20150915final_order_no_33377.pdf

Office of the Secretary
Service Date
September 15,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S APPLICATION FOR )CASE NO.IPC-E-15-20
APPROVAL OF CAPACITY DEFICIENCY )
TO BE USED FOR AVOIDED COST )
CALCULATIONS )ORDER NO.33377
_____________________________________________________________________________________
)
On July 2,2015,Idaho Power Company filed an Application with the Commission
for an Order approving the capacity deficiency period to be used for the Company’s avoided cost
calculations under the Public Utility Regulatory Policies Act (PURPA).As explained in greater
detail below,a PURPA project is eligible for avoided cost “capacity payments”when the utility
is capacity deficient.The Company asked that the Application be processed under Modified
Procedure.
On July 24,2015,the Commission issued a Notice of Application and Notice of
Modified procedure with a 28-day comment period.Staff filed the only written comments.The
Company did not file areply.
BACKGROUND
Under PURPA,electric utilities must purchase electric energy from qualifying
facilities (QFs)at rates approved by the applicable state regulatory agency in Idaho,this
Commission.16 U.S.C.§824a-3;Idaho Power Co.v.Idaho PUC,155 Idaho 780,789,316
P.3d 1278,1287 (2013).The purchase or “avoided cost”rate shall not exceed the “incremental
cost’to the purchasing utility of power which,but for the purchase of power from the QF,such
utility would either generate itself or purchase from another source.”Order No.32697 at 7,
citing Rosebud Enterprises v.Idaho PUC,128 Idaho 624,917 P.2d 781 (1996);18 C.F.R.§
292.101 (b)(6)(defining “avoided cost”).
The Commission has established two methods of calculating avoided cost,depending
on the size of the QF project:(1)the surrogate avoided resource (SAR)methodology,and (2)
the integrated resource plan (IRP)methodology.See Order No.32697 at 7-8.The Commission
uses the SAR methodology to establish what is commonly referred to as “published”avoided
cost rates.Id.Published rates are available for wind and solar QFs with a design capacity of up
to 100 kilowatts (kW),and for QFs of all other resource types with a design capacity of up to 10
ORDERNO.33377 1
average megawatts (aMW).Id.For QFs with design capacity above the published rate
eligibility caps.avoided cost rates are “individually negotiated by the QF and the utility using the
[IRP methodology].”Order Nos.32697 at 2;32176.In 2012,the Commission authorized the
use of revisions to the IRP methodology which “focus on identifying the incremental costs that
[Idaho Power’s]system would incur.”Order No.32697 at 21.
In calculating avoided cost,the Commission found it “reasonable,appropriate and in
the public interest to compensate QFs separately based on a calculation of not only the energy
they produce,but the capacity that they can provide to the purchasing utility.”Id.at 16.As to
the capacity calculation,the Commission found it appropriate “to identify each utility’s capacity
deficiency based on load and resource balances found in each utility’s IRP.”Id.The
Commission elaborated:
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 directed that “when a utility submits its [IRP]to the Commission,a
case shall be initiated to determine the capacity deficiency to be utilized in the SAR
Methodology.”Id.at 23.The Commission also stated “utilities must update fuel price forecasts
and load forecasts annually —between IRP filings....We find it reasonable that all other
variables and assumptions utilized within the IRP Methodology remain fixed between IRP filings
(every two years).”Id.at 22.
In 2014,the Commission determined that Idaho Power’s eligibility for capacity
deficiency will occur in July 2021 and that this deficiency period shall be used to determine
capacity payments under the avoided cost IRP methodology.Order No.33159 at 9.
