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HomeMy WebLinkAbout20220315IPC to ICIP 11-18.pdf<EHmR. ' '..- i:- rltt l.C'?..ii,..'.r+ ii'i l'Lt :i:1i.','i:D An ]oACOPP Company March 15,2022 VIA ELECTRONIC FILING Jan Noriyuki, Secretary ldaho Public Utilities Commission 11331 W. Chinden BIvd., Bldg 8, Suite 201-A (83714) PO Box 83720 Boise, ldaho 83720-0074 Re Case No. !PC-E-2141 ln The Matter Of ldaho Power Company's Application For Authority to Proceed with Resource Procurements to Meet ldentified Capacity Deficiencies in 2023, 2024, and 2025 to Ensure Adequate, Reliable, and Fair-Priced Service to its Customers Dear Ms. Noriyuki Attached for electronic filing is ldaho Power Company's Response to the Second Production Request and First Request forAdmission of the lndustrial Customers of ldaho Power in the above entitled matter. lf you have any questions about the attached document, please do not hesitate to contact me. Very truly yours, DONOVAN WALKER Lead Counsel dwalker@ida hooower.com DEW:cd Enclosures - .- ,A - -'-. r..,.-rn !l Donovan E. Walker Mzda!4- DONOVAN E. WALKER (lSB No. 5921) ldaho Power Company 1221 West ldaho Street (83702) P.O. Box 70 Boise, ldaho 83707 Telephone: (208) 388-5317 Facsimile: (208) 388-6936 dwa lker@ idahopower.com Attorney for ldaho Power Company BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF IDAHO POWER COMPANY'S APPLICATION FOR AUTHORITY TO PROCEED WITH RESOURCE PROCUREMENTS TO MEET IDENTIF]ED CAPACITY DEFICIENCIES IN 2023,2024, AND 2025 TO ENSURE ADEQUATE, RELIEABLE, AND FAIR. PRICED SERVICE TO ITS CUSTOMERS. cAsE NO. rPC-E-2141 IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER ) ) ) ) ) ) ) ) ) ) COMES NOW, ldaho Power Company ("ldaho Powe/' or "Company'), and in response to the Second Production Request of the lndustrial Customers of ldaho Power to ldaho Power Gompany and First Request for Admission dated February 22,2022, herewith submits the following information: IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER.l REQUEST NO. 11 AND REQUEST FOR ADMISSION NO. l: The lClP Request for Production No. 2 provided: Page 23 of the Company's Application references "[M]odern tools used in attempts to force deregulation onto state jurisdictions that have chosen to retain the traditional vertically integrated, state regulated service providers..." later in the same sentence the Company's Application identifies some of those modern tools, "such as . . . [an] anticompetitive tax credit policy for renewable energy procurement." The lClP Request for Production No. 2 then asked ldaho Power to identify the "anticompetitive tax credit policy" itwas referencing in its application. The lClP specifically asked: Please identify the "anticompetitive tax credit policy for renewable energy procuremenf [that] ...forces ... deregulation onto state jurisdictions." In response, ldaho Power stated that "Federal and state tax policies can have different impacts on regulated and non-regulated utilities." And that, "Ihese policies have been cited as a factor in driving non-utility ownership of renewables, which erodes the regulatory compact for veftically integrated utilities;' Please admit that the Company is unaware ol an"anticompetitive tax credit policy for renewable energy procuremenf ... [that] ... forces deregulation onto state jurisdicfions." ln the alternative, please respond to the question and identify the tax credit policy[ies]that the company is referencing in its Application that "forces ... deregulation onto state jurisdictions." ln the second part of Request No. 2, the lClP asked ldaho Power to: Please explain ldaho Powe/s understanding as to how said policies "forces de reg u I ation o nto state j u ri sd icfions. " ln response, ldaho Power stated: These policies have been cited as a factor in driving non-utility ownership of IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 2 renewables, which erodes the regulatory compact for veftically integrated utilities. Please admit that the Company has no understanding as to how said polices "forces . . . deregulation onto state jurisdictions." ln the alternative, please respond to the question and explain Idaho Powe/s understanding as to how said policies "forces. . . dereg u I ation onto state j u risd icfions." RESPONSE TO ICIP REQUEST NO. 11 AND REQUEST FOR ADMISSION NO. 1: The Company denies that it is unaware of an"anticompetitive tax credit policy for renewable energy procuremenf ... [that] ... forces deregulation onto state jurisdicfions" and denies that it has no understanding as to how said policies "forces . . . deregulation onto state ju ri sdiction s ;' As explained in the Company's response to lClP Request No. 2, tax policies can result in differing tax outcomes for regulated utilities and unregulated