20161026IPC to Staff 1-29.pdf

RE CEIVED
JULIA A. HILTON
Senior Counsel
[e-mail]
2016 OCT 26 PM 4: 44
October 26 , 2016
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-16-19
An IDACORP Company
Deferral and Recovery of Costs Associated with Participation in Energy
Imbalance Market -Idaho Power Company's Response to the First
Production Request of the Commission Staff
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and three (3) copies
of Idaho Power Company's Response to the First Production Request of the
Commission Staff.
Also enclosed are four (4) copies each of non-confidential and confidential disks
containing information responsive to Staff's production requests. Please handle the
confidential information in accordance with the Protective Agreement executed in this
matter.
JAH :csb
Enclosures
Very truly yours,·
di~
Julia A. Hilton
1221 W Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
JULIA A. HILTON (ISB No. 7740)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for Idaho Power Company
REC EIVE D
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
DEFERRAL AND RECOVERY COSTS
ASSOCIATED WITH PARTICIPATION IN
AN ENERGY IMBALANCE MARKET
)
) CASE NO. IPC-E-16-19
)
) IDAHO POWER COMPANY'S
) RESPONSE TO THE FIRST
) PRODUCTION REQUEST OF
) THE COMMISSION STAFF
----------------)
COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and in
response to the First Production Request of the Commission Staff to Idaho Power
Company dated September 30, 2016, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1
REQUEST NO. 1: Please provide line item detail for the $1 .73 M startup cost
estimate. For each item, please provide a description of the cost, the basis for the
estimates, and explain how the Company will ensure that it is least cost. Please provide
copies of all contracts and invoices to date.
RESPONSE TO REQUEST NO. 1: The following table summarizes the
estimated $1. 73 million in start-up costs and the basis for the estimates:
Start-Up Activity Cost Basis for Estimate
Outside legal counsel $350,000 Estimated hours used by other
utilities at outside counsel 's
discounted hourly rate
Consulting, including RFP, vendor $350,000 Utilicast contract and
training, etc. discussions with other utilities
FERG filing/market pricing analysis $400,000 Previous triennial market-
based rate filings
EIM market entry $550,000 Included in Implementation
Agreement with CAISO
New hires $60,320 Six full-time employees hired
approximately six months prior
to April 2018 (non-capital
portion)
Training and travel $20,000 Projected CAISO on-site
training and meetings
Total $1,730,320
Idaho Power takes its responsibility to obtain qualified, low-cost services
seriously and has enacted procurement processes and standards to ensure that
purchase and contracting decisions are made in a manner that is based upon the best
overall value. These processes provide a framework for differing types of procurement
activities to ensure the maximum value for each dollar spent, taking into account cost,
experience, quality, and other factors. These processes have been and will continue to
be used to obtain services as part of Idaho Power's Energy Imbalance Market ("EIM")
implementation.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -2
In order to ensure outside counsel fees were the least cost for qualified
attorneys, Idaho Power spoke with several different outside attorneys. The attorney
selected has relevant experience at comparable hourly rates, is familiar with Idaho
Power's existing load serving organization and processes (which will reduce time
necessary to complete the work), and provided a discount off the firm's rates.
The Company's Request for Proposal ("RFP") processes will be used in order to
obtain services for Consulting and other vendor training that will provide the maximum
overall value. Utilicast, LLC ("Utilicast"), a consultant who was selected through the
RFP process, will provide Idaho Power with additional support as it works through the
RFP process for other EIM vendors and will also assist the Company as it determines
investments required in software integration systems. The assistance of a consultant
who has worked through EIM-specific RFP processes is beneficial because it allows the
Company to be precise in describing its needs in the RFP , which limits the potential for
cost increases through change orders at a later date.
The required market pricing analysis estimate is based upon the historic cost
Idaho Power has incurred to evaluate its market-based rate authority, which the
Company is required to submit to the Federal Energy Regulatory Commission ("FERG")
every three years. The analysis is highly complex and the limited vendors that provide
the analysis service have comparable rates.
The California Independent System Operator ("CAISO") sets a market entry fee
for each western EIM participant, which is calculated based on the utility's load ratio
share of the Western Electricity Coordinating Council ("WECC"). Idaho Power will use
the Implementation Agreement, included as Exhibit No. 3 to the Direct Testimony of
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
Kathleen Anderson, to ensure amounts invoiced are accurately based on the market
entry fee, as set forth in that agreement.
The labor costs listed in the chart above are the labor charges for additional
employees that will be used during the implementation process and, therefore, this
portion of labor charges are categorized as start-up costs. A larger part of the labor
brought on during the project will be capitalized. The amount reflected above is the
non-capital portion of labor that is included in the deferral request. In order to ensure
the Company receives the maximum value for employment-related expenses, Idaho
Power's employment positions are regularly evaluated to ensure wages and benefits
are competitive with market rates. Idaho Power analyzes its business needs and
overall costs prior to posting any position. Applicants go through Idaho Power's
structured hiring process, which is designed to ensure that the Company hires the most
qualified candidate for the job and that Idaho Power appropriately compensates
successful candidates based upon its previously scrutinized and established wage
schedules.
Travel and training costs listed in the chart above capture the costs the Company
will need to incur to train its employees on EIM implementation. CAISO has developed
and provided Idaho Power with access to computer-based training modules, but there
are some components of the EIM project where computer-based training has not been
developed. For these portions of project training, Idaho Power will need to separately
obtain training from existing EIM experts. Idaho Power will select the more cost­
effective option between sending its employees to obtain training, bringing an expert to
Boise to train Company staff, or a combination of the two approaches. Due to the types
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 4
of training that remain, Idaho Power anticipates that a combination will be most
beneficial. In order to obtain maximum value for each dollar spent in this area, Idaho
Power will rely on its procurement processes for obtaining goods and services.
A copy of CAISO's Milestone #1 invoice (Attachment 1 on the non-confidential
CD) is included as supplemental information. In addition, the confidential agreements
between Idaho Power and Utilicast and the confidential July, August, and September
invoices and expense reports from Utilicast (Attachments 2-9 on the confidential CD)
are included as supplemental information. The confidential CD will be provided to those
parties that have executed the Protective Agreement in this matter.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
REQUEST NO. 2: Please provide line item detail for the $7.88 M software
integration cost estimate. For each item, please provide a description of the cost, the
basis for the estimates, and explain how the Company will ensure that it is least cost.
