20070119ICIP comments.pdf

Peter Richardson
Mark Thompson
515 N. 27th Street
Boise, Idaho 83702
[phone]
[phone] (fax)
Deter~richardsonandolearv com
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S 2006 INTEGRATED
RESOURCE PLAN
CASE NO. IPC-06-
COMMENTS OF THE
INDUSTRIAL CUSTOMERS OF
IDAHO POWER
INTRODUCTION
The Industrial Customers of Idaho Power (ICIP) appreciate the opportunity to
offer comments on Idaho Power s 2006 Integrated Resource Plan (IRP), filed with the
Commission on September 24 2006. ICIP also appreciates Idaho Power s efforts to
develop its IRPs with the assistance of the IRP Advisory Council, to which some of
ICIP's individual members belong. These comments are intended to offer ICIP's views
of the 2006 IRP after having a chance to review the final product in whole, and to assist
the Company in its resource planning as well as the Commission in determining whether
it should approve the 2006 IRP for filing. For all of the reasons below, ICIP believes that
the Commission should not accept the 2006 IRP for filing at this time, but should instead
require Idaho Power to reconsider and supplement the 2006 IRP as explained herein.
The Commission has explained that an IRP must include both supply- and
demand-side options available to the Company in meeting its loads in a cost-effective
manner. 1 Also, it has held that the "IRP should not be regarded by Idaho Power as
simply an academic or regulatory exercise.z It should be regarded as an "actual
planning document ofthe Company" and it should accurately represent its "best estimate
of future changes in loads, resources and contract obligations.',3 The 2006 IRP does not
achieve those standards, and contains certain inaccuracies and incomplete considerations
of various important issues.
II.THE 2006 IRP FAILS TO OFFER A COMPREHENSIVE
EVALUATION OF THE VARIOUS RESOURCE ALTERNATIVES
AVAILABLE TO IDAHO POWER
a. The 2006 IRP Did Not Evaluate Resources Under Consideration by the
Company and Commission
Although ICIP does not believe it is appropriate in this proceeding to reiterate its
opposition to the Company s recently approved Evander Andrews natural gas-fired
combustion turbine, the process through which that plant was chosen and approved raised
concerns with ICIP that are relevant to the company s IRP. Idaho Power s application in
the Evander Andrews proceeding relied almost exclusively on the 2004 IRP, which called
for an 88 MW peaking resource.4 By the time that application was considered by the
Commission, the Company had already released its 2006 IRP, which contained
drastically different assumptions regarding, among other things, natural gas prices and
Demand-Side Management (DSM) program levels. In ICIP's view, these changes called
into serious question the advisability of constructing a natural gas combustion turbine.
And, unfortunately, the 2006 IRP simply assumed that the Evander Andrews plant would
be built, and contained no analysis of whether it in fact should still be pursued. This left
I Order No. 29189, Case No. IPC-02-, at 20 (Feb. 11 2003).
!d.
!d.
See Application ofIdaho Power, filed in Case No. IPC-06-09 (April14, 2006).
ICIP Comments on Idaho Power s 2006 IRP
the task of showing whether the Evander Andrews project was appropriate under current
conditions up to ICIP and Commission staff, without any supporting analysis from the
company based on current data.
In light of the purpose of an IRP to accurately evaluate the various resource
choices available to Idaho Power, ICIP urges the Commission to require the Company, in
future IRPs, to evaluate any resources under consideration in order to determine if they
continue to be preferred options. Allowing the company to bootstrap old resource
decisions into new planning processes leaves open the possibility that imprudent
resources will be constructed due simply to the inertia of the process that initiated them.
Until a project is constructed, it should never be too late to reevaluate the wisdom of
pursuing it to completion.
b. The 2006 IRP Does Not Evaluate A Resource the Commission Has Now
Ordered it to Investigate and Implement
As explained by ICIP in the Evander Andrews application proceeding, Idaho
Power has previously committed to investigate the potential of using distributed
generation, in the form of emergency backup generators installed throughout its service
territory, as a potential resource for meeting its peak demand.5 Idaho Power has not
followed through on that commitment, and this Commission accordingly entered the
following order in that case:
Idaho Power shall investigate and develop a proposal for the
implementation of a "virtual peaking plant" program based upon
the use of customers' emergency generator resources located
throughout the Company s service area. This proposal shall be
submitted to the Commission for its review no later than June 1
2007.
See Oregon Public Utilities Commission Order No. 05-871 , p. 15 (July 28 2005).6 Order 30201 , p. 18, Case No. IPC-06-09 (Dec. 15 2006).
ICIP Comments on Idaho Power s 2006 IRP
Idaho Power s 2006 IRP does not offer any consideration of the potential peaking
resource that could be gained through a "virtual peaking plant." Because the Company
currently engaged in evaluating this resource, and because it will have a proposal for the
implementation of such a plant by June 1 , 2007, ICIP believes that the Commission
should direct Idaho Power to include in its 2006 IRP its findings, and the impact that such
a plant will have on its resource decisions. Without such a supplement to the 2006 IRP, it
will not contain a reasonably accurate resource picture upon which Idaho Power can base
resource decisions.
III.THE 2006 IRP DOES NOT CONTAIN IDAHO POWER'S BEST LOAD
FORECAST
As described above, Idaho Power s 2006 IRP should contain its "best estimate of
future changes in loads, resources and contract obligations.',7 However, Idaho Power is
aware of significant changes in its load forecast that it did not include in its 2006 IRP.
