20140721clarification_order_no_33078.pdf

Office of the Secretary
Service Date
July 21,2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
rN THE MATTER OF rDAHO POWER )
coMPANy'S PETITON TO TEMPORARILY ) CASE NO. IPC-E-14-09
SUSPEND ITS PURPA OBLIGATION TO )
PURCHASE ENERGY GENERATED BY )
soLAR-powERED QUALTFYING ) ORDER NO. 33078
FACILITIES (OFs) )
On June 2,2014, the Idaho Conservation I-eague (ICL) filed a Petition requesting that
the Commission "clarify" its final Order No. 33043 issued on May 28,2014. [n that final Order,
the Commission denied Idaho Power Company's request to temporarily suspend the utility's
obligation to purchase energy from solar-powered qualifying facilities (QFs) under the federal
Public Utility Regulatory Policies Act (PURPA). In its Petition, ICL requested that the
Commission clarify final Order No. 33043 by simply striking the sentence "We believe the
benefits and value of solar generation are reflected in the solar avoided cost rates and not part of
[sic] consideration when developing the costs of integrating solar [resources]." Petition at 1.
On June 9,2014,Idaho Power filed an answer to ICL's Petition. The utility asked the
Commission to deny the Petition and not remove the sentence. After reviewing the Petition and
the answer, we clarify our Order but deny ICL's request to delete the sentence as set out in
greater detail below.
BACKGROUND
On May 13, 2014, Idaho Power filed a Petition requesting the Commission
immediately issue an Order temporarily suspending the utility's obligation to purchase energy
from solar-powered QFs under PURPA. In the alternative, Idaho Power requested the
Commission require any subsequent solar power purchase agreements (PPAs) between a solar
developer and Idaho Power "contain an appropriate solar integration charge." Petition at I-2.
The Commission issued a Notice of Petition and scheduled a public hearing on May 21,2014.
Order No. 33039. In response to the Notice, the Commission received about 30 written
comments and testimony from 14 individuals at the public hearing. Order No. 33043 at 5.
On May 28,2014, the Commission issued an Order denying Idaho Power's request to
suspend its purchase obligation but partially granting and modifing Idaho Power's alternative
request. The Commission directed "Idaho Power and its solar counterparties to negotiate solar
ORDER NO. 33078
integration provisions in their PPAs. ." Order No. 33043 at 2. More specifically, the
Commission found that the more "reasonable course of action . . . is for parties to consider and
negotiate a solar integration provision in their PPAs." Id. at7. The Commission encouraged the
negotiating parties to consider several possible options for including a solar integration provision
in their PPAs.
The Commission's Order also responded to the written comments and testimony that
addressed the adoption of a solar integration charge.l In recognition and response to the
testimony provided by the public, the Commission stated its belief that "the benefits and value of
solar generation are reflected in the solar avoided cost rates and not part of the consideration
when developing the costs of integrating solar resources" into the utility's resource stack. Id. at
8. There were no Petitions for Reconsideration filed regarding final Order No. 33403.
PETITION FOR CLARIFICATION
In its Petition for clarification, ICL requests the Commission simply strike the
sentence "We believe the benefits and value of solar generation are reflected in the solar avoided
cost rates and not part of [sic] consideration when developing the costs of integrating solar
[resources]." Petition at 1. ICL generally asserts that the information contained in the statement
"goes beyond the narrow issues before the Commission and . . . does not comport with the
Commission's description of the IRP methodology in Order No. 32976, GNR-E-I1-03." Id. The
two issues raised by ICL are examined below.
