20071004Dragoon direct.pdf

William M. Eddie
610 SW Alder St. Suite 910
Portland, OR 97205
..... '""'
rr-c, \"c. v!~ I -
2001 OCT -4 Plf! 12: Ph: 503-542-5245
Fax: [phone]
Cell: 503-956-8521\Df\HO P~B~IC
~~tLlT'li) rnf\,H.,
October 3, 2007
Jean Jewell, Commission Secretary
Idaho Public Utilities Commission
427 W. Washington St.
Boise, ID 83702-5983
Re: IPC-O7-03; A VU-O7-02; P AC-O7-
Dear Ms. Jewell:
Please find enclosed for filing the following documents in the above-referenced cases:
IPC-O7-03: Nine (9) copies ofthe Direct Testimony of Ken Dragoon
A VU-O7-02: Original and seven (7) copies of the Motion For Approval of
Settlement Stipulation (including the Stipulation as Attachment I to such
Motion); and nine (9) copies ofthe Direct Testimony of Ken Dragoon.
P AC-O7-07: Original and seven (7) copies of the Joint Motion For Approval of
Settlement Stipulation (including the Stipulation as Attachment 1 to such
Motion).
I have included a cover page of these documents to be conformed and returned to me.
Thank you for your attention to this matter.
William M. Eddie
HECE!\/EL
znO7 OCT -4 Pr112: 21
IDi\HO PUBLIC
UTILITIES COMMISSIOt\
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO INCREASE
THE PUBLISHED RATE ELIGIBILITY
CAP FOR WIND POWERED SMALL POWER
PRODUCTION FACILITIES; and
TO ELIMINATE THE 90% / 110 %
PERFORMANCE BAND FOR WIND
POWERED SMALL POWER PRODUCTION
FACILITIES
) CASE NO. IPC-O7-
DIRECT TESTIMONY OF
KEN DRAGOON
ON BEHALF OF RENEWABLE NORTHWEST PROJECT AND NW ENERGY
COALITION
PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.
My name is Ken Dragoon.I am employed by the Renewable
Northwest Project (IJRNP"
) ,
917 SW Oak St., Suite 303,
Portland , Oregon 97205.
ON WHOSE BEHALF ARE YOU TESTIFYING?
I am testifying on behalf of RNP and NW Energy Coali tion.
PLEASE DESCRIBE RNP.
Established in 1994, RNP is a nonprofit organization
promoting the responsible expansion of solar, wind and
geothermal energy in the Northwest.RNP works to
establish policies that support renewable energy
development and nurture the development of a market for
renewables.RNP's day-to-day work includes active
participation in any type of energy policy proceeding in
the Northwest which may impact renewable energy
development.
RNP's unique coalition of members includes renewable
energy project developers, public and consumer interest
groups such as the Citizens Utility Board of Oregon,
turbine manufacturers, environmental organizations and
others.To my knowledge , the NW Energy Coalition is the
only other participant in this proceeding which is a
member of or otherwise formally affiliated with RNP.
Attached as Exhibit 301 is a current list of RNP's board
Dragoon, Ken -
RNP & NW Energy Coalition
of directors.More .information can be obtained at our
websi te, http: / /www. rnp. org
PLEASE DESCRIBE YOUR PROFESSIONAL BACKGROUND AND
EXPERIENCE.
I have bachelor s and master s degrees in physics from
Western Washington University and the University of New
Hampshire respectively.From 1982 to 1997, I worked at
Bonneville Power Administration as a Power Systems
analyst , and a Power Resources Division manager.From
1997 to 2006 I worked for PacifiCorp in a variety of
roles including power system planning, fundamentals
analysis , structuring and pricing analyst, and renewable
resource contract originator.In this capacity, I was
the lead analyst for developing pricing of PacifiCorp ' s
wind integration services and wind integration cost
analysis contained in PacifiCorp s 2003-2007 Integrated
Resource Plans.I have authored or coauthored papers on
a variety of power system topics , including wind
integration , streamflow forecasting, power system risk
management , power system reliability and adequacy
assessment.
WHAT SPECIFIC EXPERIENCE DO YOU HAVE RELATED TO THIS
PROCEEDING?
