20140718Reply Comments.pdf

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An IDACORP Company
July 18;2014
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-14-06
Little Wood River Ranch ll Energy Sales Agreement - ldaho Power
Company's Reply Comments
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of Idaho
Power Company's Reply Comments.
DONOVAN E. WALKER
Lead Counsel
DEW:csb
Enclosures
7
Donovan E. Walker
1221 W. ldaho 5t. (83702)
PO. 8ox 70
Boise, lD 83707
DONOVAN E. WALKER (!SB No. 5921)
Idaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for ldaho Power Company
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH
WILLIAM ARKOOSH FOR THE SALE
AND PURCHASE OF ELECTRIC
ENERGY FROM THE LITTLE WOOD
RIVER RANCH II PROJECT.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. tPC-E-14-06
IDAHO POWER COMPANY'S
REPLY COMMENTS
Pursuant to Order No. 33055, Notice of Modified Procedure, ldaho Power
Company ("ldaho Powe/' or "Cornpany") hereby respectfully submits its Reply
Comments. With this Reply, the Company seeks ldaho Public Utilities Commission
("Commission") approval of the Energy Sales Agreement ('ESA' or "Agreement") as
submitted and provides additional information related to the change from quarterly to
monthly estimates of Net Energy AmOunts in the Agreement.
I. BACKGROUND AND SUMMARY
On April 30, 2014, ldaho Power submitted an application seeking the
Commission's review of a Public Utility Regulatory Policies Act of 1978 ("PURPA") ESA
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
between ldaho Power and William Arkoosh for the Little Wood River Ranch !l Project
("Project"). The Project is a 1.25 megawatt ("MW') Non-Seasonal Hydro energy facility
to be located near Shoshone, Idaho. The Project's Scheduled First Energy Date is May
1,2015, and its Scheduled Operation Date is June 1,2015.
On May 27, 2014, ldaho Power submitted an Amended Application. The
Amended Application is identical to the originally submitted Application with the
exception of the addition of the initial paragraph and the addition of paragraph 9.5.
Paragraph 9.5 provides a summary of changes to terms and conditions contained in the
proposed ESA from those that the Commission has approved in prior firm energy sales
agreements.
On July 11,2014, Commission Staff ("Staff') filed Comments. Staff reviewed the
ESA and discussed the terms and conditions in the ESA that are new or differing from
previously approved PURPA agreements. Staff recommends that all of the new and
differing terms and conditions are acceptable except for the change from quarterly to
monthly estimates of Net Energy Amounts in the Agreement. Consequently, Staff
recommends that the Agreement be rejected.
ldaho Power respectfully disagrees with Staff and recommends that the
Commission approve the ESA as submitted. The change that allows the Project to
update its initial monthly Net Energy Estimates every month, rather than every three
months, is a reasonable change that continues to preserve the existing "firmness"
requirements of the 90%/110% provisions, while providing a more accurate estimate of
monthly generation amounts to the Company.
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
II. AMENDED APPLICATION AND COMMENTS
A. Amended Application. As stated in the Amended Application, this ESA
is one of the first PURPA hydro ESAs submitted subsequent to the final Commission
orders from the general PURPA proceedings that made many changes to avoided cost
pricing and other contractual terms and conditions.
This ESA is the first hydro-based agreement submitted to
the Commission for approval that contains revised terms and
conditions subsequent to the Commission's final and
reconsideration orders from Case No. GNR-E-11-03. As
such, the form of the ESA has several terms and conditions
that vary from previously approved agreements in order to
comply with the Commission's recent orders. ln addition,
ldaho Power and the Seller have agreed to changes in some
provisions that the parties propose for Commission approval.
