20150326IPC to Staff 1-18.pdf

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711!5 Fif,li 25 Pli 3: 58DONOVAN E. WALKER
Lead Gounsel -. . ![e-mail] :;f l:.'ttilii; ,;; ,;, ,.i1::;,Lli;. j;
March 26,2015
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case Nos. IPC-E-15-01 , AVU-E-15-01 , and PAG-E-15-03
Modify Terms and Conditions of PURPA Purchase Agreements - ldaho
Power Company's Response to the First Production Request of the
Commission Staff
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and three (3) copiesof ldaho Power Company's Response to the First Production Request of the
Commission Staff.
Very truly yours,
ffi*P.{t-^/", """-b
Donovan E. Walker
DEW:csb
Enclosures
1221 W' ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for ldaho Power Company
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO MODIFY
TERMS AND CONDITIONS OF PURPA
PURCHASE AGREEMENTS
IN THE MATTER OF AVISTA
CORPORATION'S PETITION TO
MODIFY TERMS AND CONDITIONS OF
PURPA PURCHASE AGREEMENTS
IN THE MATTER OF ROCKY MOUNTAIN
POWER COMPANY'S PETITION TO
MODIFY TERMS AND CONDITIONS OF
PURPA PURCHASE AGREEMENTS
,i
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC.E.15.O1
CASE NO. AVU-E.15.01
CASE NO. PAC-E-15-03
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE
COMMISSION STAFF
COMES NOW, ldaho Power Company ("!daho Powe/' or "Company'), and in
response to the First Production Request of the Commission Staff to Idaho Power
Company dated March 5,2015, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REOUEST OF THE COMMISSION STAFF - 1
REQUEST NO. 1: Idaho Powe/s cunent first capacity deficit occurs in July 2021
based on the Company's Petition in Case No. IPC-E-14-22 and Order No. 33159. What
would be the Company's new capacity deficiency period if all PURPA contracts signed
subsequent to Order No. 33159 were considered? What would the capacity deficiency
period be if 885 MW of additional proposed solar projects were also considered?
RESPONSE TO REQUEST NO. 1: As stated above, Case No. IPC-E-14-22
Order No. 33159 approved ldaho Powe/s first deficit year to be 2021. Since the date of
this Order (October 29,2014), only the Blind Canyon small hydro (1.63 megawatts
('MW')) and the J. R. Simplot Company ("Simplot") - Pocatello cogeneration (15.9 MW)
contracts have been executed. All other projects currently under contract were
executed prior to October 29,2014. Both the Blind Canyon and Simplot contracts were
replacement contracts for projects that were previously under contract with ldaho Power
and therefore their capacity is already embedded in the 2021 deficit year capacity
calculation.
ldaho Power currently has 19 solar projects under contract and approved by the
ldaho Public Utilities Commission ("Commission") for a nameplate rating of 461 MW (six
of these projects, 10 MW each, are Oregon contracts). Adding the estimated on-peak
capacity from the 461 MW of signed solar contracts to the first deficit year of 2021
would result in a first deficit year of 2024.
ldaho Power does not have actual estimated energy profiles for all of the
additional 885 MW of proposed projects; however, an estimated on-peak capacity factor
of 50 percent (50 percent estimate is an average on-peak contribution of the existing
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 2
461 MW of solar contracts) applied to the 885 MW of nameplate capacity would result in
the first deficit year being approximately 2030.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
REQUEST NO. 2: ldaho Powe/s Petition states on page 21 "The continued and
unchecked addition of extremely large amounts of intermittent wind and solar QF
generation onto ldaho Power's system at long-term fixed rate prices when the Company
has no need for additional generation inflates power supply costs borne by customers
and degrades the reliability of the system." How does ldaho Power expect the recent
addition of 461 MW of solar contracts to impact customers' retail rates? Does the
Company expect rates will have to increase once the contracted solar projects are
online and ldaho Power is purchasing the energy? lf ldaho Power expects rates will
increase, has the Company estimated the approximate rate or revenue requirement
increase? lf so, please provide the estimate.
RESPONSE TO REQUEST NO. 2: The Company expects 100 percent of the
costs associated with the additional 461 MW of solar contracts to be collected from
customers through retail rates. The extent to which retail rates would change as a
result of the referenced solar contract costs requires a modeled forecast of power
supply expenses that must include a comprehensive set of assumptions that is not
known today and is subject to debate. To date, ldaho Power has not performed such
an analysis.
