20140611notice_of_modified_procedure_order_no_33054.pdf

Office of the Secretary
Service Date
June H,2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S APPLICATION TO UPDATE )CASE NO.IPC-E-13-22
ITS WIND INTEGRATION RATES AND )
CHARGES.)NOTICE OF
)MODIFIED PROCEDURE
)
_______________________________
)ORDER NO.33054
On November 29,2013,Idaho Power Company filed an Application with the
Commission seeking to update its wind integration rates and charges.The Company’s
Application includes a 2013 Wind Integration Study Report as well as the supporting testimony
of Philip DeVol and Michael J.Youngblood.
BACKGROUND
The Application
Idaho Power reports rapid growth in wind generation over the past several years.
Idaho Power maintains that it currently manages a total of 678 megawatts (MW)of wind
generation capacity on its system —577 MW of capacity are provided by Public Utility
Regulatory Policies Act (PURPA)projects and an additional 101 MW of wind generation
capacity is provided by a non-PURPA project (Elkhorn Valley Wind Farm).Idaho Power states
that 505 MW of its total wind generation capacity has been added to the Company’s system
during 2010,2011,and 2012.
Idaho Power’s Application maintains that,due to the variable and intermittent nature
of wind generation,the Company must modify its system operations to successfully integrate
wind projects without impacting system reliability.Idaho Power explains that it must provide
operating reserves from resources that are capable of increasing or decreasing dispatchable
generation on short notice to offset changes in non-dispatchable wind generation.The effect of
having to hold operating reserves on dispatchable resources is that the use of those resources is
restricted and they cannot be economically dispatched to their fullest capability.Idaho Power
states that this results in higher power supply costs that are subsequently passed on to customers.
Idaho Power asserts that its capability to integrate wind generation is nearing its limit.
The Company maintains that,even at the current level of wind generation capacity penetration,
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33054 1
dispatchable thermal and hydro generators are not always capable of providing the balancing
reserves necessary to integrate wind generation.Idaho Power states that this situation is
expected to worsen as wind penetration levels increase,particularly during periods of low
customer demand.
The Company states that it considers the cost of integrating wind generation in its
integrated resource planning when evaluating the costs of utility and third-party generation
resources.Idaho Power maintains that the costs associated with wind integration are specific and
unique for each individual electrical system based on the amount of wind being integrated and
the other types of resources that are used to provide the necessary operating reserves.The
Company explains that,in general terms,the cost of integrating wind generation increases as the
amount of nameplate wind generation on the electrical system increases.Idaho Power asserts
that a failure to calculate and properly allocate wind integration costs to wind generators when
calculating avoided cost rates impermissibly pushes those costs onto customers.
Idaho Power asserts that the costs associated with wind integration are currently
under-collected.The costs are assessed on a percentage basis of various avoided cost rates,
which results in an inequitable contribution of the various wind QFs to the cost of integrating
wind on the system.
The Company states that the use of the percentage of avoided cost rates really has no
relation to actual costs of the additional reserves necessary to integrate variable and intermittent
resources on the system.Idaho Power further maintains that setting the amount of wind
integration charge for the entire duration of the power sales agreement assures further under-
collection of integration costs as those costs rise.The under-collection from existing wind QFs
results in an additional allocation to new wind QFs.
The Company discusses three separate methods by which wind integration costs
could be accounted for in avoided cost rates.
1)Maintaining current allocation;
2)Current allocation with an integration tariff and
3)Equitable allocation of costs.
The Company’s Application proposes two overall changes,which have been incorporated into
each of the three methods offered above,to address the collection of wind integration costs.
Change one abandons the use of percentage of avoided cost rate allocation and instead allocates
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33054
a fixed amount based upon penetration level.Change two decouples the wind integration charge
from the avoided cost rate contained in the power sales agreement and instead has wind
integration costs assessed as a stand-alone tariff charge.
Procedural History
A Notice of Application was issued on December 31,2013,allowing 21 days for
intervention.Idaho Winds,LLC;Snake River Alliance;Cold Springs Windfarm,LLC:Desert
Meadow Windfarm,TIC;Hammett Hill Windfarm,LLC;Mainline Windfarm,LLC;Ryegrass
Windfarm,LLC;Two Ponds Windfarm,LLC;Renewable Northwest Project;America Wind
Energy Association;Cassia Windfarm,LLC;Hot Springs Windfarrn,LLC;Bennett Creek
Windfarm,LLC;Cassia Gulch Wind Park,LLC;Tuana Springs Energy,LLC;High Mesa
Energy,LLC;Rockland Wind Farm,LLC;Idaho Wind Partners I,LLC;and Meadow Creek
Project Company,LLC,petitioned for,and were granted,intervention.A Notice of Parties was
issued on January 31,2014.
Twelve intervenors1 (all qualifying facilities,‘QFs”)represented by the firm of
Richardson Adams tiled a Motion to Dismiss on January 31,2014 (hereafter,“Petitioners”).
