20200520IPC to Staff 3-8.pdf

=rrmroS!FilER.
ili:il[l\,iED
,,l,iii,'i 20 Pl'l L: lrZ
AnD [e-mail]
LISA D. NORDSTROi'I
Lead Counsel
[e-mail]
LDN:sdh
Enclosures
X* !-7("rut -*,
. aL'I. l-!", :ii
May 20, 2020
VIA ELECTRONIC FILING
Diane Hanian, Secretary
ldaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, ldaho 83714
Re Case No. IPC-E-19-18
Validation of North Valmy Power Plant Unit 2 Closure in 2025
ldaho Power Company's Response to the Second Production Request of the
Commission Staff
Dear Ms. Hanian:
Attached for electronic filing in the above matter is ldaho Power Company's
Response to the Second Production Request of the Commission Staff (Request Nos. 3-8).
If you have any questions about the enclosed documents, please do not hesitate to
contact me.
Very truly yours,
Lisa D. Nordstrom
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I n o rd strom @ ida hopower. co m
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILIT!ES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER FOR A VALIDATED
ECONOMIC CLOSURE DATE FOR NORTH
VALMY POWER PLANT UNIT 2
CASE NO. !PC-E-19-18
IDAHO POWER COMPANY'S
RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
THE COMMISSION STAFF
COMES NOW, ldaho Power Company ("ldaho Powe/' or "Company"), and in
response to the First Production Request of the Commission Staff to ldaho Power
Company dated April 29, 2020, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1
)
)
)
)
)
)
)
)
)
)
REQUEST NO. 3: Please describe and quantify the risk to system reliability
associated with a Planning Margin of 14.90 percent in2024, and 13.43 percent in2025 shown
in response to PR1, tabs A through H of file Attachmenf - Response fo Sfaffs Request No. 1
(00269972x8CD5C).XLSX, versus the Company's 15 percent Planning Margin.
RESPONSE TO REQUEST NO. 3: Planning margin is used to ensure reliable
system operation in the future and is intended to account for the North American Electric
Reliability Corporation ("NERC") reliability requirements, Ioad variability, and loss of
system elements that may reduce the capability of existing generation resources to serve
demand. A planning margin of 15 percent, which is consistent with the NERC N-1 reserve
margin criteria and is similar to the methodologies employed by regional peer utilities for
capacity planning, is representative of ldaho Power's risk tolerance and accounts for
multiple factors:
Load Variabilitv - Load varies from year to year for several reasons including
temperature, the economy, and precipitation. As an example, a low water year combined
with high temperatures is associated with increased demand, both from additiona!
irrigation load and air-conditioning load. The difference in the Ioad forecast between the
planning scenario (an average temperature year or 50th percentile) and a one-in-20
temperature year (95th percentile) is approximately 5 percent.
Resource or Transmission Outaoes - The Company is diligent about performing
maintenance to ensure all resources and transmission lines are functioning properly;
however, unplanned outages do occur. As an example, an outage at Langley Gulch
results in a loss of generating capacity of 300 megawatts, or approximately 9 percent of
cunent summer peak demand.
Continoencv Reserve Requirements - Per NERC reliability standards (BAL-002-
WECC-1), ldaho Power must hold enough generation in reserve to reliably operate the
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF.2
system under abnormal conditions, or must hold 3 percent of generation and 3 percent of
load as reserves, for a total of 6 percent held as reserve.
Portfolio Simulation
The 15 percent planning margin requirement is incorporated into the Long-Term
Capacity Expansion (LTCE') process and ldaho Power maintained the 15 percent
planning margin in all manual portfolio optimizations. The portfolio simulations in
AURORA are performed under the planning scenario (50h percentile load, temperature,
and hydro conditions). While a portfolio with a margin of 14.90 percent or 13.43 percent
in one year is adequate to serve demand under the planning scenario and normal
operating conditions (no system elements out of service), there is increased risk that the
portfolio wil! not adequately perform when expectations vary from the planning case due
to the risk factors detailed above, among others. That risk is quantified utilizing loss-of-
load analysis. Please see the Company's Response to Request Nos. 4 and 5 for the
quantification of the risk to system reliability resulting from the change in the planning
margin from 15 percent to 14.9 percent in 2024 and 13.43 percent in 2025, respectively.