Dragoon, Ken -
RNP & NW Energy Coalition
I was the lead staff person at RNP in reviewing filings
and proposals in this matter since Idaho Power Company
filed its application in February 2007.I served as the
technical analyst in this case both for RNP and for NW
Energy Coalition.Had this case proceeded to a technical
hearing, I would ' have served as expert witness before the
Commission in this case and the related cases involving
Avista Utilities and PacifiCorp.I attended all the
public workshops and settlement conferences in this case
and was very active in providing feedback, criticism, and
suggestions to Idaho Power on the Wind Integration Study.
Outside of workshops and settlement conferences, I had
regular and frequent communications with Idaho Power
technical staff concerning the Wind Integration Study
filed in this docket.
WHAT IS THE SUBJECT OF YOUR TESTIMONY?
I will explain and express RNP' s and NW Energy
Coalition s support for the settlement stipulation
Stipulation ) in this docket.
PLEASE SUMMARIZE YOUR PERSPECTIVE ON WIND INTEGRATION
ANALYSIS.
Utility integration of large amounts of wind energy
entails system costs due to the relative variability and
unpredictabili ty of wind generation output.Wind
Dragoon, Ken -
RNP & NW Energy Coalition
generation can change relatively rapidly on a timescale
of roughly several minutes to a few hours.When the wind
suddenly changes, other generating plants on the system
have to change their output to compensate.The
availabili ty and movement of the balancing resources
represents a system level cost of wind integration.The
amount of such cost is dependent upon numerous factors,
including:(a) the quality and relative amount of wind
resources on the system; (b) the other resources
available to a utility; (c) the nature and accessibility
of energy markets , including whether sub-hour
transactions are possible; (d) the market price of energy
at any given time; (e) the nature and availability of
wind forecasting tools; and (f) the decisions of utility
system operators in managing wind on the power system.
Analysis of the cost of wind integration is a
relatively new endeavor, though the general problem is
not new.For example, mathematically, there is little
difference between how some run-of-river hydropower
projects and wind generation impact the power system.
Nevertheless, few utilities have done a comprehensive
analysis of system costs associated with run-of-river
hydropower, such as the studies conducted for wind.
There is now a growing body of work on wind integration
Dragoon, Ken -
RNP & NW Energy Coali ull
that can be referenced.There is a range of
sophistication among the approaches, and Idaho Power
chose to undertake a highly sophisticated, and highly
complex analysis.The obvious advantage of more complex
analysis is that it may capture nuances in power system
interactions that might be missed in a simpler analysis.
On the other hand, complex analyses such as Idaho Power
provide many more opportunities for disagreements on the
assumptions used in the analysis.Al though the workshop
process was effective in addressing many of the contested
issues associated with the Idaho Power study, time did
not permit all of the potentially important issues
associated with the study to be resolved.The proposed
stipulation properly sets a path forward for wind
integration to be addressed in conjunction with the IRP
process.RNP looks forward to participating in that
process.
ARE YOU AWARE OF ANY UPDATES TO IDAHO POWER'S STUDY SINCE
IT WAS FILED IN FEBRUARY 2007.
Yes.In response to issues I and others raised in the
workshops in this case, and through its continuing
analysis , Idaho Power revised its estimated cost of wind
integration downward.The Company s new estimated cost
of wind integration is $7.92/MWh, as described in its
Dragoon , Ken -
RNP & NW Energy Coalition
Response to Production Requests, provided herewith as
Exhibit 302.Exhibit 302 is self-explanatory and does
not need to be recounted.
AFTER REVIEWING IDAHO POWER'S REVISED ESTIMATES AS
DESCRIBED IN EXHIBIT 302, DO YOU HAVE CONTINUING CONCERNS
WITH THE RESULTS OF IDAHO POWER'S WIND INTEGRATION STUDY?
Yes.There are some outstanding issues of potentially
significant impact on the results of the analysis.
offer these to demonstrate some of the ongoing disputed
issues among the parties, and to show why the integration
charges reflected in the settlement stipulation, together
wi th ongoing review of wind integration issues; represent
a reasonable resolution of this case.