Please provide copies of all contracts and invoices to date.
RESPONSE TO REQUEST NO. 2: The following table summarizes the
estimated $7.88 million in software integration costs and the basis for the estimates:
Software Cost Cost Basis for Estimate
One-time perpetual license fee $1,349,017 EIM SCED Assessment plus
allowance for funds used
during construction
Software design/integration/implementation $6,531 ,975 EIM SCED Assessment plus
allowance for funds used
during construction
Total $7,880,992
An EIM Security Constrained Economic Dispatch ("SCED") Assessment was
done to determine what investments Idaho Power would be required to make to join a
market and is detailed in the Structure Consulting Group, LLC ("Structure Group"),
which is provided as an attachment to the Company's response to Staff's Request No.
25. The report indicates that as a SCED Balancing Authority ("BA") (which is the same
as an EIM Entity BA in the western EIM), Idaho Power would be responsible for
activities such as submitting schedules, submitting bids and offers to the real-time
market, submitting forecasted demands, and settling financial obligations with the
market operator. The report goes on to set forth functional requirements to participate
in the market and where Idaho Power has technology gaps. One such gap is the
system to perform all of the functions listed above. This software system is commonly
referred to as a Bid-to-Bill (828) system. Because Idaho Power currently does not
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -6
participate in a market such as the western EIM, this system will need to be procured to
participate. The software will integrate with current Idaho Power systems and CAISO
market systems to provide the necessary data to both CAISO and Idaho Power for
Idaho Power to operate in the EIM. Idaho Power will use its RFP process as described
in the Company's response to Staff's Request No. 1 to ensure that the maximum value
is derived from these expenditures. The Company has not signed any contracts or
received any invoices associated with software integration costs to date.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 7
REQUEST NO. 3: Please provide line item detail for the $1.48 M metering cost
estimate. For each item , please provide a description of the cost, the basis for the
estimates, and explain how the Company will ensure that it is least cost. Please provide
copies of all contracts and invoices to date.
RESPONSE TO REQUEST NO. 3: The following table summarizes the
estimated $1 .48 million in metering costs and the basis for the estimates:
Metering Cost Cost Basis for Estimate
Materials 844,312 Current market cost of
revenue quality metering
equipment
Design and Installation 571 ,919 Estimated design work and
installation costs
Allowance for Funds Used During 63,708
Construction
Total $1,479,939
As explained on page 22 of Ms. Anderson's testimony, in order to participate in
the EIM, Idaho Power is required to replace existing intertie and generation meter
equipment with revenue quality meters on those units that will become participating
units in the western EIM. The cost reflected in the above table is a preliminary estimate
specific to the purchase and installation of Current Transformers ("CTs"), Potential
Transformers ("PTs"), and meters capable of providing a minimum of 0.6 percent
accuracy in order to meet CAISO EIM requirements for settlement quality meter data.
CAISO's metering requirements typically necessitate a 0.3 percent accuracy
requirement and will require newly installed meters to meet that accuracy requirement.
CAISO will accept the local regulatory authority's accuracy requirements of 0.6 percent
accuracy for existing meters. In Idaho Power's case, the local regulatory authorities are
the Idaho and Oregon commissions. Both the Idaho Public Utilities Commission
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 8
("IPUC") and Public Utility Commission of Oregon ("OPUC") base their accuracy
requirements on the American National Standards Institute (ANSI) standard.
The above dollar amount is preliminary and based upon estimated costs to
obtain the required metering for 19 metering units at seven participating generation
sources and estimated seven intertie locations. The above estimate was based upon:
(1) knowledge of existing equipment at each metering location, including estimated age
of the equipment; (2) cost of the hard equipment such as CTs, PTs, and meters capable
of five-minute data; and (3) estimated design and installation costs. The costs for
design and installation are based upon the type of design work required and the location
of the existing metering equipment. In some cases, metering locations may need to be
moved in order to obtain accurate net meter data.
As described in the Company's response to Staff's Request No. 1, Idaho Power
will use its procurement process and standards to ensure maximum value is derived
from these expenditures. Idaho Power has not signed any contracts or received any
invoices associated with meter costs to date.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 9
REQUEST NO. 4: Please provide job descriptions and estimated salaries and
overhead for each of the six employees the Company included as labor necessary to
operate as an EIM participant.
RESPONSE TO REQUEST NO. 4: Idaho Power estimates that it will require six
additional employees based on discussions with Structure Group during its analysis,
and discussions with other utilities that have either entered the EIM or are in the
process of entering. Based on Idaho Power's current structure, it was determined that it
would take a minimum of six additional full-time equivalent ("FTE") employees in order
for the Company to operate in the EIM, which is fewer employees than other utilities that
have joined. For example, in a presentation made to the EIM Governing Body in its
October meeting (see link provided below), Arizona Public Service Electric Company
attributed 16 new hires directly associated with the EIM. Based on Idaho Power's
current structure, the Company intends to automate several functions, which it believes
will allow for fewer additional FTE employees than were required by other EIM entities.
http://www.caiso.com/Documents/Briefing WesternEnergylmbalanceMarket­
ArizonaPublicServiceUpdate Presentation-Oct2016. pdf
The functional areas that were deemed in need of additional staffing were
settlements, regulatory/policy, and Information Technology ("IT")/technical application
support. It is estimated that Idaho Power will need three additional settlement staff in
the Power Supply organization to handle all the settlement data received from the
market to ensure the charges received and allocated to Idaho Power are accurate.
Settlement data comes in daily for different dates up to 36 months in the past.
Settlement statements are in five-and 15-minute intervals so validating that the data
and charges are correct over such a large data volume will require increased staffing .
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -10
These positions will also be tasked with calculating and allocating charges to Idaho
Power's Open Access Transmission Tariff customers taking service from Idaho Power
for EIM services.
Idaho Power also anticipates the need for one additional regulatory/policy analyst
to follow and participate in the various CAISO stakeholder processes to ensure Idaho
Power and its customers' interests are represented in market policy activity. This will
also ensure that Idaho Power is involved and engaged as the market evolves. Idaho
Power has not historically participated in the CAISO stakeholder process and therefore
does not have the additional staff necessary to follow and actively engage in this
process.
The last two positions will be in the Company's energy management system
and/or IT/technical application area. These positions are required to maintain the full
network model and system applications required by CAISO to participate in the EIM.
