20180731IPC to Staff 7-21.pdf

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An IDACORP CompanY
DONOVAN E. WALKER
Lead Counsel
[e-mail]
July 31 ,2018
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
47 2 \N est Wash ington Street
Boise, ldaho 83702
Re Case No. IPC-E-18-07
Petition for Modification of 90/1't0 Performance Band and Calculation of
O&M Charges for PURPA QFs - ldaho Power Company's Response to the
Second Production Request of the Commission Staff to ldaho Power
Company
Dear Ms. Hanian:
Enclosed for filing in the above matter are an original and three (3) copies of ldaho
Power Company's Response to the Second Production Request of the Commission Staff
to ldaho Power Company.
Also, enclosed are four (4) copies of non-confidential disks containing information
responsive to these production requests.
Very yours,
E.ker
DEW:csb
Enclosures
1221 W. ldaho St. (83702)
PO. Box 70
Boise, lD 83707
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221\Nest ldaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwa I ker@ id a h opower. com
IN THE MATTER OF THE PETITION OF
IDAHYDRO, SHOROCK HYDRO, INC.,
J.R. SIMPLOT COMPANY, AND
RENEWABLE ENERGY COALITION FOR
MODIFICATION OF THE 9O/1 1O
PERFORMANCE BAND AND
CALCULATION OF OPERATION AND
MAINTENANCE CHARGES FOR PURPA
QUALIFYING FACILITIES
I]ECEIVED
i0i0 jUL 3 t pH t:31
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iSSION
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UT]LITIES COMMISSION
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CASE NO. !PC-E-18-07
IDAHO POWER COMPANY'S
RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE
COMMISSION STAFF TO IDAHO
POWER COMPANY
COMES NOW, ldaho Power Company ("ldaho Power" or "Company"), and in
response to the Second Production Request of the Commission Staff to ldaho Power
Company dated July 1 1,2018, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY. 1
REQUEST NO. 7: lf ldaho Power purchases power from a Qualified Facility
(QF) on a month-ahead basis and the amount of power actually delivered over the
course of that month does not match the monthly estimates, please list and describe the
sources of incremental costs incurred by ldaho Power to cope with the differentia!. ln
addition, with regard to these incrementa! costs, please provide answers to the following
questions:
a. For each of these sources of incremental cost, please describe how these
incremental costs increase as the size of the differential between the specified amount
of generation and the actual amount of generation changes.
b. Please describe how these incremental costs to the Company can be
estimated? Please provide actual historical data to quantify each of these sources of
incremental cost; and if the amount of incremental cost is dependent on the size of the
differential between the contracted amount of generation and the actual amount of
generation (or other factors), please reflect this in your data.
c. Does ldaho Power believe that the 901110 requirement is intended to
recover these incrementa! costs? Please explain.
d. Please compare this to market purchases or other power purchases.
RESPONSE TO REQUEST NO. 7: Idaho Power does not purchase power from
QFs on a month-ahead basis. QFs that have Energy Sales Agreements ("ESA") with
ldaho Power are paid the avoided cost prices specified in the QF's ESA for Net Energy
that is delivered on an actual basis. However, in order to maintain a balanced and
reliable electrical system, Idaho Power must successfully integrate generation from
variable and intermittent generation resources that deliver to the Company. Idaho
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2
Power has conducted multiple wind and solar integration studies that attempt to quantify
the cost of modifying the Company's operations to hold additional up and down
regulation reserves to manage intermittent resources.
!f ldaho Power is required to replace QF generation with generation from other
resources, all those other resources are currently lower cost than the QF's contract rate.
Nearly al! of ldaho Power's ESAs with QFs contain firm generation pricing even though
what most QFs deliver is not firm generation. !f the majority of non-firm QF generators
were appropriately priced with the non-firm avoided cost rate, that cost would be closer
to a market price, and less harmfulto customers.
a. The determination of any type of integration costs that are needed to carry
reserves to account for the intermittency of QF generation, is made in integration cost
studies. ldaho Power's most recent Wind Integration Study ('WlS') was recently
completed in response to Order No. 17-075, Case No. UM 1793, issued by the Public
Utility Commission of Oregon ("OPUC"). This study will be filed with the OPUC by July
31, 2018, and an informational copy will be provided to the ldaho Public Utilities
Commission ("IPUC" or "Commission") at the same time. The WIS suggests that the
Idaho Power system may be nearing a point that it is no longer capable of integrating
additional intermittent generation resources.
