20120629McHugh Rebuttal.pdf

BEFORE THE
202JtJN29 PM
LJAHC PUBliC
UTILUTI ES COMM!SSOr
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION'S )
REVIEW OF PURPA QF CONTRACT ) CASE NO. GNR-E-11-03
PROVISIONS INCLUDING THE SURROGATE )
AVOIDED RESOURCE (SAR) AND )
INTEGRATED RESOURCE PLANNING (IRP) )
METHODOLOGIES FOR CALCULATING )
PUBLISHED AVOIDED COAT RATES. )
)
REBUTTAL TESTIMONY OF DR. CATHLEEN M. MCHUGH
IDAHO PUBLIC UTILITIES COMMISSION
JUNE 29, 2012
i Q. Please state your name and business address for
2 the record.
3 A. My name is Cathleen McHugh. My business address
4 is 472 West Washington Street, Boise, Idaho.
5 Q. Are you the same Cathleen McHugh who previously
6 submitted testimony in this proceeding?
7 A. Yes lam.
8 Q. What is the purpose of your rebuttal testimony
9 in this proceeding?
10 A. The purpose of my rebuttal testimony is to
11 propose an update to the manner in which capacity payments
12 are calculated in the SAR model. I am effectively
13 providing rebuttal testimony to my earlier direct
14 testimony.
15 Q. What was your previous recommendation in terms
16 of how capacity payments are calculated in the SAR model?
17 A. Previously, I had recommended that when a
18 utility is capacity deficient, resource-specific capacity
19 payments be based on that resource's ability to contribute
20 to the deficient season's peak demand. If both seasons
21 were deficient, then capacity payments would be based on
22 the minimum of the two seasons' capacity contribution.
23 This method is straightforward and
24 computationally simple. Furthermore, it considered the
25 fact that capacity provided by a QF in one season does not
CASE NO. GNR-E-11-03 McHUGH, C. (Reb) 1
6/29/12 STAFF
i necessarily translate into capacity avoided by the utility
2 if the utility has to add capacity for the other season.
3 Q. Why are you now proposing changes to this
4 method?
5 A. Since filing direct testimony, Staff has
6 continued to review the SAR model. Quite frankly, during
7 this time Staff devised what it believes is a better
8 method of computing avoided capacity. Staff recognized
9 that if the nameplate capacity of the QF resource was used
10 as an input into the SAR model, then the capacity
ii contribution of the QF could be computed for each year of
12 the contract. Capacity payments could then be based on
13 this capacity contribution.
14 Staff devised a worksheet to be included in the
15 SAR model which demonstrates how the capacity contribution
16 is calculated step-by-step and the resultant factor
17 applied to the capacity payment. The factor represents
18 the share of the capacity payment the QF receives - for
19 instance, a factor of 10 percent indicates the QF would
20 receive 10 percent of the capacity payment. This
21 worksheet is included as Exhibit No. 305 for a 10 MW canal
22 drop hydro project located in Idaho Power's service
23 territory.
24 In 2012-2013, the capacity factor is 0 percent
25 reflecting the fact that Idaho Power is not capacity
CASE NO. GNR-E-11-03 McHUGH, C. (Reb) 2
6/29/12 STAFF
a. deficient in those years. In 2014, the factor is 10
2 percent which reflects the fact that only 10 percent of
3 the QF's output can be used to reduce Idaho Power's need
4 for capacity. From 2015 onward, the capacity factor is
5 100 percent reflecting the fact that all the capacity
6 provided by the QF can be used to reduce Idaho Power's
7 need for capacity. As can be seen, this new method is
8 robust to different scenarios regarding the needs of a
9 utility and the ability of a particular QF resource to
10 meet those needs.
11 Q. How does this new method compare to the old
12 method?
13 A. In Exhibit No. 305, I use a star to indicate
14 years in which the capacity factor differs between the two
15 methods and show the capacity factor calculated under the
16 old method. The old method could not differentiate
17 between years in which the utility needed a little
18 capacity (such as 2014) and years in which the utility
19 needed a lot of capacity (years 2015-2031). Furthermore,
20 the old method could not recognize that sometimes capacity
21 provided in only one season did actually translate into
22 capacity avoided by the utility (years 2027-2031)
23 Q. Have you updated Exhibit No. 303 to reflect this
24 new methodology?
25 A. Yes. I have included this as Exhibit No. 306.
CASE NO. GNR-E-11-03 McHUGH, C. (Reb) 3
6/29/12 STAFF
1 I have used a star to indicate which rates have changed
2 from the old method to the new method. Furthermore, I
3 have indicated the magnitude of those changes. Only the
4 avoided rates for Idaho Power and Avista change. The
5 biggest change for both utilities is the rates for canal
6 drop hydro projects. Under the new method, Idaho Power
7 rates increase by 7 percent and Avista rates increase by 6
8 percent.
9 Q. Are there any other changes you have made to
10 this exhibit?
11 A. Yes. I have updated the energy and capacity
12 needs for PacifiCorp based on new information from the
13 Company.
14 Q. Does this conclude your rebuttal testimony in
15 this proceeding?
