20030106_354.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:DECEMBER 30, 2002
RE:CASE NO. IPC-02-8 (Idaho Power)
INTEGRATED RESOURCE PLAN (IRP) YEAR 2002
BIENNIAL CO MPLIAN CE FILING
On June 28, 2002, Idaho Power Company (Idaho Power; Company) filed its year
2002 Integrated Resource Plan (IRP) with the Idaho Public Utilities Commission (Commission).
The Company s filing is pursuant to a biennial requirement established in Commission Order
No. 22299, Case No. U-1500-165. The IRP describes the Company s loads and resources
provides an overview of technically available resource options including purchases of power
from the wholesale market, the acquisition of additional generating resources and, to a lesser
extent, pricing options and demand-side management programs.
Under the Company s planning assumptions, the Company contends that existing
resources are likely to be insufficient to meet expected peak energy requirements as early as
2003.
2002 INTEGRATED RESOURCE PLAN
The 2002 Integrated Resource Plan assumes that during the planning period, from
2002 through 2011 , Idaho Power will continue to be responsible for acquiring sufficient
resources to serve its customers and will continue to operate as a vertically-integrated electric
utility. One of the Company s stated goals is to ensure that resources selected are cost effective
low risk and meet the increasing electrical energy demands of its customers. The number of
households in the Company s service territory is expected to increase from 310 000 today to
nearly 380 000 by the end of the planning period in 2011. Under the 70th percentile water and
DECISION MEMORANDUM
load conditions, the Company projects that peak hour loads may cause peak hour transmission
overloads from the Pacific Northwest presenting significant difficulties during the summers of
2003 and 2004. A combination of purchases from the east side, demand reduction programs, and
temporary generation resources may be required to meet the projected summer peak hour loads
in 2003 and 2004.
In the Company s 2000 Integrated Resource Plan, Idaho Power identified a need for
additional generating resources located close to the Treasure Valley load center beginning in
June 2004. The identified need was the basis upon which Idaho Power issued a request for
proposal. The Gamet Energy LLC proposal was selected. A Power Purchase Agreement (PP A)
between Idaho Power Company and Gamet Energy LLC was negotiated and filed with the
Commission in December 2001. The Garnet project had it gone forward would have allowed the
Company to purchase up to 250 MW of capacity and associated energy during periods of peak
need.
Future resource options identified by the Company include market purchases
generation and transmission resources, and targeted demand side management, targeted
conservation measures and pricing options.
In the near term, the Company has identified six items to address its resource needs:
1. Continuing to make seasonal purchases of wholesale market power of
about 100 average megawatts during the utility s peaking months of June
July, November and December. A megawatt is enough energy to power
about 750 homes.
2. Integrate demand side (conservation) measures, where economical, to
address the short duration peaks of the system load.
3. Solicit proposals and initiate the siting and permitting for about 100
megawatts of a utility owned and operated peaking plant to be available
beginning in 2005.
4. Purchase up to 250 megawatts of capacity from the Gamet project, if
approved, for use during peak periods beginning June 2005.
5. Add a new ten-mile transmission line between Brownlee and Oxbow that
will add 100 megawatts of transmission capacity. The transmission
upgrade is planned to be in service in the fall of 2004.
DECISION MEMORANDUM
6. Proceed with an upgrade at Shoshone Falls, expected to be in service in
2007. This will result in an average increase in output of about 30
megawatts.
Additionally, the Company notes that it supports the Green Power Program. To meet
the needs of customers desiring green energy, the Company has identified two specific near term
actions to be initiated during the next two years:
1. Idaho Power anticipates participating in several educational and
demonstrational energy projects with a focus on green resources.
2. Idaho Power intends to dedicate up to $50 000 to explore the feasibility
of constructing a pilot anaerobic digester project within the Company
service territory.
Idaho Power states that the Company and the Commission must agree on mechanisms that
ensure prompt recovery of prudent costs incurred for the pilot and demonstration projects.
Idaho Power notes that it will continue to pursue cost effective incremental upgrades
at its existing generation facilities. The Company will also continue to use the short-term
regional market to balance system load and generation, as well as take advantage of the long-
term energy market to secure energy at reasonable prices.
The Company s Integrated Resource Plan filing includes the plan, sales and load
forecast, a technical appendix, conservation plan and an economic forecast.
COMMENTS
On July 18 , 2002, the Commission issued a Notice of Filing in Case No. IPC-02-
and established a comment deadline of August 30, 2002. Comments were filed by Idaho Rivers
United, Northwest Energy Coalition and the Land and Water Fund of the Rockies, collectively
the Clean Energy Advocates or Advocates, Jay C. Hormel, Windland, Inc., Citizens for
Responsible Land Use, Windworks, Inc., Idaho Rural Council, Advanced Energy Strategies and
Commission Staff. Pursuant to request and Commission scheduling, Idaho Power filed reply
comments on October 23 2002.
The comments of the parties and reply comments of the Company can be
summarized as follows:
DECISION MEMORANDUM
Idaho Rural Council
Rural Council contends that the Company s 2002 IRP is not an "Integrated Resource
Plan." What it is, the Rural Council contends is a resource plan to justify a particular project, a
particular course of action. The Rural Council contends that the 2002 IRP is flawed for three
primary reasons: (1) the public process was flawed; (2) the assumptions are flawed; and (3) with
flawed process and flawed assumptions the analysis aspect of the plan and product was flawed.
Regarding "public process" the Rural Council states that Idaho Power s ratepayers
rely on the Company to meet their electrical needs, as citizens of the area in which they live and
also rely on the Company to meet those needs not only in terms of costs, reliability, and safety,
but to help steward the resources and quality of life that might be impacted by the Company
management decisions. The Commission oversees this relationship, but also , the Rural Council
contends, relies on an interactive relationship between Idaho Power and its customers.
As part of the process of developing the Integrated Resource Plan, Rural Council
states that the Company was to hold a number of public meetings, ostensibly to get public input
as to what should be considered in the plan. The Rural Council states that it was looking forward
to this process and intended to participate fully in the discussion. At the first public meeting, it
states that discussion was limited to Idaho Power s agenda, which was to discuss the
water/weather data they should use for planning purposes. That discussion centered on whether
to use the mean averages or to skew the planning process toward a more severe prospect. What
the Rural Council asked for at that meeting was to also look at what Idaho Power could do in
terms of conservation, efficiencies, shaping of demand curves and alternatives to meet projected
shortfalls. The Rural Council was told that that would happen at other meetings in the future.