It follows logically that as the differential between incremental costs increase with
additional generation on the system, that as the amount of actual generation increases
the overall cost increases.
b. To estimate the costs of integrating wind in the WlS, the Company used a
comparison of annual production costs between two scenarios having different
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3
regulating reserves requirements, where the difference in regulating reserves is related
to wind's variability and uncertainty. The production cost difference between scenarios
was divided by the annual megawatt-hours ("MWh') of wind generation to yield an
estimated integration cost expressed per MWh of wind generation. These data are
included in the WlS. A similar type of analysis could quantify costs for any other
Variable Energy Resource ('VER").
c. No. The cost of integrating VERs identifies the cost of carrying adequate
reserves to operate a balanced electrical system, whereas, as described in ldaho
Power's response to Staffs Request No. 1, the primary function of the 90/110
provisions in the state of ldaho's implementation of the Public Utility Regulatory Policies
Act of 1978 ('PURPA") is to serve as a measure of firmness that establishes a QF's
eligibility for firm avoided cost rates determined at the time of contracting as opposed to
non-firm avoided cost rates established at the time of generation delivery.
All QF purchases are non-firm in that delivery of their generation occurs as,
when, and in whatever amounts the QF determines it will deliver. The IPUC's
implementation of PURPA's mandatory purchase has identified its own unique definition
of firm and non-firm pricing. For non-firm purchases, "as available" pricing is applied
and is determined at the time of delivery. For firm pricing, avoided cost values are used
for the duration of the term at the time of contracting.
d. ldaho Power is not sure what is meant in the question by "compare this."
The 90/110 provisions are applied in ESAs with QFs so that if a QF is unable to deliver
energy on a monthly basis that meets the requirements of the 90/1 10 provisions, the
non-firm, Surplus Energy is paid the Schedule 86 market-based, non-firm price that has
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
some correlation with actual market value of energy. ldaho Power has demonstrated in
the past that historical average costs of generation provided by PURPA QFs has
exceeded average Mid-C market prices, and the disparity between future average cost
obligations of QFs under contract with ldaho Power and Mid-C market prices is
anticipated to continue to grow. Please see the chart below.
Avcrr8c PURPA Pricc vr. Mid.C lndcx
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The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
REQUEST NO. 8: ln the "Answer to lnterrogatory No. 2" of "ldaho Power
Company's Answers and Responses to J.R. Simplot's First lnterrogatories, Requests
for Admission, and Requests for Production to ldaho Power Company", the Company
described the process for developing the Operating Plan, which reflects the economic
dispatch of the Company's resources on a monthly basis. According to ldaho Power,
QF contract estimated generation amounts, most recent 12-month history, five-year
rolling average, project adjusted estimated net energy amounts, and any previous or
current adjustments are used to develop the plan. Data from the Operating Plan is used
in the development of short-term forecasts, to determine trends and expectations for
energy deliveries on a long-term and near-term basis, including day-head. Throughout
the month, this process compares balance of month purchases and sales with ldaho
Power available generation, the CSPP forecast and load forecast to derive a preliminary
plan for the day... The preliminary plan is then forwarded to the day-ahead process,
where the forecasting process updates the preliminary plan to correct short or long
positions, based on three-day trending of average output from generation resources, to
estimate expected deliveries for the upcoming day.
a. Does ldaho Power use the QF energy estimation amounts for purposes
other than the development of the Operating Plan, the Preliminary Plan for the Day, and
the Day-ahead Process? lf so, please describe them in detail.
b. Please describe in details how an inaccurate estimate can affect the
Operating Plan, the Preliminary Plan for the Day, and the Day-ahead Process. Please
support your answers with examples.
c. ls developing improved forecasting capabilities an appropriate
replacement for 9Ol 1 10?
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
RESPONSE TO EST NO. 8:
a. Yes. As described in ldaho Power's response to Staff's Request No. 1,
the primary function of the 901110 provisions in the state of ldaho's implementation of
PURPA is to serve as a measure of firmness that establishes a QF's eligibility for "firm"
avoided cost rates determined at the time of contracting or legally enforceable obligation
('LEO') as opposed to "non-firm" avoided cost rates established at the time of
generation delivery.
All QF purchases are "non-firm" in that delivery of their generation occurs as,
when, and in whatever amounts the QF determines it wi!! deliver. The purchasing utility
has no dispatchable control over the QF's generation deliveries. The Commission's
current implementation of PURPA's mandatory purchase requires its own unique
definition of "firm" and "non-firm" pricing. For "non-firm" purchases, "as available"
pricing is applied and is determined at the time of delivery. For "firm" pricing, avoided
cost values are used for the duration of the term at the time of contracting or LEO.