THE APPLICATION
The Company notes that it filed its 2015 IRP (Case No.IPC-E-15-19)with the
Commission on June 30,2015.According to Idaho Power,its 2015 IRP “identifies the first
capacity deficit occurring in July 2025.”Id.Idaho Power’s Application here includes Table 1,
which “shows a first capacity deficiency of 14 [MW]occurring in July 2025.”Id.at 3.Table 1
ORDER NO.33377
includes 461 MW of PURPA solar that was under contract when the analysis of Table 1 was
completed for the 2015 IRP.”Id.However,after Table 1 was developed in the 2015 IRP,“four
PURPA Energy Sales Agreements (“ESAs”)were terminated due to failure of the projects to
perform”per their terms and provisions.Id.,cuing Case Nos.IPC-E-14-28,IPC-E-14-29,IPC
E-14-30,and IPC-E-14-31.Idaho Power reports that the “total amount of capacity for these four
terminated ESAs was 141 MW.”1J at 3-4.
Idaho Power’s Application also includes Table 2,which shows an “updated peak-
hour surplus/deficit chart.”reflecting removal of the 141 MW of PURPA.Id.at 4.Idaho Power
states,“Removal of the 141 MW of terminated PURPA solar projects results in a first capacity
deficit of 47 MW in July 2024,one year earlier than that shown in Table 1 and the 2015 IRP.”
Id.The Company asks that “a first capacity deficit of July 2024 be utilized for avoided cost
calculations for both the SAR and IRP methodologies.”Id.
STAFF COMMENTS
Staff reviewed the capacity deficiency updated for the removal of 141 MW of solar
projects.Staff confirmed that the new first capacity deficiency occurs in July 2024,and has
updated the SAR model and avoided cost rates (attached to comments).Staff recommended that
the Commission approve the new rates to reflect the removal of the 141 MW of solar projects.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over Idaho Power and the issues raised in this
matter under the authority and power granted it under Title 61 of the Idaho Code and PURPA.
The Commission has authority under PURPA and the implementing regulations of the Federal
Energy Regulatory Commission (FERC)to set avoided costs,to order electric utilities to enter
into fixed-term obligations for the purchase of energy from QFs,and to implement FERC rules.
We have reviewed the record in this case,including the Application,its attachments,and Staff
comments.
We find Idaho Power’s recalculated capacity deficiency period,reflecting removal of
141 MW of terminated PURPA solar projects,to be reasonable and appropriate.We further find
Staffs updated SAR model and recalculated SAR-based avoided cost rates to be just,reasonable,
and appropriate.We therefore approve the new rates and confirm July 2024 as the Company’s
capacity deficiency period for use in the avoided cost IRP methodology.
ORDER NO.33377 3
ORDER
IT IS HEREBY ORDERED that Idaho Power’s Application is approved.We
confirm that the Company’s capacity deficiency period for use in the avoided cost IRP
methodology will run to July 2024’.
IT IS FURTHER ORDERED that Commission Staffs updated SAR model and SAR
based avoided cost rates,attached hereto,are also approved.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of September 2015.
PAUL KJELLAN R.P ESIDENT
MARSHA SMITH,COMMISSIONER
43tt/Q)7€4W
K TINE RAPER,CMMISSIONER
ATTEST:
Jn D.Jewell
Mmmission Secretary
O:IPC-E-1 5-2Odjh2
ORDER NO.33377 4
IDAHO POWER COMPANY
AVOIDED COST RATES FOR WIND PROJECTS
XXXX,2015
5(MWh
aciPamonts
ElIgIbility for these rates is limited to projects 100kW orarnaller.
