20150130Grow Direct.pdf

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?nl5 JAN 30 Pfl lr: 2l
iDAHC F'u;. ",iIJT ll-lTl r:S CCi',:tu{ ISS i0it
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
rN THE MATTER OF IDAHO POV{ER
COMPANY' S PETITION TO MODITY
TERMS AND CONDITIONS OF
PROSPECTIVE PURPA ENERGY SALES
AGREEMENTS.
CASE NO. IPC-E-15-01
IDAHO POI/{ER COMPANY
DIRECT TESTIMONY
OF
LISA A. GROW
I Q. Please state your name and business address.
2 A. My name is Lisa A. Grow and my business
3 address is 1,221, West Idaho Street, Boise, Idaho 83702.
4 Q. By whom are you employed and in what capacity?
5 A. I am employed by Idaho Power Company ("Idaho
6 Power" or "Company") as the Senior Vice President of Power
7 Supply.
8 Q. Please describe your educational background
9 and work experience with Idaho Power.
10 A. I graduated from the University of Idaho in
11 7987 with a Bachelor of Science in Electrical Engineering.
72 I received an Executive Masters of Business Administration
1-3 from Boj-se State University in 2008. f began my career at
L4 Idaho Power after graduatlng from the University of Idaho
15 in 1987, and have held several engineering positions before
1,6 moving into management in 2005. In 2005, I was named Vice
1-7 President of Delivery Engineering and Operations. In 2009,
18 I was appointed to my current position as Senior Vice
1,9 President of Power Supply. My current responsibilities
20 include overseeing the operation and maintenance of Idaho
21- Power's generation fl-eet, power plant engineeri-ng and
22 construction, environmental affairs, water management,
23 power supply pJ-anning, and whol-esale electricity and gas
24 operations. I also oversee Idaho Power's Load Serving
25 Operations Group, which is responsible for delivering
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Idaho Power Company
relj-abl-e energy to customers through the Company's
electrical grid using its generatlon portfolio and system
purchases. The management and administratj-on of Public
Utility Regulatory Policies Act of 1,978 (*PURPA")
5 cogeneration and small power production facilities is
6 withln fdaho Power's Load Serving Operations Group.
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8 matter?
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o.What is the purpose of your testimony in this
A.The purpose of my testi-mony is to present the
10 Company's request to modify terms and conditions for PURPA
energy sales agreements that the Company is required to
enter into pursuant to federal l-aw. More specifically,
Idaho Power bel-ieves the current 20-year authorized
contract term places undue risk of power supply cost
i-ncreases on customers at a tlme when Idaho Power has
sufficient resources to meet customer demands. The
Company's required Integrated Resource Plan ("IRP") process
is filed and updated every two years. Non-PURPA purchase
and sales transactions are limited to less than two years
pursuant to the Company's approved risk management policy.
Avoided cost rates are updated at least every year.
Therefore, Idaho Power requests that the Idaho Public
Util-ities Commission ("Commission") issue an order
directing that the maximum required term for an Idaho Power
PURPA energy sales agreement be reduced from 20 years to
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two years. I will- provide an overview of the Company's
case and describe the composition of Idaho Power's
generation resources, including 1ts carbon emissions and
renewable generation.
O. Are you sponsoring any exhibits?
A. No. However, Idaho Power is contemporaneously
filing the Direct Testj-mony of Randy A11phin. Mr. AIIphin
is sponsoring 10 exhibits in support of Idaho Power's
Petition and request in this matter.
I. IDABO POITER' S GENERATION RESOI'RCES
O. Could you describe Idaho Power and its
generation resources?
A.Yes. Idaho Power is a vertically integrated
electric utility with operations beginning in 1,9L6. Idaho
Power serves more than 513,000 customers throughout a
24,000 square mile area j-n southern Idaho and eastern
Oregon. Idaho Power owns and operates t1 hydroelectric
generating facilities, primarily on the Snake River, which
provide the bulk of the Company's generating ability.
