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Home My WebLink About20140813IPC to Staff 1-4.pdfli.HCi:-trii' i' ?0lh AUS l3 PH 3: 53 uTilr?#b',ibuu,;is*'u" 3E'ffi*. An IDACORP Company DONOVAN E. WALKER Lead Counsel dwalker@idahopower.com August 13,2014 VIA HAND DELIVERY Jean D. Jewell, Secretary !daho Public Utilities Commission 472 West Washington Street Boise, ldaho 83702 Re: Case No. IPC-E-13-22 Update to Wind lntegration Rates and Charges - ldaho Power Company's Response to the First Production Request of the Commission Staff to ldaho Power Company Dear Ms. Jewell: Enclosed for filing in the above matter are an original and three (3) copies of ldaho Power Company's Response to the First Production Request of the Commission Staff to Idaho Power Company. Also enclosed are four (4) copies of a non-confidential disk containing information responsive to Staffs production requests. DEW:csb Enclosures 1221 W. ldaho St. (83702) P.O. Box 70 Boise, lD 83707 DONOVAN E. WALKER (lSB No. 5921) JULIA A. HILTON (lSB No. 7740) ldaho Power Company 1221 West ldaho Street (83702) P.O. Box 70 Boise, ldaho 83707 Telephone: (208) 388-5317 Facsimile: (208) 388-6936 dwalker@idahopower.com ih i lton@idahopower. com Attorneys for Idaho Power Company IN THE MATTER OF IDAHO POWER COMPANY'S APPLICATION TO UPDATE ITS WIND INTEGRATION RATES AND CHARGES. Rf CilVi:l 201!i AUG I 3 PH 3; 53 lDAi';i) ;' .i,,r . tJT I L l"f l [: S C Ot,{ i-'l tli$ lLiir CASE NO. IPC.E.13-22 IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION COMES NOW, ldaho Power Company ("ldaho Powe/' or "Company"), and in response to the First Production Request of the Commission Staff to ldaho Power Company dated July 24,2014, 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 copy of the spreadsheet used to derive the levelized and non-levelized wind integration charges shown on the proposed Schedule 87. Please state the escalation rate used to derive the non-levelized rates and discuss why that rate was chosen. Please also state the discount rates used in the calculations and discuss why that rate was chosen. RESPONSE TO REQUEST NO. 1: Please see the attached Excel file used to derive the levelized and non-levelized wind integration charges shown on the proposed Schedule 87. The escalation rate used to derive the non-levelized rates is 3.0 percent and the discount rate used in the calculation of the 2O-year contract term levelized rates is 6.7 percent. Both of these rates were chosen because they were the percentage rates used in the 2013 lntegrated Resource Plan ('lRP"). They can be found in the Financial Assumptions and Factors section on page 83 of the 2013 !RP, Appendix C: Technical Report. The response to this Request is sponsored by Michael Youngblood, Manager of Regulatory Projects, ldaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2 REQUEST NO. 2: ldaho Power discusses in its Reply Comments its decision to base its analysis of integration costs on day-ahead rather than hour-ahead forecasts. Does ldaho Power believe there could be integration costs associated with both hour- ahead and day-ahead forecasting errors? Does Idaho Power believe the method it used in its 2013 Wind lntegration Study captures integration costs associated with hour- ahead forecasting enors? RESPONSE TO REQUEST NO. 2: For the 2013 Wind lntegration Study, the capacity held in reserve on dispatchable generators was based on an analysis of day- ahead forecast errors. lt is the Company's view that having the capacity held in reserve on dispatchable generators for responding to day-ahead forecast errors also positions these generators to respond to smaller hour-ahead forecast errors. Thus, it is unlikely that there is significant additional integration costs associated with hour-ahead forecast errors. The response to this Request is sponsored by Phil DeVol, Resource Planning Leader, ldaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3 REQUEST NO. 3: On page 9 of AWEA and Renewable Northwest's comments it states "As the wind comes up, a utility will back 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." lf 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 ldaho Power consider these to be integration costs? How would these costs be captured by the utility if they are not considered integration costs? Does ldaho Power believe these costs would be captured by a wind integration study performed using ldaho Power's method or the method recommended by AWEA and Renewable Northwest? Does ldaho Power believe these costs are captured in either the SAR or IRP methodologies employed by the Commission for calculating avoided cost rates? RESPONSE TO REQUEST NO. 3: The quoted language from American Wind Energy Association ("AWEA") and Renewable Northwest starts with an assumption that the utility backs off and increases more expensive generation to adjust for wind output. !n reality, because of the Public Utility Regulatory Policies Act of 1978 obligation to purchase at avoided cost rates and the operation of ldaho Power's hydro system and other load following generation, it is often a lower cost resource that may be backed off or ramped up to integrate wind. The Request asks about the difference between resource integration costs and avoided costs. Avoided costs for a wind project IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY.4 exceeding 100 kilowatts are calculated by ldaho Power using the IRP methodology. The IRP methodology does simulate "backing down" existing resources to incorporate must-take resources such as wind. These costs of replacing the more expensive generation resource (or alternatively, a less expensive resource) are included in the avoided-cost analysis. Short-term re-dispatch costs and regulation costs, including the costs of "backing down" existing resources to incorporate must-take resources such as wind, necessary to accommodate short-term deviations from scheduled energy deliveries and natura! variations in wind are calculated in integration studies such as this proceeding on wind integration. The