20131106Comments.pdf

Benjamin J. Otto (ISB No. 8292)
710 N 6'h Street
Boise,ID 83701
Ph: [phone] xr2
Fax [phone]
[e-mail]
Attorney for the Idaho Conservation Icague
BEFOR3 THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER ) CASE NO' IPC-E-I3-I5
COMPANY'S 2Ol3INTEGRATED )
RES',RCE ,LAN.
rlvrvrrl,- ) IDAHO CoNSERVATIoN LEAGUE'S
) CoMMENTS
The Idaho Conservation League (ICL) actively participated in Idaho Power's Integrated
Resource Plan Advisory Committee. While the 2013 IRP process was an improvement from 20L1,
serious flaws remain in both the structure and results of the IRP. These flaws implicate the four
primary goals of the IRP: (1) identifr sufficient resources to reliably serve growing energy
demands over the Z}-year planning period; (2) ensure the selected resource portfolio balances
cost, risk, and environmental concerns; (3) give equal and balanced treatment to supply-side
resource and demand-side measures; and (4) involve the public in the planning process.' Despite
these flaws, Idaho Power appears to be marching ahead with capital spending premised on a
faulty analysis. Accordingly,ICL recommends the Commission direct Idaho Power to reinitiate
the IRP process as soon as possible in2014.
Below ICL highlights three major flaws to the IRP: a stale load and resource balance,
unbalanced treatment of demand-side and supply-side resources, and an incomplete assessment
of coal costs and alternative options. Then ICL provides comments on six additional issues: the
carbon price forecast, delays in Boardman to Hemingway, invalid assumptions about solar
generation and costs, the deeply flawed wind integration study, the lack of planning to pursue the
identified benefits of an energy imbalance market, and an inadequate assessment of risks and
options to mitigate this risk. The three major flaws alone show the 2013 IRP does not meet the
four primary goals. The additional issues pile on to establish that renewed planning must begin
immediately.
'IRP at 1.
IPC-E-13-15
ICL's Comments on Idaho Power's 2013 IRP
i.ii :.: 39
November 5,2013
Stale load and resource balance
The most obvious example of the flaws in the IRP is Idaho Power's November 4,2013
filing to set the capacity deficit for the Surrogate Avoided Cost Methodology.' In that application,
Idaho Power now claims the first peak hour deficit is not until |uly 2021--about seven years after
the deficient identified in the IRP. And this change in resource needs occurred without building a
single additional resource considered in the 2013 IRP, rather largely from including current levels
of demand response into the load and resource balance. So already, arguably the most important.
part of the IRP, the load and resource balance, is stale. Because the alternate portfolios are
premised on a stale load and resource balance, this 2013 IRP cannot "identifr sufficient resources
to reliable serve growing energy demands over the 2}-year planning period." Instead, the 2013
IRP will contribute to an already overbuilt system.
Hobbled assessment of demand-side resources
A second critical flaw is in how Idaho Power considers demand-side resources in the IRP.
In short, demand-side and supply-side are not given equal and balanced treatment. For demand-
side resources, Idaho Power assumes the Company will essentially maintain current levels.
During the advisory process, Idaho Power informed the IRPAC, without a discussion about the
underlying assumptions, the forecast of energy efficiency levels going forward. As a member of
Idaho Power's Energy Efficiency Advisory Group, ICL knows Idaho Power did not run this
forecast through this public process either. But for supply-side resources Idaho Power and the
IRPAC spent several meetings discussing the relative merits, costs, and capabilities of each.
Further, during the portfolio design workshops stakeholders had the opportunity to advocate for
various levels of different supply-side resources. This discussion, collaboration, and meaningful
public involvement simply did not occur for demand-side resources. By contrast, Rocky
Mountain Power properly models demand-side options when developing new resource
portfolios. By hobbling the analysis and selection of additional demand-side measures in resource
portfolios, Idaho Power's 2013 IRP does not "give equal and balanced treatment to supply-side
and demand side resources."
