20170913Reply Comments.pdf

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An IDACORP Company
DONOVAN E. WALKER
Lead Counsel
[e-mail]
September 13,2017
VtA HAND DELIVERY
Diane M. Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re Case No. IPC-E-17-12
Capacity Deficiency to be Utilized for Avoided Cost Calculations - ldaho
Power Company's Reply Comments
Dear Ms. Hanian:
Enclosed for filing in the above matter please find an original and seven (7)
copies of Idaho Power Company's Reply Comments.
very yours,
novan E. Walker
DEW:csb
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@idahopower. com
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF THE CAPACIry
DEFICIENCY TO BE UTILIZED FOR
AVOI DED COST CALCULATIONS
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILIT!ES COMMISSION
CASE NO. IPC-E-17-12
IDAHO POWER COMPANY'S
REPLY COMMENTS
ldaho Power Company ("ldaho Power" or "Company"), in accordance with ldaho
Public Utilities Commission ("Commission") Order No. 33738, hereby respectfully
submits the following Reply Comments to the Comments of the Commission Staff
("Staff') and the Response Comments of ldaHydro.
I. REPLY COMMENTS
Staff filed Comments on September 6, 2017, in accordance with the
Commission's Notice of Modified Procedure, Order No. 33738, which set forth a
September 6, 2017, comment deadline and a September 13, 2017 , deadline for
Company reply comments. Although ldaHydro was granted intervention, Order No.
33856, it did not file comments. lnstead, ldaHydro filed Response Comments to the
Comments of the Commission Staff on September 1 1 ,2017 .
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IDAHO POWER COMPANY'S REPLY COMMENTS - 1
Staff recommends that the Commission accept July 2026 as the Company's first
capacity deficit as set forth in the Company's Application and 2017 lntegrated Resource
Plan ("lRP"). Staff correctly identifies in its Comments those items from the IRP that
drive a shift in the Company's first deficit year as coming from: a re-evaluation of the
Company's transmission system conducted as part of addressing the closure of the
Valmy coal plant and the Company's ldaho/Montana path; a decrease in peak-hour load
forecast due to reduction in annual growth; an increase in the amount of existing energy
efficiency; and a small increase in hydro generation and firm purchase power
agreements. Staff Comments, pp. 3-4. Staff recommends that the IRP assumptions
resulting in a two-year shift in the first capacity deficiency from that previously approved
by the Commission are reasonable, and that the Commission authorize July 2026 as
the first capacity deficiency for calculating Public Utility Regulatory Policies Act of 1978
("PUPRA") avoided cost rates. ld., at3,4.
ldaHydro states in its Response Comments that transmission capacity and
market access, as a basis to meet capacity deficits, "is factually contrary to the text of
the lRP" and "conceptually contrary to the Public Utilities [Regulatory] Policy fsicl Act."
ldaHydro's Response Comments, p. 1. Neither of these allegations are correct. The
inclusion of transmission capacity, or as sometimes referred to as import capability, in
ldaho Power's load and resource balance is not contrary to the lRP. ln fact, the
inclusion of such in this case comes directly from the inclusion of the same in the lRP.
Furthermore, the Commission has specifically addressed this issue, in the context of
setting the utility's first capacity deficit for purposes of PUPRA avoided cost rates, and
determined that a utility's import capability and its ability to make short-term purchases
using its transmission capacity should be treated the same as available generation
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
resources, such as a signed Qualifying Facility ("QF") contract or generation from its
own plant. Order No. 33425, pp. 6-7
. . . the question here is whether a utility's import capability -its ability to make short-term purchases using its
transmission capacity - should be treated the same as
available generation resources such as a signed QF contract
or generation from its own plant. We find that it should.
lmport capability constitutes capacity. Exclusion of import
capability from the capacity deficiency determination would
fail to properly account for the Company's mix of existing
resources and the timing and costs of those resources.
We further find that including import capability in the capacity
deficiency determination does not violate the Company's QF
purchase obligation and does not discriminate against QFs.
Rather, it recognizes utilization of the utility's existing
resources that would be used to meet the Company's
capacity needs prior to bringing on any new resource-
without regard to whether it is QF or utility generation. lf a
utility possesses available transmission capacity, it is clearly
capacity surplus. Consequently, capacity is not being
avoided through the purchase of QF power. Consistent with
our findings and conclusions in Order No. 32697, a QF is
only entitled to capacity payments when a utility becomes
capacity deficient.
Avoided cost calculated without considering the Company's
import capability would fail to recognize the entirety of the
Company's available capacity resources. lf capacity
payments are made prior to the utility becoming capacity
deficient then the avoided cost rates would exceed Rocky
Mountain's "incremental cost" of obtaining "alternative
electric energy." We find that including, rather than
excluding, Rocky Mountain's import capability in the capacity
deficit determination comports with the "incremental cost"
mandate in PURPA. By including import capability, avoided
cost rates appropriately recognize the Company's mix of
available resources. And importantly, including import
capability ensures that avoided cost rates do not favor QFs
at the expense of Rocky Mountain's ratepayers, who
ultimately bear the costs.
Order No. 33425, pp. 6-7 (citations omitted)
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
ln the past, ldaho Power has included import capability for the ldaho-Northwest
path. However, in the current load and resource balance, as recognized by Staff, ldaho
Power also included its import capability from the ldaho-Nevada path and the ldaho-
Montana path. Attached hereto as Attachment 1, and incorporated herein by this
reference, is ldaho Power Company's Response to the First Production Request of the
Commission Staff, Response to Request No. 1. This Response contains the peak-hour
load and resource balance from the 2017 lRP, which also appears in Appendix C:
Technical Report to the 2017 IRP. Also attached as Attachment 2, and incorporated
herein by this reference, is ldaho Power Company's Response to the Second
Production Request of the Commission Staff, Response to Request No. 2. This
Response contains discussion of the Energy Efficiency Potential Study as well as
discussion of import capacity in the load and resource balance from the ldaho-Nevada
path and the ldaho-Montana path. As stated in Attachment2, p. 5, the import capability
on the ldaho-Nevada path is a result of the analysis for the closure of the Valmy coal
plant, that-in essence-swaps out coal generation for import capability in that path.
The 77 megawatts ("MW") of import capability on the ldaho-Montana path was not
previously included in the 2015 lRP, but in ldaho Power's assessment of the regional
transmission interconnections for the 2017 IRP and in conjunction with the closure of
Valmy, the Company determined that an additional 77 MW of transmission capacity on
the ldaho-Montana path could be assumed for peak-hour market purchases in July
2024-2026.
II. CONGLUSION
ldaho Power filed its 2017 IRP with the Commission on June 30,2017, in Case
No. IPC-E-17-11. ldaho Power's 2017 IRP identifies the first peak-hour deficit occurring
in July 2026, as shown in Table 1 below. This table also appears on page 60 of the
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
2017 lRP, Appendix C: Technical Report. As described in the 2017 lRP, peak-hour
load deficits are determined using g0th percentile water and 95th percentile peak-hour
load conditions. ldaho Power's 2017 lRP, p. 94.
Table 1
Peak-hour monthly deficits with existing DSM and existing resources
Table 1 shows a first capacity deficiency of approximately 34 MW occurring in
July 2026 under the preferred portfolio of the 2017 lRP. The first energy deficit of 143
MW under the preferred portfolio occurs in July 2029. See 2017 lRP, Appendix C:
Technical Report, p. 106. The Company has properly included its import capability in
the capacity deficiency determination as authorized, and required, by the Commission.
See Order No. 33425, p.7. Staff recommends that the IRP assumptions resulting in a
two-year shift in the first capacity deficiency from that previously approved by the
Commission are reasonable, and that the Commission authorize July 2026 as the first
capacity deficiency for calculating PURPA avoided cost rates. Staff Comments, pp.
3,4.
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IDAHO POWER COMPANY'S REPLY COMMENTS - 5
ldaho Power respectfully requests that the Commission issue its order approving
a first capacity deficit of July 2026 to be utilized in the Company's avoided cost
determinations under the surrogate avoided resource (SAR) and IRP methodologies.
Respectfully submitted this 13th day of September 2017.
E.
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 13th day of September 2017 I served a true and
correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following
named parties by the method indicated below, and addressed to the following:
Commission Staff
Camille Christen
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
ldaHydro
C. Tom Arkoosh
ARKOOSH LAW OFFICES
802 West Bannock Street, Suite 900
P.O. Box 2900
Boise, ldaho 83701
X Hand Delivered
_U.S. Mail
_Overnight Mail_FAXX Email [e-mail]
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
erin. ceci l@arkoosh. com
(1
Bearry, Leg nt
IDAHO POWER COMPANY'S REPLY COMMENTS. T
BEFORE THE
IDAHO PUBLIC UTILITIES GOMMISSION
GASE NO. IPC-E-17-12
IDAHO POWER COMPANY
ATTACHMENT 1
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@ ida hopower. com
: .-, -, ,:" i.i
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Attorney for ldaho Power Company
BEFORE THE IDAHO PUBL]C UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF THE CAPACITY
DEFICIENCY TO BE UTILIZED FOR
AVOI DED COST CALCULATIONS.
CASE NO. IPC.E-17-12
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE COMMISSION STAFF
COMES NOW, ldaho Power Company, and in response to the First Production
Request of the Commission Staff to ldaho Power dated August 10, 2017, herewith
submits the following information :
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 1
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REQUEST NO. 1: Please provide the peak-hour monthly deficits with existing
DSM and existing resource data (that support Table 1 in the Application) in Excel
format.
RESPOILSE TO BECIUEST NO 1: Please see the Excel file on the endosed
CD which contains the peak-hour load and resource balance data from the 2017
lntegrated Resource Plan, Appendix C: Technical Report.
The response to this Request is sponsored by Michael Darrington, Energy
Contracts Leader, ldaho Power Company.
DATED at Boise, ldaho, this 1sth day of August 2017 .
DONOVAN E. WALKER
Attomey for ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF.2
CERTIFICATE OF SERVICE
t HEREBY CERTIFY that on this 15th day of August 2017 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Camille Christen
Deputy Attomey General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
X Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
Christa Bearry, Lega Assistant
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BEFORE THE
IDAHO PUBLIG UTILITIES COMMISSION
GASE NO. IPC-E-17-12
IDAHO POWER COMPANY
ATTACHMENT 2
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221 West ldaho Street (83702\
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: (208) 388€936
dwalker@ idahopower. com
:" j I Pi,! ir: Lg
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF THE CAPACITY
DEFICIENCY TO BE UTILIZED FOR
AVOI DED COST CALCUIATIONS
CASE NO. IPC-E-17-12
IDAHO POWER COMPANY'S
RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
THE COMMISSION STAFF
COMES NOW, ldaho Power Company ("ldaho Power" or "Company"), and in
response to the Second Production Request of the Commission Staff to ldaho Power
dated August 31,2017, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMM]SSION STAFF - 1
)
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REQUEST NO. 2: Please provide and explain the major drivers causing the first
capacity deficiency date to move from the currently authorized date of July 2024 to July
2026 as proposed by the Company. Specifically, but not limited to:
a. Please explain why "Adjustments for EE Potential Study Forecast" in the
load resource balance is reduced from an average 161 MW for July peak months from
2024 through 2026 in the 2015lRP as compared to an average 18 MW in the 2017 lRP.
b. Please explain the drivers causing the difference in Market Purchase
availability/transmission import capacity in the load resource balance between the 2015
IRP and 2017 IRP for months July 2024, July 2025, and July 2026. As part of the
explanation, please describe the specific rationale for each driver and/or any changes in
assumptions between the 2015lRP and the 2017 lRP.
