20160901Comments.pdf

Peter J. Richardson ISB # 3195
Gregory M. Adams ISB # 7454
RICHARDSON ADAMS, PLLC
515 N. 2?1h Street
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
[e-mail]
[e-mail]
Attorneys for the Industrial Customers of Idaho Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
) CASE NO. IPC-E-16-14
)
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IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION TO
APPROVE NEW TARIFF SCHEDULE 63,
A COMMUNITY SOLAR PILOT
PROGRAM
) COMMENTS OF THE INDUSTRIAL
) CUSTOMERS OF IDAHO POWER
)
)
----------------)
COMES NOW, the Industrial Customers ofldaho Power ("ICIP") pursuant to that
Notice Application and Notice of Modified Procedure issued by the Idaho Public Utilities
Commission ("Commission") on August 16, 2016, and hereby provides the following comments
on Idaho Power Company's ("Idaho Power" or the "Company") Application for approval of a
community solar pilot Program. The Company is proposing to construct a 500 kilowatt ("kW")
solar array located in southeast Boise. This "pilot program" is open to Schedules 1, 5, 7, 9, 11,
19, 29, and special contract customers. Participants in the program can elect to purchase one or
more subscriptions in the solar array, which will determine their entitlement to a proportional
share of the power generation by the facility. Once the pilot project is operational, subscribers
will receive a bill credit for their portion of the net actual solar energy generated.
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-16-14
PAGEl
As proposed by the Company, participation is voluntary and will be available on a first
come first served basis at an upfront cost of $740 for each 320-watt panel installed. Participants
are limited to their actual load. In addition, non-residential customers are limited to 50
subscriptions. A total of 1,563 subscriptions will be available; 70% of which are initially
allocated to residential customers with the remaining 30% allocated to the other customer
classes. Although each panel is estimated to generate 638 kWh annually, actual production will
be used in the calculation of the credit allowed in the customer's bill.
Idaho Power calculates the value of the credit on the customer's bill per kWh based on
the Company 's embedded energy-related portion of its base rates that will be updated "as
needed" based on changes in future cost estimates. 1 The customer class amounts vary from a
high of 3.0246 cents per kWh for residential customers to a low of2.4915 cents per kWh for the
special contract customer the Department of Energy (DOE).
Without considering the time value of money or future credit adjustments by the
Company, a simple calculation using the Company's current solar energy credit and the upfront
cost of $740 per panel indicates that the payback period for subscribers in the pilot varies by
customer class from a low of 3 8 years to a high of 4 7 years as displayed in the following table.
As can be seen, the payback period actually exceeds the expected life of the project. There is
simply no valid economic reason for a rational ratepayer to subscribe to this program as it has
been proposed by Idaho Power.
II
1 Matthew Larkin, Direct Testimony Idaho Power, IPC-E-16-14, p. 14.
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-16-14
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Solar
Energy Annual
Credit Credit
(C per Payback per
Schedule Description kWh) (years) Panel
1 and 5 Residential Service 3.0246 38.3 $19.30
7 Small General Service 3.0209 38.4 $19.27
95 Large General Service 2.9936 38.7 $19.10
9P and 9T Large General Service 2.7352 42.4 $17.45
19 Large Power Service 2.7735 41.8 $17.69
24 Irrigation Service 2.6559 43 .7 $16.94
26 Micron Special Contract 2.5167 46.1 $16.06
29 Simplot Special Contract 2.5371 45.7 $16.19
30 DOE Special Contract 2.4915 46.6 $15.90
Given the fact that the average annual residential power bill is $1 ,140, against which the bill
credit of less than $20 per year will be applied (along with an upfront cost of $740 per panel), it
very unlikely that the program will attract enough participants to fill Idaho Power's quota of
1,095 residential subscriptions.' This problem is exacerbated for non-residential customers as
they have an even longer payback period.
The varying amount for each customer class' solar energy credit amount is based on the
Idaho Power's most recent (almost one decade old) cost-of-service study from general rate case
IPC-E-11-08 . This figure has, however, been adjusted for discreet revenue requirement changes
authorized by the Commission since the conclusion of that case. There are two problems with the
Company's approach to the calculation of the customer credit. First, the data used by the
Company -its old cost-of-service study --is stale. Updating it using a series of Commission
approved revenue adjustments is not sufficient to compensate for the structural changes that have
1 2016-2017 PCA Application, Idaho Power Company, IPC-E-16-08, Attachment 2, April 15, 2016.