One of the most difficult complexities in these
kinds of studies is related to the development of assumed
wind gen~ration data for hypothetical wind projects that
have not yet been (and may never be) constructed.The
Idaho Power study was based on wind speed data obtained
from a very credible consulting firm based on historical
observations applied to a physical model similar to those
used for weather forecasting.While these models give
reasonably reliable wind speed estimates, the conversion
from wind speed to wind generation needs further work.
In my opinion , as Idaho Power gains experience with
Dragoon , Ken -
RNP & NW Energy Coalition
.. 18
integrating wind on its system, it will conclude that the
specific method used in Idaho Power s study to convert
wind speed to wind generation overestimates the
variabili ty of wind generation output.Wind integration
costs are mainly dependent on wind generation
variabili ty, so an overestimate in this parameter has a
very significant effect on the results.
Another area where I believe that actual experience
will show that wind integration costs can come down is
the type of resource used to provide regulation.The
, Idaho Power study assumed that only Idaho Power s own
hydro resources would be used to hold additional reserves
to cover wind's variability.Idaho Power found that a
significant cost component was associated with the
relatively infrequent rapid increases in wind generation.
In order to maintain system balance with hydro , Idaho
Power s study assumed that the hydro system would have to
run at higher generation levels when they would otherwise
back the system down to minimum allowable flows for
economic reasons.The additional, mostly nighttime,
generation would come at the expense of hydro generation
during higher value periods during the day.The
resulting operation is very expensive.Workshop
participants suggested that allowing thermal units to
Dragoon, Ken -
RNP & NW Energy Coalition
back off would reduce the costs by a large amount.Idaho
Power showed more than $2/MWh of savings were possible
when thermal units were allowed provide just 45 MW of
down-regulation capability (this is also reflected at
page 13 of Exhibit 302).
On page 9 of Exhibit 302, Idaho Power explained that
it did not include the thermal units as available
resources to provide down regulation because this
approach represents a departure from current thermal
power plant operating practice and could be problematic
considering Idaho Power s position as a non-operating
partner at the three coal-fired plants in which it has an
ownership interest.As a result , the Company was
unwilling to agree that a long-term integration cost
15 .which assumes deployment of its coal-fired resources in
this manner is a reasonable measure of actual integration
costs.
I believe that this issue deserves further analyses
by Idaho Power and I anticipate that at the conclusion of
that analysis Idaho Power will determine use of the
thermal plants is a reasonable way to provide down
regulation for wind integration.
Resolution of these issues is best conducted through
the informal IRp-related processes described in the
Dragoon , Ken -
RNP & NW Energy Coalition
Stipulation.Given the likely effect of all the
outstanding issues, the integration costs reflected in
the Stipulation are a reasonable compromise of disputed
issues.
GIVEN THE ADMITTED UNCERTAINTIES IN WIND INTEGRATION
STUDIES, ARE THERE CIRCUMSTANCES UNDER WHICH THE
CALCULATED COSTS ARE LOWER THAN THE COSTS ACTUALLY
INCURRED BY IDAHO POWER?
There a few factors that could push the costs higher than
the costs identified- in the settlement stipulation.
Principal among these is wind plant construction at
penetration levels much higher than the upper tier in the
negotiated settlement.However, it is unlikely that the
penetration could reach such high levels prior to Idaho
Power having an opportunity to review the integration
cost issue with the Commission.We welcome continuing
reviews of wind integration cost analysis.
IN THIS CASE, HAVE YOU SIMPLY PUSHED FOR THE LOWEST
POSSIBLE INTEGRATION COST?
No.The most accurate estimate of wind integration is to
the advantage of all three affected parties: the
utili ties , ratepayers , and the wind industry.If the
integration cost is assumed to be artificially high, less
wind will be built, and utilities and ratepayers will
Dragoon, Ken -
RNP & NW Energy Coalition
miss out on the economic advantages of a competitively-
priced , clean generating resource with zero fuel costs.
