20070910IPC to RNP-NWEC 1-3.pdf

IDAHO~POWER~
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Barton L. Kline
Senior Attorney \D;6J-t()?~~;\~c~ In"
UTILITIES i";UWLV1
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September 7 2007
Jean D. Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise, Idaho 83720-0074
Re:Case No. I PC-07 -
In the Matter of Idaho Power Company s Petition to Increase the
Published Rate Eligibility Cap for Wind Powered Small power
Production Facilities; and
To Eliminate the 90%/110% Performance Band for Wind Powered
Small Power Production Facilities
Dear Ms. Jewell:
Please find enclosed for filing an original and two (2) copies of Idaho Power
Company s Response to the First Production Request of Renewable Northwest Project and
NW Energy Coalition.
I would appreciate it if you would return a stamped copy of this transmittal letter in
the enclosed self-addressed, stamped envelope.
Very truly yours
~W\~Barton L. Kline
BLK:sh
Enclosures
O. Box 70 (B3707)
1221 W. Idaho St.
Boise. ID 83702
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 Telephone: [phone]
bkline (tg idahopower.com
mmoen (tg idahopower.com
Attorneys for Idaho Power Company
Express Mail Address
1221 West Idaho Street
Boise, Idaho 83702
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO INCREASE
THE PUBLISHED RATE ELIGIBILITY CAP
FOR WIND POWERED SMALL POWER
PRODUCTION FACILITIES; and
TO ELIMINATE THE 90%/110%
PERFORMANCE BAND FOR WIND
POWERED SMALL POWER PRODUCTIONFACILITIES
CASE NO. IPC-07-
IDAHO POWER'S RESPONSE TO
) THE FIRST PRODUCTION
) REQUEST OF RENEWABLE
) NORTHWEST PROJECT AND NW
) ENERGY COALITION
COMES NOW , Idaho Power Company ("Idaho Power" or "the Company ) and, in
response to the First Production Request of Renewable Northwest Project and
Energy Coalition to Idaho Power Company dated August 29, 2007, herewith submits the
following information:
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -
REQUEST FOR PRODUCTION NO.Please provide copies of all written
information (including PowerPoint presentations and printed handouts) presented or
otherwise provided to attendees of the public workshops in the above-captioned matter
held on March 15 , and June 20 , 2007.
RESPONSE TO REQUEST FOR PRODUCTION NO.
Electronic versions of information presented to participants at the March 15, and
June 20, 2007 workshops have been continuously available to the public on Idaho
Power s Web Site and can be found at:
http://idahopower.com/energycenter/wind/workshops.htm.
The response to this request was prepared by M. Mark Stokes, Manger, Power
Supply Planning, Idaho Power Company, in consultation with Barton L. Kline , Senior
Attorney, Idaho Power Company.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 2
REQUEST FOR PRODUCTION NO.: Please identify all corrections , changes
or amendments to the assumptions, data inputs , or methodologies used for the wind
integration study which Idaho Power Company believes are appropriate as of the
current day, including without limitation corrections , changes, or amendments related to
(a) elimination of inappropriate arbitrage opportunities between the west and east sides
of Idaho Power s system; (b) the use of asymmetric up-and down-regulation reserve
requirements; (c) regulatory reserve requirements for high-resolution (less than 10-
minute) variability; (d) use of the Elkhorn (Telocaset) wind project; (e) use of different or
refined wind forecast techniques or assumptions; (f) in the wind integration study "base
case " any changes in the weighting of wind production in high-load and low-load hours;
(g) market price inputs for the low , median , and high water years evaluated in the wind
integration study; and (h) use of coal-fired generation units or other generation units for
regulation.Please include a brief description of each correction , change , or
amendment.
RESPONSE TO REQUEST FOR PRODUCTION NO.
Idaho Power s wind integration study titled "Operational Impacts of Integrating
Wind Generation into Idaho Power s Existing Resource Portfolio" was filed in this case
on February 7 2007. The results of the study indicated an average cost of $10.72 per
megawatt-hour (MWh) of delivered wind energy was incurred to integrate up to 600 MW
of wind generation on Idaho Power s system.
In general terms , the objective of the study as expressed by the Company in its
filing was to assess the operational impacts it must manage to maintain system
reliability as wind generation is added to its existing resource portfolio. It is important to
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 3
note that the study s assessment of the operational impacts associated with integrating
wind focused on the hour-ahead time frame. The basic principle underlying the study
was that the existing generating system needed to have the flexibility during any given
operating hour to respond to generation deviations due to actual wind varying from
forecast hour-ahead wind. The hour-ahead forecast for wind in the February study was
based on a simple persistence approach. As indicated in this Production Request
Idaho Power has since modified the hour-ahead forecast methodology as a result of on-
going analysis underlying input received in the two public workshops and continued
work with EnerNex , a consultant hired to assist in the design of the study as well as the
preparation of the final report.