Request contains an important qualifying statement, "lf both the utility's day- ahead and hour-ahead wind forecasts were perfectly accurate." ln the case of a perfectly accurate day-ahead and hour-ahead wind forecast, there are no hour-by-hour wind integration costs due to forecast error (please note that the assumption is that "perfectly accurate" means that the day-ahead forecast exactly matches the hour-ahead forecast and both the day-ahead and hour-ahead forecasts exactly match the actual hour-by-hour wind energy delivery). However, forecast error is only one component of wind integration. The natural variability of wind is also a component of wind integration. There is a significant difference between a constant wind energy delivery of 400 megawatts ("MW') throughout an hour and wind energy delivery that ranges between 600 MW and 200 MW but delivers an average of 400 MW over the period of an hour. ldaho Power's wind integration study also includes regulation costs based on the quantity of wind IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5 energy forecast to be delivered in the hour and the natural variation of wind within the hour associated with the forecasted quantity of delivered wind energy. ldaho Power's avoided cost analysis is intended to quantify the resource- planning cost of dispatch. ldaho Power's wind integration analysis is intended to quantify short-term costs of re-dispatch. AWEA and Renewable Northwest have not provided specific detail to enable ldaho Power to comment on re-dispatch costs calculations contained in an AWEA and Renewable Northwest proposa!. ln summary, even with a perfectly accurate hourly wind forecast, there will still be integration costs due to the natural variability of wind within an hour. ldaho Power has accounted for the natural variability of wind within an hour in the wind integration analysis. The response to this Request is sponsored by Thomas A. Noll, Senior Planning Analyst, ldaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REOUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6 REQUEST NO. 4: Under the proposal described in Idaho Powe/s Reply Comments, how would wind integration charges be assigned in instances in which the proposed project's capacity straddled a penetration level in the tariff? For example, what would be the integration charge for a proposed 40 MW project if the cunent wind penetration level on ldaho Powe/s system is 678 MW? Would the project be assigned the integration charge for the 601-700 penetration level, the 701-800 level, or a prorated amount? RESPONSE TO REQUEST NO. 4: The Company proposes a prorated wind integration charge be assigned in instances in which the proposed project's capacity straddles a penetration level in the tariff. For clarification, using the suggested example of a proposed 40 MW project seeking a contract with a contract on-line year of 2014, when the current wind penetration level on ldaho Powe/s system is 678 MW, the proposed wind integration charge would be a prorated amounl of 22 MW charged at the 601-700 MW penetration level rate and 18 MW charged at the 701-800 MW penetration level rate. The resulting 20-year contract term levelized wind integration charge with an on-line year of 2014 would be $17.15 per MW. The attached Excel file provides the proposed wind integration charges for the project in this example. The response to this Request is sponsored by Michael Youngblood, Manager of Regulatory Projects, ldaho Power Company. DATED at Boise, ldaho, this'l3h day of August 2014. IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7 DONOVAN E. W Attomey for ldaho Power Company CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 13th day of August 2014 t 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 A. Sasser Deputy Attomey General ldaho Public Utilities Commission 472 W est Washington (83702) P.O. Box 83720 Boise, ldaho 83720-007 4 ldaho Winds LLG Dean J. Miller McDEVITT & MILLER LLP 420 West Bannock Street (83702) P.O. Box 2564 Boise, ldaho 83701 Rick Koebbe, President ldaho Winds LLC 5420 West Wicher Road Glenns Ferry, ldaho 83623 Bob Eggers, Legal Counsel ldaho Winds, LLC 15850 Jess Ranch Road Tracy, California 95377 Cold Springs Windfarm, LLC; Desert Meadow Windfarm, LLG; Hammett Hill Windfarm, LLG; Mainline Windfarm, LLC; Ryegrass Windfarm, LLG; and Two Ponds Windfarm, LLC Peter J. Richardson RICHARDSON ADAMS, PLLC 515 North 27th Street Boise, ldaho 83702 Hand Delivered U.S. Mail Overnight Mail FAXX Email kris.sasser@puc.idaho.gov Hand Delivered U.S. Mail Overnight Mail FAX Email ioe@mcdevitt-miller.com Hand Delivered U.S. Mail Overnight Mail FAXX Email rk@powenruorks.com _Hand Delivered_U.S. Mail Overnight Mail FAXX Email re@powenruorks.com _Hand Delivered U.S. Mail Overnight Mail FAXX Email peter@richardsonadams.com IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8 Benjamin G. Huang, Manager c/o Mountain Air Projects 6000 North FoxtailWay Glenns Ferry, ldaho 83623 Cassia Wind Farm LLC; Hot Springs Windfarm, LLG; Bennett Creek Windfarm, LLC; Cassia Gulch Wind Park LLC; Tuana Springs Energy, LLC; and High Mesa Energy, LLC Gregory M. Adams RICHARDSON ADAMS, PLLC 515 North 27th Street Boise, ldaho 83702 PaulAckerman Assistant General Counsel Exelon Business Services Corporation 100 Constellation Way Baltimore, Maryland 21202 American Wind Energy Association and Renewable Northwest Project Teresa A. Hill K&L GATES, LLP One S.W. Columbia Street, Suite 1900 Portland, Oregon 97258 Dina M. Dubson Renewable Northwest Project 421 SW 6s Avenue, Suite 1125 Portland, Oregon 97204 Hand Delivered U.S. Mail Overnight Mail FAX Email bhuanq@terna-enerqv.com Hand Delivered U.S. Mail Overnight Mail FAXX Emai! qreq@richardsonadams.com Hand Delivered U.S. Mail ,Overnight Mai! FAXX Email paul.ackerman@constellation.com Hand Delivered U.S. Mail ,Overnight Mail FAX Email teresa. hill@kloates.com Hand Delivered U.S. Mail FAX Overnight Mail X Email dina@rnp.orq IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY.9 Christa Bearry, Legal Assistant