20210623IPC to Staff 1-4.pdf

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An IDACORP Company
June 23,2021
VIA ELECTRONIC iITAIL
Jan Noriyuki, Secretary
ldaho Public Utilities Commission
11331 West Chinden Blvd., Building 8
Suite 201-A
Boise, ldaho 83714
Re Case No. IPC-E-21-15
ldaho Power Company's Application to Update the Gas Forecast in the
lncremental Cost lntegrated Resource Plan Avoided Cost Model
Dear Ms. Noriyuki:
Attached for electronic filing is ldaho Power Company's Response to the First
Production Request of the Commission Staff in the above entitled matter. lf you have any
questions about the attached documents, please do not hesitate to contact me.
Please be aware that Response Nos. 2 and 4 and the Attachment to Response
No. 3 are confidential. Please handle the confidential information in accordance with
the Protective Agreement executed in this matter.
Very truly yours,
DONOVAN E. WALKER
Lead Counse!
[e-mail]
DEW:cld
Enclosures
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Donovan E. Walker
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@ idahopower. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IDAHO POWER COMPANY'S
APPLICATION TO UPDATE THE GAS
FORECAST IN THE INCREMENTAL COST
INTEGRATED RESOURCE PLAN
AVOIDED COST MODEL
CASE NO. |PC-E-21-15
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE COMMISSION STAFF
COMES NOW, ldaho Power Company ("ldaho Power' or "Company"), and in
response to the First Production Request of the Commission Staff to ldaho Power
Company dated June 2,2021, herewith submits the following information:
IDAHO PO\A/ER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUESTS OF THE
COMMISSION STAFF - 1
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REQUEST NO. 1: The 2017 lntegrated Resource Plan ("lRP") used the U.S.
Energy lnformation Administration's ("ElA") Henry Hub High Oil and Gas Resource and
Technology forecast. The 2019 IRP used the gas forecast from S&P Global Platts
("Platts"). Please describe the key difference between the two methods and explain the
advantages of the Platts forecast over the EIA forecast.
RESPONSE TO REQUEST NO. 1: When preparing for the 2019 lntegrated
Resource Plan in October 2018, the Company assessed the information in the chart
below and determined that the EIA natural gas forecasts were significantly above market
in the first several years; therefore, the Company decided to evaluate other sources:
Henry Hub Natural Gas Forecast as of October 2018
s8.oo
57.00
Se.oo
Ss.oo -
EIA Ref Case
-
EtA High oil and Gas
Market on 10/3/2018S4.oo
53.00
Sz.oo
20L8 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040
Because the first few years of forwards are traded actively, ldaho Power felt that
what the EIA was forecasting was not accurate, at least for those first few years. After
examining how other utilities in the area forecast natural gas prices in their IRP's the
Company observed that it is common practice to use third-party providers for such
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUESTS OF THE
COMMISSION STAFF .2
forecasts. For the study the Company used both Moody's and Platt's and the results are
indicated in the chart below. Platt's forecast appeared to more closely align with the first
several years of the forward market and then was in range with the others by 2026.
Based on these observations, and the fact that Platt's is an industry leader in
providing market information whose daily and monthly indexes are the standard for
physical and financial transactions for the locations that are relevant to ldaho Power, the
Company chose to use Platt's.
Henry Hub Natural Gas Forecast as of October 2018
S8.oo
s7.00
s6.oo
-
Plattrs
-
EIA Ref Case
-
EtA High oil and Gas
Market on l0l3l20t9
-
Moodys
5s.oo
Sq.oo
s3.oo
s2.oo
20L8 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040
\Mth respect to methodologies, both the EIA and Platt's use typical supply and
demand fundamentals, assumptions fortechnological improvements, and othereconomic
factors in their forecasts. The differences in the resulting forecasts are primarily due to
the differences in the assumptions each entity makes for each factor, as well as the use
of their own proprietary weighting of these factors in determining their independent natural
gas price forecasts. For more information on factors the EIA used in their Annual Energy
Outlook 2021 please refer to their website at the following address:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUESTS OF THE
COMMISSION STAFF .3
Similarly, Pletts' slide deck ftorn their presentation at the March 2021 IRPAC
meeting is availabh upon request.
The response to this Requeet is sponsored by Michael Polito, Power Supply
Operations Senior Manager, ldaho Pover Company.
IDAHO POTfVER COMPANYS RESPONSETOTHE FIRST PRODUCTION REQUESTS OFTHE
COMMISSIO}I STAFF - 4
REQUEST NO. 2: The Application states that the 2021 Platts forecast is
approximately 3% lower overall than the 2018 Platts forecast, except for the periods of
2021-2023 and 2039-2040. Please explain what causes the 2021 Platts forecast to be
3% lower and why the periods of 2021-2023 and 2039-2040 are exceptions.
RESPONSE TO REQUEST NO. 2: Please see the confidentia! attachment
provided for this response. The confidential attachment will be provided to those parties
who have executed the Protective Agreement in this matter.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Senior Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUESTS OF THE
COMMISSION STAFF - 5
REQUEST NO. 3: Please provide Table No. 1 in ConfidentialAttachment No. 1 in
Excel format and include the 2021 EIA Henry Hub High Oil and Gas Resource and
Technology forecast for comparison.
RESPONSE TO REQUEST NO. 3: See the attached confidential Excelfile for the
requested information.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Senior Manager, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUESTS OF THE
COMMISSION STAFF - 6
REQUEST NO.4: Please explain how Plafts determines the first five years of the
natural gas forecasts. If forward market prices are used, how are they incorporated into
the forecast, especially during the first five years of the forecast.
RESPONSE TO REQUEST NO. 4: PIease see the confidential attachment
provided for this response. The confidential attachment will be provided to those parties
who have executed the Protective Agreement in this matter.
The response to this Request is sponsored by Michael Polito, Power Supply
Operations Senior Manager, ldaho Power Company.
Respectfr.rlly submitted this 23rd day of June 2021.
Mzrlat4-
DONOVAN E. WALKER
Attorney for ldaho Power Company
IDAHO POIA/ER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUESTS OF THE
COMMISSION STAFF - 7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 23d day of June 2021,1 served a true and correct
copy of the within and foregoing IDAHO POWER COMPANY'S RESPONSE TO THE
FIRST PRODUCTION REQUESTS OF THE COMMISSION STAFF upon the following
named parties by the method indicated below, and addressed to the following:
John R. Hammond
Deputy Attorney General
ldaho Public Utilities Commission
Po Box 83720
Boise, ldaho 83720-0074
Hand Delivered
U.S. Mail
Overnight Mail
_ FAXX Email: [e-mail]
Christy Davenport, Legal Assistant
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUESTS OF THE
COMMISSION STAFF - 8