20020524Idaho Power's Reply Comments.pdf

RECEIVED G
BARTON L.KLINE ISB #1526 EÍE
Idaho Power Company
2002 MAY 24 PM 4:17P.O.Box 70
Boise,Idaho 83707 ¡D QP 3DCTelephone:[phone] UTILITIESCOMMISS10N
FAX Telephone:[phone]
Attorney for idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise,Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.IPC-E-02-04
OF IDAHO POWER COMPANY FOR )AMENDMENTS TO SCHEDULE 84 --)IDAHO POWER COMPANY'S
NET METERING.)REPLY COMMENTS
INTRODUCTION
Idaho Power Company ("Idaho Power"or "the Company")filed its
Application in this case in compliance with the Commission's Order No.28951 (the
Order).While the Company believes its filing met all the requirements of the Order,
several commenters (RenewableEnergy Advocates ("Advocates"),MotivePower,Inc.
("MPI"),Idaho Farm Bureau Federation ("Farm Bureau"),and Idaho Rural Council
("lRC")),continue to request additional features to expand the scope (and cost)of the
net-metering program.Idaho Power believes that a number of the additional features
suggestedby the commenters require further discussion.The followingsummarizes
IDAHO POWER COMPANY'S REPLY COMMENTS,Page 1
Idaho Power's understanding of the changes to Idaho Power's compliance filing
proposed by the commenters.
Bankinq of Enerqy Provided.Idaho Power proposes to financially credit
generators on a monthly basis for the kilowatt-hours they generate during that month.
Farm Bureau,the Advocates and the IRC request the ability to "bank"generation that
exceeds consumption ("excess generation")with payment for any excess generation
remaining at the end of the year regardless of when it was generated.The Advocates
and IRC offer banking on an indefinite basis as an alternative.
Billinq Methodoloqy-AvoidedCost.Idaho Power proposed crediting
customers'monthly excess generation at a rate per kWh equal to eighty-five (85%)of
the Mid-C market price for non-firm energy.The Advocates and the Farm Bureau
contend that excess generation should be carried-over for a one-year period to allow
offset of consumption throughoutthe year.At the end of the annual period,the Farm
Bureau contends any remaining excess generation should be credited at the full Dow
Jones Mid-C Index price and the Advocates recommend crediting excess generation at
the non-firm avoided cost rate.
NameplateRatinq Versus OutputLimit.Idaho Power proposed that
generation capacity at the nameplaterating be used to determine the maximum
generation facility size and total program generation maximum amount.The MPI and
the Farm Bureau argued that the limits should be expandedto cover the generation
facilities'projected energy output.
IDAHO POWER COMPANY'S REPLY COMMENTS,Page 2
One other commenter,Dan Hennis,provided a troublingcomment
suggesting that developersof wind farms may not accurately state the nameplate
ratings of their generation.This could have serious safety ramifications.
Meterinq.A dual meter arrangementwas proposed by ldaho Power to
accurately measure customers'demand,kilowatt-hour usage and generation.The
Advocates suggest all net-metered customers should be metered through a single
meter.
Interconnection Benefits.Idaho Power's proposal maintains the existing
policy that net-metered customers are responsible for the costs of all interconnection
equipment,system additions,upgrades or modifications necessary to accommodate
their net-metering system.The Advocates suggestthat requiring net-metered
customers to cover costs associated with Company facilities may result in inequitable
payment by net-metered customers because the upgraded distribution system may
benefit non-net-metered customers.
As will be addressed in more detail in the followingreply comments,the
Company believes that its Application remains the best proposal to comply with
commission Order No.28951 and represents the most equitableapproach for all
customers under the guidelines of the Order.