Idaho Power has a nameplate generation capacity of nearly
3,600 megawatts (*MW") . Idaho Power's peak system load is
just over 3,400 MW, which occurred on July 2, 20L3. The
Company's peak system load for 2074 was approximately 3,784
MW. Its minj-mum system load for 2014 was approximately
1,073 MW. fdaho Power residentlal, business, and
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agricultural customers consistently pay some of the
nation's lowest prices for el-ectricity.
Idaho Power's f ive-year average fue.l- mix consists of
over 58 percent renewables, which is primarily hydro and
wind. Idaho Power has always been a l-ow carbon emitting
and primarily renewable energy electric utility. Idaho
Power is nearly 100 years o1d, and its first power plant
was hydroelectric. Idaho Power believes in a balanced
generation portfoli-o, including renewable energy that
blends demand-sj-de management and energy efficiency
programs to meet the needs of all its customers. As shown
in Mr. Allphin's Exhibit No. 2, as of January 26, 20!5,
Idaho Power had 7,428 MW of renewabl-e energy (PURPA and
non-PURPA purchases) on its system or under contract,
excluding the Company's hydro resources. This renewable
generation consists of: 128 MW of wind, 461 MW of solar,
35 MW of geothermal-, and 184 MW of small PURPA hydro and
other. Because Idaho Power does not receive the Renewable
Energy Certificates/Credits ("RECs") from most of its
Qualifying Facility ("QE") generation, this generati-on
cannot be used to meet any potential renewabl-e portfolio
standard requirements. Idaho Power cannot represent to
customers that they are receiving renewable energy from the
QEs, or from generation, for which it does not receive the
RECs, and is not making any such representation here.
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1 However, these are the renewables that operate on the
2 Company's system and which the Company must integrate.
3 Q. Could you describe Idaho Power's current
4 portfolio of generation resources?
5 A. Idaho Power's current resource portfolio
6 consists of a diverse mj-x of l-ow-cost generatj-on types
7 totaling nearly 3,600 MW of nameplate capacity. Idaho
I Power's resource portfolio is anchored by the Company's
t hydroelectric system consisting of \7 projects l-ocated on
10 the Snake River and its tributaries. These Ll projects
11 provide \,709 MW of nameplate capacity and approximately
1,2 8.4 mil-Iion megawatt-hours ("MWh") annual-Iy under median
13 water condi-tions. Idaho Power is the non-operating partner
1,4 in three coal-fired power plants that provide the Company
15 with L,L79 MW of nameplate capacity. Idaho Power's share
1,6 of these resources includes the Jim Bridger power plant at
L7 '171" MW, the North Valmy power plant ("Valmy") at 284 MW,
18 and the Boardman power plant ("Boardman") at 64 MW. Idaho
19 Power's resource portfolio al-so includes three natural- gas-
20 fired combustion turbine plants. Langley Gulch, a
2L combined-cycle p1ant, provides 318 MW of nameplate
22 capacity. The Company's two si-mp1e-cycle "peaker" pJ-ants,
23 the Danskin power plant and Bennett Mountain power p1ant,
24 provide a combined 444 MW of nameplate capacity. Idaho
25 Power also owns a small diesel-fired generator 1ocated in
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1 Salmon, Idaho, that provides approximately 5 MVi of
2 nameplate capacity.
3 Q. In addition to energy from its own resources,
4 does Idaho Power obtaln generation from any other sources?
5 A. Yes. The Company currentl-y has power purchase
6 agreements with one wind project and two geothermal
7 projects. Elkhorn Valley wind project, located j-n
8 northeastern Oregon, provides 101 MW of nameplate wind
9 generation. The Raft River geothermal power plant, located
10 in southern Idaho, provides 13 MW of nameplate capacity.
11 The Neal Hot Springs geothermal project, located in eastern
L2 Oregon, provides 22 MW of nameplate capacity.