The response to this Request is sponsored by Jared Hansen, Resource Planning
Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
REQUEST NO. 4: What is the difference to the Loss of Load Probability (LOLP)
between a 15 percent Reserve Margin compared to the stated 13.43 percent deficient
Reserve Margin?
RESPONSE TO REQUEST NO.4:
A Valmy Unit 2 exit in 2023 results in an anticipated 13.43 percent planning margin
in 2025. The Company performed a Frequency Duration Loss of Load to evaluate the
system loss using a frequency duration outage methodology. This evaluation, described
in detail on page 119 of the Company's 2019 Amended lRP, analyzed 100 iterations of
the Preferred Portfolio. There were six unique loss-of-load events that occurred out of
the 100 iterations of the year 2025, adjusted below to reflect the 2025 LOLP:
Scenario Expected Loss of Load
Hours (Annual 20251
Percent Loss of Load
Hours e0251
Prefened Portfolio 0.73 0.008%
Valmy 2 Retired in
2023
1.38 0.016%
As shown in these results, the Expected Loss of Load in 2025 almost doubles with
a2023 exit of Valmy Unit 2.
Note, this evaluation was only performed for one single year and the Company
must maintain a reliable and robust portfolio in the years that precede and follow.
The response to this Request is sponsored by Jared Hansen, Resource Planning
Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 4
REQUEST NO. 5: What is the difference to the LOLP between a 15 percent
Reserve Margin compared to the stated 14.9 percent deficient Reserve Margin?
RESPONSE TO REQUEST NO. 5:
A Valmy Unit 2 exit in 2023 results in an anticipated 14.9 percent planning margin
in 2024. The Company performed a Frequency Duration Loss of Load to evaluate the
system loss using a frequency duration outage methodology. This evaluation, described
in detail on page 119 of the Company's 2019 Amended lRP, analyzed 100 iterations of
the Prefened Portfolio. There were six unique loss-of-load events that occuned out of
the 100 iterations of the year 2025, adjusted below to reflect the 2024 LOLP:
As shown in these results, the Expected Loss of Load in 2024 more than doubles
with a 2023 exit of Valmy Unit 2.
Note, this evaluation was only performed for one single year and the Company
must maintain a reliable and robust portfolio in the years that precede and follow.
The response to this Request is sponsored by Jared Hansen, Resource Planning
Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
Scenario Expected Loss of Load Hours
(Annual 20241
Percent Loss of Load
Hours l.20241
-Preferred Portfolio 0.29 0.003%
Valmy 2 Retired in2023 0.81 0.009%
REQUEST NO. 6: The Company delayed exiting a Bridger coal unit to address
the Reserve Margin shortfall in PR2. Please provide evidence demonstrating that the
Company analyzed a range of other resources that could meet that Reserve Margin
shortfall, and that shows that extending the life of the Bridger unit is the least cost resource
to meet that need.
RESPONSE TO REQUEST NO. 6:
As described in the Company's Response to Request No. 2, ldaho Power utilized
a delay in the exit of a Bridger coal unit to address the planning shortfal! created by the
early exit of Valmy Unit 2 prior to 2025. Under the Oregon competitive bidding rules, for
which ldaho Power is subject to by the Public Utility Commission of Oregon, the Company
estimates that the entire process would take a minimum of six years, including an
approximately 550 day resource acquisition process, with any necessry construction
further adding to the timeline. These rules would hinder the Company's ability to have
available a supply-side resource prior to 2024.
In addition, as discussed further in the Company's Response to Request No. 7,
additional demand response is not a feasible altemative. Consequently, the Company
does not believe acquisition of an additional supply-side resources is a practical option
given the timing of the resource deficiency. As a result, the next best option for meeting
load if Valmy Unit 2 were shutdown prior to 2025 would be the movement in the exit date
of a Bridger unit.
The response to this Request is sponsored by Jared Hansen, Resource Planning
Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 6
REQUEST NO. 7: Was additional demand response considered a feasible
altemative to offset reliability constraints attributed to early closure of Valmy Unit 2 and
the Reserve Margin shortfall?
a. Please explain why, or why not, demand response could satisfy the noted
reliability constraints aftributed to the early exit of Valmy Unit 2 prior to 2025. Please
provide justification and evidence supporting the Company's assertions and analysis.