However, it is to the- wind industry s benefit to ensure
that utili ties plan for, finance, and operate a power
system capable of accommodating wind as a significant
energy resource.It is important for the wind industry
to advance understanding of wind integration costs and
operations on utility systems.wind's relative
variabili ty presents a very surmountable challenge to
power system operators that must be addressed squarely
for the wind industry to continue its rapid maturation.
The wind integration workshops sponsored by Idaho Power
presented an excellent forum for both the wind industry
and power system operators to understand the issues more
clearly.All parties learned much from the process, and
we hope to keep those lines of communication open as
Idaho Power gains experience with additional wind on its
system.Any power system disturbance that can be traced
back to insufficient planning for wind will ultimately be
of enormous detriment to the wind industry.We need to
understand the costs, the challenges , and the solutions
as accurately as possible.
Dragoon , Ken -
RNP & NW Energy Coalition
Commisslon approve the Stipulation.
Q. DOES THIS CONCLUDE YOUR TESTIMONY?
Yes.
PLEASE EXPLAIN WHY THE SETTLEMENT STIPULATION IN THIS
CASE PROPOSES A TIERED APPROACH, WHILE RNP' S SETTLEMENT
WITH PACIFICORP IS NOT TIERED.
In my view, both approaches are reasonable.All else
being equal, integration costs tend to rise with
increases in penetration level.PacifiCorp presently has
significant amounts of wind on its system and a goal of
reaching approximately 20% wind penetration that it is
actively pursuing through the additions of large wind
projects to the utility portfolio.A tiered approach
tailors integration costs better to intermediate
penetration levels, whereas PacifiCorp ' s single cost
simply averages the integration cost over a single large
tier.In addition, the results of PacifiCorp ' s wind
integration study are much less disputed than Idaho
Power s or Avista ' s.The tiered approach is a reasonable
compromise and sharing of risks in light of Idaho Power
and Avista ' s studies and projected wind acquisitions.
DO YOU HAVE A SPECIFIC RECOMMENDATION FOR THE COMMISSION?
Yes.RNP and the NW Energy Coalition recommend the
Dragoon, Ken -
RNP & NW Energy Coalition
Renewable Northwest Project
Current Board of Directors (October 2, 2007)
BOARD OFFICERS:
Chair: Nancy Hirsh, Northwest Energy Coalition
Vice Chair: David McClain D.W. McClain & Associates, Geothermal
Resources Council
Secretary: K.C. Golden
Treasurer: Alan Zelenka
BOARD MEMBERS:
V. John White , Center for Energy Efficiency & Renewable Technologies
Jason Eisdorfer, Citizens Utility Board of Oregon
Mark Smith FPL Energy, Inc
Chris Taylor Horizon Wind Energy
Jim Jensen Montana Environmental Information Center
Ralph Cavanagh Natural Resources Defense Council
Maureen Kirk Oregon State Public Interest Group
Don Furman PPM Energy
Bill LaBorde Washington Public Interest Research Group
Exhibit 301
BARTON L. KLINE, ISB # 1526
MONICA B. MOEN, ISB # 5734
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
bkline
((j)
idahopower.com
mmoen Cg) idahopower.com
Attomeys for Idaho Power Company
Express Mail Address
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MA TIER OF IDAHO POWER
COMPANY'S PETITION TO INCREASE
THE PUBLISHED RATE ELIGIBILITY CAP
FOR WIND POWERED SMALL POWER
PRODUCTION FACILITIES; and
TO ELIMINATE THE 90%/110%
PERFORMANCE BAND FOR WIND
POWERED SMALL POWER PRODUCTIONFACILITIES
CASE NO. IPC-07-
IDAHO POWER'S RESPONSE TO
) THE FIRST PRODUCTION
) REQUEST OF RENEWABLE
) NORTHWEST PROJECT AND NW
) ENERGY COALITION
COMES NOW, Idaho Power Company ("Idaho Power" or "the Company ) and, in
response to the First Production Request of Renewable Northwest Project and
Energy Coalition to Idaho Power Company dated August 29 2007, herewith submits the
following information:
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEW ABLE NORTHWEST PROJECT AND NW ENERGY COALITION - EXHIBIT
302..-
REQUEST FOR PRODUCTION NO.Please provide copies of all written
information (including PowerPoint presentations and printed hahdouts) presented or
otherwise provided to attendees of the public workshops in the above-captioned matter
held on March 15, and June 20 2007.
