20170630Application.pdf

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An IDACORP CompanY
j;ii.l-i,130 Pli 3;2iLISA D. NORDSTROM
Lead Counsel
I nordstrom@ida hopower. com
June 30,2017
VIA HAND DELIVERY
Diane M. Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington
Boise, ldaho 83702
Case No. IPC-E-17-11
2017 lntegrated Resource Plan - ldaho Power Company's Application
Dear Ms. Hanian:
Enclosed for filing in the above matter please find an original and seven (7) copies
of ldaho Power Company's Application.
Very truly yours,
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Lisa D. Nordstrom
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Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I nordstrom@ idahopower. com
Attorney for ldaho Power Company
BEFORE THE ]DAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S 201 7 INTEGRATED
RESOURCE PLAN.
CASE NO. |PC-E-17-11
APPLICATION
COMES NOW, ldaho Power Company ("ldaho Power" or "Comp?[y"), and in
accordance with ldaho Public Utilities Commission ("IPUC" or "Commission") Order
No. 22299, hereby requests that the Commission accept for filing the Company's 2017
Integrated Resource Plan ("lRP"). ln support of this request, ldaho Power states as
follows:
I. BACKGROUND
1. As required by Commission Order No. 22299 and the Public Utility
Commission of Oregon's ("OPUC") Order Nos. 89-507,07-002,07-042, and 12-013, the
Company prepares and files a biennial !RP with both the IPUC and the OPUC setting
forth how ldaho Power intends to serve the electric requirements of its customers.
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APPLICATION - 1
ldaho Power's 2017 lRP addresses available supply-side and demand-side resource
options, planning period load forecasts, potential resource portfolios, a risk analysis,
and an action plan that details the steps the Company plans to take to implement the
2017 !RP.
2. The complete 2017 IRP consists of four separate documents: (1) 2017
lntegrated Resource Plan; (2) Appendix A: Sales and Load Forecast; (3) Appendix B:
2017 DSM Annual Report; and (4) Appendix C: Technical Report. A copy of the
complete 2017 IRP is provided as Attachment 1 and can also be found on the
Company's website at www.idahopower.com. lnterested persons may also request a
printed copy of the 2017 !RP by contacting [e-mail].
3. ldaho Power has worked with stakeholders over the last year to develop
the 2017 lRP. To incorporate stakeholder and public input, the Company worked with
the Integrated Resource Plan Advisory Council ("lRPAC'), comprised of members of the
environmental community, major industrial customers, agricultural interests,
representatives from both the IPUC and OPUC, representatives from the ldaho
Governor's Office of Energy and Mineral Resources, representatives from the
Northwest Power and Conservation Council, and others. A list of the 2017 IRPAC
members can be found in Appendix C. For the 2017 lRP, ldaho Power conducted eight
IRPAC meetings, including a workshop designed to explore the potential for distributed
generation to defer grid investment.
II. lRP GOALS AND ASSUMPTIONS
4. The primary goals of ldaho Power's 2017 IRP are to: (1) identify sufficient
resources to reliably serve the growing demand for energy within ldaho Power's service
APPLICATION - 2
area throughout the 2O-year planning period (2017-2036); (2) ensure the selected
resource portfolio balances cost, risk, and environmental concerns; (3) give balanced
treatment to both supply-side resources and demand-side measures; and (4) involve
the public in the planning process in a meaningful way.
5. The 2017 IRP assumes that during the 2O-year planning period, ldaho
Power will continue to be responsible for acquiring resources sufficient to serve its retail
customers in its ldaho and Oregon service areas and will continue to operate as a
vertically integrated electric utility. During this period, average system load is
forecasted to grow by 0.9 percent per year and 1.4 percent per year for peak-hour
demand. The tota! number of customers is expected to increase from 534,000 in 2016
to 756,000 by 2036. ldaho Power continues to use 70th percentile water conditions and
70th percentile average load for energy planning. For peak-hour capacity planning,
ldaho Power uses 90th percentile water conditions and g5th percentile peak-hour load.
Based on the forecasted demand and energy over the 2}-year planning period,
including expanded demand-side measures, additional resources will be needed to
meet these increased demands.
III. IRP METHODOLOGY
6. Preparation of ldaho Power's 2017 IRP began with the forecast of future
customer demand. Existing generation resources, demand-side resources, and
transmission import capacity were combined with forecasted customer demand to
create a load and resource balance for energy and capacity over the 2O-year planning
period. ldaho Power then evaluated new energy efficiency programs and the expansion
of existing demand-side management ("DSM") programs to revise energy and capacity
APPLICATION - 3
deficits. A baseline assumption for the 2017 IRP was ldaho Power's exit from coal-fired
operations of North Valmy Unit 1 and Unit 2 at the end of 2019 and 2025, respectively.
ldaho Power designed the portfolio analysis for the 2017 IRP to inform the IRP's action
plan with respect to two key resource actions: (1) selective catalytic reduction ("SCR")
investments required for Jim Bridger Units 1 and 2 by 2022 and 2021, respectively, and
(2) the Boardman to Hemingway Transmission Line Project ("B2H"). ldaho Power
designed and analyzed supply-side and transmission resource portfolios to address the
remaining energy and capacity deficits.
