20100209notice_of_case_docket_order_no_30999.pdf

Office of the Secretary
Service Date
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
February 9 2010
IN THE MATTER OF THE DEVELOPMENT
OF REQUEST FOR PROPOSAL (RFP)
GUIDELINES FOR THE PROCUREMENT
OF SUPPLY-SIDE RESOURCES BY IDAHO
POWER COMPANY
CASE NO. IPC-IO-
(Previous Case No. GNR-08-03)
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ORDER NO. 30999
BACKGROUND
On November 26, 2008 , the Northwest and Intermountain Power Producers Coalition
(NIPPC), the Industrial Customers of Idaho Power (ICIP), the J.R. Simplot Company, and the
Idaho Irrigation Pumpers Association, Inc. (lIP A), collectively Petitioners, filed a Petition with
the Idaho Public Utilities Commission (Commission) asking the Commission to open a generic
investigation into the desirability of establishing competitive bidding guidelines for the
procurement of supply-side resources by Idaho Power, PacifiCorp and Avista.
Petitioners contend that electric utilities in Idaho are free to offer supply-side resource
acquisition requests for proposals (RFPs) that are designed and administered completely without
Commission or other stakeholder input. Integrated Resource Plans (IRPs), while useful
tools in analyzing resource options, Petitioners contend, are generally silent on the method
by which any particular resource should be acquired. The IRP process, Petitioners contend
does not provide a framework for oversight of the resource acquisition process. Electric
utilities in Idaho, Petitioners state, are even free to make supply-side resource acquisition
decisions without the benefit of RFPs. In the Pacific Northwest States of Washington and
Oregon, Petitioners contend that the same utilities are required to make resource
acquisitions through a Commission-approved, and stakeholder-involved, process. Idaho
Petitioners contend, is the only state in the Pacific Northwest that does not actively oversee
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or provide guidelines for the investor-owned utilities it regulates that govern their
acquisition of supply-side resources.
The adoption of guidelines and active oversight of supply-side resource
acquisition decisions, Petitioners contend, is increasingly the norm. Petitioners cite a July
2008 Report of NARUC/FERC entitled "Competitive Procurement of Retail Electric
Supply: Recent Trends in State Policies and Utility Practices." That Report concludes:
Competitive procurements for retail electricity supply have been used for
many years in different states. More than forty percent of the states now
rely on formal policies and rules for procurements, while regulators in
many other states encourage use of competitive procurements by utilities
in determining which resources to add to their mix of retail supply.
Where regulators have committed to relying upon competitive
procurement approaches as a means to help identify the "best" resources
needed to meet the needs of the utility's customers, the process should be
designed and implemented so that it reflects the following criteria (and is
generally viewed as being consistent with them):
Fair and objective;
Designed to encourage robust competitive responses from
market participants with creative responses from the market;
Based on evaluations that incorporate all appropriate and
relevant price and non-price factors;
. Efficient, with a timely selection process; and
Supported by regulatory actions that positively reinforce the
commission s commitment.
The Report, Petitioners contend, is a blueprint on how to implement guidelines that are both
fair and effective.
The consequence of an under-subscribed RFP and/or one where the outcome is
pre-ordained, Petitioners contend, deprives the ratepayers of access to the competitive
marketplace. It also forecloses the opportunity of tapping into what may prove to be least
cost - in economic and environmental terms - power generated by independent power
producers (IPPs).
Petitioners contend that competitively procured power purchase agreements
(PP As) can shift tangible and considerable risk from ratepayers onto IPPs. The IPP business
model, Petitioners state, is based on competition and the principle of pay for performance; it
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leverages the profit motive to consumers' advantage. Regardless of the current "need for
action " the implementation of competitive procurement guidelines in Idaho, Petitioners
contend, is consistent with good regulatory practice.
Petitioners requested that the Commission open a generic docket for the purpose
of exploring and establishing reasonable parameters and rules governing the supply-side
acquisition process through competitive procurement.
NIPPC MOTION
On December 22, 2009, the Northwest Intermountain Power Producers
Coalition (NIPPC) filed a Motion in Case No. GNR-08-03 requesting that the
Commission initiate a procedural schedule and narrow the scope of the docket to Idaho
Power (removing PacifiCorp and A vista).
NIPPC notes that proceedings in GNR-08-03 were stayed pending completion
of Case No. IPC-09-, Idaho Power s Langley Gulch Certificate case. In Commission
Order No. 30892 granting a Certificate for Langley Gulch, the Commission made the
following findings:
The Company should, however, be concerned about perception that the third-
party consultant was directed by the Company and there was a bias in the
selection process. The actual and perceived flaws in the RFP process, wefind, while not fatal to the Company s resource selection, clearly demonstrate
a need for a separate proceeding to consider RFP competitive bidding rules
and guidelines. We recognize that the Northwest & Intermountain PowerProducers Coalition has filed a petition requesting such an investigation (Case
No. GNR-08-03). The Commission will explore utility RFPs for supply-side resources in that case or another opened for that purpose.
Order No. 30892, pp. 30-31.
NIPPC requests that the Commission establish a procedural schedule under which
interested parties can proceed to fully investigate the competitive procurement practices of Idaho
Power Company. NIPPC recommends workshops facilitated by an expert with experience in
implementing competitive bidding procedures for investor-owned utilities.
NIPPC further requests that this docket be amended to eliminate its generic status and
limit the issues to be explored to only Idaho Power. NIPPC understands that the other two
relevant electric utilities operating in Idaho already comply with competitive procurement rules
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in the other states in which they operate. NIPPC contends that there is no need for Idaho to be
duplicative for rules already in play in those states.