The Company's request in this case is to prospectively limit the contract term for
projects above the established surrogate avoided resource ('SAR") eligibility cap and
seeks to mitigate the risk of uncertain rate impacts that exist associated with additional
generation that is not needed to satisfy any near-term capacity or energy requirements.
The response to this Request is sponsored by Mike Youngblood, Regulatory
Projects Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 4
REQUEST NO. 3: If Idaho Power expects that customers' rates will increase in
the future in order to recover an increased revenue requirement due to new solar
contracts, please explain why the Company believes an increase in rates will be
necessary. Please specifically address whether ldaho Power believes upward rate
pressure is due to inaccurate avoided cost rates.
RESPONSE TO REQUEST NO. 3: To date, the Company has not performed
the analysis needed to determine the extent to which retail rates would change as a
result of recovering the costs associated with the new solar contracts. Such analysis
would require a modeled forecast of power supply expenses that must include a
comprehensive set of assumptions that is not known today and is subject to debate.
While the Commission-approved methodology for establishing avoided cost rates
may be more reflective of the Company's costs today than the previous methodology, it
still locks in long-term, fixed-rate prices for capacity and energy when the Company has
no need for the additional generation. As the Company is required to purchase
unneeded Public Utility Regulatory Policies Act of 1978 (.PURPA") generation, it may
be required to back down or curtail other less expensive sources of generation or
market purchases in order to continue purchasing PURPA generation at a higher cost.
This would mean that the Company's overall net power supply expense, on a dollars
per megawatt-hour ("MWh') basis, would increase, adversely impacting customers
today for generation that is not needed to satisfy any near-term capacity or energy
requirements.
The response to this Request is sponsored by Mike Youngblood, Regulatory
Projects Manager, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
REQUEST NO. 4: ldaho Powe/s Petition states on page 23, "ldaho Powe/s
average cost of PURPA generation included in base rates is $62.49/MWh. This price is
always high when compared to current alternatives. ldaho Power's avoided cost,
established through the avoided cost methodologies approved by the Commission, has
historically exceeded market price, and is projected to always exceed market price into
the future as shown in the graph below which is reproduced from Mr. Allphin's Exhibit
No. 10."
a. Please explain how the PURPA prices beyond 2015 as shown on the
graph on page 24were computed or estimated.
b. Please explain how the Mid-C prices beyond 2015 as shown on the graph
on page 24were computed or estimated.
Please explain why ldaho Power believes PURPA prices are projected to
"A!WglE" exceed market prices in the future.
RESPONSE TO REQUEST NO. 4:
a. PURPA prices beyond 2015 were calculated by dividing the estimated
total annual PURPA payment obligations by the estimated annual PURPA energy
deliveries (MWh). These estimates are based upon the energy pricing within the
individual energy sales agreements, historical generation information for existing
projects, and project provided generation estimates. Detail of these calculations can be
seen in ldaho Powefs confidential attachment provided with its response to Simplot's
Request for Production No. 10.
b. Please see ldaho Powe/s response to Simplot's Request for Production
No. 12 and the confidential attachment provided with ldaho Powe/s response to
Simplot's Request for Production No. 10.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 6
The full sentence within the Petition in which the referenced "always" is included
states:
ldaho Powe/s avoided cost, established through the avoided
cost methodologies approved by the Gommission, has
historically exceeded market price, and is projected to
always exceed market price into the future as shown in the
graph below which is reproduced from Mr. Allphin's Exhibit
No.10.
The statement of "always exceeds" is a simple interpretation of the referenced graph.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REOUEST OF THE COMMISSION STAFF - 7
REQUEST NO. 5: lf ldaho Power believes that avoided cost rates are too high,
please explain why the Company is not proposing adjustments to the avoided cost rates
instead of a reduction in maximum contract length.