Modifications and continued maintenance will be needed to Idaho Power's "full network
model," which is exported to CAISO in order to participate in the market, as well as
additional software applications and interfaces that need to be developed and
maintained .
Idaho Power currently does not have formal job descriptions developed for five of
the positions identified above because the Company is still determining the most
efficient use of these positions and the functions they will perform.
The only job description currently developed is for the IT/technical application
support position, which will be filled by an Application Development Analyst. This
position will be vital in developing, implementing, and supporting the new software and
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -11
integration points needed to function in the western EIM and provide ongoing support
after implementation. This position will involve:
• Providing in-depth analysis, design, development, and ongoing support for
the implementation of short-and long-term IT solutions to facilitate
business process needs through new and existing applications.
• Applying technology as necessary in the solution of complex business
problems by developing detailed systems analysis and design for in-house
development and/or third-party software integrations.
• Participating in complex incident/problem analysis, solution development,
action planning, implementation coordination, and evaluation.
• Determining IT requirements and business processes, codes, tests,
debugs, and coordinating the implementation of complex software
solutions.
Because Idaho Power is still developing the exact positions and skill set
requirements, the salaries were all estimated at the same annual salary and overhead
rate, totaling approximately $139,000 per employee.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -12
REQUEST NO. 5: Are the six employees included in the Company's proposal
incremental to current headcount? Please explain. Will the Company require six full­
time employees before or upon start-up in April 2018 or will employees be phased into
EIM over a period of time?
RESPONSE TO REQUEST NO. 5: Yes. The six employees are incremental to
the current headcount. Please see the Company's response to Staff's Request No. 4
for additional information on these positions. The employees will be phased in during
various points of the project to help implement the project and to ensure they are fully
-trained for the go-live date. All positions will be fully staffed prior to the go-live date of
April 1, 2018.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -13
REQUEST NO. 6: Please explain if any duties performed by employees
currently operating in a non-EIM environment be eliminated once the Company begins
operating in an EIM environment.
RESPONSE TO REQUEST NO. 6: There are no duties that are currently
performed by employees today in the non-EIM environment that will be eliminated when
the Company begins operating in the EIM environment. However, the Company
continually evaluates staffing levels and will make changes as needed as part of this
process as described in the Company's response to Staff's Request No. 1.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -14
REQUEST NO. 7: Based on Kathleen Anderson's testimony detailing benefits
through the EIM relative to the planning and managing of congestion, please provide a
list of curtailed energy purchases attributable to transmission path congestion over the
past year. For each occurrence, please provide the amount and cost of the energy
curtailed, as well as the type of resource, and the amount and cost of energy from the
alternate resource ultimately used to balance load.
RESPONSE TO REQUEST NO. 7: Please see the Excel file provided on the
non-confidential CD listing the energy purchases that were curtailed from August 2015-
August 2016 for congestion reasons. Many of the transactions curtailed were replaced
by Idaho Power's internal hydro generation. The cost of the hydro generation has not
been provided in this response because it is difficult to quantify the opportunity cost of
hydro. Additionally, the Company does not have an approved regulatory pricing
methodology to accurately capture the variable costs of its hydro resources. When
hydro resources are used to replace purchases that are curtailed, it creates less
opportunity and "fuel" for generation in the future.
Overall, the western interconnection has seen fewer curtailments in the
unscheduled flow program over the last two years. According to information obtained
from WECC, the number of tag curtailments due to unscheduled flow events has
dropped from 2014 levels. The table below is based on information obtained from
WECC.
Hours of Tag Curtailments for
Unscheduled Flow Events
As of 10/14/14 As of 10/14/15
860 204
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -15
As of 10/14/16
286
Although it is difficult to determine how much of the curtailment decrease is due
to the creation of the EIM, Idaho Power believes that some of the reduction is due to the
EIM's ability to redispatch generation across a larger footprint to help manage the
congestion on those paths that historically resulted in higher curtailments under the
program and that EIM participants are financially incented to have their actual flows
match their schedules, thereby creating less unscheduled or loop flow. Idaho Power
believes this trend could continue as more utilities join the EIM.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -16
REQUEST NO. 8: For each of the occurrences listed in the previous question,
please explain if and how participating in the EIM would have prevented the use of the
higher cost alternate source.
RESPONSE TO REQUEST NO. 8: The EIM is designed to price congestion in a
way that creates a redispatch of generation to help reduce that congestion. It is difficult
to determine if the EIM would have prevented the specific curtailments reflected in the
attachment provided with the Company's response to Staffs Request No. 7 because
there are many reasons for congestion that are often unknown, including scheduling
practices in the western interconnection or outages on other transmission owners'
systems that redirect the flow of power to other lines.
However, based on the data collected and reported by WECC, there has been a
marked decrease in the use of the unscheduled flow program (used in the western
interconnection to manage congestion on specific defined qualified paths) since 2014,
when the EIM went live. Whether this reduction is based on the EIM or other factors is
difficult to determine. However, EIM participants are financially incented to have their
actual flows match their schedules, thereby creating less unscheduled or loop flow.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -17
REQUEST NO. 9: Please provide electronic versions of exhibits included in the
original application. Also, please provide any worksheets used to derive inputs or
constants within the exhibits. Please provide all worksheets with formulas intact.
RESPONSE TO REQUEST NO. 9: Please see the Excel file provided on the
non-confidential CD for electronic versions of Exhibit Nos. 1 and 2 as well as the
worksheets used to derive inputs to the exhibits.
The response to this Request is sponsored by Courtney Waites, Senior
Regulatory Analyst, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -18
REQUEST NO. 10: Based on Kathleen Anderson's testimony (p. 5), please
provide data illustrating that "the Company is at its limits of system integration
capabilities given the proliferation of existing intermittent Public Utility Regulatory
Policies Act of 1978 wind and anticipated solar generation beginning in 2016."
RESPONSE TO REQUEST NO. 10: The capability of Idaho Power's system to
integrate intermittent sources of generation is finite. The limits of this capability were
studied in the 2013 Wind Integration Study Report completed by Idaho Power.1 The
2013 Wind Integration Study Report states on page 34:
Modeling performed for the wind study has demonstrated the
occurrence during low load periods where the balancing
reserves necessary for responding to a wind up-ramp (i.e.,
generation that can be dispatched down in response to an
increase in wind) cannot be provided without pushing the
system to an overgeneration condition. Customer load for
these periods, where load consists of sales to retail
customers and to wholesale customers by way of regional
transmission connections, is too low to allow for the
integration of a significant quantity of wind. This situation
requires curtailment of wind generation to maintain system
balance.
