20140408final_order_no_33016.pdf

Office of the Secretary
Service Date
April 8.2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S APPLICATION FOR )CASE NO.IPC-E-13-21
APPROVAL OF ITS CAPACITY )
DEFICIENCY PERIOD TO BE UTILIZED )
IN THE COMPANY’S SAR )ORDER NO.33016
METHODOLOGY.)
In Order No.32697,the Commission directed that a case be initiated outside of each
utility’s Integrated Resource Plan (IRP)filing for the establishment of the capacity deficiency
period to be utilized in the utility’s SAR methodology.Idaho Power filed its 2013 IRP with the
Commission on June 28,2013.On November 4,2013,Idaho Power filed this Application for
approval of the capacity deficiency period to be utilized in the SAR avoided cost methodology.
Idaho Power reports that its first deficit occurs in July 2021.
On November 26,2013,the Commission issued a Notice of Application and set a
deadline for intervention.Order No.32933.J.R.Simplot Company petitioned for,and was
granted,intervention.Order No.32937.A Notice of Parties was issued on January 21,2014.
The parties agreed upon and proposed a procedural schedule for the processing of this case.
On January 24,2014,the Commission issued a Notice of Modified Procedure and
adopted the parties’proposed schedule.The Commission set a comment deadline of February
28,2014,and a reply deadline of March 14,2014.Order No.32969.Staff and the Idaho
Irrigation Pumpers Association,Inc.,were the only people/parties to file comments.Idaho
Power filed a reply.
By this Order,we approve July 2013 as Idaho Power Company’s first capacity deficit
to be utilized in the Company’s SAR methodology as set out in more detail below.
THE APPLICATION
Idaho Power filed its 2013 IRP with the Commission on June 28,2013.Idaho
Power’s 2013 IRP identifies the first peak-hour deficit occurring in July 2016.On October 15,
2013,Idaho Power filed updated components of the incremental cost IRP avoided cost
methodology consisting of an updated load forecast,updated natural gas forecast,and updated
list of new and terminated PURPA contracts and long-term power purchase agreements.
ORDER NO.33016
Applying the updated load and contract information with the 2013 IRP peak-hour deficits results
in a first deficit for Idaho Power in July 2013.
On October 2,2013,Idaho Power filed a settlement agreement regarding the
continuation of its demand response programs.The Company maintains that updating its peak-
hour deficits with up to 440 MW of capacity from the suspension of demand response programs
results in the peak-hour deficits first occurring in July of 2021.Consequently,Idaho Power
requests that the Commission approve July 2021 as the capacity deficiency period to be utilized
in its SAR avoided cost methodology.
COMMENTS
Staff Comments
Staff did not dispute Idaho Power’s IRP determination of its first peak-hour deficit or
the effect of updated load and contract information on the Company’s first deficit year.Staff
did,however,oppose inclusion of 440 MW of demand response.Staff argued that inclusion of
440 MW of demand response assumes the Company can reliably and immediately provide 440
MW throughout the entire 20-year planning period.Staff stated that Idaho Power’s position
“contradicts the basis of the Commission-approved settlement agreement,the likely effect of the
program modifications included in the settlement,and is not justified by the Company’s
responses to discovery in this case.”Staff Comments at 4.Staff maintained that 170 MW would
be the most reasonable estimate of capacity provided by Idaho Power’s demand response.
Staff asserted that the effect of the October 2013 settlement terms on participation in
the reinstated demand response programs is not yet known.However,Staff stated that the
combination of reduced incentive payments,three mandatory annual dispatches,and reduced
notification times will shrink the potential demand response capacity that existed prior to the
settlement agreement.Staff based its calculation of 170 MW on the value of Idaho Power’s
demand response as used in the Company’s demand response settlement.“Without demand
response,the Company would likely build a 170 MW simple cycle combustion turbine (SCCT)
to meet ...short-term deficits and [the SCCT would]remain in the Company’s resource
portfolio through the life of the plant to meet future capacity deficits.”Staff Comments at 5.
