20140806AWEA&RNP to Staff 1-10.pdf

Teresa A. Hill
ISB No. 6175
K&L Gates LLP
One Columbia St. Suite 1900
Portland, OR 97258
Telephone: [phone]
Fax: [phone]
Attorneyfor Renewable Northwest and American
RECr'tu i1l
?01rr AuG -5 pf 5: 00
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Wind Ene r g1,, As so c i ot io n
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPAI\Y'S APPLICATION TO UPDATE ITS
WIND INTEGRATION RATES AND CHARGES.
CASE NO. IPC.E.I3-22
AWEA AND RENEWABLE
NORTHWEST'S RESPONSE TO
FIRST PRODUCTION
REQUEST OF THE
COMMISSION STAFF
Comes now American Wind Energy Association ("AWEA") and Renewable Northwest
(collectively "lntervenors"), and in response to the First Production Request of the Commission Staff
dated July 14,2014, submits the following information:
REQUEST NO. 1: Please provide a copy of all spreadsheets, workpapers, analysis,
calculations and other documentation used or relied upon to derive the recommended integration cost
of $5.84AvIWh as presented on page 19 of AWEA and Renewable Northwest's comments.
RESPONSE: All of the calculations used to derive the $5.84/MWh are included in the testimony
itself on page l9; no separate spreadsheets were used. However, it does appear that a citation was
omitted from our comments on page 18. We took Idaho Power Company's ("Company") wind
integration cost estimate of $6.33/IMWh from Table 5 of the 2007 Study Addendum (page24), and
then simply reduced itby 7.7Yo, as the math in our comments illustrates.
AWEA and Renewable Northwest's Response to Staff s First Production Request - Page I
August 5,2014
A spreadsheet was used to calculate the 7.7Yo difference in average market prices described on page
l8 of our comments, which is attached here as "IDP integration prices scratch.xls." The pricing data
in this worksheet comes from the Company's response to our data request number l0 ("2013 IRP
market prices for 2017") and Appendix F of the 2007 Wind Integration Study.
The response to this request is sponsored by Cameron Yourkowski, Senior Policy Manager,
Renewable Northwest.
REQUEST NO.2: Please provide a copy of all spreadsheets, workpapers, analysis,
calculations and other documentation used or relied upon to derive the recommended integration cost
of $5.30/]vIWh as presented on page l9 of AWEA and Renewable Northwest's comments.
RESPONSE: This number is based in part on our experience with utility wind integration studies in
the region. For example, Portland General Electric's 2013 wind integration study update resulted in a
$3.9944Wh cost, and PacifiCorp's2012 wind integration study resulted in a $2.55/MWh cost. The
$5.3044Wh figure is also based on adjustments to the $5.84/MWh figure described in our response to
data request no. I to account for the fact that (l) the scheduling errors ofconventional generators and
expected solar generation are not included in the Company's integration studies, (2) the benefits of
the Company's wind forecasting tool are not included in the Company's 2013 Wind Integration
Study, (3) liquidity in the l5-minute scheduling market is increasing, and (4) the Company could join
an energy imbalance market, such as the CAISO-PacifiCorp EIM, as soon as October 1,2015. All of
these factors would greatly reduce the Company's costs of integrating wind and solar resources and
following load.
The response to this request is sponsored by Cameron Yourkowski, Senior Policy Manager,
Renewable Northwest.
REQUEST NO.3: AWEA and Renewable Northwest's comments state on page 19
"However, our calculations are based in part on limited data from Idaho Power, and more analysis
may be required to arrive at accurate wind integration rates." Please describe the additional data and
analysis that you believe you need to arrive at accurate wind integration rates. Has AWEA and
AWEA and Renewable Northwest's Response to Staff s First Production Request - Page ,
Ougust 5, 2014
Renewable Northwest requested the additional data from Idaho Power? Does AWEA and Renewable
Northwest intend to request the additional data and perform additional analysis?