Amended Applicatiofl, p. 5, 1[ 9.5. The major changes incorporated in the ESA and
summarized in the Amended Application include:
(a) Changed the definition of "Mid-Columbia Market
Energy Cost" to replace reference to the Dow Jones index
with reference to the Intercontinental Exchange (lCE) index
and formula consistent with the proposed settlement in Case
No. IPC-E-13-25. This change is relevant to the 90/110
performance requirement;
(b) Added definitions and provisions, paragraphs 1.29,
1.38, 1.39, 3.4, and 7.6, to incorporate definitions of "Non-
seasonal Hydro Facility" and "Seasonal Hydro Facility" as
well as "Seasonal Hydro Facility Test Periods" to incorporate
and maintain separate rates for Seasonal and Non-seasonal
hydro facilities, and to ensure that Seasonal hydro projects
perform within the requirement of generating 55 percent of
their annual generation in the months of June, July, and
August;
(c) Removed the provisions providing for Delay
Liquidated Damages and maintained provisions to provide
for Delay Security and actual delay damages as provided for
by the Commission's adoption of the partial stipulation in
Commission Order No. 32697;
IDAHO POWER COMPANY'S REPLY COMMENTS.3
(d) Changed Article V!!1, "Environmental Attributes," to
indicate that the Seller owns all Environmental Attributes or
Renewable Energy Cred its/Certificates;
(e) Changed paragraph 6.2 to allow the Seller to adjust
the "lnitial Year Monthly Net Energy Amounts" on a monthly,
rather than quarterly, basis. This change is contrary to the
Commission's direction that requires Seller revisions to be
submitted no sooner than "the end of month three and every
three months thereafter." Order No. 29632, p.23. However,
with the proposed change, the Seller must still provide 12
months of estimated Net Energy Amounts, and still cannot
revise the immediate three months of estimated Net Energy
Amounts. However, the Seller can submit revisions on a
monthly basis, rather than once every three months. A table
was added to the ESA indicating both "Notification Month"
and "Future monthly Net Energy Amounts eligible to be
revised," primarily to provide clarity to the confusing nature
of the Estimated Net Energy Amounts and a Seller's desire
to update the same. Although this change varies from Order
No. 29632, both ldaho Power and the Seller propose
Commission adoption of this change. The Seller gains more
clarity and flexibility in adjusting its estimated energy
deliveries, and Idaho Power maintains the stability in the
estimates necessary for its planning and operation;
(f) Revised paragraph 12.4 relating to Scheduled
Maintenance to give the Seller the option to claim
maintenance will be scheduled at the same time each year
with one notification, in order to eliminate the requirement of
sending multiple notifications for maintenance that is
scheduled for the same time every year; and
(g) Several other more minor revisions were made, such
as moving the list of pricing from paragraph 7.1 to Appendix
E and F, adding clarifying terms in Article X relating to
metering and SCADA telemetry, adding a definition for
"Authorized Agent," and adding a provision in the forced
outage definition providing for icing events in the facility's
primary motive force water source.
Amended Application, pp. 5-7, t[9.5.
B. Staff Comments. Staff reviewed the ESA and discussed the terms and
conditions in the ESA that are new or differing from previously approved PURPA
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
agreements. Staff recommends that all of the new and differing terms and conditions
are acceptable except for the change from quarterly to monthly estimates of Net Energy
Amounts in the Agreement. Consequently, Staff recommends that the Agreement be
rejected.
Staff recommends that the proposed Agreement be rejected
because it fails to comply with the requirements of Order No.
29632. Staff does not believe that ldaho Power provided
adequate justification to carve out an exception to a prior
Commission order. However, Staff believes that a separate
proceeding, in which all utilities and interested parties can
actively participate, would provide a good opportunity to
discuss the benefits and detriments of ldaho Power's
proposed modifications to the existing generation estimate
requirements.
However, if the parties to the Agreement wish to revise its
901110 requirement so as to be consistent with Order No.
29636, Staff believes all other proposed changes from prior
hydro contracts are acceptable.
Staff Comments, p. 9.
Staffs primary objection is that the provision that allows a project to update its
initial year estimated Net Energy Amounts on a monthly rather than a quarterly basis is
contrary to Order No. 29632, from the consolidated Case Nos. IPC-E-04-08 and IPC-E-
04-10. Staff Comments, p. 5. These two cases were separate complaint proceedings
filed against ldaho Power by U.S. Geothermal and Bob Lewandowski/Mark Schroeder,
respectively. The cases were consolidated and Order No. 29632 is the final order
resolving those matters. !n addition, Staff lists out and numbers seven reasons that it
opposes the change from quarterly to monthly revision of estimated New Energy
Amounts. Staff Comments, pp. 5-6.
