20101112Comments.pdf

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Benjamin Otto
ISB No. 8292
710 N 6th Street
PO Box 844
Boise,ID 83701
Ph: [phone] x 12
Fax: [phone]
botto~idaoconservation.org
19m NOV 12 . At1 n: l 6
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UTILITIES
Attorney for Idao Conservtion League
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE )
APPLICATION OF IDAHO POWER )CASE NO. IPC-E-I0-23
FOR AUTHORITY TO MODIFY )
SPECIAL CONTRACT ELIGABILITY BY )COMMENTS OF THE IDAHOREDUCING THE UPPER LIMIT OF )CONSERVATION LEAGUEPOWER REQUIREMENTS FOR LARGE )
LOAD CUSTOMERS )
COMES NOW the Idaho Conservtion League (((ICL"), puruat to the Commission's notice of
September 23,2010, with the followig comments. In this matter, Idao Power Company
requests authority to reduce the eligibilty cap for Schedules 19 and 24 from 25,000 kW to 20,000
kW of maximum monthly demand. For customers who request servce above this cap, Idao
Power plans to enter into special contracts. These special contracts wi allow ((for spcific cost-of-
servce information as well as the unique operating charcteristics of cutomers of this size to be
considered and captured withi the terms of the agreement." Application at 3, (Augut 26, 2010).
ICLsupports Idaho Power's request and urges the Commission to approve this application.
New large loads present several important issues for Idao Power, curent ratepayers, and the
economy of Idaho generally. ICL believes that by lowering the eligibilty cap for tarff servce
Idao Power, potential new customers and the Commission can work together to address these
issues. Below, ICL highights four important considerations we believe Idao Power should
COMMENTS OF ICL 1 November 11,2010
consider in negotiating, and the Commission should examine in approvig, these new large load
contracts.
1. New contracts should encourge load shapes that avoid times of peak demand For Idao
Power, new large loads present unique planning diffculties in light of the curent capacity and
energy constrats the company faces at certai times of the year. Idao Power's 2009 IRP reveals
curent deficits for both average energy and peak energy durg the summer months. See 2009
IRP at 88 - 89 (Figue 8.1 Monthly Average Energ Surluses and Deficits with Existing Resources
and Figue 8.4 Peak-Hour Deficits with Existing Resources). In the Application Idao Power
identifes five reguatory goals that under lay this request. Application at 4. Goals one and two are
to ((provide requested servce consistent with sytem capabilty and the reliabilty needs of existing
customers; (and) (2) provide options to the customer when the Company is unable to provide
servce as requested." Id. ICL submits that shaping loads to avoid times of peak demands are the
best way to achieve these stated goals.
The Commission should encourge Idao Power to enter into contracts where new
customers agree to fully curai durg peak hour. The Hoku Materials contract approved in IPC-
E-08-21 provides for reduced energy deliveries durg the summer for the initial few years until
Idao Power could acquie new generation and trasmission. See Staff Comments at 2, IPC-E-08-
21 (Februry 2, 2009). Ths is not the only reason to limit energy delivery durg peak demand
hours. Rather than continuig to add peak demand loads, Idao Power should make every effort
to reduce peak demand and these potential specia contracts present a prie opportunity to due
so. Ths could be accomplished through either planned operating chacteristics, or through on-
call curaiment similar to the Flex Peak progr. Before approvig any new special contract, the
Commission should ensure it minimizes the impact to peak demand hours.
COMMENTS OF ICL 2 November 11,2010
2. Idao Power should requie new large loads to maximize the effciency of their facilties and
processes. In all likelihood the new large loads Idao Power will be entering into special contracts
with wi either be constructing new facilities or undertakng substantial renovations. The
Commission should instruct Idao Power to not lose the opportunity to lock in effciency throug
construction and operation design. By lockig in energy efficiency before the customer takes the
first electron of energy deliveries, Idao Power and the Commission wi accomplish the first three
goals underlyig this request. When approving special contracts the Commission should examine
whether the customer has pursued every economical means to reduce their demand, thereby
limiting potential impacts to other ratepayers.
