20170808IPC to Staff 1-15.pdf

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An IDACORP Company
DONOVAN E. WALKER
Lead Counsel
[e-mail]
August 8,2017
VIA HAND DELIVERY
Diane M. Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re Case No. GNR-E-17-02
Review of Surrogate Avoided Resource (SAR) Methodology - ldaho
Power Company's Response to the First Production Request of the
Commission Staff
Dear Ms. Hanian
Enclosed for filing in the above matter please find an original and three (3) copies
of ldaho Power Company's Response to the First Production Request of the
Commission Staff.
Also enclosed are four (4) copies of a non-confidential disk containing
information responsive to Staff's production requests.
Very truly yours,
Donovan E. Walker
DEW:csb
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West Idaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@idahopower. com
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY TO
REVIEW THE SURROGATE AVOIDED
RESOURCE (SAR) METHODOLOGY
FOR CALCULAT! NG PUBLISHED
AVOIDED COST RATES
-8 Pl''t h: 52
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. GNR-E-17-02
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE COMMISSION STAFF
COMES NOW, ldaho Power Company ("ldaho Power" or "Company"), and in
response to the First Production Request of the Commission Staff to ldaho Power dated
July 18,2017, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1
REQUEST NO. 1: Please provide the Natural Gas Spot Price at Henry Hub
forecast data and the website where it is located as referenced on page 2 of the
Amended Application.
RESPONSE TO REQUEST NO. 1: The Natural Gas Spot Price at Henry Hub
referenced on page 2 of the Amended Application is provided on the enclosed CD. The
website address is:
https://www.eia.gov/outlooks/aeo/data/browserl#l?id=13-AE02014&region=0-
0&cases= ref20 1 4&starl=201 1 &end=2040&f=A&sou rcekey=Q.
The response to this Request is sponsored by Rick Haener, Power Supply
Planning Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 2
REQUEST NO. 2: Please provide the Sumas and ldaho City Gate differentials to
the Henry Hub forecast as referenced on page 2 of the Amended Application. Please
include the source of the differential data (and links to website if applicable), and
worksheets that show how the calculation of the resulting forecast is derived. Please
provide all worksheets with formulas intact.
RESPONSE TO REQUEST NO. 2: The Sumas basis and the transport costs
included in the 2015 lntegrated Resource Plan ("lRP") that are currently used in the
incremental cost IRP avoided cost pricing methodology are shown in the Excel file
provided on the enclosed CD in the columns labeled "Sumas Adder" and "Transport
Cost (nominal)," respectively, located on the "Summary" tab. This Excel file also
includes source data and documentation, as well as working formulas that detail how
the figures were calculated. The columns labeled "Nominal ldaho City Gate Price" and
"Calculated Sumas Price" demonstrate how the resulting forecast was calculated.
The response to this Request is sponsored by Rick Haener, Power Supply
Planning Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
REQUEST NO. 3: Please provide the 20 year EIA Mountain Region forecasts
and the 20 year Natural Gas Spot Price at Henry Hub forecasts adjusted for pricing at
Sumas and ldaho City Gate published each year over the past twenty years. Please
provide allworksheets with formulas intact.
RESPONSE TO REQUEST NO. 3: Please see the Excel file provided on the
enclosed CD containing the following forecasts prepared by the United States Energy
lnformation Administration ("EIA"): (1) Mountain Region forecasts (nominal $/MMBtu)
developed for the 2010 through 2017 Annual Energy Outlook reports, (2) Natural Gas
Spot Price at Henry Hub: Reference Case forecasts (nominal $/MMBtu) developed for
the 2010 through 2017 Annual Energy Outlook reports, and (3) Natural Gas Spot Price
forecasts at Henry Hub: High Oil and Gas Resource and Technology scenario (nominal
$/MMBtu) developed for the 2013 through 2017 Annual Energy Outlook reports. The
Excel file also includes a link to each forecast on EIA's website. Please note the "Henry
Hub: High Oil and Gas Resource and Technology" scenario was first provided by EIA in
the 2013 Annual Energy Outlook and is therefore unavailable for years prior to 2013.
For the Mountain Region and Natural Gas Spot Price at Henry Hub: Reference Case
forecasts, the file contains forecasts beginning with the 2010 Annual Energy Outlook, as
data for reports prior to 2010 is not available in electronic format on EIA's website.
Annual Energy Outlook reports prior to 2O1O are available as archived PDF files listed in
the column "Annual Energy Outlook" on EIA's website via the following link:
https : //www. e ia. g ov/o utlooks/aeo/a rch ive. p h p.
As a point of clarification, please note that ldaho Power used EIA's Annual
Energy Outlook Natural Gas Spot Price at Henry Hub: High Oil and Gas Resource and
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REOUEST OF THE COMMISSION STAFF - 4
Technology (nominal $/MMBtu) forecast for its 2017 IRP and is recommending its use in
the surrogate avoided resource methodology as detailed in the Company's Application
in this case. Prior to this case, ldaho Power did not use this forecast and is therefore
only providing prior forecasts for the ldaho Public Utilities Commission Staff's ("Staff')
reference. Additionally, the Sumas basis and transport costs are calculated by ldaho
Power as detailed in the Company's response to Staff's Request No. 2 and are not
included in the data published in the Annual Energy Outlook prepared by ElA.