Undercounting the cost to continue coal generation
'pc-p-t3-2t
rPC-E-13-1s 2
ICL's Comments on Idaho Power's 2013 IRP
November 5,2013
A third critical flaw is Idaho Power's assessment of the costs and benefits of replacing coal
generation. The fundamental flaw is Idaho Power's insistence that any replacement much match
the nameplate capacity of the coal unit. This narrow view ignores the fact that Idaho Power
operates an integrated system of various resources designed to adequately and reliable meet
demand while keeping costs low. And this system is sufficient to meet Idaho Power's needs far
into the future. As described above, today Idaho Power has sufficient peak hour capacity through
2021 and,, as the chart below shows, on an energF basis, never dips below 200 aMW excess
through 2023. Despite ICL's several requests in the IRPAC process, Idaho Power never analyzed
how simply removing each coal unit from the resource stack would change the overall resource
balance prior to considering replacement generation. By refusing to consider how removing
individual coal units affects the overall resource balance, the selected portfolio does not "identifr
sufficient resources" - instead it plans for resource levels far beyond what is sufficient to meet
Idaho's energy needs.
1,400
1,200
1,000
800
600
= 400
=o 200
0
(200)
(400)
(600)
(800)oN
E(5a
oto@Noo
ECECCCC(!G(u(!(u(!0-------
o-N(',tC.INNNNccccc(E(!(E(oG
-a---
@NONCIN
ECC(s66---
OrolooocEco66-a-
Figure 5.4 Monthly average-energy surpluses and deficits with existing and commifted resources
and existing DSM (70th-percentile water and 70th-percentile load)
The IRP does include four portfolios that consider coal replacement, but all are flawed.
The Idaho Conservation League, with John Gardner of Boise State University, did provide a coal
replacement portfolio as a theoretical exercise. But the company imposed a few arbitrary
restraints on this design - namely no new energy efficiency measures and an insistence on MW
for MW replaeement. By excluding the least cost resource, and locking in resource surpluses, this
portfolio was destined to be a higher cost option.
IPC-E-13-1s
ICL's Comments on Idaho Power's 2013 IRP
November 5,2013
Idaho Power then created three alternate coal retirement portfolios. For each of these,
Idaho Power created the replacement generation options without public input. And two of them,
portfolios 8 and 9, were late additions after Idaho Power heard in a news story of NV Energy's
intention to shutter Valmy in202l and2025. As described above, none of these portfolios
considered how retiring individual coal units affected the overall resource balance before
developing the alternatives, and energy efficiency was not available as a potential resource.
Along with a narrow focus on nameplate capacity, the IRP excludes environmental
compliance costs that will necessarily be incurred through continued operation of the plants. The
IRP only considers four pollutants--Nitrogen Oxides, Sulphur Oxides, Mercury, and Carbon
Dioxide.3 This does not cover the range of costs on track to be imposed on Idaho Power's coal
units, thereby undercounting the risks of continued coal operations and the benefits of alternate
resources. Idaho Power's unit-by-unit coal study does not rectifr this flawed analysis. The public
coal study describes additional environmental controls for particulate matter, cooling water, and
coal ash, but contains no estimate of the costs for these additional controls.a
While Idaho Power does apply a "carbon adder" this is not intended to represent the costs
of environmental compliance generally, something Idaho Power admits.s Rather the carbon
adder is focused solely on the additional costs of future carbon regulations. The current
regulatory requirements for coal ash, cooling water, and other air pollutants will impose
additional costs on Idaho Power during the time horizon of this IRP. While forecasting future
regulations is difficult, Idaho Power regularly forecasts other difficult aspects of the system
including loads, water flows, gas prices, and future resource development costs. Until Idaho
Power includes credible estimates of the future costs of environmental compliance at existing
coal plants the IRP does not have the information necessary to "ensure the selected resource
balances cost, risk, and environmental concerns."
Idaho Power should use an independent carbon price forecast
ICL appreciates Idaho Power was receptive to using an independent forecast of future
carbon prices authored by Synapse Energy Economics Inc, as a starting point in the IRP.6 But ICL
3 IRP at 63 - 64.
n Coal study at 9.
'IRP at 63-64.
u The 2011 and2012 Synapse Energy Economics Inc. Carbon Price Foreca.rrs are published online at:
http://www.synapse-energy.com/Downloads/SynapsePaper.20ll-02.0.2011-Carbon-
rPC-E-13-15 4
ICL's Comments on Idaho Power's 2013 IRP
November 5,2013
does not endorse the final forecast Idaho Power uses because it arbitrarily and unilaterally adjusts
the forecast to meet Idaho Power's internal needs. First, Idaho Power uses a "low" cost of zero
dollars. Assuming no future carbon costs over the planning horizon ignores areal and present
risk. As the Commission stated just two months ago "it seems more likely than not that the EPA
will move forward and enact additional regulations of fossil fuels under the federal Clean Air
Act."7 Assuming zero carbon costs maybe an interesting exercise, but it is an invalid planning
criteria.