RESPONSE TO REQUEST NO. 5: Page 4 of ldaho Power's Petition included a
list of eight additional items that could warrant additional examination and possible
revision, one of those items being "further modifications to the existing avoided cost
pricing methodologies to more appropriately reflect need and resource sufficiency in the
price." As implied by this statement, ldaho Power agrees that there most likely are
additional avoided cost rate calculations and data input revisions that may be warranted
and could be pursued. However, the results of all avoided cost fixed rate calculations
are based upon inputs and formulas at a specific point in time and under current
contract requirements, these rates are then locked in for a full 20-year contract term. ln
many cases, literally the very next day input values may have changed (natural gas
prices, equipment capital costs, market value of energy, etc.) that could have resulted in
a different avoided cost rate. However, the cunent2O-year contract term does not allow
the prices within the contract to be adjusted to reflect these changes. Shortening the
contract term to two years at the least shortens this inherent avoided cost price risk that
is on the shoulders of ldaho Power customers to just a two-year period of time rather
than 20 years. This long-term lock-in of prices is problematic for several reasons,
including: (1) there is no Commission determination of need and prudency for a
PURPA purchase such as that required for the Company's acquisition of Company-
owned resources, (2) ldaho Power currently has no need for any additional generation
resources, and (3) Federal Energy Regulatory Commission ("FERC") provisions do not
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMM]SSION STAFF - 8
allow for the adjustment of rates once they are locked into a contract for the duration of
the term of that contract.
ln ldaho Powe/s Petition and the accompanying testimony, ldaho Power
presents information in regards to Commission requirements it must fulfill when adding
new resources, the two-year lntegrated Resource Plan ("lRP") process and the required
risk management policy of 18-month or shorter transactions and potential financial
impact to Idaho Power customers. As can be seen in Exhibit No. 3 to Mr. Allphin's
direct testimony, estimated contract obligations of the proposed 885 MW of new solar
contracts equates to approximately $2.1 billion for a 2O-year contract term versus $103
million for a two-year contract term. As stated above, the inputs and calculations for
both of these values were based upon a specific point in time and most likely both of
these values would be different if calculations were performed today using current data
inputs. However, if these proposed contracts were required to be tor a 2O-year contract
term, approximately $2.1 billion of purchase power expense would be locked and paid
for by Idaho Power customers. Whereas, if these same projects received contracts that
were only for a two-year contract term, only $103 million would be the approximate
locked in expense and after the two-year period expires new avoided cost calculations
based on then current input data would be available for any projects seeking additional
PURPA agreements with ldaho Power.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 9
REQUEST NO. 6: Does ldaho Power believe that it could be faced with more
PURPA solar capacity than it needs even if avoided cost rates are accurately set and
reflectlve of true avoided costs throughout the contract term?
RESPONSE TO REQUEST NO. 6: ldaho Power currently has no identified need
for additional generation resources, regardless of price. Even if ldaho Power's IRP
identified a solar resource as the least-cost resource, the Company would not be able to
justify, and the Commission would not approve, the investment in a solar resource until
such time as the Company could show a need for capacity or energy or both.
ldaho Power's initia! filing shows that at current prices, and the cunent 2O-year
maximum contract term, that there is an overwhelming amount of PURPA generation
actively seeking contracts. As shown in ldaho Power's initial filing, there are
approximately 48 additional projects, 885 MW that have requested 2O-year qualifying
facility ("QF") agreements with ldaho Power. !f the contract term is revised to the
proposed two-year contract term, Idaho Power does not have specific knowledge as to
how this will impact PURPA solar development. To date, none of the above projects
have officially withdrawn their requests for pricing. In fact, ldaho Power has received
additiona! requests for solar QF contracts of approximately 120 MW since the filing of
this case on January 30, 2015.
The two-year contract term proposal directly benefits the ability to set avoided
cost rates accurately. A two-year contract term will a!!ow the avoided costs to be
accurately set every two years based upon the then current avoided cost information
and approved pricing models at those times. Therefore, even if PURPA solar
development continues on ldaho Powe/s electrical system, the proposed two-year
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REOUEST OF THE COMMISSION STAFF - 1O
contract term will enable the prices paid to PURPA solar projects to more accurately
reflect ldaho Powe/s actua! avoided costs and will be consistent with ldaho Powe/s
planning and resource acquisition process mandated by the Commission.
Regardless of the contract term set by the Commission, current PURPA federal
regulations require Idaho Power to contract with all QFs that request to sell energy to
ldaho Power. Thus, if the cunent PURPA regulations still exist upon the expiration of
the contract term (proposed two years), a PURPA solar project will still have access to a
federally guaranteed sales agreement that will be subject to the Commission's rules and
regulations in effect at that time.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 11
REQUEST NO. 7: Please explain how the addition of 461 MW of solar contracts
will affect the need for the proposed Boardman to Hemingway and the Gateway West
transmission projects. How would the need for these transmission projects be impacted
if an additional 885 MW of proposed solar projects were added?