RESPONSE TO REQUEST FOR PRODUCTION NO.
Electronic versions of information presented to participants at the March 15, and
June 20, 2007 workshops have been continuously ,available to the public on Idaho
Power s Web Site and can be found at:
http://idahopower. co m/ en rgycente r /wi nd/wo rkshops. h tro.
The response to this request was prepared by M. Mark Stokes, Manger, Power
Supply Planning, Idaho Power Company, in consultation with Barton L. Kline, Senior
Attorney, Idaho Power Company.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE: NORTHWEST PROJECT AND NW ENERGY COALITION - 2
REQUEST FOR PRODUCTION NO.: Please identify all corrections, changes,
or amendments to the assumptions , data inputs, or methodologies used for the wind
integration study which Idaho Power Company believes are appropriate as of the
current day, including without limitation corrections, changes, or amendments related to
(a) elimination of inappropriate arbitrage opportunities between the west and east sides
of 19aho Power's system; (b) the use of asymmetric up-and down-regulation reserve
requirements; (c) regulatory reserve requirements for high-resolution (less than 10-
minute) variability; (d) use of the Elkhorn (Telocaset) wind project; (e) use of different or
refined wind forecast techniques or assumptions; (f) in the wind integration study "base
case " any changes in the weighting of wind production in high-load and low-load hours;
(g) market price inputs for the low, median, and high water years evaluated in the wind
integration study; and (h) use of coal-fired generation units or other generation units for
regulation.Please include a brief description of each correction, change, or
amendment.
RESPONSE TO REQUEST FOR PRODUCTION NO.
Idaho Power s wind integration study titled "Operational Impacts of Integrating
Wind Generation into Idaho Power's Existing Resource Portfolio" was filed in this case
on February 7 2007. The results of the study indicated an average cost of $10.72 per
megawatt-hour (MWh) of delivered wind energy was incurred to integrate up to 600 MW
of wind generation on Idaho Power's system.
In general terms, the objective of the study as expressed by the Company in its
filing was to assess the operational impacts it must manage to maintain system
reliability as wind generation is added to its existing resource portfolio. It is important to
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEW ABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 3
note that the study s assessment of the operational impacts associated with integrating
wind focused on the hour-ahead time frame. The basic principle underlying the study
was that the existing generating system needed to have the flexibility during any given
- operating hour to respond to generation deviations due to actual wind varying from
forecast hour-ahead wind. The hour-ahead forecast for wind in the February study was
based on a simple persistence approach. As indicated in this Production Request
Idaho Power has since modified the hour-ahead forecast methodology as a result of on-
going analysis underlying input received in the two public workshops and continued
work with EnerNex, a consultant hired to assist in the design of the study as well as the
preparation of the final report.
In the February study and the follow-up work completed to date , Idaho Power
has not attempted to assess the operational impacts and associated costs beyond the
hour-ahead time frame. Therefore, while no forecast of wind output has been assumed
in the study process beyond the next hour, no costs related to the impact of these
longer-term time frames (from two hours ahead and longer) are included in the results
of the study.
This Production Request notes several areas, including wind forecasting, in
which Idaho Power modified the work of the February study. The following corrections
changes, or amendments to the study methodology were noted at the second public
workshop held on July 20 2007:
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 4
(a)Elimination of inappropriate arbitrage opportunities between the west and
east sides of Idaho Power s system
In the February study, the hydroelectric dispatch model used to perform the study
(Vista DSS) was able to take advantage of arbitrage opportunities between the west
and east sides of Idaho Power's system. While these opportunities do periodically exist
in practice and it is expected that operational impacts of integrating wind will limit Idaho
Power's ability to take advantage of them in the future, the Company has considered
that the model overstated the level of this arbitrage activity. In subsequent model
analyses, the arbitrage opportunities were eliminated by setting wholesale electricity
prices equal between the west and east sides of Idaho Power's system.