Rural Council contends that there was only one more meeting and that was a public meeting to
unveil the draft plan. There were no discussions on alternatives. There was no public discussion
of the options available. Rural Council contends that the trust relationship was broken by the
Company and the process is flawed. The whole public input aspect was merely a charade, the
Rural Council contends, to say that public meetings were held. The public was allowed to
comment on the draft IRP, but it came out unchanged.
Regarding "flawed assumptions " the Rural Council states that the demand curve
assumptions of the Company seem to be cast in stone, that the Company is contending that they
are real and solid and that nothing can be done to shape those curves. The Rural Council notes
DECISION MEMORANDUM
that Idaho Power advanced nothing in the 2002 IRP to encourage conservation. If there had been
true public discussions about conservation, efficiency, load shaping and alternative production
then the Rural Council contends that the demand assumptions that Idaho Power relied on in their
IRP would have been different and that would have led to various other analyses of possibilities
not only in terms ofload projections but assumptions about how to meet those loads.
Regarding the "flawed analysis " the Rural Council contends that to have a valid
analysis or assessment of any scenario, one has to have some criteria on which to assess the
situation. Here again, the public meeting process, the Rural Council contends, would have
played an important role; there the public could have helped to define the scenario. There is
where the assumption about demand would have gotten defined as well as some sense of what
the goal of the IRP should be. Left to Idaho Power and IDACORP , that goal was to build the
Garnet facility. With public input it would have been to implement energy efficiency and
conservation efforts, to shape the load curves and implement some renewables before looking to
other means of production. The analysis done on the 2002 IRP, Rural Council contends, was
limited by both the process of defining demand and the assumptions made about the demand. A
false assumption was made that only one option existed to deal with demand and that was to
build a power plant to meet wasteful, thoughtless consumption. Yet there was a host of evidence
in the region, the Rural Council contends, that the demand curve could be shaved and shaped
with other alternatives. Those alternatives were not discussed.
The Rural Council contends that public hearings without listening are a senous
disservice. What is needed, it states, is a full, honest and open discussion of the issue. Rural
Council recommends that a new docket be opened to explore ways to bring the public s concerns
into the planning process.
Jay C. Hormel
Mr. Hormel characterizes the public process for development of the Company s IRP
as inadequate and completely one sided. To assume that future plans reflect more than the
Company s narrow perspective of energy power, Mr. Hormel suggests that the Commission
require the Company to hire an outside facilitator to manage a process that would consider not
only energy production, but also energy conservation, demand side management and
alternative/clean energy sources.
DECISION MEMORANDUM
Windworks, Inc.
Windworks in its comments stresses the need for Idaho Power to conduct a fair and
detailed analysis of the benefits and costs of wind power. Windworks notes that the Company
has failed to identify a utility-scale wind power project as a viable competitive resource in its
IRP. The Company, it states, has also erred in its evaluation of wind power project costs.
Instead, the Company addresses an interest in a "pilot" wind project, possibly followed by a
utility-scale (50-100 megawatts) wind project. A pilot project, Windworks states, is not needed
and if not sized appropriately would not obtain the cost benefits of economy of scale.
Windworks owns and operates wind turbines (900 turbines in California and 150
megawatts under contract to BP A) and in its comments provides information as to the
competitiveness of wind power as a generation resource. Windworks also details other related
economic and environmental benefits of wind generation.
Wind power, Windworks states, is a mature technology with over 25 000 megawatts
installed worldwide, including 4 000 megawatts in the United States.Last year alone
Windworks contends that about 1700 megawatts of wind power was installed in the United
States. In the Northwest and Western United States, utility-scale wind power projects have been
installed or are in the advanced planning stages in Washington, Oregon, Montana, Nevada
California, Wyoming and Colorado.
Windworks suggests that wind power will integrate efficiently with Idaho Power
hydropower energy storage system. When the wind blows, the hydropower system can store
energy if necessary, and when the wind is absent, the hydropower system provides the necessary
peaking and load following capability.
Windland, Inc.
Windland has owned and operated utility-scale wind farms in California and is
presently developing a wind farm in southeast Idaho. Windland contends that the Company
IRP could be improved by correcting deficiencies and errors in its assessment of wind power as a
generation resource. The Idaho Power study produces estimates of wind power costs of
production in the $60-80 per megawatt hour range when levelized over 30 years. This estimate
Windland contends, overstates the cost of wind generation by 50-100 percent. Recent
experience in the Northwest, it states, has resulted in multiple contracts, amortizing capital over
shorter durations, at closer to $40 per megawatt hour.
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A proper analysis of rural economic benefits and societal costs, Windland contends
would further improve the standing of wind generation relative to other generation alternatives.
Wind generation facilities (often sized to produce 25 to 75 megawatts) approximate
the average annual load growth projected in the IRP. If the Company, Windland states, were to
conduct multiple, competitive, long-term fixed price procurements in amounts approximating
short-term load growth, Idaho Power ratepayers, it contends, could be protected from both future
price volatility and expensive temporary under utilized facilities.
As currently portrayed in Company planning figures 11 and 12, Windland contends
that the risk adjusted cost of fossil fueled alternatives are understated by the magnitude of the
unhedged risk of future fuel price variability. Adding costs, to provide certainty to future gas
prices (like the certainty available for future hydro and wind "fuel" prices), it states, is necessary
before a fair comparison can be made. Not valuing the price certainty wind provides, Windland
contends, biases the current analysis and will lead to sub-optimal resource planning decisions.
While acknowledging that intermittency in wind generation poses operational
challenges, Windland contends that the intermittency has often been incorrectly associated with a
lack of predictability. Windland contends that when measured on a seasonal or annual basis
wind is a more "firm" resource than hydro. Annual variation in streamflows are four or more
times larger than the plus or minus 5% annual variability of annual wind energy. Adding wind
resources and diversification to Idaho Power s generation portfolio, it states, offers better
mitigation of hydro resource volatility than would be provided by adding more of the same type
of resource that produced the risk exposure in the first place.
Windland rejects the Company s stated need to perform a pilot project to verify what
it states, is a well-proven, fully operational technology. What Idaho Power characterizes as
prudent" corporate behavior, Windland sees as wasteful management.
Advanced Energy Strategies
Also filing comments was Jeffrey C. Brooks of Advanced Energy Strategies, Inc. Mr.
Brooks concludes that it is apparent that Idaho Power Company is not truly interested in developing
an IRP that best serves the interest of ratepayers. Half truths, misinterpretations, misapplication of
strategies and technologies, failure to do a comprehensive base case research, and a desire to limit
the discussion of the options available to address our energy situation, Mr. Brooks contends, all
smack of a company that is less than inspired or committed to act reasonably on behalf of their
DECISION MEMORANDUM
captive customers. Mr. Brooks urges the Commission to reject Idaho Power s 2002 Integrated
Resource Plan on the grounds that it fails to meet its basic objective of providing an objective and
complete, side-by-side analysis of resource options facing us in today s energy marketplace, and
admonish Idaho Power Company for failing to fully meet their responsibility as a regulated
monopoly cloaked in the public interest, to act as responsible stewards on behalf of the ratepaying
public.
