20090206PacifiCorp Motion.pdf

John R. Hammond, Jr., ISB No. 5470
Local Counsel
FISHER PUSCH & ALDERMAN, LLP
U S Ban Plaza, 5th Floor
101 South Capitol Boulevard
P.O. Box 1308
Boise, Idaho 83701
[phone]
[phone] facsimile
jrh(ifpa-law.com.com
RECEi\!
iOß9 fEß -5 Pr\ 4: S6
Mark C. Moench
Daniel E. Solander
201 South Main, Suite 2300
Salt Lake City UT 84111
Telephone: [phone]
FAX: [phone]
Email: mark.moenchQlacifícorp.com
daniel.solander~pacificorp.com
Attorneys for Rocky Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT PETITION
TO APPROVE A STIPULATION TO ADJUST
PUBLISHED AVOIDED COST RATES
)
) CASE NO. GNR-E-08-02
)
) MOTION TO CONTINUE
) DECISION IMPLEMENTING
) STIPULATION
)
COMES NOW, Rocky Mountain Power, a division of PacifiCorp (the
"Company"), and hereby requests that the Idaho Public Utilities Commission (the
"Commission") stay its decision implementing the Stipulation entered into by and among
Idaho Power Company ("Idaho Power"), the Staff of the Idaho Public Utilities
-- Commission ("Staff'), A vista Corporation ("A vista"), PacifiCorp ("PacifiCorp"), the~
:2 United States Deparment of Energy ("DOE"), U.S. Geothermal Inc. ("U.S.-(!-Ct
o MOTION TO CONTINE DECISION IMPLEMENTING STIPULATION - 1
Geothermal"), Exergy ("Exergy"), Tuana Springs Energy LLC ("Tuana"), and Glen
Ikemoto. Rocky Mountain Power is concerned that the overall Qualifying Facility
("QF") avoided cost price that the surrogate avoided resource ("SAR") methodology
yields is too high, and accordingly, requests that the Commission stay the implementation
of the Stipulation until the Parties have had a chance to discuss the effects that the curent
economic downtrend wil have on the avoided cost price in Idaho. Alternatively, if the
Commission determines it necessar to approve avoided costs based on the current
Northwest Planning and Conservation Council's ("NPCC") forecast, Rocky Mountain
Power requests that these avoided cost rates apply to small non-fuel projects of one
megawatt or less.
1. On November 5, 2008, the Paries executed a Stipulation in which they agreed on
the non-fuel related costs of the SAR methodology for determining avoided cost prices
for QFs in Idaho. The Paries noted in the Stipulation that the fuel related costs in the
SAR have a much greater impact on the published rates than the non-fuel related costs.
2. Although the Company agreed with the Stipulation's logic for computing and
updating capital costs, heat rate, and O&M Costs in the SAR methodology, the Company
is now concerned that the overall avoided cost price that the SAR methodology yields is
too high.
3. The assumptions underlying the avoided cost prices in the Januar 26,2009, draft
paper are representative of elevated pricing and bullish economic perceptions that are not
representative of the dramatic recessionar environment that is forecast by most experts
to be deep and long. The primar, but not sole drver to the high QF avoided costs in the
MOTION TO CONTINE DECISION IMPLEMENTING STIPULATION - 2
Januar 26, 2009 draft paper is the result of using the NPCC Draft Fuel Prices for the
Sixth Power Plan, December 29,2008.
4. The Company believes that the medium natural gas price cure from NPCC yields
an avoided cost that is too high, and is not a tre reflection of current forward natural gas
market prices and projections. The impact of using the draft medium NPCC fuel curve is
approximately two-thirds of the 27% increase in the avoided costs and the Company feels
that warants, at a minimum, postponing Commission approval of the gas curve
component until the NPCC fuel prices are finaL.
5. Market forward prices for the balance of 2009 are considerably lower than even
the low NPCC price forecast. Market forward prices in 2010 are most closely aligned
with the low NPCC price forecast. Beyond 2010, the medium~low NPCC price forecast
begins to align reasonably well with curent market forward prices. Over the entire
NYEX strip, the NPCC medium case projection is considerably higher than current
market. Given the NPCC's description of their low case forecasts, curent market "sign
posts," and current market forwards, the Company believes that the low and medium-low
NPCC price forecasts are a better indicator of current and projected market conditions
than the medium case.
