20050907Draft workshop report.pdf

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IDAHO POWER COMPANY i ED O. BOX 70
BOISE, IDAHO 83707
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IDAHO
POWER CID
BARTON L. KLINE
Senior Attorney
An IDACORP Company
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Idaho Public Utilities Commission
O. Box 83720
Boise, Idaho 83720-0074
HAND DELIVERED
Re:Initial Workshop in Phase 2 of Case No. IPC-05-
Dear Commissioners:
In Order No. 29839 issued in the above-referenced case, the Commission directed
Idaho Power, in conjunction with the other utilities and in consultation with other parties to this case
to file a proposed schedule for an initial workshop to "identify issues, required studies and discovery
parameters. Also to be filed is a proposal for further procedure and related timelines. An initial
report proposing same shall be filed with the Commission within 30 days. Subsequent status reports
shall be filed every 60 days thereafter." (Order No. 29839, P. 10)
On August 29, 2005, an initial workshop-scheduling meeting was held at Idaho
Power s Headquarters in Boise. A copy of the agenda and the attendance sheet for the meeting is
attached to this letter.
At the initial workshop, the approximately 30 participants agreed to conduct the next
workshop on September 20, 2005 at Idaho Power s Headquarters building. The participants also
agreed to retain the services of Susan Hayman, North Country Resources, Inc. to provide facilitation
services for future workshops.
Idaho Power agreed to prepare the minutes of the initial workshop and to prepare an
initial status report for the Commission. The status report and the minutes have been prepared and
distributed to the meeting participants for their review and comment. Upon receipt of comments
Idaho Power will file the approved initial status report and the minutes with the Commission.
I would be pleased to respond to any questions or comments the Commission may
have regarding compliance with Order No. 29839.
Very
Barton L. Kline
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Enclosures
Telephone [phone] Fax [phone], E-mail BKlinefgtidahopower.com
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BARTON L. KLINE, ISB # 1526
MONICA B. MOEN, ISB # 5734
Idaho Power Company
1221 West Idaho Street
P. O. Box 70
Boise, Idaho 83707
Telephone: [phone]FAX: [phone]
E-mail: BKline(g)idahopower.com
MMoen(g)idahopower .com
Ie I;D f)UdL IC
UTIL! TIES COr'ir/iiSSION
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY FOR AN
ORDER TEMPORARILY SUSPENDING
IDAHO POWER'S PURP A OBLIGATION
TO ENTER INTO CONTRACTS TO
PURCHASE ENERGY GENERATED BY
WIND- PO WERED SMALL POWER
PRODUCTION FACILITIES.
CASE NO. IPC-05-
INITIAL WORKSHOP STATUS
REPORT
BACKGROUND
On August 4, 2005 , the Idaho Public Utilities Commission (Commission) entered
Interlocutory Order No. 29839 in which the Commission made initial determinations on several
issues relating to entitlement to avoided cost rates. In Order No. 29839, the Commission
deferred a final determination on other issues raised in the case pending the completion of a
workshop process in which the parties would explore the possibility of resolving or limiting the
issues to be considered by the Commission in subsequent proceedings in the case. The
Commission s Order provided in relevant part "Idaho Power in conjunction with the two utilities
INITIAL WORKSHOP STATUS REPORT, Page
DRAFT
and in consultation with other parties to this case is directed to file a proposed schedule for initial
workshop to identify issues, required studies, and discovery parameters. Also to be filed is a
proposal for further procedure and related timeline. An initial report proposing same shall be
filed with the Commission within 30 days. Subsequent status reports shall be filed every 60 days
thereafter." Order No. 29839 at page 10.
PAR TI CIP ANTS
In compliance with the Commission s Order, Idaho Power initiated a scheduling
meeting to begin the workshop process described in Order No. 29839. On August 29, 2005
representatives from the three electric utilities, the Commission Staff, and various other parties
interested in the development of wind generating resources participated in an initial scheduling
meeting. The meeting agenda and list of participants is attached.