RESPONSE TO REQUEST NO. 7: lt is not known how the existing and
proposed solar projects would impact the above-referenced transmission projects. The
461 MW of signed contracts wil! be included in the analysis for the 2015lRP. Additional
proposed MW of solar could be analyzed subsequent to this IRP analysis.
The response to this Request is sponsored by Phil DeVol, Resource Planning
Leader, ldaho Power Company, and Mark Stokes, Water and Resource Planning
Director, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 12
REQUEST NO. 8: ldaho Powe/s Petition states on page 22 "This becomes
compounded by federal constraints that prevent any update, change, or modification to
the contract rates, once locked in for the full term of the contract." The testimony of
William Hieronymus states on page 6, lines 6-11, "The only way to limit the difference
between the actual value of QF power and prices paid for it is to keep contracts short
and/or severely limit the period for which prices are fixed. This can be done in a
number of ways, including reopeners and indexation. " On page 22, lines 9-13 of his
testimony, Hieronymus states '. . it is similarly unclear whether this can be a formula
rate (e.9., one that is indexed to vary with, for example, gas prices or inflation) or if the
utility must offer a fixed schedule of rates for the term of the contract." Does ldaho
Power believe reopeners or indexation as suggested by Dr. Hieronymus would be
permitted by FERC if both parties agreed at the time of contract signature that as a
condition of the contract, prices would be adjusted at specified intervals? Is ldaho
Power aware of price reopeners or indexing methods being employed for PURPA
contracts in any other state?
RESPONSE TO REQUEST NO. 8: It is not entirely clear whether FERC would
consider reopeners or indexation to be lawful and valid avoided cost prices fixed at the
time of contracting. ldaho Power is doubtful about FERC's approval of such reopeners
and indexations. ldaho Power is not specifically aware of any such price reopeners or
indexing methods being employed in PURPA contracts in other states. Because of the
high degree of skepticism regarding FERC approval of such methods, the only way that
the Commission can effectively adjust pricing to more accurately represent current
information is to do new contracts on shorter terms where such inputs can be refreshed.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISS]ON STAFF - 13
The Commission's ability to set shorter contract terms is soundly within its discretion,
whereas a price reopener and indexation may or may not be within its discretion.
The response to this Request is sponsored by Donovan E. Walker, Lead
Counsel, ldaho Power Company.
IDAHO POWER COMPANYS RESPONSE TO THE FIRST
PRODUCTION REOUEST OF THE COMMISSION STAFF. 14
REQUEST NO. 9: Please provide a copy of all 2O-year levelized avoided cost
indicative prices provided to the developers of any or all of the solar projects comprising
the 885 MW of potential new projects refened to in ldaho Powe/s Petition.
RESPONSE TO REQUEST NO. 9: Of the 885 MW of potential projects, 16
projects for 368 MW have been provided some form of avoided cost indicative pricing.
Two of the solar projects were provided 2O-year avoided cost indicative pricing prior to
the filing of this case.
Project Name as Gontained Within
Allphin Exhibit No.3
Project Al
Project A2
Estimated Levelized $/MWh
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 15
$52.83
$54.10
REQUEST NO. 10: Why is Idaho Power restricting its request for shorter
contract lengths to only |RP-based contracts? Does the Company believe that SAR-
based rates have any greater likelihood of being more accurate than IRP-based rates
over a 20-year contract term?
RESPONSE TO REQUEST NO. 10: ldaho Power has only asked for this
contract term revision to apply to non-published rate contracts as these contracts are for
larger projects and these large projects have a material impact on ldaho Power's
system operations and purchase power costs. As shown in Exhibit No. 1 to Mr.
Allphin's direct testimony,627 MW of wind projects, 401 MW of signed solar contracts
(ldaho only), and 755 MW of proposed solar projects (ldaho only) are all projects that
exceed the current published rate eligibility cap (1,783 MW), whereas projects that
would qualify for the current eligibility cap only equate to approximately 300 MW (i.e.,
smal! hydro, wood biomass, landfill gas, digester technologies, and cogeneration).
Please see ldaho Power Company's Answer to Clearwater Paper Corporation and J. R.
Simplot Company's Joint Petition for Clarification and Cross-Petition for Clarification of
Order No.33222 filed on March 19,2015.