renewable developers, thus potentially making renewable Power Purchase Agreements ("PPA") pricing appear more attractive relative to utility ownership. For example, electric utilities are subject to tax normalization rules that require investment tax credits ("lTC") to be amortized overthe life of the associated asset. Unregulated renewable resource investors can utilize the full benefit of the ITC in the first year of the associated asset's useful life. If all other price components were equal, this tax treatment would result in a lower overall PPA cost as compared to utility ownership. \A/hile Idaho Power is not representing that tax normalization rules are bad or somehow flawed, in the example of regulated utility ownership versus unregulated renewable ownership there is a disparity in tax treatment that favors the unregulated owner. Therefore, if an evaluation of potential resource projects focuses only on price attributes, PPAs are likely to be selected over utility-owned IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER- 3 resources even though other benefits of the regulatory compact may otherwise justifiably support utility ownership of generation resources. lt is the Company's position in this case, that adding PPAs from unregulated third-party owners to the exclusion of regulated utility ownership is a form of deregulation. The response to this Request is sponsored by Tim Tatum, Vice President of Regulatory Affairs of ldaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 4 REQUEST NO. 12 AND REQUEST FOR ADMISSION NO. 2: ICIP Request for Production No. 4 provided: Yet another 'modern tool' referenced by ldaho Power that is being used to "force deregulation onto state jurisdictions" are the "competitive procurement rules and regulations specifically designed to "remove the utility's competitive advantage"... " Please . . . explain how rules that are designed to "remove the utility's competitive advantage" are being used to "force deregulation onto state jurisdictions." ln its response, the Company stated, "Please see fhe Company's response fo IPUC Sfaffs Requesf No. 12 for a discussion and analysis of such rules and regulations;' Counsel for the lClP has been unable to find a reference, or an explanation, of how "competitive procurement rules and regulations are specifically designed to remove the utility's competitive advantage" in the Company's response to IPUC Staffs Request No. 12. Please admit that the Company has no understanding as to how said "competitive procurement rules and regulations are specifically designed to remove the utility's competitive advantage." ln the alternative, please respond to the question and explain ldaho Powe/s understanding as to how said how competitive procurement rules and regulations are specifically designed to remove the utility's competitive advantage. RESPONSE TO ICIP REQUEST NO. 12 AND REQUEST FOR ADMISSION NO. 2: The Company denies lClP's statement. The Company's response to Staffs Request No. 12 describes specific features of the resource procurement rules that can remove the utility's competitive advantage. That response is repeated, in part, below. While the OPUC Resource Procurement Rules do contemplate non-price factors as part of the evaluation, the OPUC Resource Procurement Rules appear to heavily weight price over some of the operational constraints that occur with a contracted resource. OAR 860-089-0300(1)(a) provides that "[e]lectric company and affiliate bids IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 5 must be treated in the same manner as other bids." However, ownership of a resource and a contractual right to the output of a resource, when constrained by the other terms and conditions of the contract, are not equivalent. For instance, OAR 860-089-0300(5) provides that the "electric company issuing the RFP must allow independent power producers to submit bids with and without an option to renew, and may not require that bids include an option for transferring ownership of the resource." OAR 860-089-0400(2), pertaining to bid scoring, provides that the "electric company must base the scoring of bids and selection of an initial shortlist on price and, as appropriate, non-price factors. Non-price factors must be converted to price factors where practicable." The OAR then prescribes the method by which the utility must develop the price and non-price scores. This includes subsection (2)(d), which provides that scoring criteria "may not be based on renewal or ownership options, except insofar as these options affect costs, revenues, benefits or prices.' The combination of these rules, together with an independent examiner and intervenors heavily focused on price, introduce a heavy bias toward PPA transactions. This is further exacerbated by