20171120IPC to Staff 1-2.pdf

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RECEIVED
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An IDACORP Company
DONOVAN E. WALKER
Lead Counse!
dwal [e-mail]
November 20,2017
VIA HAND DELIVERY
Diane M. Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-17-15
Annual Compliance Filing to Update Load and Gas Forecast Components -
ldaho Power Company's Response to the First Production Request of the
Commission Staff
Dear Ms. Hanian
Enclosed forfiling in the above matter please find an originaland three (3) copies of
ldaho Power Company's Response to the First Production Request of the Commission
Staff.
very yours,
n E. Walker
DEW:csb
Enclosures
PO. Box 70 (83707)
1221 W. ldaho St.
Boise, lD 83702
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwal ker@ ida hopower. com
IN THE MATTER OF THE ANNUAL
COMPLIANCE FILING OF IDAHO
POWER COMPANY TO UPDATE THE
LOAD AND GAS FORECASTS IN THE
INCREMENTAL COST INTEGRATED
RESOURCE PLAN AVOIDED COST
MODEL
RECEIVED
2011 HOY 20 Plt lr:05
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CASE NO. !PC-E-17-15
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE COMMISSION STAFF
COMES NOW, ldaho Power Company ("!daho Power" or "Company"), and in
response to the First Production Request of the Commission Staff to ldaho Power
Company dated November 1,2017, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1
REQUEST NO. 1: Please explain why ldaho Power changed the natural gas
price forecast from the U.S. EIA Reference Case Forecast for Natural Gas Henry Hub
Spot Price used in Case No. IPC-E-16-22 to the U.S. EIA's Natural Gas Henry Hub
Spot Price: High Oil and Gas Resource and Technology forecast, adjusted for pricing at
Sumas and transport for ldaho City Gate delivery used in this filing.
RESPONSE TO REQUEST NO. 1: The Company has historically aligned the
natural gas forecast used within the lncremental Cost lntegrated Resource Plan
("lClRP") Avoided Cost model with the natural gas forecast used in the lntegrated
Resource Plan ("lRP"), updated to reflect the most current prices. The natural gas price
forecast that was used in the October 2016 update to the ICIRP Avoided Cost model,
Case No. IPC-E-16-22, was the Energy lnformation Administration's ("ElA') Reference
Case for Natural Gas Henry Hub Spot Price ("ElA Reference Case"), and aligned with
the natural gas forecast used in the 2015 lRP.
With this filing, the Company continued to align the natural gas price forecast
used within the ICIRP Avoided Cost model with the natural gas price forecast used in
the Company's most recent lRP (2017 !RP), which is the EIA Natural Gas Henry Hub
Spot Price: High Oi! and Gas Resource and Technology forecast. The adjustment for
pricing at Sumas and the transport for ldaho Citygate are not new with this filing, and
have been included in the AURORA model, as they have been in the previous updates
to the natural gas price forecast.
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company, and Rick Haener, Power Supply Planning
Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 2
REQUEST NO. 2: Please explain why ldaho Power chose the U.S. EIA's
Natural Gas Henry Hub Spot Price: High Oil and Gas Resource and Technology
forecast and why it believes that forecast is more accurate than other natura! gas
forecasts provided by ElA.
RESPONSE TO REQUEST NO. 2: In accordance with ldaho Public Utilities
Commission orders, the ICIRP methodology used for larger projects subject to
negotiated rates and contracts utilizes the natural gas price forecast that ldaho Power
uses in its IRP process. The Company's IRP model and process use the EIA natural
gas price forecast from EIA's Annual Energy Outlook for Henry Hub, adjusted for pricing
at Sumas and ldaho Citygate, where ldaho Power holds firm pipeline capacity and
actually performs natural gas transactions. Specifically, in the development of the 2017
lRP, ldaho Power used EIA's Natural Gas Spot Price at Henry Hub: High Oil and Gas
Resource and Technology forecast.
ldaho Power's IRP development attempts to use the gas price forecast which
most closely aligns with current and future expectations. Of the EIA natural gas
forecasts from the 2016 EIA Energy Outlook, the High Oil and Gas Resource and
Technology Case is the case that most closely aligns with current and future
expectations for gas prices, and was supported by reviewing future trading prices from
the lntercontinental Exchange ("lCE'). The other EIA forecasts did not represent the
direction of future prices indicated by the natural gas forward contract market. ldaho
Power discussed the natural gas price forecasts extensively with members of the IRP
Advisory Council and other public participants during the IRP planning process. As
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
such, ldaho Power selected the High Oil and Gas Resource and Technology Case for
use in the 2017 lRP, and subsequently for use in this case.
The graph below demonstrates that the High Oil and Gas Resource and
Technology Case and the lCE settled contracts line up very well through 2028.
Henry Hub Natura! Gas Prices (Nomina! S/mmbtu)
S16.oo
s14.00
S12.oo
S10.oo
S8.oo
S6.oo
S4.oo
S2.oo
-Historical
-2017
EIA Reference Case
-20t7
tRP Planning (EtA High
Oil and Gas Resource and
Tedrnology)
-lCE
Setdes 2015
2017 EIA Low Oil a nd Gas
Resource and Technologys-
1997 2000 2003 2006 2@9 20L2 2015 2018 202L 2024 2027 2030 2033 2036
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company, and Rick Haener, Power Supply Planning
Leader, ldaho Power Company.
DATED at Boise, ldaho, this 20th day of November 2017.
NE KER
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 4
I
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 20th day of November 2017 ! 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
Camille Christen
Deputy Attorney General
Idaho Public Utilities Commission
47 2 W est Wash i ngton (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
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