ACTION ITEMS
At the meeting on August 29th, the participants exchanged lists of issues to
considered in future workshops.The issues lists were briefly discussed for purposes of
clarification with the understanding that the next workshop would provide a further opportunity
for a full discussion of the issues presented.
The participants also agreed that the next workshop would begin at 9:30 a.m. on
September 20th at Idaho Power s Headquarters building.
Participants also agreed that Idaho Power should pursue the retention of Susan
Hayman, North County Resources, Inc., to provide facilitation of future workshops:
I Ms. Hayman has agreed to act as meeting facilitator.
INITIAL WORKSHOP STATUS REPORT, Page 2
DRAFT
Copies of the minutes of the August 29, 2005 meeting have been reviewed and
approved by the participants and are attached to this report. The undersigned submits this status
report to the Commission on behalf of all workshop participants.
RESPECTFULL Y SUBMITTED at Boise, Idaho, this day of September
2005.
BARTON L. KLINE
INITIAL WORKSHOP STATUS REPORT, Page 3
DRAFT
CASE NO. IPC-05-
SCHEDULING WORKSHOP
AUGUST 29, 2005 - 1 :30
IDAHO POWER COMPANY AUDITORIUM
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Introduction and Preliminary Matters Barton Kline, Senior Atto~ey
Idaho Power Company, chaired the meeting and welcomed the meeting participants. A
list of the participants is attached hereto as Attachment No. I. Mr. Kline distributed a
meeting sign-in sheet and established that Federal Energy Regulatory Commission
Standards of Conduct prohibit discussions at the meeting of transmission interconnection
matters.
MEETING MINUTES
Mr. Kline noted that this meeting is being conducted in accordance with the
direction given by the Idaho Public Utilities Commission (IPUC or the Commission) in
Order No. 29839 dated August 4, 2005 , in which the parties to the above-referenced
matter are to identify issues, required studies, discovery parameters and proposals for
further procedure and related time lines with respect to the above-referenced docket. Mr.
Kline reminded meeting participants that the issue of grandfathering Qualified Facilities
(QFs) for PURP A contracts with electrical utilities is beyond the scope of this group
meeting.
Mr. Kline requested that meeting participants consider whether future meetings
could benefit by the use of a professional meeting facilitator to ease the process of
carrying out the IPUC's directives in Order No. 29839. Kline noted he would poll
participants at the end of the meeting regarding their preferences with respect to this
Issue.
Exchan2e of Issues Lists : Mr. Kline expressed his belief that, in accordance
with the IPUC's Order, the parties have been directed to develop the list of issues in this
docket and to determine, over the course of a series of workshops, which issues can be
resolved by the parties and which issues must be forwarded to the Commission for
resolution. Idaho Power Company and Exergy distributed copies of their proposed issues
lists that are attached hereto as Attachment No.2 and Attachment No., respectively.
1. IPCo Issue No.1: What is Idaho Power s incremental cost for
ancillary services needed to integrate intermittent wind resources? Mr. Kline noted
that Idaho Power was moving forward with the selection of a third party consultant to
assist the Company in determining the cost of integrating intermittent wind resources
onto its system. Joe Miller requested that this issue be amended to reflect that Idaho
Power may not incur any incremental costs and that the issue be amended accordingly to
read
, "
Idaho Power s incremental cost if any
IPC-05-22 Scheduling Workshop Meeting Minutes of August 29 2005 Page 1
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Mike Heckler of Windland noted that more than one cost may confront Idaho
Power with respect to the integration of wind resources depending on the level of
integration required of differently sized projects and that the issue should be amended
accordingly. Mr. Heckler also questioned whether Idaho Power needed to conduct a
study since testimony offered by Windland at the hearing in this matter showed that
existing studies have already established the costs of integrating wind resources at
penetration levels of 100/0 or less and that those studies could be used by Idaho Power to
determine the cost of integrating up to 300 MW of wind power onto its system. He also
suggested that this analysis could be conducted in conjunction with the Company
forthcoming Integrated Resource Planning (IRP) process.
Mr. Kline noted that markets exist in the West for ancillary services and the cost
to Idaho Power of providing ancillary services should be measured from two
perspectives, the cost of integrating wind facilities using its own generation and
transmission and the opportunity cost of selling excess ancillary services to other entities.