(b)The use of asymmetric up- and down-regulation reserve requirements
For the February study, the estimated regulating reserve requirements
associated with system load and system load net wind were input at constant
symmetric levels.With further study following the February filing, the estimation
process was modified such that the regulating reserve for a given operating hour could
be expressed asymmetrically and dynamically. That is, given a forecast hour-ahead
load and hour-ahead wind, it was possible to estimate the necessary up- and down-
direction regulating reserve to schedule into the given operating hour. However, as
noted above, this scheduled flexibility is strictly related to hour-ahead uncertainty.
Operational impacts and associated costs related to longer-term uncertainty have not
been considered. This modification to the defined regulating reserve requirements is
recognized by Idaho Power as a substantial enhancement on the design of the
February study.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 5
(0)Regulatory reserve requirements for high~resolution (less than 1 O~minute)
variability
For the February study, the estimation of regulating reserve requirements was
based on separate analyses of (i) high~frequency (30-second interval) instantaneous
load data and (ii) instantaneous load and wind data collected at 10-minute intervals.
The total estimated regulating reserve level was then calculated through a root-sum-
square addition of the two separate components (i & ii). Because of comments received
following the February filing suggesting a potential double-counting of regulating reserve
as a result of this approach, Idaho Power modified the estimation process by removing
the component associated with the high-frequency data. The Company recognizes that
some of the variability in the instantaneous 10-minute interval data is reflected in the
high-frequency data, and therefore the initial process may have double-counted to some
degree. However, the impact of the double-counting is considered relatively minor.
(d)Use of the Elkhorn (Telooaset) wind project
As part of the feedback from the participants at the March 15, 2007 workshop,
the build out at the 300 MW penetration level was adjusted to reflect the selection of the
Elkhorn location in northeastern Oregon and not the Pomerelle location in southern
Idaho. To accomplish this, wind extraction points 36, 37, 38, 39, 40 and 41 were
reduced to zero MW from 15, 15, 18, 18, 18, and 18 respectively, and extraction points
, 0-, 0-, 0-, 0-5 were increased to 21 , 21 , 21 , 21 , and 18 MW respectively.
This change was reasonable in that the 300 MW build out including Elkhorn instead of
Pomerelle will more accurately reflect the possible macro geographic dispersion of the
sites in the near term.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 6
(e)Use of different or refined wind forecast techniques or assumptions
The simple persistence hour-ahead wind forecast used in the February study
was later modified to incorporate a seasonal, autoregressive method into the wind
forecast used in the Vista DSS model. In both cases, no forward-looking information on
wind generation was assumed available for input to the forecast model within 65
minutes prior to the start of the given operating hour being forecast. The basic principle
in the study was to force the hydroelectric system (Le. Hells Canyon Complex) to carry
enough up and down regulating reserve to respond to wind occurring during the given
operating hour at levels different than forecast on an hour-ahead basis. There was no
attempt to derive a 10ngeHerm (e.g. two-hour ahead) wind forecast model, and
consequently no attempt to evaluate costs associated with uncertainty on the longer-
term time frame.
(1)In the wind integration study "base case " any changes in the weighting of
wind production in high-load and low-load hours
For the February study, wind energy in the "base case" was input at blocks held
flat for the entire day. Review of the wind data following the February filing revealed a
slightly higher annual capacity factor for each of the three study years during light-load
(off-peak) hours than heavy-load (on-peak) hours. Therefore, wind generation in the
base case was modified into separate flat blocks for both heavy-load and light-load
hours.
(g)
Market prices for inputs for the low, median , and high water years
evaluated in the wind integration study
The economic impacts of increased variability of loads and the corresponding
increases in reserve requirements were determined using the monthly average heavy
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 7
--- -- -
and light load market prices for the study years (1998, 2000, and 2005). Two markets
were used in the original study, Mid-C and Palo Verde, however the Palo Verde market
was later dropped from the study to eliminate overstating arbitrage opportunities as
previously mentioned. Refer to Appendix F page 85 in the published study for the
prices used.
