20131119Reply Comments.pdf

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An IDACORP Company
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LISA D. NORDSTROM
Lead Counsel
I [e-mail]
November 19,2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-13-15
ldaho Power Company's 2013 lntegrated Resource Plan - Idaho Power
Company's Reply Comments
Dear Ms. Jewell:
Enclosed forfiling in the above matterare an originaland seven (7) copies of ldaho
Power Company's Reply Comments.
Sincerely,
6r-9 Y^u*-
Lisa D. Nordstrorh
LDN:csb
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
L: 56
LISA D. NORDSTROM (lSB No. 5733)
JENNIFER M. REINHARDT-TESSMER (lSB No. 7432)
ldaho Power Company
1221\Nest ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I nord strom @ id ahopower. com
i re i n h a rdt@ id a h opowe r. com
Attorneys for ldaho Power Company
IN THE MATTER OF IDAHO POWER
COMPANY'S 201 3 INTEGRATED
RESOURCE PLAN
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. tPC-E-13-15
IDAHO POWER COMPANY'S
REPLY COMMENTS
COMES NOW, ldaho Power Company ("ldaho Powe/' or "Compa[y"), and in
accordance with ldaho Public Utilities Commission ("Commission") Order No. 32868,
hereby submits these Reply Gomments in the above-captioned proceeding. Because
the Company's 2013lntegrated Resource Plan ("lRP") has satisfied the requirements of
Order No. 22299, ldaho Power urges the Commission to accept the IRP as submitted.
I. BACKGROUND
As required by Commission Order No. 22299 and the Public Utility Commission
of Oregon's ("OPUC") Order Nos. 89-507 and 07-002, the Company prepares and files
a biennial lRP with both the Commission and the OPUC setting forth how ldaho Power
intends to serve the electric requirements of its customers. ldaho Power submitted its
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
2013 IRP on June 28,2013. The Commission issued a Notice of Modified Procedure
setting a 90-day comment period. Order No. 32868. The Commission Staff ("Staff'),
the Snake River Alliance ("SRq";, and the ldaho Conservation League ("lCL"), all
submitted comments on or after1 the November 5, 2013, filing deadline. ldaho Power
herein responds to certain issues raised by the commenting parties as wel! as public
comments submitted by Ms. Courtney White ('White") and Mr. Michael Heckler
("Heckler").
II. THE COMMISSION SHOULD ACCEPT THE IRP AS FILED
As an initial matter, ldaho Power notes that all intervening parties providing
comments in this case actively participated in the public meetings held as part of the
Company's lntegrated Resource Plan Advisory Council ("|RPAC") process. As a result,
the Company has the ability to respond to the comments in an informed manner as well
as an opportunity to work with the commenting parties on a going-fonryard basis as part
of future planning processes. Idaho Power appreciates the valuable input provided
through the IRPAC process and carefully considers that information in developing its
lRPs.
While the commenting parties provide comments on certain areas of concern as
well as recommendations for items to be included in the Company's future !RPs, ldaho
Power has met the filing requirements set forth in Order No.22299. Accordingly, the
Commission should accept the 2013 lRP, including the identified preferred portfolio, as
filed by ldaho Power.
I While the Company does not formally object to the late filings, ldaho Power is concerned that
multiple parties filed comments after the 90-day comment deadline established in Order No. 32868.
ldaho Power will defer to the Commission's judgment as to whether the late-filed comments should be
dismissed pursuant to Rule of Procedure 65.
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
Notwithstanding, ldaho Power takes this opportunity to respond to comments
made as well as provide additional clarification on certain issues. ldaho Power
addresses these items below.
A. Coal Studv and Evaluation of Coal Resources in the lRP.
1. General Comments on the Coal Study and Jim Bridger Units 3 and 4.
With the exception of Staff, parties submitting comments on ldaho Power's 2013
IRP are generally not supportive of the Coal Unit Environmenta! lnvestment Analysis
("Coa! Study") or the analysis of coal resources performed in the IRP. ldaho Power
stands on the evidentiary record of the technical hearing conducted by the Commission
in Case No. IPC-E-13-16 regarding the Company's request for a Certificate of Public
Convenience and Necessity for the required emissions controls at the Jim Bridger
power plant ("Bridger CPCN case"). However, based on comments submitted regarding
the 2013 !RP, ldaho Power responds to the specific issues as follows.
2. Need to Update the Coal Study.
!n their Comments, both SRA and ICL raise concerns about the Coal Study either
needing to be updated or not accounting for all potentia! future costs. SRA Comments
at 2; ICL Comments at 4. As is always the case, at the time the 20'13 IRP was
prepared, the most current information available was used in the analysis, and the same
is true for the Coal Study. An IRP is prepared every two years to update the forecasts
and underlying assumptions. Furthermore, ldaho Power plans to update the Coal Study
in the summer of 2014 to inform the analysis that will be contained in ldaho Power's
2015 tRP.
ICL's criticism of the Coal Study and the 2013 IRP not incorporating all of the
potential future emissions costs has no merit. The capital cost of all reasonably
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
anticipated measures required to maintain compliance have been incorporated in both
the Coal Study and the 2013 !RP. As Joint Projects Manager Tom Harvey testified in
the Bridger CPCN case, "The Coal Study conducted by the Company included the
anticipated impacts of other existing, proposed, or expected regulations. These include
the Clean Water Act requirements for existing coal-fired power plants; Coa!-
Combustion Residuals ('CCRs'), National Ambient Air Quality Standards ('NAAQS'),
and Mercury and Air Toxic Standards ('MATS')." Case No. IPC-E-13-16, Tr. at 153, ll.
11-17. lt appears that in ICL's opinion, an absolute worst case scenario should be used
regarding future emissions controls. However, as noted by Mr. Harvey, ". . just
because there is a new regulation, it does not mean that the facility is subject to those
requirements or isn't already meeting those requirements." /d., Tr. at 190, ll. 16-19.
3. Surplus Energy and Not Replacing Coal Capacity.
ln both the Bridger CPCN case and in Comments filed regarding the 2013 lRP,
lCL claims that replacement energy for retired coal units is unnecessary because ldaho
Power has a surplus of energy in terms of the monthly average energy position
presented in the lRP. ICL Comments at 3. While it is true that the IRP average monthly
energy load and resource balance shows various amounts of surplus energy throughout
the IRP planning horizon, monthly average energy needs have never solely driven
ldaho Power's need for additional resources. Generation capacity (peak-hour) needs in
the summer months for many years now have been larger and shown up earlier than
monthly average energy needs throughout the IRP planning horizon. Therefore,
retirement of any coal unit without any commensurate replacement capacity would
result in ldaho Power not being able to serve customers during the summer peak load
season.
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
4. NV Energy's Future Plans for the North Valmy Power Plant.
ln their Comments, both SRA and ICL raise concerns about the future of the
North Valmy power plant and its treatment in the 2013 lRP. SRA Comments at 3; ICL
Comments at 7. This criticism of the 2013 IRP arises primarily from confusion related to
NV Energy's intentions with respect to its 50 percent ownership interest in the plant. ln
the spring ol 2013, NV Energy announced decommissioning plans for two other coal
plants (the Reid Gardiner and Navajo coal plants). However, there is currently no
planned closure of the two units at the North Valmy power plant. NV Energy currently
applies depreciation rates for North Valmy that are based upon end-dates of 2021 for
Unit 1 and 2025 for Unit 2. ldaho Power currently uses end-dates of 2031for Unit 1 and
2035 for Unit 2 in its currently approved depreciation rates. Both NV Energy and ldaho
Power review their depreciation rates at differing intervals, as required by their
respective state regulatory commissions. !t is important to note that these dates are
used for the sole purpose of establishing depreciable lives for accounting and
ratemaking purposes and do not represent agreed upon decommissioning dates
between NV Energy and ldaho Power. Neither company can decommission a unit
without the consent of the other partner. ldaho Power is currently working with NV
Energy to determine what would be required to establish common depreciation dates for
both parties, which would be beneficial in analyzing the future operation of the plant.
ln its 2013 lRP, ldaho Power plans on continued operation of the North Valmy
plant throughout the entire 2O-year planning period and the preferred resource portfolio
includes continued operation of Units 1 and 2 at the North Valmy plant. ldaho Power
also specifically analyzed retirement of the North Valmy generation facility in resource
portfolios 8 and 9 in order to quantify the impact of shutting the units down in 2021 and
IDAHO POWER COMPANY'S REPLY COMMENTS - 5
2025. Neither of these portfolios performed well from a cost and risk perspective;
therefore, neither was selected as the preferred portfolio. These results are consistent
with and support the findings of the Coal Study; therefore, the installation of dry sorbent
injection at the North Valmy plant is included in the IRP action plan.
5. Carbon Adder Used in the 2013 IRP.
While Staff is supportive of the carbon adder used in the 2013 IRP and Coal
Study, ICL is critica! of ldaho Power not using the exact values of an independent third-
party estimate of carbon adders in the Coal Study and IRP analyses. Staff Comments
at 10; lCL Comments at 4.
ldaho Power uses credible third-party assessments for the assumptions and
forecasts used in the IRP whenever possible. ln the case of the carbon adder used for
the IRP and Coal Study, Idaho Power relied on the high case estimates provided by
Synapse Energy Economics lnc. ("Synapse") in the 2011 Carbon Dioxide Price
Forecast and the 2012 Carbon Dioxide Pice Forecas( to establish the high case
boundary conditien analyzed in the IRP. After discussions with the IRPAC and a
comparison of other utilities' carbon adder assumptions, the planning or expected case
carbon adder used in the 2013 IRP begins in2018 at a cost of $14.64 perton, and is
escalated at 3 percent annually.
ln regards to the low case carbon adder used for the IRP analyses, ICL is critical
of using a zero-cost scenario. While ldaho Power agrees with ICL that a zero-cost
scenario is not likely as the low case scenario, it does what it is intended to do in the
IRP risk analysis in stressing a boundary condition. ln addition, several IRPAC
members expressed support of a zero-cost, low case due to the fact that carbon adder
'Synapse Energy Economics, lnc., Cambridge, MA, August 10,2011, and October 4,2012,
http://www. synaose-enerqv. com.
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
assumptions have been used in ldaho Power's lRPs for almost 20 years, and to date no
regulations have been put into effect.
!n response to criticism of the carbon adder used in ldaho Power's 2013 lRP, in
the chart below, the Company presents a comparison of the most current estimates
from Synapse,3 Portland General Electric Company's ("PGE") IRP (Wood Mackenzie),
and the Climate Protection Act of 2013 proposed by Senator Sanders (!-W) and
Senator Boxer (D-CA). As the chart reflects, Idaho Power's planning case is similar to
PGE's planning case prepared by Wood Mackenzie, and slightly lower than the
Synapse low case and the estimate provided in the Climate Protection Act of 2013.
ldaho Power's high case is higher than the high case identified by Synapse in a recently
released study.a
Carbon Adder Comparison
IPC High
Synapse High
Oimate [Yote(tion
Act of2013
Synapse Low
PGE Planning
IPC Hannirrg
lPtl Low
3 Novem ber 1, 201 3, http://www. synapse-enerqy. com.
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IDAHO POWER COMPANY'S REPLY COMMENTS - 7
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ldaho Power believes these recent forecasts support the carbon adder used in
the 2013 IRP and in the Coal Study. It is also interesting to note that while ICL believes
Idaho Power should have used the exact values forecast by an independent third party
for the lRP carbon adder scenarios, ICL does not support the use of an independent
third party to assess the achievable demand-side management ("DSM") potential in the
IRP and claims the IRP contains a "hobbled assessment of demand-side resources."s
ICL Comments at 2.
B. Demand-Side Manaqement.
1. 2013 Energy Efficiency Potential Study.
For the 2013 IRP, ldaho Power retained EnerNOC Utility Solutions Consulting
("EnerNoc") to conduct a comprehensive 2}-year study of the Company's energy
efficiency potential.6 The study resulted in a forecast of achievable energy efficiency
potential that was fully incorporated into the IRP planning process prior to the
consideration of any new supply-side resources, which resulted in decreased forecast
customer loads across all customer classes. The total energy efficiency forecast,
including the EnerNOC achievable potential plus the additional forecast amount to
account for future savings from special contracts, totaled 261 average megawatts
("aMW") over the 2}-year IRP planning period.
2. ldaho Power Funding of NEEA.
SRA expresses concern that ldaho Power may reduce its support of the
Northwest Energy Efficiency Alliance ("NEEA"). SRA Comments at 5. The Company's
critical evaluation of its continued relationship with NEEA is reasonable and reflects the
s This characterization appears in the heading.
'The 2013 Energy Efficiency Potential Study was published in Supplement 2: Evatuafion of the
Demand-side Management 2012 Annual Report filed in Case No. IPC-E-13-08 at429-545.
IDAHO POWER COMPANY'S REPLY COMMENTS. S
Company's commitment to obtain cost-effective energy efficiency solutions for its
customers. NEEA savings have accounted for more than 10 percent of the Company's
energy efficiency savings since 2010. However, these savings have not come without
costs. lndeed, since 2002, NEEA energy efficiency savings have increased by 37
percent while NEEA funding from utilities like ldaho Power has increased 141 percent.
As one of the original funding partners of NEEA in 1997, ldaho Power and its
customers have historically found value in a relationship with NEEA. NEEA was
created at a time when ldaho Power began to rebuild its DSM portfolio offerings and
NEEA has contributed to the increased awareness and adoption of DSM in the region.
Over the past 15 years, ldaho Power has continued to build extensive programs and
acquired significant energy efficiency savings through customer education and program
participation. ldaho Power has gained expertise with program design, delivery, and
evaluation and a good understanding of its customers' energy needs. ldaho Power has
a solid understanding of the marketplace and works directly with its customers, as well
as the Energy Efficiency Advisory Group, to identify and implement cost-effective
solutions that provide the best value for customers.
During 2009, the year leading up to NEEA's current funding cycle, ldaho Power
expressed its desire for NEEA to alter. how NEEA designed its services and
corresponding funding in the 2010 to 2014 business plan. ldaho Power sought to direct
its funding toward those activities it believed would bring the most value to its
customers. There were some aspects in this funding cycle that Idaho Power supported,
such as regiona! research, especially with emerging technologies; regional training; and
NEEA's "upstream" work with manufacturers. ldaho Power communicated to NEEA its
preference for an alternative funding model that would allow ldaho Power's funds to be
IDAHO POWER COMPANY'S REPLY COMMENTS - 9
directed toward the costs of these supported activities. ldaho Power continues to seek
a funding model that maximizes the investment of customer funds for DSM. ln the
meantime, ldaho Power provided advance notice of its intention to not pursue a
commitment with NEEA for the next funding cycle ol 2015-2019. ldaho Power will
continue to participate in the current2010-2014 funding cycle and actively participate as
currently committed.
3. Demand-Side Manaqement Comments.
Staff expresses concern that the IRP load and resource balance excludes new
residential energy efficiency savings in 2013 and 2014. Staff Comments at 7. Although
the Company acknowledges that in the printed version of the load and resource balance
tabfes as well as the table on page 82 ol Appendix C that the energy efficiency savings
potentia! for the residential sector appear to be zeto, in fact, the potential is less than
one aMW for 2013 and 2014. The actual potential for 2013 and 2014 for the residential
sector is 0.122 aMW and 0.244 aMW, respectively. When rounded, energy efficiency
savings potential appear to be zero; however, they are included in the load and
resource balance calculations.
Staff recommends that ldaho Power increase its efforts to improve customer
participation rates to bridge the disparity between achievable and economic potential
savings. Staff Comments at 7. As previously noted, ldaho Power's third-pafi
consultant EnerNoc determined the achievable energy efficiency potential for ldaho
Power's service territory. The total energy efficiency achievable potential plus the
additional forecast amount to account for future savings from special contracts totaled
261 aMW over the 2O-year IRP planning period. ldaho Power is committed to pursue all
cost-effective energy efficiency. ln alignment with this commitment, the Company.does
IDAHO POWER COMPANY'S REPLY COMMENTS - 1O
not view the achievable potential as a "ceiling" for the pursuit of energy efficiency and
will continue to pursue energy efficiency beyond the achievable potential when possible.
ldaho Power believes the energy efficiency achievable potential, as determined by a
reputable third-party consultant, is reasonable to include in the IRP for planning
purposes.
Staff comments that the IRP failed to address how future DSM savings will be
acquired and recommends including details regarding energy efficiency acquisition in
the IRP's action plan section. Staff Comments at 7. Traditionally, energy efficiency
acquisition has not been included in the action plan section because the pursuit of
energy efficiency savings is an ongoing activity at ldaho Power and is explicitly included
in the load and resource balance analysis. The 2013 IRP Appendix B, Demand-Side
Management 2012 Annual Report, identifies the Company's DSM programs and
activities and the Energy Efficiency Potential Study, which was filed with the Company's
Demand-Side Management 2012 Annual Report, Supplement 2: Evaluation, identifies
the achievable energy efficiency potential by sector and by end use.7
ICL claims ldaho Power does not give equal and balanced treatment to demand-
side and supply-side resources and that "For demand-side resources, ldaho Power
assumes the Company will essentially maintain current levels." ICL Comments at 2.
ICL's Comments are not consistent with the data presented in Table 4.1 on page 43 of
the 2013 IRP which show increasing amounts of energy efficiency being added
throughout the 2O-year planning period. Additionally, ldaho Power disagrees with ICL's
statement that demand-side resources are not given equa! and balanced treatment to
supply-side resources. The Company includes all achievable energy efficiency
7 The 2013 Energy Efficiency Potential Study was published in Supplement 2: Evaluaflon of the
Demand-side Management 201 2 Annual Report filed in Case No. IPC-E-1 3-08 at 429-545.
IDAHO POWER COMPANY'S REPLY COMMENTS - 11
potential, as determined by a third party in the load and resource balance analysis prior
to the consideration of any supply-side resources.
Public comments from Ms. Courtney White claim that "Energy efficiency was not
adequately considered as a resource." White Comments at 7. ldaho Power believes
that Ms. White's opinion reflects a lack of understanding regarding how energy
efficiency programs are evaluated in the IRP and that all achievable, cost-effective
energy efficiency programs are included in the IRP before supply-side resources are
evaluated. For this reason, energy efficiency programs were not included a second
time in the Resource Alternative Analysis, as stated in Ms. White's Comments.
C. Transmission Proiects.
1. Delayed On-Line Date for the Boardman to Hemingway Project.
Staff and SRA express concerns over ldaho Power's recently announced delay
of the expected on-line date for the Boardman to Hemingway project ('82H") from 2018
to 2020. Staff Comments at 11; SRA Comments at 2. At the time the 2013 lRP was
being prepared, the expected on-line date for B2H was in 2018 and, as shown in the
preferred portfolio, ldaho Power plans to utilize demand response programs to meet
summertime deficits until the B2H project is completed. ldaho Power believes the
recently approved settlement agreement regarding Idaho Power's demand response
programs (Case No. IPC-E-13-14) will provide the flexibility to increase or decrease the
amount of demand response available as needed. Order No. 32923. This flexibility is
an advantage demand response programs provide that a supply-side resource cannot.
Once a supply-side resource is built, it exists for the life of the plant.
Based on ldaho Power's latest load forecast, sufficient demand response
program capacity exists to meet peak-hour deficits through the summer of 2020. This
IDAHO POWER COMPANY'S REPLY COMMENTS - 12
coming summer, ldaho Powerwil! begin the process of preparing the 2015 IRP where
both the current status of the B2H project and the forecast amount of demand response
programs will be evaluated.
2. Need for the Gateway West Project.
ln its Comments, Staff requests that ldaho Power provide a broader discussion of
the Gateway West project and analysis in the next IRP update. Staff Comments at 11.
SRA questions the need for Gateway West. SRA Comments at 4. ldaho Power
currently has no additional available transmission capacity from the Midpoint substation
located in southern ldaho to the Company's primary load center in Boise and the
Treasure Valley area. Over time, the Company has scaled back its participation in
Gateway West to only this portion of the much larger total project. The Gateway West
project will provide additiona! capacity atong this path, allowing ldaho Power to move
additional amounts of energy across the electrical system, especially during times when
wind generation is at high levels. ln addition, increased capacity on this path will
provide options for siting future supply-side resources in southern ldaho.
Due to the uncertainty of the amount of time it takes to permit large transmission
projects, ldaho Power believes it is prudent to continue participating in the permitting
process for Gateway West. lf ldaho Power were to not participate in this project, it
would be very difficult, if not impossible, for ldaho Power to permit and construct new
transmission capacity along this path in the future. Having partners in the project is also
beneficial as it helps to reduce the overall cost.
On November 14, 2013, the Bureau of Land Management ("BLM") released the
Record of Decision ("ROD") for the project and is deferring a decision on segments 8
and 9, which are the segments that connect the Midpoint substation and the Cedar Hill
IDAHO POWER COMPANY'S REPLY COMMENTS - 13
substation to the Hemingway substation.s This deferral is primarily due to routing
issues across the Snake River Birds of Prey National Conservation Area. ldaho Power
will continue working with the BLM to complete the ROD for these two segments. The
Boise BLM district office wi!! lead this effort, initiating siting discussions with cooperating
agencies and stakeholders to determine whether or not new information and/or
modifications to the alternatives analyzed in the Final Environmental lmpact Statement
will be required. lf so, BLM will prepare additional environmental analysis for public
review and comment. Should new plan amendments be required as part of the
environmental analysis, then there would be a protest period, a 60-day Governor's
consistency review, and then the BLM will prepare a separate ROD to approve the plan
amendments. As stated in section 1.8.1 of the current ROD, the BLM estimates the
timeframe for a decision will take one to two years.
D. Distributed and Solar Photovoltaic ("PV") Generation.
1. PV Panel Orientation.
SRA, lCL, and Ms. White express concern in their Comments that the IRP's
analysis of solar PV resources is focused on systems with a due-south orientation.
SRA Comments at 5; ICL Comments at 6; White Comments at 7. ldaho Power
acknowledges the effect of a southwest orientation and includes in the 2013 IRP
Technical Appendix a comparison of PV generation profiles for Boise, ldaho,
installations oriented to the south and to the southwest beginning on page 93. Timing of
generation from the southwest-oriented installations coincides better with peak
customer demand. However, because ldaho Power experiences peak customer
demand as late as or after 6:00 p.m. (MDT), installations with a southwest orientation
t Bureau of Land Management, htto://www.wy.blm.qov/nepa/cfodocs/qateway wesU. November
14,2013.
IDAHO POWER COMPANY'S REPLY COMMENTS - 14
still require large amounts of nameplate capacity to contribute significantly to meeting
peak demand. The following is taken directly from page 95 of the Technical Appendix:
The tables indicate the southwest orientation in Boise has a
25.7 percent capacity factor from 6:00 to 7:00 pm in July and
the south orientation has a 1.5 percent capacity factor during
the same hour in July. Even though the southwestern
exposure has a considerably greater capacity factor in late
afternoon in July, the southwestern exposure capacity factor
is still only 26 percent during the 6:00 to 7:00 pm hour in
July. To meet a 100 MW capacity deficit during the 6:00 to
7:00 pm hour in July would require almost 400 MW of
installed nameplate solar PV according to the NREL data. !t
is Iikely that the 90th percentile exceedance criteria used by
ldaho Power for capacity resource planning would further
increase the quantity of solar generation needed to address
a capacity deficit.
ldaho Power recognizes that solar as an energy resource comes with options,
certainly more options than wind. An analysis exploring solar as an energy alternative
must address numerous considerations, such as tracking systems (one- or two-axis),
resource orientation of non-tracking systems, and materials (c-Si, thin film, etc.).
Among the myriad of options, for this lRP, ldaho Power chose to focus on non-tracking
systems with a due-south orientation because a vast majority of the existing solar PV on
ldaho Power's system comes from either the net metering tariff in ldaho or the Oregon
Solar Photovoltaic Volumetric lncentive Program. Under both programs customers are
economically incented to orient PV panels to the south in order to maximize overall
annual production.
2. Cost Estimate for Solar PV Resources.
Staff, SRA, lCL, Ms. White, and Mr. Heckler all provided comments on aspects of
the cost estimate for solar PV resources used in the 2013 lRP. Staff Comments at 9,
SRA Comments at 5; ICL comments at 6; White Comments at 7; Heckler Comments at
IDAHO POWER COMPANY'S REPLY COMMENTS - 15
5. For the 2013 IRP resource cost estimates, ldaho Power relied on a National
Renewable Energy Laboratory (.NREL") report published in February 2012.e ldaho
Power shares the views expressed in comments with respect to the downward cost
trend of solar PV, and the lRP accounts for this trend while the cost of all other resource
types are escalated at 3 percent annually. There has also been some confusion in the
comments filed because the resource costs from the NREL report were converted to
2013 dollars for use in the lRP.
The Company views the NREL cost report as an appropriate source for resource
cost data for the 2013 lRP as it was the best available information at the time cost
estimates had to be finalized for the lRP. Further, the accuracy of the NREL cost data
for distributed solar installations was confirmed by the Public Utility Commission of
Oregon's January 2013 legislative report on the Oregon Solar Photovoltaic Volumetric
lncentive Program.lo Summary statistics for ldaho Power customers lor 25 small
systems installed in 2010-2011 show average costs of $5.65 per watt (dc); these costs
align well with the !RP's cost estimate of $5,610 per kilowatt.
The other issue raised in comments regarding the cost of solar PV is whether the
IRP cost estimate for distributed solar PV should account for a lower capital cost
because under the net metering tariff, participants pay the capital cost. The IRP has
always evaluated resource costs on a total resource cost basis. lt is ldaho Power's
view that this is appropriate because ultimately all costs wil! come back to customers.
Decisions to self-build a resource or to issue a request for proposals for a long-term
e Cosf and Peiormance Data for Power Generation Technologies, February 2012. Prepared for
NREL by Black and Veatch, http://bv.com/docs/reports-studies/nrel-cost-reoort.odf.
'o Oregon Solar Photovoltaic Volumetric lncentive Program, January 1,2019. Public Utility
Commission of Oregon, http://www.puc.state.or.us/docs/0l02l3SolarPilotProoramReoort.odf.
IDAHO POWER COMPANY'S REPLY COMMENTS - 16
power purchase agreement with an independent power producer ('lPP') have always
been made at the time a resource needs to be built. lf ldaho Power builds a resource,
the costs get put into rates and customers pay for the capital cost plus a rate of return
over time. lf an lPP builds a generation facility and ldaho Power purchases the
generation, the rates paid in the contract reflect the capita! cost the IPP expended to
build the project plus a profit margin. ln the specific case of the net metering tariff,
participants benefit by not having to pay their full share of the fixed costs associated
with providing electric service. ln all these cases, ldaho Power's customers end up
paying for the capital cost of the resource regardless of who builds it or how it is
acquired; therefore, it is appropriate to evaluate all resource alternatives in the IRP on a
total cost basis.
ldaho Power believes it would be inappropriate to artificially ignore any portion of
the capital cost of any resource type because it creates a situation where resources are
not being compared on an "apples to apples" basis. While Staff is supportive of
considering only utility costs, it also points out that under that logic, ldaho Power "should
spend no money on resources and acquire all the distributed solar it can." Staff
Comments at 9. Staff goes on to point out that ldaho Power currently does this under
the net metering tariff and, to date, it has resulted in Iess than 3 megawatts ("MW") of
nameplate generation. ldaho Power agrees with Staff and it is the Company's opinion
that it would be irresponsible planning to rely on a resource of utility scale being built by
others simply because the capital cost was ignored in the IRP analysis.
For the 2015 !RP, Staff recommends that ldaho Power investigate whether
incentive programs could realistically generate enough interest in expanding distributed
solar PV installations in sufficient capacity (10 MW and above) to warrant including
IDAHO POWER COMPANY'S REPLY COMMENTS - 17
distributed solar PV as a resource alternative. Staff Comments at 9. ldaho Power has
already been considering options for possible distributed generation programs and
intends to include an analysis/evaluation as part of the 2015 lRP.
E. Other lssues.
1. Use of the U.S. Energy lnformation Administration ("ElA") Nominal
Gas Price Forecast.
Staff recommends that ldaho Power use the EIA nominal gas price forecast
rather than starting with the version that is published in 2010 dollars and converting it to
nominal dollars. Staff Comments at 5. Idaho Power is agreeable to using the EIA
nominal forecast, but would propose making this change starting with the 2015!RP. All
of the analyses performed in the 2013lRP were performed with the 2010 real dollar gas
price as the basis. Because the AURORA model and all of its inputs are also used in
determining negotiated Public Utility Regulatory Policies Act of 1978 ("PURPA") rates,
for consistency, the Company believes it makes sense to make this change at the
beginning of an IRP cycle.
2. Energy lmbalance Market.
ICL is critical of the explanation provided in the IRP of the regiona! investigation
into an energy imbalance market of which ldaho Power is only one of over 20
participants. ln its Comments, ICL states, ". . . the IRP makes no effort to explain how
ldaho Power will pursue this opportunity, other than participation in some ill defined
discussions." ICL Comments at 7. ldaho Power stands behind the following
explanation provided in the IRP:
ln May 2012, the Northwest Power Pool (NWPP) initiated a
study of an energy imbalance market (ElM) for the NWPP
region. The2012 study extended earlierwork byWECC and
various utility commissions. The NWPP study focused on
IDAHO POWER COMPANY'S REPLY COMMENTS. 18
issues related to hydroelectric resources in the Northwest.
The NWPP analyzed the dispatch costs of the region to
capture the diversity of load and wind variations that occur
during the operating hour. ln addition to the analysis, the
NWPP study considered a mathematical simulation of the
Northwest ElM.
ldaho Power was 1 of over 20 entities supporting the study.
The study found that an EIM would reduce the dispatch
costs for the NWPP by about 3 percent when applied to the
observed annual thermal dispatch cost of about $3 billion
and resulted in savings between $40 and $120 million
depending on the specific study assumptions. While the
NWPP study found a positive benefit to cost ratio, many
institutional issues remain before an EIM can be
implemented in the Pacific Northwest.
IRP at 17.
ldaho Power continues to participate in the regional process to determine the
benefits, costs, and feasibility of implementing an EIM within the NWPP. As stated in
the lRP, there are many unresolved issues such as governance, which entities will be
participants, and other technica! details that must be agreed upon by the participants.
ldaho Power has little to no contro! over these issues that must be addressed before an
EIM can be implemented.
3. Peak-Hour Planning Griteria.
Staff suggests ldaho Power should consider adopting less conservative peak-
hour planning criteria as a way to delay the need to build a new resource for a low
probability event. Staff Comments at 5. Current peak-hour planning criteria are 90th
percentile water conditions (one year in ten) and 95th percentile peak load (one year in
20). The appropriateness of ldaho Power's planning criteria can be assessed by
examining the capacity planning margin calculations shown in Chapter 9 of the 2013
IDAHO POWER COMPANY'S REPLY COMMENTS - 19
lRP.11 The capacity planning margin values are calculated using the median or 50th
percentile peak-hour load forecast. The capacity planning margin of the preferred
resource portfolio varies from a high of 23 percent just after the increased import
capacity of B2H is added to ldaho Power's system in 2018 to a low of 13 percent at the
end of the planning period in 2032.
On July 1,2013, ldaho Power's peak load reached 3,402 MW, which set a new
system peak load record and exceeded the previous record of 3,245 MW by 157 MW,
which was set in the summer of 2012. On the next day, another new record was set
when system peak load reached 3,407 MW. The poor water conditions experienced in
ldaho in 2013 are slightly worse than g0th percentile and the peak-hour load on July 1
and 2 this past summer was very close to 95th percentile.
The conservative nature of the peak-hour planning criteria is designed to provide
necessary operating reserves, but does not account for other contingencies related to
transmission, such as loop flow or the impact of losing transmission due to range fires
or other localized weather events. Both of these issues have the potential to severely
impact ldaho Power's ability to serve customers under peak load conditions; therefore,
the Company opposes any change to the current planning criteria.
4. First Capacity Deficit Year.
SRA and ICL both comment on a perceived discrepancy between the IRP and
ldaho Power's filing in Case No. IPC-E-13-21 regarding the Company's first capacity
deficit year. SRA Comments at 4; ICL Comments at 2. Figure 5.5 on page 61 of the
IRP shows ldaho Power's first capacity deficit year being in 2016 without accounting for
tt 2o1g lRP, Chapter 9, pp. 107-108.
IDAHO POWER COMPANY'S REPLY COMMENTS - 20
any of ldaho Power's demand response programs or other new resources. lf demand
response programs are included, this chart would show the first deficit year being 2023.
ln order to comply with the final order from the ldaho PURPA case (Case No.
GNR-E-11-03, Order No. 32871), on November 4, 2013, ldaho Power filed an
application in Case No. IPC-E-13-21to update information that influences the first deficit
year and other inputs used to determine negotiated PURPA rates. The updated
information provided included the load forecast, natural gas price forecast, and any
changes in PURPA or other long-term power purchase agreements. With these new
inputs, the first capacity deficit year changed to 2021.12
5. Wind lntegration Study.
ICL is critica! of ldaho Power's wind integration study and comments that "The
wind integration study is irretrievably flawed.' ICL Comments at 6. lCL would like Idaho
Power to include in the analysis technology and market conditions that do not yet exist.
For the wind integration study, ICL wants ldaho Power to speculate on the existence of
an Energy lmbalance Market, the use of 15 minute markets, and future improvements in
wind forecasting. While the IRP looks forward 20 years, the wind integration study is
designed to evaluate the cost of integrating wind today under current conditions. As ICL
points out, others are performing studies to evaluate the potential benefits of these
advances. However, ldaho Power does not believe it is appropriate to account for
things that do not currently exist because the results of the study are used to determine
wind integration charges assigned to PURPA contracts. Idaho Power will update the
wind integration study if and when these advances actually happen, or when other
" Case No. IPC-E-13-21, Application at 4.
IDAHO POWER COMPANY'S REPLY COMMENTS - 21
material changes occur that would influence the determination of the cost to integrate
wind resources.
6. Dynamic Pricing Programs.
Staff recommends that the Company investigate dynamic pricing options,
enrollment strategies, and potential savings for inclusion in the 2015 lRP. Staff
Comments at 8. ldaho Power has had dynamic pricing plan offerings including time of
day and seasonal pricing for most customer sectors since approximately 2004.
Currently, ldaho Power is conducting a study to determine customer behavior and
revenue impact of the residentia! time-of-day pilot plan. The Company will continue to
evaluate dynamic pricing options for customers going forward to determine the
appropriate time for implementation.
7. Shoshone Falls Upgrade Project.
In its Comments, SRA raises concern over the need for the Shoshone Falls
Upgrade Project. SRA Comments at 5. SRA is correct in its Comments that the
upgrade of the project would result in increased generation mostly during months when
ldaho Power has surplus energy, and provide little summertime capacity. The benefit of
the upgrade project has always been the value of the surplus sales into the market,
which results in lower overall power supply costs, and the value associated with
generation from a non-COz emitting resource. With the decrease in market prices seen
over the past few years, the benefits of the upgrade project have deteriorated.
ldaho Power has continued to analyze the project, and it is still marginally
beneficial. The Federal Energy Regulatory Commission license amendment reqyires
the project to be completed in 2017, which is when it is shown to come on-line in the
lRP. Idaho Power is currently evaluating the possibility of requesting a time extension
IDAHO POWER COMPANY'S REPLY COMMENTS -22
to the license amendment. In the meantime, ldaho Power is moving ahead with the
reconstruction of the spillway structure which is necessary due to the deteriorated
condition of the existing spillway. Reconstruction of the spillway is expected to start in
the spring of 2014.
8. Storage Technologies.
Public comments from Ms. White state the IRP process did not incorporate the
value of projected improvements in storage technology. White Comments at 5. As part
of every lRP, and between lRPs, ldaho Power investigates numerous storage
technologies, their stage of development, and projected costs. To date, none of the
storage technologies has proven to be cost effective. Pumped storage in particular is a
storage technology that ldaho Power follows closely. The evaluation of pumped storage
in the 2013lRP indicates a levelized cost of energy of $239 per megawatt-hour, or 23.9
cents per kilowatt-hour.13
9. Peak-Hour Capacity Factor.
Ms. White suggests that the IRP Resource Alternatives Analysis and other
analyses in the IRP are flawed because peak-hour capacity factors were not used for all
resource types. White Comments at 5. Ms. White specifically states, ". . . the risk that
the sun doesn't shine translates into a cost in the IRP's comparison of solar to
alternative resources. However, the cost of risks associated with disrupted operation of
the Bridger coal facilities is not integrated into the cost of continuing to rely on these
alternatives." White Comments at 5.
Ms. White's comments are simply not true. For all analyses in the lRP, thermal
resources have a forced outage rate applied as part of determining the peak-hour
'' 2013 lRP, Figure 5.8, 3O-year levelized cost of production at 67.
IDAHO POWER COMPANY'S REPLY COMMENTS - 23
capacity factor for the resource. For analysis purposes, the forced outage rates applied
to coal plants, combined-cycle and simple-cycle combustion turbines, and combined
heat and power typically range from 5 to 8 percent, which results in peak-hour capacity
factors of 92to 95 percent.la
10. IRP Advisory Counci! Schedule and Process.
Mr. Heckler proposes changing the schedule of when and how certain topics are
presented at IRPAC meetings as well as other suggestions to improve the public
process. Heckler Comments at 2. ldaho Power believes several of Mr. Heckler's
suggestions have merit and prior to starting the 2015 IRP, members of the IRP planning
team will meet with Mr. Heckler to discuss his suggestions and determine what can be
feasibly implemented.
III. CONCLUSION
ldaho Power appreciates the comments submitted by interested parties in this
case as well as the opportunity to address those comments. Because the Company's
2013 IRP filing has met the requirements set forth in Order No. 22299, ldaho Power
requests the Commission issue an order accepting the Company's 2013lRP as filed.
DATED at Boise, ldaho, this 19th day of November 2013.
'o 2013lRP, Table 7.1, "Resource Alternatives to Achieve 2OO MW of Peak-Hour Contribution in
2018" a184.
IDAHO POWER COMPANY'S REPLY COMMENTS.24
Attorney for ldaho Power Company
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 19th day of November 2013 I served a true and
correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following
named parties by the method indicated below, and addressed to the following:
Commission Staff
Karl Klein
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
ldaho Gonservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street
Boise, ldaho 83702
ELECTRONIC SERVICE ONLY
Snake River Alliance
Ken Miller, Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
Boise, ldaho 83701
J.R. Simplot Company
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street
Boise, ldaho 83702
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
ELECTRONIC SERVICE ONLY
Renewable Energy Coalition
Thomas H. Nelson
P.O. Box 1211
Welches, Oregon 97067
X Hand Delivered
U.S. Mai!
Overnight Mail
FAXX Emai! [e-mail]
Hand Delivered
U.S. Mail
Overnight Mail
_FAXX Email botto@ idahoconservation. orq
Hand Delivered
U.S. Mail
Overnight Mail
FA)(X Email kmiller@snakerivera!!iance.oro
_Hand DeliveredX U.S. Mail
,Overnight Mail
FA)(X Email [e-mail]
_Hand DeliveredX U.S. Mail
_Overnight Mail_FAXX Email [e-mail]
_Hand Delivered
_U.S. Mail
Overnight Mail
FAX
Email [e-mail]
IDAHO POWER COMPANY'S REPLY COMMENTS -25
ELECTRONIC SERVICE ONLY
John Lowe, Director
Renewable Energy Coalition
12050 SW Tremont Street
Portland, Oregon 97225
ELECTRONIC SERVICE ONLY
Nancy Esteb, Ph.D.
P.O. Box 490
Carlsborg, Washington 98324
Hand Delivered
U.S. Mail
_Overnight Mail
-FAxX Email [e-mail]
_Hand Delivered
_U.S. Mail
_Overnight Mai!
FAxX Email [e-mail]
IDAHO POWER COMPANY'S REPLY COMMENTS - 26