The 2013 Wind Integration Study Report also notes on page 36 that modeling results
indicate that "operational challenges are likely to grow markedly more severe with
expanding wind penetration beyond 800 MW of installed nameplate capacity," at which
point the "occurrence of low load periods for which balancing reserves cannot be
provided without causing overgeneration is expected to become more frequent and
require deeper curtailment of wind production."
The 2013 Wind Integration Study Report findings are corroborated by the
flexibility resource needs assessment performed for the 2015 Integrated Resource Plan
1 Wind Integration Study Report, February 2013, IPUC Case No. IPC-E-13-22, Maximum Idaho
Power System Wind Penetration, pp. 34-36,
https://www.idahopower.com/pdfs/AboutUs/PlanningForFuture/irp/2013/windlntegrationStudy.pdf.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -19
(IRP),2 which found significant violations of balancing reserve requirements during the
spring. The 2015 IRP notes that the balancing reserve violations occur during periods
of overgeneration when Idaho Power generating resources are reduced to safe
operating levels, yet Company generation plus the intermittent (i.e., wind-and solar­
powered) generation exceeds customer load.
Idaho Power currently integrates 678 megawatts ("MW") of installed wind­
powered nameplate capacity, a total which includes a power purchase agreement with
the 101 MW nameplate Elkhorn Wind Farm. The Company also integrates 56 MW of
installed solar-powered nameplate capacity. The Company also has signed contracts
for an additional 50 MW of wind-powered nameplate capacity and 233.5 MW of solar­
powered nameplate capacity (additional MW as of October 12, 2016), all expected to
begin delivering energy within the next year. The findings of the 2013 Wind Integration
Study Report and the 2015 IRP discussed above, coupled with the penetration of wind­
and solar-powered resources connected to the Idaho Power system, are the basis for
the Company's view that it is at its limits of system integration capabilities.
The response to this Request is sponsored by Philip DeVol, Senior Planning
Analyst, Idaho Power Company.
2 Idaho Power Integrated Resource Plan 2015, IPUC Case No. IPC-E-15-19, Flexible Resource
Needs Assessment, pp. 135-139,
https://www.idahopower.com/pdfs/AboutUs/Planning F orFuture/irp/2015/20151 RP. pdf.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -20
REQUEST NO. 11: Based on Kathleen Anderson's testimony (p. 6), please
provide data illustrating the reduction in bilateral market liquidity for up to two hours prior
to the next operating hour due to the expansion of the EIM.
RESPONSE TO REQUEST NO. 11: As used in testimony, the term "bilateral"
describes those transactions that Idaho Power conducts directly with an individual utility
and not through a market hub such as Mid-C; therefore, market data is not available.
These transactions are conducted through telephone calls to utilities to ask if they are
purchasing or selling energy for the next hour.
The reduction in this activity referenced in the testimony is based on the
experience of Idaho Power's real-time trading and load serving staff since NV Energy
and PacifiCorp began participating in the western EIM. This conclusion was derived
from direct conversations with neighboring utilities in the EIM. Although there are many
reasons why liquidity could be down (such as lower energy prices impacting supply),
Idaho Power believes this reduction could also be partially due to EIM. Idaho Power
believes that the impact to the EIM is largely because the timing requirements in the
EIM are different than the historical bilateral timing requirements. EIM schedules and
offers must be made earlier than the timeline applied to bilateral tagging deadlines.
Bilateral transactions can still occur after the EIM time limits; however, it creates a
potential unknown congestion price risk to the seller and purchaser, thereby making
these bilateral transactions less likely to occur.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -21
REQUEST NO. 12: Based on Kathleen Anderson's testimony (p. 10), please
describe and define a "determined default energy bid ." How is that different than an
EIM market bid, how is it used in the EIM market in place of a conventional EIM bid, and
how is the amount determined for each resource?
RESPONSE TO REQUEST NO. 12: The EIM market bid is a bid curve
determined by the resource owner's internally developed methodology and can be
based on different variables at the time the bid is created. For example, variables such
as, but not limited to the availability and cost of gas for different levels of dispatch or
water conditions that may limit the dispatch of certain units during certain hours. The
bid curve indicates how many megawatts and at what price the generator owner is
willing to offer energy into the market.
The default energy bid is a resource's cost-based bid that may be used in the
place of the EIM market bid in the event that the market determines that a resource
wields local market power (CAISO EIM Business Practice Manual ("BPM") Section
11.3.5 provides additional information on the market power mitigation practice.). The
default energy bid is calculated by CAISO in accordance with the methodology
described in CAISO's tariff Section 39.7.1, and is designed to represent the actual cost
of the generation resource. The calculation of the default energy bid is further explained
in CAISO's BPM for Market Instruments, Attachment D.
Links to the referenced documents are provided below:
CAISO EIM BPM:
https://bpmcm.caiso.com/Pages/BPMDetails.aspx?BPM=Energy Imbalance Market
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -22
CAISO Tariff Section 39:
http://www.caiso.com/Documents/Section39 MarketPowerMitigationProcedures asof J
un2 2016.pdf
CASIO 8PM for Market Instruments (refer to Attachment D in the
document):
https://bpmcm.caiso.com/Pages/BPMDetails.aspx?BPM=Market%201nstruments
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -23
REQUEST NO. 13: Please explain how the E3 model was verified and validated
to ensure it reflects how the electricity system operates in reality.
RESPONSE TO REQUEST NO. 13: E3 conducted EIM benefit studies for
PacifiCorp, Puget Sound Energy, Arizona Public Service, NV Energy, and Portland
General Electric Company ("PGE"), and is recognized in the region as having the best
model to incorporate hydro electric generation. E3 utilized the model that was
developed for the PGE benefits study as the base model for the Idaho Power study,
which provided significant benefits to Idaho Power. Idaho Power and other utilities
provided data regarding each company's system and generation for use in the PGE
study. By order of the OPUC, PGE was required to create a steering committee,
including representatives of OPUC Staff, stakeholders, and industry experts, to oversee
the study. PGE subsequently established three committees to oversee and offer insight
on the study. These committees consisted of a stakeholder advisory committee, a
technical review committee, and a modeling team comprised of utility and market
operator partners. Idaho Power was an active participant in all three committees. The
committees met on multiple occasions throughout the study process and provided PGE
with timely guidance on many issues, including the following:
Stakeholder Advisory Committee. Commented on matters technical in
nature and advised PGE's internal modeling team on foundational study elements, such
as study structure and key assumptions.