In support of including 170 MW of demand response,Staff further noted that current
participation rates indicate that Idaho Power has approximately 30 MW of demand response
remaining in its A/C Cool Credit Program.Staff also proposed including approximately 30 MW
ORDER NO.33016 2
of commercial demand response.’Finally,Staff believed it reasonable to assume that irrigation
participation would not fall more than two-thirds,or below approximately 110 MW,in the first
year of the modified program.
Staff noted that Idaho Power’s energy position does not affect the outcome of this
case because the Company’s capacity position is most critical in all years throughout the 20-year
planning period.Therefore,Staff recommended approval of a 2016 first deficit year assumption
for capacity.
Idaho Irrigators’Comments
The Idaho Irrigation Pumpers Association,Inc.(“Irrigators”)filed public comments
on March 14,2014.The Irrigators oppose Staffs inclusion of only 170 MW of demand response
in a determination of Idaho Power’s capacity deficiency.The Irrigators claim that “higher
avoided cost rates will be needed to be paid for new PURPA contracts to fill the capacity deficit
that was caused by reducing the incentive paid to demand response participants.”Irrigators
Comments at 3.The Irrigators support use of the Company’s proposal to use 440 MW of
demand response in a determination of Idaho Power’s capacity deficiency as it relates to rates
using the SAR methodology.“Before using any value other than the 440 MW demand response
figure,the Commission should wait until the 2015 IRP is released and Idaho Power has more
experience with the new rates that went into effect for this coming summer.”Id.
Idaho Power’s Reply
Idaho Power filed reply comments on March 14,2014.The Company argued that
“Staffs arbitrary limitation of DR capacity to 170 MW”is inconsistent with the settlement
agreement and would result in an overpayment of capacity in PURPA avoided cost rates to the
detriment of customers.Reply at 3.Idaho Power stated that “Staffs position incorrectly equates
the value (the amount the Company can spend on demand response)with the capacity (the
amount of demand response the Company is required to accept).”Id.at 4.
Idaho Power conceded that participation in demand response programs subsequent to
the settlement agreement is unknown.“A reduction in the amount of DR was anticipated in the
Settlement Agreement due to a current lack of need for the amount of DR that had been attained
in the past.”Id.at 8.However,Idaho Power argued that,because it is required to accept up to
‘The settlement proposed and approved in IPC-E-13-14 requires Idaho Power to offer a commercial demand
response program.
ORDER NO.33016 3
440 MW of demand response pursuant to the terms of the settlement,it is reasonable to include
that amount in a consideration of capacity deficiency.Idaho Power maintained that Staffs
recommendation is unreasonably low because “as customer load continues to grow and the need
for increasing amount of DR returns,the Company anticipates incentive payment may need to be
adjusted to attain program participation levels experienced in the past.”Id.at 9.
Idaho Power stated that Staffs calculation regarding inclusion of 170 MW of
demand response in the Company’s assessment of capacity deficiency is arbitrary and without
support.The Company encouraged the Commission to include 440 MW of demand response.
FINDINGS AND CONCLUSIONS
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company,
an electric utility,and the issues raised in this matter pursuant to the authority and power granted
it under Title 61 of the Idaho Code and the Public Utility Regulatory Policies Act of 1978
(PURPA).The Commission has authority under PURPA and the implementing regulations of
the Federal Energy Regulatory Commission (FERC)to set avoided costs,to order electric
utilities to enter into fixed-term obligations for the purchase of energy from qualified facilities
(QFs)and to implement FERC rules.
The Commission has reviewed the record in this case,including Order No.32697,
Idaho Power’s Application,and the comments of Commission Staff and the Irrigators,and reply
of Idaho Power.In Case No.GNR-E-1 1-03,the Commission found it fair and reasonable to
subject each utility’s IRP determination of capacity deficiency to further scrutiny for purposes of
use within the SAR methodology.Order No.32697 at 23.The Company’s 2013 TRP was filed
with the Commission on June 28,2013.The Commission accepted Idaho Power’s 2013 IRP on
February 24,2014.