In the February study and the follow-up work completed to date , Idaho Power
has not attempted to assess the operational impacts and associated costs beyond the
hour-ahead time frame. Therefore, while no forecast of wind output has been assumed
in the study process beyond the next hour, no costs related to the impact of these
longer-term time frames (from two hours ahead and longer) are included in the results
of the study.
This Production Request notes several areas, including wind forecasting, in
which Idaho Power modified the work of the February study. The following corrections
changes, or amendments to the study methodology were noted at the second public
workshop held on July 20 , 2007:
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEW ABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 4
(a)Elimination of inappropriate arbitrage opportunities between the west and
east sides of Idaho Power s system
In the February study, the hydroelectric dispatch model used to perform the study
(Vista DSS) was able to take advantage of arbitrage opportunities between the west
and east sides of Idaho Power s system. While these opportunities do periodically exist
in practice and it is expected that operational impacts of integrating wind will limit Idaho
Power s ability to take advantage of them in the future, the Company has considered
that the model overstated the level of this arbitrage activity.In subsequent model
analyses , the arbitrage opportunities were eliminated by setting wholesale electricity
prices equal between the west and east sides of Idaho Power s system.
(b)The use of asymmetric up- and down-regulation reserve requirements
For the February study, the estimated regulating reserve requirements
associated with system load and system load net wind were input at constant
symmetric levels.With further study following the February filing, the estimation
process was modified such that the regulating reserve for a given operating hour could
be expressed asymmetrically and dynamically. That is , given a forecast hour-ahead
load and hour-ahead wind, it was possible to estimate the necessary up- and down-
direction regulating reserve to schedule into the given operating hour. However, as
noted above , this scheduled flexibility is strictly related to hour-ahead uncertainty.
Operational impacts and associated costs related to longer-term uncertainty have not
been considered. This modification to the defined regulating reserve requirements is
recognized by Idaho Power as a substantial enhancement on the design of the
February study.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 5
(c)Regulatory reserve requirements for high-resolution (less than 10-minute)
variability
For the February study, the estimation of regulating reserve requirements was
based on separate analyses of (i) high-frequency (30-second interval) instantaneous
load data and (ii) instantaneous load and wind data collected at 10-minute intervals.
The total estimated regulating reserve level was then calculated through a root-sum-
square addition of the two separate components (i & ii). Because of comments received
following the February filing suggesting a potential double-counting of regulating reserve
as a result of this approach , Idaho Power modified the estimation process by removing
the component associated with the high-frequency data. The Company recognizes that
some of the variability in the instantaneous 10-minute interval data is reflected in the
high-frequency data, and therefore the initial process may have double-counted to some
degree. However, the impact of the double-counting is considered relatively minor.
(d)Use of the Elkhorn (Telocaset) wind project
As part of the feedback from the participants at the March 15, 2007 workshop,
the build out at the 300 MW penetration level was adjusted to reflect the selection of the
Elkhorn location in northeastern Oregon and not the Pomerelle location in southern
Idaho. To accomplish this, wind extraction points 36, 37 , 38 , 39 , 40 and 41 were
reduced to zero MW from 15 , 15 , 18 , 18, 18 , and 18 respectively, and extraction points
5 were increased to 21 , and 18 MW respectively.
This change was reasonable in that the 300 MW build out including Elkhorn instead of
Pomerelle will more accurately reflect the possible macro geographic dispersion of the
sites in the near term.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 6
(e)Use of different or refined wind forecast techniques or assumptions
The simple persistence hour-ahead wind forecast used in the February study
was later modified to incorporate a seasonal , autoregressive method into the wind
forecast used in the Vista DSS model. In both cases , no forward-looking information on
wind generation was assumed available for input to the forecast model within 65
minutes prior to the start of the given operating hour being forecast. The basic principle
in the study was to force the hydroelectric system (i.e. Hells Canyon Complex) to carry
enough up and down regulating reserve to respond to wind occurring during the given
operating hour at levels different than forecast on an hour-ahead basis. There was no
attempt to derive a longer-term (e.g. two-hour ahead) wind forecast model, and
consequently no attempt to evaluate costs associated with uncertainty on the longer-
term time frame.
(f)In the wind integration study "base case," any changes in the weighting of
wind production in high-load and low-load hours
For the February study, wind energy in the "base case" was input at blocks held
flat for the entire day. Review of the wind data following the February filing revealed a
slightly higher annual capacity factor for each of the three study years during light-load
(off-peak) hours than heavy-load (on-peak) hours. Therefore , wind generation in the
base case was modified into separate flat blocks for both heavy-load and light-load
hours.