In May of2006, a significant increase in Idaho s Conservation Reserve
Enhancement Program (CREP) was announced. Under the CREP program, significant
amounts of farmland is set aside, and irrigation pumps are accordingly turned off.
Although water conservation is a main purpose of CREP, it has a significant impact on
Idaho Power s loads, and especially its peak demands, which are substantially driven by
irrigation pumping loads.
In a recent forecast ofIdaho Power s loads, Idaho Power has incorporated an
annual energy reduction over the next 15 years (2007 through 2021) of approximately 4%
!d.
See Direct Testimony of Don Reading on Behalf of IClP filed in Case No. IPC-06-, p. 33 (non-
Confidential version).
ICIP Comments on Idaho Power s 2006 IRP
because of CREP.9 However, Idaho Power has stated that "(fJor planning purposes
Idaho Power has not incorporated any specific assumptions in the 2006 IRP regarding the
. . . CREP.',10 The effects of that reduction could be significant in Idaho Power
preferred portfolio in the 2006 IRP, especially given the dual impact to energy and peak
demand. The Commission stated a concern on this topic in its order accepting the
company s 2004 IRP for filing. It cautioned
, "
the continued effects of the drought on
irrigation pumping and other state actions that reduce the amount of irrigation pumping
creates uncertainty regarding the need for additional peaking resources.ll The
Commission should direct Idaho Power to incorporate this new forecast into its 2006 IRP
analysis in order to ensure that it provides a complete evaluation ofthe resource options
available to it, based on accurate data.
IV.THE 2006 IRP'S ANALYSIS OF TRANSMISSION
IMPROVEMENTS DOES NOT TAKE INTO ACCOUNT
IMPORT ANT RESOURCES AND MARKETS EAST OF IDAHO
POWER'S SERVICE TERRITORY
In its 2006 IRP, Idaho Power elects to pursue two transmission upgrades.
Both upgrades are intended to expand its access to the power market in the Pacific
Northwest 12 Although relatively inexpensive hydropower exists in the northwest
ICIP is concerned that the 2006 IRP does not fully consider options for upgrading
Idaho Power s transmission system to increase access to markets and resources
located east of its service territory.
See id. (citing Exhibit No. 234, Response to ICIP Request for Production No. 41).
10 !d.
11 Order No. 29762, Case No. IPC-04-, p. 10 (emphasis added).
2006 IRP, p. 98.
ICIP Comments on Idaho Power s 2006 IRP
The Pacific Northwest hydrosystem has become increasingly constrained
due to operations for compliance with the Endangered Species Act and other fish
and wildlife mitigation measures. Additionally, growing loads in the Pacific
Northwest are expected to consume an increasing proportion of the low-cost
hydropower available there. Given these changes, ICIP questions the prudence of
Idaho Power s assumption in its 2006 IRP that "all off-system market purchases
will come from the Pacific Northwest.,,13 ICIP expects that coal resources located
in the Power River Basin will likely be the source of low-cost generation resources
for the region. Idaho Power s call for 500 MW of new coal-fired generation
tends to support a closer look at transmission expansion options to the east of its
system, where such resources are more likely to be located than in the Pacific
Northwest or Idaho.
THE IRP DOES NOT ADDRESS THE EFFECTS OF RATE DESIGN
ON LOAD
Again, Idaho Power s IRP should contain an accurate and complete evaluation of
the resources available to it, based on its most accurate data concerning loads, resources
and contracts. In order to do this, ICIP believes that the 2006 IRP should contain an
evaluation ofthe effects that various rate designs will have on Idaho Power s loads. For
example, time-of-use metering could have a significant effect on Idaho Power customers
usage. ICIP is not certain that the 2006 IRP evaluates the effects that such programs
could have on Idaho Power s load forecast or resource decisions. The Commission
2006 IRP, p. 32.
2006 IRP, p. 5. Half of the coal-fIred generation contemplated in the 2006 IRP is Integrated Gasification
Combined Cycle (IGCC) clean coal technology.
ICIP Comments on Idaho Power s 2006 IRP
should direct Idaho Power to clarify how its IRP accounts for such tools, or direct it to
supplement the 2006 IRP with relevant data.
VI.THE COMMISSION SHOULD REQUIRE IDAHO POWER TO
SUPPLEMENT ITS 2006 IRP WITH NECESSARY INFORMATION
For all the reasons stated above, ICIP urges the Commission to deny Idaho
Power s application to have the Commission accept its 2006 IRP for filing at this time.
The Commission should instead direct the company to reconsider and revise its 2006 IRP
to fully address 1) the resource potential of a virtual peaking plant in Idaho Power
service territory, 2) changes in load due to the CREP program, 3) whether its
transmission upgrade decisions should not be revised, and 4) the effects of rate design on
its load forecasts and resource decisions. Additionally, the Commission should direct the
company to fully consider in future IRPs the prudence of any resources that are under
consideration for construction at the time, even if called for in a prior IRP.
Respectfully submitted this 19th day of January, 2007.e~. ~4
Peter Richardson
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the above Comments of the
Industrial Customers of Idaho Power in Docket No. IPC-06-24 was mailed via u.S.
Mail, postage prepaid, on January 19 2007 to:
Bart Kline, Senior Attorney
Idaho Power Company
PO Box 70
Boise, Idaho 83707
Lisa Nordstrom
Idaho Power Company
PO Box 70
Boise, Idaho 83707
ICIP Comments on Idaho Power s 2006 IRP