federal tax credit amortization rules for regulated utilities that favor third-party ownership of resources, resulting in a power purchase agreement (PPA) bias... The response to this Request is sponsored by Tim Tatum, Vice President of Regulatory Affairs of ldaho Power Company. ]DAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER_6 REQUEST NO. 13: At page 15 of the Company's Application ldaho Power states that, "ldaho Power objected to the adoption of the Competitive Bidding Guidelines, the precursor to the OPUC Resource Procurement Rules." Please provide copies of ldaho Power's objections that are referred to in its Application. RESPONSE TO lClP REQUEST NO. 13: The Public Utility Commission of Oregon (OPUC) adopted its Competitive Bidding Guidelines in OPUC Docket UM 1182. ldaho Power's filed comments in OPUC Docket UM 1182 are publicly available on the OPUC's website. ldaho Power's objections referenced on page 15 of the Company's Application refer to the OPUC's presumption that there is a utility self-build bias that needed to be mitigated through the adoption of the Competitive Bidding Guidelines. The Commission adopted its original Competitive Bidding Guidelines in OPUC Order No. 06-446 in August 2006. Concurrent with adopting the Competitive Bidding Guidelines, the OPUC also initiated Docket UM 1276 "to address the bias inherent in the utility resource procurement process that favors utility ownership of generation assets over Power Purchase Agreements (PPAs) with third parties." OPUC Order No. 11-001 at 1. ln Docket UM 1276, the OPUC "accept[ed] the premise that a bias exists in the utility resource procurement process that favors utility-owned resources over PPAs' and based on the acceptance of the premise ordered the following: we reopen Docket UM 1182 to further examine issues related to our competitive bidding guidelines. ln Order No. 06*446, this Commission adopted comprehensive guidelines to improve competitive bidding for utility resource acquisitions. Utilities are now expected to issue an RFP for major resources with generating capacity greater than 100 MW. Utilities must also engage an lE to oversee the RFP process if they expect to receive Commission acknowledgement of the finalshort-list IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 7 of RFP resources. Although these guidelines have greatly increased confidence that the utility RFP process is being conducted fairly and properly, we believe further improvements are needed to fully address utility self-build bias. OPUC Order No. 11-001 at 5-6. !n the re-opened OPUC Docket UM 1182 proceeding the Company repeatedly objected to the OPUC's presumed utility self-build bias. For example, at page 5 of comments filed by ldaho Power on April 22,2011, in the re-opened Docket UM 1182, the Company, explained: The Commission specifically reopened this docket to explore further improvements to the competitive biddlng guidelines designed to address utility self-build bias. As an initial matter and one of extreme significance to ldaho Power, the Commission has presumed that this bias exists but it has not reached this conclusion based upon evidence in the record before it. Rather, in Docket UM 1276 the Commission instructed the parties to assume that the bias exists. ldaho Power objects to the comments of any party in this proceeding that assumes this Commission has made a finding that a build versus buy bias exists. The Commission has not reached such a finding, and ldaho Power reserves the right to submit evidence to the contrary. ldaho Power repeated this objection at page 2 of a Prehearing Brief, filed on February 1,2013, in Docket UM 1 182: ln Order No. 11-001 the Commission assumed that a "bias exists in the utility resource procurement process that favors utility-owned resources over[power purchase agreements]" because utilities earn a return on utility-owned resources but do not earn a return on power purchase agreements. \Mrile the Commission assumed the bias existed, it neither quantified the significance of the assumed bias nor concluded that the assumed bias resulted in customer harm. To avoid doubt, ldaho Poweremphasized in footnote 3 of the Prehearing Brief that it has previously "noted its objection to [the self-build bias] assumption, which was not IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 8 based upon evidence in the record. ldaho Power continues to object to this premise based upon the evidene presented in Phase ll of this docket." The response to this Request is sponsored by Tim Tatum, Vice President of Regulatory Affairc of ldaho Power Company. IDAHO POVVER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POVVER - 9 REQUEST NO. 14: Did ldaho Power also object to the adoption of the OPUC Resource Procurement Rules? lf