RESPONSE: We would require actual generation and load data on a minute-by-minute basis, the
hourly schedules/forecasts for load, wind, conventional generation, and expected solar generation,
and the Company's dispatch costs for its other generating resources. We would also need to see a
record of the transactions the Company has made in the market and a record of its transmission
reservations and availability on a long-term firm, short-term firm, and non-firm basis. Unless the
Company was going to rerun the study for us, we would also need to have a copy of the Company's
production cost model.
Our understanding is that the Commission intends to complete this proceeding as rapidly as possible.
Based on our understanding of the compressed schedule and our organizations' limited resources, it
does not appear to be feasible for our organizations to perform such additional analysis at this time.
The response to this request is sponsored by Cameron Yourkowski, Senior Policy Manager,
Renewable Northwest and Michael Goggin, Research Director, AWEA.
REQUEST NO.4: AWEA and Renewable Northwest's comments explain the netting
concept in an example presented on pages I I - l2 in which load forecast error is + I 0 MW and wind
forecast error is -13 MW. In the example, AWEA and Renewable Northwest contend that wind and
load error cancel each other out and that the system operator only needs to dispatch 3 MW of
balancing reserves. Is it equally probable that the wind and load forecast errors could both be either
positive or negative, therefore not cancel each other out? If so, would the reserve requirement be
equal to 23 MW? Why wouldn't the appropriate reserve requirement be equal to the square root of
the sum of the squares (16.4 MW) as discussed on pages 12 -13?
RESPONSE: Commission Staff is correct that the reserve requirement would be 16.4 MW for
accommodating the combined variability of two factors whose stand-alone variabilities are l0 MW
and l3 MW, per the square root of the sum of the squares method for combining the variabilities of
uncorrelated factors. Importantly, this reserve requirement is significantly lower than the 23 MW of
AWEA and Renewable Northwest's Response to Staff s First Production Request - Page 3
August 5,2014
reserve requirement that the Company's methodology incorrectly claims would be needed in this
case. The Company's methodology incorrectly claims that because two factors are uncorrelated, their
variabilities are fully additive. In fact, their combined variabilities will be less than the sum of their
parts precisely because the two factors are uncorrelated. The 3 MW example from our comments was
intended to show how those variabilities cancel each other out in a specific time period of the power
system's dispatch, which is different from the long-term statistical calculation of what level of
reserves must be maintained to meet reliability standards.
Statistical principles indicate that it is extremely unlikely that a combination of uncorrelated factors
will all deviate in the same direction and magnitude at the same time. This principle is a cornerstone
of how power system demand and deviations in conventional generation are cost-effectively
accommodated, and the same principle and methods apply to accommodating any incremental
variability that wind adds to that mix. The Company and all utilities correctly understand that the
combined variability in the demand from allof their hundreds of thousands of customers will be less
than the sum of their parts, as those variabilities are not perfectly correlated and it is extremely
unlikely that all would happen to experience their maximum hourly deviation in the same direction at
the same time. As a result, NERC reliability criteria and standard utility practice are based upon
holding reserves to accommodate a statistically expected amount of deviation, but not all theoretically
possible amounts of deviation, as doing so would be prohibitively expensive and economically
inefficient.
The response to this request is sponsored by Michael Goggin, Research Director, AWEA.
REQUEST NO. 5: Please discuss whether AWEA and Renewable Northwest believe that
Idaho Power incurs additional costs due to day-ahead wind forecast errors. If so, how would these
costs be captured using the hour-ahead forecasting approach advocated by AWEA and Renewable
Northwest?