Citizens for Responsible Land Use (CFRLU)
CFRLU prefaces its comments by noting that it was an intervenor in the Idaho Power
Gamet Case, Case No. IPC-01-42. That case was dismissed pursuant to CFRLU motion on
July 24, 2002. Reference Order No. 29085.
The 2002 IRP, CFRLU contends, makes no effort to integrate supply side and
demand side planning. In the entire draft there is only a very brief discussion of conservation
and demand side management. Idaho Power concludes by saying that "conservation, demand
side measures, and pricing options must be carefully designed and targeted to cost effectively
address the projected deficits.
For all practical purposes, the IRP, CFRLU states, appears to be formulated as a
justification for the questionable Gamet Energy facility - a project that the Company for
economic reasons has now abandoned.
Energy Advocates (Advocates)
The Energy Advocates recommend that the Idaho Power 2002 IRP be rejected and
that formal proceedings be initiated.
rejecting the plan:
1. Idaho Power s failure to identify and analyze (with any specificity or
rigor) potential load management and conservation resources. The IRP
includes no analysis of DSM measures or their cost effectiveness. The
Advocates note that Idaho has the highest per capita energy use of any
state in the nation.
Specifically, the Advocates identify three reasons for
2. The Company s IRP assumes that IDACORP's 250 megawatt Gamet
combined cycle facility would be constructed in the near future. If
Garnet is not an available resource, the IRP must be redrafted to identify
alternate resources, including load management and conservation.
DECISION MEMORANDUM
3. The Company s proposed change in water planning criteria (moving from
median water to more extreme water and weather conditions) represents a
significant change which deserves closer scrutiny.
The Advocates express concern that the IRP does not outline a plan to meet customer
energy needs in a cost effective manner, but instead is presented as a justification for the
Company to sell more energy from IDACORP controlled facilities. Contingency planning
focusing on load management, the Advocates contend, should be the cornerstone of the
Company s approach. The Company, it states, should plan for critical water and load conditions
using varied and innovative approaches. Several suggestions such as employing financial
instruments as an effective "low water insurance " creating interruptible power rates to deal with
transmission constraints or supply short falls and other load management programs (e., time of
use) were made in the IRP public meetings, yet go without mention in the Company s IRP.
A rational, risk minimizing strategy, the Advocates state, would rely on a diversity of
tools and resources to plan for future power needs, including both demand-side and supply-side
resources and a diversity of power sources. Instead, Idaho Power, it states, has focused on
supply side measures from traditional generating resources. The Company proposes to rely
almost entirely on constructing new generating resources or market purchases to meet
deficiencies.
One of the most glaring deficiencies in the Company s IRP, the Advocates contend
is the Company s failure to include a load analysis. The Company cannot effectively plan for
meeting its load in the most cost effective manner, the Advocates state, without adequately
understanding the character of that load. Load analysis, it states, can particularly assist the
Company in determining whether to respond with supply side measures or demand side
measures.
The Advocates note that Idaho Power currently has no ongoing programs or pricing
structures (apart from a small pilot time-of-use plan) to encourage customers to shift their energy
use to off-peak hours. Constructing new generating resources, they note, is expensive and if the
Company relies on fossil fuels, exposes customers to fluctuating fuel prices. Reliance on the
market also exposes customers to price uncertainty and raises transmission constraint issues.
This uncertainty, the Advocates states, could be lessened by greater reliance on demand side
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measures (including conservation and efficiency measures as well as load shifting measures),
and distributed and utility-scale renewables, which are not dependent on market fuel prices.
The Advocates state that another glaring deficiency of the IRP is its failure to
seriously consider any non-hydro power renewable energy. The Company unfortunately, it
states, appears to view non-hydro renewable sources of generation as charitable undertakings
not as a real resources.
Noting that the Company has proposed constructing a small pilot wind project, the
Advocates counter that wind is no longer an experimental source of energy. A small pilot
project, they state, would not accurately reflect the cost of a utility-scale project. Instead of a
pilot, the Company, it states, should invest money in analyzing potential wind site information
and then use that data to actually construct a utility-scale wind project; or contract to purchase
power from commercial wind developers.The Advocates note that the Company did not
propose constructing a pilot gas plant to determine whether it is a cost effective generating
resource. It simply looked at existing data on those sources.
To the extent that new generating resources are necessary, the Advocates recommend
that the Company focus on creating a new diversified power base to include more renewable
energy such as wind, solar and bio-mass. The Company, it notes, relies almost exclusively on
thermal and hydropower generation. Such a homogenous generation base, it states, can only
exacerbate extreme conditions. Distributed renewable generation, the Advocates state, should
also be an integral part of diversifying Idaho Power s generation resources. This would help
relieve supply shortfalls as well as relieve transmission constraints, provide voltage support and
boost grid reliability.
Commission Staff
Staff recommends that the Commission reject Idaho Power s 2002 IRP. The IRP, it
states, does not contain a serious discussion of demand side opportunities and instead relies
primarily on a contract for 250 megawatts of peak power from the proposed Middleton-Gamet
plant and market purchases to meet its growing demand. Given transmission constraints on
power purchases from outside its own system and the risk on relying upon purchases from
Gamet (now defunct), it appears, Staff contends, that the viability of the Company s IRP is in
serious jeopardy.
DECISION MEMORANDUM
Staff recommends that the Commission return the IRP to Idaho Power and require
the Company to revise it in recognition of current conditions and to comply with the
Commission s 1989 requirement that IRPs include a balanced consideration of demand side and
supply side resources. Reference Commission Order No. 22299, January 27 , 1989.
As reflected in Staff comments, in the Commission s Order No. 29085 dismissing the
Company s application in the Gamet case (Case No. IPC-01-42), Idaho Power was required to
report to the Commission by October 23, 2002 on the status of efforts to acquire financing for
Garnet and the project's continued viability. Without Garnet , Staff notes that the IRP would not
be representative of the Company s load resource condition and would fall 250 megawatts short
of meeting load during critical periods. The IRP assumes that the Commission would approve
the Garnet contract. The four resource strategies analyzed by the Company for satisfying future
resource deficits are based on that assumption. None of the strategies are viable, Staff contends
if an additional 250 megawatts is needed to replace Garnet.
Apart from its request that the Company s IRP be rejected, Staff makes the following
specific comments on the Company s IRP filing.
