20140701Application.pdf

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DONOVAN E. WALKER
Lead Counsel
dwalker@idahopower. com
July 1 ,2014
VIA HAND DELIVERY
Jean D. Jewell, Secretary
!daho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-14-18
Solar lntegration Rates and Charges - ldaho Power Company's Application
and Testimony
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and seven (7)
copies of ldaho Power Company's Application.
Also enclosed for filing are nine (9) copies each of the Direct Testimony of Philip
B. DeVo! and Michael J. Youngblood. One copy of each of the aforementioned
testimonies has been designated as the "Reporter's Copy." In addition, a disk
containing Word versions of Mr. DeVol's and Mr. Youngblood's testimonies is enclosed
for the Reporter.
lf you have any questions about the enclosed documents, please do not hesitate
to contact me.
Donovan E. Walker
Z
1221 W. ldaho 5t
PO. Box 70
Boise, lD 83707
DEW:csb
Enclosures
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@ idahopower. com
Attorney for ldaho Power Company
!N THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY TO
I MPLEMENT SOLAR I NTEGRATION
RATES AND CHARGES.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. IPC-E-14-18
APPLICATION
ln accordance with RP 052, ldaho Power Company ("ldaho Powe/' or
"Company") hereby respectfully requests the ldaho Public Utilities Commission
("Commission") authorize ldaho Power to implement solar integration rates and charges
consistent with its 2014 solar integration study ("Study" or "Solar Study").
ln support of this Application, ldaho Power represents as follows:
I. INTRODUCTION
1. Due to the variable and intermittent nature of solar generation, ldaho
Power must modify its system operations to successfully integrate solar power without
impacting system reliability, similar to wind generation. Idaho Power, or any electrical
system operator, must provide operating reserves from resources that are capable of
APPLICATION - 1
increasing or decreasing dispatchable generation on short notice to offset changes in
non-dispatchable solar 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. This results in higher power
supply costs that are subsequently passed on to customers.
2. ldaho Power is currently experiencing very high interest by, and rapid
growth of, solar generation projects wishing to contract with and locate on ldaho
Power's system. Idaho Power has recently signed six new Public Utility Regulatory
Policies Act of 1978 ("PURPA') solar contracts for 60 megawatts ("MW") of solar
generation in its Oregon service territory. ldaho Power is currently negotiating, and
nearing final agreements, for an additional 120 MW of solar projects in ldaho, one for 80
MW and one for 40 MW PURPA. ldaho Power has an additional 260 MW of proposed
PURPA solar projects seeking pricing and contracts. Case No. !PC-E-14-09 and the
Direct Testimony of Randy Allphin filed in that case provides additional details regarding
the current status of requests for PURPA contracts from solar developers. !n addition,
ldaho Power has seen rapid growth of PURPA wind generation that has been integrated
onto its system. ldaho Power currently has a total of 678 MW of wind generation
capacity currently operating on its system; 505 MW of this wind generation capacity has
been added to ldaho Power's system during 2010,2011, and 2012. As set forth in
Case No. IPC-E-13-22, this rapid growth has led to the recognition that ldaho Powe/s
finite capability for integrating variable and intermittent generation is nearing its limit.
Even at the current level of wind generation capacity penetration, dispatchable thermal
and hydro generators are not always capable of providing the balancing reserves
APPLICATION - 2
necessary to integrate variable generation. This situation is expected to worsen as wind
and solar penetration levels increase, particulady during periods of low customer
demand.
3. The costs associated with solar integration are specific and unique for
each individual electrical system based on the amount of solar generation being
integrated and the other types of resources that are used to provide the necessary
operating reserves. ln general terms, the cost of integrating solar generation increases
as the amount of nameplate solar generation on the electrical system increases.
Failure to calculate and properly allocate solar integration costs to solar PURPA
generators when calculating avoided cost rates impermissibly pushes those costs onto
utility customers, making them no longer indifferent to whether the generation was
provided by a PURPA qualifying facility or othennrise generated or acquired by the
Company.
II. 2014 SOLAR INTEGRATION STUDY AND REPORT
4. ln support of its Application requesting the Commission to implement solar
integration charges, ldaho Power presents its current Solar lntegration Study Report
("Study Report") as Exhibit No. 1 to the Direct Testimony of Philip B. DeVol, filed
contemporaneously with this Application. The Study Report was completed on June 16,
2014, and filed with the Commission on June 17, 2014, in Case No. IPC-E-14-09.
5. As described in Mr. DeVol's Testimony, the Solar Study determined solar
integration costs for four solar build-out scenarios at installed capacities of 100
megawatts ("MW"), 300 MW, 500 MW, and 700 MW. The Study utilized geographically
dispersed build-out scenarios with solar generation located across the Company's
APPLICATION - 3
service territory at Parma, Boise, Grand View, Twin Falls, Picabo, and Aberdeen.
Pages 6 and 7 of the Study Report provide additiona! information regarding the build-out
scenarios. The Company initiated the Study with the formation of a Technical Review
Committee ("TRC"), with the purpose of providing input, review, and guidance for the
Study. ln collaboration with the TRC, the Study Report shows the solar integration
costs as indicated on the following table:
Average lntegration Cost Per MWh
(2014 cost and dollars)
Build-out Scenarios 0-100 MW 0-300 MW 0-500 MW 0-700 MW
lntegration Cost $0.40 $1.20 $1.80 $2.50
lncremental lntegration Cost Per MWh
(2014 cost and dollars)
Penetration Level 0-100 MW 100-300 MW 300-500 MW 500-700 MW
lntegration Cost $0.40 $1.50 $2.80 $4.40
III. IMPLEMENTATION OF SOLAR INTEGRATION CHARGES
6. The Direct Testimony of Michael J. Youngblood, filed contemporaneously
with this Application, sets forth the Company's request and proposal to implement solar
integration rates and charges based upon the costs identified in the Solar Study. ldaho
Power proposes that a solar integration charge be established to collect the incremental
cost of integration at each 100 MW of solar generation penetration. Because there are
currently no solar projects paying an integration charge on Idaho Power's system, under
this proposal, the solar integration charge simply starts atzero and increases consistent
with the costs of integration identified in the Solar Study, at every 100 MW of solar
nameplate capacity penetration level. The proposed solar integration charges are
rounded to the nearest penny and are illustrated in the following graph:
APPLICATION - 4
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7. ldaho Power proposes that the above solar integration costs be set forth in
a tariff schedule, Schedule 87, Variable Generation lntegration Charges. Similar to
what the Company submitted and will request for the cost recovery of wind integration
costs, ldaho Power recommends that the Commission allocate costs on a per
megawatt-hour basis for incremental levels of solar penetration, not on a percentage of
avoided cost rate basis, like what was done for the initial wind integration charge. ldaho
Power also proposes that both wind and solar integration charges are set forth in a tariff
schedule, specifically established for intermittent generation integration charges.
8. Exhibit No. 2 to the Direct Testimony of Michael J. Youngblood contains a
draft Schedule 87. Schedule 87 is meant to provide the wind and solar integration
charges consistent with the most recent Commission-approved integration study
applicable to both wind and solar generation. The draft of Schedule 87 submitted as
Exhibit No. 2 contains only the proposed incremental integration charges for solar
APPLICATION - 5
generation based upon the Study. lt also contains a placeholder for the inclusion of the
appropriate wind integration charges, once they are determined by the Commission.
The charges set forth in Schedule 87 are the amounts to be deducted from avoided cost
rates each year, beginning in the year the project comes on-line, based on the
nameplate capacity of installed solar generation at the scheduled operation date of the
proposed project. The integration charges set forth in Schedule 87 are formatted to
appear in the same format as that used by the Commission to post the published
avoided cost rates. Each penetration level (each 100 MW increment) has its own table
clearly identified and set forth in Schedule 87, and discloses both the levelized
integration charge as well as the non-levelized stream of integration charge amounts
listed by year. Just like published avoided cost rates, the scheduled operation date for
the proposed generation project is used as the starting point in the table, and each
yearly amount through the term of the proposed contract is set out accordingly.
IV. MODIFIED PROCEDURE
9. ldaho Power believes that a technical hearing is not necessary to consider
the issues presented herein and respectfully requests that this Application be processed
under Modified Procedure; i.e., by written submissions rather than by hearing. RP 201
ef seg. Idaho Power has contemporaneously filed Direct Testimony of Philip B. DeVol
and Michae! J. Youngblood in support of this Application. Should the Commission
determine that a technical hearing is required, the Company stands ready to present the
testimony at hearing in support of this Application.
APPLICATION - 6
V. COMMUNICATIONS AND SERVICE OF PLEADINGS
10. Communications and service of pleadings with reference to this
Application should be sent to the following:
Donovan E. Walker
Regulatory Dockets
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
[e-mail]
dockets@idahooower. com
Michael J. Youngblood
Greg Said
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
mvounq blood @ idahopower. com
[e-mail]
VI. REQUEST FOR RELIEF
11. As described in greater detail above, ldaho Power respectfully requests
that the Commission issuri an order approving the Company's proposed implementation
of solar integration rates and charges as set forth in the proposed Schedule 87, Variable
Generation lntegration Charges, as indicated by the Solar Study presented herewith,
effective as of August 1,2014.
DATED at Boise, ldaho, this 1" dry of July
Attorney for ldaho Power Company
APPLICATION - 7
DONIC,VAN E. WALKER