Petitioners argued that federal preemption principles should apply that would prohibit the
Commission from considering the Application of Idaho Power.On February 7,2014,pursuant
to Rule of Procedure 256.04,the remaining lntervenors2 filed motions in response to the Motion
to Dismiss.Idaho Power filed an Answer to the Motion to Dismiss and additional motions on
February 21,2014.The Petitioners filed a Reply to Idaho Power’s Answer on February 28,
2014.
Order No.33030
The Commission issued Order No.33030 on April 30,2014,denying Petitioners’
Motion to Dismiss.The Commission stated that “[a]Commission proceeding commenced to
consider a request by a utility to update its wind integration rates and charges does not conflict
with federal statutes.”Order No.33030 at 7.However,we clarified that ‘any Commission
approved modifications to Idaho Power’s wind integration rates and charges will only apply
Cold Springs Windfarm.LLC;Desert Meadow Windfarm,LLC;Hammett Hill Windfarm,LLC;Mainline
Windfarm,LLC;Ryegrass Windfarm.LLC;Two Ponds Windfarm,LLC;Cassia Wind Farm.LLC;Hot Springs
Windfarm.LLC;Bennett Creek Windfarm.LLC;Cassia Gulch Wind Park,LLC;Tuana Springs Energy,LLC;and
High Mesa Energy,LLC.
2 American Wind Energy Association;Idaho Wind Partners I,LLC;Idaho Winds,LLC;Renewable Northwest
Project;Rockland Wind Farms,LLC;Snake River Alliance;and Meadow Creek Project Company,LLC.
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33054 3
prospectively —to new contracts as they are entered into by the parties and submitted to the
Commission for approval.”Id.at 8.
The Commission allowed parties fourteen (14)days to withdraw as intervenors if any
party believed that,based on our ruling in Order No.33030,it no longer had a direct and
substantial interest in the underlying proceeding.Several parties withdrew from the case.An
Amended Notice of Parties was issued on May 20,2014.Thereafter,pursuant to the
Commission’s directive,Staff informally discussed a procedural schedule,service of discovery,
and other issues pertinent to the processing of this case with the remaining parties.
NOTICE OF MODIFIED PROCEDURE
YOU ARE HEREBY NOTIFIED that the parties agree that a technical hearing is not
necessary and that Modified Procedure can be used to effectively process the remainder of this
case.IDAPA 31.01.01.201-204.The Commission notes that Modified Procedure and written
comments have proven to be an effective means for obtaining public input and participation.
Consequently,the parties proposed and the Commission adopts the following procedural
schedule:
Comment deadline July 2,2014
Settlement conference July 9,2014
Reply comment deadline July 22,2014
The parties agree that best efforts will be made to answer discovery within 14 days.but no later
than 21 days from the date of the discovery request.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or in opposition with the Commission no
later than July 22,2014.The comment must contain a statement of reasons supporting the
comment.Persons desiring a hearing must specifically request a hearing in their written
comments.Written comments concerning this Application may be mailed to the Commission
and Idaho Power at the addresses reflected below:
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33054 4
Commission Secretary Donovan E.Walker
Idaho Public Utilities Commission Regulatory Dockets
P0 Box 83720 Idaho Power Company
Boise,ID 83720-0074 P0 Box 70
Boise.ID 83 707-0070
Street Address for Express Mail:E-mail:dwalkerIidahopower.corn
472 W.Washington Street Michael J.Youngblood
Boise,ID 83702-5918 Greg Said
Idaho Power Company
P0 Box 70
Boise,ID 83707-0070
E-mail:myoungbioodidahopower.com
gsaid(äidahopower.com
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission’s home page located at wvw.puc.idaho.gov.Click the “Case Comment or Question
Form”under the Consumers”tab,and complete the comment form using the case number as it
appears on the front of this document.These comments must also be sent to Idaho Power at the
e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the deadline,the Commission may consider the matter on its merits and may
enter its Order without a formal hearing.If comments or protests are filed within the deadline,
the Commission will consider them and in its discretion may set the matter for hearing or may
decide the matter and issue its Order based on the written positions before it.IDAPA
3 1.01.01.204.
YOU ARE FURTHER NOTIFIED that the Application and supporting workpapers
have been filed with the Commission and are available for public inspection during regular
business hours at the Commission offices.The Application is also available on the
Commission’s web site at www.puc.idaho.gov.Click on the “File Room”tab at the top of the
page,scroll down to “Open Electric Cases,”and then click on the case number as shown on the
front of this document.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and that the
Commission may enter any final order consistent with its authority under Title 61.
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33054 5
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 31.01.01.000,el seq.
ORDER
IT IS HEREBY ORDERED that Idaho Power’s Application requesting authority to
update its wind integration rates and charges be processed by Modified Procedure.
IT IS FURTHER ORDERED that the parties adhere to the procedural schedule as set
out in the body of this Order.
IT IS FURTHER ORDERED that interested persons wishing to file comments must
do so no later than July 22,2014.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of June 2014.
PA L KJE L N ER,PRESIDENT
(—)
/
MACK A.REDFOJkJ2.X’OMMISSIONER
//8?tJL
MARSHA H.SMITH,COMMISSIONER
ATTEST:
/1 L•/’p 1?
Jean D Jewel(
Cbmmission Secretary
O:IPCE-I 3-22ks3
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33054 6