1. Scope of Proceeding. ICL first maintains the subject sentence goes beyond the
scope of the "two narrow questions," that the Commission asked to be addressed in its public
hearing Notice. In its Notice, the Commission asked: (1) should Idaho Power's obligation to
purchase power generated by solar QFs be temporarily suspended; or alternatively, (2) should the
Commission direct Idaho Power to include a solar integration charge in its solar PPAs? Order
Nos. 33039 at 2; 33043 at l. The Notice stated that testimony and comments regarding the
amount and "t5/pe of solar integration charge . . . will occur at a later date in a subsequent
proceeding." Order No. 33039 at 2; see also Order No. 33043 at 1.
l'Integration charge' represents the utility's increased costs ofintegrating an intermittent generating resource into its
system and acts as a discount to reduce the avoided cost rate paid to QFs. Typically, intermittent resources cause a
utility to operate its own dispatchable "resources differently in order to successfully integrate the intermittent QF
power without compromising [the] reliability" of its own system. Order No. 33043 at 3.
ORDER NO. 33078
ICL asserts that the Commission "specifically excluded consideration of 'whether and
what type of integration charge may be appropriate.' By opining on the types of benefits and
values to include or exclude from an integration charge, the Commission went beyond the scope
of the narrow issues noticed for hearing in Order No. 33039." Petition at I (citations omitted).
While ICL concedes the sentence does not represent "a finding of fact," it isooconcerned that [the
sentence] could be interpreted by some as precluding exploring that question in subsequent
proceedings. Striking the sentence will avoid confusion and possible further litigation before the
Commission." Petition at 2.
In its answer to ICL's Petition, Idaho Power acknowledges that the scope of the
hearing was limited but observed that several witnesses made various statements addressing solar
integration charges. Idaho Power maintains the testimony about solar integration charges
"opened the door to [the solar integration] issue," thus, it was appropriate for the Commission to
respond to those comments. Answer at 2. Idaho Power also maintains that the subject sentence
correctly portrays that the 'obenefits and value of solar generation are reflected in the solar
avoided cost rates provided to solar projects." Answer at 2.
Commission Findings: We find ICL's first argument to strike the sentence because it
is beyond the scope of the proceeding unpersuasive. We agree with ICL and Idaho Power that
the primary focus of the Commission's public hearing was whether Idaho Power's obligation to
purchase power from solar QFs should be suspended. Our hearing notice specifically stated that
the merits of a solar integration charge "will be the subject of a subsequent proceeding." Order
No. 33043 at 1. In addition, we requested that public witnesses at the hearing "limit your
comments to the two issues [set out in the Order]. This is not the time and place where the
Commission will be considering [solar integration charges]." Tr. at2. Despite our attempts to
limit the scope of the hearing, several commenters and witnesses discussed the issue of solar
integration charges.
Having addressed solar integration charges, we found it appropriate to respond to the
tenor of the comments. We simply observed that "[s]everal commenters and witnesses offered
conflicting testimony about solar integration charges in general. In particular, some commenters
and witnesses recognized that there are costs associated with integrating solar generation with
the utility's resources, and others said there were no costs or that the benefits outweighed the
costs." Order No. 33043 at 6. We were careful to not address "the merits of a specific
ORDER NO. 33078
integration charge." Id. at7. Moreover as ICL acknowledges, the Commission made no specific
findings regarding a solar integration charge. Petition at 2. Thus, we believe that it was
reasonable for the Commission to respond to the statements concerning solar integration charges.
2. Is the sentence contrary to the IRP methodology? tCL next asserts that the subject
sentence is inconsistent "with the Commission's description of the IRP methodology in Order
No. 32976, GNR-E-I1-03." Petition at 1. In December 2012, the Commission explained in the
GNR-E-I1-03 case, that the IRP methodology 'orecognizes the individual generation
characteristics of each project by assessing when the QF is capable of delivering its resources
against when the utility is most in need of such resources. We find that the resultant [avoided
cost] pricine is reflective of the value of the QF energy being delivered to the utility." Petition at
2 quoting Order No. 32697 at 20 (emphasis added); n.t. ICL asserts that the avoided cost rates
"are clearly from the utility or systemic perspective and are not developed based on the
characteristics of the QF." Petition at 2. ICL also argues that avoided cost rates do not capture
location and project specific attributes.
For its part, Idaho Power challenges ICL's statement that avoided cost rates "do not
reflect the value of the QF; they reflect the value of a generic avoided resource." Answer at 3.