Idaho Power’s 2013 IRP identifies that the Company’s first peak-hour deficit occurs
in July 2016.Updates based on load forecast,natural gas forecast,new and terminated PURPA
contracts and long-term power purchase agreements results in the first deficit occurring in July
2013.These determinations of Idaho Power’s first deficits are not disputed.The Company also
proposed to include 440 MW of demand response which would delay a first deficit until July
2021.
Staff supports inclusion of only 170 MW of demand response resulting in a first
deficit year of 2016.Staffs recommendation takes into consideration the untested and
ORDERNO.33016 4
unforeseen effects of the demand response settlement agreement.The Irrigators support Idaho
Power’s proposal to include 440 MW of demand response in order to allow any potential
benefits to inure to demand response participants and not unjustifiably inflate the capacity paid to
new PURPA projects.
The Commission agrees with all of the parties and comments that the effect of
demand response program changes is not yet known.Prior to the Company’s 2013 suspension of
demand response,Idaho Power reported having 437 MW of peak demand reduction potential.
However,the settlement agreement reduces incentive payments,provides for three mandatory
annual dispatches,and reduces notification times.Despite what the Company is required to
accept in demand response pursuant to the terms of the settlement agreement,even Idaho Power
expects reduced participation in its programs.It is unreasonable,then,to include 440 MW of
demand response in a determination of capacity deficiency.
The recommendations of Commission Staff are equally subjective.Staff believes
that some amount of demand response should be included in a determination of capacity
deficiency,but must speculate on how much the demand response settlement will effect program
participation.
Idaho Power made a business decision to suspend its demand response programs.As
a consequence,demand response was not included as an existing resource in the Company’s
2013 IRP.The terms and conditions of participation in these programs is now different and will
result in differing levels of participation than what Idaho Power enjoyed prior to suspension.No
one can determine participation levels with any degree of certainty.As we stated in the
settlement proceedings,we continue to believe that “it is important for the Company to continue
its DR programs to ensure it has sufficient,reliable DR resources to meet expected deficits.”
Order No.32923 at 7.However,we decline to arbitrarily choose a number to attach to demand
response for purposes of calculations within the SAR methodology absent evidence of the
restructured programs’success.It is simply too early in the implementation process to be able to
reasonably predict participation.Therefore,at this time,we cannot find a reasonable basis upon
which to approve inclusion of any demand response in a determination of when Idaho Power
becomes capacity deficient.
Based on the Company’s IRP,updated load forecast,updated natural gas forecast,
new and terminated PURPA contracts and long-term power purchase agreements,we find that
ORDERNO.33016 5
Idaho Power experiences its first capacity deficiency in July 2013.We find it fair and reasonable
to direct the Company to utilize July 2013 for capacity deficiency to be used in the Company’s
SAR methodology.Consistent with these findings,we approve the SAR methodology avoided
cost rates included as Attachment A to this Order.The Company will have an opportunity with
its 2015 IRP to account for the restructured demand response potential and its corresponding
impact on the utility’s capacity deficiency.
ORDER
IT IS HEREBY ORDERED that Idaho Power utilize July 2013 as its first capacity
deficit to be used in the Company’s SAR methodology,as more fully described herein.
IT IS FURTHER ORDERED that the updated SAR avoided cost rates become
effective upon issuance of this Order.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of April 2014.
PAL KJELIAr,PRESIDENT
M’KEDD,CR
MARSHA H.SMITH,COMMISSIONER
ATTEST:
A
Li /
Jean D Jewell /
ORDER NO.33016 6
IDAHO POWER COMPANY
AVOIDED COST RATES FOR WIND PROJECTS
April 8,2014
$/MWh
New Contracts and Replacement Contracts without Full Capacity Payments
Eligibility for these rates is limited to projects 100 kW or smaller.