13 Idaho Power also contracts with QEs for energy
1,4 purchases under PURPA. As shown in Mr. Allphin's Exhibit
15 No. 2, Idaho Power currently has 133 PURPA contracts for
16 approximately 1,,302 MW of nameplate capacity. The PURPA
t7 generatj-on facilitles consist of low-head hydroelectrj-c
18 projects on various irrigatj-on canals, cogeneration
1,9 projects at industrial facilitj-es, wind projects, solar
20 projects, anaerobic digesters, Iandfi11 9ds, and wood
2L burning facilities.
22 O. How does a diverse generation portfolio
23 benefit Idaho Power and its customers?
24 A. Idaho Power has learned from nearly a century
25 of operations that energy diversity means energy security.
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The Company's resource portfolj-o is among the most diverse
and therefore secure in the natj-on. The Company leverages
its hydro, coal, and natural- gas resources to provide
dependable "basel-oad" energy to customers, along with
purchased renewabl-e resources and a robust set of energy
efficiency programs. It is the same principle as
maintaining a diversified investment portfolio to manage
risk; a variety of resources mj-nimi-zes the risk that comes
with having all your eggs in one basket.
o.
emissions?
Could you describe Idaho Power's carbon
A.Idaho Power is one of the lowest carbon
emitting utilities in the industry. Based upon 20L2
emissions, for overall emissions, Idaho Power is ranked
among the 36 lowest and, for emission intensity (MWh), it
is among the 38 lowest carbon dioxide emitters among the
nation's 100 largest el-ectricity producers. Idaho Power
charts its carbon j-ntensity in its annual sustainability
reportsr ds well as tracking and displaying its progress on
its website. Idaho Power establ-ished a carbon emission
intensity goal in 2009 to reduce average carbon dioxide
emission intensity for the 2010 to 2013 period by 10 to 15
percent be1ow its 2005 intensity of l,!94 pounds per MWh.
In November 2012, Idaho Power's Board of Directors approved
extending that goal through 2015. By the end of 201,3,
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Idaho Power had reduced its average carbon dioxide
intensity over the 2070 to 2013 period to 929 pounds per
MWh, a 22 percent reduction from 2005 carbon dioxide
intensity. Prelimj-nary results for the year ending 2014
show that the Company remains on track with approxj-mately
944 pounds per MWh, which is a 2! percent reduction from
2005 levels.
Being a predominately hydro-based system, Idaho
Power's carbon intensity varies based upon the hydrologic
conditions; that is, good water years help reduce carbon
emissions. However, Idaho Power has taken other steps to
reduce emission intensity. The most recent addition to
Idaho Power's generation is the Langley Gu1ch natural gas-
fired plant, which was originally planned to be a coal-
p1ant, generates with about half of the carbon dioxide
intensity of a coal-fired pIant, helps with integratj-on of
intermj-ttent renewable energy, and provides an option to
further reduce carbon dioxide emi-ssions and intensity by
fuel switching from coal to natural gas. Idaho Power has
al-so been working to maximize effective utilization of its
existing hydroelectric resources. Recent turbine upgrades
have seen efficiency gains of 3 to 5 percent increases in
MW generated with the same amount of water. This lnc1udes
cloud seeding and effective water leasj-ng practices. Idaho
Power's current cloud seeding project includes 36 ground
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1 generators and an aircraft, which results in an estimated
2 193,000 MWh of additional- hydroelectric generation.
3 Expansion of the cl-oud seeding program could produce an
4 estimated additional 277,000 MWh of hydroelectrj-c
5 generation.
5 Q. Are there other considerations with the
7 continued operation of coal plants besides carbon
8 emissions?