RESPONSE: We recognize that the Company may incur transactional "costs" (sometimes positive
and sometimes negative) associated with being forced to move excess must-take PURPA energy into
the day-ahead market. However, there is a difference between the costs incurred in connection with
AWEA and Renewable Northwest's Response to Staff s First Production Request - Page 4
August 5,2014
excess PURPA energy and the costs associated with wind (or other generation) serving an identified
need for energy on the Company's system. The hour-ahead forecasting approach is not intended to
capture the day-ahead costs associated with remarketing excess must-take PURPA energy, as these
day-ahead costs are not attributable to wind integration. As discussed further in our comments, the
day-ahead forecasting approach does not accurately reflect the costs associated with within-hour
reserve requirements for wind serving the Company's load in a given hour; these costs associated
with within-hour reserve requirements are properly characterized as integration costs. To ensure
accuracy and prevent costs from being over-collected, the Company should separately categorize and
calculate (1) the costs of day-ahead forecasting and marketing activities associated with excess must-
take PURPA energy, and (2) the costs associated with the within-hour reserve requirements for wind
that is serving the Company's load. The Company's current study does not calculate costs in this
manner.
The response to this request is sponsored by Cameron Yourkowski, Senior Policy Manager,
Renewable Northwest.
REQUEST NO.6: Does AWEA and Renewable Northwest believe there could be costs
associated with both hour-ahead and day-ahead forecasting errors?
RESPONSE: This question highlights a critical contradiction in the Company's filing. The
Company's 2013 Wind Integration Study contradicts itself by assuming reserve needs must be set
based on the day-ahead forecast error, but then requiring that balancing reserves only be provided by
fast-acting generators that are currently online. If reserve needs truly are set based on day-ahead
forecast error (as the Company claims), then far cheaper options, such as non-spin reserves provided
by generators that are not currently online but can start up relatively quickly, would be able to
accommodate deviations from the day-ahead forecast.l Ho*ever, the 2013 study2 and the Testimony
I This category ofday-ahead costs is different from the day-ahead costs identified in our response to request
NO. 5, which relate to costs associated with remarketing excess must-take PURPA energy and are not
attributable to wind integration.
'2Ol2 Wind Integration Study at page 16 states that "As a consequence of the high operating costs, the simple-
cycle turbines have been historically operated primarily in response to peak demand events and have seldom
been dispatched to provide operating reserves."
AWEA and Renewable Northwest's Response to Staff s First Production Request - Page 5
August 5,2014
of Mr. DeVol3 indicate the Company's unwillingness to use offline simple-cycle gas generators (and
presumably other offline generators) for providing balancing reserves.
Across a range of markets, non-spinning reserves cost far less than the spinning and regulating
reserves that must be provided by online generators. This makes sense, as the opportunity cost for a
plant that is offline to provide reseryes is near zero, and in most cases the plant providing non-
spinning reserves is not actually called up to provide those reserves, as major deviations in net load
are very infrequent. Thus, by setting the reserve requirement based on day-ahead forecast error but
then requiring the use of expensive fast-acting reserves to meet that reserve need, the Company is
having it both ways, unnecessarily driving up the calculated cost of providing reserves as a result. To
more accurately calculate the cost of integrating wind resources, the Company should either (l) allow
far cheaper non-spinning reserve resources to be used to meet day-ahead schedule deviations, or (2)
acknowledge that the fast-acting reserves it is charging for are only truly needed for deviations that
occur closer to real-time and that it would be appropriate to charge for these reserves only if the
Company was using the hour-ahead forecast error as the metric for setting the need for those reserves.
The response to this request is sponsored by Michael Goggin, Research Director, AWEA.
REQUEST NO. 7: On page 9 of AWEA and Renewable Northwest's comments it states "As
the wind comes up, a utility willback off more expensive generation previously made available in the
day-ahead time frame to meet load, which saves the utility operating costs. As the wind drops off, a
utility will increase the use of its more expensive generation, hour-by-hour, adjusting for the wind's
output and mindful to not use any more higher-cost generation than necessary." If both the utility's
day-ahead and hour-ahead wind forecasts were perfectly accurate, but the utility still had to back
down more expensive generation resources in order to receive wind generation (or alternatively, less
expensive resources), would AWEA and Renewable Northwest consider these to be integration costs?