Idaho Power maintains that this is simply not true under the IRP methodology. It argues that
ICL "appears to be confusing the Surrogate Avoided Resource (SAR) published avoided cost
rate methodology with the approved incremental cost IRP methodology applicable to all solar
projects over 100 kilowatts." Id. at2-3.
Idaho Power explained that a proposed solar QF 'oreceives a much higher avoided
cost price than most other resource types. The value of the solar generation is reflected with the
higher avoided cost rate paid to the project." Answer at 3. Idaho Power maintains this is based
upon two factors. First, solar generation is typically greater "when the Company needs
[generation] most during summer peak and heavy load hours." 1d. Second, solar QFs naturally
do not "provide generation during light load hours atnight." Id.
Idaho Power characterizes ICL's main reason for wanting the sentence stricken as 'oa
motivation to argue about purported additional benefits regarding integration that solar may
provide. This motivation and rational is ironically the very thing that ICL objects to in the first
place. . . ." Answer at 4. Idaho Power insists that nothing in the Commission's Order, including
the subject sentence, "precludes ICL from making such arguments in a future proceeding
oRDERNO. 33078
addressing the solar integration charge." Id. Idaho Power concludes that the sentence accurately
portrays the fact the avoided cost pricing model assigns added value to a proposed solar project
based upon the individual generation characteristics of that proposed project. Consequently,
Idaho Power requests that ICL's Petition be denied.
Commission Findings: After reviewing ICL's Petition and our prior Order No.
32697 from our generic PURPA investigation, we do not find the subject sentence inconsistent
with the prior Order. ICL maintains that avoided cost rates "are not developed based upon the
characteristics of the QF." Petition at 2. We disagree with this statement. Consistent with Order
No. 32697, we believe the economic o'value of solar generation [is] reflected in the solar avoided
cost rates. . . ." By that we mean simply that the economic value of QF generation 'ois reflective
of the value of the QF energy being delivered to the utility." Order No. 32697 at 20. For
example, Idaho Power's avoided cost rates are lower for power delivered when the utility's need
for the power is lowest, and conversely rates are higher when the utility's need for such energy is
the greatest. In addition, intermittent solar QF generation has a higher value during heavy load
hours (late afternoon in summer) than intermittent wind generation. For illustrative purposes, the
following table of recently approved published avoided cost rates for various types of QF
resources demonstrates this differential :
Tvne of OF Generation
Levelized Avoided Cost Rate for
2O-vear Contract Besinnins in2014
Wind s46.02
Solar s75.35
Non-seasonal Hydro $72.s0
Seasonal Hydro (summer)$92.4s
Source: OrderNo. 33041, IPCo Atch. l-4.
As is evident, even SAR avoided cost rates distinguish the value of energy supplied to the utility
based upon the type of QF generation.
More importantly, we expressly acknowledged in our final Order that this case was
not about "addressing the merits of a specific integration charge." Order No. 33043 at 7. Our
Notice of Hearing and the final Order both recognize that the details of establishing a solar
integration charge for Idaho Power "will be the subject of a subsequent proceeding." Order No.
33039 at 2; Order No. 33043 at l. Indeed, on July l,2|l4,Idaho Power filed an application to
implement solar integration charges, Case No. IPC-E-14-18. The opportunity to address the
merits of the appropriate solar integration charge is the new case. In summary, the important
ORDERNO. 33078
point is that this case was about suspending Idaho Power's obligation to purchase - not
determining the value of integration charges. Having clarified our prior Order, we deny ICL's
request to delete the sentence.
ORDER
IT HEREBY ORDERED that Idaho Conservation League's Petition to Clarify final
Order No. 33043 is partially granted as set out above. ICL's request to strike the subject
sentence is denied.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;Ll *
day of July 2014.
n^"Mh* I &^fr*
MARSHA H. SMITH, COMMISSIONER
ATTEST:
O:IPC-E-14-09 dh2
D. Jewel
ORDERNO. 33078