RESPONSE TO REQUEST NO. 7:
Demand response is considered a resource that is able to meet peak demand and,
as such, is factored into ldaho Power's 15 percent peak planning margin. However,
demand response is not a resource able to broadly address reliability constraints or
reserve requirements. Contingency events can occur any time throughout the year. The
390 MW of demand response on ldaho Power's system is only available in the summer
during specific hours. The Frequency Duration Loss of Load evaluation performed by the
Company indicates resources are required to address reserve margin deficits during non-
peak hours for which current demand response programs are unavailable. The evaluation
included 100 iterations of the year 2025 from the preferred portfolio with a Valmy Unit 2
exit modeled in 2023. Results from the evaluation are shown below. Hours in which
cunent demand response programs are available are shaded.
LOI Frequencv by Hour of Day
Hour Count
(Hours)
LOt
Percentage
by Hour
l:fl)AM 4 2.9%
2:fl)AM 5 3.6%
3:fi)AM 2 t.4%
4:fl)AM 1 0.7%
10:fi)AM 2 t.4%
ll:fl)AM 6 4.3%
12:00 PM 6 4.3%
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 7
9:00 PM 13 9.4*
10:(Xl PM 11 8.0,6
ll:fi) PM 11 8.(,,5
12:fl)AM 7 5.1%
Total 138 100.016
The response to this Request is sponsored by Quentin Nesbitt, Customer
Research and Analysis Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REOUEST OF THE COMMISS]ON STAFF - 8
REQUEST NO. 8: Please provide the Net Present Value (NPV) difference and the
annual breakdown of cost and benefit value streams (capital, fixed operation and
maintenance, exit fees, Net Power Supply Expense, etc.) used to calculate the NPV
difference considering the lRP Preferred Portfolio with a Valmy Unit 2 shutdown date of
December 31, 2025 versus:
a. The same portfolio using increased demand response to satisfy the
reliability constraint considering a Valmy Unit 2 shutdown date of December 31, 2024
using "planning" naturalgas and "planning" CO2 assumptions;
b. The same portfolio using increased demand response to satisfy the
reliability constraint considering a Valmy Unit 2 shutdown date of December 31, 2023
using "planning" natura!gas and "planning" CO2 assumptions;
c. The same portfolio using increased demand response to satisfy the
reliability constraint considering a Valmy Unit 2 shutdown date of December 31, 2024
using "planning" naturalgas and "high" CO2 assumptions; and
d. The same portfolio using increased demand response to satisfy the
reliability constraint considering a Valmy Unit 2 shutdown date of December 31, 2023
using "planning" naturalgas and "high" CO2 assumptions.
RESPONSE TO REQUEST NO. 8:
An expansion of existing demand response programs is not a feasible alternative
to meet the reliability and dispatch requirements to accelerate the exit from Valmy Unit 2.
Please see the Company's Response to Request No. 7 for an explanation of why demand
response cannot be used.
The response to this Request is sponsored by Quentin Nesbitt, Customer
Research and Analysis Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 9
DATED at Boise, ldaho, this 20h day of May 2020.
&;!.ff"u,..*,
LISA D. NORDSTROM
Attomey for ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REOUEST OF THE COMMISS]ON STAFF - 10
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 20h day of Mary 2020, I served a true and correct
copy of the within and foregoing IDAHO POWER COMPANY'S RESPONSE TO THE
SECOND PRODUCTION REQUEST OF COMMISSION STAFF upon the following
named parties by the method indicated below, and addressed to the following:
Commission Staff
Edward Jewell
Deputy Attomey General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-OOT 4
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North 6h Street
Boise, ldaho 83702
lndustrial Customers of ldaho Power
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702')
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
U.S. Mail
_Ovemight Mail
_FAXX Email [e-mail]
_Hand Delivered
_U.S. Mail
Overnight Mail
_FAXX Email [e-mail]
_Hand Delivered
_U.S. Mail
Overnight Mail
_FAXX Emai! [e-mail]
Z".zJ-24.-=_
Sandra D. Holmes
Legal Administrative Assistant
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 11