9 A. Beyond carbon di-oxide, Idaho Power has been
10 working to reduce NO* and SO2 emi-ssions from coal-fi-red
11 plants and has seen a dramatic decrease in those emissions
72 since 1998 because of enhanced operating efficiencies at
13 the plants, improvements in pollution control- equipment,
14 and increased integration of renewable energy. In
15 testimony from Case No. IPC-E-13-16 during 2073, Idaho
1,6 Power discussed a path for the eventual retirement of coal-
11 resources. As the Company seeks to balance the impacts of
18 carbon with the economic realities of its customers, it
L9 knows that it cannot immediately terminate operation of
20 coal-fired plants. As the Company continues to evaluate
21, its coal plants from an economic standpoint, from the
22 context of 111 (d) , and from a1l- relevant considerations, it
23 j-s mindful that those plants have a f inite l-ife. The
24 Company has no new coal plants in its IRP. The Company is
25 shutting down coal-fired operations at the Boardman plant
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in 2020. Idaho Power has been in discussions with the
joint owner of the Valmy plant regarding the future of that
plant and the resource alternatives that could repJ-ace the
generation from that p1ant. Cost is, of course, dD
important factor, and the state public utility commissions
and Idaho Power's customers demand that risk be considered
and that future rate increases be mitigated where possible
Idaho Power currently benefits from the diversity of its
generation resources, and that diversity helps mitigate the
power supply cost risk borne by customers as the Company
transltions to the new energy landscape.
At the end of the d"y, the Company 1s still
obligated to produce rel-iabl-e, faj-r-priced energy for its
customers. Moreover, it has to operate within its
regulatory framework, but while doing so must be
consclentious as to environmental- issues, cost recovery
risk, and other various issues that must be considered when
striking an appropriate bal-ance.
II. OVERVIEYT OF THE COMPA}IY' S CASE
O. What does Idaho Power see as the major issues
in this case?
A. Several- things: (1) the continuing and
unchecked requirement for the Company to enter into long-
term, fixed-price agreements to acquire QF generation with
no regard for the Company's need for additional generation
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on its system; (2) the continued acquisition of large
amounts of unneeded intermittent PURPA generation pursuant
to long-term, fixed-price agreements which inflate power
supply costs and degrade the reliability of Idaho Power's
system; (3) the continuing requirement to acquire
generation outside of the Commission's established IRP
process; (4) the fundamental disconnection between the way
a regulated monopoly service provi-der, like Idaho Power,
must plan for and acquire generation resources and the
PURPA mandatory purchase requirement; and (5) the
unnecessary risk that is entirely borne by Idaho Power and
its customers of locking in a long-term, fixed-price
agreement, with no ability to aIter, change, update, ox
adjust the pricing, terms, and conditions therein for the
duration of the agreement.
o.Why is the Company bringing another PURPA
related matter before the Commission at this time?
A.Idaho Power's requested modification of terms
and conditions of requl-red PURPA energy sales agreements is
in response to the overwhelmj-ng amount of continued PURPA
requests for long-term, fixed-prlce contracts with Idaho
Power and in response to the Commission's recent statements
in orders approving contracts for upwards of 500 MW of new
PURPA solar generation.
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1 Idaho Power has a long history of active PURPA QE
2 prolects. The first QF projects were constructed and
3 started selling their output to Idaho Power under PURPA in
4 approximately 1982. For about the next 20 years, Idaho
5 Power accumulated a large number of predominately small-
6 hydro PURPA QE projects that steadily increased and
7 maintained energy deliveries under 200 MW total generation,
I as shown in Mr. Allphin's Exhibit No. 1. In fact, to this
9 ' day, smal-I hydro QFs make up the majorlty of PURPA projects
10 under contract with Idaho Power, but provide a relatively
11 small amount of the total PURPA generation. However, since
72 about 2002, and after the Commission increased the maximum
13 contract term from 5 years back to 20 years (Case No. GNR-
L4 E-02-01), Idaho Power has experienced rapid and large
15 additi-ons of predominately wind, and now solar, QF projects
16 coming on-l-j-ne and under contract. Idaho Power currently
l7 has a total of 1,302 MW of PURPA QE projects under
18 contract, with 781 MW of those projects constructed and
19 operating today, as shown in Mr. Allphin's Exhibit No. 2.
20 In addition, Idaho Power has current requests, received
2L over the last several- months, for an additional 885 MW of
22 PURPA solar generation.
23 Upon review of the Commission's recent approval of
24 the last 11 PURPA sol-ar energy sales agreements in the l-ast
25 two months, the Commission questioned the continued
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acquisition of such large amounts of PURPA generation when
there is no assocj-ated need for that generation, and a
concern for passing those substantial costs on to Idaho
t.hose orders:Power customers.The Commission stated in
To encourage the development of
renewabl-e energy resources, PURPA
requires that electric util-ities
purchase generation produced by QEsunder a federal rate mechanism(i.e., avoided cost) that is
established and implemented by state
utility commj-ssions. Unfortunately,
PURPA does not address and FERC
reguJ-at j-ons do not adequately
provide for consideration of whetherthe utility being forced to purchase
QF power is actually in need of such
energy.
Idaho Power's 2013 Integrated
Resource Plan does not reflect that
the utility is in need of energy toreliably serve its customers. Andyet, in less than four months time,13 QFs have contracted with Idaho
Power for nearly 400 MW of sofargeneration all expected to be on-line and producing power by the end
of 20]-6.The combined 2)-year
contractual obligation of these 13projects is approximately $1.4bi1lion.As we have previousJ-y
stated, 100% of the costs of QFgeneration are
ratepayers.
passed on to
We recently undertook a detailed
review of the implementation of
PURPA in ldaho. See generaTTy GNR-
E-11-03. This Commission considered
changes to numerous terms andconditions contained in PURPA
agreements. Recent modifications ofvariables within the incremental
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cost IRP methodology confirm that
the methodology provides flexibility
that aIIows us to accurateJ-y value
each QF's unique capability to
del-iver its resources. However, QEscontinue to request contracts with
Idaho Power in significant enough
numbers that we remai-n concerned
about the Company's ability to
balance the substantial- amount of
must-take intermittent generation
and stil-I reliably serve customers.Whil-e we are pleased with the
progression of the IRP methodology,
avoided cost rates are not the onJ-y
terms to a PURPA contract. The
utilities are in the best positlon
to inform the Commissi-on if review
of additional PURPA contract terms
and conditions is warranted.
order Nos. 33198, pp. 5-7; 331,99, pp. 5-1 ; 33200, pp. 5-7;
3320L, pp. 5-6;33202, pp.5-6;33204, pp. 6-1;33205, pp.
6-1;33206, pp.1-8;33207, pp. 5-8;33208, pp. 6-8;33209,
pp. 6-8. Idaho Power agrees with and shares the
Commission's concerns, and thus believes it is necessary to
bring the current action to the Commission for its
determination.
o.
reviewed by
What issues does Idaho Power bel-ieve should be
the Commission 1n response to its concerns?
Several issues related to the Commission's
implementation of PURPA in the state of Idaho could warrant
additional examinatj-on and possible revision. These items
could include: (1) further modificati-on to the existing
avoided cost pricing methodol-ogies to more appropriately
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refl-ect need and resource sufficiency in the price; (2)
implement new avoided cost pricing methodologies which move
to a market-based or competitively bid-based avoided cost
mechanism, such as that utilized in Washington; (3)
exemption from PURPA under S 210, part M; (4) Commission
pursuit of a waiver from the requirements of s 2L0,
subpart C, for fdaho Power pursuant to 18 C.E.R. S
292.402; (5) refinement of the Commj-ssion's 902/L702
definition of firmness to require firm scheduled del-iveries
for entitlement to rates establ-ished at the time of
contractj-ng or legally enforceable obligation, as opposed
to rates determined at the time of delivery, simj-1ar to the
implementation in Texas; (6) further refinement of the
eligibility for rates established at the time of
contracting or 1ega1J-y enforceable obligation by requiring
QEs to be within 90 days of delivering power before the
utility is obligated to the price, again similar to the
implementation in Texas; (7 ) contractual term l-imitationsi
and (8) caps r ox MW targets, upon the amount of new or
repowered projects a utility is required to procure over a
given period of time, simj-1ar to those j-n place in
Cal-ifornia. However, dt this time, Idaho Power's specific
request with its Petitj-on is that the Commission modj-fy the
terms and conditj-ons of prospective purchases from PURPA
QEs by reducing the current 2)-year contract term for Idaho
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Power energy sales agreements to a maximum of two years,
and direct any other relief it deems appropriate and in the
public interest.