Despite claiming to use a third-party analysis Idaho Power's "planning" carbon cost was
"selected to be consistent with the $ l6-per-ton value in 202I used in the coal study that was part
of the Idaho Power 2011 IRP Update".8 Choosing carbon price forecasts to match an internally
generated document does not ensure transparent and rigorous planning. Further, Idaho Power's
"planning" case of $16/ton in 202I figtre is actually the beginning of the "low" estimate by
Synapse.e In later years Idaho Power's "planning" cases increases to $22-per- ton in 2032, while
Synapse "low" case rises to $27-per-ton. Meanwhile, Synapse "medium" case, based on a review
of all available carbon price forecasts, begins at $20 in2020 and rises to $47 in2032. Like
forecasting natural gas prices, forecasting carbon prices may be fraught with uncertainty. But
also like gas prices, relying on independent, third party assessments based on a nationwide
surveys of forecasts is more likely to be accurate than Idaho Power's unexplained, unilateral
decision to match forecasts to their coal study. By under forecasting the cost of carbon the IRP
does not accurately "balance costs, risks, and environmental concerns."
Idaho Power does not believe Boardman to Hemingwaywill be online in 2018
Most glaringly, the IRP forecasts Boardman to Hemingway (B2H) to be online in 2018.
But Idaho Power does not believe this to be true. On November 5,2013IDACORP told analyst
they expect an online date of 2020 and beyond.'o ICL believes B2H is likely to benefit Idaho
through increased access to low cost power markets, expanding the footprint to integrate
renewables, and increasing capacity for off system sales. ICL is not critical of B2H as a resource,
Paper.AO029.pdf and http://www.synapse-energy.com/Downloads/SynapseReport.20l2-
1 0.0.20 1 2-CO2-Forecast.A0035.pdf
' Order No 32890 at 12, (September 11, 2013).
'IRP at 68.
e See Attachment 1 comparing Idaho Power's forecast with Synapse 2011and,2012 forecasts.
'0 Conference call presentation of IDACORP Third Quarter 2013 earnings at slide 10. Available
at: http://www.idacorpinc.com/pdfs/confcalls/ERwc3QP20 I 3.pdf
IPC-E-13-15 5
ICL's Comments on Idaho Power's 2013 IRP
November 5,2013
rather raises this point to show the resource portfolios considered in the 2013 IRP are
fundamentally flawed.
The IRP solar assumptions are invalid
Idaho Power also continues to use invalid assumptions for solar technologies. First, Idaho
Power Despite Idaho Power's peak energy needs occur in the afternoon, when the sun is in the
southwestern sky, Idaho Power only considered solar PV panels oriented due south. IRPAC
members pointed out that panel orientation is driven by incentives and pricing structures could
incent southwest oriented installations. While an analysis of southwest oriented panels does
appear in the Technical Appendix, Idaho Power refused to adjust their panel orientation
assumptions during the 2013 IRPAC sessions.
Similarly, while Idaho Power considered "distributed" solar, the company refused to
consider any level of cost sharing between the company and system owners. Not only does this
refusal undercut the public participation, it ignores a potential benefit to Idaho - developing a
distributed solar industry with related job growth, spending, and increase tax base. While
assuming system owners contribute 1007o of the capital costs could skew the planning results,
refusing to analyze any level of capital costs misses a viable option to "identifr sufficient resources
to meet growing energy needs" and does not ensure the "selected portfolio balance cost, risk, and
environmental concerns.
The wind integration study is irretrievably flawed
Idaho Power filed their wind integration study as an update to the 2011 IRP, and
presented it to the 2013 IRPAC on November 5, 2013. But this wind study continues to have deep
flaws that render it essentially useless. As ICL commented to Idaho Power in April of 2012,the
integration study ignores the current flexibility to integrate variable resources available in the
Federal Energy Regulatory Commissioners Licenses for the Mid Snake River Dams. The study
only considers resources with Idaho Power's footprint, when every credible study of wind
integration demonstrates that using a larger footprint reduces costs. The study only considers
one-hour transmission scheduling when the clear trend is towards 15-minute schedules. And the
study does not describe the forecasting improvements that can reduce integration costs. Despite
more than orle year, Idaho Power did nothing to address these comments and continues to
pursue a deeply flawed integration study.
