20140708IPC to Staff 1-7.pdf

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An IDACORP Company
DONOVAN E. WALKER
Lead Gounsel
[e-mail]
July 8, 2014
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-14-07
Head of U Canal Project Energy Sales Agreement - ldaho Power Company's
Response to the First Production Request of the Commission Staff
Dear Ms. Jewell:
Enclosed for filing in the above matter are an origina! and three (3) copies of ldaho
Power Company's Response to the First Production Request of Commission Staff.
DEW:csb
Enclosures
1221 W. ldaho 5t. (83702)
P.O. Box 70
Boise, lD 83707
6-novan E. Walker
DONOVAN E. WALKER (lSB No. 5921) RECEIVIfi
ldaho Power Company
1221West ldaho Street (83702) ?0llt JUL -8 Pil l: I 6
P.O. Box 70 tDAt"t0 pU*Llt_:
Boise, ldaho 83707 uTlLtTlE$ COMMI$$i0t,i
Telephone: [phone]
Facsimile: [phone]
dwal ker@ idahopower.com
Attomey for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
rN THE MATTER OF THE APPLTCATION )oF IDAHO POWER COMPANY FOR ) CASE NO. |PC-E-14-07
APPROVAL OR REJECTTON OF AN )
ENERGY SALES AGREEMENT WITH ) IDAHO POWER COMPANY'S
NORTH SIDE ENERGY COMPANY, lNC., ) RESPONSE TO THE FTRST
FOR THE SALE AND PURCHASE OF ) PRODUCTION REQUEST OF THE
ELECTRTC ENERGY FROM THE HEAD OF ) COMMTSSTON STAFF TO rDAHO
U CANAL PROJECT.) POWER COMPANY
)
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 June 18,2014, 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 confirm whether Staff's graphical depiction of
paragraph 6.2.3 as shown in Table 3 above accurately represents the terms of the
proposed Agreement. lf Staffs depiction is not accurate, please explain why.
RESPONSE TO REQUEST NO. 1: Staffs graphical depiction in Table 3
accurately represents paragraph 6.2.3 of the proposed Energy Sales Agreement
("Agreement").
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, 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: On page 6 of the Amended Application, ldaho Power states
"However, with the proposed change, the Seller must still provide 12 months of
estimated Net Energy Amounts, and still cannot revise the immediate three months of
estimated Net Energy Amounts." Please reconcile this statement with paragraph 6.2.3
of the Agreement.
RESPONSE TO REQUEST NO. 2: The Amended Application is correct in that
12 months of estimated Net Energy Amounts will be on file with ldaho Power at all times
during the term of the Agreement. However, the statement "cannot revise the
immediate three months of estimated Net Energy Amounts" is not correct.
Paragraph 6.2.1 of the Agreement specifies that the Seller must provide 12
months of estimated generation data at the time the Agreement is executed. Through
the term of the Agreement, paragraph 6.2.3 allows the Seller to revise this 12 months of
data on a monthly basis with a minimum of 30 days notice prior to the beginning of the
next month.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator 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: The Amended Application states that under the new method
"the Seller gains more clarity and flexibility in adjusting its estimated energy deliveries,
and ldaho Power maintains the stability in the estimates necessary for its planning and
operation". Please describe what kind of "clarity" the new method allows the Seller to
gain. Please list the implications, if any, of the new method to ldaho Power's planning
and operation processes, and explain why the implications would not affect ldaho
Power's "stability" in the estimates.
RESPONSE TO REQUEST NO. 3: The new Net Energy Estimate process
identified in the Agreement provides both ldaho Power and the Seller with a
straightforward 30-day notification process as described in paragraph 6.2.3 of the
Agreement. The current three-month notification process has caused significant
confusion with Qualifying Facility ("QF") projects. ldaho Power has worked with each
project individually to clear up any confusion; however, the issue still persists.
By allowing the Seller to revise these Net Energy Estimates on a more frequent
basis, there is a greater chance that these estimates will be more reliable values that
ldaho Power can use in its short-term planning process. As stated in the Company's
response to Staff's Request No. 2, ldaho Power will still have 12 months of data from
the project that can be used in its long-term planning processes.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
REQUEST NO. 4: Please identify the pros and cons of the new method with
regard to each party, compared to the current method specified in Order No. 29632.
RESPONSE TO REQUEST NO. 4: Below is a brief list of pros and cons
regarding the new method.
Pros
ldaho Power
. Potential of more accurate monthly estimated Net Energy Amounts.o More clarity of the requirement, resulting in better information from the
project and fewer disputes.o Maintains 12 months of monthly estimated Net Energy Amount data.
Project
o Potential of providing more accurate monthly estimated Net Energy
Amounts.. Less risk of failing to meet performance requirements.. More clarity of the requirement, resulting in better information being
provided to ldaho Power.
Cons
lf a project fails to meet the 90/110 performance criteria, a reduced energy
payment is made to the project. This change to a 30-day notification period versus the
old process of a three-month notification period could reduce the amount of times a
project misses this performance criteria (if the project opts to better manage its project).