o.Has the Commission changed the maximum term of
required PURPA energy sales agreements in the past?
A.Yes. I am generally aware that the Commission
has changed the authorized maximum term of a required PURPA
purchase several- times throughout its implementation of
PURPA in the state of Idaho. The various changes to the
maximum contractual term have resulted from the
Commission's evaluation of changing conditions in the
energy and utility environment and its attempts to balance
the promotion of the development of QE resources with the
cost and risk borne by Idaho Power and its customers in the
transaction. From 1980 when PURPA was first implemented in
the state of Idaho through 1987, utilities were obligated
to provide QFs with a 35-year contract. In 1987, the
Commission shortened the maximum term to 20 years based
primarily upon the inherent uncertaj-nty in long-term
forecasting. Order No. 2L630. In L996, the Commlssion
further reduced contract term to five years for QFs of 1 MW
and larger, the published rate eligibility cap at that
time. Order No. 26576. In 7997, the Commission extended
the five-year contract term limitation to include QFs under
the 1 MW published rate eligibility cap as wel-l-. Then, in
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2002, the Commission went back to a 2O-year contract term,
which has been in place to the present. Order No. 29029.
o.What factors does Idaho Power bel-ieve support
its request to reduce the maximum term of a PURPA energy
sal-es agreement to a maximum of two years?
A.Several things establish that the long-term
l-ock-in of contractual rates, and the bearing of that risk
entirely by customers, for 20 years is unjust, unreasonable
and contrary to the public interest. The acquisition of
any Company-owned generation resourcer dS well as the
Company's purchase and sale of non-PURPA generation, is
either limited to terms of two years or less or is subject
to intensj-ve Commission and public participation, scrutiny,
process, and proceedings to determine that the Company is
acting prudently, in the public interest, and fulfilling a
need in the least cost, most reliable manner possible.
These requJ-rements, part.icularly that of establishing need
for the resource, are absent in a mandatory PURPA QE
purchase. The further constraint imposed by PURPA that
eli-minates any ability to modify, adjust, or change the
prices that are l-ocked into a PURPA energy sal-es agreement
for the duration of that contract's term, regardless of
whether aII costs were included or whether actual costs and
conditions changed or varied, makes long-term, 20-year
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contract terms at best risky, and in Idaho Power's case
harmful.
The Company's required IRP is filed with and
reviewed by the Commission every two years. Changes in
conditions, positions, market prices, 9ds forecasts, l-oad
forecasts, etc., are incorporated and captured continually
as they happen during the development of the IRP and 1ts
biennial filing. Those decisions and j-nputs are
not locked in for 20 years with no ability to adjust,
update , or change, like PURPA transactions.
With regard to market purchases of generation
resources to serve load or any other energy market
transactions of purchases and sales that the Company
conducts, it must comply with the Commission-approved rj-sk
management policy. The Company's risk management policy,
set up to govern the risk and customer exposure to market
fluctuations when the Company makes power purchases and
sales on the market, has short-term Iimitations. Under its
authorized and required risk management policy, the Company
does not enter into transactions beyond 18 months. If the
Company were to desire to transact for any perj-ods of two
years or more, specJ-fic Commission authorizatj-on and
approval is required. This policy has been deemed a
prudent process for managing customer exposure to the
market and transactional risk with making generation
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purchases and sales, and the prudent term is far below the
20 years required for mandatory, unchangeable PURPA
purchases.
