20141006Comments.pdf

Benjamin I. Otto (ISB No. 8292)
710 N 66 Street
Boise,ID 83701
Ph: [phone] x12
Fax [phone]
botto@idahoconservation. org
Attorney for the Idaho Conservation League
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY CONFIRMING USE OF
THE CAPAPCITY DEFICIENCY
PERIOD FOR THE INCREMENTAL
COST, INTEGRATED RESOURCE
PLAN, AVOIDED COST
METHODOLOGY.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-14-22
IDAHO CONSERVATION LEAGUE
COMMENTS
The Idaho Conservation League (ICL) submits the following comments regarding Idaho
Power's application to confirm the use of the capacity deficiency period for the Integrated
Resource Plan (IRP) Methodology. Below ICL sets forth three alternative pathways for the
Commission to resolve this case. First, the most appropriate pathway is for the Commission to
follow Order No. 32697 and re-affirm that only the forecast for load and fuel prices, as well as
changes in long-term resource contracts, may be updated between IRP filings. Second, if the
Commission desires to update resource assumptions outside of the IRP, tCL recommends the
Commission use the established annual update to IRP Methodology inputs. Third, if the
Commission wishes to rule on Idaho Power's resource position in this docket, this determination
must consider all changes to the resource assumptions embodied in the 2013 IRP. ICL
recommends the Commission adopt the first pathway and use the currently underway IRP
process to update Idaho Power's resource assumptions.
As a preliminary matter, during the pendency of this issue the Commission retains the full
ability to review contracts to ensure ratepayer protections. Whatever the Commission decides
IPC-E-L4-22
ICL COMMENTS
OCTOBER 6,2014
here will have no direct impact on customers in terms of either increasing or deceasing utility
rates. As Idaho Power describes in the Application, only the Commission can create a legally
enforceable obligation, either through approving a signed contract or determining "there would
be a contract but for the conduct of the utility." Applicationat 8-9. This individual review enables
the Commission to use one of the primary values of the IRP Methodology-its ability to compare
the unique output of a QF in relation to the needs of the utility. Imposing a default capacity
position for all QFs, regardless of their individual characteristics, may foreclose the opportunity
discover lower cost resources. Instead, the Commission should encourage QFs and Idaho Power
to negotiate using the individual characteristics of a resource and submit such agreements for
approval.
I. The Commission should use the currently underway 2015 IRP to update Idaho Power's
resource assumptions.
The simplest resolution for the Commission is to follow Order No. 32697 and defer any
update to resource assumptions to the IRP process. As the Commission has explained: "It would
not be reasonable, nor to the benefit of customers, to hold a utility to a fixed 2}-year projection
of its anticipated resource needs." Order No. 32697 at 23. Despite this statement, Idaho Power
asks the Commission for just such a determination-that current DR programs will continue at
the present size and scale until at least 2021. Below ICL sets forth two reasons the Commission
should reject this request.
A. The future level of Demand Response programs is an assumption.
In GNR-E-I1-03, after adopting Idaho Power's proposed changes to the IRP
methodolog)r, the Commission explicitly stated which inputs should be updated annually and
which should not. Order No. 32697 at22.To ensure accuracy, the Commission ordered annual
updates to the forecasts for fuel and loads along with updates for "long-term contract
LPC-E-I4-22
ICL COMMENTS
OCTOBER 6,20T4
commitments" and expired or terminated PURPA contracts. Id.The Commission concluded "we
find it reasonable that all other variables and assumptions utilized in the IRP methodology
remain fixed between IRP filings (every two years)." Id.Updating long-term contracts, but not
other resource assumptions, remains a logical approach to implementing the IRP Methodology
for avoided costs.
Idaho Power's application here, on pages 4 - 5, states that inclusion of the revived
Demand Response (DR) programs is the reason to change the current capacity deficient period.
However, future participation in the DR programs is an assumption, not a long-term contract
commitment. In docket IPC-E-13-14 the Commission approved a multiparty settlement to re-
implement Idaho Power's existing DR programs. Order No. 32923. The settlement "shall apply to
Idaho Power's DR programs for 2014 andbeyond until a change occurs in Idaho Power's system
operations or cost-effectiveness of a DR Program that would warrant reevaluation of the
Agreement's terms."rThe plain language of the settlement makes clear that ldaho Power's DR
programs are not a long-term contractual commitment; rather the size and scope of DR
programs may change in the future to reflect new circumstances. ICL continues to support this
settlement term because it reflects that DR provides a unique ability to adjust the size of a
resource to meet future needs. But here, Idaho Power asks the Commission to confirm that
current DR programs will continue at current sizes until at least 202l.To align with the
settlement adopted by Order No. 32923 and the adoption of the IRP Methodology in Order No.