The Commission has determined that a LEO for the purchase of QF generation
translates into contractual obligations for both the utility and the QF. !n order to receive
the "firm" pricing avoided cost rates, the QF is obligated to deliver its generation within
the 90 percent-110 percent band of its own monthly generation estimates, which the
QF sets itself and is free to modify. Compliance with the 90/1 10 provisions is how a QF
establishes its eligibility for pricing determined at the time of contracting or LEO that is
set for the term of the contract or LEO. lf the QF is not in compliance with the 90/1 10
provisions required of "firm" pricing, then it receives the other approved avoided cost
price for "non-firm" or "as available" pricing determined at the time of delivery.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7
ln addition to determining a QF's eligibility for proper pricing, initial or seller
adjustments to monthly estimated net energy amounts are used in several other
provisions of ESAs with QFs.
For example, ESAs that contain avoided cost prices based on the incremental
cost integrated resource plan (lClRP) methodology monthly generation estimates serve
as an input to the Pricing Adjustment mechanism to ensure the generation profile
submitted by the project that is used to establish contract prices is a realistic
expectation of monthly energy production based on the characteristics of the generation
equipment being installed at the project. lf a seller submits adjusted monthly net energy
amounts that differ from those that were used for initial pricing, then contract prices may
be subject to a pricing adjustment.
For hydro projects that are eligible for published avoided cost rate ESAs, monthly
generation estimates provided by the QF are used to determine the hydro project's
eligibility for seasonal or non-seasonal avoided cost prices.
If a QF submits to ldaho Power a Seller Declared Suspension of Energy
Deliveries or notice of a Force Majeure event that is accepted by Idaho Power, the
monthly generation estimate is used as an input in the calculation of an adjusted
monthly net energy amount, which may provide the QF with relief from the 90/110
provision.
Monthly estimated net energy amounts provided by projects are used in an
annual determination of a project's ability to deliver a minimum of 10 percent of the
annual estimated Net Energy, otherwise the QF may be in default of the ESA.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8
ln ESAs that contain levelized avoided cost pricing, monthly estimated net
energy amounts are utilized to calculate the amount required in a debt service reserve
account and the accumulated overpayment amount required by the ESA.
b. The overall forecasting process that utilizes monthly generation estimates
provided by QFs is described in ldaho Power's answer to J.R. Simplot Company's
!nterrogatory No. 2, which explains the process of utilizing various sources of
information to create the forecasts the Company's utilizes in its Operating Plan. As
described in that answer, data from the Operating Plan is used to determine trends,
balance of month positions, and day-ahead forecasts in order to operate the system
within balancing limits, which includes information from the cogeneration and small
power production ('CSPP') forecast. When a new QF project is entered into the CSPP
forecasting process, the only source of generation information specific to the project is
the monthly generation estimates provided by the QF, while many QFs under historical
ESAs with ldaho Power do not provide monthly generation estimates. That is why
ldaho Power utilizes all sources of information it has access to from QFs to develop its
CSPP forecast to mitigate the impacts of an inaccurate estimate of generation provided
by QFs.
As further described in ldaho Power's answer to J.R. Simplot Company's
lnterrogatory No. 2, actual deliveries from ldaho Power available generation resources,
CSPP projects, the latest load forecast, and the latest wind and solar forecasts are all
used to determine if the Company is within balancing limits or if additional mitigating
actions must be taken, such as placing orders to balance the system.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 9
c. No. The determination of a QF's compliance with 901110 provisions is
separate and independent of ldaho Power's ability to forecast generation from a QF,
although the two separate processes may utilize some of the same inputs; i.e., the
monthly generation estimates provided by QFs. As previously stated in subpart a
above, the primary function of the 90/110 provisions in the state of ldaho's
implementation of PURPA is to serve as a measure of firmness that establishes a QF's
eligibility for "firm" avoided cost rates determined at the time of contracting or LEO as
opposed to "non-firm" avoided cost rates established at the time of generation delivery.
Compliance with the 90/110 provisions is how a QF establishes its eligibility for pricing
determined at the time of contracting or LEO that is set for the term of the contract or
LEO. lf the QF is not in compliance with the 90/1 10 provisions required of "firm" pricing,
then it receives the other approved avoided cost price for "non-firm" or "as available"
pricing determined at the time of delivery.