(g)
Market prices for inputs for the low, median, and high water years
evaluated in the wind integration study
The economic impacts of increased variability of loads and the corresponding
increases in reserve requirements were determined using the monthly average heavy
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 7
and light load market prices for the study years (1998, 2000 , and 2005). Two markets
were used in the original study, Mid-C and Palo Verde, however the Palo Verde market
was later dropped from the study to eliminate overstating arbitrage opportunities as
previously mentioned. Refer to Appendix F page 85 in the published study for the
prices used.
At the March 15 , 2007 workshop, participants voiced concerns over using actual
market prices for year 2000 due to the impact the California energy crisis had on market
prices that year. To address this concern , actual market prices for the three study years
were replaced in the model with 2006 actual , monthly average , Mid-C market prices
which are presented in the table below. The results of this modeling change were
presented at the June 20 2007 workshop.
2006 Average Monthly Mid-Columbia Prices
Light Load Heavy Load45.42 57.
47.80 51.43.43 44.
12.97 23.
11.87 30.
11.86 39.
43.22 68.
50.07 63.
39.64 48.
44.63 52.
49.08 59.52.46 59.
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
(h)Use of coal-fired generation units or other generation units for regulation
At the request of the participants in the March 15 , 2007 workshop, Idaho Power
agreed to analyze the potential change in integration costs that would occur if down-
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 8
direction regulating reserve was assigned to its coal-fired generation units. The intent of
this approach is to use base-loaded thermal resources to respond to severe
unexpected , energy surpluses due to greater than forecasted wind generation. The
result of incorporating this concept into the modeling is that less regulating reserves
must be held on the hydro system to account for the variable and intermittent nature of
wind resources.However, this approach represents a pronounced departure from
current thermal power plant operating practice , and is expected to be problematic
considering Idaho Power s position as a non-operating partner at the three coal-fired
plants in which it has an ownership interest. Therefore , the Company cannot agree that
a long-term integration cost which assumes deployment of its coal-fired resources in
this manner is a reasonable measure of actual integration costs.
The purpose of the wind integration study was to determine the operational
impacts arising from integrating wind generation , under the baseline assumption that
Idaho Power s current system of generating resources, the wholesale energy market
with which it interacts , and the general operating practices currently followed would be
used to conduct the study.Idaho Power has acknowledged that as experience
gained in operating its system with greater amounts of wind generation and potential
cooperative agreements between control areas are developed , a future analysis of the
impact of wind generation may indicate a lower cost of integration. However, Idaho
Power feels it would be imprudent to determine the current cost of integrating wind
generation into its system based on the speculation of future operating conditions.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 9
The response to this request was prepared by M. Mark Stokes , Manger, Power
Supply Planning, Idaho Power Company, in consultation with Barton L. Kline, Senior
Attorney, Idaho Power Company.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -
REQUEST FOR PRODUCTION NO.Please state the estimated impact to
wind integration costs caused by each correction, change, or amendment identified in
response to Production Request No., above; and please state Idaho Power s net
current estimated cost of wind integration.
RESPONSE TO REQUEST FOR PRODUCTION NO.
As presented at the June 20, 2007 workshop, the impact on the total cost of
integrating wind generation of each correction, change, or amendment detailed in
Request for Production No.2 above is difficult to estimate with a great deal of certainty.
As changes were being made to the model and methodology, time restrictions limited
Idaho Power s ability to make a single change and perform the required 24 model runs
to determine the exact impact of each change. The estimated cost impacts for each
correction , change, or amendment presented below for items (a) through (f) were
derived by looking at the overall impact of all the changes and assigning a portion to
each item based on experience gained through the use of the model and countless
hours of reviewing model output and results. The cost impact due to items (g) and (h)
(using 2006 market prices and the use of Idaho Power s coal-fired facilities) were
determined by performing independent sensitivity analyses for these scenarios and are
therefore considered to be more accurate than the estimates for items (a) through (f).
(a)Elimination of inappropriate arbitrage opportunities between the west and
east sides of Idaho Power s system
The elimination of arbitrage opportunities is estimated to have reduced
integration costs by approximately $1.50/MWh.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -
(b)The use of asymmetric up- and down-regulation reserve requirements
The implementation of asymmetric up- and down-regulation reserve
requirements is estimated to have reduced integration costs by approximately
$1.77/MWh.
(c)Regulatory reserve requirements for high-resolution (less than 10-minute)
variability
The omission of high-resolution regulating reserve requirements is estimated to
have reduced integration costs by approximately $0.1 O/MWh.