LEVELIZED NON.LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2014 2015 2016 2017 2018 2019 YEAR RATES
1 3194 33.28 38.22 4085 44,28 46,72 2014 31 94
2 32 58 35.65 39.49 42.50 45.46 47.66 2015 33.28
3 34.32 37.25 4096 43.80 4645 48.91 2016 38.22
4 35.76 38.81 42.24 44.88 4761 50.32 2017 40.85
5 37.21 40.15 43.33 46.04 48.91 51.65 2018 44.28
6 38.50 41.31 44.47 47.29 50.17 52.73 2019 46.72
7 39.64 42.47 45.67 48.51 51.22 53.65 2020 48.68
8 40.76 43.66 46.84 49.54 52.13 54.46 2021 51.73
9 41.92 44.82 47.85 50.45 52.95 55.17 2022 55.25
10 43.03 45.83 48.75 51.27 53.66 55.85 2023 58.20
11 44.01 46.73 49.56 51.99 54.34 56.52 2024 59.56
12 4490 47.55 5028 52.67 55.00 57.17 2025 60.99
13 45.70 48.27 50.96 53.33 55.65 57.84 2026 62.37
14 46.42 48.96 51.62 53.98 56.30 58.51 2027 63.36
15 47.10 49.62 5226 54.61 56.96 59.20 2028 65.12
16 47.75 50.25 52.88 55.26 57.63 59.93 2029 67.09
17 48.37 50.87 53.51 55.91 58.32 60.70 2030 69.09
18 48.98 51.49 54.14 56.58 5906 61.51 2031 71.58
19 49.58 52.11 54.79 5729 59.83 62.36 2032 7445
20 50.18 52.73 5547 5802 60.64 63.24 2033 7747
2034 81.47
2035 86.49
2036 91.75
2037 97.20
2038 103.41
2039 107.10
Note:These rates will be further adjusted with the applicable integration charge.
Note.The rates shown in this table have been computed using the U.S.Energy Information Administration (EIA)s Annual Energy
Outlook 2013 released May 2,2013.See Annual Energy Outlook 2013.All Tables,Energy Prices by Sector and Source,Mountain.
Reference case at http://www.eia.gov/oiaf/aeo/tablebrowser/
IDAHO POWER COMPANY Page 1
Attachment A
Order No.33016
Case No.IPC-E-13-21
IDAHO POWER COMPANY
AVOIDED COST RATES FOR SOLAR PROJECTS
April 8,2014
S/MWh
New Contracts and Replacement Contracts without Full Capacity Payments
Eligibility for these rates is limited to projects 100 kW or smaller.
LEVELIZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2014 2015 2016 2017 2018 2019 YEAR RATES
1 58.36 60.08 65.41 68.44 72.28 75.12 2014 58.36
2 59.18 6264 66.87 70.28 73.64 76.26 2015 60.08
3 61.10 64.42 68.53 71.77 74.83 77.71 2016 65.41
4 62.72 66.16 69.99 7304 76.18 79.30 2017 68.44
5 64.35 67,68 71.26 74.38 77.67 80.83 2018 72.28
6 65.81 69.01 72.58 75.81 79.11 82.09 2019 75.12
7 67.11 70.35 73.95 77.20 80.33 83.19 2020 77.49
8 68.40 71.71 7529 78.41 81.42 84.18 2021 80.96
9 69.72 73.03 76.47 7949 82.41 85.06 2022 84.92
10 70.99 74 19 7753 8047 8329 85.91 2023 8830
11 72.12 75.25 7850 81.35 84.13 86.75 2024 9009
12 73.16 76.22 7937 82,19 84,95 87.56 2025 91.97
13 74.11 77.09 80.21 83.00 85.76 88.38 2026 93.81
14 74.97 77.93 81.01 83.79 86,56 89.21 2027 95.25
15 75.79 78.72 81.79 8458 87.36 90.05 2028 97.48
16 76.57 79.49 82,55 85.36 88.17 90.92 2029 99.93
17 77.33 80.25 83.32 86.15 89.01 91.83 2030 102.41
18 78.06 81,00 84 08 86.95 89.88 92.78 2031 105,38
19 78.79 81.74 84 85 87.79 90.78 93.76 2032 108 75
20 79.51 82.49 85.65 88.65 91 71 94.77 2033 112,27
2034 116.78
2035 122.32
2036 128.11
2037 134.09
2038 140 84
2039 145.09
Note:These rates will be further adjusted with the applicable integration charge.
