20101228Comments.pdf

Comments of the Snake River Allance
On the Matter of the Appropriate Disposition of Proceeds from the Sale of Idaho
Power Company's S02 Emission Allowances in Calendar Year 2010
December 23, 2010
r"=-t:~ ;0(. rnN ()W ,n
Case No. IPC-E-IO-20
Submitted by
Ken Miler, Clean Energy Program Director, Snake River Allance
-0:'.roo,"'" N
~,~:' 0"The Snake River Allance ("Allance") appreciates the opportunity to provide comments
relating to the disposition of proceeds from the sale of Idaho Power Company's 502
emission allowance sales for calendar year 2010.
The Allance has long been interested in promoting sustainable energy opportunities as
an alternative to conventional fossil fuel-based energy resources in Idaho. As such, the
Allance is interested in encouraging local, state, and federal policies that promote
renewable energy resources to serve Idahoans, as well as in promoting energy
conservation and efficiency measures to slow the growth of base load and peak energy
demands among Idaho's utilities. The Alliance has participated regularly before the
Idaho Public Utilties Commission in furtherance of these goals. The Allance submits
these comments on behalf of its members, many of whom are Idaho Power customers.
Issues in this Case and Past Treatments of S02 Emission Allowance Sales Proceeds
Case No. IPC-E-l0-20 is relatively straightforward. The issue before the Public Utilties
Commission is whether the proceeds from three separate 2010 sales of surplus 502
emission allowances, totaling $543,000 net after deducting fees of $5,000, should be
returned to Idaho Power customers and shareholders under the 95-5 split used in Idaho
Power's current Power Cost Adjustment mechanism and to offset the PCA Deferral
Account. In one form or another, this has been the practice dating back to the first 502
emission allowance sale case in 2005, when the division was 90 percent customers and
10 percent shareholders.
Snake River Alliance Clean Energy Program Director Ken Miler, who is submitting these
comments on behalf of the Allance, has participated in Idaho Power 502 emission
allowance sales cases beginning with IPC-E-05-26 (Ratemaking Treatment of 502
Allowance Sales Proceeds) in 2005-2006; in IPC-E-07-18 (502 Allowances Revenue
Allocation) in 2007-2008; and IPC-E-08-14 and IPC-E.09-08 in 2008 and 2009. In the
initial case in 2005, Miller participated as Idaho Energy Advocate for the NW Energy
Coalition. He joined the Alliance shortly thereafter.
The approach taken by Idaho Power and the Commission in dealing with the 502
emission allowance sales proceeds has evolved since the initial case in 2005. From the
initial case in which all of the proceeds were returned to customers and shareholders
through the PCA, the treatment of the proceeds in IPC-E-07-08 provided Idaho Power,
the Commission, and interested parties an opportunity to explore novel uses for some
of the proceeds. The Allance was pleased to see Idaho Power suggest such possible
uses as investing in land for a possible future wind farm, or the possible acquisition of
renewable energy credits (RECs) in anticipation of future renewable energy standards.
In the end, the Alliance fully supported the proposal by Bill Chisholm and the Idaho
Energy Education Project (ORDER No. 30790), which called for the use of a small portion
of the proceeds for a two-year energy efficiency education pilot project in conjunction
with Idaho Power to foster greater energy efficiency awareness among students in
schools in Idaho Power's service territory. The Commission in Order 30760 reserved
$500,000 in 502 proceeds for the energy efficiency education project.
The Alliance is aware that in Order 30790 the Commission determined that "it is not
appropriate to set aside additional 502 proceeds for energy education ... until the two-
year pilot project has been evaluated." We agree that such evaluation wil follow
completion of the energy education pilot in mid-20ll, and given this order it is unlikely
502 proceeds in this case wil be used for anything but passing them through the PCA at
the 95-5 split and apportioned equitably between Idaho Power's Idaho and Oregon
service territories.