At the March 15, 2007 workshop, participants voiced concerns over using actual
market prices for year 2000 due to the impact the California energy crisis had on mark~t
prices that year. To address this concern, actual market prices for the three study years
were replaced in the model with 2006 actual , monthly average, Mid-C market prices
which are presented in the table below. The results of this modeling change were
presented at the June 20, 2007 workshop.
2006 Average Monthly Mid-Columbia PricesLight Load Heavy Load
45.42 57.
47.80 51.43.43 44.57
12.97 23.
11 .87 30.
11.86 39.
43.22 68.
50.07 63.
39.64 48.
44.63 52.
49.08 59.
52.46 59.
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
(h)Use of coal~fired generation units or other generation units for regulation
At the request of the participants in the March 15, 2007 workshop, Idaho Power
agreed to analyze the potential change in integration costs that would occur if down-
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 8
direction regulating reserve was assigned to its coal-fired generation units. The intent
this approach is to use base~loaded thermal resources to respond to severe
unexpected, energy surpluses due to greater than forecasted wind generation. The
result of incorporating this concept into the modeling is that less regulating reserves
must be held on the hydro system to account for the variable and intermittent nature of
wind resources.However, this approach represents a pronounced departure from
current thermal power plant operating practice, and is expected to be problematic
considering Idaho Power's position as a non-operating partner at the three coal~fired
plants in which it has an ownership interest. Therefore, the Company cannot agree that
a long-term integration cost which assumes deployment of its coal-fired resources in
this manner is a reasonable measure of actual integration costs.
The purpose of the wind integration study was to determine the operational
impacts arising from integrating wind generation, under the baseline assumption that
Idaho Power s current system of generating resources, the wholesale energy market
with which it interacts , and the general operating practices currently followed would be
used to conduct the study. Idaho Power has acknowledged that as experience is
gained in operating its system with greater amounts of wind generation and potential
cooperative agreements between control areas are developed, a future analysis of the
impact of wind generation may indicate a lower cost of integration. However, Idaho
Power feels it would be imprudent to determine the current cost of integrating wind
generation into its system based on the speculation of future operating conditions.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 9
The response to this request was prepared by M. Mark Stokes, Manger, Power
Supply Planning, Idaho Power Company, in consultation with Barton L. Kline, Senior
Attorney, Idaho Power Company.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEW ABLE NORTHWEST PROJECT AND NW ENERGY COALITION - 10
REQUEST FOR PRODUCTION NO.: Please state the estimated impact to
wind integration costs caused by each correction, change, or amendment identified in
response to Production Request No., above; and please state Idaho Power's net
current estimated cost of wind integration.
RESPONSE TO REQUEST FOR PRODUCTION NO.
As presented at the June 20, 2007 workshop, the impact on the total cost of
integrating wind generation of each correction, change, or amendment detailed in
Request for Production No.2 above is difficult to estimate with a great deal of certainty.
As changes were being made to the model and methodology, time restrictions limited
Idaho Power s ability to make a single change and perform the required 24 model runs
to determine the exact impac~ of each change. The estimated cost impacts for each
correction, change, or amendment presented below for items (a) through (f) were
derived by looking at the overall impact of all the changes and assigning a portion to
each item based on experience gained through the use of the model and countless
hours of reviewing model output and results. The cost impact due to items (g) and (h)
(using 2006 market prices and the use of Idaho Power s coal-fired facilities) were
determined by performing independent sensitivity analyses for these scenarios and are
therefore considered to be more accurate than the estimates for items (a) through (f).
(a)Elimination of inappropriate arbitrage opportunities between the west and
east sides of Idaho Power s system
The elimination of arbitrage opportunities is estimated to have reduced
integration costs by approximately $1.50/MWh.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -
--~
(b)The use of asymmetric up- and down-regulation reserve requirements
The implementation of asymmetric up- and down-regulation reserve
requirements is estimated to have reduced integration costs by approximately
$1.77/MWh.
(c)Regulatory reserve requirements for high-resolution (less than 10-minute)variability
The omission of high-resolution regulating reserve requirements is estimated to
have reduced integration costs by approximately $0.1 O/MWh.
(d)Use of the Elkhorn (Telocaset) wind project
.. Updating the distribution of wind projects is estimated to have reduced
integration costs by approximately $0.15/MWh.