Planning criteria
In the Idaho Power 2002 IRP, the Company is emphasizing the 70th percentile water
conditions and 70th percentile load conditions for resource planning. In previous IRPs, a median
water planning criterion was used. Staff agrees with the Company s decision to plan using more
conservative water and load condition criteria as a way of reducing planning risk and rate
volatility. Planning based on more conservative criteria, however, Staff notes, will result in
more resources being added sooner.
Load Forecast
In the Company s 2000 IRP, the expected ten year average annual load growth was
forecasted at 1.8 percent. In the 2002 IRP the rate is 2.3 percent. The new forecasted growth
rates are based on a new economic forecast, the prediction of sales and load figures on a monthly
basis, rather than a seasonal or an annual basis, use of a median peak day temperature in its
analysis instead of an average day temperature, and modifications to more accurately account for
differences between when energy is actually used and when meters are read and bills prepared.
Staff points out a perceived incongruity and overstatement in the Company
residential load forecast, which when corrected for would reduce proj ected usage.
DECISION MEMORANDUM
Market Purchases
The Company s IRP reflects a decision to reduce its reliance on market purchases.
The Company, Staff contends, recognizes the substantial risks associated with over reliance on
the market. The Company s decision also reflects that substantial investment in additional
transmission facilities would be required to relieve existing transmission constraints.
Staff agrees with the Company s decision to reduce its reliance on the market. While
too much reliance is undesirable, however, Staff notes that some reliance is still appropriate. If
Gamet is abandoned, Staff would like to see greater scrutiny of possible transmission upgrades
and additions, that would give the Company better access to the market, especially during critical
peak periods. The Company s analysis, Staff notes, shows that there are times during the
summer beginning in 2003 when the transmission system is not adequate to import power to
serve load.The IRP offers no specific plan to satisfy these deficits.Without Gamet
transmission constraints, Staff contends, are even more critical.
. DSM - Conservation Efficiency and Pricing Options
Idaho Power mentions DSM in most chapters of its IRP, but other than an irrigation
time of use pricing trial does not list or describe any new measures that it is currently
investigating to help meet its future resource requirements. Omitted from the IRP is any
suggestion that Idaho Power will investigate or implement any DSM that is not targeted at
reducing short duration peak loads. The Company in its IRP states that it is waiting for the
issuance of customer funding for DSM to be resolved before it will initiate DSM measures. The
Company is also concerned about the revenue effects of reduced sales resulting from DSM.
Order No. 29026, issued May 13, 2002, over six weeks before the IRP was filed, Staff notes that
the Commission approved a Company proposal to implement a 0.5 percent surcharge to fund
DSM projects. More importantly, Staff contends that the Company s position of waiting for
customer funding" is contrary to the first ordering clause in Commission Order No. 22299
issued January 27, 1989, in Case No. U-1500-165 , which requires that electric utilities "give
balanced consideration to demand side and supply side resources when formulating resource
plans and when procuring resources." Order at p. 20.
Staff believes that during peak load hours, Idaho Power customers use electricity,
often inefficiently for many purposes other than cooling buildings and irrigating crops. Staff
contends that in order to design the most cost efficient incentives and time-of-use rates the
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Company must conduct an end use load research study. Such a study was not performed to the
surprise of both Staff and other commenting parties. Staff notes that the Company considers
such a study to be an imprudent expenditure. Reference Idaho Power Rebuttal Testimony, Case
No. IPC-01-42. Staff believes that an end use load resource study is integral to any IRP that
seriously considers cost effective DSM measures, especially those targeted to peak load hours
and that the cost recovery of this research should not be restricted to DSM surcharge monies.
Staff believes that Idaho Power should re-evaluate various DSM alternatives
targeted conservation and pricing options, this time assigning appropriate value to each
alternative s potential to displace or defer the need to add new generation, transmission and
distribution facilities. The burden should be on Idaho Power, Staff contends, to demonstrate
why peak load reduction measures are not viable.Demand side alternatives should be
thoroughly evaluated as part of the IRP process, and the IRP should contain the results of that
analysis.
Because Idaho Power, Staff contends, has been acqumng much less than its
theoretical share of DSM resources over the past several years (reference NWPPC Conservation
Goals), Staff believes the Company may have the potential to achieve a DSM peak load
reduction goal in the range of 150 aMW to 400 aMW over the next few years.
Shoshone Falls Upgrade
Idaho Power in its IRP proposes pursuing a 64 megawatt upgrade of its Shoshone
Falls plant. The Company states that this is a non-deferrable project. Staff contends that more
information is necessary to judge whether upgrading the plant is reasonable. It would seem
Staff states, that most of the increased generation would not be during either the peak summer or
winter months when the Company expects to have deficiencies. In the summer time, flows are
diverted upstream of Shoshone Falls for irrigation. In the wintertime, flows are normally quite
low due to the weather.
Peaking Plants
The IRP indicates that the Company plans to solicit proposals and initiate the siting
and permitting of approximately 100 megawatts of a utility owned and operated peaking
resource to be available beginning in 2005. Given the short duration of system peaks that this
plant needs to satisfy, along with the advantages cited by the Company in the Garnet case of
having an affiliate own and operate the plant, Idaho Power s intention, Staff contends, seems
DECISION MEMORANDUM
contrary to its prior position. At a minimum, Staff recommends that the Company be required to
solicit bids for a variety of ownership options.
Additional Strategies
Staff further supports the Company s plans as reflected in additions to its earlier draft
IRP to
1. Make firm purchases for the system (possibly sourced from areas other
than the Pacific Northwest) while simultaneously making a non-firm off
system sale. This provides Idaho Power with the ability to interrupt the
non-firm sale during critical peak-hour conditions.
2. Accelerate construction of the Brownlee to Oxbow No.2 transmission
line from its originally planned completion date in 2005 to the summer of
2004.
3. Continuing investigating opportunities for cost effective power
exchanges as a method to manage projected surpluses and efficiencies.
4. Incorporate into its planning the short-term peaking capability of the C J
Strike, Bliss and Lower Salmon hydro plants.
These additions, Staff contends, may represent viable alternatives to help relieve peak hourly
deficiencies.
Idaho Power Reply Comments
Idaho Power addresses the following subjects in its reply:
Garnet Power Purchase Agreement
The Company acknowledges that the removal of Garnet from its 2002 resource stack
will require expeditious pursuit of cost effective alternative resources. (Reference Order No.