However, the motivation of this performance criteria is not to increase or reduce the
energy payments to a project but instead to have the project provide ldaho Power with
more accurate energy estimates that could be used in the planning of both long-term
and short-term operations of the electrical system to optimize efficiency and operate in
the most cost-effective manner possible.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
REQUEST NO. 5: Please explain why ldaho Power believes the Commission
should allow use of its proposed method, instead of utilizing the existing framework as
outlined in Order No. 29632.
RESPONSE TO REQUEST NO. 5: As described in the Company's response to
Staffs Request Nos. 1 , 2, 3, and 4, ldaho Power believes the adoption of this new
process of estimating Net Energy Amounts has the potential of providing more accurate
data for ldaho Power to use in operating its electrical system in the most efficient and
least cost method. The process outlined in Order No. 29632 had its foundation in sound
analysis and logic. However, the approximate 10 years that have lapsed since this
Order was adopted (November 2004) has provided both ldaho Power and the projects
significant experience with the performance criteria and a better understanding of ways
to improve the process to achieve more optimal outcomes. This change to the 30-day
notification period has very little impact on the 12 months of estimated generation data
and provides significant potential for improved short-term energy estimates.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
REQUEST NO. 6: Order No. 29632 was born out of cases IPC-E-04-08 and
IPC-E-04-10 in 2004. Back then, ldaho Power proposed to allow QFs to revise their
energy estimates three times during the first year of operation and every two years
thereafter. Idaho Power reasoned that a two-year interval allows the Company to more
easily integrate the QF resource into its biennial IRP planning process. Please discuss
whether this is still the Company's position and how Idaho Power's proposal in this case
aligns with the Company's previously stated position.
RESPONSE TO REQUEST NO. 6: ldaho Power fully agrees with the ldaho
Public Utilities Commission ("Commission") that the 901110 performance band is a key
element establishing a QF project's eligibility to receive "firm" energy prices versus
"non-firm" energy prices and believes the proposed change to a 30-day notification
period wi!! maintain this 901110 obligation. lt will also enable projects to provide more
meaningful energy forecasts that ldaho Power can utilize in operations of its electrical
system.
ln the two cases noted above, the statements are correct as to what ldaho Power
originally proposed in those cases. However, in Order No. 29632 (pages 22-23), the
Commission found with regard to the frequency of providing estimated energy
statements that:
The Commission finds that it is reasonable and operationally
expedient to require QFs to provide ldaho Power with monthly kWh
production estimates. The estimate amount is the QF's generation
delivery commitment. lt is the monthly production estimate that will
be used in the 90/110 performance band. The Commission finds it
reasonable to provide more frequent opportunities to revise
generation estimates than proposed by the Company. We find that
the interest of the Company in planning for QF resources is better
served if the generation forecast is a reliable estimate. QFs shall
initially provide ldaho Power with one year of monthly generation
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7
estimates and beginning at the end of month nine and every three
months thereafter provide the Company with an additional three
months of fonruard estimates. QF opportunities for estimate
revisions begin at the end of month three and every three months
thereafter for the fonryard period beginning the fourth month out
through the end of the estimate period. For planning purposes,
following the first year the Company on a rolling basis will always
have six months of QF production estimates.
At the time this Order was issued (November 2004, nearly 10 years ago), there
was little experience with how QF projects would be providing the generation forecasts
and how accurate the forecasts would be. At that time, the Commission made a sound
ruling based on the evidence presented in Case Nos. IPC-E-04-08 and IPC-E-04-10.
However, 10 years of experience with the three-month generation estimation process
has brought to light some shortcomings, some of those being:
. Project confusion with regard to when it can provide notification.
. lnaccurate energy estimates.
o Monthly kilowatt-hour ("kWh") estimates provided many
months prior to actual energy deliveries are not proving to be
reliable energy estimates.
. ln some cases, canal irrigation water allocations
(water used to run the QF canal based projects) many
times are not known three months prior.
o The various approved relief mechanisms (Force Majeure,
Forced Outages, and Suspension of Energy Deliveries)
significantly detract from stability of the energy estimates
provided by projects.
o Monthly kWh estimates tend to be poor indications of actual
hourly energy deliveries.
o Short-term planning is better served by receiving more
accurate estimates closer to the period in which the actual
energy deliveries will occur.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8
Long-term planning use of this data will not materially change under the
proposed new 30-day notification process. As stated in the Company's response to
Staffs Request No. 2, the 12-month estimated generation is not materially changing in
this new 30-day notification process.
Consistent with the Commission's findings noted above, the 90/1 10 performance
band is being maintained, and the proposed 30-day notification period is consistent with
the Commission findings stating, "We find that the interest of the Company in planning
for QF resources is better served if the generation forecast is a reliable estimate."
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 9
REQUEST NO. 7: Please state whether Idaho Power intends to utilize its
proposed estimation method for all new hydro QF projects.
RESPONSE TO REQUEST NO. 7: Yes, contingent upon the Commission
approving this estimation process in the Agreement currently under review.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
DATED at Boise, ldaho, this 8th day of July 2014.
DONOVAN E. WALKER
Attomey for ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1O
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 8th day of July 2014 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 A. Sasser
Deputy Attomey General
ldaho Public Utilities Commission
47 2 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
Head of U Ganal Project
Alan W. Hansten, Manager
North Side Canal Company
921 North Lincoln
Jerome, ldaho 83338
X Hand Delivered
U.S. Mail
Overnight Mail
FAXX Email [e-mail]
Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 11