The Company is not able to acquire any other
generation or purchased power that is indiscriminately
l-ocked in for such long terms. If the Company does acquire
any non-PURPA generation or purchases longer than two
years, it comes with specific Commissj-on determinations of
meeti-ng a need in the least cost, most relj-able manner
avail-abIe. These determj-nations are made only after
careful examinati-on and process, including various public
processes and proceedings such as through the IRP process,
a certificate of public convenience and necessity
proceeding, rate base proceediflgs, and other specific
Commission proceedings and determinatj-ons that assure
customers are protected and the Company meets its
obligations to reliably serve. It does not follow that a
PURPA transactJ-on, that does not have the benefit,
requirement, or protecti-ons associated with al-l- of the
previously mentioned Commission processes and procedures,
and must be acquired regardless of need, would be
indiscriminately locked in with long-term, fixed costs that
cannot be changed.
O.You previously mentj-oned an inflation of power
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Idaho Power Company
supply expenses. Could you explaj-n?
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A.Yes. As shown in Mr. Allphin's Exhibit No. 7,
PURPA power supply expenses are growing at a very rapid
pace and becoming quite large. In sum, Exhibit No. 7 shows
an alarming 575 percent increase in PURPA power supply
expense from 2004 through 2024. AdditionalIy, Exhibit No.
1-0 shows that Idaho Power's average cost of PURPA
generation since 2001 has always exceeded the Mid-C index
price and is projected to always exceed the Mid-C index
price through 2032.
Moreoverr ds illustrated in Mr. Allphin's Exhibit
No. 8, which shows net power suppJ-y expenses in base rates,
the average cost of PURPA purchases, at $62.49 per MWh, is
greater than the average cost of coal- at $22.79 per MWh,
greater than gas at $33.57 per MWh, greater than non-PURPA
purchases of $50.64 per MWh, and significantly greater than
what is being sold as surplus sales at $22.41 per MWh. If
and when the Company i-s required to purchase PURPA
generation when it is not needed, the Company may be
required to back-down or curtail other less expensive
sources of generatj-on or market purchases in order to
continue purchasing PURPA generation at a higher cost.
This would mean that the Company's overall net power supply
expense, on a dollars per MWh basis, would i-ncrease,
adversely impacting customers.
GROW, DI 20
Idaho Power Company
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O. You also previously mentioned a degradation of
the reliability of Idaho Power's system. Could you
explain?
A.Yes Idaho Power's hydroelectrj-c and coal
generation has must-run l-evels that the Company cannot go
below without viol-ating environmental regulations relating
to the hydro facilities or taking the coal generation off-
line and thus making it unavailable to meet requj-red l-oads
until it could be restarted. With the addition of the
must-take PURPA generation, which is less predictable than
firm generation and does not equate to non-firm generation
as it is unscheduled and del- j-vered tf , when, and in
whatever amount the QF determines, the Company's system can
rapidly move to an imbalance position, in this case,
primarily to an over-generation position, and the Company
must take remedial actions to bal-ance the system. If
remedial actions are not available, or not empJ-oyed in a
timely manner, then the Company can have system reliability
violations, events, and/or outages and damage. In fact,
over the last several years, reliability curtailments of
PURPA generation have been necessary in order to maintain
the integrity of Idaho Power's system. Eor the period from
May 2011 through December 20L4, the Company had at l-east 15
reliability events that resulted in wind generation output
reductions in order to maintain the reliabl-e operation of
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Idaho Power Company
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the Company's electrical system. These curtailments r ot
generation limitation set points, have been relatively
infrequent, for relatively short durations, and are removed
as soon as possible once it can safely be done and maintain
a balanced system.