Note:The rates shown in this table have been computed using the U.S.Energy Information Administration (EIA)s Annual Energy
Outlook 2013 released May 2,2013.See Annual Energy Outlook 2013,All Tables,Energy Prices by Sector and Source,Mountain,
Reference case at http://www.eia.gov/oiaf/aeo/tablebrowser/.
IDAHO POWER COMPANY Page 2
IDAHO POWER COMPANY
AVOIDED COST RATES FOR NON-SEASONAL HYDRO PROJECTS
April 8,2014
$/MWh
New Contracts and Replacement Contracts without Full Capacity Payments
Eligibility for these rates is limited to projects smaller than 10 aMW.
LEVELIZED NON LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2014 2015 2016 2017 2018 2019 YEAR RATES
1 55.79 57.48 62.77 65.76 69.56 72.37 2014 55.79
2 56.60 60.02 64.21 67.59 70.91 7348 2015 57.48
3 58.50 61.79 65.85 6906 72.07 74.91 2016 6277
4 60 11 63,51 67.29 70.30 73.41 76.49 2017 65.76
5 61.71 65.01 68.55 71.63 74.88 78.00 2018 69.56
6 63.16 66.32 69.85 73.04 76.30 79.24 2019 72.37
7 64.44 67.64 71.21 74.42 77.51 80.32 2020 74.69
8 65.72 68.98 7253 75.61 78.58 81 30 2021 78,12
9 67 02 70.29 7369 76.67 79.55 82.16 2022 82.04
10 68.27 71.44 74,74 77,63 80,41 82 99 2023 85.38
11 69.40 72.48 75,69 78.50 81.24 8381 2024 87.13
12 70.42 73.44 76.55 79.32 82.05 8461 2025 88,96
13 71 35 74.30 77.37 80.12 82.83 85.42 2026 9076
14 7220 7511 7816 80.90 83,62 8623 2027 9216
15 7300 75.90 78.92 81,67 84.41 87.05 2028 94.34
16 73.77 76.66 79.67 82.44 85.21 87.91 2029 96,74
17 74.52 77.40 80,42 83.21 86.03 88,81 2030 99.18
18 75.24 78.13 81.17 84.00 86.89 89.75 2031 102.10
19 75.95 78.86 81.93 84.83 87.78 90.71 2032 105,42
20 76.66 79.60 82.72 85.68 88.70 91.71 2033 108,89
2034 113.35
2035 118.84
2036 124,58
2037 130.51
2038 137.21
2039 141.40
Note:The rates shown in this table have been computed using the U.S.Energy Information Administration (EIA)’s Annual Energy
Outlook 2013 released May 2,2013.See “Annual Energy Outlook 2013,All Tables,Energy Prices by Sector and Source,Mountain,
Reference case”at http://www,eia.govloiaf/aeoltablebrowser/.
IDAHO POWER COMPANY Page 3
IDAHO POWER COMPANY
AVOIDED COST RATES FOR SEASONAL HYDRO PROJECTS
April 8,2014
$/MWh
New Contracts and Replacement Contracts without Full Capacity Payments
Eligibility for these rates is limited to projects smaller than 10 aMW.
LEVELIZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2014 2015 2016 2017 2018 2019 YEAR RATES
1 7376 7571 81.27 84.53 88.60 91.69 2014 7376
2 7470 7838 8284 8649 90.08 92.94 2015 7571
3 76.72 80.27 84,61 88.09 91.38 94.50 2016 81.27
4 78.45 82.12 86.18 89.46 92.85 96.21 2017 84.53
5 80.17 83.74 87.56 90.91 9444 97.85 2018 88.60
6 81.74 85.17 88.98 92.45 95.99 99,21 2019 91.69
7 83.14 86.61 90.45 93.94 97.32 100.42 2020 94.30
8 84.53 88.06 91.89 95.25 98.51 101.52 2021 98.01
9 85.93 89.48 93.16 96,42 99.59 102.50 2022 102.22
10 87.30 90.74 94.32 97.50 100.57 103.45 2023 105.85
11 88.52 91.89 95.38 98.47 101.51 104.38 2024 107.90
12 89.64 92.94 96,34 99.41 102,42 10529 2025 110.04
13 90.68 93.91 97.26 100.31 103.32 106,20 2026 112.15
14 91.62 94.82 98.15 101.19 104.20 107.12 2027 113.86
15 92.52 9570 99,01 102.06 105.10 10804 2028 116.36
16 93.38 96.55 99.86 102.92 105.99 108.99 2029 119.08
17 94.21 97.38 100.70 103.79 106.90 109.99 2030 121.85
18 95.02 98,21 101.54 104.67 107.86 111.02 2031 125,10
19 95,82 99.02 102,39 105,58 108.84 112.08 2032 128.76
20 9661 9984 103.26 106,52 109.84 11316 2033 132.57
2034 137.38
2035 143.22
2036 149.32
2037 155.61
2038 162.68
2039 167.24
Note:A “seasonal hydro project”is defined as a generation facility which produces at least 55%of its annual generation during the
months of June,July,and August.Order 32802.