1.TYING THE PRICE PAID FOR ENERGY RECEIVED TO THE TIME
WHEN THE ENERGY IS RECEIVED IS APPROPRIATE
The Farm Bureau,the IRC,and the Advocates oppose the concept of
monthly settlement for excess generation.These commenters propose that the excess
energy be "banked"to allow the net-metered customer to displace future retail
consumption.The electrical reality is that as a net-metered customer provides
IDAHO POWER COMPANY'S REPLY COMMENTS,Page 3
generation,it is delivered into the grid and immediatelyconsumed.Since Idaho Power
cannot dispatch the net generation,it is accepted and other alternative,potentiallylower
cost resources are curtailed or foregone.The Farm Bureau,in its comments,is candid
that irrigators using wind turbines will primarily be generating in the winter and spring.
Those are the periods when Idaho Power's energy costs and need for additional energy
are usually at their lowest levels.Therefore,"banking"energy generated during these
"off-peak"periods is a financial benefit for the net-metered customer rather than an
accurate measure of the value of the energy to Idaho Power.In addition,Idaho Power's
customer billing system is not designed to allow for "banking"of excess kWh.Should
the Commission determine that "banking"is appropriate,the Company will incur
additional expense to have the system modified.
Idaho Power maintains that the appropriate recognition of the value of
non-firm energy is the market price determined as nearly as possible to the time period
in which it is delivered to the utility.In the final analysis,the proposed "banking"of
kilowatt-hours is in reality an additional subsidy for net-metered customers.Idaho
Power continues to believe that its proposalprovides the best balancing of the interests
of net-metered customers to offset most of their consumptionand the main body of
Idaho Power's customers who desire that Idaho Power acquire least-cost resources.
2.EXCESS GENERATION SHOULD BE VALUED AS NON-FIRM ENERGY
Excess generation from a net-metered facility is a textbook exampleof
non-firm energy.It is only made available if,as and when the net-metered customer
desires to make it available.Idaho Power has no way to predict when it will be made
available.A fair representation of the value of such non-firm energy is 85%of the
IDAHO POWER COMPANY'S REPLY COMMENTS,Page 4
monthly average non-firm Mid-C price.A purchase price for excess generation of 85%
of the average monthlyMid-C price provides Idaho Power with confidence that non-firm
energy received from net-metered customers can be resold on the wholesale market at
a price that will recover Idaho Power's purchase cost plus transmission costs.
Conversely,when Idaho Power retains the non-firm energy received from net-metered
customers,a purchase price of 85%of the Mid-C price provides Idaho Power with
assurance that the purchase price is at least as beneficial as a wholesale non-firm
market purchase.
In its comments the Farm Bureau complainedthat Idaho Power did not
present an explanationof why 85%rather than 100%of the monthlyof Mid-C price was
appropriate in this case.The rationale supportingthis market-based purchase price
methodology was presented to the Commission in Idaho Power's pending Application to
revise Schedule 86,Case No.IPC-E-01-40.With the exceptionof MPl,all of the
commenters in this case provided comments in Case NO.IPC-E-01-40 and should be
familiar with the rationale supporting Idaho Power's recommendation of the 85%
amount.
3.BASING INTERCONNECTION ANALYSES ON AN ACCURATE
GENERATION NAMEPLATE RATING IS CRITICAL.
The comments of Dan Hennis describing small to intermediate wind farm
developersusing "Velcro"nameplateratings to allow them to install the full amount of
generation capacity they need to generatethe amount of kWh's they desire to sell is
very troubling.It is critical that all non-utility generators,including net-metered
customers,recognize that their generation outputat times will peak at its nameplate
IDAHO POWER COMPANY'S REPLY COMMENTS,Page 5
rating and Idaho Power's electrical system must be able to accommodate these peak
generationoutputs.
For example,a wind unit may operate at 100%capacity for 2 hours in a
day,10%capacity for 15 hours of the same day and zero capacity,or no generation,for
the remaining 7 hours of the day.The resulting "average"capacity factor is a
mathematical averaging of the various output levels throughoutthe day.However,
Idaho Power must provide adequateelectrical systemsto accommodate the full
nameplaterating of the customer generationin a safe and reliable manner because the
generationunit at times may be delivering100%of its nameplategeneration rating to
the Company'ssystem.Failure to accurately identify nameplateratings could impose
significant risk on Idaho Power and could affect Idaho Power's ability to provide safe
and reliable service to its non-net-metered customers.