No. ln Case No. GNR-E-11-03, ldaho Power proposed to replace the SAR-
based pricing methodology with an IRP methodology and still supports that proposal.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF. 16
REQUEST NO. 11: What does Idaho Power believe should be the maximum
contract length for renewa! contracts (expired contracts) under both the SAR and IRP
methods?
RESPONSE TO REQUEST NO. 11: There are no "renewal" PURPA contracts.
There are only contracts that expire and that may be replaced with a new contract. For
replacement of expired contracts with new contracts for projects that are over the
published rate eligibility cap, ldaho Power believes a two-year maximum contract term
is appropriate and necessary. ldaho Powe/s request is to reduce the maximum
contract term to two years for only those QF projects that exceed the published rate
eligibility cap.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 17
REQUEST NO. 12: Please provide analysis, by year for at least the next 20
years, showing which generation from existing resources would be offset by generation
from new contracted solar projects. ln other words, in how many hours would
generation from new solar projects offset generation from Bridger, Valmy, Boardman,
Langley Gulch, Danskin, Bennett Mountain, and market purchases?
RESPONSE TO REQUEST NO. 12: The table below shows the MWh for each
year that is estimated to be displaced by the addition of the 461 MW of signed solar
contracts. This data was generated by running two AUROM simulations of ldaho
Power's electrical system<ne run without the solar energy and another run with the
solar energy and then calculating the difference between the two simulations.
Year
2015
20L6
20L7
20L8
20L9
2020
202L
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
MWh
Bennett
Mountain Boardman
(2,857l'
(3,185)
(187)
Jim
Bridger
(24,LL21
(135,263)
(L22,8681
(22,6491
1L7,2561
(42,L341
(36,47Ol'
(109,826)
(47,5941
(s7,9781
(57,369)
(29,881)
(40,385)
(67,2881
(LO6,271l,
Langley
Gulch
132,6871
(26,7531
Market
Purchases
(182,045)
(705,954)
(550,325)
{.567,2331
(643,469)
(56L,77O1
(724,7551.
(756,7151.
(706,886)
(645,3L71
(7LO,2L9l
(749,25L1
1748,4M)
(78L,67Ol.
(695,700)
(750,155)
Valmy
(7,807l.
(53,839)
(11,585)
(70,358)
(35,485)
(45,064)
(33,2721
(113,535)
(1L6,9421
(42,009)
(95,302)
(7,3471
(42,L581
(64,2591
(24s)
(411)
(306)
(4e21
(1,025)
(2,L481
(2,0971
(7,031)
(3,648)
(s46)
(1,359)
(2,9121
(2,990)
(7e21'
(777l'
(e72l'
(1,430)
(604)
(2,L78]'
(4,478l'
(5,066)
(11,936)
15,o77)
(3,773l'
(3,196)
(2,551)
(4,808)
(4,9521 L7
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 18
REQUEST NO. 13: ldaho Power's Petition states on pages 24-25 "This
economic relationship between PURPA and the Company's other power costs
illustrates that as the Company is required to purchase unneeded PURPA generation, it
may be required to back down or curtail other less expensive sources of generation or
market purchases in order to continue purchasing PURPA generation at a higher cost.
This would mean that the Company's overall net power supply expense, on a dollars
per MWh basis, would increase, adversely impacting customers."
a. As modeled under the current IRP method, PURPA generation is priced at
the cost of the highest displaceable resource in each hour; therefore, why should less
expensive resources ever have to be backed down or curtailed?
b. Please explain why net power supply expense would increase if rates
under the IRP method are properly computed and implemented.
RESPONSE TO REQUEST NO. 13: The Company's statement on pages 24-25
of its Petition regarding the economic relationship between PURPA and the Company's
other power costs refers to the costs shown on Exhibit No. 8 to Mr. Allphin's direct
testimony.
a. At the time a PURPA contract is signed and approved by the Commission,
the long-term, fixed-rate prices for the PURPA project are established in accordance
with the currently approved methodology. Those prices will be paid for the PURPA
generation, regardless if that generation is needed or not. While the approved PURPA
pricing methodology may be a more reflective determination of the Company's avoided
cost than prior pricing methodologies, it is still a modeled forecast of the Company's
highest cost resource for every hour resulting in a fixed price for the 2O-year forecast
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 19
period. During times when the Company is required to purchase unneeded PURPA
generation at a modeled fixed price, the Company may be required to back down or
curtail other less expensive sources of generation or market purchases on an actual
basis. This example represents a scenario where modeled avoided costs would exceed
actual avoided costs, resulting in higher overall costs for customers. ln other words, the
must-take nature of PURPA purchases results in a non-economic dispatch of
generation resources and the overall net power supply expense, on a dollars per MWh
basis, would increase.
b. Please see ldaho Powe/s response to Request No. 13.a above.