IDAHO POWER COMPANY'S REPLY COMMENTS - 5
C. Order No. 29632. ln the U.S. Geothermal/Lewandowski case, the
Commission considered and addressed three main issues: (1) Regulatory Out Clause;
(2) 10 MW Published Rate Eligibility Definition; and (3) lmplementation of a 90-110%
Performance Band. Order No. 29632 , p. 4. With regard to the 90-1 10% requirements,
the Commission ordered that a 90/110 performance band was a reasonable
requirement to represent the "firmness" of the Qualifying Facility's ('QF") energy
deliveries under its legally enforceable obligation "to deliver its monthly estimated
production." Order No. 29632, p. 20. The Commission directed that "energy delivered
in excess of the 11Oo/o should be priced at 85% of the market or the contract price,
whichever is less." ld. The Commission further directed that it was reasonable "when
the QF fails to deliver 90% of the monthly commitment amount to price all delivered
energy at 85% of the market price, or the contract rate, whichever is !ess." /d.
With regard to revision of the QF's generation estimates, the Commission set
forth the following findings and directives:
The Commission finds that it is reasonable and operationally
expedient to require QFs to provide ldaho Power with
monthly kWh production estimates. The estimate amount is
the QF's generation delivery commitment. lt is the monthly
production estimate that will be used in the 90/110
performance band. The Commission finds it reasonable to
provide more frequent opportunities to revise generation
estimates than proposed by the Company. We find that the
interest of the Company in planning for QF resources is
better served if the generation forecast is a reliable estimate.
QFs shall initially provide ldaho Power with one year of
monthly generation estimates and beginning at the end of
month nine and every three months thereafter provide the
Company with an additional three months of forward
estimates. QF opportunities for estimate revisions begin at
the end of month three and every three months thereafter for
the forward period beginning the fourth month out through
the end of the estimate period. For planning purposes,
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
following the first year the Company on a rolling basis will
always have six months of QF production estimates.
Order No. 29632, pp.22-23.
D. Idaho Power Comments. At the time of the proceedings for the U.S.
Geothermal/Lewandowski complaints, during 2003, ldaho Power purchased about 75
average megawatts ("aMW") of QF generation from facilities with a nameplate capacity
under contract of 182 MW. Order No. 29632, p. 14. Today, during 2013,ldaho Power
purchased about 243 aMW of QF generation from facilities with a nameplate capacity
under contract of 780 MW.
Subsequent to Order No. 29632, ldaho Power implemented the 90/1 10
provisions, as directed by the Commission, including the provisions for making
adjustments to the monthly generation estimates almost word-for-word from Order No.
29632. However, starting with the presently submitted ESA for this Project (Case No.
IPC-E-14-06) and the ESA for the Head of U Canal project (Case No. IPC-E-14-07),
ldaho Power has revised the provisions for making adjustments to the generation
estimates to allow QFs to revise on a monthly rather than a quarterly basis. This was
seen by the Company as a relatively straightforward and non-controversial revision that
maintains the integrity of the existing 90/110 performance and firmness requirements,
but clarified a complicated and confusing contractual provision that talks about yearly,
monthly, quarterly, and nine month time periods.
Most importantly, in the Company's decade of experience integrating QF
generation into its system, and the exponential growth of PURPA QF generation on
ldaho Powe/s system since Order No. 29632, the Company's interest in this revision is
that it will result in a more accurate monthly estimate for Idaho Power's operations. The
IDAHO POWER COMPANY'S REPLY COMMENTS - 7
revised provisions still maintain the one year of monthly generation estimates that can
be used for long-term planning, but what is ultimately more critica! is the short-term,
operational planning needs-and a more accurate monthly estimate is much more
beneficial for integrating QF generation than locking in a three-month estimate. From
the Company's perspective, the purpose of the 901110 provisions, and the consequent
direction about revision to the estimated Net Energy Amounts used for the 90/110
requirement, is not to implement some kind of punitive pricing policy, but, rather, to get
an accurate estimate and forecast of QF generation to assist in the real-time planning
and operation of ldaho Power's system for the benefit of its customers in a least cost
manner. The Company believes that allowing a QF facility to update its estimated
monthly Net Energy Amounts on a monthly basis will result in a more accurate monthly
forecast that what the Company receives currently with the quarterly revisions.