Idaho Power believes this comment is further evidence that,at least for
the time being,net metering should be limited to smaller units and spread over a larger
number of customers.Net metering should not be considered as a way to encourage
the developmentof wind farms.
4.THE DEMAND COMPONENT OF NET METERED CUSTOMERS MUST
BE BILLED ACCURATELY
ldaho Power must provideand maintain facilities to supply the electrical
demand of its customers.Althoughit is possiblethat a net-metered customer will be
generating energy at the time of its highest monthlypeak,it would not be reasonable to
assume that the net-metered customer's generation would be available every time a
customer places its highest demand on Idaho Power's electrical system.To allow Idaho
Power to recover costs associated with the delivery infrastructure such as transformers
IDAHO POWER COMPANY'S REPLY COMMENTS,Page 6
and conductors needed to serve net-metered customers,it is appropriate that net-
metered customers'actual demand be separatelymeasured and billed.A single bi-
directional meter is unable to capture the customer's demand independent from any
impact that the customer's generation unit would have.
5.NET-METERED CUSTOMERS THAT CREATE THE NEED FOR
SYSTEM UPGRADES,MODIFICATION OR ADDITIONS SHOULD
BEAR THE COSTS
If the proposed size limitation of 100 kW is approved,it is anticipated that
the majority of net-metering projects will not require significant facility upgrades.In
circumstances where upgrades,modifications or additions are necessary,it is only fair
to all other customers that those receiving the benefit of the net-metering service pay for
the necessary upgrades to accommodate their requests.
It's important to remember that the Companyfaces the issue of system
benefit raised by the Advocates every time it builds a line extension for a customer.
Just as is the case with the Company's line extension policy,if the upgrade required by
a net-metering request is found to provide betterment to the Company and its non-net-
metered customers,the Company will calculate the appropriate costs to be shared by
the net-metered customer and Idaho Power Company.If the net-metered customer
disputesthe equity of the cost sharing proposal,the Commission provides an
experienced forum to resolve such disputes.
Dated at Boise,Idaho,this 24th day of Ma ,2002.
BAR ON L.KLINE
Attorneyfor Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS,Page 7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 24th day of May,2002,I served a true
and correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the
followingnamed parties/individualsby the method indicated below,and addressed to
the following:
Scott Woodbury,Deputy Atty.General x Hand Delivered
Idaho Public Utilities Commission U.S.Mail
472 W.Washington Street OvernightMail
Boise,Idaho 83720-0074 FAX
Kristy Webb,President Hand Delivered
Idaho Rural Council x U.S.Mail
2158 Addison Ave.East OvernightMail
Twin Falls,Idaho 83301 FAX
Bill Chisholm,Energy Coordinator Hand Delivered
Idaho Rural Council x U.S.Mail
19073 East Highway30 Overnight Mail
Buhl,Idaho 83316 FAX
William M.Eddie Hand Delivered
Renewable Energy Advocates x U.S.Mail
P.O.Box 1612 Overnight Mail
Boise,Idaho 83701 FAX
Dan Hennis Hand Delivered
2792 Desert Wind Road x U.S.Mail
Mountain Home,Idaho 83647 Overnight Mail
FAX
Norman E.Anderson Hand Delivered
MotivePower,Inc.x U.S.Mail
4600 Apple Street Overnight Mail
Boise,Idaho 83716 FAX
Frank Priestly,President Hand Delivered
Idaho Farm Bureau Federation x U.S.Mail
P.O.Box 167 Overnight Mail
Boise,Idaho 83701 FAX
BARTON L.KLINE
CERTIFICATE OF SERVICE