As described in subpart a above, monthly generation estimates provided by QFs
are used in several provisions in ESAs and in the CSPP forecasting process. However,
severa! historical QFs that are under contract with ldaho Power currently do not have a
requirement to provide monthly estimated generation amounts. With regard to
forecasting, as described in ldaho Power's answer to J.R. Simplot Company's
lnterrogatory No. 2, ldaho Power takes necessary steps, including using its own tools
and processes to mitigate the intermittency of QF energy deliveries and makes
decisions in order to operate a reliable and balanced electrical system.
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1O
REAIrESL NQJ: Does ldaho Power estimate generation amounts of its own
hydro and other variable resources? lf so, please answer and provide the following:
a. Describe the estimation process.
b. Quantify the accuracy of ldaho Power's estimates compared to QFs'
estimates.
c. lf ldaho Power believes its estimates are more accurate than QFs'
estimates, please discuss whether it is possible to allow QFs affected by this case to
use the same estimate service and share the cost of the service.
RESPONSE TO REQUEST NO.9:
a. ldaho Power uses a version of the Nationa! Weather Service's River
Forecast System for forecasting streamflow at each of ldaho Power's hydrogeneration
facilities. The version of the River Forecast System used by ldaho Power has been
calibrated specifically for the Snake River basin, for ldaho Power's operational planning
purposes. The system is comprised of physically based, lumped hydrologic models that
are calibrated to represent the average value over each elevation band within the
forecast system. The lumped models used within ldaho Power's hydro forecast system
include a snow accumulation and ablation model, soi! moisture accounting procedure,
channel routing, and a consumptive use model. These hydrologic models combined
with RiverWare rule-based simulation reservoir models provide ldaho Power with a
streamflow forecast at each of ldaho Power's hydrogeneration facilities. The streamflow
forecast is then input into the hydro model. The hydro model optimizes the use of water
during individual months of the water year. The model uses updated inflows, market
prices, and an updated position for all components. The model includes any unit
constraints, reservoir levels, flood requirements and minimum flow requirements,
maintenance schedules, and unit generation capacities.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 11
b. There is no comparison. As described in subpart a above, and in ldaho
Power's answer to J.R. Simplot Company's lnterrogatory No. 2, ldaho Power performs
many steps and utilizes multiple sources of information to estimate generation from all
of its available resources to move from monthly, long-term forecasts to day-ahead and
real-time operations to balance the electrical system. Generation from QFs is not
dispatchable and ldaho Power has no control over when or how much is delivered at
any point in time. The Company must operate a balanced and reliable system, while
integrating intermittent and variable generation from QFs.
c. lt is not possible for ldaho Power to determine if its estimates are more
accurate than a QF's because QF generation is delivered to ldaho Power on an as,
when, and in whatever amount basis determined by the QF. ldaho Power cannot
dispatch QF generation in order to meet load, whereas, ldaho Power must move its
month-ahead and balance-of-month forecasts to day-ahead and real-time operations to
balance generation and load. ln addition, QFs' generation is contingent on the location
and the source of motive force that is used to produce power, and ldaho Power's
forecasting processes are designed specifically for the Company's resources and
system. Therefore, it is not possible to allow QFs to use the same tools that ldaho
Power utilizes in developing its forecasts as described in subpart a above and in ldaho
Power's answer to J.R. Simplot Company's Interrogatory No. 2. However, like it has
done for wind and solar QFs for purposes of integrating variable and intermittent
generation, it is possible for ldaho Power to investigate purchasing or developing its
own tools and processes for forecasting generation from the QFs affected by this case
at the cost of the QFs.
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 12
REQUES'L NQ-IO: Please provide a schematic of the typical installation of a QF
transmission level interconnection (138kV to 161 kV). Show components and equipment
items from the existing system tie-in through to the QF generator. Please identify each
item, the point of delivery, and the limits of the Company's O&M responsibility.
RESPONSE TO REQUEST NO. 10: Please see the single line of an actual 138
kilovolt ("kV") interconnection provided on the enclosed CD. The Company's operation
and maintenance ('O&M") responsibility includes the interconnection station and begins
at the point of delivery indicated on the drawing. Because transmission level
interconnections vary on the size of project and specific location of the station, an actual
drawing from a Facility Study was provided in lieu of a standard interconnection
schematic. However, the ownership and O&M responsibilities would be similar with
other projects.
