HomeMy WebLinkAbout20130408Reply Comments.pdfHO
PONER®
An IDACORP Company
PM 4:
JULIA A. HILTON
Corporate Counsel yflL!T
jhiItoncidahopower.com
April 8, 2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. GNR-E-11-03
PURPA SAR and IRP Methodologies - Idaho Power Company's Reply
Comments on Reconsideration
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of Idaho
Power Company's Reply Comments on Reconsideration.
Very truly yours,
Julia A. Hilton
JAH:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
DONOVAN E. WALKER (ISB No. 5921)
JULIA A. HILTON (ISB No. 7740)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: (208) 388-5317
Facsimile: (208) 388-6936
dwaIkeridahopower.com
jhiItoncidahopower.com
ZUI3 APR -8 PH 4: 4.4
- ' UtL LIT IT:S (OMMLS;ON
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION'S )
REVIEW OF PURPA QF CONTRACT ) CASE NO. GNR-E-1 1-03
PROVISIONS INCLUDING THE )
SURROGATE AVOIDED RESOURCE ) IDAHO POWER COMPANY'S
(SAR) AND INTEGRATED RESOURCE ) REPLY COMMENTS ON
PLANNING (IRP) METHODOLOGIES FOR ) RECONSIDERATION
CALCULATING AVOIDED COST RATES. )
Idaho Power Company ("Idaho Power" or "Company") hereby respectfully
submits to the Idaho Public Utilities Commission ("Commission") its Reply Comments
on the reconsideration of the canal drop hydro definition and the resource-specific
capacity factors of the Surrogate Avoided Resource ("SAR") methodology for canal drop
hydro and the other categories.
I. INTRODUCTION
On February 5, 2013, the Commission issued its Order on Reconsideration in the
above-captioned case. Order No. 32737. This Order was a final order as to some
issues, and either granted or denied reconsideration and clarification as to some issues.
IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -1
The Commission directed the parties to file comments by March 25, 2013, and reply
comments by April 8, 2013, regarding the issues raised on reconsideration and
clarification regarding canal drop hydro and the resource-specific capacity factors
utilized in the SAR methodology. Order No. 32737 at 3-4.
Idaho Power, Commission Staff ("Staff), the Renewable Energy Coalition
("REC"), and Twin Falls Canal Company, North Side Canal Company, Big Wood Canal
Company, and American Falls Reservoir District No. 2 filed Comments on March 25,
2013. Idaho Power is mainly in support of Staffs Comments and greatly appreciates
the thorough analysis contained therein. As more fully explained below, Idaho Power
supports Staff's recommendation for the terminology changes, although Idaho Power
believes that it is appropriate to use the months of June, July, and August for this
definition. Idaho Power agrees with Staff's analysis on the peak hour period and the
90th percentile capacity factor. Idaho Power believes the Commission should use the
data set presented in Idaho Power's Comments on Reconsideration in calculating
Equivalent Forced Outage Rates ("EFOR") as an accurate reflection of forced outage
rates for current Qualifying Facility ("QF") projects.
II. DEFINITION OF CANAL DROP HYDRO
Staff proposed the use of the term "seasonal hydro" in place of "canal drop
hydro" and "non-seasonal hydro" in place of "hydro." Idaho Power supports this change
in terminology as a more accurate reflection that the difference in valuing these types of
power deliveries is based upon their seasonal nature. The Company agrees with Staff
that the important distinction is not necessarily a project's source of water but whether it
generates and delivers energy "during the season of the year when capacity is most
IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -2
valuable to the utility." Staff Comments at 2-3. Staff also proposes that the
Commission define a seasonal hydro project as one that generates at least 90 percent
of its average annual generation during the months of April through October. Staff
Comments at 2. Idaho Power has proposed that the definition of a seasonal hydro
project be one that produces at least 55 percent of its generation during June, July, and
August. Idaho Power Comments at 6. The Company continues to advocate for these
primary generation months because they are the months during which the Company
has the greatest need, as demonstrated by its annual peak loads, which have
historically occurred between June 23 and July 31. See Staff Comments at 5. Using
Staffs proposed definition of a seasonal hydro project as one that delivers 90 percent of
its generation from April through October does not accurately reflect Idaho Power's
peak consumption period. Using the months of June, July, and August is still greater
than the period Staff identified as the Company's historical peak hour period of June 23
through July 31. Idaho Power believes that requiring a greater amount of generation in
these three months instead of spreading it out over the months of April to October is
most valuable to the utility and better reflects the time during which the utility has the
greatest need.
Idaho Power is also supportive of Staffs recommendation that a project be
required to demonstrate compliance with the applicable definition in its first year, with
adjustment of rates retroactively if a project fails to comply. Staff Comments at 3.