Idaho Power Reply
Idaho Power has no objection to either of the two parts of NIPPC's Motion. Idaho
Power agrees that this proceeding should apply only to Idaho Power. Idaho Power is also
amenable to the Commission establishing a procedural schedule to process this case.
Addressing NIPPC's proposal that an expert be retained to facilitate the workshops
Idaho Power suggests that it may be more cost-effective for the parties to conduct the first
workshop without a facilitator to see if one is really needed. At the first workshop, Idaho Power
states it will be prepared to discuss a draft set of competitive bidding guidelines that it would
distribute beforehand. That same first workshop, the Company contends, could be used as a
place for the parties to work out a procedural schedule for this docket.
A vista Reply
On January 8, 2010, Avista Corporation made a letter filing with the Commission
concurring with NIPPC's proposal to narrow the scope of the docket to Idaho Power only.
Avista states that it is subject to the State of Washington s competitive procurement rules, which
are codified at WAC 480-107-001, et seq. Avista states it complies with the WUTC'
competitive procurement rules with regard to all resource acquisitions that are subject to those
rules. To the extent the Commission grants NIPPC's request to narrow the proceeding to only
Idaho Power, Avista requests that the Commission expressly state in its order that any rules
developed or promulgated in the proceeding will apply to only Idaho Power and will not apply to
any other utility that is subject to and complies with the competitive procurement rules of
another state.
PacifiCorp Reply
On January 15 , 2010, PacifiCorp dba Rocky Mountain Power made a letter filing
with the Commission concurring with NIPPC's proposal to narrow the scope of the proceeding
to Idaho Power only.PacifiCorp states that it has extensive experience with competitive
procurement guidelines, rules or laws in the States of Oregon, Washington and Utah. Rocky
Mountain Power s generation and transmission resources are system allocated; therefore it is
subject to each of the procurement rules, laws, and guidelines of these three jurisdictions
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(referenced copIes attached to letter).If the Commission grants NIPPC's request , Rocky
Mountain Power requests that the Commission expressly state in its order that any guidelines or
rules developed or promulgated in this proceeding apply to Idaho Power only.
COMMISSION FINDINGS
The Commission has reviewed the November 26, 2008 Petition of the Northwest &
Intermountain Power Producers Coalition (NIPPC), the Industrial Customers of Idaho Power
(ICIP), the J.R. Simplot Co., and the Idaho Irrigation Pumpers Association, Inc. (lIP A).
Petitioners in 2008 requested the Commission to open a generic electric docket to establish
competitive bidding guidelines for the procurement of supply-side resources by Idaho Power
PacifiCorp and A vista.
Following the filing of testimony by Petitioners on March 27, 2009, Petitioners
agreed to a stay of proceedings pending conclusion of Idaho Power s Langley Gulch Certificate
case (IPC-09-03).
On December 29, 2009, NIPPC filed a Motion requesting that the Commission
reframe the case from generic to Idaho Power-specific and establish a procedural schedule.
We have reviewed the testimonies filed by Petitioners and find that their focus is on
the competitive procurement practices of Idaho Power, not A vista or PacifiCorp. YOU ARE
HEREBY NOTIFIED that the Commission has reviewed and considered the reply of Idaho
Power and the letter filings of A vista and PacifiCorp and finds good reason to reframe the case
from generic (GNR-08-03) to Idaho Power-specific (IPC-IO-03). In so doing, we accept the
representations of Avista and PacifiCorp that their RFP processes in Idaho for the procurement
of supply-side resources are informed by the RFP requirements that they are subject to in their
other jurisdictional states. The case being reframed for these reasons, we provide assurance to
PacifiCorp and Avista that any guidelines developed or promulgated in this proceeding will
apply only to Idaho Power and not to utilities that conform Idaho RFP processes to satisfy and
comply with the procurement rules, laws and guidelines of other state regulatory jurisdictions.
NOTICE OF SCHEDULING
YOU ARE FURTHER NOTIFIED that Idaho Power has agreed to provide and file
with the Commission a draft set ofRFP guidelines on Wednesday, February 17 2010. The draft
guidelines will form the framework for initial discussions. The draft guidelines will be available
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ORDER NO. 30999
for review at the Commission s office and at the principal business office of Idaho Power. The
draft guidelines will also be available electronically on the Commission s web site
www.puc.idaho.gov by clicking on "File Room" and then "Electric Cases.
NOTICE OF PUBLIC WORKSHOP
YOU ARE FURTHER NOTIFIED that the Commission Staff will host a public
workshop in this case on THURSDAY. FEBRUARY 25. 2010. COMMENCING AT 9:30
M. AT THE COMMISSION'S HEARING ROOM. 472 WEST WASHINGTON
STREET. BOISE IDAHO Idaho Power s draft set ofRFP guidelines will be discussed as well
as the need for and scope of further proceedings.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission does hereby formally close Case No. GNR-08-
and initiate Case No. IPC-1O-03.
IT IS FURTHER ORDERED and the Commission does hereby adopt the foregoing
scheduling for prefiling of draft RFP guidelines and workshop.
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ORDER NO. 30999
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 9 r"
day of February 2010.
Q1T~
MARSHA H. SMITH, COMMISSIONER
~~~
MACK A. REDFORD, COM
ATTEST:
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Commission Secretary
bls/O:IPC-IO-03 sw
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