The response to this Request is sponsored by Jeremiah Creason, Operations
Analyst ll, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 13
REQUEST NO. 11: Please provide a schematic of the typical installation of a QF
distribution level interconnection (below 138kV). Show components and equipment
items from the existing system tie-in through to the QF generator. Please identify each
item, system tie-in point, the point of delivery, and the limits of the Company's O&M
responsibility.
RESPONSE TO REQUEST NO. 11:Please see the line drawing provided on
the enclosed CD for a standard distribution !eve! interconnection. The Company's O&M
responsibility begins at the point of delivery indicated.
The response to this Request is sponsored by Jeremiah Creason, Operations
Analyst l!, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 14
REQU NO. 12:ln the "Response to Request for Production No. 1 .2" of
"ldaho Power Company's Response to Renewable Energy Coalition's First Request for
Production", ldaho Power stated that the workpapers supporting the calculation of the
0.4 percent rate for 138 kV interconnections and above were not available.
a. Please confirm that Attachment A to this request is the workpaper used to
calculate the 0.4 percent rate.
b. Please update the 0.4 percent rate by using the most recent input data
(i.e. 12 months ending December 31,2017), and provide worksheets (with formula
intact) to show the calculation steps.
RESPONSE TO REQUEST NO. 12:
a. Yes, Attachment A to this Request is the workpaper used to calculate the
0.4 percent rate.
b. Please see the Excelfile provided on the enclosed CD.
The response to this Request is sponsored by Mark Annis, Senior Regulatory
Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY. 15
REQUEST NO. 13: The Company's response to Renewable Energy Coalition's
first production request No. 1.3 provides the data for calculating a current version of the
3S-year levelized Distribution Operation and Maintenance rate of 0.70o/o. Please
explain how this rate, when applied to the initial construction cost of a QF
interconnection, provides an accurate levelized monthly estimate of O&M expense. ln
addition, please provide the following:
a. Please provide a detailed description for each item in Line Nos. 147 and
explain why each of the items are included in the calculation of the O&M rate.
b. Are there any other components beyond those listed on lines 1 and 2
(poles and conductors) necessary for distribution level QF interconnections? lf so, what
are they? lf they are not included, why not?
RESPONSE TO REQUEST NO. 13: The monthly O&M charges under Schedule
72 are a cost ratio based upon the actual O&M expenses incurred on similar facilities on
ldaho Power's system. The monthly cost ratio is the amount the Company spends on a
total system basis to operate and maintain its investment in Federal Energy Regulatory
Commission ("FERC") Account 364-Poles, Towers & Fixtures, and Account 365-
Overhead Conductors and Devices, to its total investment in these accounts. The
monthly O&M charge provides a reasonable proxy for what the Company may expect to
spend over the life of interconnection facilities similar to the ones installed at a typical
CSPP. The project pays its pro rafa share of O&M costs, based on the original costs of
its interconnection facilities.
a. Please see the spreadsheet provided on the enclosed CD for a description
of Line Nos. 1-47. The purpose of the O&M charge under Schedule 72 is to hold retail
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 16
customers of ldaho Power harmless by charging PURPA projects a reasonable rate for
what the Company may expect to spend on O&M over the life of the interconnection
facilities required by the QF projects. The costs used to calculate the rate are derived
from actual Company costs incurred for operating and maintaining distribution assets.
These costs represent reasonable expenses, including overheads, associated with
owning, operating, maintaining, repairing, and replacing interconnection facilities.
b. The interconnection consists primarily of items such as poles, conductor,
and related fixtures and devices accounted for in FERC Plant Accounts 364 and 365.
The methodology developed in the past only focused on the poles and conductor;
however, other equipment and investments may be required on any particular
interconnection.
Also, in order to integrate the generation into the ldaho Power system the
distribution and transmission systems are necessary to move the generation to load.
The response to this Request is sponsored by Mark Annis, Senior Regulatory
Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 17
REQUES'L NO.l!4: Please provide the same information for the calculation of
the 35-year levelized Transmission Operation and Maintenance rate of 0.40% as
requested in the previous question. Please include subparts a and b in your response.