(e)Use of different or refined wind forecast techniques or assumptions
Implementation of enhanced hour-ahead wind forecast techniques is estimated
to have reduced integration costs by approximately $0.25/MWh.
(1)In the wind integration study "base case " any changes in the weighting of
wind production in high-load and low-load hours
Modification of the "base case" scenario to account for the difference in capacity
factors between heavy load and light load hours is estimated to have reduced the cost
of wind integration by approximately $O.25/MWh.
(g)
Market prices for inputs for the low, median , and high water yearsevaluated in the wind integration study
The use of 2006 Mid-C monthly average market prices increased the cost of
integration by $1.22/MWh.
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -
(h)Use of coal-fired generation units or other generation units for regulation
Using Idaho Power's coal-fired generation units for down-direction regulating
reserves reduced the cost of integration by $2.08/MWh.
Idaho Power believes that items (a) through (9) above represent refinements and
improvements to the modeling and methodology used since the February study was
submitted. As previously stated, Idaho Power feels it would be imprudent to determine
the current cost of integrating wind generation into its system based on the speculation
of future operating conditions at it's coal-fired resources as indicated in item (h).
Therefore, accounting for items (a) through (g) above, Idaho Power s estimate of the
current cost of integrating upto 600 MW of wind on its system is $7.92 per MWh.
The response to this request was prepared by M. Mark Stokes, Manger, Power
Supply Planning, Idaho Power Company, in consultation with Barton L. Kline, Senior
Attorney, Idaho Power Company.
DATED at Boise, Idaho, this 7..;1tday of September 2007.
~)~
BARTO L. KLINE
Attorney for Idaho Power Company
IDAHO POWER'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF
RENEWABLE NORTHWEST PROJECT AND NW ENERGY COALITION -
CERTIFICATE OF SERVICE
_. . .- ~
I hereby certify that on this 3rd day of October 2007, true and correct copies of
the foregoing DIRECT TESTIMONY OF KEN DRAGOON were delivered to the
following persons via overnight delivery (for the Commission) and U.S. Mail for all other
recipients. Electronic copies also were provided on this date to all parties of record.
Jean Jewell (9 copies)
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83702
Robert M. Ellis, Esq.
4 Nickerson, Suite 301
Seattle, W A 98109
Barton Kline
Monica Moen
Idaho Power Company
O. Box 70
Boise, ID 83707-0070
Glenn Ikemoto
Idaho Windfarms, LLC
672 Blair Avenue
Piedmont, CA 94611
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472W. Washington St.
Boise, ID 83702
Dean J. Miller, Esq.
McDevitt & Miller, LLP
PO Box 2564
Boise, ID 83701
Peter Richardson
Richardson & O'Leary
515 N. 2ih
Boise, ID 83702
Ronald K. Arrington
Associate Chief Counsel
John Deere Renewables, LLC
6400 NW 86th Street
PO Box 6600
Johnston, IA 50131
Don Reading
6070 Hill Road
Boise, ID 83703
R. Blair Strong
Paine Hamblen, LLP
717 W. Sprague, Suite 1200
Spokane, W A 99220
Dean Brockbank
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
Michael G. Andrea
Staff Attorney
A vista Corporation
PO Box 3727
Spokane, W A 99220-3727Brian Dickman
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
Ken Miller
Snake River Alliance
PO Box 1731
Boise, ID 83701Rich Rayhill
Ridgeline Energy, LLC
720 W. Idaho Street, Suite 39
Boise, ID 83702
CERTIFICATE OF SERVICE --
Gerald Fleischman
11535 W. Hazeldale Ct.
Boise, ID 83713
Brian D. Jackson
Renaissance Engineering & Design,
2792 Desert Wind Rd.
Oasis, ID 83647-5020
M. J. Humphries
Blue Ribbon Energy, LLC
2630 Central Ave.
Idaho Falls, ID 83406
Gary Seifert
Kurt Myers
INL Biofuels & Renewable Energy
Technologies
PO Box 1625 , MS 3810
Idaho Falls, 10 83415-3810
William Eddie
CERTIFICATE OF SERVICE -- 2