LEVELIZED -NONLEVEUZED
CONTRACT ON-UNE YEAR
LENGTH CONTRACT NONLEVELtZEDjgejj201520162017201820192020YEARRATES
1 3336 3406 3442 3669 3937 4305 2015 3336
2 3370 3423 35 03 3746 41 14 4446 2018 3408
3 3392 3488 3536 3917 4263 4581 2017 3442
4 34 31 3572 37 64 4068 4386 4658 2018 3569
5 3517 3696 3923 4196 4490 4794 2019 3937
6 36.24 38 19 40.44 4305 4622 4920 2020 43.05
7 37 33 3930 41 51 44 33 4744 5039 2021 48.00
8 38 34 4030 42 73 45 54 4881 51 37 2022 48 19
9 3927 4144 4388 4668 4958 5214 2023 49.99
10 40.31 4252 4498 4765 5036 5279 2024 54,59
11 41.32 4355 4592 4845 5104 5339 2025 57,23
12 42.29 4445 4871 4914 5166 5399 2028 5991
13 43,14 4522 4740 4977 5227 5461 2027 6085
14 4387 4589 4803 5039 5288 5522 2028 8100
15 4452 4650 4865 5101 5349 5582 2029 6168
IS 4512 4710 4925 5161 5409 5646 2030 62.91
17 4570 4770 4984 5220 54 70 57 10 2031 64.98
16 4626 4827 5042 5281 5533 5772 2032 8739
19 48.81 4883 51 01 53.42 5593 5838 2033 59.48
20 4735 4939 5160 5400 5855 5904 2034 7193
2035 75.31
2036 76.62
2037 80.55
2038 84.88
2039 90.07
2040 95.53
Note These rates wilt be further adustad with the applicable integration charge
Note The rates shown in this tab e have been computed using the U S Energy Information Administration (EIA)s Annuat Energy
Outlook 2015 released April 14 2015 See Annual Energy Outlook 2015 Table 38 Energy Prices by Sector-Mountain at
http I/ww cia govflorecastslaeo(tables ret cfm#supplemeriti
tDAHO POWER COMPANY Page 1
Attachment
Order No.33377
Case No.IPC-E-15-20
Page 1 of5
IDAHO POWER COMPANY
AVOIDED COST RATES FOR SOLAR PROJECTS
XXXX,2015
5/MWh
CaaciPaments
Eligibility for these rates Is limited to projects 100 kW or smaller.
LEVEL1ZED NON.LEVELIZED
CONTRACT ONUNE YEAR
LENGTH CONTRACT NONLEVEUZED
(YEARS)2015 2016 2017 2018 2019 2020 YEAR RATES
1 3336 3406 3442 3569 3937 4305 2015 3336
2 33 70 3423 3503 3748 41 14 4446 2016 3406
3 3392 3488 3636 3917 4263 4581 2017 3442
4 3431 3572 3784 4088 4388 4858 2016 3569
5 3517 3896 3923 4196 4490 5312 2019 3937
6 3624 3819 4044 4305 5036 5789 2020 4305
7 37 33 3930 41 51 4774 54 58 61 62 2021 4600
8 38 34 4030 45 58 51 52 58 01 64 52 2022 48 19
9 39 27 43 86 48 97 54 68 60 77 86 82 2023 49 99
10 42 40 4690 51 87 5729 8300 6871 2024 85 12
11 4513 4954 5430 5944 8488 7036 2025 8822
12 47 54 51 80 5634 81 28 6851 71 83 2026 91 35
13 4962 5371 5809 6287 6800 7320 2027 9275
14 5140 5537 5965 6434 6937 7447 2028 9337
15 52 97 5685 61 07 6569 7064 7566 2029 9451
16 54 37 5822 8239 66 95 71 83 7681 2039 9623
17 5567 5948 6361 6812 7297 7793 2031 9878
18 5668 6066 6478 6925 7408 7896 2032 10169
19 5800 6176 6585 7033 7510 7999 2033 10428
20 5905 6282 6691 71 34 75 11 81 02 2034 10725
2035 111 14
2038 11498
2037 11744
2038 12231
2039 128 05
2040 134 07
Note These rates wHt be further adjusted wdh the appicabte integration charge.
Note The ratea shown in Iris table have been computed using th U S Energy Informahori Adimnistrat en (ElAys Annual Energy
Outlook 2015.released April 14,2015 See Annual Energy Outlook 2015,Table 3 8 Energy Prices by Sector44ountain at
http llravw eagovlforecaste/aeottabtelLref cfm#supptement!
