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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 X Hand Delivered U.S. Mail Overnight Mail FAX X Email kris.sasser(puc.idaho.qov Hand Delivered X U.S. Mail Overnight Mail FAX X Email michaeI.andreacavistacorp.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email daniel.solanderpacificorp.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email peter(ärichardsonandoleary.com gregrichardsonandoleary.com Exergy Development Group of Idaho, LLC Hand Delivered James Carkulis, Managing Member X U.S. Mail Exergy Development Group of Idaho, LLC Overnight Mail 802 West Bannock Street, Suite 1200 FAX Boise, Idaho 83702 X Email icarkulisexerqydevelopment.com IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -8 Dr. Don Reading Hand Delivered 6070 Hill Road X U.S. Mail Boise, Idaho 83703 Overnight Mail FAX Grand View Solar II Robert A. Paul Grand View Solar II 15690 Vista Circle 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 Boise, Idaho 83707-0027 Northwest and Intermountain Power Producers Coalition Robert D. Kahn, Executive Director Northwest and Intermountain Power Producers Coalition 1117 Minor Avenue, Suite 300 Seattle, Washington 98101 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 X Email dreadinpcmindsprinq.com d r(beniohnsonassociates.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email robertaDaul08(gmail.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email don. sturtevantsim plot. com Hand Delivered X U.S. Mail Overnight Mail FAX X Email rkahn(ãnippc.om Hand Delivered X U.S. Mail Overnight Mail FAX X Email bd brown frontie met. net _Hand Delivered X U.S. Mail _Overnight Mail FAX X Email marv.lewalIencIearwaterpaper.com IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -9 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 2176 East Franklin Road, Suite 120 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 Hand Delivered X U.S. Mail Overnight Mail FAX X Email ronwiIIiamsbradbury.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email iravenesanmarcosvahoo.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email wthomascdynamisenerqy.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email creci(ãmimuraIaw.com _Hand Delivered X U.S. Mail _Overnight Mail FAX X Email biIIpiske(cabIeone.net Hand Delivered X U.S. Mail Overnight Mail FAX X Email ioemcdevitt-miIIer.com chascmcdevift-miIIer.com Megan Walseth Decker Hand Delivered Senior Staff Counsel X U.S. Mail Renewable Northwest Project Overnight Mail 421 SW 6th Avenue, Suite 1125 FAX Portland, Oregon 97204 X Email mecian(ãrnp.orq 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 802 West Bannock, Suite 900 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 ELECTRONIC SERVICE ONLY 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 Hand Delivered X U.S. Mail Overnight Mail FAX X Email qIenni(envisionwind .com marqaretcenvisionwind .com Hand Delivered X U.S. Mail Overnight Mail FAX X Email tom.arkooshcarkoosh.com erin .cecil(äarkoosh .com Hand Delivered U.S. Mail Overnight Mail FAX X Email dwscr-c-s-inc.com Hand Delivered U.S. Mail Overnight Mail FAX X Email olmsteadctfcanal.com _Hand Delivered U.S. Mail _Overnight Mail FAX X Email nscanalccableone.net Hand Delivered X U.S. Mail Overnight Mail FAX X Email tedctsorenson.net IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -11 Blue Ribbon Energy LLC M.J. Humphries Blue Ribbon Energy LLC 3470 Rich Lane Ammon, Idaho 83406-7728 Arron F. Jepson Blue Ribbon Energy LLC 10660 South 540 East Sandy, Utah 84070 Idaho Conservation League Benjamin J. Otto 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 Boise, Idaho 83701 Energy Integrity Project Tauna Christensen Energy Integrity Project 769 North 1100 East Shelley, Idaho 83274 Idaho Wind Partners I, LLC Deborah E. Nelson Kelsey J. Nunez GIVENS PURSLEY LLP 601 West Bannock Street (83702) P.O. Box 2720 Boise, Idaho 83701-2720 Hand Delivered X U.S. Mail Overnight Mail FAX X Email bIueribbonenerQyqmail.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email arronesp(äaol.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email boftoidahoconservation.orq Hand Delivered X U.S. Mail Overnight Mail FAX X Email lwoodruff(ãsnakeriveralliance.orq kmillersnakeriveralliance.orq Hand Delivered X U.S. Mail Overnight Mail FAX X Email taunacenerc1yinteqrityDroiect.org _Hand Delivered X U.S. Mail _Overnight Mail FAX X Email den(qivenspursley.com kinqivenspursley.com Mountain Air Projects, LLC Hand Delivered J. Kahle Becker X U.S. Mail The Alaska Center Overnight Mail 1020 West Main Street, Suite 400 FAX Boise, Idaho 83702 X Email kahle(kahIebeckerlaw.com IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -12 Michael J. Uda UDA LAW FIRM, P.C. 7 West 6th Avenue, Suite 4E Helena, Montana 59601 Hand Delivered X U.S. Mail Overnight Mail FAX X Email mudacmthelena.com Christa Bearry, Legal Assistn) IDAHO POWER COMPANY'S REPLY COMMENTS ON RECONSIDERATION -13