29085 - Commission direction to Company to file Gamet Report.Idaho Power notes that
contemporaneous with its reply comments, the Company has filed its Gamet Report where in it
has presented several alternative resource strategies to the Commission. As a result of changes
in the wholesale energy markets, the Company is optimistic that it will be able to replace the
seasonal purchases specified in the Garnet Power Purchase Agreement with a combination of
resources including, but not limited to, seasonal wholesale firm power purchase contracts and
exchange contracts at prices equal to or less expensive than the cost of the Gamet PP A. Idaho
Power represents that it is actively pursuing negotiations to secure some of these resource
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options. Negotiation particulars were provided to the Commission under separate confidential
seal.
Conservation
Idaho Power believes that using estimated conservation savings to defer or displace
other resources in the IRP would be inconsistent with prior Commission Orders and has the
potential to short circuit the Commission s recently approved Energy Efficiency Advisory Group
(EEAG) process. In support of its decision to not evaluate and assign specific values to potential
DSM, conservation programs and new energy pricing options (e., time of use pricing, inverted
rates, etc.) and use assigned values to displace or defer the need to add new generation, the
Company cites Commission PURP A Order No. 22636 wherein the Commission stated:
All three of the utilities plan to use conservation as their next resource. Yet we
are unaware of a single electric utility that has documented a reliable
predictable conservation resource procurement program. We applaud the Idaho
electric utilities for their new-found enthusiasm for conservation. However
until there is sufficient industry experience in estimating the quantity, quality,
and cost of conservation resources so that they are procurable and reliable, we
will not consider them avoidable resources: You can t avoid what you can
procure. Therefore, only conservation resources actually contracted for shall be
used to extend the time until load/resource balance; estimated future
conservation resources shall not. Utilities are expected to contract only for
reasonably confirmable conservation resources.
Order No. 22636, pp. 51-52.
For many years, the Company states, it has prepared and filed a Conservation Plan with
the Commission that is separate from the IRP and identifies possible conservation load reductions.
A copy of the Conservation Plan has been included with the Company s 2002 IRP. Under the
existing conservation planning regime, the benefits of existing conservation, the Company states
are reflected in the IRP as reduced load forecast. Additional estimated or projected conservation
savings are not treated as resources to defer or replace future planned resources. The Company
expects that the written reports generated in conjunction with the recently approved Energy
Efficiency Advisory Group process will be an integral part of the Company s annual conservation
reporting process.
The Company notes that the Commission and Company have created a method to fund
conservation (tariff rider) as well as an advisory group (EEAG) to ensure that the Company
conservation programs are realistically assessed and conservation funds are wisely spent - to ensure
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that Idaho Power "contracts only for reasonably confirmable conservation resources." Idaho Power
states its intention to work closely with EEAG to evaluate potential demand reduction and energy
conservation programs.
Idaho Power believes that the proper forum for identifying and promoting new
conservation programs is the EEAG process. Requiring the Company to develop conservation
plans within the IRP process, it contends, would render the EEAG process meaningless. The
Company contends that the EEAG process should be given an opportunity to succeed before it is
discarded and replaced by energy goals or targets developed in the IRP.
Attached to the Company s reply comments are copies of all Commission Orders
pertaining to Idaho Power and conservation.
. End Use Research
Idaho Power disagrees that end use studies are a critical part of the integrated resource
planning process or are necessary to make good resource planning decisions. The term "end-use " it
states, is not mentioned in Commission Order No. 22299 directing utilities to submit resource
management reports or integrated resource plans.
There is significant agreement among all parties, the Company states, that the primary
contributors to Idaho Power s summer peak are residential and commercial air conditioning and
irrigation load. For current resource planning purposes, the Company therefore contends that it is
more productive to focus immediate attention and programs on air conditioning and irrigation loads
where there is the greatest likelihood to reduce summer peak demand.
Idaho Power states that it is presently investigating demand reduction pilot programs
focusing on residential air conditioning and irrigation loads. An end use study is not essential, the
Company states, for developing these pilot programs.
Planning Criteria
The Company notes that the Advocates in their comments were critical of the
Company s proposed change in water and load condition planning criteria. The Company indicates
that this change was suggested and discussed at numerous public meetings following the 2000-2001
run-up in market prices. Under median planning, the Company states, it was understood that if
streamflows were below median or loads were higher than forecast, the Company would meet
deficiencies with market purchases.Reliance on market purchases as a contingency was a
reasonable and time-tested planning consideration. The changes to the planning criteria in the
DECISION MEMORANDUM
Company s 2002 IRP assume that lower than median water conditions and higher than expected
load conditions are the starting point for planned additional resources. By acquiring resources
based on the new starting point, the Company has less reliance on market purchases.
The Advocates contend that "contingency planning" should be "the cornerstone" of the
IRP and that the Company should plan for critical water and load conditions. The Company states
that it is involved in "contingency planning." However, the Company views contingency planning
as a relatively near term process rather than a long-term process. The Company believes that
changing the nature of the IRP from a long-term planning document to a contingency evaluation
document is inappropriate.
Alternative Rate Structures
It was suggested by several commentors that Idaho Power evaluate altemative rate
structures to reduce peak loads. The Company states that it has looked at time-of-use pricing and
submitted its report to the Commission. Reference Case No. IPC-02-12. The Company
conclusion in its report was that until an automated meter reading system is in place that allows for
the economic recording and collection of customer usage by time of day, residential time-of-use
pricing is not economically viable. Idaho Power believes that Case No. IPC-02-12 and not this
case is the proper form in which to consider comments regarding time-of-use pricing.
It is the Company s stated position that alternative rate structures to the extent that they
result in load shifting, must not have a negative impact on the Company s revenues and expenses.
. Load Forecast
Idaho Power agrees with Staff that its forecasted residential growth rate is in error. The
Company corrects for the error. The Company presents new growth rates for Idaho households
Idaho Power service area households, the number of residential customers, and residential
electricity sales.
The Company notes that electricity demand varies inversely with electricity prices.
Higher prices have reduced customer use on an annual basis. Summer months, however, continue
to show increasing use. Once electricity prices return to closer to historical normal levels, Idaho
Power expects residential use per customer to increase for a time before stabilizing and returning to
a slow pattern of downward descent on an annual basis.
DECISION MEMORANDUM
Shoshone Falls
Idaho Power believes that the Shoshone Falls upgrade should be pursued. It is an
opportunity to provide additional renewable energy and it is the lowest cost opportunity for the
Company to add additional generation at existing hydro facilities. While the Shoshone Falls
expansion would provide limited peaking capacity, the Company states that it continues to spill
significant volumes of water over the falls during winter and spring months and during high water
years during the whole year. The Company projects that the increased energy generated will be at
or below market rates. In the long-term, the Shoshone Falls project, the Company states, is
expected to reduce overall power supply costs. If Idaho Power declines to pursue the expansion
development at Shoshone Falls, the Company states that the opportunity becomes available to other
generation developers.