IDAHO POWER COMPANY Page 2
Attachment
Order No.33377
Case No.IPC-E-15-20
Page 2 of 5
IDAHO POWER COMPANY
AVOIDED COST RATES FOR NON-SEASONAL HYDRO PROJECTS
XXXX,2015
SiMWh
New Contracts and Replacement Contracts without Full Capacity Payments
Eligibility for these rates is limited to projects smaller than 10 aMW,
LEVELIZED NONLEVELlZED
CONTRACT ON-LiNE YEAR
t.ENGTN CONTRACT NON-LEVELIZED
(YEARS)2015 2015 2017 2016 2019 2020 YEAR RATES
1 3336 3405 34.42 35.69 3937 4305 2015 3336
2 3370 3423 3503 37.46 4114 4446 2016 34.06
3 3392 3468 3636 39.17 42.63 4561 2017 34.42
4 34 31 3572 37.84 40,68 4366 4858 2018 35.69
5 3517 36.96 3923 41.95 4490 5262 2019 3937
6 3624 38.19 40.44 4305 4996 5704 2020 4305
7 3733 39.30 41.51 47.41 53.89 6053 2021 4600
8 38.34 40.30 45.30 5094 57.10 6325 2022 4819
9 39.27 43,63 48.48 5391 59.89 6539 2023 49.99
10 42,20 4847 51.20 5635 61.78 6717 2024 82.16
11 44 76 48 96 53.49 5837 63.54 6870 2025 8521
12 4703 51.08 55.40 60.09 6607 7010 2026 8830
13 4699 52.88 57.06 61,60 6647 7140 2027 89.65
14 5067 5445 58.52 62.98 67,77 7260 2028 9023
15 5215 5585 59.86 64.27 6897 7374 2029 9133
16 5347 5714 61.11 65.45 7011 7484 2030 9299
17 5470 583.4 6227 6658 71.20 7591 2031 9550
18 5565 5946 6336 67.65 7226 7690 2032 9836
19 5691 6051 64.41 6869 7324 7789 2033 10090
20 5792 61 52 65 42 69.65 74 21 76 89 2034 10382
2035 10766
2038 11145
2037 11386
2038 11867
2039 124 37
2040 13033
Nle The rales shown n this table have been computed usrng the U S Energy Informaton Admin strahon (EIA)’s Annual Energy
Outlook 2015 re 8sed Apr4 14,2015 See Annual Energy Outlook 2015,Table 3.8 Energy Pnces by Sector-Mountain at
http IIww ma govltorecasts!aeo)labtesjel cfm#supplemeritf
IDAHO POWER COMPANY Page 3
Attachment
Order No.33377
Case No.IPC-E-15-20
Page 3 of 5
IDAHO POWER COMPANY
AVOIDED COST RATES FOR SEASONAL HYDRO PROJECTS
XXXX,2015
$/MWh
out Full Ca ad Pa monte
Eligibility for these rates is limited to projects smaller than 10 aMW,
LEVELIZED NONLEVEUZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON.LEVEUZED
JX8L 2015 2016 2017 2018 2019 2020 YEAR RATES
1 3336 3406 3442 3569 3937 43115 2015 3336
2 3370 3423 35 03 3746 41 14 44,46 2016 34,06
3 3392 3468 3636 3911 4263 4561 2017 34.42
4 3431 3572 3784 4068 4386 4658 2018 3559
5 3517 3696 3923 4196 4490 5615 2019 39.37
6 36 24 38 19 4044 43 05 52 78 62 95 2020 43.05
7 3733 3939 41 51 49 72 58 74 68 16 2021 4600
8 3834 4030 4724 5501 6350 7220 2022 48.19
9 3927 4528 51 94 5935 67 30 7538 2023 49.99
10 4362 4945 5589 6291 7038 7800 2024 10293
11 4735 5304 5919 6585 7295 8024 2025 10629
12 5060 5668 6198 6834 7518 6224 2026 10969
13 5340 5866 6433 7052 7717 6405 2027 11135
14 5579 6090 6643 7247 7899 8570 2028 11224
15 5790 6289 6832 7426 8964 8723 2029 11367