Note The rates shown in this table have been computed using the U.S.Energy Information Administration (EIA)’s Annual Energy
Outlook 2013 released May 2,2013.See “Annual Energy Outlook 2013,All Tables,Energy Prices by Sector and Source,Mountain,
Reference case”at http://www.eia.gov/oiaf/aeo/tablebrowser/.IDAHO POWER COMPANY Page 4
IDAHO POWER COMPANY
AVOIDED COST RATES FOR OTHER PROJECTS
April 8,2014
$/MWh
New Contracts and Replacement Contracts without Full Capacity Payments
Eligibility for these rates is limited to projects smaller than 10 aMW.
LEVELIZED NON..LEVELIZED
CONTRACT ONLINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2014 2015 2016 2017 2018 2019 YEAR RATES
1 48.83 50.41 55.61 5850 62.18 64.88 2014 4883
2 49.59 52.91 56 99 6027 6348 65.95 2015 50.41
3 51.44 5463 58.59 61.69 64.59 67.32 2016 55.61
4 53.00 56.30 59.98 62.89 65.88 68 85 2017 58.50
5 54.56 57.76 61.19 64.17 67.30 70.31 2018 62.18
6 55.96 59.03 62.44 6553 68.68 7150 2019 64.88
7 57.20 60.30 63.76 66.86 69.84 72.54 2020 67.10
8 58.44 61.60 65.04 68.00 70.86 73.47 2021 70.42
9 59.69 62.86 66.15 69.02 71 78 74.28 2022 74.22
10 60.91 63.97 67.16 69.94 72.60 75.07 2023 77.45
11 61 99 64,97 68.07 7076 73.39 75.85 2024 79.08
12 62.97 65.88 68.88 71 55 74,16 7661 2025 80.80
13 63.87 66.70 69.66 72.31 74.90 77.37 2026 82.48
14 64.68 67,48 70.41 73.04 75.65 78.14 2027 83 75
15 65.45 68.23 71.14 73.78 76.40 78.93 2028 85.82
16 66.18 68.95 71.86 74.51 77.16 79.74 2029 88.09
17 66.89 69.66 72.57 75.24 77.94 80.61 2030 90.40
18 6758 7036 73.28 7600 78.77 81.51 2031 93.19
19 68.26 71.05 7401 76,79 7963 82,44 2032 9639
20 68.93 71.76 74,77 77.61 80.51 83,40 2033 99.72
2034 104.05
2035 109.40
2036 115.00
2037 120.79
2038 127.35
2039 131.39
Note “Other projects”refers to projects other than wind,solar,non-seasonal hydro,and seasonal hydro projects.These “Other projects”
may include (but are not limited to):cogeneration,biomass,biogas,landfill gas,or geothermal projects.
Note:The rates shown in this table have been computed using the U.S.Energy Information Administration (EIA)’s Annual Energy
Outlook 2013 released May 2,2013.See “Annual Energy Outlook 2013.All Tables,Energy Prices by Sector and Source,Mountain,
Reference case”at http.//ww.eia.gov/oiaf/aeo/tablebrowser/.
IDAHO POWER COMPANY Page 5