20160701Decision Memo.pdf

TO:
FROM:
DATE:
DECISION MEMORANDT]M
COM1VIISSIONER ISELLA}IDER
COMNIISSIONER RAPER
COMMISSIONER AITDERSON
COMMISSION SECRETARY
COMNIISSION STAFF
DAPHNE IIUAI\IG
DEPUTY ATTORNEY GEI\ERAL
JIILY L,2016
SUBJECT: IDAHO POWER'S APPLICATION TO APPROVE ltEW TARIFF
SCHEDULE 63, A COMMUMTY SOLAR PILOT PROGRAM, CASE NO.
IPC-E-I6-14
On June 22,2016,Idaho Power Company filed an Application with the Commission
to authorize it to implement an optional program, Schedule 63, Community Solar Pilot Program.
Under the Program, the Company proposes to build a 500 kilowatt (kW) single-axis tracking
community solar array in southeast Boise that will allow a limited number of Idaho Power
customers to subscribe to the generation output. Idaho Power asked that the case be processed
by Modified Procedure, and that an Order be issued with an effective date of September 15,
2016. With its Application, the Company attached the proposed Tariff Schedule 63, and Direct
Testimonies by David Angell, Matthew Larkin, and Peter Pengilly.
THE APPLICATION
Idaho Power's Application states that the proposed Program, offered in response to
customer input, enables customers to invest or participate in the "operation of solar resources"
without "requir[ing] upfront capital costs . . . [and] long-term expenses and liabilities associated
with system operation and maintenance." Application at 2-3. The Company's proposal also
permits participation in a solar power program by those for whom "rooftop or ground-mounted
solar installations" are not feasible. Id. at2.
The Community Solar Program is separate and distinct from Idaho Power's Green
Energy Purchase Program Rider, for which an application was simultaneously filed before the
Commission in Case No. IPC-E-I6-13.
DECISION MEMORANDUM
The proposed Community Solar Program would be open to the following customer
service classes on a first-come, first-served basis: residential, small general, large general, large
power, agricultural irrigation, Micron special contract, Simplot special contract, and Department
of Energy special contract. Application at 3-4. Under the Program, individual customer
subscriptions would allow expected annual production up to 100% of a participant's usage for
the prior 12 months on a kilowatt-hour GUfh) basis. Id. at 4. The Application sets forth the
number of subscriptions and kWs to which customers are limited, as well as the transferability of
subscriptions in the event a participant moves within Idaho Power's seryice area. Id. at 4-5.
Idaho Power proposes to retain ownership of renewable energy credits (RECs) associated with
the Program. Id. at 5.
Participants' monthly energy production will be calculated as per kWh "Solar Energy
Credits" (SEC) that participants receive for their share of the solar production each month.
Application at 5-6; Larkin Direct at 12. The Company proposes calculating its per kWh SEC as
the product of the rate specified in Tariff Schedule 63, and the participant's share of the total
monthly production for the month. Application at 10. The Company will base the SEC on "its
embedded energy-related costs recovered through base rates," and will update them as needed.
Id. Participation in the Program will be reflected in participants' bills "as a dollar offset to the
total bill, not as a kWh credit that offsets billed kWh consumption." Application at 6; Pengilly
Direct at 13. "[E]xcess production will be carried forward on a kWh basis to be credited on a
participant's bill in a future month." Id.
The Company proposes ongoing operations and maintenance (O&M) expenses of $16
per kW. Application at 6. If approved, the Program's facility would be built adjacent to Idaho
Power's Boise Bench substation. Id. at 7. Testimony by David Angell, attached to the
Application, describes the Company's request for bid (RFB) process for the design, procurement,
and construction of the solar photovoltaic (PV) system. Id.; see Angell Direct at 4-8. The
successful bidder gave a cost-estimate for the project of $1,158,769. Application at 7; Angell
Direct at 6.
In April 2016,Idaho Power completed the facility study - required in order for the
facility to interconnect with the Company, consistent with Idaho Power's Open Access
Transmission Tariff with the Federal Energy Regulatory Commission. Application at 7-8.
DECISION MEMORANDUM
According to the study, the preliminary interconnection costs for the Program's facility are about
$81,000. /d
The Company states that the Program is designed to "ensure that [its] costs . . . are
borne by customers who choose to participate . . . , while holding non-participating customers
harmless." Id. at 9. A participant's subscription fee reflects "the cost to construct and
interconnect the solar PV facility and market the program, less an IDACORP, Inc. shareholder
contribution of 15 percent, as well as ongoing costs such as O&M expenses and property tax."
Id. The Company proposes the shareholder-funded contribution of l5o/o of construction costs
because the project is smaller than the industry standard for a "utility scale" solar project, and
because "construction of a larger facility would likely result in cost savings due to economies of
scale estimated at 15 percent." Id. According to Idaho Power, the Company will not earn a
return on the Program. Id.
The Company expects to receive federal investment tax credits (ITCs) of 30Yo for the
Program. Id. The Company will pass the ITC benefits to the Program participants, calculated
into the upfront subscription fee. Id. The proposed subscription fee, based on anticipated costs,
is $740, "the equivalent of a 320-watt panel." Id. Idaho Power will treat the project facility as
"utility plant." Application at ll. Using accounting methods set forth in the Application, the
project's costs will be zero on the Company's books, thus "any futtre change in base rates will
exclude any community solar plant-related costs." .Id.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Application and Deadline to
lntervene of two weeks from the service date of the Order.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and Deadline to
Intervene of July 19,2016?
M:IPC-E-16-14_djh
DECISION MEMORANDUM