6 17.5
13 12.2 14.2 15.9 15.8 18.5 17.5
13 12.2 14.2 15.9 15.8 18.5 17.5
13 12.2 14.2 15.9 15.8 18.5 17.5
13 12.2 14.2 15.9 15.8 18.5 17.5
13 12.2 14.2 15.9 15.8 18.5 17.5
13 12.2 14.2 15.9 15.8 18.5 17.5
13 12.2 14.2 15.9 15.8 18.5 17.5
13 12.2 14.2 15.9 15.8 18.5 17.5
13 12.2 14.2 15.9 15.8 18.5 17.5
Jul Aug Sep Oct Nov Dec
7.666111 7.947953 8.342532 9.244428 9.188059 11.10459
7.609742 8.004322 8.342532 9.244428 9.188059 11.04822
7.609742 8.004322 8.286164 9.244428 9.188059 11.O4822
7.553374 7.947953 8.286164 9.244428 9.131691 10.87911
7.553374 7.891585 8.229795 9.188059 9075322 10.65364 ,;"
7.497005 7.046058 8.229795 9.131691 9.131691 11.21732.
7.440637 7.046058 8.173427 9.131691 9.075322 10.99185
7.384269 6.989689 8.117059 9.075322 9.018954 10.82274
7.384269 6.933321 8.06069 9.075322 8.962585 10.65364
10.3
Staff Response to REC 1st PR
Case No. GNR-E-1 1-3
Staff Response to REC 1st PR
6/01/12 Page 3of4
7.3279 6.933321 8.06069 9.018954 8.962585 10.5409 9.9
7.3279 6.876952 8.004322 8.962585 8.906217 10.48453 9.9
7.3279 6.876952 8.004322 8.962585 8.906217 10.42817:..,. 9.9
7.3279 6.876952 8.004322 8.962585 8.906217
7.3279 6.876952 8.004322 8.962585 8.906217 1O.42817 %. kA
7.3279 6876952 8004322 8962585 8906217 1042817 y
7.3279 6876952 8004322 8962585 8906217 1042817
7.3279 6876952 8004322 8962585 8906217 10428174!!I9*
7.3279 6876952 8004322 8962585 8906217 1042817 98
73279 6876952 8004322 8962585 8906217 1042817 98
73279 6876952 8004322 8962585 8906217 1042817
7.415271
AMM
Staff Response to REC Vt PR
Case No. GNR-E-1 1-3
Staff Response to REC Vt PR
6/01/12 Page 4of4
4cnJ I flWIJfllIIfl U flJI1 flI.flUIIIl CtP'.J - P.flIIUML CItCflUI 'Jul UJJIJA
Natural Gas Price Forecast
by Year FUEL COS1
YEAR (2010 $ per MMBtu) ($ per MMBtu) $/MWh
2009 4.49 4.44 31.53
2010 5.02 5.02 35.63
2011 4.18 4.24 30.11
2012 398 4.09 2907
2013 3.91 4.07 28.89
2014 3.76 3.97 28.21
2015 3.98 4.29 3043
2018 4.01 4.41 31.28
2017 4.18 4.68 3321
2018 4.39 5.01 35.59
2019 4.55 5.30 37.66
2020 4.67 5.55 39.42
2021 5.00 6.06 43.02
2022 5.34 6.60 46.87
2023 5.52 6.97 49.51
2024 5.60 7.22 51.27
2025 5.63 7.41 52.59
2026 5.80 7.78 55.21
2027 6.02 8.24 58.48
2028 6.10 8.51 60.41
2029 8.10 8.67 61.57
2030 6.15 8.92 63.31
2031 6.30 9.31 66.07
2032 6.48 9.74 69.16
2033 6.64 1017 72.21
2034 8.82 10.84 75.51
2035 7.05 11.19 79.48
AVOIDED COST CALCULATION MODEL version io
Idaho Public Utilities Commission 513112012
PRELIMINARY
1.Choose Utility H vi
2.Choose Condition NON-RfO V
Nui
Note: Currently this model does not compute Fueled rates correctly. -1
3.Choose specific resource 0
Hd vi
20-yr Levelized rate 7
2012 on-line date: 45.08 8
in Eth 303 9
2014 on-line date: 4895 10
2015 on-line date: 51.30 11
2018 On-line date: 53.70 12
2017 on-line date: 56.23 13
14
15
INPUT
DATA
PCP
I DATA
Als
SAR PLANT LIFE (YEARS) I 30
SAR PLANT COST ($c1 1313.00
BASE YEAR OF SAR" COST I 2008
SAR CAPACITY FACTOR (%)I 90.0%
HEAT RATE (BTU/kW,): 7,100
JTILITY WEIGHTED COST OF CAPITAL (%): 7.980%
RATEPAYER DISCOUNT RATE (%)j 7.980%
"EAR" FIXED O&M ($/kA 14.57
SAR" VARIABLE O&M ($/MWh)I 1.77