16 A. Yes, it does.
17
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20
21
22
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24
25
CASE NO. GNR-E--11-03 McHUGH, C. (Reb) 4
6/29/12 STAFF
Prior
factor
I0%I *
i.e., when the planning deficit (column d) is not negative.
Capacity contributions cannot exceed the absolute value of the planning deficit (column d).
Prior
factor
I 100% I
:3 P CD
w 9-
Cr
-
$120
$100
$80
-0$60
N
$40
U -J
$20
$0
Comparison of Proposed SAR Methodology Rates
Levetized Rates for 20-yr Contract Term, January 2013 Online Date

Az AS
Baseload Canal Drop Fixed PV Solar
Idaho Power Idaho Power Avista Idaho Power Avista
Rates under new method $61.27 $84.65 $47.01 $61.58 $39.45
Rates under old method $62.90 $79.09 $44.50 $58.71 $38.21
Difference ($1.63) $5.56 $2.51 $2.86 $1.24
Percentage difference -3% +7% +6% +5% +3%
PacitiCorp's avoided rates also changed but they changed because of updated resource and load data.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 29TH DAY OF JUNE 2012,
SERVED THE FOREGOING REBUTTAL TESTIMONY OF DR. CATHLEEN M.
McHUGH, IN CASE NO. GNR-E- 11-03, BY E-MAILING AND MAILING A COPY
THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:
DONOVAN E WALKER
JASON B WILLIAMS
IDAHO POWER COMPANY
P0 BOX 70
BOISE ID 83707-0070
MICHAEL G ANDREA
AVISTA CORPORATION
1411 EMISSION AVE
SPOKANE WA 99202
ROBERT D KAHN
NW & INTERMOUNTAIN POWER
PRODUCERS COALITION
1117 MINOR AVE STE 300
SEATTLE WA 98101
ROBERT A PAUL
GRAND VIEW SOLAR II
15690 VISTA CIRCLE
DESERT HOT SPRINGS CA 92241
THOMAS H NELSON
RENEWABLE ENERGY COALITION
P0 BOX 1211
WELCHES OR 97067
R GREG FERNEY
MIMURA LAW OFFICES PLLC
2176 E FRANKLIN RD
STE 120
MERIDIAN ID 83642
DANIEL E SOLANDER
TED WESTON
ROCKY MOUNTAIN POWER
201 S MAIN ST STE 2300
SALT LAKE CITY UT 84111
PETER J RICHARDSON
GREGORY M ADAMS
RICHARDSON & O'LEARY
515 N 27TH STREET
BOISE ID 83702
DON STURTEVANT
ENERGY DIRECTOR
J R SIMPLOT COMPANY
P0 BOX 27
BOISE ID 83707-0027
JAMES CARKULIS
EXERGY DEVELOPMENT GROUP OF
IDAHO LLC
802 W BANNOCK ST STE 1200
BOISE ID 83702
JOHN R LOWE
RENEWABLE ENERGY COALITION
12050 SW TREMONT ST
PORTLAND OR 97225
BILL PISKE MGR
INTERCONNECT SOLAR
DEVELOPMENT LLC
1303 E CARTER
BOISE ID 83706
CERTIFICATE OF SERVICE
RONALD L WILLIAMS WADE THOMAS
WILLIAMS BRADBURY DYNAMIS ENERGY LLC
1015 W HAYS ST 776 E RIVERSIDE DR
BOISE 1D83702 STE 15
EAGLE ID 83616
BRAIN OLMSTEAD MEGAN WALSETH DECKER
GENERAL MANAGER SR STAFF COUNSEL
TWIN FALLS CANAL CO RENEWABLE NW PROJECT
P0 BOX 326 421 SW 6TH AVE STE 1125
TWIN FALLS ID 83303 PORTLAND OR 97204
TED DIEHL BILL BROWN CHAIR
GENERAL MANAGER BOARD OF COMMISSIONERS
NORTH SIDE CANAL CO OF ADAMS COUNTY ID
921 N LINCOLN ST P0 BOX 48
JEROME ID 83338 COUNCIL ID 83612
TED S SORENSON P E GLENN IKEMOTO
BIRCH POWER COMPANY MARGARET RUEGER
5203 SOUTH I 1TH EAST IDAHO WINDFARMS LLC
IDAHO FALLS ID 83404 672 BLAIR AVE
PIEDMONT CA 94611
M J HUMPHRIES ARRON F JEPSON
BLUE RIBBON ENERGY LLC BLUE RIBBON ENERGY LLC
3470 RICH LANE 10660 SOUTH 540 EAST
AMMON ID 83406 SANDY UT 84070
DEAN J MILLER BENJAMIN J OTTO
McDEVITT & MILLER LLP ID CONSERVATION LEAGUE
P0 BOX 2564 P0 BOX 844
BOISE ID 83701 BOISE ID 83702
KEN MILLER MARV LEWALLEN
SNAKE RIVER ALLIANCE CLEAR WATER PAPER CORP
BOX 1731 STEI100
BOISE ID 83701 601 W RIVERSIDE AVE
SPOKANE WA 99201
ENERGY INTEGRITY PROJECT
TAUNA CHRISTENSEN
769N 1100E
SHELLEY ID 83274
SECRETARY
CERTIFICATE OF SERVICE