20191126_dh3.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KIELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DAYNHARDIE
DEPUTY ATTORNEY GENERAL
DATE:NOVEMBER 14,2019
SUBJECT:ROCKY MOUNTAIN POWER’S PETITION TO UPDATE THE LOAD
AND GAS FORECASTS USED IN ITS INTEGRATED RESOURCE PLAN
AVOIDED COST MODEL;CASE NO.PAC-E-19-18.
On November 7,2019,Rocky Mountain Power (“Company”),a division of PacifiCorp,
applied to the Commission to update its load forecast,natural gas forecast,and contract
information components of the incremental cost Integrated Resource Plan (“IRP”)avoided cost
methodology for qualifying facilities (“QF”)under the Public Utility Regulatory Policies Act of
1978 (‘PURPA”).Application at 1.The Company indicates that the filing complies with Order
Nos.32697 and 32802.Id.
BACKGROUND
Under PURPA,electric utilities must purchase electric energy from QFs at rates
approved by the applicable state agency—in Idaho,this Commission.16 U.S.C.§824a-3;Idaho
POIL’er Co.v.Idaho PUC,155 Idaho 780,780,316 P.3d 1278.1287 (2013).The purchase or
“avoided cost”rate shall not exceed the “‘incremental cost’to the purchasing utility of power
which,but for the purchase of power from the QF,such utility would either generate itself or
purchase from another source.”Order No.32697 at 7,citing Rosebud Enterprises v.Idaho PUC,
128 Idaho 624,917 P.2d 781 (1996);18 C.F.R.§292.l0l(b)(6)(defining “avoided cost”).
The Commission has established two methods of calculating avoided cost,depending
on the size of the QF project:(1)the surrogate avoided resource (“SAR”)methodology,and (2)
the LRP methodology.See Order No.32697 at 7-8.The Commission uses the SAR methodology
to establish what is commonly referred to as “published”avoided cost rates.Id.Published rates
DECISION MEMORANDUM
are available for wind and solar QFs1 with a design capacity of up to 100 kilowatts (“kW”),and
for QFs of all other resource types with a design capacity of up to 10 average megawatts (“aMW”).
For QFs with a design capacity above the published rate eligibility caps,avoided cost rates are
“individually negotiated by the QF and the utility using the [IRP methodology].”Id.at 2;Order
No.32176.The IRP methodology “takes into account many different variables and produces a(n
avoided cost]result based on each individual utility’s need for energy.”Order No.32697 at 17.
The IRP methodology’s variables are at issue here.
The Commission stated,“utilities must update fuel price forecasts and load forecasts
annually—between IRP filings....We find it reasonable that all other variables and assumptions
utilized within the IRP Methodology remain fixed between IRP filings every two years].”Id.at
22.The Commission directed that the update to fuel price forecasts and load forecasts should occur
on October 15 of each year.Order No.32802 at 3.The Commission also found it appropriate to
consider long-term contract commitments,as well as PURPA contracts that have terminated or
expired,in the utility’s load and resource balance.Order No.32697 at 22.
THE APPLICATION
The Company provides its updated load forecast,natural gas forecast,and contract
information,and explains that if approved,the information will be incorporated into the
Company’s IRP avoided cost model and that the model will be used as the starting point for the
negotiation of its contractual avoided cost rates as of October 15,2019.Application at2.
The Company’s updated load forecast is from July 2019 and “shows a slight increase
in load compared to the July 2018 load forecast provided in Case No.PAC-E-18-09 and approved
by the Commission in Order No.34213.”Id.The Company also provides both the July 2019 and
the July 2018 load forecasts for years 2019 through 2039.See Table I.
The Company’s updated natural gas forecast was prepared on September 30,2019
using the Official Forward Price Curve (“OFPC”)as reference which indicates a slight decrease
in the average natural gas forecast prices over the next 20 years compared to the September 28,
2018 OFPC.Id.at 3;See Table 2.The Company provides both the 2019 and the 20l8 forecasts
for years 2019 through 2038.See Table 2.
See Order No.33785 (regarding batiery storage facilities).
DECISION MEMORANDUM 2
Finally,the Company summarizes the contract termination,expiration,and additions it
has experienced since its 2018 update.Id.at 3.The Company provides the new and terminated or
expired contracts in Table 3 to the Application.Id.at 7.
The Company requests the Commission issue an order approving the updated
information in its Application for inclusion in the Company’s IRP avoided cost calculations with
an October 15,2019 effective date.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Application and Notice of
Modified Procedure,with comments due December 17,2019 and reply comments,if any,due
December 24,2019.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and a Notice of Modified
Procedure,with comments due December 17,2019 and reply comments,if any,due December 24,
2019?
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Deputy Attorney General
DECISION MEMORANDUM 3