The response to this Request is sponsored by Rick Haener, Power Supply
Planning Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REOUEST OF THE COMMISSION STAFF - 5
REQUEST NO. 4: Please provide the actual annual natural gas prices for ldaho
Power over the past twenty years and explain how they are calculated. Please provide
all worksheets with formulas intact.
RESPONSE TO REQUEST NO.4: The earliest available data in the Company's
transaction database is March 2009. The Langley Gulch combined cycle facility went
into service mid-year 2012 causing the large jump in volume starting that year. The
weighted average price per MMBtu for physical natural gas purchases on an annual
basis is listed in the Excel spreadsheet provided on the enclosed CD. The weighted
average cost of gas was calculated by summing the annual cost of gas purchased
divided by the nominal quantity of gas purchased.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 6
REQUEST NO. 5: Please provide the annual amounts, prices, and percentages
of natural gas for each hub from which ldaho Power purchased gas over the last five
years. Please provide allworksheets with formulas intact.
RESPONSE TO REQUEST NO. 5:The Excel spreadsheet provided on the
enclosed CD summarizes annual natural gas purchases from 2012 through 2016,
including annual amount by hub, weighted average purchase price by hub, and
percentage of purchases by hub.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 7
REQUEST NO. 6: Please explain why ldaho Power proposes to adjust the
forecast at Sumas instead of other hubs.
RESPONSE TO REQUEST NO. 6: ldaho Power holds firm natural gas
transportation capacity from Sumas, Washington, to ldaho and Stanfield, Oregon, to
ldaho. A majority of ldaho Power's capacity is Sumas to ldaho.
Consistent with the transportation assets that ldaho Power owns, per the data
included in the Company's response to Staffs Request No. 5, ldaho Power purchases
much of its natural gas supply either at Sumas or at various other supply hubs using
Sumas pricing (Huntingdon, Pacific Pool, and Jackson Prairie). Occasionally, there is
an exception to this (see purchases in 2013), when it was beneficial for ldaho Power to
purchase its natural gas supply at Stanfield. However, the Company believes the data
demonstrates that this is an exception.
Additionally, Stanfield is a physical trading hub only, there is no financial
derivative market, making hedging and fonryard price forecasting difficult and unreliable.
Whereas, Sumas is a robustly traded market, both physically and financially, with daily
fonruard pricing settlements provided by the lntercontinental Exchange ('lCE") where
ldaho Power can derive future price forecasts. For these reasons, Sumas aligns with
the Company's transportation rights, trading practices, and provides enough market
Iiquidity and transparency to give the best possible indication of future natural gas
purchases for its natural gas fleet.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 8
REQUESLNQJ: The Com pany states that it "holds firm pipeline capacity and
actually performs natural gas transactions" (Response at 3). Please describe the
business relationship with Northwest Pipeline and provide copies of
contracts/agreements including a description of all services provided by Northwest
Pipeline.
RESPONSE TO REQUEST NO. 7: Northwest Pipeline is a Federal Energy
Regulatory Commission regulated lnterstate Natural Gas Pipeline Operator. ldaho
Power leases long-term, firm natural gas transportation rights from Northwest Pipeline.
ldaho Power uses these firm transportation rights to transport natural gas from Sumas,
Washington, and Stanfield, Oregon, to ldaho Power's natural gas fired generation
facilities.
For a full list and description of all services provided by Northwest Pipeline,
please refer to its website at: http://www.northwest.williams.com/NWP Portal/.
Provided on the enclosed CD are the following firm transportation contracts
between ldaho Power and Northwest Pipeline: Contract Nos. 138390, 138369, 126442,
139664, and 138370.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF.9
REQUEST NO. 8: Please update the graph on page 4 of the Company's
Application to include historical average monthly natural gas ICE transaction prices for
1997 through 2017 and explain how the average was calculated.
RESPONSE TO REQUEST NO. 8: ICE was formed in 2000; therefore, no data
exists prior to that year. ldaho Power began tracking and recording the ICE Henry Hub
settlements in 2008; therefore, the table below represents ICE Henry Hub settlements
from 2008-2016 and ICE's forward assessment through 2023.
Henry Hub Natural Gas Prices (NominalS/rnmbtul
r
The annual historical ICE data is a straight average of the 12 months for each year from
2008-2016.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1O
REQUEST NO. 10 ISrCI: Please describe how the Company participates in ICE
transactions, including the types of transactions it conducts on lCE.
RESPONSE TO REQUEST NO. 10: ICE is a regulated commodity exchange.
ldaho Power contracts with ICE to execute natural gas and power transactions on the
electronic interface of ICE's exchange. ldaho Power purchases and sells physical and
financial natural gas and power on ICE's exchange.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 11
REQUEST NO. 11 tsl0l: Please describe how the Com pany uses lCE data and
information.
