20170608notice_of_application_order_no_33778.pdf

Office of the Secretary
Service Date
June 8,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.GNR-E-17-02
OF IDAHO POWER COMPANY TO )
REVIEW THE SURROGATE AVOIDABLE )NOTICE OF APPLICATION
RESOURCE (SAR)METHODOLOGY FOR )
CALCULATING PUBLISHED AVOIDED )NOTICE OF
COST RATES )INTERVENTION DEADLINE
)
_______________________________
)ORDER NO.33778
On May 16,2017,Commission Staff sent letters advising Idaho’s three electric
utilities of Staffs proposed annual update to published avoided cost rates for contracts entered
between utilities and qualifying facility projects under the Public Utility Regulatory Policies Act
(PURPA).Staffs update reflects the updated natural gas price forecast of the U.S.Energy
Information Administration (EIA).See Case Nos.IPC-E-17-07,PAC-E-1705,AVUEl702.
Each year since 2013,Staff has calculated updated published avoided cost rates per Order No
32697,using the EIA’s Mountain Region natural gas forecast.See Order Nos.328i7,33041,
33305,33538.Idaho Power Company filed an objection to Staffs May 2017 proposal,asserting
that the update to published avoided cost rates should instead be calculated using a different
forecast—the EIA’s Henry Hub forecast.Idaho Power Objection in Case No.IPC&17-07.
Consistent with our prior procedure and Orders,the Commission approved Staffs
proposed published avoided cost rates as reasonable.We also directed the Commission
Secretary to accept Idaho Power’s objection as an application to initiate a generic proceeding to
consider its proposed change to Staffs methodology for calculating updated published avoided
costs each year.Order No.33773.The Commission now issues this notice of the Application,
and notice of a deadline for petitions to intervene in the matter.
BACKGROUND
Under PURPA,electric utilities must purchase electric energy from “qualifying
facilities”(QFs)at rates approved by this Commission.16 U.S.C.§824a-3;Idaho Power Co.v,
Idaho PUC,155 Idaho 780,789,316 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
NOTICE OF APPLICATION
NOTICE OF NTERVENTION DEADLINE
ORDER NO.33778
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.§292.10 1(b)(6)(defining “avoided cost”).
The Commission has established two methods of calculating avoided costs,
depending on the size of the QF project:(1)the surrogate avoided resource (SAR)methodology,
and (2)the integrated resource plan (IRP)methodology.See Order No.32697 at 7-8,The
Commission uses the SAR methodology to establish “published”avoided cost rates.Id.
Published rates are available for wind and solar QFs 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).Id.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that Idaho Power objected to Staffs use of the
ETA’s Mountain Region natural gas forecast in calculating updated published avoided cost rates.
Idaho Power proposed that the updated published avoided cost rates should have been calculated
using the ETA’s Henry Hub natural gas forecast.See Idaho Power Objection (accepted for filing
in this case as an Application,per Order No.33773;hereafter “Application”).
YOU ARE FURTHER NOTIFIED that Idaho Power uses the Henry Hub forecast in
the Company’s Integrated Resource Plan (IRP)process,and in arriving at avoided cost rates
calculated under the Incremental Cost IRP method (for projects that exceed the published rate
eligibility cap).Application at 2.
YOU ARE FURTHER NOTIFIED that the Company asserts that using the Mountain
Region forecast (as proposed by Staff and adopted by the Commission in Order No.33773)to
calculate published avoided cost rates results in rates that are over $8 per megawatt-hour (MWh)
more than using the Henry Hub forecast for the same calculation.Id.
YOU ARE FURTHER NOTIFIED that,according to the Company,Order No.32697
does not specify which subset of the ETA’s forecast Staff must use in calculating updates to the
Commission’s published avoided cost rates.Id.at 3.The Company asserts that the Henry Hub
ETA forecast is used by the Public Utility Commission of Oregon to update its published avoided
cost pricing.Id.at 6.The Company contends,“Customers are harmed by an avoided cost
methodology that results in inflated prices based on natural gas forecasts that are not applicable
to the utility.”Id.at 6.The Company further contends,“{t]he continued use of the Mountain
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33778 2
Region natural gas forecast that does not represent prices that are utilized by Idaho Power,results
in an artificially high price that customers should not be required to pay.”Id.at 7.
YOU ARE FURTHER NOTIFIED that the Company argues,using the EIA’s Henry
Hub forecast “would result in a closer approximation of the Company’s avoided cost pricing.
which for published rates is locked in for 20-year term contracts,and results in a substantial cost
savings to Idaho Power customers in the mandatory PURPA purchase requirements of
potentially hundreds of millions of dollars.’Id.at 7-8.
YOU ARE FURTHER NOTIFIED that Application has been filed with the
Commission and is available for public inspection during regular business hours at the
Commission offices.The Application is also available on the Commission’s web site at
pçidaho.gpy.Click on the “File Room”tab at the top of the page,scroll down to “Open
Electric Cases,”then click on either case number as shown on the front of this document.
NOTICE OF DEADLINE TO INTERVENE
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter
must file a Petition to Intervene with the Commission pursuant to this Commission’s Rules of
Procedure 72 and 73,IDAPA 3 1.01.01.072 and -.073.All Petitions to Intervene must be filed
no later than 14 days from the service date of this Order.Persons desiring to present their
views without parties’rights of participation and cross-examination are not required to intervene
and may present their comments without prior notification to the Commission or the parties.
YOU ARE FURTHER NOTIFIED that the following persons are designated as Idaho
Power’s representatives in this matter:
Donovan Walker Michael Darrington
Idaho Power Company Idaho Power Company
1221 West Idaho Street P.O.Box 70
P.O.Box 70 Boise,Idaho 83707
Boise,ID 83707 E-Mail:mdaITingtonidahopower.co1
E-Mail:
docketsidahopower.eom
YOU ARE FURTHER NOTIFIED that,once the deadline for intervention has
passed,the Commission Secretary shall prepare a Notice of Parties.Staff counsel will then
confer with the parties regarding a procedural schedule for this matter and shall report the
proposed schedule to the Commission.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33778 3
ORDER
IT IS HEREBY ORDERED that persons desiring to intervene in this matter shall file
a Petition to Intervene no later than 14 days from the service date of this Order.Once the
deadline for Petitions to Intervene has passed,the Commission Secretary shall prepare and issue
a Notice of Parties.
IT IS FURTHER ORDERED that,after the Notice of Parties has issued,Staff counsel
shall confer with the parties regarding a procedural schedule for this matter and shall report the
proposed schedule to the Commission.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this ‘
day of June 2017.
PAUL KJEL A ER,PRESIDENT
44Z 1€44LA.
KRIWFINE RAPER,COMMISSIONER
ATTEST:
//
Diane M.Hanian
Commission Secretary
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33778
COMMISSIONER
4