How would these costs be captured by the utility if they are not considered integration costs? Does
AWEA and Renewable Northwest believe these costs would be captured by a wind integration study
performed using Idaho Power's method or the method recommended by AWEA and Renewable
3 Direct Testimony of Philip B. DeVol at 7-8.
AWEA and Renewable Northwest's Response to Stafls First Production Request - Page 6
August 5,2014
Northwest? Does AWEA and Renewable Northwest believe these costs are captured in either the
SAR or IRP methodologies employed by the Commission for calculating avoided cost rates?
RESPONSE: As a general matter, if the day-ahead and hour-ahead forecasts were perfectly
accurate, then the utility operator would have already backed down the more expensive generation in
favor of wind, which has zero fuel costs. However, the costs described in this hypothetical appear to
be costs resulting from the misalignment of the Company's load needs with its portfolio of must-take
PURPA energy. These costs are not properly characterized as "integration costs." Rather, we would
expect these types of costs to be factored into the Company's avoided cost methodology. We do not
have a detailed enough understanding of the inputs associated with the SAR or IRP methodologies to
answer this portion of the question; however, we have submitted a request to the Company to gain
more clarity on these methodologies.
The response to this request is sponsored by Cameron Yourkowski, Senior Policy Manager,
Renewable Northwest and Michael Goggin, Research Director, AWEA.
REQUEST NO.8: Please provide a list of AWEA and Renewable Northwest's members in
Idaho.
RESPONSE: A complete list of Renewable Northwest's members is available here:
http:,//rvrvvr'.rrrp.org,'ouLnrembers. Renewable Northwest does not categorize its members by state,
nor does the organization track which of its members are doing business in a given state at a given
time. Many of the wind industry companies that are active in Idaho are national companies that have
facilities in many states. AWEA does have information on which of its members have business
addresses in ldaho, but this information is commercially valuable information that is typically only
provided to AWEA members. AWEA can make this information available to the Commission Staff
on a confidential basis.
The response to this request is sponsored by Cameron Yourkowski, Senior Policy Manager,
Renewable Northwest and MichaelGoggin, Research Director, AWEA.
AWEA and Renewable Northwest's Response to Staff s First Production Request - Page 7
August 5,2014
REQUEST NO.9: Please describe AWEA and Renewable Northwest's participation, either
in person or by phone, in any advisory committee meetings, public meetings or workshops conducted
by Idaho Power relating to the 2013 Wind Study.
RESPONSE:
l) Renewable Northwest participated in the 2013 Wind Study Workshop in Boise, Idaho, on April 6,
2012.
2) After the April 6,2012 meeting, Renewable Northwest submitted comments to the Company
lamenting the lack of stakeholder review and making several suggestions for how to improve the
study. See attached.
3) Renewable Northwest submitted data requests to the Company on March 27,2013 in Oregon PUC
docket no. LC 53 (regarding the Company's 2013 IRP) that specifically focused on the use of the
day-ahead wind forecast error methodology. Proceedings in that docket were subsequently
suspended, and the docket was closed without an order.
4) Renewable Northwest submitted comments on the Company's 2013 IRP in Oregon PUC docket
no. LC 58 that also criticized the Company's use of the day-ahead wind forecast error methodology.
See In the Motter of ldaho Power Company, 2013 Integrated Resource Plan, DocketNo. LC 58, RNP
Opening Comments at7-9 (Oct. 8, 2013), available at
httn://cdocs.puc.state.or.usleftlocsr'UACilc5{lhacl72.l3.pdl. RenewableNorthwest'sFinalComments
in LC 58 also describe our concerns with the Company's Wind Integration Study methodology and
assumptions. See In the Motter of ldaho Power Company, 201j Integrated Resource Plan, Docket
No. LC 58, RNP Final Comments at 6-8 (Jan. 15,2014), available at
http://edocs.puc.state.or.uslefilocsll lAC/Ic5 8liac829-l0.pd L
The response to this request is sponsored by Cameron Yourkowski, Senior Policy Manager,
Renewable Northwest and Dina Dubson, Staff Counsel, Renewable Northwest.
