20200529IPC to Staff 51-28.pdf

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AnD COnPOotntrIlY
LISA D. NORDSTROM
Lead Counsel
[e-mail]
May 29, 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-19-19
2019lntegrated Resource Plan - ldaho Power Company's Response to the
Second Production Request of the Commission Staff to ldaho Power
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 to ldaho Power.
lf you have anyquestions aboutthe enclosed documents, please do not hesitate to
contiact me.
Very truly yours,
x; !.7(""ut -*,
Lisa D. Nordstrom
LDN:sdh
Enclosures
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I nord strom @ ida hopower. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILIT!ES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S 201 9 INTEGRATED
RESOURCE PLAN
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CASE NO. IPC-E-19-19
IDAHO POWER COMPANY'S
RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
THE COMMISSION STAFF TO
IDAHO POWER COMPANY
COMES NOW, ldaho Power Company ('!daho Powe/' or "Company"), and in
response to the Second Production Request of the Commission Staff to ldaho Power
Company dated May 8, 2020, 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. 51: ln its response to Staffs Production Request No. 21 the
Company lists the capital weighting of longterm debt and the capital weighting of common
equity as 50.10% and 49.90o/o, respectively. The Company also states that the cost of long-
term debt and the cost of common equity are 5.73o/o and 10.00%, respectively. According to
footnote No. 1 of the document, these percentages are interpreted by ldaho Power,
because in the General Rate Case of IPC-E-11-08 the Commission only approved an
overall rate of return of 7.860/o without specifying the capita! weightings and the costs.
Please show and provide documentation supporting the capita! weighting percentages and
the cost percentages used for longterm debt and common equity.
RESPONSE TO REQUEST NO. 51:
Staff correctly notes that the capital weighting and costs were not specifically
identified in ldaho Powe/s General Rate Case, IPC-E-11-08. The Commission noted in its
Order 32380 issued October 13, 2011, that 'the signing parties agreed that it would be just
and reasonable to allow the Company to earn a 7.86 percent rate of return on an authorized
ldaho jurisdictional rate base of $2,355,906,412." (pg. 2). Subsequently, in Order 32426,
issued December 30,2011, the Commission restated testimony from Company witness Tim
Tatum that the overall rate of return did not specify or identify the equity rate of return (pg.
7). Mr. Tatum had stated in his testimony filed September 23,2011 that "The specific rate
of return components are not identified as part of the Stipulation." (pg. 5).
On December 27, 2011, as part of Case IPC-E-1 1-22, the Commission issued Order
32424, extending and modifying the Company's ADITC accounting order. This mechanism
had been in place for 2009, 2010 and 2011, utilizing a customer revenue sharing threshold
of 10.5 percent. This 10.5 percent rate was described by IPUC Staff as "a three-year
settlement on retum on equity ('ROE')' (IPC-E-09-30, Order 30978, pg. 4, quoting Lobb
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY.2
Direct, pg. 2). ln Order 32424, the commission reauthorized and extended the mechanism
and reset the threshold for customer revenue sharing from 10.5 percent to 10.0 percent.
Further, Order 32424 approved a ROE reset provision, that if the Company's authorized
return on equity rate were to be adjusted in a general rate case priorto January 1,2015,
then the ADITC threshold would also move to 95 percent of such new rate, and the revenue
sharing threshold would also move to 105 percent of such new rate (pg. 4). The
Commission's Order, using 10.0% as the new threshold for revenue sharing, provided
contemporaneous support for the current and authorized ROE.
These Orders, taken together, provided the Company a foundation that:
1. the cost of debt was 5.73 percent (uncontested, IPC-E-11-08, Steve Keen Direct, pg.
47, see Exhibit 13, pg. 59, for the computation of the 5.73 percent rate, filed June 01,
2011);
2. the equity rate was contemporaneously accepted by the Commission to be 10
percent for customer sharing purposes under the ADITC mechanism;
3. the overall rate must be not more or less than 7.86 percent; therefore
4. the imputed mathematical weighting for debt is 50.10 percent and for equity is 49.90
percent.