32697,ICL recommends the Commission reject Idaho Power's application and confirm that
assumptions regarding future DR programs remain fixed between IRP filings.
The DR schedules also reflect the short-term, flexible nature of the DR programs. For
example, the Irrigation Peak Rewards program allows for automatic annual renewal by
participants, but also allows participants to terminate their involvement before and during the
t IPC-E-t3-14, Settlement at 2 (emphasis added).
IPC-E-I4-22
ICL COMMENTS
OCTOBER 6,2014
season. Idaho Power Schedule 23 at 6. Schedule 23 also states that prior participation is no
guarantee of future participation and may depend on equipment availability and program
funding. Id at L.ICL strongly supports a long-term commitment to a robust DR program.
However, the current program is simply not a long-term contractual commitment eligible to be
updated outside of the IRP cycle.
B. The IRP Methodology does not require an extrinsic determination of a utility's resource
deficiency date.
The IRP Methodology intrinsically considers an individual QF's ability to deliver €r€rg[,
when needed, for less than or equal to Company owned resources. As the Commission found:
"the IRP Methodology recognizes the individual generation characteristics of each project
by assessing when the QF is capable of delivering its resources against when the utility is
most in need of such resources." Order No. 32697 at20.
This is distinct from the Surrogate Avoided Resource (SAR) Methodology, which does
not intrinsically compare the QF's capability to deliver energy based on the needs of the utility.
Because the SAR method computes avoided costs regardless of the utility's need, it is appropriate
to apply an extrinsic determination of the utility's capacity position. This, in part, is why ICL
does not object that when a utility files a new IRP "a case shall be initiated to determine the
capacity deficiency to be utilized in the SAR Methodology." Order No. 32697 at23.
But the IRP Methodology bases avoided costs specifically on a QF's ability to deliver
energy in relation to the utility's incremental displaceable resource. As explained further below,
the IRP methodology to determine the avoided costs for energy and capacity will ensure
customers pay no more, and often less, than Company-owned energy and capacity resources. The
Commission should rely on this inherent ability of IRP Methodology to determine the ability of a
QF to deliver energy and capacity in relation to the utility's need to serve loads.
IPC-E-I4-22
ICL COMMENTS
OCTOBER 6,2014
The energy component of the IRP methodology is calculated by comparing the QF's
hourly output to "the highest cost Company resource. . . serving load for that hour." Application
at 6. If a QF accepts this energy component, then they commit to deliver energy in specific hours
for less than or equal to the cost of Company-owned resources. Logically, if a QF is delivering
energy instead of a Company resource, then the QF is providing capacity in that hour and should
be compensated for providing that service. The capacityvalue is based on the assumed least-cost
capacity resource, a simple cycle combustion turbine, decremented by the QF's peak hour
capacity factor. Application at 7. Therefore, once a QF commits to deliver energy in a specific
hour, customers pay an accurate avoided cost for both the energF and capacity provided in that
hour. This accuracy comes not from a "default capacity position"; rather it comes from ensuring
a QFs potential capacity payments are directly related to the ability, and commitment, to deliver
energy in relation to the utility's need.
ICL recognizes the Commission determined, in general, that QFs should not receive
capacity payments until a utility is capacity deficient. Order No. i2697 at21. However, the
Commission is free to re-examine this issue and change positions. "The Commission is a
regulatory agency that performs both judicial and legislative functions and it is not bound by
stare decisis." Building Contractors Ass'n of Southwestern ldaho v. Idaho PUC,l5l Idaho 10,15,253
P.3d 684, 689 (2011). Order No. 32697 admits the IRP methodology "has seldom been utilized"
and "has not had the benefits of adjustments over time to ensure that the calculation produces an
accurate representation of the utility's avoided cost." Order No. 32697 at 17. Further, the GNR-E-
11-03 docket covered a wide range of issues and did not focus on the interplay of energy and
capacity embodied in the IRP methodology. The present case brings this issue into sharper focus.