RESPONSE TO REQUEST NO. 11: ICE provides a daily settlement price for all
traded products listed on its exchange. ldaho Power uses the ICE data for internal
analytical purposes in trading, planning, and credit and risk management.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 12
REQUEST NO. 12 fsrGr: Please provide 5 years of monthly reports for each the
following forms: EIA Form - 423, FERC Form - 423, and EIA Form -923.
RESPONSE TO REQUEST NO. 12:Beginning in 2008, EIA Form 923
superseded FERC Form 423 and EIA Form 423. EIA Form 923 for the years 2012
through 2016 is provided on the enclosed CD.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 13
REQUEST NO. 13 fSrCI: The Com pany states that it used the EIA's Natural
Gas Spot Price at Henry Hub: High Oil and Gas Resource and Technology forecast and
that this was presented to the IRP Advisory Council (Application at 3). Please describe
the IRP Advisory Council's general response to the use of this forecast.
RESPONSE TO REQUEST NO. 13: The !RP Advisory Council ('|RPAC"), along
with other stakeholders in the public process, generally responded to the Company's
presentation with a high level of interest. The Company emphasized the importance of
the natural gas price forecast as an input to the IRP's analysis, and the discussion
which followed with IRPAC and other stakeholders reflected their understanding of the
critical role of the natural gas price forecast to the lRP.
The response to this Request is sponsored by Phil DeVol, Lead Planning
Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 14
REQUEST NO. 14 fsrGl: Please explain why the graph on page 4 of the
Company's application showing the ICE transaction price does not extend beyond 2023.
RESPONSE TO REQUEST NO. 14: The graph on page 4 of the Application was
presented at the January 12,2017, IRPAC meeting and was used to help demonstrate
the Company's rationale for choosing to use EIA's High Oil and Gas Resource and
Technology forecast as an input into the 2017 lRP. The line labeled as "lCE Settles"
was added to the graph to show how the EIA forecast was in close alignment with lCE
settled transactions, which are based on actualwilling buyer/willing seller transactions.
The ICE Settles line on the graph was not extended beyond 2023 because ICE settled
transactions with Sumas basis were not reported beyond 2023.
The response to this Request is sponsored by Rick Haener, Power Supply
Planning Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 15
REQUEST NO. 15 fSrCI: Please provide the actual future trading prices of
natural gas from lCE, including dates of delivery and volume of gas per delivery date for
2029 through 2037 as of June 12,2017
RESPONSE TO REQUEST NO. 15: Please see the following actual future
trading prices of natural gas
January 2029
February 2029
March 2029
April2029
May 2029
June 2029
July 2029
August 2029
September 2029
October 2029
November 2029
December 2029
$3.729
$3.684
$3.609
$3.234
$3.219
$3.254
$3.299
$3.339
$3.354
$3.409
$3.494
$3.66e
As of June 2017,lCE does not provide pricing beyond December 2029. ldaho
Power does not retain volume data; therefore, there is no record of open interest on
June 12,2017,for 2029 Henry Hub.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Manager, ldaho Power Company.
DATED at Boise, ldaho, this 8th day of August 2017.
DONOVAN E.R
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF. 16
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 8th day of August 2017 t served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Daphne Huang
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
J. R. Simplot Company
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
Avista Gorporation
Michael G. Andrea, Senior Counsel
Avista Corporation
1411 East Mission Avenue, MSC-33
Spokane, Washington 99202
Clint Kalich, Manager
Resource Planning and Analysis
Avista Corporation
1411 East Mission Avenue, MSC-7
Spokane, Wash ingt on 99202
ldahydro
C. Tom Arkoosh
ARKOOSH LAW OFFICES
802 West Bannock Street, Suite 900
P.O. Box 2900
Boise, ldaho 83701
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IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 17
Renewable Energy Coalition
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street
Boise, ldaho 83702
lrion Sanger
SANGER LAW, P.C.
1117 SW 53'd Avenue
Portland, Oregon 97215
Tamarack Energy Partnership
Preston N. Carter
Michael C. Creamer
GIVENS PURSLEY LLP
601 West Bannock Street
Boise, ldaho 83702
PacifiCorp, d/bla Rocky Mountain
Power
Yvonne Hogle
Ted Weston
PacifiCorp dlbla Rocky Mountain Power
1407 West North Temple, Suite 320
Salt Lake City, Utah 84116-3187
Daniel MacNeil
PacifiCorp dlbla Rocky Mountain Power
825 NE Multnomah Street
Portland, Oregon 97232
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m cc@q ive nsp u rslev. com
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ted.weston@ pacificorp. com
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Jeffrey K. Larsen, VP
Regulation and Government Affairs
PacifiCorp dlbla Rocky Mountain Power
1407 West North Temple, Suite 310
Salt Lake City, Utah 84116
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FAXX Email ieff.larsen@paeifieq rp.com
Christa Bearry,Assistant
A
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 18