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-16-14
PAGE 3
occurred on Idaho Power's system since that time. Second, and more importantly, a cost-of­
service study is a cost allocation methodology among the various customer classes; it is not a
value of power measurement methodology.
The Company calculates the value of electricity on its system every two years in its
Intergraded Resource Plan (IRP). As part of the IRP process Idaho Power computes the
alternative cost of power for evaluating the cost-effectiveness of its demand-side management
(DSM) programs. The Company determines the value of energy and capacity throughout the 20-
year planning period using its AURORA model in order to estimate the system benefit for each
of its DSM programs. These DSM energy prices are a more appropriate measure of the value of
the power generated by the pilot project's solar array because they show what the company
would offset with community solar.
Along with these DSM energy values being estimated by the Company, there are several
other reasons why these values should be used in determining the Solar Energy Credit applied to
a subscribing customer's power bills. Unlike the cost of service number, DSM values are
consistently and regularly updated every two years and thus are automatically adjusted as the
power system costs change, (both up and down). In addition, they are transparent in that Idaho
Power provides the inputs, formulae, and results on a non-proprietary basis as part of its IRP
process and filings. The DSM method used by the Company and the results, have been accepted
by all parties and have not been challenged in comments after Idaho Power's IRPs have been
filed at the Commission.
A very rough estimate, using the 2015 DSM energy price estimates as the twenty-five
year levelized solar energy credit, indicates that the credit would be in the range of five cents per
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-16-14
PAGE4
kWh. This level of bill credit would create a more meaningful and viable program due to the
increased incentive. It actually cuts the payback period by approximately half. Therefore, it
makes it more likely that the program may be successful.
The ICIP supports the concept of a nonsubsidized community solar program. Using the
Company's preapproved and fully vetted DSM value of power provides a realistic value of
power on Idaho Power's system and sufficiently assures that the solar credit to customer's bills
will not be subsidized by non participants.
)y
RESPECTFULLY SUBMITTED this _I day of September 2016.
RICHARDSON ADAMS, PLLC
By P.£)~fl -'
Peter J. Richardson on behalf of
the Industrial Customers of Idaho Power
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-16-14
PAGES
CERTIFICATE OF SERVICE
I hereby certify that on the 1st day of September 2016, copies of the foregoing Comments
of the Industrial Customers ofldaho Power in Docket No. IPC-E-16-14 were hand delivered to
and/or electronically delivered:
Lisa Nordstrom
Idaho Power Company
1221 West Idaho Street (82702)
Boise, Idaho 83 707
[e-mail]
[e-mail]
Matt Larkin
Peter Pengilly
Idaho Power Company
1221 West Idaho Street (82702)
P.O. Box 70
Boise, Idaho 83 703
[e-mail]
ppengill [e-mail]
Daphne Huang
Deputy Attorney General
Idaho Public Utilities Commission
4 72 West Washington (83 702)
P.O. Box 83702
Boise, Idaho 83720-0074
daphne [e-mail]
Benjamin J. Otto
Idaho Conservation League
710 North 6th Street
Boise, Idaho 83 702
[e-mail]
Kandi Walters
Administrative Assistant
Elizabeth A. Koeckeritz
Deputy City Attorney
Boise City Attorney's Office
150 N Capitol Blvd
Boise, Idaho 83 702
[e-mail]
Eric L. Olsen
Echo Hawk & Olsen, PLLC
P.O. Box 6119
Pocatello, Idaho 83205
[e-mail]
Anthony Y ankel
12700 Blake A venue, Unit 2505
Lakewood, Ohio 44107
[e-mail]
Zack Waterman
Director, Idaho Sierra Club
503 W Franklin St
Boise, Idaho 83 702
zack. waterman@sierracl ub. org
Michael Heckler
3606 N Prospect Way
Garden City, Idaho 83714
[e-mail]
Snake River Alliance
P.O. Box 1731
Boise, Idaho 83701
[e-mail]
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-16-14
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