CURRENT YEAR GAS PRICE ($IT4MBTU 409
CURRENT YEAR FUEL COST ($/MWh) 29.07
BASE YEAR, O&M EXPENSES 2008
BASE YEAR FUEL COST4.___,
ESCALATION RATE. SAR . 1.40%
ESCALATION RATE; O&M (%)l 2.00%
ADJUSTABLE PORTION ($JMWh) 0.00 To
CAPITAL CARRYING CHARGE (% 11.l%
LEVEL CARRYING COST ($/M1Mi
TILTING RATE (%) 1.40%
TYPE OF RATES NON-FUELED
CURRENT YEAR 2012
Cl)
i':I
tjj
Z CD
CD
CD
Eo
- 0
CD
16
17
18
19
20
21
22
23
24
25
General inflation rate 2.0% per year
Note The Annual Energy Outlook includes both a real and nominal forecas
be updated when model is capable of computing 'Fueled
Updated Avoided Cost Model.xlsrn
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 1ST DAY OF JUNE 2012,
SERVED THE FOREGOING STAFF RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE RENEWABLE ENERGY COALITION, IN CASE NO. GNR-E-1 1-03,
BY E-MAILING AND MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
DONOVAN E WALKER
JASON B WILLIAMS
IDAHO POWER COMPANY
P0 BOX 70
BOISE ID 83707-0070
MICHAEL G ANDREA
AVISTA CORPORATION
1411 EMISSION AVE
SPOKANE WA 99202
ROBERT D KAHN
NW & INTERMOUNTAIN POWER
PRODUCERS COALITION
1117 MINOR AVE STE 300
SEATTLE WA 98101
ROBERT A PAUL
GRAND VIEW SOLAR II
15690 VISTA CIRCLE
DESERT HOT SPRINGS CA 92241
THOMAS H NELSON
RENEWABLE ENERGY COALITION
P0 BOX 1211
WELCHES OR 97067
R GREG FERNEY
MIMURA LAW OFFICES PLLC
2176 E FRANKLIN RD
STE 120
MERIDIAN ID 83642
DANIEL E SOLANDER
TED WESTON
ROCKY MOUNTAIN POWER
201 5 MAIN ST STE 2300
SALT LAKE CITY UT 84111
PETER J RICHARDSON
GREGORY M ADAMS
RICHARDSON & O'LEARY
515 N 27TH STREET
BOISE ID 83702
DON STURTEVANT
ENERGY DIRECTOR
J R SIMPLOT COMPANY
P0 BOX 27
BOISE ID 83707-0027
JAMES CARKULIS
EXERGY DEVELOPMENT GROUP OF
IDAHO LLC
802 W BANNOCK ST STE 1200
BOISE ID 83702
JOHN R LOWE
RENEWABLE ENERGY COALITION
12050 SW TREMONT ST
PORTLAND OR 97225
BILL PISKE MGR
INTERCONNECT SOLAR
DEVELOPMENT LLC
1303 E CARTER
BOISE ID 83706
CERTIFICATE OF SERVICE
RONALD L WILLIAMS WADE THOMAS
WILLIAMS BRADBURY DYNAMIS ENERGY LLC
1015 W HAYS ST 776 E RIVERSIDE DR
BOISE ID 83702 STE 15
EAGLE ID 83616
BRAIN OLMSTEAD MEGAN WALSETH DECKER
GENERAL MANAGER SR STAFF COUNSEL
TWIN FALLS CANAL CO RENEWABLE NW PROJECT
P0 BOX 326 421 SW 6TH AVE STE 1125
TWIN FALLS ID 83303 PORTLAND OR 97204
TED DIEHL BILL BROWN CHAIR
GENERAL MANAGER BOARD OF COMMISSIONERS
NORTH SIDE CANAL CO OF ADAMS COUNTY ID
921 N LINCOLN ST P0 BOX 48
JEROME ID 83338 COUNCIL ID 83612
TED S SORENSON P E GLENN IKEMOTO
BIRCH POWER COMPANY MARGARET RUEGER
5203 SOUTH I TH EAST IDAHO WINDFARMS LLC
IDAHO FALLS ID 83404 672 BLAIR AVE
PIEDMONT CA 94611
M J HUMPI-IRIES ARRON F JEPSON
BLUE RIBBON ENERGY LLC BLUE RIBBON ENERGY LLC
3470 RICH LANE 10660 SOUTH 540 EAST
AMMON ID 83406 SANDY UT 84070
DEAN J MILLER BENJAMIN J OTTO
McDEVITF & MILLER LLP ID CONSERVATION LEAGUE
P0 BOX 2564 P0 BOX 844
BOISE ID 83701 BOISE ID 83702
KEN MILLER MARV LEWALLEN
SNAKE RIVER ALLIANCE CLEAR WATER PAPER CORP
BOX 1731 STE1100
BOISE ID 83701 601 W RIVERSIDE AVE
SPOKANE WA 99201
ENERGY INTEGRITY PROJECT
TAUNA CHRISTENSEN
769N 1100
SHELLEY ID 83274
'. 'q', G, Z, cr- b,
SECRETARY
CERTIFICATE OF SERVICE