Market Purchases
The Company plans to continue to utilize long and short-term market purchases
throughout the planning period to supplement existing and future Company resources.The
Company agrees with Staff that excessive reliance on the market, especially excessive reliance on
the real-time or spot market, carries excessive risk. The Company intends to reduce reliance on the
short-term or spot market by acquiring resources, including long-term firm market purchases from
entities that own generating resources. The Company is presently investigating opportunities to
secure long-term firm commitments for capacity, energy and transmission. (See Garnet Report.
For determining system deficiencies, the 2002 IRP assumes that all market
opportunities are in the Pacific Northwest power market. The Northwest is Idaho Power s preferred
market for two reasons - liquidity and price. Northwest transmission constraints, the Company
contends, may result in purchases from the northeast, east or south power markets.
Renewable Resources
Idaho Power does not dispute the fact that wind developers with detailed analysis and
monitoring of specific proposed projects should have more accurate data than the generic data Idaho
Power relied on to develop its estimates of the cost of wind generation. For future IRPs Idaho
Power will meet with local wind developers to gather additional site specific data.
Idaho Power notes that its resource needs in the near term are primarily of a peaking
nature. Since wind, the Company contends, is considered an intermittent resource, wind generation
is not Idaho Power s preferred resource to meet seasonal hourly peak needs.
DECISION MEMORANDUM
It was suggested that the Company could use wind generation to displace hydro
generation, in effect storing the wind energy within the hydro system. The Company notes that in
its 2002 IRP, the Company assumes that the hydro systems peaking capacity is fully used. It is
therefore unlikely, the Company states, that a wind resource will significantly increase the peaking
capacity ofthe hydro system given the present physical and operating restrictions.
Idaho Power agrees with comments suggesting that wind generation is a mature
technology and that there is no need for a pilot project. Although present in the draft 2002 IRP, the
Company intended to remove pilot wind project from the fmal IRP. It failed to do so and
apologizes for the confusion. The Company anticipates adding a utility-scale wind project within
its service territory sometime in the future. However, the Company does not view such a resource
as addressing the seasonal and peak nature ofthe Company s near term-projected deficiencies.
The Company agrees that wind generation will reduce the fuel related volatility
associated with its resource mix. A properly structured power or market purchase agreement, the
Company states, will also reduce the fuel related volatility. The difference, the Company states, is
that a power or market purchase agreement can provide firm power whereas a wind generation
option can provide only intermittent power.
Idaho Power states that it has developed a mechanism, the Green Power Program
whereby demand for green energy, such as wind can be fostered. It is designed to provide a
voluntary choice for customers who wish to support new, renewable resources. The Green Power
Program, the Company states, is a crucial first step in the assessment of customer s interest in
supporting a more expensive, renewable resource. At present, Idaho Power has approximately 1600
customers participating in the Green Power Program requiring about 1 aMW to serve.
While the economies of wind generation are steadily improving, the decision to
incorporate the higher cost wind generation in its resource portfolio, the Company states, is
primarily a societal and political one. Should the Commission authorize its inclusion for
ratemaking purposes, the Company states, it will do so.
GARNET REPORT
Idaho Power requests that the Commission take administrative notice of the Garnet
Report in making its ultimate determination as to whether or not to acknowledged the Company
2002 IRP. The Garnet Report outlines the Company s plans for replacing the Garnet PP A in the
Company s resource stack. As noted in the Garnet Report, the Company is currently pursuing
DECISION MEMORANDUM
several wholesale fmn purchase contracts and exchange agreements.As those contracts are
concluded, they will be presented to the Commission for approval for ratemaking purposes.
Idaho Power contends that it is now optimistic that it will be able to replace the seasonal
purchases specified in the Garnet PP A with a combination of resources including but not limited to
seasonal firm purchase contracts and exchange contracts in the wholesale market that will allow the
Company to obtain the capacity and energy that previously would have been supplied under the
Gamet PP A at prices that are equal to or less than the cost of the Garnet PP A.
Idaho Power has investigated a number of potential alternatives to replace the Garnet
PP A. The alternatives investigated include acquiring firm transmission rights and firm wholesale
purchases, energy exchanges, adding or acquiring the output of generation resources located within
the Company s control area, and integration of demand side measures where cost effective.
Given the current forward market prices and the projected market clearing prices
calculated by the Company s Aurora Analysis Model, the Company contends that firm intermediate
term wholesale purchase contracts and exchanges are the Company s lowest cost options at this
time. Given the projected market clearing prices for electricity, building generation resources, it
states, is not the least cost option in today s market and environment. However, it notes, a solution
based on firm wholesale purchases and exchanges, while perhaps the lowest cost alternative at this
time, is not equivalent to having a dispatchable generation resource located inside the Company
control area.
The need for additional internal generation or construction of new transmission lines
the Company contends, is inevitable. The Company notes that there are risks associated with
building new transmission and relying on a robust wholesale market to supply its future needs.
However, if the firm exchange and wholesale purchase agreements identified in the Company
Garnet Report can be consummated at current price levels, then the Company states that a
commitment to construct new facilities can be reasonably deferred for a period of time.
In the near term, the Company states it will attempt to acquire available firm
transmission rights and move expeditiously to negotiate firm exchange and wholesale power
purchase agreements. If firm energy exchanges and wholesale purchases cannot be secured at
favorable prices in the near term, the Company contends that it will need to immediately pursue
acquisition/development of additional internal generation.
DECISION MEMORANDUM
Based on the assumption that the Garnet PP A is cancelled, the Company has identified
the following measures as potential alternatives to replace the Garnet PP A and to meet future
resource needs:
Additional transmission & power purchase agreements
Build additional generation facilities inside Idaho Power s service territory
Energy exchanges
Wholesale purchase contracts
. Demand side measures
Interruptible sales
Build ajointly owned generation facility
The confidential portion of the Report further narrows and identifies the options the Company is
actively pursuing.
Motion to Initiate Formal Proceedings
Motions to initiate a formal proceeding were filed by AARP and the Clean Energy
Advocates on August 30, 2002. A similar recommendation was made by the Idaho Rural Council.
Idaho Power filed an answer to the motions to which the Advocates responded.