ldaho Power answered a series of seven production requests from Commission
Staff related to Staff's concerns regarding the change to monthly generation estimates.
ldaho Power has attached hereto as Attachment 1, and incorporates by this reference,
ldaho Power Company's Response to the First Production Request of the Commission
Staff. Staff's Comments provide a brief summary of some of the Company's responses
to its production requests and states, "Staff agrees that much of the justification
provided by ldaho Power in response to Staff production requests has merit.
Nonetheless, Staff believes that a change to the notification requirements associated
with the 901110 rules is more properly addressed in a separate proceeding that includes
all of the potential stakeholders." Staff Comments, p. 7. ldaho Power does not believe
that a separate larger proceeding is required. ln fact, the very case that established the
IDAHO POWER COMPANY'S REPLY COMMENTS - 8
901110 provisions itself, as well as the provisions for adjusting generation estimates,
was a consolidation of two complaint cases against ldaho Power, not a separate,
generally applicable docket for all three utilities. !t was an ldaho Power docket. The
findings and ordering language from Order No. 29632 are specific to ldaho Power and
direct ldaho Power "to conform its QF contracting practice and Firm Energy Sales
Agreement contract provision requirements." Order No. 29632, pp. 22-24. Surely, it is
appropriate to address a modification of one of these provisions within the context of an
Idaho Power case seeking the review and approval or rejection of those contract
provisions.
As stated in the attached responses to Staffs production requests, the new Net
Energy Estimate process indentified in the ESA provides both ldaho Power and the QF
with a straightforward, 30-day notification process as described in paragraph 6.2.3 of
the Agreement. Response to Request No. 3. The current three-month notification
process has caused significant confusion with QF projects. ld. ldaho Power has
worked with each project individually to clear up any confusion; however, the issue still
persists. ld. By allowing the QF to revise these Net Energy Estimates on a more
frequent basis, there is a greater chance that these estimates will be more reliable
values that ldaho Power can use in its short-term planning process. ld. ldaho Power
will still have 12 months of data from the project that can be used in its long-term
planning processes. /d. This conforms with the Commission's findings from Order No.
29632, that were also quoted by Staff in its Comments: "The Commission finds it
reasonable to provide more frequent opportunities to revise generation estimates than
proposed by the Company. We find that the interest of the Company in planning for QF
IDAHO POWER COMPANY'S REPLY COMMENTS - 9
resources is better served if the generation forecast is a reliable estimate." Order No.
29632, p. 23; Staff Comments, p. 5. The main purpose being to obtain a more accurate
and reliable generation estimate. The Company is of the view today that it will receive
more accurate and reliable generation estimates if the QF is allowed to update such
estimates on a monthly basis.
Furthermore, as stated in Response to Request No. 4, if a QF fails to meet the
901110 performance requirements, a reduced energy payment is made to the project.
The proposed change to a monthly notification of changes to the estimates could
reduce the amount of times that a project misses the performance criteria. However,
the purpose of the performance criteria is not to increase or reduce the energy
payments to a project, but, instead, to have the project provide ldaho Power with a more
accurate energy estimate that can be used in the planning of both long-term and short-
term operations of the electrical system to optimize efficiency and operate in the most
cost-effective manner possible.
In response to Staff's Production Request No. 6, asking to compare the
Company's position today, with that which it expressed in the U.S.
Geothermal/Lewandowski case, the Company responded:
Idaho Power fully agrees with the ldaho Public Utilities
Commission ("Commission") that the 901110 performance
band is a key element establishing a QF project's eligibility to
receive "firm" energy prices versus "non-firm" energy prices
and believes the proposed change to a 30-day notification
period will maintain this 90/1 10 obligation. lt will also enable
projects to provide more meaningful energy forecasts that
Idaho Power can utilize in operations of its electrical system.
ln the two cases noted above, the statements are correct as
to what ldaho Power originally proposed in those cases.
However, in Order No. 29632 (pages 22-23), the
IDAHO POWER COMPANY'S REPLY COMMENTS - 1O
Commission found with regard to the frequency of providing
estimated energy statements that:
"The Commission finds that it is reasonable
and operationally expedient to require QFs to
provide ldaho Power with monthly kwh
production estimates. The estimate amount is
the QF's generation delivery commitment. lt is
the monthly production estimate that will be
used in the 90/110 performance band. The
Commission finds it reasonable to provide
more frequent opportunities to revise
generation estimates than proposed by the
Company. We find that the interest of the
Company in planning for QF resources is
better served if the generation forecast is a
reliable estimate. QFs shall initially provide
ldaho Power with one year of monthly
generation estimates and beginning at the endof month nine and every three months
thereafter provide the Company with an
additional three months of forward estimates.
QF opportunities for estimate revisions begin at
the end of month three and every three months
thereafter for the forward period beginning the
fourth month out through the end of the
estimate period. For planning purposes,
following the first year the Company on a
rolling basis will always have six months of QF
prod uction esti mates. "
At the time this Order was issued (November 2004, nearly
10 years ago), there was little experience with how QF
projects would be providing the generation forecasts and
how accurate the forecasts would be. At that time, the
Commission made a sound ruling based on the evidence
presented in Case Nos. IPC-E-04-08 and IPC-E-04-10.
However, 10 years of experience with the three-month
generation estimation process has brought to light some
shortcomings, some of those being:
o Project confusion with regard to when it can
provide notification.
o lnaccurate energy estimates.
IDAHO POWER COMPANY'S REPLY COMMENTS - 11
o Monthly kilowatt-hour ('kwh') estimates
provided many months prior to actual energy
deliveries are not proving to be reliable
energy estimates.
. ln some cases, canal irrigation water
allocations (water used to run the QF
canal based projects) many times are
not known three months prior.
o The various approved relief mechanisms
(Force Majeure, Forced Outages, and
Suspension of Energy Deliveries) significantly
detract from stability of the energy estimates
provided by projects.
o Monthly kwh estimates tend to be poor
indications of actua! hourly energy deliveries.
o Short-term planning is better served by
receiving more accurate estimates closer to
the period in which the actual energy
deliveries will occur.
Long-term planning use of this data will not materially
change under the proposed new 30-day notification process.
As stated in the Company's response to Staff's Request No.
2, the 12-month estimated generation is not materially
changing in this new 30-day notification process.
Consistent with the Commission's findings noted above, the
90/110 performance band is being maintained, and the
proposed 30-day notification period is consistent with the
Commission findings stating, "We find that the interest of the
Company in planning for QF resources is better served if the
generation forecast is a reliable estimate."
Response to Request No. 6.
Finally, in response to Staffs Production Request No. 7, the Company stated that
contingent upon the Commission's approval of change to the provisions allowing a
monthly revision of estimated generation in the PURPA ESA, that the Company's intent
is to utilize the monthly revision provision for g0/1 10 contract provisions in all new hydro
IDAHO POWER COMPANY'S REPLY COMMENTS - 12
QF projects. ldaho Power has included the same provisions in several other hydro
contracts that are fu!!y executed and are pending Commission review. The Company
has also included such provisions in a fully executed solar QF negotiated agreement
that contains 90/1 10 provisions, but has not yet been filed with the Commission for its
review.