Allance Comments on Future Considerations of Sale Proceeds
Nonetheless, the Alliance believes it is appropriate for the Commission and others to
prepare for the treatment of future sale proceeds. It is logical that Idaho Power wil
continue to sell surplus 502 emission allowances as the company continues its laudable
efforts to reduce its reliance on coal-fired generation. Idaho Power is assuming in the
20llintegrated Resource Plan that is now being prepared by the company and its IRP
Advisory Committee (the Allance is a member of the IRPAC) that coal-fired generation
from the Boardman coal plant in Oregon wil end no later than the end of 2020. While
Idaho Power is only a 10 participant in that plant, its need for pollution allowances wil
presumably be diminished, perhaps substantially so. Likewise, as federally mandated
improvements are made at the Jim Bridger coal complex in Wyoming and at North
Valmy in Nevada, it is logical to assume additional sales of surplus 502 emission
allowances will take place.
While the proceeds from these sales are at levels that are not dramatically reflected in
Idaho Power's annual PCA, the Alliance believes some of them deservedly should flow to
the customers who are paying for the power plant improvements that make the sales
possible.
The Alliance is not prepared at this point to recommend one or more possible additional
uses of future sales proceeds. Rather, we would hope all parties begin to give serious
consideration to uses and programs that, as with the energy efficiency education
program promoted by IEEP, wil have longer lasting impacts and that can be leveraged
with other financial resources.
The case of GNR-E-l0-04 (Joint Petition of Idaho Power, Avista Corporation, and Rocky
Mountain Power to Address Avoided Cost Issues and to Reduce the Published Avoided
Cost Rate Eligibility Cap) notwithstanding, Idaho Power appears to be embarking on a
commendable effort to integrate more renewable resources into its supply-side
portfolio. Its suggestion in 2007 that sales proceeds be used to perhaps secure real
estate for a wind project, while not accepted by the Commission, was nonetheless a
signal that Idaho Power is interested in such resources - and perhaps even owning
them. Acquisition of RECs, in the Alliance's view, is not the best use ofthese proceeds at
this time for several reasons, not the least of which is the Commission's direction to
Idaho Power to sell its RECs in the short term pending establishment of their need
through a renewable standard or other renewable energy requirement. Idaho Power is
seriously exploring solar photovoltaics and thermal solar resources for future supply-
side needs. Acquisition of property purchase options for the land needed for such a
project could be an effective use of these funds and would have clean-energy impacts
for decades rather than the one year's worth of benefit from a relatively minor PCA
adjustment. It appears that all classes of Idaho Power's customers would benefit directly
and indirectly from such a foresighted planning regime.
Additionally, as Idaho Power observed in its Comments in IPC-E-07-08 in which it
discussed these possible uses of the proceeds, the company said: "These investments
also conform to the 2007 Idaho Energy Plan's recommendation that Idaho,utilities
develop in-state renewable resources to promote fuel diversity, create Idaho jobs and
tax revenues, and reduce Idaho's vulnerability to likely carbon regulation." The Allance
couldn't agree more.
And of course, energy efficiency programs have life spans of several years. Not only do
they deliver direct benefits to utility customers, they also have the important effect of
moderating or even reducing the need for new supply-side resources. IEEP's energy
education project wil certainly prove its value once it is evaluated, and we wil be
among those who will encourage the pilot program be extended. We would also
encourage Idaho Power to explore whether funds from these sales in the future could
be leveraged to enhance its demand-side management efforts.
We expect that the Commission wil likely direct the proceeds at issue in this case to be
treated as they have in the past through the PCA. Our comments in this case serve more
to encourage the Commission and others to begin considering the rich array of options
for the funds so that we are prepared for a constructive discussion on possible uses of
the funds when we return to this discussion, most likely at this time next year.
The Alliance once again appreciates the opportunity to provide its comments in Case
No. IPC-E-l0-20 and looks forward to participating in future discussions ofthe most
effective disposition of future allowance sale proceeds.
Respectfully submitted,
Ken Miller
Clean Energy Program Director
Snake River Allance
P.O. Box 1731
Boise, ID 83701
[phone] (0)
[phone] (c)
km iller(gsnakerivera Ii ia nce .org
www.snakeriveralliance.org
cc via e-mail: Lisa D. Nordstrom and Donovan E. Walker, Idaho Power Company