The response to this Request is sponsored by Mike Youngblood, Regulatory
Projects Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 20
REQUEST NO. 14: ldaho Powe/s Petition states on page 27 "lt transmission
capacity is available to conduct off-system sales, the Company would sell at a loss."
Under the IRP methodology, what assumptions are made in assigning QF prices in
hours when over-generation occurs, transmission capacity is available and off-system
sales can be made? Does the methodology ever assume excess PURPA generation
wil! be sold at a loss?
RESPONSE TO REQUEST NO. 14: Within the lncremental Cost IRP
Methodology (lRP methodology) the hourly price is assigned based on the highest
increment cost displaceable generation resource operating in that hour. The
displaceable resources being Idaho Power-owned generation, including any must-run
limitations and ldaho Power market purchases. lf there are no displaceable resources
available in a specific hour, the energy rate is set to $0 in that hour. The methodology
does not assume excess PURPA generation will be sold at a loss.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 21
REQUEST NO. 15: Beginning on page 25 of the Company's Petition, system
reliability is discussed. Does ldaho Power expect curtailments of solar generation will
be necessary in the future, given that the solar generation occurs only in daytime
hours?
RESPONSE TO REQUEST NO. 15: Yes, ldaho Power expects that there may
be curtailment of solar generation. Please see page 5 of Exhibit No. 6 to Mr. Allphin's
direct testimony for an example of this. This exhibit indicates that in the first week of
April it is forecasted that ldaho Powe/s must-run generation may exceed customer
loads in some hours. lf transmission capacity or market buyers are not available, the
PURPA solar generation in this example will need to be curtailed to maintain the
reliability of the ldaho Power electrical system.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordlnator Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 22
REQUEST NO. 16: On pages 8-11 of Randy Allphin's testimony, he discusses
Exhibit 6 which relates to analysis comparing estimated total system !oad, on an hourly
basis, over 2016 and 2017, to the Company's must-run, resources, must-take PURPA
generation, and must-take non-PURPA power purchase agreements. Please clarify
whether coal units are assumed to be taken down to minimal operational levels in all
hours. Are coal units ever shut down completely at times during the year for purposes
other than maintenance or unscheduled outages? If so, discuss the circumstances.
RESPONSE TO REQUEST NO. 16: Yes, the analysis assumed the coal units
are taken down to minimum aggregate operations of 266 MW in all hours. No shut
downs for maintenance or unscheduled outages have been assumed.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 23
REQUEST NO. 17: Idaho Power's Petition on page 4 lists several issues that
might warrant additional examination and possible revision regarding the Commission's
implementation of PURPA. One of those issues is further modification to the existing
avoided cost pricing methodologies to more appropriately reflect need and resource
sufficiency in the price. Further, on page 21, the Petition states that "ldaho Power
shares the Commission's concem that significant and substantial requests for additional
energy sales agreements with PURPA QFs continue, unchecked by the pricing
methodology and not burdened with meeting any requirements of need." Does ldaho
Power have any suggestions or recommendations on how need and resource
sufficiency might be more effectively reflected in avoided cost prices?
RESPONSE TO REQUEST NO. 17: ldaho Powe/s Petition on page 4lists eight
additional items that could warrant additional examination and possible revision;
however, ldaho Power is not making a specific suggestion or recommendation "on how
need and resource sufficiency might be more effectively reflected in avoided cost
prices" in this case. This case is limited to the appropriate contract term.
The response to this Request is sponsored by Randy Allphin, Energy Contracts
Coordinator Leader, ldaho Power Company; Tess Park, Director Load Serving
Operations, ldaho Power Company, and Donovan E. Walker, Lead Counsel, ldaho
Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 24
REQUEST NO. 18: On page 22, the Petition states that ". . . the risk and
potential harm increases, the longer the price estimates are locked in." Does ldaho
Power believe long-term, locked-in price estimates could potentially benefit ldaho Power
in some circumstances?