7. ldaho Power evaluates the costs and benefits of each resource type. The
financia! costs include construction, fuel, operation and maintenance, transmission
upgrades, projected wholesale market purchases, integration costs, and anticipated
environmental controls. The financial benefits include economic resource operations,
projected wholesale market sales, transmission revenue, and the availability and market
value of renewable energy certificates.
8. ldaho Power is part of the larger northwestern and western regional
energy markets, and market prices are an important component of evaluating energy
purchases and sales. ldaho Power faces transmission import constraints and, at times
of peak customer load, must rely on its own generation resources regardless of regional
market prices. Likewise, there are times when the generation connected to ldaho
Power's system exceeds customer demand and transmission export capacity, and the
Company must curtail generation on its system.
9. An additional transmission connection to the Pacific Northwest has been
part of the ldaho Power preferred resource portfolio since the 2006 lRP. By the 2009
APPLICATION - 4
lRP, ldaho Power determined the approximate configuration and capacity of the
transmission line now known as B2H. ldaho Power again evaluated B2H as an
uncommitted resource in the 2017 resource plan to ensure the transmission addition
remains a prudent resource acquisition.
IV. PREFERRED RESOURCE PORTFOLIO
10. A fundamental goal of the IRP process is to identify a selected, or
preferred, resource portfolio. The preferred portfolio identifies resource options and
timing to allow ldaho Power to continue to reliably serve customer demand, balancing
cost and risk over the 2017 to 2036 planning period. While the preferred resource
portfolio represents current resource acquisition targets, it is important to note that the
actual resource portfolio may differ from the quantities and types of resources outlined
in the IRP depending on the changing needs of ldaho Power and its customers.
11. Analysis for the 2017 IRP indicates favorable economics associated with
two significant resource actions: (1) the acquisition of the B2H transmission line and (2)
the early retirement of the Jim Bridger Plant-Unit 2 in 2028 and Unit 1 in 2032-without
the installation of SCRs. These two resource actions are central to portfolio 7 (P7), the
2017 IRP's preferred resource portfolio. P7 contains no other resource actions through
the end of the 2020s, but adds 36 megawatts ("MW") reciprocating engine resources in
2031 and in 2032, a 300 MW combined-cycle combustion turbine in 2033, and 54 MW
reciprocating engine resources in 2035 and 2036.
APPLICATION - 5
v. AcTtoN PLAN (2017-2021)
12. The 2017 lRP includes an action plan with resource activities that the
Company plans to take in the next two to four years.l The action plan for the 2017 to
2021 period ("2017 IRP Action Plan") includes items specifically related to the preferred
portfolio, P7, and other items included in all portfolios. The following items are
significant:
o The 2017 IRP Action Plan includes Idaho Power's continued planning
to enter the western Energy lmbalance Market ("ElM") in April of 2018.
Since its inception, the EIM has resulted in significant cost savings for
its participants and ldaho Power expects that its participation will
similarly result in net power supply savings for its customers.
o The 2017 IRP Action Plan includes planning and coordination with NV
Energy (ldaho Power's co-owner) for ldaho Power's exit from coal-fired
operations of North Valmy Unit 1 by year-end 2019 and Unit 2 by 2025
and the planning and negotiation with PacifiCorp (ldaho Power's co-
owner) and applicable environmental regulators to achieve early
retirements of Jim Bridger Unit 2 by 2028 and Unit 1 by 2032.
o The 2017 IRP Action Plan includes the ongoing permitting and
construction of B2H from 2017 to 2026.2 The Company has included a
longer action plan "window" for B2H given the length of time required
to permit and construct the 300 mile 500 kilovolt transmission line. The
t As discussed below, ldaho Power has extended the action plan window for the B2H
transmission line to include activities lrom 2017 to 2026, given the unusually lengthy timeline for
permitting and constructing this 300 mile 500 kilovolt transmission line.
' The Company anticipates a B2H project in-service date of 2024 or later-subject to coordination
of activities with project co-participants.
APPLICATION - 6
pursuit of these items over the relevant action plan periods is critical to
the successful and timely implementation of the preferred portfolio.