However, the Company believes that this compliance test should occur annually for the
full term of an Energy Sales Agreement ("ESA"). If a project does not meet the test,
Idaho Power believes it is appropriate to recalculate the previous year's payments
IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -3
based on non-seasonal hydro rates, with any overpayment being collected back from
the project in the next 12 month period. In addition, if the project fails to meet this
requirement over three consecutive years, the avoided cost rates within the ESA will be
adjusted to reflect non-seasonal hydro rates for the remaining term of the ESA.
III. CAPACITY FACTORS FOR CANAL DROP HYDRO AND OTHER
Idaho Power is appreciative of Staffs extensive review of the issues and data
surrounding the capacity factor. The Company believes that Staffs analysis addresses
any deficiencies identified by other parties. Staffs analysis results in a proposal that the
peak-hour period consist of the hours between 3 p.m. and 8 p.m. on June 23 through
July 31. Staff Comments at 5. Idaho Power concurs that this is a reasonable
conclusion based upon the data.
Idaho Power also notes that Staff agreed with the use of the 90h percentile
capacity factor as appropriate. Staff Comments at 4. In support of the 90th percentile
capacity factor, Staff stated:
It is consistent with Idaho Power's IRP as Idaho Power uses
90th percentile water conditions for peak hour capacity
planning in their IRP. Using a lower percentile capacity
factor increases the probability that planned-on capacity will
not be available when needed. Staff believes that the 90th
percentile capacity factor minimizes this risk. If, instead, a
50th percentile capacity factor (the median) was used, then
half of the time, planned-on capacity would not actually be
available during peak hours.
Id. The Company believes that peak hour capacity factors presented in its Comments
on Reconsideration are an appropriate calculation; however, when Staff's extensive
calculations are coupled with the proposed definition of seasonal hydro, Idaho Power
IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -4
would also concur that Staffs recommended peak hour and annual capacity factors are
reasonable.
REC's Comments question whether an adjustment for seasonality is necessary
when capacity factors are used. REC Comments at 2-3. The currently approved SAR
avoided cost model produces annual published avoided cost values. The purpose of
the seasonal and time of day adjustments to these published avoided cost values is to
accurately reflect the value of the energy to Idaho Power based upon the time of year
and time of day. These adjustments are consistent with prior Commission orders that
established seasonal and time-of-day adjustments and should be retained. Seasonality
and heavy and light load adjustments are not required in the recently approved
incremental cost Integrated Resource Plan methodology because this model produces
individual monthly heavy and light load prices which are then reflected in the ESA with a
particular QF. Idaho Power believes that both are necessary in order to more precisely
value the energy for the utility.
Staffs Comments also appear to introduce an adjustment to an input within the
SAR model: spreading the annual fixed operations and maintenance ('O&M") cost of a
proxy resource over the expected generation of the QF resource. See Staff Comments
at 2. With this adjustment, if the specific QF project achieves the same capacity factor
as assumed for the generic QF resource type, the QF project via payments per kilowatt-
hour of production would receive the full annual fixed O&M costs as estimated for the
proxy resource. Idaho Power does not disagree that the fixed O&M cost of the proxy
resources when using the SAR avoided cost model is part of the proxy resource
avoided cost. However, if a specific QF project does not perform at the same capacity
IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -5
factor of the generic resource's capacity factor, the QF project will receive a fixed O&M
payment that either exceeds or is less than the proxy resource's estimated annual fixed
O&M costs. This risk of over- or under-payment is a potential downside of using the
SAR proxy resource avoided cost model. To help minimize this risk of potential over- or
under-payment to a QF project, the Company believes it is very important to have
accurate definitions of the various QF resource types so that only projects with similar
annual and peak hour capacity factors will be eligible for the same avoided cost rate
schedules.
Staff has proposed a different peak hour capacity factor be applied to other QF
resource types. Staff Comments at 7. Staffs proposal is different, although similar, to
the Company's proposal. The basic data used to create Staff's proposed peak hour
capacity factor, which is set forth in Staffs Attachment 4, is consistent with the
Northwest Power and Conservation Council's data on EFOR, which is the data Idaho
Power used in making its recommendation. See Idaho Power Comments at 9. Staff
appears to have selected five QF resource types and averaged the individual values to
arrive at Staffs proposed values. Idaho Power's proposal for a 92 percent peak hour
capacity factor for other projects (92 percent, being 100 percent less a forced outage
rate of 8 percent) is consistent with Attachment 4 to Staff's Comments and the
Northwest Power and Conservation Council's data on EFOR. Idaho Power believes the
use of the 8 percent forced outage rate (resulting in a 92 percent peak hour capacity
factor) is appropriate because the majority of other recent projects that have been
developed and are being proposed to Idaho Power have been landfill gas and animal
manure energy recovery (digesters) projects, which have an 8 percent EFOR, although
IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -6
the Company notes there is potential for development of other resource types listed in
Attachment 4 to Staffs Comments.