The response to this Request is sponsored by Bruce MacMahon, Director of Business
Unit Finance, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY. 3
REQUEST NO. 52: Response to Staffs Request No. 39 provides the number of
megawatt hours where regulation requirements are not met in each portfolio. The
highest unmet rate is 0.0760/o in Portfolio 24. Please answer the following questions.
a. Please provide the Company's threshold for unmet rates and/or criteria
that the Company used to determine that a portfolio was not acceptable.
b. When the Company found a portfolio that was unacceptiable based on the
Company's thresholds or criteria, please explain how the Company adjusted the
portfolio to meet the Company's acceptance thresholds/criteria.
c. Please explain how the Company verified that the portfolios will meet the
NERC BAL-001-2 Standard that the development of regulation requirements is based
on
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
RESPONSE TO REQUEST NO. 52:
a. The Company did not quantify a specific threshold for unmet regulation
requirements that would be applied to determine that a portfolio was not
acceptable. Rather, the Company evaluated all portfolios and compared the
magnitude of unmet regulation requirements as a relative measure to
compare portfolios. As described in the Company's response to Staff
Request No. 39, Portfolio 24 experienced the highest unmet regulation
requirements of 269,650 MWh out of 355,832,278 MWh, or 0.076 percent,
while the preferred portfolio had only 4,981 MWh of unmet regulation
requirements, or 0.001 percent.
b. Please see the Company's response to Part A above. As discussed in that
portion of this response, unmet regulation reserves were used as a relative
comparison metric rather than a threshold at which portfolio adjustments
would be required.
c. The regulation requirements determined in the 2018 Variable Energy
Resource lntegration Analysis and based on the NERC BAL-001-2 reliability
standard were applied to the 2019 IRP setup; therefore, the LTCE process
and portfolio simulations included those rules. The Company has verified that
the portfolios will meet the NERC BAL-001-2 through the portfolio results
described above.
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 TO IDAHO POWER COMPANY - 5
REQUEST NO. 53: Response to Staffs Production Request No. 40 discusses
the approximation results for Regulation Up (Regup) and Regulation Down (RegDn).
Please answer the following questions.
a. Please provide and explain each step in the monthly approximation
process used to develop the RegUp and RegDn percentages shown in Tables 8.1 and
8.2 in the Amended 2019 lRP.
b. The Company states that the match between the VER study and the
[monthly] approximation results are "less clea/' for RegDn. Please explain what is
meant by "less clea/' and what was done to rectiff the situation.
c. Please provide the data and an explanation (using examples if necessary)
that illustrates why the Company included a RegDn requirement for Solar during the
winter season, but did not include a RegDn requirement for solar during the remaining
seasons or for wind across all four seasons.
d. By using monthly approximation rules, is there a loss of accuracy due to
the loss in hourly resolution that could affect the amount of regulation resources held in
reserve? Please explain.
RESPONSE TO REQUEST NO. 53:
a. To determine the RegUp and RegDn percentages shown in Tables 8.1
and 8.2 in the Amended 2019 lRP, the Company began with the RegUp and RegDn
percentages for load, wind and solar as determined in the July 2018 Variable Energy
Resource ('VER") lntegration Analysis ('VER Study"). Section 3.2 - Study Design and
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
specifically Tables 5 and 8 of the VER Study provide additional detail on the study
design and the RegUp and RegDn values.l
To apply these reserves to the full 2O-year IRP modelling process, the Company
used an Excel-based optimization model called "What's Best!". The Excel file
accompanying this response contains the analysis. There is a worksheet for each
season:
SON = September, October, November (Fal!)
DJF = December, January, February (Winter)
MAM = March, April, May (Spring)
JJA = June, July, August (Summer)
Within each seasonal worksheet load, wind and solar are binned according to
specific characteristics: load and solar are binned according to time of day and wind
according to wind level as a percent of nameplate capacity. The bins and resulting
RegUp and RegDn percentages were determined in the VER Study and are provided in
the top left section of each worksheet.
ldaho Power proportionally adjusted the respective load, wind, and solar
regulating reserye levels until compliance with the NERC BAL-001-2 standard was
achieved. This adjustment is shown in cells O6-P10 in each of the seasonal
worksheets (SON, DJF, MAM, JJA). This allocation factor represents the estimated
reserye levels given the diversity benefit that occurs when load, wind, and solar
reserves are netted together.
For each season, the Company optimized the regulating reserye values (RegUp
and RegDn) using the rules from the VER Study and the approximated reserve levels.
t httos://edocs.puc.state.or.us/efdocs/HAD/um 1 793had1 691 0.odf
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7
The regulating requirements for load, wind, and solar (cells V16-V18 and Y16-Y18 in
each of the seasonal sheets) were optimized by minimizing the difference squared
between the RegUp and RegDn regulating reserve calculations. A visualization of each
seasonal best fit is shown on the sheets titled, 'RegUp fit graphs" and "RegDn fit
graphs."
b. The Company states that the match between the VER Study and the new
monthly approximation results are "less clea/' for RegDn. This can be seen on the
RegUp and RegDn fit graphs in the Excel file accompanying this response. The RegDn
graph shows a fit that is not as close as the RegUp fit graphs. As noted in the IRP and
in the Company's response to Staffs Request No. 40, the risk of RegDn violations was
considered less of a @ncern because oversupply can be mitigated by ramping down
resources. RegUp violations, on the other hand, are a larger risk because the
generation undersupply would need to be filled with another resource.
c. Please refer to the Company's response to Staffs Request No. 40 (b) for
the requested information.
d. While imperfect, the quarterly approximation rules allowed the Company
to incorporate results from the VER Study into the Aurora tool, providing a more realistic
estimate of reserve levels needed for the combined load net wind and solar as opposed
to using a reserve leve! based on the summation of the three.
