20210416Application.pdf

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DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BARNO. 9917
rr'ii :i.lil i6 Efill: ltr
Street Address for Express Mail:
I1331 W CHINDEN BVLD, BLDG 8, SUITE 2OI-A
BOISE, D 83714
Attorney for the Commission Staff
BEF'ORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF COMIVISSION STAFF'S
APPLICATION TO TIPDATE INPUTS TO THE*SURROGATE AVOIDED RESOURCE"
METHOD AVOIDED COST RATES
CASE NO. GNR.E.21-01
APPLICATION
Commission Staff, under Commission Rule of Procedure 52, the applicable provisions of
the Public Utility Regulatory Policies Act of 1978 ("PURPA'), and as directed by Order No.
34628, hereby respectfully applies to the Idaho Public Utilities Commission ("Commission") for
an order updating inputs to the surrogate avoided resource method ("SAR Method") model,
making administrative changes to the SAR Method model, and approving the SAR Method
avoided cost rates attached to this Application to be effective June 1,2021.
ln support of this Application, Commission Staffrepresents as follows:
I. BACKGROINTD.
l. The Commission calculates and publishes SAR Method rates for qualifuing
facilities ("QF" or "QFs") that are under the applicable resource type project eligibility cap. In
Order No. 32697, the Commission found that the final release of U.S. Energy Information
Administration ("ElA") Annual Energy Outlook automatically triggers a recalculation of
published avoided cost rates. In Order No.32802, the Commission clarified that an update should
occur on June I or within 30 days of the final release of the Annual Energy Outlook, whichever is
later. Following the issuance of Orders No. 32697 and32802, Staffannually entered the updated
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IAPPLICATION
natural gas price inputs into the SAR Method model and a Staffattorney sent letters to the utilities
requesting each utility veriff that Staffupdated and calculated the published avoided cost rates
correctly. The letters were filed with the Commission and served to open the dockets for the annual
updates. Notices were not generally issued. The Commission stated, "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 I
citing Order Nos. 33305, 33538, and 33773.
2. Last year, the Commission approved a more formal process to update inputs to the
SAR Method. Order No. 34628. The Commission stated, "Subsequent annual SAR updates will
be initiated with an Application to the Commission. Despite the change in procedure to allow for
better tracking and transparency, ttris update is still intended to be a simple arithmetic calculation
to an established methodology." Id.
3. This year, in addition to the updated natural gas forecast, Commission Staff
proposes administrative updates and implementation of previously approved changes to Idaho
Power's and Avista's wind integration charges. Staffbelieves these updates continue to reflect a
"simple arithmetic calculation to an established methodology" and does not propose changes to
the established methodology in this Application.
II. THE UPDATES.
4. Staffupdated the natural gas forecast in the SAR Method model to the "reference
case" natural gas price forecast for the Mountain Region's Electric Power sector included in the
EIA Annual Energy Outlook 2021 released on February 3,2021. A copy of the relevant natural
gas price forecast is included on the ABOz0zl-EnergyPricesMountain tab in the attached SAR
Method model. Staffhas incorporated this forecast into the attached SAR Method model.
5. Staff created a log to document changes to the SAR Method model. File names,
modifications to the model, orders that authorize the modifications, and effective dates are
included on the tab. Currently, the tab includes four updates to the SAR Method model approved
lrl,2021. Staffwill keep adding new versions of the model to the list as they are approved. The
log is included in the SAR Method model attached and is found in the tab "Log of Prior SAR
Models."
6. Staffdeactivated the calculation of wind integration charges for Idaho Power in the
SAR Method model. Idaho Power's integration charges are published in Schedule 87 and applied
to individual QF contacts outside the SAR Method model. The integration charges are dependent
2APPLICATION
on QF online date and levels of wind penetration on ldaho Power's system. Previous to the
modifications Staff proposes in this case, calculations of wind integration charges were left active
in the SAR Method model but were no longer used in the model. Eliminating this functionality in
the model is intended to be a non-material change with the benefit of eliminating potential
confusion. Staffset Idaho Power's Wind Integration Adjustment (Cell D67 on the AVOID NEW
tab) to be 'NA" and changed corresponding column titles on the "IPCO NF HLH LLH Levelized"
tab, the "IPCO NF HLH LLH Non-levelized" tab, the lPCOStorage(Energy)Non-LevelADJ tab,
and the IPCOStorage(Energy)LevelizedADJ tab, to "Final avoided cost rates for wind and solar
QFs include integration charges from Schedule 87." Idaho Power's Solar Integration Adjustment
cell has always been "NA" in the SAR model.