3. For servce above 20,000 kW Idao Power should strive to use market based prices. As stated in
the Application, Idao Power's thid goal is to ((mitigate the rate impact on existing cusomers by
developing a rate structure that includes a margial price component for an initial term of the
servce agreement." Application at 4. Because peak energy demands are drvig electricity rates,
ICL believes al rate structures should provide a strong price signal to those who drve peak
demand. New large loads can potentially add large chunks of peak demand. The size of these
chunks, and the customer responsible for them, wil be uniquely identifiable when negotiating
these special contracts. In order to achieve goal three, the Commission should instruct Idao
Power to establish contract terms where the margial price and the initial contract term wil fully
account for rising energy prices attributable to each new customer.
Along these lines, ICL is encouraged by the Staff Comments concerning the Hoku
Materials contract whin Staff endorsd the use of market-based prices for energ demand
above the tariff amount. Staff Comments at 4, IPC-E-08-21. Whe in that case Idaho Power and
Hoku used the avoided costs rates, ICL believes the Commission should encoure Idaho Power to
us market-based pricing such as the results provided by the AURORA modeL. These market-based
COMMENTS OF ICL 3 November 11,2010
prices wi more accurately capture the impact to other ratepayers causd by the new customer,
thereby accomplishing goal three. When approvig a new specia contract the Commission should
ensure the margial price component accurtely captures the impact to power cost caused by the
customer.
4. Idao Power should not adopt a uniform interi period for the margial price component.
The Hoku contract provided for an interi period of higher margial cost rates followed by a
longer term at the existing embedded costs rates. Order No. 30748 at 3 - 4, IPC-E-08-21 (March
16,2009). The Hoku contract used a four-year interi period, which the Staff stated was
((somewhat subjective." Staff Comments at 6, IPC-E-08-21. ICL agrees that selecting an
appropriate interi period is subjective therefore; Idaho Power should not adopt any standad
length. Instead, the interi period should encompass enough time to recover the increased power
supply costs attributable to the special contract and alow the company to incorporate the new
load into their resource planning process. Allowig for individuaized interi period alows Idao
Power to achieve the priary goal of this application, ((for specific cost-of-servce information as
well as the unique operating charcteristics of customers of this size to be considered and captured
withi the terms of the agreement." Application at 3.
In closing, ICL supports this Application. To accomplish the goals set forth in the
application, ICL encourges the Commission to adopt the four suggestions described above.
DATED this 11th day of November 2010.
Respectfully submitted,~~
Benjamin J. Otto
Idaho Conservtion League
COMMENTS OF ICL 4 November 11,2010
CERTIFICATE OF SERVICE
I hereby certify that on this 11 th day of November, 2010 true and correct copies of
the foregoing COMMENTS OF IDAHO CONSERVATION LEAGUE were delivered to
the followig persons via the method of servce noted:
Hand delivery
Jean Jewell
Commission Secretar (Origial and seven copies provided)
Idao Public Utilties Commission
427 W. Washington St.
Boise, ID 83702-5983
Electronic Mai:
Lisa D. Nordstrom
Donovan E. Waler
Idaho Power Company
1221 West Idao Street
Boise, Idaho 83707-0070
lnordstrom~idaopower.com
dwale~idaopower.com
Dr. Don Readig
6070 Hil Road
Boise, Idao 83703
Telephone: [phone]
Fax: [phone]
dreadig(mindsprig.com
GregW. Said
Michael J. Youngblood
Darlene Nemnich
Idaho Power Company
P.O. Box 70
Boise, Idao 83707
gsaid~idaopower.com
myoungblood~idaopower.com
dnemnich~idahopower.com
Peter J. Richardson
Gregory M. Adams
Richardson & O'lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, ID 83702
Telephone: [phone]
Fax: [phone]
pete~richardsonandoleary.com
greg(richardson an dolear. com
A~
Benjamin J. Otto
Idaho Conservation League