AARP contends that the IRP does not provide a basis for concluding that the cost of
future resources identified by the Company are prudent. AARP requests that a new docket be
created and full scale hearings be held on the IRP, and on alternative resources more compatible
with a least cost scenario for ratepayers. The present proceeding impacts future rate change
requests, AARP contends, because it identifies the magnitude of loads to be met and the resources
that will be chosen to serve them. Once those decisions are made, AARP contends that it will be
too late to challenge the rate increases that follow. The time for public participation and full
Commission deliberation, AARP contends, is now. AARP recommends that hearings be held and
conducted in the service areas to be affected with an opportunity for all consumers to express their
views. AARP identifies the following issues that need to be addressed at hearing: (1) capacity
constraints: generation versus transmission; (2) load growth; (3) renewable resources such as wind
power and bio-mass; (4) demand side measures and conservation; and (5) cogeneration. AARP
notes that the IRP ascribes 0 megawatts to wind power, 0 megawatts to bio-mass, 0 megawatts for
load reductions due to demand side measures, pricing options or buy back irrigation programs, 0
megawatts to cogeneration and 0 load reduction to conservation measures. The resultant IRP
AARP contends, is so seriously flawed that it cannot serve as a planning tool for future resource
acquisition by the Company.
DECISION MEMORANDUM
The Clean Energy Advocates believe that the Company s 2002 IRP does not present a
reasonable and prudent plan to meet Idaho Power s customer load in a cost effective manner.
Moreover, the Advocates believe that the IRP's deficiencies, as well as the important changes in
planning direction reflected in the IRP, are of a significant magnitude to warrant greater scrutiny.
The Advocates ask the Commission to open a formal docket and hold hearings for the purpose of
investigating cost effective resources which should be pursued in the short and long-term to the
benefit ofratepayers but which Idaho Power has chosen to disregard in its IRP. The Advocates note
that although the IRP repeatedly recognizes that peak power demands will likely drive the need for
more resource acquisition, the IRP does not include any meaningful analysis of load management
and other demand side resources. The Advocates believe that it is also appropriate to investigate the
prudence of Idaho Power s planning assumptions in the IRP, including the Company s move
toward more extreme water and weather conditions.
The Advocates reference testimony filed in Case No. IPC-01-42 and note that the
extensive testimony filed in that case addressed many of the issues relevant to Idaho Power s 2002
IRP. Because of the manner in which that case was ultimately resolved, the Advocates note these
issues were never substantively addressed by the Commission. It seems regrettable, the Advocates
contend, for that analysis to go to waste.
The Advocates propose that Idaho Power s 2002 IRP be sent back to the Company
pending the outcome of formal proceedings. The Advocates believe such proceedings could
encompass numerous issues but request that the Commission investigate the following: (1) changes
to the IRP development process, including more rigorous public and Commission review, as well as
meaningful development of alternative methods of meeting loads; (2) specific DSM (both load
management and general efficiency) resource alternatives; (3) specific alternative resource options
including increased acquisition of non-hydro power renewable energy resources and other
distributed generation; (4) Idaho Power s plans for meeting peak loads in the absence of the Garnet
facility; and (5) investigation of the prudence of Idaho Power s new planning criteria for more
extreme water and weather conditions.
The Advocates believe that it would be in best interest of customers of regulated electric
utilities in Idaho if the docket were generic and involved all the major electric utilities. It is not the
Advocates intent for this formal proceeding to be adversarial, but rather more investigatory in
DECISION MEMORANDUM
nature, leading to a revised IRP process and the implementation of load management and alternative
resource development.
Idaho Power s Answer to Motions to Initiate Formal Proceeding
Idaho Power notes that the two motions and accompanying comments of the Advocates
and AARP make essentially the same arguments. First, that the Company s 2002 IRP is fatally
deficient because the plan does not include sufficient consideration of demand side management
and renewable resource acquisition as alternatives to the acquisition of capacity and energy from
more traditional generating resources; and second, that the potential unavailability of the Garnet
contract justifies initiating a greatly expanded formal proceeding to revisit the entire 2002 IRP as
presented by the Company.
The Company states that the motions fail to recognize that the Commission has already
issued Orders and initiated proceedings to address the issues that the Advocates and AARP desire to
pursue through "full scale hearings, with testimony and cross-examination available to all parties.
The hearings requested by the motions, the Company contends, will require substantial amounts of
Commission time and resources to duplicate processes the Commission has already put in place.
The proposal that the hearings be expanded to include all three jurisdictional electric utilities in a
single proceeding, the Company contends, will only exacerbate the problem. Idaho Power requests
that the motions be dismissed without prejudice.
Idaho Power believes that once the Garnet Report is prepared and the Company s reply
comments filed, the Commission will be in a much better position to make a determination as to
whether or not it has all the information it needs to make a decision to acknowledge the 2002 IRP.
Regarding demand side management and renewable resources, the Company contends
that the motions fail to recognize that the Commission has already established a process for
considering potential demand side management programs for Idaho Power. In Case No. IPC-Ol-
13 (the DSM case), the Company states that after a long and detailed review of the Company
demand side management programs, the Commission established a process by which potential
demand side management programs are proposed and reviewed by a customer centered Energy
Efficiency Advisory Group (EEAG).Reference Order No. 28894.As those programs are
developed, funded and implemented, the Company contends that they will be included in the
Company s plans for meeting load.
DECISION MEMORANDUM
The EEAG process, the Company contends, is the proper venue for Advocates and
AARP to propose new DSM programs and to advocate increased expenditures for DSM programs.
Granting Advocates and AARP's motions, the Company contends, would by-pass this established
EEAG process and would, in reality, render the EEAG process moot.
Advocates Reply
The Advocates contend in reply that neither argument put forth by the Company is a
valid excuse for the Company s deficient IRP. If the Company is permitted to file an IRP grounded
on a resource which in all likelihood will not be acquired, and also lacking in any serious discussion
of potential cost effective DSM and renewable resources, then the Advocates contend that the IRP
process itself is rendered meaningless. If Garnet is a defunct resource, the Advocates contend that
the 2002 IRP should be rejected for that reason alone. Idaho Power s statement that DSM resources
will be "developed funded and implemented" some time in the future, the Advocates contend
highlights the concerns expressed by the Advocates in their motion and comments submitted in
response to the Company s IRP. The critical point for purposes of the current motion, the
Advocates contend, however, is that the IRP fails to discuss what those resources might be, even in
the most general terms. Excellent information, the Advocates contend, is available through regional
studies, experience of other regional utilities during the Energy Crisis of 2000-2001 , and Idaho
Power s historical experience in DSM, all of which could have informed the IRP, but were ignored
by the Company. Should the Commission grant the pending motion and hold formal hearings in
this matter, the Advocates intend to present testimony of Tom Power, Bill Chisholm and Jeff
Brooks, as well as Ms. Nancy Hirsch, Policy Director of Northwest Energy Coalition.
The Advocates understand and anticipate a reluctance to open a new docket, but believe
that the IRP process, and perhaps general rate cases, are the only proceedings in which the
Commission and the public must take a comprehensive look at Idaho Power s resources and plans.