. The Gateway West transmission line remains a beneficial future
upgrade to ldaho Power and the region, creating additional capacity
and promoting continued grid reliability in a time of expanding variable
energy resources. Therefore, the 2017 IRP Action Plan includes
continued permitting and planning associated with the Gateway West
project.
. Finally, Clean Air Act ("CA4"1 Section 1 1 1(d) could potentially have a
pronounced impact on coal and natural gas-fired power plant
operations on ldaho Power's system and throughout the Nation. Due
to ongoing litigation about the legality of the rule, ldaho Power will
continue to monitor and assess the impacts of CAA Section 111(d) on
the preferred portfolio.
13. ln addition to continued transmission permitting efforts and evaluation of
potential changes in therma! fleet operations at North Valmy and Jim Bridger, the 2017
IRP Action Plan also includes the following items:
o lnvestigation of solar photovoltaic (PV) contribution to peak and loss-
of-load probability analysis.
o Continued pursuit of cost-effective energy efficiency.
o Continued coordination with Portland General Electric Company to
achieve cessation of coal-fired operations at the Boardman plant by
year-end 2020.
APPLICATION - 7
Year Resource Action Action Number
Table 10.2 on page 135 provides actions with dates for the 2017 to 2021 period
Table 10.2 Action plan (2017-20211
2017-2018 EtM
2017-2018
2017-2019
Loss-of-load and solar
contribution to peak
North Valmy Unit 1
Jim Bridger units 1
and2
Energy efficiency
Carbon emission
regulations
2017-2020 B2H
2018-20263 B2H
2017-2021 Boardman
2017-2021 Gateway West
Continue planning for western EIM participation beginning in
April2018.
lnvestigate solar PV contribution to peak and loss-of-load
probability analysis.
Plan and coordinate with NV Energy ldaho Power's exit
from coal-fired operations by year-end 2019. Assess import
dependability from northern Nevada.
Plan and negotiate with PacifiCorp and regulators to achieve
early retirement dates of year-end 2028lor Unit 2 and
year-end 2032 for Unit 1.
Conducl ongoing permifting, planning studies,
and regulatory filings.
Conduc{ prelimi nary construction activities, acquire long-lead
materials, and construct the B2H project.
Continue to coordinate with PGE to achieve cessation of
coal-fired operations by year-end 2020 and the subsequent
decommission and demolition of the unit.
Conducl ongoing permitting, planning studies,
and regulatory filings.
Continue the pursuit of cost-effective energy efficiency.
Continue stakeholder involvement in CAA Section 111(d)
proceedings, or altemative regulations affecting
carbon emissions.
Plan and coordinate with NV Energy ldaho Powe/s exit
from coal-fired operations by year-end 2025.
2
3
2017-2021 4
5
6
7
8
2017-2021
2017-2021
I
10
2017-2021 North Valmy Unit 2 't1
Vl. RESPONSE TO ORDER NO. 33/141
14. ln Order No. 33441, the Commission accepted the Company's 2015 lRP.
On page 12 of its Order, the Commission encouraged ldaho Power "to continue to use
the IRPAC meetings and other outreach opportunities to further explore issues raised in
this [2015 !RP] case." The Commission specifically encouraged the Company to further
explore issues related to the closure of North Valmy Unit 1 in 2025 versus 2019 and
whether "its IRP could more effectively incorporate energy efficiency by using a model
t B2H in-service date of 2024 or later, subject to coordination of activities with project co-
participants.
APPLICATION - 8
that is similar to those used by PacifiCorp, Avista, the Northwest Power and
Conservation Council, or Puget Sound Energy."
15. After the Company's initial filing for expedited recovery of costs associated
with the North Valmy coal-fired plant in Case No. IPC-E-16-24 and at the request of
multiple parties, ldaho Power performed a supplemental North Valmy shutdown
analysis in early 2017. When last evaluated in ldaho Power's 2015|RP, the Company's
P9 portfolio, which included the retirement of North Valmy Unit 1 in 2019 and retirement
of Unit 2 in 2025, was identified as the lowest cost portfolio on an economic basis.