Technical Review Committee. Offered expertise in, and recommendations
on, modeling techniques, model inputs, and feasibility of the modeling approach.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -24
Utility/Market Operator Modeling Team. Reviewed input and output data
for accuracy and robustness.
Prior to the start of the benefits study for Idaho Power, the Company reviewed
the assumptions that were used in the PGE study with regard to Idaho Power's
generation and transmission systems to ensure they were still valid and nothing needed
to be updated. The model applies past behavior to predicted future conditions to create
the most accurate predictors possible. Idaho Power also reviewed the data set that was
used in the WECC Transmission Expansion Planning Policy Committee ("TEPPC")
cases. Idaho Power ensured that the generation and transmission system modeled for
its own system and the transmission lines modeled were correct in the TEPPC cases
that are used as the basis for the analysis. In addition, Idaho Power reviewed the
specific generation and transmission reflected as inputs in the model to ensure they are
correct.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -25
REQUEST NO. 14: Please provide all worksheets (with formulas intact) for any
analysis performed as a result or related to the E3 study. This should include the
allocation of benefits between the Company and other EIM participants for each of the
modeled scenarios.
RESPONSE TO REQUEST NO. 14: Idaho Power performed a revenue
requirement analysis as a result of the E3 study, which is provided as an attachment to
the Company's response to Staffs Request No. 9. Idaho Power requested and
received data in relation to the analysis the Company needed to perform for the revenue
requirement analysis referred to above. Idaho Power also requested monthly data on
the savings represented in each case, which is included in the Company's response to
Staff's Request No. 16.
Idaho Power requested 10-minute detailed dispatched generation and the
corresponding 10-minute savings data represented from the EIM and business-as-usual
("BAU") cases. The 10-minute dispatched Imbalance Savings data used to calculate
the base case table is provided as Attachment 1 on the non-confidential CD. Idaho
Power does not have corresponding data for the other scenarios. This 10-minute data
was used to produce graphs that create a visual depiction of the generation and
benefits for sample days based on the base case (BAU) and the EIM case (EIM) and
are provided as confidential Attachments 2 and 3 on the confidential CD. These graphs
were previously provided to the IPUC and are provided as Attachment 4 on the non­
confidential CD. The confidential CD will be provided to those parties that have
executed the Protective Agreement in this matter.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -26
Because the intent of the E3 study was to determine potential benefits to be
derived by Idaho Power's participation in the EIM, the Company did not request any
data related to the benefits provided to other EIM participants. The only information
Idaho Power has in relation to the benefits to other participants is contained in the E3
study.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -27
REQUEST NO. 15: Please provide a copy of model inputs, model outputs, and
all reports completed as a result of the E3 study. This should include a comprehensive
list of assumptions (e.g. IPC participating generation resources bid into the market, gas
prices, electricity prices, costs, bid strategy/values etc.) used for each of the scenarios
modeled : base scenario, no APS or PGE, early coal retirement, and high RPS case.
RESPONSE TO REQUEST NO. 15: Please see the non-confidential and
confidential Excel files provided on the non-confidential and confidential CDs that were
provided by E3 for verification by Idaho Power as model inputs. The confidential CD will
be provided to those parties that have executed the Protective Agreement in this matter.
Attachment 1 is a summary of Idaho Power's transmission topology that was used in the
model to represent the transmission capacity between Idaho Power and its adjacent
BAs. This data was verified by Idaho Power to ensure the study was modeling transfer
capacity. Attachment 2 is a confidential comprehensive look at Idaho Power's
generation, reserves, and load and gas forecasts that were used in the model. These
inputs use the data set from Pacific Northwest National Laboratory's Northwest Power
Pool ("NWPP") EIM study as a base, and integrates modifications to the data set
recommended by Idaho Power from the PGE study. This was the same data that Idaho
Power assisted in verifying during PGE's study as discussed in the Company's
response to Staff's Request No. 13.
These general assumptions were used in all of the scenarios. The differences in
the scenarios were only those characteristics the scenarios were testing (i.e., higher
renewable penetration in various BAs and faster coal retirements that were reflected in
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -28
----------------------------------------·······-·--
the 2020 TEPPC case). All other assumptions used in the cases reflected in the Excel
files provided on the non-confidential and confidential CDs remained the same.
The completed report based upon the results of the E3 study is the Idaho Power
Company Energy Imbalance Market Analysis, included as Exhibit No. 4 to Kathleen
Anderson's testimony.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -29
REQUEST NO. 16: Please provide a breakdown of the net benefits by
purchases and off-system sales for each of the E3 modeled scenarios. For the amount
of purchases, please provide the amount of energy (MWh) and dollar amounts
purchased . For the amount of off-system sales, please provide the amount of energy
(MWh) and the dollar amounts sold for each of the Company's participating generation
resources.
RESPONSE TO REQUEST NO. 16: The following charts detail the net
generation costs and net EIM sales/purchases for each of the E3 scenarios modeled.
These charts were provided by E3 at the request of Idaho Power in order for the
Company to conduct the revenue requirement analysis. Idaho Power did not request
the megawatt-hour ("MWh") values from E3; therefore, that data is not available. The
Imbalance Savings in the charts below reflect the net of both purchases and off-system
sales.