RESPONSE TO REQUEST NO. 14: O&M charges under Schedule 72 are
based on system average costs of ldaho Power's transmission facilities, using the
methodology provided in the Company's response to Staff's Request No. 12. The
project pays its pro rata share of O&M costs, based on the original costs of its
intercon nection facilities.
a. Please see the spreadsheet provided with the Company's response to
Staff's Request No. 12 for a description of Line Nos. 1-46. The purpose of the O&M
charge under Schedule 72 is to hold retail customers of ldaho Power harmless by
charging PURPA projects a reasonable rate for what the Company may expect to spend
on O&M over the life of the interconnection facilities required by the QF projects. The
costs used to calculate the rate are derived from actual Company costs incurred for
operating and maintaining Transmission Assets. These costs represent reasonable
expenses, including overheads, associated with owning, operating, maintaining,
repairing, and replacing interconnection facilities.
b. The interconnection consists of items such as towers, poles, conductor,
and related fixtures and devices accounted for in FERC Accounts 354, 355, and 356.
The methodology developed in the past only focused on the assets specific to the 138
kV and 161 kV lines; however, other equipment and investments may be required on
any particular interconnection.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 18
Also, in order to integrate the generation into the ldaho Power system the
distribution and transmission systems are necessary to move the generation to load.
The response to this Request is sponsored by Mark Annis, Senior Regulatory
Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 19
REQUEST NO. 15: Please explain why the 3S-year levelized Distribution
Operation and Maintenance rate is different than the 3S-year levelized Transmission
Operation and Maintenance rate.
RESPONSE TO REQUEST NO. 15: The methods used to calculate the
distribution O&M rate and the transmission O&M rate are shown in the Company's
responses to Renewable Energy Coalition's Request for Production Nos. 1 .10 and 2.2.
The methods use ldaho Power financial information specific to distribution plant and
transmission plant, respectively. The different results of the calculations are the result
of the different inputs used, and indicate that, for the plant balances included in the
calculation, O&M as a percentage of total plant balances is higher for distribution plant
than for transmission plant.
The response to this Request is sponsored by Mark Annis, Senior Regulatory
Analyst, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 20
REQUEST NO. 16: What sort of expenditure in time and resources does it take
to integrate the monthly output estimates into your resource stack?
RESPONSE TO REQUEST NO. 16: ldaho Power does not directly integrate the
monthly generation estimates from QFs into its resource stack. As explained in ldaho
Power's answer to J.R. Simplot Company's lnterrogatory No. 2, monthly generation
estimates are one of several inputs that are evaluated and considered in the overall
CSPP forecasting process. However, there are several historical ESAs between QFs
and ldaho Power that do not contain monthly generation estimates, so they cannot be
used to determine the estimated amount of total generation from QFs on the ldaho
Power system. The CSPP forecast, which takes several days to prepare, is one of
many inputs to ldaho Power's Operating Plan, which is refined through multiple
processes to derive short-term and day-ahead plans to ensure the electrical system is
operated reliably and balanced.
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 21
REQUEST NO. 17: At the time the legally enforceable obligation is incurred, do
you know whether you will pay the QF published avoided costs or Surplus Energy Price
for the electricity you purchase from the QF?
RESPONSE TO REQUEST NO. 17: ln order to obtain a QF ESA with ldaho
Power, under the state of ldaho's implementation of PURPA, QFs must submit a
Schedule 73 Qualifying Facility Energy Sales Agreement Application ("Application") to
ldaho Power. As part of an Application, the QF selects the avoided cost rate option it is
requesting, such as published avoided cost rates, rates determined at the time of
delivery, or Integrated Resource Plan ("lRP")-based rate. The QF, at its sole discretion,
is free to choose which rate it desires, subject to eligibility thresholds.
The prices paid to a QF that has an executed ESA that has been approved by
the Commission are determined in accordance with the ESA that is in place with a QF.
For example, in current published avoided cost and |RP-based rate ESAs, the Net
Energy delivered by a QF that has achieved a First Energy Date but has not yet been
granted an Operation Date is defined as Surplus Energy in the applicable ESA and the
QF is paid the Surplus Energy Price for the amount delivered. For QFs with ESAs that
contain the 90/110 provisions that have achieved an Operation Date, the Net Energy
delivered to ldaho Power from a QF that is between 90 percent and 1 10 percent of the
QF's estimated monthly net energy amount is paid the contractual Purchase Price
according to the ESA, while Net Energy delivered that is less than 90 percent or over
1 10 percent is defined as Surplus Energy and paid the Surplus Energy Price. At no
point are QFs "penalized" or not paid a proper price for the amount of Net Energy
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 22
delivered. They are paid the applicable and appropriate price for the type (firm or non-
firm) and amount of Net Energy they deliver in accordance with the QFs' ESAs.
lf a QF requests an ESA that contains fixed contract rates for the term of the
ESA, then it is expected to accept the provisions and conditions of the agreement and
will be paid in accordance with the ESA. QFs that are unable to or do not desire to
conform to the 901110 provisions are free to select the "rates determined at the time of
delivery" rate option in their Application and enter into a Schedule 86 ESA.