O. Has the Company done any analysis as to what
effect the continued acquisition of large amounts of
unneeded must-take PURPA generation has upon the
reliability of the system?
A.Yes. As previously noted, the Commission
expressed concern with this issue stating, "we remain
concerned about the Company's ability to balance the
substantial- amount of must-take intermittent generation and
still reliably serve customers. "Mr. Allphin's Exhibit
No. 6 contains a summary of the Company's analysj-s
estimating the frequency of hours, over the years 2076 and
2077, in whj-ch Idaho Power's must-run and must-take
resources exceed total- system load.
What are the results of that analysis?
The results are summarized on page 1 of
Exhibit No. 6. The results generally show an alarming
amount of hours throughout 20L6 and 2017 where must-run and
must-take generation exceeds total system l-oad.
Without the incl-usion of any gas-fired generation,
and including only the Company's must-run coal and hydro
GROW, Dr 22
Idaho Power Company
1 generatj-on, without any of the must-take PURPA generation
2 whatsoever, that generation is projected to exceed load for
3 14 percent of al-I hours during 2016 and 2017. The
4 Company's must-run hydro and coal generation combj-ned with
5 existing must-take PURPA, but without any of the recently
6 approved PURPA solar generation, exceeds total system l-oad
7 for approximately 29 percent of aII hours during 20L6 and
I 2077. hlhen the 461 MW of PURPA solar that is under
9 contract and scheduled to be on-line in 201,6 is included,
10 Idaho Power's must-run and must-take generation exceeds
11 total system load for approximately 32 percent of all hours
12 in a year. Eina11y, inclusion of the additional 885 MW of
13 proposed PURPA solar generation increases the frequency of
14 must-run and must-take generation in excess of l-oad to 40
15 percent of aII hours during 20L6 and 2017.
16 0. What is significant about the hours in which
t7 must-run and must-take generation exceeds total system
18 load?
L9 A. It is significant because the system has
20 already been backed down as far as it can without shutting
2l something off or sending generation off-system. Each one
22 of these hours creates a potential over-generation event
23 where remedial action of some kind wiII be necessary to
24 keep the system in ba1ance and meet the obligation to
25 reliably serve customers. The historical and projected
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Idaho Power Company
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market price for surplus sales has always been, and is
projected to always be, much lower than the price the
Company pays for PURPA. A11phin, Ex. 8; Ex. 10. If
transmj-ssj-on capacity is avai-1able to conduct off-system
sal-es, the Company would seII at a 1oss. When the Company
has no identifiabl-e need for any additional generation,
each one of these potential reliability events is a
completely unnecessary destabilization of Idaho Power's
system, putting its required service to its customers at
risk.
O. Is it your opinion that the granting of the
requested relief proposed by the Company is in the public
interest?
A. Yes. The Company's requested relief is in the
public j-nterest, is withj-n the authori-ty and discretion of
the Commissj-on, and the Company respectfuJ-J-y asks the
Commission to implement the same.
Does this conc1ude your testimony?
Yes, it does.
GROW, Dr 24
fdaho Power Company
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ATTESTATION OE. IESEIIIONY
STATE OF IDAHO )
) ss.
County of Ada )
I, Lisa A. Grow, having been duly sworn to testify
truthfully, and based upon my personal knowledge, state the
following:
I am employed by Idaho Power Company as the Senior
Vice President of Power Supply and am competent to be a
witness in this proceeding.
I declare under penalty of perjury of the l-aws of
the state of Idaho that the foregoing pre-filed direct
testimony is true and correct to the best of my information
and belief.
DATED this 30th day of January 2015.
SUBSCRIBED AND
January 20t5.
SWORN to before me this 30th day of
Notary Pub1ic r Idaho
Res j-ding at:
expires {
GROW, Dr 25
Idaho Power Company
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My commission