so, please provide copies of ldaho Powe/s objections to the adoption of the OPUC Resource Procurement Rules. RESPONSE TO lGlP REQUEST NO. 14: Yes. ldaho Power actively engaged in the investigations and rulemakings that developed Oregon's resource procurement rules. ldaho Power filed comments both individually and in coordination with Oregon's other investor-owned utilities. The Company's and joint utility comments made suggestions to improve certain aspects of the rules and objected to other provisions. Ultimately, the OPUC weighed those suggestions and adopted the rules. Please see ldaho Powe/s response to lClP Request No. 13 describing the OPUC's presumption of a utility self-build bias, which informed its Competitive Bidding Guidelines. !n addition, please see the Joint Utility Comments in filed on February 14, 2018, in the OPUC's rulemaking proceeding that lead to the adoption of the Resource Procurement Rules, OPUC Docket AR 600. Among other things, these comments state that 'certain proposals depart from the Commission's long history of promoting fairness and transparency in competitive bidding, and instead reflect an anti-utility bias." The response to this Request is sponsored by Tim Tatum, Vice President of Regulatory Affairs of ldaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER- 1O REQUEST NO. 15: ldaho Power, in its response to the IPUC Stafts Request for Production No. 7 states that the premise of the OPUC competitive procurement rules is flawed, stating The OPUC Resource Procurement Rules were established under the inconect premise that without such rules, there is an inherent bias toward utili$ ownership or that the utility holds an unfair advantage over third-pafi owners that must be corrected. ln fact the utility does not hold an unfair advantage over third-party owners... Please provide copies of all pleadings filed by ldaho Power in which it sought to redress the OPUC's alleged erroneous rulemaking when it based said rules on an "incorrect premise." PIease identify the year said rules were first adopted and explain why ldaho Power has waited until now to raise objections before the ldaho PUC as to the incorrect premise upon which the Oregon Commission's established its Resource Procurement Rules. Please identiff, and provide documentation, as to when ldaho Power first came to the realization that the OPUC Rules referenced above, "were established under [an] inconect premise." RESPONSE TO lClP REQUEST NO. 15: Please see ldaho Power's response to lClP Request No. 13 describing the OPUC's presumption of a utility self-build bias, which informed its Competitive Bidding Guidelines. ln addition, please see the Joint Utility Comments in filed on February 14,2018, in the OPUC's rulemaking proceeding that lead to the adoption of the Resource Procurement Rules, OPUC DocketAR 600. Among other things, these comments state that "certain proposals depart from the Commission's long history of promoting fairness and transparency in competitive bidding, and instead reflect an anti-utility bias." IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER- 11 The resBonse to this Request is sponsored by Tim Tatum, Mce-President of Regulatory Affairs of ldaho Power Gompany. IDAI{O POVI/ER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AT{D FIRST REQUEST FOR ADMISSION OF THE INDUSTR]AL CUSTOMERS OF IDAHO POWER- 12 REQUEST NO. 16: ln its response to IPUC Staff Request for Production No. 12, ldaho Power asserts that, For a utility-scale baftery storage facility in pafticular... lf the company were to execute a PPA for a battery storage facili$, the dispatchability, curtailment, maintenance, secuity, mandatory payment, and operational terms, conditions, and limitations would be pre-defined for the term of the PPA. And that These terms would be detrimental [to the company]... Please explain (with specific legal citations) what would require ldaho Power execute a PPA for a utility-scale battery storage project that is detrimental to the Company. RESPONSE TO lClP REQUEST NO. 16: ldaho Power was not attempting to describe this issue from a legal perspective, but from a practical perspective. A third-party PPA with pre-defined terms related to curtailment, discharge of stored energy, and other operationa! mafters would limit the Company's flexibility when making decisions on how to optimize its system resources. lf those same resources are owned by the Company, those contractual limitations would not exist and the Company wil! have greater flexibility to make decisions that are optimalfrom both an operationaland a cost standpoint, which is beneficialto the Company and its customers. The response to this Request is sponsored by Tim Tatum, Vice-President of Regulatory Affairs of ldaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCT]ON REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 13 REQUEST NO. 17: Does ldaho Power understand that ldaho PUC Order No. 32745 requires it to comply with the Oregon competitive bidding requirements governing the issuance of an RFP by ldaho Power for new supply-side resources? RESPONSE TO ICIP REQUEST NO. 17: Yes. That is why the Company is requesting a change to that requirement in this docket. On page 1 of the Company's Application in this docket, the Company states: "ldaho Power requests that the Commission issue an order: (1) eliminating the IPUC requirement to comply with the Public Utility Commission of Oregon ("OPUC") resource procurement rules in favor of a competitive, but expedited process;... ldaho Power goes on to explain in part lll of its Application that the Oregon resource procurement rules are unable to timely address the dynamic circumstances that the Company is currently facing and presents in part lV of its Application its alternate Request for Proposa! and Certificate of Public Convenience and Necessity process. The response to this Request is sponsored by Tim Tatum, Vice President of Regulatory Affairs of ldaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER- 14 REQUEST NO. 18: At page 15 of the Company's Application, ldaho Power asserts that "fhe OPUC Ru/es do not align with the state of ldaho 's sysfem of public utility regulation." Please provide copies of all pleadings filed by ldaho Power before the OPUC in which it objected to the OPUC's Rules referenced above because those rules "do nof align with the state of ldaho's sysfem of utility regulation." Please identiff, and provide documentation, as to when ldaho Power first came to the realization that the OPUC Rules referenced above, "do not align with the state of ldaho's sysfem of utility regulation." RESPONSE TO IGIP REQUEST NO. 18: Please see the Company's response to lClP Request No. 13 describing the OPUC's presumption of a utility self-build bias. The Company has not filed pleadings with the OPUC using the specific term cited by lClP. The Company is making that assertion to the ldaho Public Utilities Commission in this case. The response to this Request is sponsored by Tim Tatum, Vice President of Regulatory Affairs of ldaho Power Company. Respectfully submitted this 1Sth day of March 2022 fuzdat4- DONOVAN E. WALKER Attorney for ldaho Power Company IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 15 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 1Sth day of March 2022,1 served a true and correct copy of the within and foregoing Idaho Power Company's Response to the Second Production Request and First Request forAdmission of the lndustrial Customers of ldaho Power upon the following named parties by the method indicated below, and addressed to the following: Dayn Hardie ldaho Public Utilities Commission Po Box 83720 Boise, ldaho 83720-0074 Peter J, Richardson RICHARDSON ADAMS, PLLC 515 N.27th Street Boise, ldaho 83702 Dr. Don Reading 6070 Hill Road Boise, lD 83703 ldaHydro C. Tom Arkoosh Amber Dresslar ARKOOSH LAW OFFICES 913 w. River Street, Suite 450 P.O. Box 2900 Boise, lD 83701 ldaho Conservation League Benjamin J. Otto Emma E. Sperry 710 North 6th Street Boise, ID 83701 Greg M. Adams RICHARDSON ADAMS, PLLC 515 N.27th Street Boise, ldaho 83702 Spencer Gray NIPPC P.O. Box 504 Mercer lsland, WA 98040 Emailed to: davn. hardie@puc. idaho.qov Emailed to: peter@richardsonadams.com Emailed to: d read inq@mindsprinq.com Emailed to: tom. a rkoosh@arkoosh.com amber.d resslar@arkoosh. com erin. cecil@arkoosh.com Emailed to: botto@ida hoconservation.oro esperrv@ id a hocon se rvatio n. o ro Emailed to: q reo @richa rdsonadams.com Emailed to: sorav@nippc.orq IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER- 16 Abigail R. Germaine Elam & Burke, P.A. 251 E. Front St., Suite 300 P.O. Box 1539 Boise, ID 83701 Scott Miller Western Power Trading Forum 1540 River Park Dr., Suite 211 Sacramento, CA 95815 Max Greene Renewable Northwest 421 SW 6th Ave., Suite 1400 Portland, OR 97204 Jim Kreider STOP BB2H Coalition 60366 Marvin Road La Grande, OR 97850 Jack Van Valkenburgh Van Valkenburgh Law, PLLC P.O. Box 531 Boise, !D 83701 Ed Jewell Boise City Attorneys Office P.O. Box 500 Boise, lD 83701 Wil Gehl Boise City Dept. of Public Works P.O. Box 500 Boise, !D 83701 Emailed to: arq@elamburke.com Emailed to: smiller@wptf.com Emailed to: max@renewablenw.orq Emailed to: iim@stopb2h.oro Emailed to: iack@va nva lkenbu ro h law.com Emailed to: eiewell@citvofboise,o rq boisecitvatto rnev@citvofboise. orq Emailed to: wqeh l@citvofboise.orq Christy Davenport, Lega! Assistant IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST AND FIRST REQUEST FOR ADMISSION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 17