IPC-E-13-1s
ICL's Comments on Idaho Power's 2013IRP
November 5,2013
The IRP discloses that an Energy Imbalance Market can benefit Idaho ratepayers
The IRP explains that an Energy Imbalance Market can benefit the entire Northwest
Power Pool region and identifies specific benefits to Idaho Power.rrThese benefits include access
to balancing energF, reducing dispatch costs, and improved real-time power imbalance pricing.
By not pursuing these benefits, Idaho Power is causing customer to pay more for power than may
be possible otherwise. Despite recognizing these benefits the IRP makes no effort to explain how
Idaho Power will pursue this opportunity, other than participation in some ill defined
"discussions." As a20 year planning document the IRP is the appropriate forum to discuss these
long-term resource strategies.
The IRP does not adequately identifr or plan for risks
The IRP also identifies and, ideally, plans for, risk. Idaho Power's 2013 IRP misses the
mark in this regard. Two of the biggest risks facing Idaho Power today are increasing stringent
environmental controls at the coal plants and delays in permitting and constructing large power
projects. As described above, the IRP undercounts coal risks by not forecasting the cost to comply
with forthcoming regulations of particulates, coal ash, cooling water, and ozone, along with
tightening standards for sulphur dioxides, and nitrogen oxides. Also, being the minority owner in
a coal plant presents its own unique risk. Idaho Power did not know about NV Energy's plans for
Valmy until the public announcement. Meanwhile, PacifiCorp, majority owner of Iim Bridger,
continues to negotiate and litigate the timing and extent of pollution controls there. The IRP
does not adequately capture the risk to ratepayers of a Z}-year commitment to coal from plants
Idaho Power does not control.
Delay in completing large-scale generation projects is a real risk that is not captured in the
IRP. In general, permitting and construction delays tend to increase inline with the scale of the
project. For example, as mentioned above, even Idaho Power does not believe the 2018
timeframe for B2H contained in the IRP. While less explicit, the IRP also does not appear to
capture the delay risk for permitting and building gas power plants. The IRP plans only for large
generation projects but does not capture this risk of delay.
This inadequate risk assessment affects other resource options in a different way - not
capturing their risk mitigation value. Some resource options have the effect of mitigating risks by
reducing dependence on single fuel sources, deferring new resource additions into the future to
" IRP at 17.
IPC-E-13-1s
ICL's Comments on Idaho Power's 2013 IRP
November 5,2013
address delays, and distributing generation sources geographically to reduce the effect of
catastrophic events at major resources. The Resource Alternatives Analysis nor Modeling Analysis
and Results chapters do not consider how these benefits may offset some of the capital costs of
various resources. By missing entire ca(egories of risks and mitigation options, the IRP does not
"ensure the selected resource portfolio balances cost, risk, and environmental concerns".
Conclusion
ICL recognizes that the Commission approves the ongoing planning process, not the
individual resource decisions. Because the load and resource balance is already stale, the process
is flawed. Because the IRP hobbles demand-side resource, the process is flawed. By not
accurately and transparently accounting for the risks of coal generation, the process is flawed.
And by missing the mark on several important resource and system integration issues, the
process is flawed. These flaws prevent the IRP from meeting the four goals. It identifies
excessive, not sufficient, resources. It favors supply-side resources. It does not ensure the
selected portfolio balances costs, risk, and environmental concerns. And, while better, it does not
allow for meaningful public input into the analysis and results. For these reasons, ICL
recommends the Commission not acknowledge the 2013 IRP and direct Idaho Power to begin the
planning as soon as possible.
Respectfully submitted this 5th day ofNovember 2013.
Idaho Conservation League
IPC-E-13-ls
ICL's Comments on Idaho Power's 2013 IRP
November 5,2013
ATTACHMENT I
Carbon prices from Synapse 20l l Forecast, Synapse 2012Forecast and Idaho Power 2013 IRP.