IV. CONCLUSION
For the reasons set forth above, Idaho Power concurs with Staffs request that
the Commission replace "canal drop hydro" with "seasonal hydro" and "hydro" with "non-
seasonal hydro." The Company also requests that the Commission use the months of
June, July, and August for this definition as set forth in Idaho Power's Comments.
Idaho Power requests that the Commission apply Staffs recommendation for the peak
hour period and the 90th percentile capacity factor for seasonal hydro projects. Further,
with regard to capacity factors for other projects, Idaho Power asks that the Commission
direct the use of a 92 percent peak hour capacity factor and an 88 percent annual
capacity factor.
Respectfully submitted this 8th day April 2013.
JUL4A. HIYON
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 8 th day of April 2013 I served a true and correct
copy of IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION
upon the following named parties by the method indicated below, and addressed to the
following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Avista Corporation
Michael G. Andrea
Avista Corporation
1411 East Mission Avenue, MSC-23
Spokane, Washington 99202
PacifiCorp dlbla Rocky Mountain Power
Daniel E. Solander
PacifiCorp d/b/a Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
Exergy Development, Grand View Solar II,
J.R. Simplot, Northwest and Intermountain
Power Producers Coalition, Board of
Commissioners of Adams County, Idaho,
and Clearwater Paper Corporation
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
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IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -8
Dr. Don Reading Hand Delivered
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Robert A. Paul
Grand View Solar II
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Desert Hot Springs, California 92241
J.R. Simplot Company
Don Sturtevant, Energy Director
J.R. Simplot Company
One Capital Center
999 Main Street
P.O. Box 27
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Northwest and Intermountain Power
Producers Coalition
Robert D. Kahn, Executive Director
Northwest and Intermountain Power
Producers Coalition
1117 Minor Avenue, Suite 300
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Board of Commissioners of Adams
County, Idaho
Bill Brown, Chair
Board of Commissioners of
Adams County, Idaho
P.O. Box 48
Council, Idaho 83612
Clearwater Paper Corporation
Mary Lewallen
Clearwater Paper Corporation
601 West Riverside Avenue, Suite 1100
Spokane, Washington 99201
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Renewable Energy Coalition and Dynamis
Energy, LLC
Ronald L. Williams
WILLIAMS BRADBURY, P.C.
1015 West Hays Street
Boise, Idaho 83702
Renewable Energy Coalition
John R. Lowe, Consultant
Renewable Energy Coalition
12050 SW Tremont Street
Portland, Oregon 97225
Dynamis Energy, LLC
Wade Thomas, General Counsel
Dynamis Energy, LLC
776 East Riverside Drive, Suite 150
Eagle, Idaho 83616
Interconnect Solar Development, LLC
R. Greg Ferney
MIMURA LAW OFFICES, PLLC
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Meridian, Idaho 83642
Bill Piske, Manager
Interconnect Solar Development, LLC
1303 East Carter
Boise, Idaho 83706
Renewable Northwest Project, Idaho
Windfarms, LLC, and Ridgeline Energy LLC
Dean J. Miller
Chas. F. McDevitt
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, Idaho 83701
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IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -10
Idaho Windfarms, LLC
Glenn Ikemoto
Margaret Rueger
Idaho Windfarms, LLC
672 Blair Avenue
Piedmont, California 94611
Twin Falls Canal Company, North Side
Canal Company, Big Wood Canal
Company, and American Falls Reservoir
District No. 2
C. Tom Arkoosh
ARKOOSH LAW OFFICES
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P.O. Box 2900
Boise, Idaho 83701
ELECTRONIC SERVICE ONLY
Donald W. Schoenbeck
RCS, Inc.
900 Washington Street, Suite 780
Vancouver, Washington 98660
ELECTRONIC SERVICE ONLY
Twin Falls Canal Company
Brian Olmstead, General Manager
Twin Falls Canal Company
P.O. Box 326
Twin Falls, Idaho 83303
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North Side Canal Company
Ted Diehl, General Manager
North Side Canal Company
921 North Lincoln Street
Jerome, Idaho 83338
Birch Power Company
Ted S. Sorenson, P.E.
Birch Power Company
5203 South 11th East
Idaho Falls, Idaho 83404
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Blue Ribbon Energy LLC
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Ammon, Idaho 83406-7728
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Blue Ribbon Energy LLC
10660 South 540 East
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Idaho Conservation League
710 North Sixth Street (83702)
P.O. Box 844
Boise, Idaho 83701
Snake River Alliance
Liz Woodruff, Executive Director
Ken Miller, Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
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Energy Integrity Project
Tauna Christensen
Energy Integrity Project
769 North 1100 East
Shelley, Idaho 83274
Idaho Wind Partners I, LLC
Deborah E. Nelson
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GIVENS PURSLEY LLP
601 West Bannock Street (83702)
P.O. Box 2720
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