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REOUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 23
REQUEST NO. 18: Accord ing to ldaho Power's response to lnterrogatory
number 2trom the J.R. Simplot Co., a forecastforeach QF is developed based on; "a
number of factors including contract estimated generation amounts, most recent 12-
month history, five-year rolling average, project-adjusted estimated net energy amounts,
and any pervious or current adjustments. Generally, the starting point is the rolling five-
year historical average of monthly generation Given the numerous factors
considered, and that the starting point is the five-year plan, admit or deny that an
accurate estimate is feasible without the 90/1 10 performance band.
RESPONSE TO REQUEST NO. 18: As described in ldaho Power's answer to
J.R. Simplot Company's lnterrogatory No. 2, Idaho Power uses several inputs to
develop its CSPP forecast. One of the inputs taken into consideration is the monthly
generation estimates provided by QFs. For QFs that are under contract but have not
made any energy deliveries to ldaho Power, the only source of generation data
available to the Company are the initial monthly net energy amounts provided by the QF
in its ESA. However, aside from the beneficial use that ongoing seller adjusted monthly
generation estimates provide in ldaho Power's forecasting processes, the 90/110
provision has no relevance to ldaho Power's ability to forecast generation from the QF
on an ongoing basis. QFs are free to update their monthly generation estimates on a
regular basis as described in the QFs' ESAs, to achieve energy deliveries that are
within the 90/110 percent band. The determination of a QF's ability to receive the
Purchase Price specified in its ESA as it relates to the 901110 provision is independent
of ldaho Power's ability to forecast generation from a QF. The g0/110 provision in
ESAs require the use of monthly energy estimates in the determination of prices paid to
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 24
the QFs, while ldaho Power's CSPP forecasting process may use the same monthly
energy estimates as an input source in the development of its forecast.
The primary purpose of the 90/110 provisions in an ESA is to serve as a
measure of firmness that establishes a QF's eligibility for "firm" avoided cost rates
determined at the time of contracting as opposed to "non-firm" avoided cost rates
established at the time of generation delivery. Compliance with the 90/110 provisions is
how a QF establishes its eligibility for pricing determined at the time of contracting that
is set for the term of the contract. lf the QF is not in compliance with the 90/110
provisions required of "firm" pricing, then it receives the other approved avoided cost
price for "non-firm" or "as available" pricing determined at the time of delivery.
For QFs that have ESAs with ldaho Power containing the 90/1 10 provisions,
ldaho Power determines the price to be paid to the QF on a monthly basis by comparing
the monthly generation estimates provided by the QF to the actual deliveries of Net
Energy from the QF. Based on this comparison of energy delivered by a QF on a
monthly basis, ldaho Power pays the project the Purchase Price specified by the ESA
or, if some amount of the energy delivered is Surplus Energy, then the Surplus Energy
Price is paid for the applicable energy.
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 25
REQUEST NO. 19: How many times have small hydro QFs fallen outside the
901110 performance band? By how much as a percentage?
RESPONSE TO REQUEST NO. 19: Through March 2018, out of 697 months
that hydro QFs that have ESAs with ldaho Power containing the 90/110 provisions have
delivered Net Energy to ldaho Power, there were 163 months that hydro QFs delivered
Net Energy that was less than 90 percent of the QFs' estimated monthly Net Energy
Amounts, which equates to 23 percent of months. Out the same 697 months, there
were 221 months when hydro QFs provided Net Energy that was greater than 110
percent of the QFs' estimated monthly Net Energy Amounts, or 32 percent.
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 26
REQUEST NO. 20: Have there been any increased operation difficulties
integrating electricity from wind QFs with the replacements to the 90/110 requirement in
Order No. 30488?
RESPONSE TO REQUEST NO. 20: Yes. The 90/110 requirement does not
directly impact operations; however, the continued expansion of intermittent generation
resources interconnected and delivering energy to the ldaho Power system have
increased operational difficulties for ldaho Power. ln 2017 curtailments of VER
exceeded all previous years' curtailments combined. Multiple factors, including the
addition of non-dispatchable, must-take generation resources, relatively flat load growth,
high spring hydro conditions, and a low-priced energy market in the West, contributed to
the increased number of curtailment events in ldaho Power's balancing area.