(d)Use of the Elkhorn (Telocaset) wind project
Updating the distribution of wind projects is estimated to have reduced
integration costs by approximately $0.15/MWh.
(e)Use of different or refined wind forecast techniques or assumptions
Implementation of enhanced hour-ahead wind forecast techniques is estimated
to have reduced integration costs by approximately $0.25/MWh.
(f)In the wind integration study "base case " any changes in the weighting of
wind production in high-load and low-load hours
Modification of the "base case" scenario to account for the difference in capacity
factors between heavy load and light load hours is estimated to have reduced the cost
of wind integration by approximately $0.25/MWh.
(g)
Market prices for inputs for the low, median, and high water years
evaluated in the wind integration study
The use of 2006 Mid-monthly average market prices increased the cost of
integration by $1.22/MWh.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -
(h)Use of coal-fired generation units or other generation units for regulation
Using Idaho Power s coal-fired generation units for down-direction regulating
reserves reduced the cost of integration by $2.08/MWh.
Idaho Power believes that items (a) through (g) above represent refinements and
improvements to the modeling and methodology used since the February study was
submitted. As previously stated , Idaho Power feels it would be imprudent to determine
the current cost of integrating wind generation into its system based on the speculation
of future operating conditions at it's coal-fired resources as indicated in item (h).
Therefore, accounting for items (a) through (g) above , Idaho Power s estimate of the
current cost of integrating up to 600 MW of wind on its system is $7.92 per MWh.
The response to this request was prepared by M. Mark Stokes , Manger, Power
Supply Planning, Idaho Power Company, in consultation with Barton L. Kline , Senior
Attorney, Idaho Power Company.
DATED at Boise , Idaho, this 7#t day of September 2007.
(lti)~
BARTO~ L. KLINE
Attorney for Idaho Power Company
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 1'11\..day of September 2007, I served a true
and correct copy of the within and foregoing document upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington (83702)
O. Box 83720
Boise , Idaho 83720-0074
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Exergy Development Group of Idaho
Peter J. Richardson, Esq.
Richardson & O'Leary
515 N. 2ih Street
O. Box 7218
Boise, Idaho 83702
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Don Reading
Ben Johnson Associates
6070 Hill Road
Boise, Idaho 83702
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Renewable Northwest Project and
NW Energy Coalition
William M. Eddie
Advocates for the West
610 SW Alder Street, Suite 910
Portland, OR 97205
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Natalie Mcintire
Renewable Northwest Project
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Portland , OR 97205
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Rocky Mountain Power
Dean Brockbank
Brian Dickman
Rocky Mountain Power
201 S. Main Street, Suite 2300
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IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -
Data Request Response Center
PacifiCorp
825 NE Multnomah , Suite 2000
Portland, OR 97232
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Ridgeline Energy, LLC
Rich Rayhill
720 W. Idaho, Suite 39
Boise , Idaho 83702
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Robert M. Ellis, Esq.
4 Nickerson , Suite 301
Seattle, WA 98109
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Blue Ribbon Energy LLC
J. Humpries
Blue Ribbon Energy LLC
2630 Central Ave.
Idaho Falls, Idaho 83406
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Avista
R. Blair Strong
Jerry K. Boyd
Paine Hamblen, LLP
717 W. Sprague, Suite 1200
Spokane, VVA 99220
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Michael G. Andrea
Avista Corporation
1411 East Mission Ave., MSC-
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Cassia Gulch Wind Park LLC
Cassia Wind Farms LLC
Dean J. Miller
McDevitt & Miller, LLP
O. Box 2564
Boise, Idaho 83701
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IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEW ABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 15
Ronald K. Arrington
Associate Chief Counsel
John Deere Renewables, LLC
6400 NW 86th Street
O. Box 6600
Johnston , IA 50131
Idaho Windfarms LLC
Glenn Ikemoto
Authorized Manager
Idaho Windfarms, LLC
672 Blair Ave.
Piedmont, CA 94611
Snake River Alliance
Ken Miller
Clean Energy Program Director
Snake River Alliance
O. Box 1731
Boise , Idaho 83701
Renaissance Engineering & Design
Brian D. Jackson
Renaissance Engineering
& Design , PLLC
2792 Desert Wind Road
Oasis, Idaho 83647-5020
Gerald Fleischman
Gerald Fleischman
11535 W. Hazedale Ct.
Boise, Idaho 83713
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Gary D. Seifert, P.
Kurt Myers, P.
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2525 S. Fremont Ave.
O. Box 1625, MS 3810
Idaho Falls, Idaho 83415
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QE)(J.
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Barton L. Kline
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -