20140905notice_of_application_order_no_33116.pdf

Office of the Secretary
Service Date
September 5,2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-14-22
CONFIRMATION OF THE CAPACITY )
DEFICIENCY PERIOD FOR )NOTICE OF APPLICATION
INCREMENTAL COST,INTEGRATED )
RESOURCE PLAN,AVOIDED COST )NOTICE OF
METHODOLOGY.)MODIFIEI)PROCEDURE
)
__________________________
)ORDER NO.33116
Idaho Power filed an Application with the Commission on August 13,2014,
requesting that the Commission issue an Order confirming the use of a July 2021 capacity
deficiency period in the approved incremental cost,integrated resource plan,avoided cost
methodology (IRP methodology)applicable to negotiated avoided cost rates for proposed
PURPA qualifying facilities (QFs).
BACKGROUND
On December 18,2012,the Commission issued Order No.32697 authorizing the use
of Idaho Power’s incremental cost IRP methodology.Solar and wind QF projects that exceed
1 00 kilowatts (kW)and all other QF generation that exceeds 10 average megawatts (aMW)
negotiates avoided cost rates based on the approved incremental cost.IRP methodology.In its
Order,the Commission stated We further find it appropriate to identify each utility’s capacity
deficiency based on load and resource balances found in each utility’s IRP.”Order No.32697 at
16.
In calculating a QF’s ability to contribute to a utility’s need for capacity,we
find it reasonable for the utilities to only begin payments for capacity at such
time that the utility becomes capacity deficient.If a utility is capacity
surplus.then capacity is not being avoided by the purchase of QF power.By
including a capacity payment only when the utility becomes capacity
deficient,the utilities are paying rates that are a more accurate reflection of a
true avoided cost for the QF power.
Id.at 21.The Commission discussed the use of inputs from the Company’s integrated resource
planning process in the calculation of avoided cost rates.The Commission directed that “when a
utility submits its Integrated Resource Plan to the Commission,a case shall be initiated to
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ORI)ERNO.33116 1
determine the capacity deficiency to be utilized in the SAR [Surrogate Avoided Resource]
Methodology.”Id.at 23.With regard to the IRP Methodology,the Commission stated that
“utilities must update fuel price forecasts and load forecasts annually —between IRP filings.
all other variables and assumptions utilized within the IRP Methodology remain fixed between
IRP filings (every two years).”Id.at 22.
For purposes of the SAR methodology,the Commission recently determined that
Idaho Power experiences its first capacity deficiency in July 202L Order No.33084.Although
the Company’s 2013 integrated resource planning process showed a first deficit in July 2016,
Idaho Power presented evidence that it had 400 MW of demand response program customers
enrolled for the 2014 seasofl.The addition of 400 MW of capacity pushed the Company’s deficit
out to July 2021.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that Idaho Power states that both the SAR and the
IRP methodologies start with a default capacity deficit which is the same as that established by
the most recent integrated resource planning process.For the 2013 planning process,a first
deficit was identified as 2016 in the Company’s preferred resource portfolio.However.Idaho
Power states that because of the suspension of the Company’s demand response programs in
2013,the first deficit of 2016 legitimately did not consider the approximately 400 MW of
demand response.
YOU ARE FURTHER NOTiFIED that,because of the unique circumstances of
demand response not being considered in the planning process and therefore also not being
considered in the IRP Methodology calculation of avoided cost rates,Idaho Power has entered
into contracts that contain capacity payments for the entire term of the 20-year agreements.
Idaho Power believes the correct avoided cost pricing for all proposed PURPA projects should
take into account the Commission’s finding that Idaho Power experiences its first capacity deficit
in July 2021.The Company maintains that the IRP Methodology is meant to be a more flexible,
negotiated process whereby a more accurate representation of avoided cost can be determined.
Therefore,the IRP Methodology should reflect the capacity deficiency that the Commission
determined based on the consideration of an additional 400 MW of capacity —provided through
the Company’s demand response program.Idaho Power states that the Company has just over
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529 MW of proposed new solar QF projects seeking pricing and contracts.The difference in
price for all 529 MW of proposed solar when applying a capacity deficit of July 2021 (includes
400 MW of demand response)instead of July 2016 (Idaho Power’s 2013 integrated resource
planning process determination of capacity deficiency)is approximately $170 million over the
life of the projects.
YOU ARE FURTHER NOTIFIED that Idaho Power states that because the IRP
Methodology is meant to be flexible and because the Company is obligated to ensure that
avoided cost rates are an accurate reflection of the utility’s avoided cost,the Commission should
confirm use of a first capacity deficit of July 2021 for purposes of avoided cost prices determined
through use of the IRP Methodology.
YOU ARE FURTHER NOTIFIED that Idaho Power requested that its Application
be processed by Modified Procedure.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules
of Procedure,IDAPA 3 1.01.01.201-204.The Commission notes that Modified Procedure and
written comments have proven to be an effective means for obtaining public input and
participation.
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 Tuesday,September 30,2014.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 APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDERNO.33116 3
Commission Secretary Donovan E.Walker
Idaho Public Utilities Commission Lead Counsel
P0 Box 83720 Idaho Power Company
Boise,ID 83 720-0074 P0 Box 70
Boise,ID 83707-0070
E-mail:dwa1keri’idahopower.com
Street Address for Express Mail:Randy C.Aliphin
Energy Contract Administrator
472 W.Washington Street Idaho Power Company
Boise,ID 83702-5918 P0 Box 70
Boise,ID 83707-0070
E-mail:[e-mail]
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 www.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 Oregon-Idaho at the
e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that reply comments may be filed no later than
Tuesday,October 7,2014.
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
31.01.01.204.
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.
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NOTICE OF MODIFIED PROCEDURE
ORDERNO.33116 4
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.
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.et seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons and the parties may file written comments no later than September 30,2014.
IT IS FURTHER ORDERED that reply comments be filed no later than October 7,
2014.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this I
day of September 2014.
ATTEST:
ii i(•i 11 [
Jean D.Jewell
Commission Secretary
O:IPC-E-14-22ks
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDERNO.33116
Th S /5
I ///I F
PAUL KJELLANDEW,P’R1SIDENT
Out of the Office on this Date
MARSHA H.Si\’IITH.CON MISSIONER
MMISSIONER
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