Month
1
2
3
4
5
6
7
8
9
10
11
12
Tot
Generation
Savings
$151,908
• • I
-$768,566
$198,089
$1,797
-$550,614
-$84,083
$82,550
$52,473
$49,564
$80,767
-$419,907
-$1,305,751
Base Case
Imbalance
Savings
$172,613
$607,018
$1,296,053
$248,856
$373,804
$832,055
$368,898
$203,619
$275,540
$280,862
$256,239
$864,896
$5,780,453
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -30
Net Benefits
Savings
$324,522
$507,290
$527,490
$446,949
$375,606
$281,447
$284,822
$286,177
$328,022
$330,436
$337,018
$445,002
$4,474,781
Month
1
2
3
4
s
6
7
8
9
10
11
12
Tot
Month
1
2
3
4
s
6
7
8
9
10
11
12
Tot
Coal Retirement
Generation Imbalance
Savings Savings
$77,203 $249,611
-$378,006 $847,325
-$840,098 $1,330,613
$139,577 $276,739
-$96,360 $400,589
-$646,886 $917,503
-$220,661 $516,325
-$99,541 $354,683
-$78,034 $372,986
-$32,827 $340,520
-$22,736 $318,048
-$507,458 $926,455
-$2,705,830 $6,851,396
High Renewable Portfolio Standards
Generation
Savings
$246,417
$163,194
-$21,739
$300,063
$3,368
-$304,966
$47,731
$29,988
$80,427
-$17,243
$120,061
-$122,796
$524,507
Imbalance
Savings
$224,525
$521,469
$668,170
$218,313
$337,946
$588,404
$275,443
$257,444
$263,263
$304,328
$319,797
$564,479
$4,543,581
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -31
Net Benefits
Savings
$326,815
$469,321
$490,517
$416,321
$304,234
$270,623
$295,671
$255,149
$294,960
$307,703
$295,323
$419,008
$4,145,644
Net Benefits
Savings
$470,944
$684,666
$646,433
$518,381
$341,320
$283,443
$323,181
$287,440
$343,700
$287,095
$439,869
$441,695
$5,068,166
No Arizona Public Service or Portland General Electric
Generation Imbalance Net Benefits
Month Savings Savings Savings
1
2
3
4
5
6
7
8
9
10
11
12
Tot
$142,434
-$142,869
-$742,000
$209,923
$24,431
-$508,191
-$304,270
$32,018
-$14,865
$51,066
$79,955
-$473,533
-$1,645,901
$180,885 $323,321
$544,393 $401,526
$1,239,297 $497,299
$159,996 $369,923
$297,683 $322,120
$771,675 $263,490
$580,165 $275,901
$226,172 $258,199
$350,193 $335,337
$267,103 $318,179
$250,760 $330,726
$928,025 $454,503
$5,796,349 $4,150,525
The 10-minute dispatched Imbalance Savings data used to calculate the base
case table above is provided as Attachment 1 to the Company's response to Staff's
Request No. 14. This Excel file contains 52,704 rows of data. The values reflected in
the savings spreadsheet represent the difference between the BAU case and the EIM
case (BAU-EIM) and tie in total to the base case table above. This data assumes that
in the BAU case, Idaho Power is not participating in the EIM. As a result, purchases
can be identified by a negative value (the cost to buy from the EIM) and sales are
represented as a positive value. The 10-minute savings data file provides greater detail
of these numbers.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -32
REQUEST NO. 17: Based on Tim Tatum's testimony (p. 5), please explain and
provide E3 model output data that quantifies benefits. Specifically, please show model
output comparing model runs with Idaho Power as an EIM participant and as a non­
participant demonstrating: (1) increased surplus sales, (2) improved transmission
congestion, and (3) more efficient integration of renewable resources.
RESPONSE TO REQUEST NO. 17: Please see the Company's response to
Staff's Request No. 16 for the monthly quantification of net power supply benefits under
the four scenarios modeled by E3. Inherent in the model runs performed by E3 are
benefits associated with improved transmission congestion and the efficient integration
of renewable resources and thus they are not separately quantified. While the study
does not quantify the results of increased surplus sales, improved transmission
congestion, or more efficient integration of renewable resources, the EIM structure
maximizes transmission utilization, and captures diversity of loads and renewable
generation, resulting in improved operational efficiency.
The response to this Request is sponsored by Kathleen Anderson , Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -33
REQUEST NO. 18: In Kathleen Anderson's testimony (p. 16), the estimated cost
of production for the Company's resources was used instead of market-based rates in
the E3 model. Was the cost of production used for all resources across all BA's
modeled and was this applied to purchases the Company made in balancing its
resources? Please explain.
RESPONSE TO REQUEST NO. 18: Yes. The cost of production was used for
all resources in all BAs that were modeled, which encompass the entire western
interconnection. This cost of production is based on generator specifications created by
the WECC's TEPPC, and subsequently refined by the NWPP (for the NWPP EIM study)
and PGE and its technical advisory committee (for the PGE EIM study). These costs
are represented by region-specific fuel costs, generator-specific heat rates, variable
operations and maintenance costs, and start-up costs for all WECC units, as well as
CO2 costs for units located in California.
The purchases and sales the Company made in balancing its resources were
based on 10-minute prices that are based on the marginal cost of energy for each
10-minute interval. These marginal prices are based on the fundamental cost-based
inputs described above. The marginal cost can be different for different BAs/zones
during 10-minute intervals in which transmission constraints between the two zones limit
the amount of energy transfer to a level that is less than what would be economically
optimal. To value purchases and sales between EIM entities during each interval, the
study calculated a single EIM-wide average price for that interval, weighting the prices
for each EIM participating BA by the volume of purchases and sales that each zone
transacts during the interval. This calculation is explained in Section 2.5 of the Idaho
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -34
Power Company Energy Imbalance Market Analysis provided as Exhibit No. 4 to
Kathleen Anderson's testimony.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -35
REQUEST NO. 19: Does the E3 model take into account stream flows and
water availability constraints of the Company's hydro resources included as EIM
participating resources? If not, please explain why not? If so, please provide the
assumptions used and explain how the model takes this into account.
RESPONSE TO REQUEST NO. 19: Yes. As can be seen in the confidential
attachment provided with the Company's response to Staff's Request No. 15, E3
modeled generation by specific hydro unit. Additionally, the model incorporates the
maximum and minimum capacity for each hydro unit per month.
The model represents hydro water availability (for all units in the western
interconnection) in the following two ways:
(1) Some hydro units are represented with a fixed hourly schedule that
is derived from historical data on energy production for those units. This is used for
units that are run of river or that are determined to be otherwise substantially
constrained in their dispatch flexibility and better represented by the fixed profile.
(2) More flexible dispatch hydro units are constrained by month-
specific parameters representing the maximum and minimum instantaneous output
levels (in MW), as well as the monthly total energy production on the unit (in MWh).