The IRP process, they contend, is one of the few opportunities we have to take a step back, and
ensure that the Company s long-term planning is just and reasonable. IRPs are filed every two
years, and the Company is not required to update the data contained therein during the interim.
The Advocates contend that they are not suggesting that the Commission "micro-
manage" Idaho Power s resource acquisition decisions. Nonetheless, the Advocates strongly urge
the Commission to take a more pro-active role in scrutinizing Idaho Power s IRP and ensuring that
ratepayers interests are properly addressed therein. The Advocates contend that Idaho Power has a
DECISION MEMORANDUM
fundamental statutory mandate to provide "adequate, efficient, just and reasonable" service. Idaho
Code 9 61-302. The Advocates view the IRP as ideally a roadmap toward that mandate, which
should include alternative routes. At present, they contend, the map is incomplete.
Based on its review of the Garnet Report, the Advocates filed a Sur-Reply Brief on
December 3, 2002. The Advocates query what meaning the IRP holds if Idaho Power s actual
plans to meet customer loads change radically between the time the Company submits its IRP and
the Commission reviews it? The Advocates are concerned that the IRP process is now reduced to a
paper exercise, and a waste of the Company , the Commission , and the public s time. Advocates
believe that the IRP should be a truly integrated look at the Company s resources and plans to meet
customer loads; and further should be a document upon which the Commission and the public can
rely when actual acquisition of resources are proposed. The 2002 IRP filed by the Company, the
Advocates contend, fails that test.
The Advocates disagree with the Idaho Power s contention that consideration of energy
efficiency measures in the IRP would "short circuit" the EEAG. It is plain that consideration ofthe
Garnet facility in the IRP, the Advocates contend, did not "short circuit" the Company
negotiations over the Garnet PP A. As with its other resource acquisition efforts, the Advocates
contend, that the Company should have taken the detailed information that is available for energy
efficiency investments (including information developed at the EEAG) for analysis and
consideration in the IRP. Unfortunately, it states, such analysis did not occur.
The Advocates contend that the Commission should also reject the Company
argument that Commission precedent precludes the Company from closely considering potential
investments in energy efficiency. Of course, the Advocates state, the Commission s prior Orders
are precedental to the extent that the facts and circumstances to the prior cases are applicable to the
current matter. The circumstances of 2002, however, the Advocates state, are markedly different
from the circumstances in 1989, when the Commission issued Order No. 22636, from which the
Company prominently quotes. Indeed, the 2002 IRP, the Advocates note, plainly demonstrates that
Idaho Power has done a reversal since the time when it planned to "use conservation as (its) next
resource" and generally had "new found enthusiasm for conservation." Reference Order No. 22636
at pp. 51-52. Moreover, the Advocates contend that the Commission s historic findings that there is
not "sufficient industry experience in estimating the quantity, quality and cost of conservation
resources so that they are procurable and reliable " must be re-evaluated under the circumstances of
DECISION MEMORANDUM
2002. The energy efficiency industry, the Advocates contend, has matured sharply in recent years.
Indeed, increasingly precise information, they state, is available about the potential for investments
in energy efficiency in the Northwest; but this information, the Advocates contend, was disregarded
by Idaho Power in its IRP. Available energy efficiency resources today, the Advocates contend, are
certainly "reasonably confirmable" and should have been considered in the IRP.
The Advocates note that Idaho Power also eschews the need for and importance of "end
use" studies.However, it is plain, the Advocates contend, that one must first ascertain the
magnitude and character of a given DSM resource so that targets worth pursuit can be determined
strategies designed, budgets and implementation plans developed and resources acquired. If the
first step - customer load research - is not taken then the follow up steps will not be forthcoming
and no demand side resource will accrue.
DECISION
Idaho Power on June 28, 2002 filed its 2002 IRP with the Commission. The Company
on October 30, 2002 filed its Garnet Report. Based on the supplemental information provided
Idaho Power recommends that the Commission acknowledge and accept its 2002 IRP. The Rural
Council, Advocates, Commission Staff and Advanced Energy Strategies recommend that the IRP
be rejected. Commentors suggest that the plan is flawed in the following respects:
1. That the public process was one sided and flawed.
2. That the plan fails to present a balanced consideration of demand side and
supply side resources.
3. That the IRP failed to incorporate an end use load analysis.
4. That the IRP does not adequately address transmission constraints and
related plans to remedy same.
5. That the IRP failed to consider what the Company could do in terms of
conservation, efficiencies, shaping of demand curves and alternatives to
meet projected shortfalls.
6. The wind industry contends that the IRP fails to recognize wind resources as
a mature technology able to provide energy for utility-scale projects at a
competitive price.
DECISION MEMORANDUM
The following recommendations were made:
1. Require the Company to hire an outside facilitator to manage a process that
would consider not only energy production, but also energy conservation
DSM and alternative/clean energy sources.
2. Recommend that the Company focus on creating a new diversified power
base to include more renewable energy such as wind, solar, and bio-mass.
3. Recommend that the Company be required to conduct an end use load
research study.
4. Recommend that the Company be required to evaluate various DSM
alternatives, targeted conservation and pricing options - this time assigning
appropriate value to each alternative s potential to displace or defer the need
to add new generation, transmission and distribution facilities.
5. Recommend that the Company evaluate DSM as part of the IRP process
and include the results ofthat analysis in the IRP.
6. Recommend that the Company be required to solicit bids for peaking
plants.
Idaho Power recommends that the IRP be acknowledged. Perceived shortcomings or
holes in its IRP, it states, are remedied by its Garnet Report (and the alternative resources identified
therein) and for lack of DSM and conservation by the recently formed Energy Efficiency Advisory
Group. Idaho Power notes that it has filed with its IRP a Conservation Plan. Existing conservation
is reflected in the IRP as reduced load forecast. The Company believes that using estimated or
proj ected conservation savings to defer or displace other resources in the IRP would be inconsistent
with prior Commission Orders and would short circuit the newly formed EEAG process. The
Company believes that the EEAG process is the correct form for identifying and promoting new
conservation programs, not the IRP.
AARP, the Advocates and the Rural Council recommend that the Commission initiate a
formal proceeding or docket to explore the issues presented in their comments including the
proposed change in water planning and load condition criteria and to provide a process for
meaningful public participation.
DECISION MEMORANDUM
Q. Should the 2002 IRP be accepted or rejected?
Q. If rejected, should the Company be directed to rework (with public process) and
resubmit?
Q. Should the Company be directed to comply with any of the commenting party
recommendations?
Q. Should formal proceedings or a new docket be initiated?
Scott D. Woodbury
blslM:IPCEO208 sw3
DECISION MEMORANDUM