20171127_Daphne1.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPIER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
DATE:NOVEMBER 20,2017
SUBJECT:THE APPLICATION OF IDAHO POWER COMPANY TO ESTABLISH A
METHOD OF RECOVERY FOR COSTS ASSOCIATED WITH
PARTICIPATION EN THE WESTERN ENERGY IMBALANCE
MARKET,CASE NO.IPC-E-17-16.
On November 14,2017,Idaho Power Company applied to the Commission for an Order
authorizing the Company to establish an interim method of recovery of costs associated with
participation in the western Energy Imbalance Market (ElM)through a temporary rate
component in Tariff Schedule 55.the Power Cost Adjustment.Application at I.The Company
asks that the Application be processed by Modified Procedure and requests a case schedule that
would allow for an order to be issued on or before March 31,2018.Id.at 6.
BACKGROUND
In November 2014,the California Independent System Operator (CAISO)and PacifiCorp
formed the western ElM.The western ElM is a five-minute market administered by CAISO.
The market utilizes an automatic model to identify the least-cost energy resources to serve real
time customer demand.The western ElM “focuses solely on real-time imbalances and allows
ElM entities to retain all balancing responsibilities and transmission provider duties.”Id.at 2.
ElM participants bid resources into the market and the operator dispatches those resources based
on the marginal price for energy imbalances factoring in load,available generation,and
transmission congestion.Id.Idaho Power plans to begin participating in the western ElM in
April 2018.Id.ElM participants by that time will include PacifiCorp,the California
Independent System Operalion (CAISO),NV Energy,Inc.,Arizona Public Service Company,
Portland General Electric Company,and Powerex Corp.Id.
DECISION MEMORANDUM
In a previous case,Case No.IPC-E-16-19,the Company sought to defer costs related to
joining the ElM in a regulatory asset until they could be amortized into rates after the Company’s
ElM participation begins.Order No.33706 at 2.The Commission found that the Company’s
ElM participation “would provide an opportunity for benefits greater than costs”and thus the
possibility of a net benefit to customers.Id.at 9.The Commission concluded “that the
Company’s joining the ElM is reasonable and in the public interest.”Id.The Commission
authorized Idaho Power to track the incremental operations and maintenance (O&M)expenses of
joining the ElM in a deferral account with a ten-year amortization period.Id.at 11.
THE APPLICATION
Idaho Power now “seeks authorization to establish an interim method of recovery for the
incremental costs associated with joining the ElM.”Id.at 3.Specifically,the Company
proposes to include the revenue requirement associated with the incremental costs of ElM
participation as a temporary rate component in Tariff Schedule 55,the Power Cost Adjustment,
until these costs and benefits can be reflected in base rates.Id.According to Idaho Power,this
will allow it to “more closely match the timing of benefits and costs of participation”in the ElM,
and “allows for administrative efficiencies and utilizes the same tariff schedule that ElM-related
benefits will ultimately be reflected in.”Id.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Application and set a 14-day
deadline for petitions to intervene,after which Staff would confer with parties about a schedule
for processing the case.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and Order setting a 14-day
deadline for petitions to intervene?
I \Lcg,I\LMEMOS\IPCEI7 16_djItI_dec memo_not ofapp.doc
Deputy Attorney Genen
DECISION MEMORANDUM 2