This sharper focus reveals the Commission can avoid the need to make an extrinsic
determination of a utility's resource position because the IRP Methodology inherently does so.
By ensuring capacity payments are tied to a QF's ability to deliver energy at or below avoided
LPC-E-I4-22
ICL COMMENTS
OCTOBER 6,2014
costs, the IRP Methodology inherently balances the demands of PURPA with protecting Idaho
ratepayers. Using the biennial IRP process to update resource assumptions ensures this balance is
timely.
II. Alternatively, the annual update of inputs to the IRP methodology is the appropriate docket
to address this issue.
If the Commission desires to update resource assumptions outside of the IRP cycle, then
ICL recommends using the already established IRP Methodology update scheduled for October
15,2014.In the first update to IRP Methodology inputs, IPC-E-13-18, Idaho Power updated the
load forecast, natural gas forecast, and contract termination, expirations, and additions. Order No
i2941at 1. The Commission, parties, and the public will benefit from consolidating all of the
load and resource balance issues into a single docket. However,ICL notes this will lead to a
complex, time-consuming process with a short-term relevancy. Idaho Power's 2015 IRP is
currently under development and will likely result in a revised capacity position due to a host of
changes to loads, resources, fuel costs, environmental regulations, and other factors.
III. Any update to Idaho Power's capacity position must consider all resource changes.
If the Commission desires to update Idaho Power's resource assumptions now, then ICL
recommends the Commission consider all assumptions based on the most recent available
information. Here Idaho Power asks the Commission to assume 403 MW of capacity for DR
programs, based on Order No. 33084. Application at 4.2 The size of the DR programs in that
order was based on Idaho Power's enrolled capacity as of April 24,2014. Application at 4. At the
close of the 2014 DR season, we now have a more accurate accounting of the maximum
contribution to meeting peak demands by DR programs during any individual hour. According
to Idaho Power, during the 2014 DR season, the maximum demand reduction achieved was 318
2 Idaho Power's Application says "exceeding 400 MW" in reference to Order No 33084. That
Order determined Idaho Power enrolled 403 MW of DR participants.
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ICL COMMENTS
OCTOBER 6,2014
MW on |uly 14. See Attachment 1 Idaho Power Response to ICL Production Request No 3. ICL
acknowledges that for the Irrigation program Idaho Power splits total participants into four
separately dispatched groups. ICL supports this method of dispatch because it can provide Idaho
Power system operators more flexibility to shape DR contributions. However, this evidence of
actual operations demonstrates that in reality not all400 MW of DR is intended to serve every
possible peak hour.
Further, current DR program hours are constrained in that individual participants can be
dispatched only 4 hours per day, 15 hours per week, and 60 hours per season. Order No. 32923 at
4- 5.3 The 2013 IRP forecast future capacity deficits in2020 to last for 62 hours and in 2021 for
68 hours. See Attachment 2.ldaho Power's Application does not explain whether the current DR
programs can provide capacity over a sufficient number of hours to avoid these deficits. This is
another example of why the Commission should adhere to Order No. 32697 and conclude that
assumptions about resources remain fixed between IRP fillings.
Idaho Power's requested first deficiency date of |uly 2021 also relies on assumptions
about other resources beyond DR. For example, the 2013 IRP assumed the Shoshone Falls
upgrade would come online in 2019. Subsequently Idaho Power received an extension on this
timing until2022. See Attachment 3, IPC response to ICL 6. While the upgrade may contribute a
small amount of capacity to the fuly peak, the important point is that the Company's
assumptions about their future resource stack are changing constantly. Likewise, the 2013 IRP
assumed the Company's energy efficiency programs would provide 18 MW of capacity in |uly of
2013. IRP Appendix C at 53. However, the actual contribution of efficiency programs was 6.5
MW in l:uly 2013. DSM Report at 143.
3 The Flexpeak program appears to omit the 15 hour per week limit, but maintains the 4 hour per
day and 60 hour per season limits.