18 5977 6470 7005 7589 8218 8869 2030 11566
17 61 48 6636 7164 7741 8363 9007 2031 11650
18 6306 6789 7312 7884 8501 9136 2032 12170
19 6452 6931 7451 8020 6629 9261 2033 12458
20 6588 7065 7583 8146 8753 9384 2034 12784
2035 132.04
2036 136,19
2037 138,96
2038 144.14
2039 150.21
2040 156.55
Note A “seasonal hydro projeor s defned as a generabon fac6ty wNch produoes at least 55%01 ds annual generabon during the
months ot June July and August Order 32802
Note The rates shown ri th s table have been computed using the Ii S Energy Infonliabon Admnotrahon (EIA)s Annual Energy
Outlook 2015 released Aprit 14 2015 See Annual Energy Outlook 2015 Table 3 8 Energy Pnces by Sector-Mountmn at
http llwwv ma gov/Yorecasts/aeoltables ref cfm#aupplemand
IDAHO POWER COMPANY Page 4
Attachment
Order No.33377
Case No.IPC-E-15-20
Page 4 of 5
IDAHO POWER COMPANY
AVOIDED COST RATES FOR OTHER PROJECTS
XXXX,2015
SIMWh
N3w Contracts and Replacement Contracts wthout Full Capacity Payments
EliqIbit)ty for thece rates Is limited to projects smaller than 10 aMW.
LEVELIZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
J!EL 2015 2016 2017 2018 -2019 2020 —YEAR RATES
1 3336 3406 3442 3589 3937 4305 2015 3336
2 3370 3423 3503 3748 4114 4446 2016 3406
3 3392 3468 3836 3917 4263 4561 2017 3442
4 3431 3572 3784 4068 43.86 4658 2018 3569
5 3517 3696 39.23 4196 4490 5125 2019 39.37
6 3624 38 19 40.44 4305 4886 54.75 2020 43.05
7 3733 3930 41 51 46 51 5201 5757 2021 46.00
6 33 34 4030 44 55 49 36 54 62 59.78 2022 48.19
9 3927 42 99 47 14 51 80 5674 61 52 2023 49.99
10 4165 4532 4939 5381 58.45 6297 2024 74,11
11 4375 4738 51.28 5547 5933 6424 2025 77.05
12 4565 4915 5287 5689 6116 6540 2026 80.02
13 4728 5065 5424 5815 62.33 6550 2027 81.25
14 4869 51 95 5546 5931 6343 6753 2028 81.70
15 4992 5312 5659 6040 6445 6851 2029 82.68
16 5104 5421 5765 6142 65,43 6947 2030 84.22
17 5207 55 23 58 65 62 38 6639 7042 2031 8659
18 5305 5613 5959 6332 5732 7130 2032 8932
19 53 97 57 10 60 50 64 23 68 19 72 19 2033 91 74
20 5483 57.98 61.39 6509 6906 7309 2034 94.51
2035 98 22
2036 10187
2037 10414
2038 10881
2039 11436
2040 12018
Note.‘Other protects’raters to rcects other than wrsd clar,non-seasonal hydro.and seasonal hydro projects.These Other projects’
may include (but are not tLm1ed to)cogeneration bornas,bogas andfiil gas,or geothermal projects.
Nole The rates shown in th a table have been crnpu1ed U5519 the U S Energy Information Adrninistratin (E1Aja Annual Energy
Outlook 2315 released April 14 2315 See Annual Energy Oullook 2015 Table 3 8 Ener9y Paces by Sector-Mountain at
htlp thw.w eia gowforecasts/aeo/tabtes_ref cfrn#supp ernent!
IDAHO POWER COMPANY Page 5
Attachment
Order No.33377
Case No.IPC-E-1 5-20
Page 5 of 5