However, several key factors created uncertainty that prompted the Company to choose
the higher cost P6(b) portfolio with retirement of both North Valmy units in 2025,
including: (1) uncertainty regarding the consideration of North Valmy and Jim Bridger
coal unit early retirement; (2) uncertainty related to the proposed Environmental
Protection Agency's proposed CAA Section 1 1 1(d) regulation; (3) uncertainty with the
320 MW of solar projects contracted under the Public Utility Regulatory Policies Act of
1978 that were as yet unbuilt and the effect of further cancellation on capacity additions;
and (4) uncertainty related to the timing of the B2H transmission line due to permitting
issues. These risks largely diminished in the two years since completion of the 2015
lRP, and the Company's updated quantitative analysis continued to reflect significant
cost savings related to a 2019 North Valmy Unit 1 shutdown, with greater assurance
that it would not negatively impact system reliability. The Company then incorporated
the 2019 North Valmy Unit 1 shutdown date into its portfolio planning process in this
IRP and entered into a settlement stipulation ("Settlement Stipulation") where it agreed
to use "prudent and commercially reasonable efforts" to amend the North Valmy
Operation, Construction and Ownership Agreement with co-owner NV Energy to
APPLICATION - 9
permanently cease burning coal in Unit 1 on or before December 31, 2019, and in Unit
2 on or before December 31, 2025. The Commission approved the Settlement
Stipulation in Order No. 33771 issued on May 31,2017.
16. With respect to the issue of more effectively incorporating energy
efficiency into the IRP model, since the Commission acknowledged its 2015 !RP, ldaho
Power discussed various energy efficiency modeling approaches with regional
counterparts to better understand other concepts-including an approach in which the
IRP's expansion of cost-effective energy efficiency is not static, but varies in response
to key inputs and assumptions (e.9., natura! gas price), similar to the methods used by
PacifiCorp, Avista, and the Northwest Power and Conservation Council. ln conjunction
with the DSM potential study consultant, Applied Energy Group (.AEG'), ldaho Power
led discussions with the 2017 IRPAC describing its approach of developing portfolios
that include an IRP target for energy efficiency expansion under planning (or expected)
case inputs and assumptions. The approach used by AEG to calculate energy
efficiency potential adheres to the approaches and conventions outlined in the National
Action Plan for Energy Efficiency ("NAPEE") Guide for Conducting Energy Efficiency
Potential Studies (November 2OO7).4 The NAPEE Guide represents the most credible
and comprehensive industry practice for specifying energy efficiency potential. The
energy efficiency found by this approach is considered a committed resource in all of
the IRP's resource portfolios, and is included as a portfolio element prior to supply-side
resources. Based on ldaho Power's review of techniques used for estimating energy
efficiency potential in integrated resource planning, as well as consultation with AEG on
a National Action Plan for Energy Efficiency (2007). Nationat Action Plan for Energy Efficiency
Vision for 2025: Developing a Framework for Change, https:i/www.epa.qov/sites/production/files/2015-
08/documents/potential quide 0.odf.
APPLICATION. 1O
its experience with energy efficiency modeling, ldaho Power's approach for estimating
the IRP target amount of energy efficiency is similar to that used by Portland General
Electric Company and utilities throughout the United States.
17. ldaho Power does not consider the IRP target to be a ceiling on the
amount of energy efficiency ultimately achieved; the amount of energy efficiency
achieved in practice may ultimately exceed the IRP target because of implementation
efforts of the Company and the Energy Efficiency Advisory Group. ldaho Power also
emphasized to the IRPAC the Company's recognition that the inputs and assumptions
driving cost-effectiveness evaluation (e.9., natural gas price) are not fixed, and that
future cost-effectiveness evaluations, such as those performed for the 2019 lRP, will
reflect changes in these drivers. Thus, while the target amount of achievable cost-
effective energy efficiency included in this IRP is a static amount considered appropriate
and prudent in the context of planning case inputs and assumptions, it is dynamic in the
sense that changes in the inputs and assumptions in the interim following completion of
this IRP will be reflected in future energy efficiency targets.
VII. COMMUNICATIONS AND SERVICE OF PLEADINGS
18. ldaho Power requests that any notices, inquiries, and communications
regarding this request be provided to:
Lisa D. Nordstrom Timothy E. Tatum
ldaho Power Company Michael J. Youngblood
1221West ldaho Street (83702) ldaho Power Company
P.O. Box 70 1221West ldaho Street (83702)
Boise, ldaho 83707 P.O. Box 70
Telephone: [phone] Boise, ldaho 83707
Facsimile: [phone] Telephone: [phone]
[e-mail] Facsimile: (208) [e-mail] [e-mail]
myou no blood @idahopower. com
APPLICATION - 11
VIII. REQUEST FOR ACCEPTANCE
19. ldaho Power respectfully requests that the Commission issue its order
accepting the Company's 2017 lRP and finding that the 2017 IRP meets both the
procedura! and substantive requirements of Commission Order No. 22299.
DATED at Boise, ldaho, this 30th day of June 2017.
LISA D. NOR
Attorney for ldaho Company
APPLICATION - 12
BEFORE THE
IDAHO PUBLIG UTILITIES COMMISSION
GASE NO. IPC-E-17-11
IDAHO POWER COMPANY
ATTACHMENT 1
2017 INTEGRATED RESOURCE PLAN