LPC-E-14-22 7 oCTOBER 6,2014
ICL COMMENTS
The changing capacity position also goes the other way too. tdaho Power has stated that
the growth of net-metered systems,largely solar powered, shows "no signs of slowing in the
foreseeable future." See Idaho Power Annual Net Metering Report at 4.4 But in this application,
Idaho Power chose to bring only a single resource assumption to the Commission. These
examples show that Idaho Power's assumed capacity deficiency period is influenced by the
accuracy of assumptions included in the IRP. Because of its system-wide, forward facing
assessment, the IRP is the most appropriate place to develop and refine these assumptions about
the ability of future resources to meet peak demands. Because the IRP process is the most
appropriate forum to develop and refine resource assumptions, ICL urges the Commission to
follow Order No. 32697 and continue to require that assumptions remain fixed between IRP
rycles. In the alternative, the Commission must update all assumptions that affect Idaho Power's
current resource position. To do otherwise only tells a portion of the story.
Conclusion
ICL recommends the Commission follow Order No. 32697 and defer any updates to
resource assumptions to the currently underway 2015 IRP process. The Commission can review
any contracts submitted in the interim.
Respectfully submitted this 6s day of Octob er 2014,
(*
Benjamin J Otto
Idaho Conservation League
a Filed in Docket IPC-E-12-27 on
rPC-E-t4-22
ICL COMMENTS
February 28,2014.
8 OCTOBER 6,2014
CERTIFICATE OF SERVICE
I hereby certifr that on this 6th day of October 2014, 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:
Jean Iewell - Commission Secretary (Original and seven copies provided)
Idaho Public Utilities Commission
427 W. Washington St.
Boise,ID 83702-5983
Electronic Mail:
Idaho Power Company
Donovan E. Walker
Regulatory Dockets
Randy C. Allphin
l22l West Idaho Street
P.O. Box 70
Boise,ID 83707
dwalker@idahopower. com
dockets@idahopower. com
rallphin@idahopower. com
Intermountain Energy P artners
c/o Dean I. Miller
McDEVITT & MILLER LLP
420 West Bannock Street
Boise,ID 83702
joe@mcdevitt- miller.com
leif@sitebasedenergy. com
tPC-E-t4-22
ICL COMMENTS
Benjamin Otto
OCTOBER 6,2014
Attachment I
ldaho Power Dispatched DR Programs 2013
350
300
250
=
200
E rso
100
50
0
July 2 July 10
[318
Totall
lA/CCoolCredits
July 13 July 14 July31 Aug.11 Aug 14
[318
Totall
I Flex Peak I lrrigation Peak Rewards
Source: Idaho Power Response No. 3,ICL First ProductionRequest,IPC-E-14-22.
LPC-E-I4-22
ICL COMMENTS
10 OCTOBER 6,2014
Attachment 2
bocument distributed by Idaho Power during the 2013IRP development process
l1IPC-E-I4-22
ICL COMMENTS
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Attachment 3
Idaho Power Response to ICL Production Request No 6 in IPC-E-14-22
REQUEST NO. 6: ldaho Power's 2013 lntegrated Resource Plan, on page 36,
states the Company "is planning on the additional capacity from the Shoshone Falls
upgrade being available in 2019". Please provide any documentation establishing that
the Shoshone Falls upgrade will in fact be online in 2019 and provide the expected MW
of additional capacity. For example, please provide copies of any permits or other
approvals received, water rights secured, and economic analysis completed.
RESPONSE TO REQUEST NO. 6:
ln ldaho Powe/s 2013 lntegrated Resource Plan ("lRP"), the Shoshone Falls
Upgrade Project ("Project") was treated as a committed resource coming on-line in
2019. While the economic analysis of the Project shows it being beneficial, the Project
only provides an additional 2 tvTVV of capacity in the month of July under the 90h
percentile IRP water planning criterion. Therefore it does little to offset the need for
other resources that are abie to serve customers' summer peak needs.
On May 19, 2014, ldaho Power was granted an extension from the Federal
Energy Regulatory Commission ("FERC") modifying the deadline to complete
e,onstruction until July 1,2022. After the 2013 IRP was filed at the end of June 2013,
ldaho Power completed an updated cost-benefit analysis of the Project assuming a July
1, 2022, completion date. This analysis is provided in the confidential spreadsheet,
Shoshone Falls Upgrade Cosf-Benefit Analysis. provided on the confidential CD.
Please note the natural gas (NG) price forecast cases used were the same as the cases
considered for the 2013 IRP (p. 62 of the 2013 IRP). The confidential CD will be
provided to those parties that have executed the Protective Agreement in this matter.
IPC-E-I4-22
ICL COMMENTS
l2 OCTOBER 6,2014