These maximum, minimum, and energy parameters are also derived based on historical
data. Stream flows will thus limit the minimum and maximum levels that the plant can
output, as well as the aggregate dispatch for the month. The model then dispatches the
hydro generators responsively to the marginal cost of thermal generation, using E3's
proprietary algorithm known as "hydro thermal coordination" or HTC, subject to ramping
limits that moderate the responsiveness of hydro to prices to a more historically
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -36
appropriate level. Hydro generator capability can be used both for energy production as
well as for carrying reserves on the portions of available hydro capacity that is not being
utilized for energy production.
Please note that E3 did not modify hydro unit characterizations for this study.
Hydro flexibility was evaluated intensively as part of the Northwest Power Pool EIM
study, published in October 2013 with input from a large group of utility staff contributing
data and guidance from across the Northwest region, including an Idaho Power
representative. More detail is available in that report, which is available via the link
below.
http://www.pnnl.gov/main/publications/external/technical_reports/PNNL-22877.pdf
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -37
REQUEST NO. 20: Please provide levels of natural gas prices, water
availability, market electricity prices, number of balancing area participants, and
renewable penetration that produces a negative net benefit through the E3 production
model.
RESPONSE TO REQUEST NO. 20: The requested analysis has not been
performed. E3 modeled four reasonable futures to be evaluated, none of which
produced a negative benefit.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -38
REQUEST NO. 21: In Kathleen Anderson's testimony (p. 12), she describes
how added participation will benefit participants of the western EIM. Did the Company
or E3 quantify the impacts to EIM only participants if some participants, such as
PacifiCorp, also joins the regional ISO (i.e. CAISO)? If so, please provide the results
and analysis. If not, please explain why not.
RESPONSE TO REQUEST NO. 21: No. Neither Idaho Power nor E3 quantified
the impacts to EIM-only participants if some participants were to also join a regional
ISO. The primary reason for not running this specific study is that all the resources in
the current CAISO BA are available for dispatch in the EIM the same as any other EIM­
entity resource. The same resources, load, and transmission would be used in the EIM
if an entity such as PacifiCorp joins the regional ISO. The significant difference would
be that PacifiCorp's generation assets would be dispatched as part of the CAISO BA
EIM participation and not as PacifiCorp's separate assets. Therefore, the Company
does not believe the benefits of the EIM would be diminished if an EIM entity joined an
ISO.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -39
REQUEST NO. 22: Please provide an estimate showing how the Company's
participation in the Western EIM could impact reserve margin and reliability.
RESPONSE TO REQUEST NO. 22: FERC Staff wrote a paper in February 2013
titled Qualitative Assessment of Potential Reliability Benefits from a Western Energy
Imbalance Market in which it notes that the western EIM could provide reliability benefits
through security constrained economic dispatch across the market footprint; enhanced
situational awareness; potentially fewer energy emergency alerts; faster identification,
dispatch, and delivery of replacement generation after reserve sharing assistance ends;
and assisting with integration of variable energy resources. A link to FERC's paper is
provided below.
In May 2012, the National Renewable Energy Laboratory ("NREL") released a
technical report titled Operating Reserve Reductions From a Proposed Energy
Imbalance Market With Wind and Solar Generation in the Western Interconnection (a
copy of the report is provided on the non-confidential CD). On page 25 of the report,
the NREL notes that a larger operating footprint enhances reliability by increasing the
ability of the system to respond to variability for two reasons: (1) pooling of variable
loads and wind generation increases diversity, which reduces overall per-unit variability,
and (2) a broader resource mix increases ramping capability linearly. In addition, the
NREL report attempts to allocate the estimated reduction in the reserves to each BA
As described above, both FERC and NREL conducted relevant studies on
impacts to reserve margins and reliability in the western interconnection. As part of the
Company's analysis of participation in the western EIM, Idaho Power reviewed both of
the studies listed above. However, Idaho Power wanted to ensure that the calculation
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -40
of its potential benefits to joining the EIM was conservative; therefore, the Company did
not attempt to quantify financial impacts to reserve margin and reliability.
FERC's Staff's white paper is available via the following link:
http://www.caiso.com/Documents/QualitativeAssessment-PotentialReliabilityBenefits­
WesternEnergylmbalanceMarket.pdf
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -41
REQUEST NO. 23: Please explain why the sub-hourly dispatch cost savings
from the E3 model are not consistent with the sales revenues shown on line 12 of
Exhibit No. 1.
RESPONSE TO REQUEST NO. 23: The sales revenues shown on line 12 of
Exhibit No. 1 are the Idaho jurisdictional share of the off-system sales under E3's base
case scenario. The E3 model estimates, under the base case scenario, off-system
sales revenues of $5,780,453 on an annual basis and an increase in fuel costs of
$1 ,305,751 on an annual basis, for net savings of $4,474,703. Please note, the off­
system sales revenues and fuel costs for 2018 reflect only nine months of revenues and
costs as Idaho Power anticipates joining the western EIM on April 1, 2018.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -42
REQUEST NO. 24: In Kathleen Anderson's testimony (p. 9), she states that if
Idaho Power does not obtain market based rate authority from FERG, it would not have
a material impact to Idaho Power's customers. Please explain what is meant by a
"material impact." Furthermore, please explain how there would be any impact to
customers if a utility is paid the settled market price for energy bid into the market,
regardless of whether it operates under market-based rate authority or a default energy
bid .
RESPONSE TO REQUEST NO. 24: The E3 analysis that was performed to
determine benefits to Idaho Power customers did not assume that Idaho Power would
have market-based rates ; therefore, if Idaho Power does not obtain market-based rate
authority, it will not have a material impact. "Material impact" carries no unique or
special meaning in this context.
If an entity in the market does not obtain market-based rate authority from FERG
for participation in the EIM , CASIO follows the process outlined in its tariff Appendix 11,
available via the following link:
http://www.caiso .com/Documents/Appendixll Market­
BasedRateAuthoritySuspension Jul 1 2013.pdf
CAISO will calculate a generated bid based on a resource's proxy cost. After the
CAISO market run, the market pays the higher of the default energy bid or the
applicable location marginal price for intervals for which the resource is dispatched. This
ensures a generator will receive the higher of the calculated determined default energy
bid or the market price.