III. CONCLUSION
ldaho Power respectfully requests that the Commission approve the ESA as
submitted. Staff has recommended that all provisions of the contract are acceptable
with the exception of the revision to allow for 30-day updates to the QF project's
estimated Net Energy Amounts. This revision will result in more accurate monthly
estimates for ldaho Power's operations as compared to the quarterly updates. The
revised provisions still maintain the one year of monthly generation estimates that can
be used for long-term planning, but what is ultimately more critical is the short-term,
operational planning needs-and a more accurate monthly estimate is much more
beneficial for integrating QF generation than locking in a three-month estimate. From
the Company's perspective, the purpose of the 901110 provisions, and the consequent
direction about revision to the estimated Net Energy Amounts used for the 90/110
requirement, is not to implement some kind of punitive pricing policy, but, rather, to get
an accurate estimate and forecast of QF generation to assist in the real-time planning
and operation of Idaho Power's system for the benefit of its customers in a least cost
manner. The Company believes that allowing a QF facility to update its estimated
monthly Net Energy Amounts on a monthly basis will result in a more accurate monthly
IDAHO POWER COMPANY'S REPLY COMMENTS - 13
forecast than what the Company receives currently with the quarterly revisions. This
will be beneficialto ldaho Powe/s operation of its system and beneficialto customers.
ldaho Power respectfully requests that the Commission issue an order: (1)
approving the ESA between ldaho Power and William Arkoosh, without change or
condition and (2) declaring that all payments for purchases of energy under the ESA
between ldaho Power and William Arkoosh be allowed as prudently incurred expenses
for ratemaking purposes.
Respectfully submitted this 18th day of July 2014.
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 14
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 18th day of July 20141 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:
Gommission Staff
Kristine A. Sasser
Deputy Attomey General
ldaho Public Utilities Commission
472 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
Little Wood River Ranch ll
William Arkoosh
2005 Highway 26
Gooding, ldaho 83330
X Hand Delivered
U.S. Mail
Overnight Mail
FAX
Email kris.sasser@puc. idaho.oov
Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
IDAHO POWER COMPANY'S REPLY COMMENTS - 15
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-14-06
IDAHO POWER COMPANY
ATTACHMENT 1
RECT IVTN
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company ?0ll JUL -8 PH lr I 5
1221West ldaho Street (83702)
P'o' Box 7o lDAii-c^;rLj5;i;'
Boise, ldaho 83707 uTiLlri:s-cciti'ilsslcN
Telephone: [phone]
Facsimile: [phone]
dwa I ker@ id a hooower. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
tN THE MATTER OF THE APPLICATION )
oF |DAHO POWER COMPANY FOR ) CASE NO. IPC-E-14-06
APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH ) IDAHO POWER COMPANY'S
WILLIAM ARKOOSH FOR THE SALE ) RESPONSE TO THE FIRST
AND PURCHASE OF ELECTRIC ) PRODUCTION REQUEST OF THE
ENERGY FROM THE LtrrLE WOOD ) COMMISSION STAFF TO TDAHO
RIVER RANCH II PROJECT.) POWER COMPANY
)
COMES NOW, ldaho Power Company ("ldaho Powe/' or "Company"), and in
response to the First Production Request of the Commission Staff to ldaho Power
Company dated June 18,2014, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REOUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1
REQUEST NO. 1: Please confirm whether Staff's graphical depiction of
paragraph 6.2.3 as shown in Table 3 above accurately represents the terms of the
proposed Agreement. lf Staff's depiction is not accurate, please explain why.
RESPONSE TO REQUEST NO. 1: Staffs graphical depiction in Table 3
accurately represents paragraph 6.2.3 of the proposed Energy Sales Agreement
("Agreement").
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY.2
REQUEST NO. 2: On page 6 of the Amended Application, ldaho Power states
"However, with the proposed change, the Seller must still provide 12 months of
estimated Net Energy Amounts, and still cannot revise the immediate three months of
estimated Net Energy Amounts." Please reconcile this statement with paragraph 6.2.3
of the Agreement.
RESPONSE TO REQUEST NO. 2: The Amended Application is correct in that
12 months of estimated Net Energy Amounts will be on file with ldaho Power at all times
during the term of the Agreement. However, the statement "cannot revise the
immediate three months of estimated Net Energy Amounts" is not correct.