VER projects are curtailed when ldaho Power is unable to maintain sufficient
dispatchable generation resources to respond to contingencies and provide regulating
reserves to respond to changes in load and non-dispatchable generation. High river
conditions with dam operating restrictions and flood-control target levels will not allow
ldaho Power's dispatchable resources, such as hydro units, to reduce generation when
VERs generate above forecast levels. Low market prices make keeping thermal
resources on-line and spinning to respond when VERs under-generate their forecast or
down ramp unexpectedly very expensive. Additionally, other possible reliability events,
such as a line outage, requires some dispatchable unit generation be maintained in
reserve to respond for reliability, public safety, or the protection of ldaho Power or public
equipment.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 27
ldaho Power has recently completed its third WlS, which will be filed with the
OPUC by the end of July 2018, and will be provided to the IPUC. The WIS report
concludes that varied analyses of wind, solar, load, Energy lmbalance Market, and
reserves indicates that a unified VER integration analysis approach may be the best
way to assess costs for additional increments of variable and intermittent generation
resources.
It is for these reasons, among others, that ldaho Power believes that due to the
variable and intermittent nature of PURPA QFs that the appropriate and fair avoided
cost price paid to these generation resources, that cannot provide "firm" scheduled
deliveries, is an "as delivered" market-based price similar to the Public Utility
Commission of Texas's ruling that defines "firm power" as "power or power-producing
capacity that is available pursuant to a legally enforceable obligation for scheduled
availability over a specified term" and "non-firm power" as "power provided under an
arrangement that does not guarantee scheduled availability, but instead provides for
delivery as available." Arguably, electricity from variable and intermittent PURPA QFs
should not be eligible for a "firm," long-term fixed rate at a!!, but should instead be paid
on an "as delivered, as available" basis, unless firm, scheduled deliveries of energy are
provided by the QF.
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 28
REQUEST NO. 21: How do you define "firm energy" in regards to QF energy
sales in Idaho? How does this definition differ from what you consider the industry
definition standard of "firm energy?"
RESPONSE TO REQUEST NO. 21: "Firm energy," with regard to QF sales in
ldaho, is defined by the Commission as QF generation deliveries to the utility falling
within 90 percent to 110 percent of the QF's own monthly generation estimates from the
power sales agreement.
For non-QF purchases of generation, the seller must preschedule the generation
delivery as firm power. "Firm energy" in this context means that the utility will purchase
and the seller will guarantee delivery of a specified amount of generation (kilowatt or
megawatt) that is scheduled and delivered for a particular time (hour) at a specified
point of delivery. Firm capacity is the amount of energy available for production or
transmission which can be, and in many cases must be, guaranteed to be available at a
given time. Firm energy refers to the actual energy guaranteed to be available. Non-
firm energy refers to all available energy that is beyond firm energy.
The response to this Request is sponsored by Tessia Park, Vice President of
Power Supply, ldaho Power Company.
DATED at Boise, Idaho, this 31't day of July 2018.
DO E. WALKER
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 29
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 31st day of July 2018 I served a true and correct
copy of IDAHO POWER COMPANY'S RESPONSE TO THE SECOND 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
Edith L. Pacillo
Edward Jewell
Deputy Attorneys General
ldaho Public Utilities Commission
47 2 W est Wash i ngton (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
J. R. Simplot Company
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Idahydro and Shorock Hydro, lnc.
C. Tom Arkoosh
ARKOOSH IAW OFFICES
802 West Bannock Street, Suite 900
P.O. Box 2900
Boise, ldaho 83701
Renewable Energy Goalition
J. Kahle Becker
Attorney at Law
223 North 6th Street, Suite 325
Boise, ldaho 83702
lrion Sanger
SANGER LAW, P.C.
11't7 SW 53rd Avenue
Portland, Oregon 97215
X Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
eduard.iqwell uc.idaho.qov
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
q req @ richardsonadams. com
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
_Hand DeliveredX 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 SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 30
Tamarack Energy Partnership
Michael C. Creamer
Preston N. Carter
GIVENS PURSLEY LLP
601 West Bannock Street (83702)
P.O. Box 2720
Boise, ldaho 83701
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Emai!urslev.com
pnc@q ivensp u rslev. com
Avista Corporation
Michael G. Andrea, Senior Counsel
Avista Corporation
1411 East Mission Avenue, MSC-23
Spokane, Washington 99202
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
Clint Kalich
Manager, Resource Planning and Analysis
Avista Corporation
1411 East Mission Avenue, MSC-7
Spokane, Washingt on 99202
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
Christa
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 31
t