The Company is currently updating the integration analysis in anticipation
of the 2021 IRP discussion this fall and will be investigating how changes to both data
granularity (seasona!, monthly, hourly) and data types (time-based, output-based) of
binning impact the results of the analysis.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8
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 TO IDAHO POWER COMPANY - 9
REQUEST NO. 54: ln the Company's 2018 VER Study (p.30), the Company
states that'AURORA does not include a cost for reserve violations in the total portfolio
cost." PIease explain how the costs of these violations were included in the cost of each
portfolio in the lRP. lf included, please provide these costs for each portfolio.
RESPONSE TO REQUEST NO. 54:
The magnitude of unmet regulation reserves for each portfolio was considered in
the IRP analysis as described in the Company's response to Staffs Request No. 52, but
the costs were not quantified and therefore not included in any of the portfolio costs.
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 TO IDAHO POWER COMPANY - 1O
REQUEST NO. 55: Response to Staffs Request No. 48 states in Section b. that
"The timing and selection of additional resources and the timing of coal unit exits in
Portfolio 14(7) are identical to Portfolio 16(4). Please answer the following questions.
a. Please explain what Bridger exit scenario "7" represents.
b. Please explain the difference between Portfolio 14(4), Portfolio 14(7), and
Portfolio 16(4).
RESPONSE TO REQUEST NO. 55:
a. Exit scenario "T" as used in "Portfolio 14(7)" refers to the same Bridger retirement
dates as those used in Portfolio 16(4), i.e. unit retirements in 2022, 2026, 2028,
and 2030.
b. The resource selection between Portfolio 14(4) and Portfolio 16(4) are shown on
pages 61 and 67 of the 2019 Amended IRP Technical Appendix C. Portfolio
14(4) and 14(7) were manually refined based upon the WECC optimized Portfolio
14 modeled under a Planning Gas - Planning Carbon scenario. Portfolio 16(4)
was manually refined based upon the WECC optimized Portfolio 16, modeled
under a Planning Gas - High Carbon scenario. Portfolio 14(4), and Portfolio
16(4) both have the same Jim Bridger exit scenario. Portfolio 14(7) and 16(4)
have the same resource build/retirement and timing for ldaho Power's resources
with the only major difference being the underlying WECC buildout for each
portfolio. The LTCE expansion that determined the WECC buildout for P16(4)
was performed under a Planning Gas - High Carbon scenario, while the LTCE
expansion that determined the WECC buildout for P14(7) was performed under a
Planning Gas - Planning Carbon scenario.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 11
The response to this Request is sponsorcd by Jared Hansen, Resource Planning
Leader, ldaho Power Company.
IDAHO POWER COMPANYS RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY. 12
REQUEST NO. 56: Please describe the Company's requirements and
specifications for capacity expansion modeling software. Please provide relevant
supporting documentation that uses common system and software engineering industry
standards such as ISO/IEC/IEEE 12207:2017 or similar. lf industry standards are not
used, please explain why not. Please provide the Company's current requirements and
specifications for capacity expansion modeling software. Please provide any changes
being considered for the 2021 lRP.
RESPONSE TO REQUEST NO. 56:
The Company's software selection process and evaluation of other software
options is described in the Company's response to Staffs Request No.7. The criteria for
selection were as follows:
The software must:
o lnclude the ability to simulate the regional power market.
. Adequately perform long-term capacity expansions.
o Have a run-time of less than 24 hours for most runs.
o Have the ability to forecast at hourly and sub-hourly time steps.
. Adequately reflect resource operations on ldaho Poweds system.
. lnclude a fully fleshed-out dataset that includes resources and access to
resources outside of ldaho Power's system.
The software should:
. Have interna! error checks and a straightforward user interface to reduce
and manage errors in the results.
. Provide reports and results that can be used efficiently in the analysis.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY. 13
o Be understood and used by ldaho and Oregon Commission Staff.