The suggestion was made that at the next workshop the group discuss the types of
services encompassed by the term
, "
ancillary services.
2. IPCo Issue No.2: How should those costs be reflected in wind
QF purchase prices?3. Should avoided costs for QF wind resources be determined
using a different methodology than the current SAR methodology? If so, what
methodology should be used? The group determined that these two issues would be
discussed in more detail at the next workshop.
4. Should the availability of published rates be limited to ensure
that some portion of total wind resource acquisitions come from RFPs? Mr. Kline
explained that this issue raises the question whether the IPUC should consider more than
one pricing methodology to set prices for wind QFs to assure that utility customers
receive the best price for wind resources. Rick Sterling, IPUC Staff, inquired whether the
Commission could legally cap the amount of energy received from QF resources in order
to permit utilities to pursue wind resources via RFPs. Bruce Griswold of Pacificorp
suggested that published standard rates versus negotiated QF contracts could be used as a
benchmark for price differentials.
Mike Heckler of Windland reminded the group that the nature of the resource, for
example, intermittent versus firm, affects the cost of the resource to a utility and its
customers and that different technologies can have different avoided cost rates. He noted
that one benefit of the RFP process is the cost set via the RFP can assist in establishing
the avoided cost for a resource in a particular service area.
Peter Richardson representing Exergy, Inc. stated that the mode or nature of the
resource should not be an issue; instead, the issue should be the cost avoided by the
utility in purchasing energy generated by QFs. He emphasized that it is inappropriate to
single out individual energy resource types for differing avoided cost rates and suggested
that the group look at integration costs for all resource technologies.
IPC-05-22 Scheduling Workshop Meeting Minutes of August 29 2005 Page 2
DRAFT
The group concurred that Issue No.5 identified by Exergy should be discussed in
conjunction with Idaho Power s Issue No.4. Bart Kline suggested that all legal issues
identified by the group should be separately identified and addressed by legal
representatives working in the group.
5. What actions should the Commission take to prevent
developers of large QF projects from configuring those projects into multiple
smaller projects to qualify for the published rates? Bruce Griswold of Pacificorp
noted that existing PURP A restrictions may already act as disincentives to the
reconfiguration of larger QF projects into smaller projects. He cited the need for separate
substations and contracts as cost disincentives that act to discourage the reconfiguration
of larger QF projects into separate smaller facilities. Bart Kline advised the group that
the IPUC has previously issued orders in the Earth Power Resources case holding that, if
a facility qualifies as a QF and meets the size requirements set by the Commission, the
project is entitled to the published rate. Peter Richardson stated that Exergy s perspective
is that reconfiguration of a project to obtain the maximum avoided cost rate is not
inappropriate or undesirable.
Bruce Griswold observed that both the RFP and the negotiated contract processes
allow consideration of integration costs in determining the cost of the energy obtained
from a resource; however, the same adjustments cannot be made if a project is eligible to
receive the tariff or avoided cost rates. Dean Brockbank of Pacificorp noted that, while
Commissions are limited in their ability to control or regulate whether a QF reconfigures
a project to become eligible for the published rates, the Commission determines what the
published rate is and, in effect, can influence whether QFs are motivated to reconfigure
projects.
6. Discovery Parameters? Scott Woodbury, IPUC counsel, stated
that discovery provides the opportunity for the parties to obtain specific information
regarding issues raised in this matter. He observed, however, that certain formalities
would have to be observed to protect proprietary interests. In response to an inquiry from
Peter Richardson, Bart Kline reminded the group that Idaho Power s 2005 Wind RFP is
only temporarily on hold and that the Company intended to maintain the validity of the
process.
The group proceeded to discuss the Issues list proposed by Exergy, Inc.
follows.
1. Is it discriminatory to set avoided cost rates for wind resources
using a methodology different from setting avoided cost rates for other resources?
