20120110IPC to Staff 1-2.pdf

DONOVAN E. WALKER (lSB No. 5921)
JASON B. WILLIAMS (ISB No. 8718)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker~idahopower.com
iwilliams~idahopower.com
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Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MAnER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR A )
DETERMINATION REGARDING ITS )
FIRM ENERGY SALES AGREEMENT )
WITH HIGH MESA ENERGY, LLC. )
)
)
)
)
CASE NO. IPC-E-11-26
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE
COMMISSION STAFF TO IDAHO
POWER COMPANY
COMES NOW, Idaho Power Company ("Idaho Powet'), and in response to the
First Production Request of the Commission Staff to Idaho Power Company dated
December 20, 2011, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1
REQUEST NO.1: Please provide a narrative describing how the rates included
in Appendix F have been computed. Please provide a copy of all spreadsheets and
analysis used to derive the rates. If any component of the rates was developed using
AURORA, please provide a copy of all AURORA files used in the analysis (input,
output, data, etc.). Please provide all files in an electronic, executable format with
formulas intact.
RESPONSE TO REQUEST NO.1: The rates included in Appendix F are based
upon calculations from the Public Utilty Regulatory Policies Act of 1978 ("PURPA")
Integrated Resource Plan ("IRP") methodology and inputs at the time this agreement
was negotiated.
The IRP methodology is comprised of three components:
1. Avoided Cost of Energy;
2. Avoided Cost of Capacity; and
3. Integration Cost.
The above-listed components are described in greater detail below.
Avoided Cost of Energy
The Avoided Cost of Energy is a direct output from the AURORA dispatch modeL.
A confidential Excel workbook containing the input, output, and summary files that were
used to calculate the Avoided Cost of Energy for this project is provided on the
confidential CD. The confidential CD wil be provided to those parties that have
executed the Protective Agreement in this matter.
Following are the basic inputs and assumptions that were used in this model run:
. 2009 IRP base assumptions;
. 2009 IRP load forecast;
. 2009 IRP natural gas fuel cost forecast; and
. Estimated hourly energy shape provided by the project.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2
Avoided Cost of Capacity
The Avoided Cost of Capacity is a calculation based upon the cost of a
combined-cycle combustion turbine ("CCCT") as identified in the 2009 IRP adjusted to
reflect the size and performance characteristics of this proposed project. The Excel file
provided on the confidential CD contains the files and formulas used to implement the
process described below to calculate the Avoided Cost of Capacity.
. The annualized capital (fixed) cost of a CCCT from the 2009 IRP is the
basis for the capital cost ($/kilowatt ("kW~') month).
· This $/kW month value is converted to a total annual capital cost
based on the nameplate rating of the proposed project.
· The totaLannual capital cost is then multiplied by the project specific
peak-hour capacity factor. (A description of the peak-hour capacity
factor is provided below.)
· This résult is then divided by the megawatt-hours ("MWh") of
generation from the proposed PURPA project, resulting in a $/MWh
rate for Avoided Cost of Capacity.
Peak-Hour Capacity Factor Calculation
. Project provided data
July, hours 3-7 p.m. average capacity factor
. Benchmark resource - Idaho Power wind data
July, hours 3-7 p.m. average capacity factor
July, hours 3-7 p.m. 90th percentile capacity factor
. Calculation
30.6 percent divided by 27.9 percent equals a capacity multiplier
of 1.10
30.6%
27.9%
5.0%
5.0 percent times the multiplier of 1.10 equals a peak-hour
capacity factor of 5.5 percent
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3
Sample Annual Calculation - Calendar Year 2014
Capital cost of a CCCT per the 20091RP = $14.17 per kW-month
($14.17 X (40 megawatts ("MW") X 1,000)) X 12 months = $6,801,600
annual capital cost
$6,801,600 X 5.5 percent peak-hour capacity factor = $374,088
$374,088/91,926 MWh annual energy production = $4.08 per MWh
Integration Cost
An Integration Cost of $6.50 per MWh has been included in these calculations.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contract Coordinator, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
REQUEST NO.2: Please explain the rationale for the Partial Completion
Damages specified in § 5.10. Please explain whether the $10,000 per MW amount is a
negotiated amount or whether there is some other basis for that specific amount.
RESPONSE TO REQUEST NO.2: The $10,000 per MW amount is a negotiated
amount. All PURPA projects introduce power supply planning risk to Idaho Power.
Delay Damages for delays beyond the expected and planned on-line date help mitigate
the risk and cost associated with a project not coming on-line when expected.
For larger projects such as Rockland (80 MW) and High Mesa (40 MW), not only
is there risk and costs associated with delays in the projects coming on-line when
expected but, due to the size of these projects, there is also risk and cost associated
with them not attaining the project size they had originally estimated and that Idaho
Power has used in its power supply planning models.
Partial Completion Damages were first introduced in the 80 MW Rockland wind
project negotiated PURPA firm energy sales agreement ($10,000 per uninstalled MW).
Through the negotiation process with High Mesa, it was agreed by both parties that this
was a reasonable contractual term and duplicating the $10,000 per MW as used in the
Rockland agreement was viewed as an acceptable negotiated amount.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contract Coordinator, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 10th day of January 2012.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 10th day of January 2012 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER
COMPANY upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Kristine Sasser
Deputy Attorney General
Idaho Public Utilties Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
-2 Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-2 Email kris.sasser~puc.idaho.gov
High Mesa Energy, LLC
Richard A. Cummings
412 East Parkcenter Boulevard, Suite 325
P.O. Box 1545
Boise, Idaho 83701
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email rcummings~cummingslawidaho.com
High Mesa, LLC
c/o Exelon Wind
4601 Westown Parkway, Suite 300
West Des Moines, Iowa 50266
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email URPS~exeloncorp.com
et ~tl--Donovan E. Walker
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6