Table 3: 2011 Synapse Low, Mid, and High COz Allowance Price Forecasts (201O$/short ton)
2015 N/A N/A $15.00
2016 N/A N/A $19.33
2017 N/A N/A $23.67
2018 N/A $15.00 $28.00
2019 N/A $17.92 $32.33
2020 ,.,'$15.00"1 i$20.83 ,i,l $3,6$7
2021 $16.50 $23.75 $41.00
2022 $18.00 $26.67 $45.33
2023 $19.50 $29.58 $49.67
2024 $21.00 $32.50 $54.00
2025 $22.50 $35.42 $58.33
2026 $24.00 $38.33 $62.67
2027 $25.50 $41.25 $67.00
2028 $27.00 $44.17 $71.33
2029 $28.50 $47.08 $75.67
2030 $30.00 $50.00 $80.00
Table ES-1: Synapse 2012COz allowance price projections (2012 dollars perton CO2)
2020 s1s.00 52o.oo s30.00
2027 s16.00 5zz.zs s34.00
2022 S17.oo S24.so S38.oo
2023 Sre.oo 526.7s S42.oo
2024 S19.oo s29.00 S+o.oo
2025 s20.00 s31.2s Sso.oo
2026 s21.00 s33.s0 ss4.00
2027 s22.00 s3s.7s Ss8.oo
2028 s23.00 s38.00 562.oo
2029 s24.00 s40.2s S66.oo
2030 s2s.00 Sqz.so s70.00
2037 s26.00 sq4.ts s72.00
2032 Szz.oo s47.00 s74.00
2033 528.oo s49.2s s76.00
2034 s2s.00 ss1.s0 s78.00
2035 s30.00 ss3.7s s80.00
2036 s31.00 Sso.oo s82.00
2037 s32.00 Ssa.zs s84.00
2038 s33.00 s60.s0 s86.00
2039 s34.00 s62.7s s88.00
2M0 s3s,00 s6s.00 S9o.oo
LeYelized 523.24 s3&s4 Ssg.s
IPC-E-13-1s
ICL's Comments on Idaho Power's 2013 IRP
November 5,2013
Table 5.4 Carbon-adder scenarios
NominalDollars
Year No Carbon Planning Upper
$21.s0 $107.30
$22.15 $116.96
2012 Dollars
Planning Upper
$12.26 $29.31
$12.26 $31.02
$12.26 $32.83
$12.26 $34.74
$12.26 $36.76
$12.26 $38.90
$12.26 $41.17
$12.26 $43.57
$12.26 $46.11
$12.26 $48.79
$12.26 $s1.63
$12.26 $54.64
$12.26 $57.83
$12.26 $61.19
$12.26 $64.76
$14.e|
$15.08
$15.53
$16.00
$16.48
$16.97
$17.48
$18.01
$18.55
$19.10
$19.68
$20.27
$20.88
$35.00
$38.15
$41.58
$4s.33
$49.41
$53.85
$58.70
$63.98
$69.74
$76.02
$82.86
$90.31
$98.44
No Carbon
$0.00
$o.oo
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$o.oo
$o.oo
IPC-E-13-rs
ICL's Comments on Idaho Power's 2013 IRP
10 November 5,2013
CERTIFICATE OF SERVICE
I hereby certifr that on this 5th day of November, 2013,I delivered true and
correct copies of the foregoing COMMENTS OF THE IDAHO CONSERVATION
LEAGUE to the following persons via the method of service noted:
Hand delivery: (on November 6,2013)
Iean Iewell
Commission Secretary (Original and seven copies provided)
Idaho Public Utilities Commission
427 W. Washington St.
Boise, ID 83702-5983
Electronic Mail:
Lisa Nordstrom
Iennifer Reinhardt
Greg W Said
Tim E Tatum
Idaho Power Company
Box 70
Boise, ID 83707
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
Ken Miller
Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
Boise,ID 83701
kmiller@snakeriveralliance. org
Peter J Richardson
Richardson Adams
515 N 27'h St
Boise ID 83616
[e-mail]
Dr. Don Reading
6070 Hill Rd
Boise,ID 83703
[e-mail]
IPC-E-13-15
ICL'S PETITION TO INTERVENE 11
Thomas H. Nelson
Attorney at Law
Box 1211
Welches OR 97068
[e-mail]
Nancy Esteb PhD
PO Box 490
Carlsborg WA98324
[e-mail]
Benjamin I. Otto
November 5,2013