7. Staff updated Avista's wind integration charges to reflect Avista's current wind
penetration. Avista's wind integration charges were approved in Order No. 30500, using three
tiers of penetrations with a cap of $6.50/IVIWh, as shown below.
Amount of Wind Online Integration Charge (cap)
Tier I 0 to 199 MW 7% ($6.s0/lv[wh)
Tier 2 200 to 299lvfv,I 8% ($6.50/NrWh)
Tier 3 300 MW and above 9% ($6.s0/vrwh)
Currently, the SAR model uses Tier I to calculate Avista's wind integration charges. However,
Avista's current wind penetration is265.75 MWl. Therefore, Staff updated the SAR Method
model to Tier 2 to calculate Avista's wind integration charges. Staffchanged Avista's Wind
lntegration Adjustment (Cell E67 on the AVOID NEW tab) from 7o/o to 8o/o to reflect the
updated penetration level.
8. Attached to this Application are the following Attachments:
a. An updated SAR model with all the updates mentioned above
incorporated.
b. Attachment A (IPCO Avoided Cost Rates forNew Contracts).
c. Attachment B (IPCO Avoided Cost Rates for Renewal Contracts).
d. Attachment C (Avista Avoided Cost Rates for New Contracts).
e. Attachment D (Avista Avoided Cost Rates for Renewal Contracts).
I This information was obtained from Avista on March 30,2021through email.
3APPLICATION
f. Attachment E (PAC Avoided Cost Rates forNew Contracts).
g. Attachment F (PAC Avoided Cost Rates for Renewal Contacts).
IIL NATURAL GAS PRICE FORECAST COMPARISON.
9. Staff compared the 202I natural gas forecast and the 2020 nat:ural gas forecast
published by Energy Information Administation. See Table No. 1, below. Although the two
forecasts are similar overall, new avoided costs of energy, which use the 2021 natural gas forecast,
will be higher fuom 2021 through around 2024 and will be lower from around 2024 movrng
fonvard than the previously-approved avoided costs of energy, which used the 2020 natural gas
forecast.
Table No. 1: Comparisonof 2020 Nafural Gas Forecast and 2021 Natural Gas Forecast
2020 Natura! Gas Forecast and 202L Natural Gas Forecast
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o r o Q35 Nominal Prices (2020) Gas Nominal Prices (2021)
IV. MODIFIED PROCEDURE.
10. Commission Staff believes that a hearing is not necessary to consider the issues
presented herein and respectfully requests that this Application be processed under Modified
Procedure; i.e., by written submissions rather than by hearing. Commission Rules of Procedure
201 - 204. If, however, the Commission detemrines that a technical hearing is required, the
Commission Staffstands ready to prepare and present its testimony in such hearing.
V. COMMUNICATIONS AND SERYICE OF PLEADINGS.
I l. Communications and service of pleadings, exhibits, orders, and other documents
relating to this proceeding should be sent to the following:
APPLICATION 4
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DaynHardie Mike Louis
Deputy Attorney General for the Idaho Public Idatro Public Utilities Commission
Utilities Commission P.O. Box 83720
P.O. Box 83720 Boise, D 83702-0074
Boise,Idaho 83702-0074 E-Mail: [e-mail]
E-mail: [e-mail]. gov
vr. REQITEST FOR RELTEF.
Commission Staffrespectfully requests the Commission issue an order: (l) authorizing this
matter to be processed by Modified Procedure; (2) updating the SAR Method model as described
herein and approving the updated SAR Method avoided cost rates shown in the attachments to this
Application.
Respectfully submitted this 166 day of April2D2l.
Deputy Attorney Ge,neral
5APPLICATION
CERTIFICATE OF SERYICE
I HEREBY CERTIFY that on this 16ft day of Apil 2021, I served the foregoing
APPLICATION, In Case No. GNR-E-21-01, Via Electronic Mail to the following:
Donovan E. Walker
Michael Daninglon
Energy Contracts
Idaho Power Company
1121 W.Idatro Street 83702
P.O. Box 70
Boise,ID 83707-0070
dwalker@ idahopower. com
dockets@ idahopow er. com
mdarrineton@ i dahopower. com
energycontacts @ idahopower. com
David Meyer
Michael Andrea
Avista Corporation
P.O.Box3727
l4l I East Mission Avenue
Spokane, Wa^99220-3721
david. meyer@ avistacorp. com
michael. andrea@ avistacorp. com
avistadockets@ avistacom.com
Ted Weston
Emily Wegener
Rocky Mountain Power
1407 West North Temple, Ste. 330
Salt Lake City, UT 84116
ted. [e-mail]
emily. wegener@pacificorp. com
l(ln; zY.ffiv{t<tlw
KERI J. HA'\MKER
Legal Assistant to Dayn Hardie
6APPLICATION