20200410Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: EDWARD JEWELL
DEPUTY ATTORNEY GENERAL

DATE: APRIL 10, 2020

SUBJECT: IN THE MATTER OF THE ANNUAL UPDATE TO “SURROGATE
AVOIDED RESOURCE” AVOIDED COST RATES; CASE NO. TBD

In GNR-E-11-03, the Commission updated the Surrogate Avoided Resource (“SAR”)
method for published avoided cost rates for all three major Idaho utilities; Idaho Power Company
(“Idaho Power”), Avista Corporation (“Avista”), and PacifiCorp dba Rocky Mountain Power
(“Rocky Mountain Power”) (collectively, “the utilities”). Order No. 32697. On reconsideration,
the Commission clarified that updates to the natural gas forecast, a component of the SAR model,
be made annually by June 1 or one month following the release of the Annual Energy Outlook
issued by the U.S. Energy Information Administration (“EIA”), whichever is later. Order No.
32802.
Following the issuance of Orders No. 32697 and 32802, Staff has annually entered the
updated natural gas price inputs into the SAR model and a Staff attorney has sent letters to the
utilities requesting each utility verify that Staff has updated and calculated the published avoided
cost rates correctly. The letters have been filed with the Commission and served to open the
dockets for the annual updates. Notices were not generally issued. The Commission has approved
this process stating, “The Commission has consistently held that this annual update is a simple
arithmetic re-calculation to an established methodology that is accomplished administratively as a
matter of course.” Order No. 34350 at 1 citing Order Nos. 33305, 33538, and 33773
Last year, Staff recommended and the Commission approved, including a comment
and reply period because last year’s update “require[d] the revision of multiple inputs, and not
GNR-E-20-01
DECISION MEMORANDUM 2
simply the annual adjustment to the natural gas price forecast[.]” Order No. 34350 at 1. The
Commission issued a Notice. Order No. 34318.
STAFF RECOMMENDATION
Staff continues to believe, as the Commission has previously stated, that this is a simple
arithmetic re-calculation to an established methodology. However, Staff proposes changes to the
manner in which the updates are accomplished to make these cases administratively smoother and
more similar to other cases the Commission processes. The manner in which these annual updates
have been processed is unique among Commission cases and annually causes discussion as to how
these cases are processed and why. Additionally, the sequence of events under the previous
process was different than typical cases, as Staff would state in its letters to the utilities the dates
it would propose to the Commission for the utilities to reply, without knowing whether those dates
would be accepted by the Commission. Furthermore, Staff believes it would be a good practice
for the Commission to issue a Notice of Modified Procedure stating comment and reply deadlines
after receiving Staff’s Decision Memo initiating these cases annually.
The EIA does not guarantee a specific release date of its updated natural gas price
forecasts. Over the past five years, the update was issued after May 1 one time. Staff believes that
if circumstances align, including the schedule of Decision Meetings and other workload
considerations, its proposed process could be accomplished in the one-month time period
prescribed by Order No. 32802 when the EIA updates are released after May 1. If meeting the
one-month time window is problematic in a given year, Staff could request an extension to the
time limit in its Decision Memo to the Commission initiating the case.
Staff proposes making these updates in an annual GNR docket, instead of utility-
specific dockets, in order to further simplify administration.
Staff recommends this Decision Memo initiate the case. Staff also recommends the
EIA’s 2020 natural gas forecast, updated published avoided cost rates for the utilities, and a copy
of the SAR model be placed in Case Files for this case. Staff also recommends the Commission
issue a Notice of Modified Procedure with a 21-day comment period and a 7-day reply period.
Staff’s recommendation is not intended to change the routine and non-controversial
nature of the updates. Staff’s recommendation is intended to make this process more like other
Commission processes, thereby making it more readily understandable. Staff also believes the
proposed process will provide greater transparency because a Notice will be issued.
DECISION MEMORANDUM 3
Counsel for Staff has reached out to the utilities to discuss Staff’s proposal and a
representative for each utility has indicated that respective utility’s support or non-opposition to
Staff’s recommendation.
COMMISSION DECISION
Does the Commission wish to initiate a general docket and assign a GNR-E-20 case
number to this case, place the referenced materials in the Case Files for the new case, and issue a
Notice of Modified Procedure and establish a 21-day comment period and a 7-day reply period?

__________________________
Edward J. Jewell
Deputy Attorney General

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