The general consensus was that this issue was a legal matter that each party should be
prepared to address at the next scheduled workshop. The question arose whether it was
appropriate to single out wind resources for separate consideration. Bart Kline reminded
the group that the IPUC already determined that wind resources were unique and that it
was suitable to study avoided costs for wind resources separately from other renewable
resources. Bob Lafferty of A vista observed that the cost of integrating resources other
IPC-05-22 Scheduling Workshop Meeting Minutes of August 29, 2005 Page 3
DRAFT
than wind onto a system is not as great and that, therefore, it is incumbent on a utility to
consider those cost differences. Rich Rayhill of Ridgeline Energy encouraged the group
to also focus on the positive attributes of wind energy in its discussion of this issue.
2. If there are ancillary service costs incurred by Idaho Power to
integrate wind into its system, how much of those costs are already being assumed
by developers through the imposition of the 90/1100/0 band?3. Will the 90/1100/0 band be eliminated if ancillary service costs
are imposed on wind projects? The group concurred that these two issues could be
addressed in conjunction with other issues identified by the parties.
4. Since RFP acquisition of power is outside of PURP A, should
impacts of QF acquisitions even be considered when setting avoided cost rates? Bart
Kline observed that it is prudent for the Commission to consider the impact of both RFP
acquisitions and PURP A acquisitions when determining the cost of services to a utility'
customers.
5. If there is a limit or cap put on acquisition of wind resources
should it be applicable to all resources, regardless of motive source? Is it
discriminatory to cap QF acquisitions based on motive force? Is it legal to do so?
What effect would such a cap have on Idaho Power s acquisition of utility-owned
resources? The group had previously decided that this issue should be discussed in
conjunction with Idaho Power Issue No.
6. What is the definition of firm for purposes of entitlement to
published rates? Should that definition be applicable to all resources, including
utility-owned resources? Peter Richardson requested that the group define what is
meant by a "firm" resource.
7. Are the ancillary service benefits of geographically diverse
wind projects to be included in an ancillary services cost calculation? The group did
not specifically discuss this issue at the meeting.
Develop schedule for workshopW to consolidate issue lists/discuss positions
on issues: Pacificorp indicated that it has completed its wind integration study and is in
the process of refining and updating that study. A vista reported that it intends to
undertake additional studies. Rick Sterling of the IPUC Staff noted that integration
studies conducted by the utilities must proceed for future discussions to be meaningful.
Ken Miller of the Northwest Energy Coalition observed that it would be helpful to
have a certain amount of wind resources integrated onto a system in order to study the
consequences to the utility of incorporating that resource onto its system. Bill Eddie
suggested that studies have already been conducted that evaluate the impact on a utility
system when 10% of wind had been incorporated onto a system. Karl Bokenkamp of
Idaho Power Company noted that it would be desirable to have reliable data specific to
Idaho Power to more accurately measure the impact of integrating wind resources onto
the Company s electrical system.
IPC-05-22 Scheduling Workshop Meeting Minutes of August 29 2005 Page 4
DRAFT
Idaho Power offered to share the results of Idaho Power s integration study with
group participants. Karl Bokenkamp identified the consultants Idaho Power is
considering using to conduct the Company s wind integration study. He reported that the
study would take between six and nine months to complete. Joe Miller suggested that an
interim solution be identified to avoid putting QF development on hold during the time
that Idaho Power is conducting its integration study. QF developers were reminded that
they could submit settlement offers to the utilities in the interim period.
The group concurred that use of a professional facilitator would be desirable for
future workshops. Bart Kline agreed to make arrangements for a facilitator to assist at
the next workshop. The group agreed that the following matters were to be completed
prior to the next workshop:
(3)
The meeting minutes/status report would be distributed among
the parties for review and approval;
The parties would come prepared to refine the issues list at the
next workshop; and
If possible, the consultant hired by Idaho Power to conduct
the Company s integration study should be present at the next
workshop.
(1)
(2)
The next workshop was scheduled for Tuesday, September 20,2005 at 9:30 AM
Mountain Time at Idaho Power Company s corporate headquarters in Boise, Idaho.
Adjournment The meeting was adjourned at 3 :50 PM.
IPC-05-22 Scheduling Workshop Meeting Minutes of August 29 2005 Page 5