REQUEST NO. 10: Please provide a copy of allwritten comments, notes, memoranda or
other documentation directly related to any critique, concerns, or recommendations made by AWEA
or Renewable Northwest on the draft of Idaho Power's 2013 Wind Study.
AWEA and Renewable Northwest's Response to Staff s First Production Request - Page 8
August 5,2014
RESPONSE: See attached, as well as our answer to request NO. 9.
The response to this request is sponsored by Cameron Yourkowski, Senior Policy Manager,
Renewable Northwest and Dina Dubson, Stalf Counsel, Renewable Northwest.
Dated at Boise,Idaho, this 5th day of August 2014.
Teresa Hill
Attorney for AWEA and Renewable Northwest
AWEA and Renewable Northwest's Response to Staff s First Production Request * Page 9
August 5,2014
CERTIFICATE OF SERVICE
I hereby certify that on the 5th day of August, 2014, a true and correct copy of the foregoing RENEWABLE
NORTHWEST AND AMERICAN WIND ENERGY ASSOCIATION'S REPONSE TO FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF, Case No. IPC-E-13-22, was served by electronic mail to:
IDAHO POWER COMPANY: Donovan E. Walker
Idaho Power Company
t22t W. Idaho St. (837 02)
P.O. Box 70
Boise,lD 83707-0070
Email: [e-mail]
docl<ets@ida hopower.com
Michael f. Youngblood
Greg Said
Idaho Power Company
L22t W. Idaho St. (837 02)
P.O. Box 70
Boise,lD 83707-0070
Email: mvouncblood@iclahonower'.com
gsaid@ ida hopower.corl
COMMISSION STAFF: Kris Sasser
Deputy Attorney General
Idaho Public Utilities Commission
47 2 W . Washington (837 02)
P.O. Box 83720
Boise,lD 83720-0074
Email: kris.sasse'[e-mail],gov
IDAHO WINDS LLC: Dean f. Miller
McDevitt & Miller LLP
420W. Bannock Street
Boise,lD 83702
Email: ioe(Omcclevitt-miller.corrr
Rick Koebbe, President
Idaho Winds, LLC
5420W. Wicher Road
Glenns Ferry,lD 83623
Email: [e-mail]
Bob Eggers, Legal Counsel
Idaho Winds, LLC
Email: re@ powerworks.cont
COLD SPRINGS WINDFARM, LLC; DESERT Peter f. Richardson
MEADOWWINDFARM, LLC; HAMMETT HILL RichardsonAdams, PLLC
WINDFARM, LLC; MAINLINE WINDFARM, LLC; 515 N. 27th StTeet
RYEGRASS WINDFARM, LLC; AND TWO PONDS Boise, lD 83702
WINDFARII{, LLC: Email: [e-mail]
AWEA and Renewable Northwest's Response to Staff s First Production Request - Page l0
August 5,2014
CASSIAWINDFARM LLC;
Benjamin G. Huang, Manager
c/o Mountain Air Projects
6000 N. FoKail Way
Glenns Ferry,lD 83623
Gregory M. Adams
HOT SPRINGS WINDFARIIT LtC; BENNETT Richardson Adams, PLLC
CREEKWINDFARM LLC; CASSIAGULCHWIND 515 N.27th Street
PARK, LLC; TUANA SPRINGS ENERGY, LLC; AND Boise; ID 83702
HIGH MESA ENERGY, LLC: Email: [e-mail]
Paul Ackerman
Assistant General Counsel
Exelon Business Services Corporation
100 Constellation Way
Baltimore, MD 2L202'
DATED this 5th day of August,2Ol4.
AWEA and Renewable Northwest's Response to StafPs First Production Request - Page I I
August 5,2014