. Be used by other utilities to provide consistency and allow for best-
practice learning and collaboration.
o Be supported by a vendor with a proven record of providing thorough and
timely software support.
Energy Exemplar, the producers of the Aurora modeling software, regularly
undergoes a Quality Management System review. In their latest review, they confirmed
compliance to the software engineering industry standard ISO 9001:2015
( h ttps : //e n e rq vexe m p I a r. co m/n ews/i so-90 0 1 /).
The Company conducted another evaluation of modeling software available on
the market for the 2021 lRP. The criteria listed above was used, as well as the ability of
the sofhryare to optimize results for ldaho Power and its customers.
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 TO IDAHO POWER COMPANY - 14
REQUEST NO. 57: Please confirm that the modeling too! used by the Company
for its 2021 IRP wil! be configured to optimize portfolio selection for the Company's
service territory. Please explain your answer.
RESPONSE TO REQUEST NO. 57:
Idaho Power has been in discussions with Energy Exemplar about this concern.
Since the version of the model that was used in the 2019 lRP, the Aurora modeling
software has been updated with new features to address this concem, specifically, the
ability to prioritize the optimization of ldaho Poweds system above the optimization of
the rest of the WECC. ldaho Power will be testing the new features in preparation for
the 2021 lRP. For additional background on modeling selection process and
optimization for ldaho Power, please refer to the Company's response to Staff Requests
Nos.7,8, and 56.
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 TO IDAHO POWER COMPANY - 15
REQUEST NO. 58: Please explain how energy efficiency will be modeled in the
2021 lRP. Please include answers to the following questions:
a. Will energy efficiency be modeled as a supply-side resource?
b. Wi!! measures be modeled individually, or bundled?
b. lf measures are bundled, please explain how measures will be selected
for inclusion in each bundle.
RESPONSE TO REQUEST NO. 58:
To preface the response below, ldaho Power has not yet determined how energy
efficiency ('EE') will be included in the 2021 lRP. The Company invited its Energy
Efficiency Advisory Group ("EEAG") to a Webinar on April 28,2020, to provide an
overview of progress to date. At that meeting, the Company's third-party consultant
provided an overview of preliminary progress in developing the potential study to be
utilized in the 2021 IRP and the Company solicited input from the EEAG on inputs to the
avoided costs to be utilized for determining cost-effectiveness. ldaho Power informed
the EEAG that it intended to invite members from the IRPAC and the EEAG to
participate in an additional meeting prior to the potential study being finalized to solicit
additional input regarding how EE will be modeled in the 2021 lRP.
a. The Company is exploring different methods of incorporating the energy
efficiency potential into the load forecast and/or the 'bundling' of energy
efficiency potential for lRP modeling, however, a methodology for the
2021 IRP has not yet been selected.
b. Please see the response to "a."
c. Please see the response to "a."
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 16
The response to this Request is sponsored by Quentin Nesbitt, Customer
Research & Analysis Leader and Jared Hansen, Resource Planning Leader, ldaho
Power Company.
DATED at Boise, ldaho, this 29s day of May 2020.
X* !.7(^1.t,-*,
LISA D. NORDSTROM
Attomey for ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 17
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 29h day of May 2020 I served a true and conect
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
Edward Jewell
Deputy Attomey General
ldaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, ldaho 83714
ldaHydro
C. Tom Arkoosh
ARKOOSH LAW OFFICES
802 West Bannock Street, Suite LP 103
P.O. Box 2900
Boise, ldaho 83701
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North 6h Street
Boise, ldaho 83702
STOP B2H Coalition
Jack Van Valkenburgh
Van Valkenburg Law, PLLC
P.O. Box 531
Boise, ldaho 83701
Jim Kreider
60366 Marvin Road
La Grande, Oregon 97850
ldaho Sierra Club
Julian Aris, Associate Attomey
2101 Webster Street, Suite 1300
Oakland, California 94612
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IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 18
Gloria D. Smith, Managing Attorney
2101 Webster Street, Suite 1300
Oakland, California 94612
Ana Boyd, Research Analyst
2101 Webster Street, Suite 1300
Oakland, California 94612
lndustrial Customers of Idaho Power
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
Dr. Don Reading
6070 Hill Road
Boise, Idaho 83703
Micron Technology, lnc.
Austin Rueschhoff
Thorvald A. Nelson
Holland & Hart, LLP
555 Seventeenth Street, Suite 3200
Denver, Colorado 8O2O2
Jim Swier
Micron Technology, lnc.
8000 South FederalWay
Boise, ldaho 83707
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Sandra D. Holmes
Legal Adm inistrative Assistant
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 19