6. Just as the rapid decline in global economic conditions has influenced the natural
gas market, the curent recessionar climate has led to extraordinar commodity price
declines. With declining raw material prices, lower demand for electricity, and the
potential for falling construction market premiums, the Company is concerned that the
SAR capital cost assumptions may be also contributing to avoided cost prices that are too
high. Presentation materials from the NPCC's Generating Resources Advisory
MOTION TO CONTINE DECISION IMPLEMENTING STIPULATION - 3
Committee (GRAC) meeting on January 22, 2009, indicate that combined cycle plant
costs are expected to decline in real terms over the entirety of their forecast horizon
("Uncertainty in the Regional Portfolio Model", slide 5).
7. The Company is also requesting that additional time be granted by the
Commission in order to more thoroughly review all of the assumptions used in the NPCC
forecast. Given the dramatic global economic downtur and extraordinary downward
impact on commodity costs that has occured in the last few months, the Company
questions the timing of an update that does not appear to reflect current market conditions
and suggests the Commission consider updating the price forecast after conditions have
become more stable.
8. An additional measure that might mitigate the impact of the use of the NPCC
draft price curve would be to limit the size of QFs that are eligible for the published
avoided cost price to 1 MW, rather than 10 MW, temporarly while the Commission
considers the remainder of the issues raised by Rocky Mountain Power.
CONCLUSION
WHEREFORE, Rocky Mountain Power respectfully requests: (l) that the Commission
stay the implementation of the Stipulation in the above-captioned Docket; and (2)
reevaluate its use of the. NPCC draft price cure before QF prices are established using
these inflated costs so that Idaho customers are not impacted by potentially above market
QF prices; or (3) limit the size of QFs eligible for the published rate to 1 MW.
MOTION TO CONTINE DECISION IMLEMENTING STIPULATION - 4
DATED this 5th day of Februar, 2009.
Respectfully submitted,
Mark C. Moench
Daniel E. Solander
Attorneys for Rocky Mountain Power
John . H mond, Jr:'
Fis er PU$ch & Alderman LLP
(J
MOTION TO CONTINE DECISION IMPLEMENTING STIPULATION - 5
~4
CERTIFICATE OF SERVICE
I hereby certify that on theS day of February, 2009, I caused to be served a
tre copy of the foregoing, by the method indicated below, and addressed to the
following:
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington (83702)
P.O. Box 83720
Boise, ID 83720-0074
scott. woodburv(fÙpuc.idaho. gov
Attorney for Commission Staff
( ) U.S. Mail
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r 1 Email
David J. Meyer, Clint Kalich
Avista Corporation - MSC - 7
P.O. Box 3727
11411 E. Mission Street
Spokane, WA 99220-3727
david.mever(iavi stacorp.com
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Donovan E. Walker
Baron L. Kline
Idaho Power Company
POBox 70
1221 W. Idaho Street (83702)
Boise, ID 83707-0070
E-mail: dwalker~idahopower.com
bkl ine(ci dahopower .com
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Peter J. Richardson, Esq.
Richardson & 0' Leary PLLC
515 N. 27th Street (83702)
PO Box 7218
Boise,ID 83707- 1218
E-mail: peter~richardsonandoleary.com
VI U.S. Mail
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TUANA SPRINGS ENERGY LLC
Dean J. Miler
McDevitt & Miler LLC
420 W. Banock Street (83702)
POBox 2564
Boise, ID 83701
E-mail: ioe~mcdevitt-miller.com
K U.S.
Mail
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MOTION TO CONTIN DECISION IMPLEMENTING STIPULATION - 6
IDAHO WIN FARS LLC
Glenn Ikemoto
672 Blair Avenue
Piedmont, CA 94611
E-mail: glenncgmacbell.nct
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MOTION TO CONTINE DECISION IMLEMENTING STIPULATION - 7
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