The cost to a utility to dispatch a unit into the market will, at a minimum , hold the
customer neutral provided the default energy bid adequately covers the cost of the
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -43
dispatch. If the default energy bid is lower than the cost of the dispatch, Idaho Power
would not dispatch the unit into the market. Therefore, if the Company does not obtain
market-based rate authority, it would not have a material impact to Idaho Power's net
benefit.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -44
REQUEST NO. 25: Please provide a detailed description and the basis for the
annual software fees of $786,000 per year (i.e., is it calculated based on number of
meters or customer count?). Is this an annual contracted rate, and if so, how long is the
initial contract and how will subsequent contract rates be determined? What services
are included in this annual fee (updates, support, etc.)? What would drive increased
software fees in the future?
RESPONSE TO REQUEST NO. 25: The value above includes an estimated
annual software fee for the required software solutions necessary for Idaho Power's
participation in the western EIM . It also includes an estimate of the annual EIM
administration fees that are required to be paid to CAISO for transactions occurring in
the EIM.
Because Idaho Power has not completed the RFP processes for obtaining
software services, the estimate for the annual software fees is based on the analysis
performed by Structure Group, which was estimated at approximately 25 percent of the
perpetual license fee for the annual maintenance cost of these systems. The 25
percent estimate is based on Structure Group's discussions and experience with EIM
vendors. Please see the EIM Security Constrained Economic Dispatch ("SCED")
Business and Technology Impact Assessment Report provided on the non-confidential
CD, specifically Sections 7.1 and 7.2.
The EIM administrative fees are based on two billing determinants: the EIM
market services fee and EIM system operations fee. Both fees are based on the
expected volume of instructed imbalance energy and the expected volume of deviation
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -45
energy the EIM entity experiences and therefore are estimated for Idaho Power based
on discussions with CAISO.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -46
REQUEST NO. 26: Please provide a detailed breakdown of software integration
costs and any documentation to support the amount (stated to be half the expected
capital costs in Kathleen Anderson's testimony (p. 21, I. 6-9)).
RESPONSE TO REQUEST NO. 26: Please see the Company's response to
Staff's Request No. 2 for the breakdown of the software integration costs. The estimate
was based on Section 7 of the EIM SCED Business and Technology Impact
Assessment Report performed by Structure Group for Idaho Power in February 2015,
please see the attachment provided with the Company's response to Staff's Request
No. 25 for a copy of the report. This section estimates the cost of implementing the
technology solutions and was used as the base for the estimate of software integration
costs referenced in Ms. Anderson's testimony. Idaho Power took the estimate for the
vendor implementation cost, the IT/technical operations, and system implementation
specialist estimates from the report and modified the results based upon the
expectations of the Company's internal IT/technical operations. The Company utilized
its internal applicable labor costs to develop an estimate based upon the amount of
hours believed necessary for implementation rather than relying on the value provided
by Structure Group.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -47
REQUEST NO. 27: Please provide details of consulting expenses for the
System Integrator needed throughout the integration process. Please provide
documentation of total expected costs and timeline for this service. Also, testimony by
Kathleen Anderson (p. 21, I. 11-13) states that the System Integrator has already been
engaged . Are these costs included in the $11.09 million of upfront costs? Please
explain.
RESPONSE TO REQUEST NO. 27: Yes. System Integrator costs are included
in the $11 .09 million upfront costs. Please see the confidential contracts provided as
Attachments 2 and 3 to the Company's response to Staffs Request No. 1. The System
Integrator costs include the cost for Utilicast to perform project management and
provide subject matter experts in various areas of project implementation (i.e., subject
matter expert in the EIM settlements, application program interface integration, change
management related to EIM, EIM market strategy, and metering (please see Exhibit A
of confidential Attachment 3 provided with the Company's response to Staffs Request
No. 1 )). The contract provides estimated costs for additional contract labor per hourly
rates as listed in Exhibit C of confidential Attachment 3 (not included in the initial
contracted price) that may be needed to supplement Idaho Power's IT staff to
implement the systems in addition to software vendor integration costs .
The contract time period is effective from June 28, 2016, to June 28, 2020, or
until termination. Idaho Power has the option to terminate or suspend the agreement
without cause and without penalty as set forth in the contract.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -48
REQUEST NO. 28: What measures are in place to insure the proposed $15.77
million of costs to join the EIM is not exceeded?
RESPONSE TO REQUEST NO. 28: Idaho Power developed the $15.77 million
estimate of costs to join the western EIM based upon Structure Group's analysis as well
as supporting information received from other EIM entities and a review of market
prices. The Company believes this is a reasonable estimate and takes its responsibility
of prudently managing costs seriously. Consistent with Idaho Power practice, the
Company will continually monitor costs before they are incurred to ensure funds spent
are prudent and cost-effective.
As discussed in more detail in the Company's response to Staff's Request No. 1,
Idaho Power has established procurement processes and standards to ensure that
purchase and contracting decisions are made in a manner that is based upon the best
overall value to the Company. For costs that fall under the Company's procurement
policy, those established processes will be followed. Also included in the Company's
response to Staff's Request No. 1 is a more detailed discussion of Idaho Power
standards and processes that ensure new hires are made in response to business
needs and that wage and benefit costs are competitive for qualified candidates.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -49
REQUEST NO. 29: What is the future nomination process for EIM Governing
Board Members? What are the length of terms for each Board Member?
RESPONSE TO REQUEST NO. 29: The EIM Governing Body is a five-member
body that exercises delegated authority over the rules of the western EIM. Section 3 of
CAISO's Selection Policy for the EIM Governing Body, provided on the non-confidential
CD, governs selection and describes the nomination process for EIM Governing Board
Members. The first set of regional industry experts to be selected to serve on the EIM
Governing Body were randomly assigned one-, two-, and three-year staggered terms.
All future members' terms will be three years.
The response to this Request is sponsored by Kathleen Anderson, Transmission
and Energy Scheduling Leader, Idaho Power Company.
DATED at Boise, Idaho, this 261h day of October 2016.
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -50
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 25th day of October 2016 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Brandon Karpen
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Industrial Customers of Idaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 2?1h Street (83702)
P.O. Box 7218
Boise, Idaho 83707
Dr. Don Reading
6070 Hill Road
Boise, Idaho 83703
Snake River Alliance
Ken Miller, Energy Program Director
Snake River Alliance
223 North 5th Street, Suite 317
P.O. Box 1731
Boise, Idaho 83701
Idaho Conservation League
Benjamin J. Otto
Idaho Conservation League
710 North 5th Street
Boise, Idaho 83702
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IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF -51