20131129Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:RICK STERLING
DATE:NOVEMBER 27,2013
RE:CASE NO.IPC-E-13-18;IDAHO POWER COMPANY’S ANNUAL
COMPLIANCE FILING TO UPDATE THE LOAD AND GAS
FORECASTS AND LONG-TERM CONTRACTS IN THE INTEGRATED
RESOURCE PLAN AVOIDED COST METHODOLOGY.
BACKGROUND
In its Final Order No.32697,the Commission determined that the inputs to the Integrated
Resource Plan (“IRP”)avoided cost methodology,utilized for all proposed Public Utility
Regulatory Policies Act of 1978 (“PURPA”)qualifying facility (“QF”)projects that exceed the
published rate eligibility cap,shall be updated every two years upon acknowledgement of the
utility’s IRP filing,with the exception of the load lorecast and the natural gas forecast—which is
to be updated annuaLly by October 15 of each year.The Commission stated:
We find that,in order to maintain the most accurate and up-to-date
reflection of a utility’s true avoided cost,utilities must update fuel price
forecasts and load forecasts annually —between IRP filings.For the sake
of consistency,these annual updates should occur simultaneously with
SAR updates —on June 1 of each year.In addition,it is appropriate to
consider long-term contract commitments because of the potential effect
that such commitments have on a utility’s load and resource balance.We
find it reasonable to include long-term contract considerations in an IRP
Methodology calculation at such time as the QF and utility have entered
into a signed contract for the sale and purchase of QF power.We further
find it appropriate to consider PURPA contracts that have terminated or
expired in each utility’s load and resource balance,We find it reasonable
that all other variables and assumptions utilized within the IRP
Methodology remain fixed between IRP filings (every two years).
Order No.32697,p.22.The date for the annual update was later changed from June 1st to
October 15th of each year.Order No.32802.
DECISION MEMORANDUM -1 -NOVEMBER 27,2013
On October 15,2013,Idaho Power (“Company”)submitted its annual updates for fuel
prices,load forecasts,and changes to long-term contracts for purchases or sales and any new or
expiring QF contracts in compliance with Order Nos.32697 and 32802.
STAFF REVJEW
Load Forecast
Idaho Power states that its most recent load forecast is dated October 7,2013,and is the
same load forecast that will be used to prepare the IRP update (each IRP is required to be
updated in the off year,between 11W filings,by the Public Utility Commission of Oregon).The
Company maintains that the methodology used for the October 7,2013 load forecast is the same
as that used for Idaho Power’s IRPs.The load forecast submitted by Idaho Power shows,on
average,a slight increase in customer loads when compared to the April 2012 load forecast that
was used in the incremental cost 11W avoided cost model presented to the Commission in Case
No,GNR-E-11-03.
Gas Forecast
As of October 15,2013,Idaho Power has updated the natural gas forecast within the IRP
avoided cost model to reflect the most recent U.S.Energy Information Administration (‘EIA”)
natural gas forecast.The natural gas forecast is consistent with that utilized for Idaho Power’s
IRP and is a combination of the ETA [-lenry I-Tub and Sumas natural gas forecasts.The natural
gas forecast submitted by Idaho Power indicates,on average,a slight increase in the average
annual natural gas forecast prices over the next 20 years in comparison to the EIA 2012 natural
gas forecast that was used in the incremental cost IRP avoided cost model presented to the
Commission in Case No.GNR-E-l 1-03.
Contract Terminations,Expirations,and Additions
Idaho Power currently has 103 QF projects under contract with a nameplate capacity of
778 megawatts (“MW”).Idaho Power also currently has three non-PURPA,long-term power
purchase agreements:Elkhom Valley Wind (101 MW),Raft River Geothermal (18 MW),and
Neal Hot Springs Geothermal (30 MW).
Order No.32697 directs that new contracts be incorporated into the IRP avoided cost
methodology at the time the QF and utility have entered into a signed contract,and that
DECISION MEMORANDUM -2 -NOVEMBER 27,2013
terminated or expired contracts should likewise be included in the utility’s load and resource
balance.Idaho Power states that it has included new contracts at the time that they are signed by
both parties,and has removed terminated/expired agreements from inclusion in the avoided cost
methodology.In its filing,Idaho Power included an updated list of all current QF projects
currently under contract with Idaho Power.
STAFF RECOMMENDATION
Staff believes that the load and gas price forecasts submitted by Idaho Power reflect the
Company’s most current estimates,and were prepared consistent with the methods used in the
IRP.Staff believes the load and gas price forecasts and the long-term contract changes
submitted by the Company comply with the requirements of Order Nos.32697 and 32802.Staff
recommends that the Commission accept the forecasts and contract changes for filing without
further process or procedure.
COMMISSION DECISION
Does the Commission wish to accept Idaho Power’s compliance filing without further
process or procedure?
ick Sterling /
U:\rszerli\123\.4VOID\ipccI3IS dmdoc
DECISION MEMORANDUM -3-NOVEMBER 27,2013