RESPONSE TO REQUEST NO. 18: No.
The response to this Request is sponsored by Mike Youngblood, Regulatory
Projects Manager, Idaho Power Company.
DATED at Boise, ldaho, this 26h day of March 2015.
]DAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 25
Attorney for ldaho Power Company
GERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 26th day of March 2015 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF upon the following named
parties by the method indicated below, and addressed to the following:
Gommission Staff
Donald L. Howell, ll
Daphne Huang
Deputy Attomeys General
!daho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
J. R. Simplot Company and Glearuvater
Paper Corporation
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, Idaho 83703
Cleanryater Paper Gorporation
ELECTRONIC MAIL ONLY
Carol Haugen
Clearwater Paper Corporation
lntermountain Energy Partners, LLC;
AgPower DCD, LLC; and AgPower Jerome,
LLC
Dean J. Miller
McDEVITT & MILLER, LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, ldaho 83701
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daphne. huanq@puc. idaho.qov
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[e-mail]
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Email [e-mail]
heather@mcd evitt-m i I ler. com
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 26
lntermountain Energy Partners, LLC
Leif Elgethun, PE, LEED AP
lntermountain Energy Partners, LLC
P.O. Box 7354
Boise, ldaho 83707
AgPower DCD, LLC, and AgPower Jerome,
LLC
Andrew Jackura
Camco Clean Energy
9360 Station Street, Suite 375
Lone Tree, Colorado 80124
ldaho Conservation League and Sierra CIub
Benjamin J. Otto
ldaho Conservation League
710 North 6th Street (83i02)
P.O. Box 844
Boise, ldaho 83701
Sierra Club
Matt Vespa
Sierra Club
85 Second Street, Second Floor
San Francisco, Califomia 94105
Snake River Alliance
Kelsey Jae Nunez
Snake River Alliance
223 North 6h Street, Suite 317
P.O. Box 1731
Boise, ldaho 83701
ELECTRONIC MAIL ONLY
Ken Miller
Snake River Alliance
PacifiGorp d/b/a Rocky Mountain Power
Daniel E. Solander
Yvonne R. Hogle
Rocky Mountain Power
201 South Main Street, Suite 24OO
Salt Lake City, Utah 84111
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wonne. hoq le@ pacificorp.com
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 27
Ted Weston
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
ELECTRONIC MAIL ONLY
Data Request Response Center
PacifiCorp
Twin Falls Canal Gompany, North Side
Canal Company, and American Falls
Reservoir District No. 2
C. Tom Arkoosh
ARKOOSH LAW OFFICES
802 West Bannock Street, Suite 900 (83702)
P.O. Box 2900
Boise, ldaho 83701
ELECTRONIC MAIL ONLY
Erin Cecil
ARKOOSH LAW OFFICES
Avista Corporation
Michael G. Andrea
Avista Corporation
1411 East Mission Avenue, MSC-23
Spokane, Washington 99202
Clint Kalich
Avista Corporation
1411 East Mission Avenue, MSC-7
Spokane, Washington 99202
ldaho lrrigation Pumpers Association, !nc.
Eric L. Olsen
MCINE, OLSON, NYE, BUDGE & BAILEY
CHARTERED
201 East Center
P.O. Box 1391
Pocatello, ldaho 83204-1391
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Email clint. [e-mail]
I i nd a. oerva is@avistaco rp. co m
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IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 28
Anthony Yankel
29814 Lake Road
Bay Village, Ohio 44140
Renewable Energy Goalition
Ronald L. Williams
WILLIAMS BMDBURY, P.C.
1015 West Hays Street
Boise, ldaho 83702
lrion Sanger
SANGER LAW, P.C.
1117 SW 53'd Avenue
Portland, Oregon 97215
The Amalgamated Sugar Gompany
Scott Dale Blickenstaff
The Amalgamated Sugar Company, LLC
1951 South Saturn Way, Suite 100
Boise, ldaho 83702
Micron Technology, !nc.
Richard E. Malmgren
Micron Technology, Inc.
800 South FederalWay
Boise, ldaho 83716
Frederick J. Schmidt
Pamela S. Howland
HOLLAND & HART, LLP
377 South Nevada Street
Carson City, Nevada 89701
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Email ron@williamsbrad burv.com
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phowland@holland hart.com
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF.29