Paragraph 6.2.1 of the Agreement specifies that the Seller must provide 12
months of estimated generation data at the time the Agreement is executed. Through
the term of the Agreement, paragraph 6.2.3 allows the Seller to revise this 12 months of
data on a monthly basis with a minimum of 30 days notice prior to the beginning of the
next month.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3
REQUEST NO. 3: The Amended Application states that under the new method
"the Seller gains more clarity and flexibility in adjusting its estimated energy deliveries,
and ldaho Power maintains the stability in the estimates necessary for its planning and
operation". Please describe what kind of "clarity" the new method allows the Seller to
gain. Please list the implications, if any, of the new method to ldaho Powe/s planning
and operation processes, and explain why the implications would not affect ldaho
Power's "stability" in the estimates.
RESPONSE TO REQUEST NO. 3: The new Net Energy Estimate process
identified in the Agreement provides both ldaho Power and the Seller with a
straightforward 30-day notification process as described in paragraph 6.2.3 of the
Agreement. The cunent three-month notification process has caused significant
confusion with Qualifying Facility ("QF") projects. ldaho Power has worked with each
project individually to clear up any confusion; however, the issue still persists.
By allowing the Seller to revise these Net Energy Estimates on a more frequent
basis, there is a greater chance that these estimates will be more reliable values that
ldaho Power can use in its short-term planning process. As stated in the Company's
response to Staffs Request No. 2, ldaho Power will still have 12 months of data from
the project that can be used in its long-term planning processes.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
REQUEST NO. 4: Please identify the pros and cons of the new method with
regard to each party, compared to the current method specified in Order No. 29632.
RESPONSE TO REQUEST NO. 4: Below is a brief list of pros and cons
regarding the new method.
Pros
ldaho Power
. Potential of more accurate monthly estimated Net Energy Amounts.. More clarity of the requirement, resulting in better information from the
project and fewer disputes.. Maintains 12 months of monthly estimated Net Energy Amount data.
Project
. Potential of providing more accurate monthly estimated Net Energy
Amounts.. Less risk of failing to meet performance requirements.. More clarity of the requirement, resulting in better information being
provided to ldaho Power.
Cons
lf a project fails to meet the 90/1't0 performance criteria, a reduced energy
payment is made to the project. This change to a 30-day notification period versus the
old process of a three-month notification period could reduce the amount of times a
project misses this performance criteria (if the project opts to better manage its project).
However, the motivation of this performance criteria is not to increase or reduce the
energy payments to a project but instead to have the project provide ldaho Power with
more accurate energy estimates that could be used in the planning of both long-term
and short-term operations of the electrical system to optimize efficiency and operate in
the most cost-effective manner possible.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
REQUEST NO. 5: Please explain why ldaho Power believes the Commission
should allow use of its proposed method, instead of utilizing the existing framework as
outlined in Order No. 29632.
RESPONSE TO REQUEST NO. 5: As described in the Company's response to
Staff's Request Nos. 1 , 2, 3, and 4, ldaho Power believes the adoption of this new
process of estimating Net Energy Amounts has the potential of providing more accurate
data for ldaho Power to use in operating its electrical system in the most efficient and
least cost method. The process outlined in Order No. 29632 had its foundation in sound
analysis and logic. However, the approximate 10 years that have lapsed since this
Order was adopted (November 2004) has provided both ldaho Power and the projects
significant experience with the performance criteria and a better understanding of ways
to improve the process to achieve more optimal outcomes. This change to the 30-day
notification period has very little impact on the 12 months of estimated generation data
and provides significant potential for improved short-term energy estimates.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
REQUEST NO. 6: Order No. 29632 was born out of cases IPC-E-04-08 and
IPC-E-04-10 in 2004. Back then, ldaho Power proposed to allow QFs to revise their
energy estimates three times during the first year of operation and every two years
thereafter. ldaho Power reasoned that a two-year interval allows the Company to more
easily integrate the QF resource into its biennial IRP planning process. Please discuss
whether this is still the Company's position and how Idaho Power's proposal in this case
aligns with the Company's previously stated position.
RESPONSE TO REQUEST NO. 6: ldaho Power fully agrees with the ldaho
Public Utilities Commission ("Commission") that the 90/110 performance band is a key
element establishing a QF project's eligibility to receive "firm" energy prices versus
"non-firm" energy prices and believes the proposed change to a 30-day notification
period will maintain this 901110 obligation. lt will also enable projects to provide more
meaningful energy forecasts that ldaho Power can utilize in operations of its electrical
system.
ln the two cases noted above, the statements are correct as to what ldaho Power
originally proposed in those cases. However, in Order No. 29632 (pages 22-23'1, the
Commission found with regard to the frequency of providing estimated energy
statements that:
The Commission finds that it is reasonable and operationally
expedient to require QFs to provide ldaho Power with monthly kWh
production estimates. The estimate amount is the QF's generation
delivery commitment. lt is the monthly production estimate that will
be used in the 901110 performance band. The Commission finds it
reasonable to provide more frequent opportunities to revise
generation estimates than proposed by the Company. We find that
the interest of the Company in planning for QF resources is better
served if the generation forecast is a reliable estimate. QFs shall
initially provide ldaho Power with one year of monthly generation
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REOUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7
estimates and beginning at the end of month nine and every three
months thereafter provide the Company with an additional three
months of fonruard estimates. QF opportunities for estimate
revisions begin at the end of month three and every three months
thereafter for the forward period beginning the fourth month out
through the end of the estimate period. For planning purposes,
following the first year the Company on a rolling basis will always
have six months of QF production estimates.
At the time this Order was issued (November 2004, nearly 10 years ago), there
was little experience with how QF projects would be providing the generation forecasts
and how accurate the forecasts would be. At that time, the Commission made a sound
ruling based on the evidence presented in Case Nos. IPC-E-04-08 and IPC-E-04-10.
However, 10 years of experience with the three-month generation estimation process
has brought to light some shortcomings, some of those being:
. Project confusion with regard to when it can provide notification.
o lnaccurate energy estimates.
o Monthly kilowatt-hour ("kwh") estimates provided many
months prior to actual energy deliveries are not proving to be
reliable energy estimates.
. ln some cases, canal irrigation water allocations
(water used to run the QF canal based projects) many
times are not known three months prior.
o The various approved relief mechanisms (Force Majeure,
Forced Outages, and Suspension of Energy Deliveries)
significantly detract from stability of the energy estimates
provided by projects.
o Monthly kWh estimates tend to be poor indications of actual
hourly energy deliveries.
o Short-term planning is better served by receiving more
accurate estimates closer to the period in which the actual
energy deliveries will occur.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8
Long-term planning use of this data will not materially change under the
proposed new 30-day notification process. As stated in the Company's response to
Staffs Request No. 2, the 12-month estimated generation is not materially changing in
this new 30-day notification process.
Consistent with the Commission's findings noted above, the 90/110 performance
band is being maintained, and the proposed 30-day notification period is consistent with
the Commission findings stating, "We find that the interest of the Company in planning
for QF resources is better served if the generation forecast is a reliable estimate."
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 9
REQUEST NO. 7: Please state whether ldaho Power intends to utilize its
proposed estimation method for all new hydro QF projects.
RESPONSE TO REQUEST NO. 7: Yes, contingent upon the Commission
approving this estimation process in the Agreement currently under review.
The response to this Request is sponsored by Randy C. Allphin, Energy
Contracts Coordinator Leader, ldaho Power Company.
DATED at Boise, ldaho, this 8th day of July 2O14.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1O
DONOVAN E. WALKER
Attorney for ldaho Power Company
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 8th day of July 2014 I served a true and correct
copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY upon the
following named parties by the method indicated below, and addressed to the following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
ldaho Public Utilities Commission
47 2 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
Little Wood River Ranch ll
William Arkoosh
2005 Highway 26
Gooding, Idaho 83330
X Hand Delivered
U.S. Mail
Overnight Mail
FAX
Email [e-mail]
Hand Delivered
U.S. Mail
Overnight Mail
FAXX Email [e-mail]
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 11