RESPONSE TO REQUEST NO. 2:
a. Prior to each lntegrated Resource Plan ("lRP"), ldaho Power contracts
with a third-pafi consultant to produce an Energy Efficiency Potential Study,
sometimes called a Conservation Potential Study ("CPA"). ln 2014 and 2016, the
Company contracted with Applied Energy Group ("AEG'). AEG's CPA analysis begins
by estimating loads by end use assuming no energy efficiency programs are offered by
ldaho Power. Each study is "re-based" at the beginning year of the study. lt is
assumed that energy efficiency's cumulative demand reduction (and cumulative energy
reduction) from previous years is embedded in the Company's load forecast. Because
of the re-basing of each study and the fact that the demand reduction is cumulative, the
load reduction from one study's calendar year to another study's calendar year is not
comparable. Additionally, the total energy efficiency peak reduction potential by month
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 2
is the sum of the Load Forecast-included EE (line 2) and the Adlustment for EE
Potential Study Forecast (line 4) from the 2017 IRP Peak-Hour Load and Resource
Balance analysis.
To compare the magnitude of estimated peak reduction from one CPA study to
another, planning years must be considered. For instance, July 2024-2026 (planning
years 8-10) in the 2017 study would be analogous to July 2022-2024 (planning years 8-
10) in the 2015 lRP. As shown in the table below, this comparison yields an average of
220 megawatts (.MW") of estimated cumulative peak load reduction from energy
efficiency in the 2015 IRP compared to an average of 192 MW of estimated peak load
reduction from energy efficiency in the 2017 lRP, a decrease of 28 MW.
Two primary drivers in the reduction of the achievable energy efficiency potential
from the 2015 study to the 2017 study were the lower demand-side management
alternate costs, primarily caused by a lower gas price forecast, and the impact of the
Energy lndependence and Security Act ("E|SA") on lighting standards affecting lighting
potential. EISA essentially removes most savings potential from energy efficiency
lighting in 2020 as efficient lighting becomes the standard. However, it should be noted
that while these may be drivers in the decrease in the estimated peak load reduction for
the years 2024-2026, AEG estimates the cumulative on-peak load reduction from the
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 3
ldaho Powefs 2017 IRP ldaho Poweds 2015 tRP
Planning July IRPyear Year
I 2924I 202510 292fi
Adjustment
for EE
Potential
Study
Forecast
{MW}
19
20
16
Load Forecast-
included EE
{MW}
149
172
199
Total
Total
{Mw)
168
192
213
575
192
Total
{MW}
169
239
251
65S
220
Non- ExistirE
Forecasted DSM
Planning Juty IRP trended EE (EElylear Year (MW) ([dW]
8 2022 86 83I 2023 125 11410 2024 134 117
Total
energy efficiency achievable potential will increase over the IRP 2}-year planning period
from473 MW in the 2015 lRPl to 483 MW in the 2017 lRP.2
b. The peak-hour load and resource balance for the 2015 and 2017 lRPs
contains the following values for the referenced line item:
2015 tRP 2017 IRP
239 MW July 2024 487 MW
261 MW July 2025 486 MW
257 MW July 2026 616 MW
Although the magnitude of the transmission capacity values appears to have
increased between the 2015 IRP and 2017 lRP, that is not the case. The apparent
differences are primarily a result in the assumptions included in each of the two lRPs
and the way the numbers are presented in the tables. Apart from these reasons, which
are discussed in detail below, the transmission capacity values are relatively
comparable.
For the 2017 lRP, the values shown on the line labeled "Transmission Capacity
Available for Market Purchases" include all the transmission capacity available for peak-
hour market purchases associated with the ldaho-Nevada path, the ldaho-Montana
path, and the ldaho-Northwest path. For the 2A15 lRP, the values contained only the
amount of transmission capacity available and needed to eliminate or reduce the pre-
marketpurchase deficit. For example, the transmission value for July 2024 shown in
the table in the 2015 IRP reflects only the amount of available transmission capacity
which was needed to eliminate the pre-market-purchase deficit, while the transmission
I IRP 2015, Appendix C, page 79.
2 IRP 2017, Appendix C, page 67.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 4
value for July 2024 in the 2017 IRP reflects all of the transmission capacity available at
the time.
Another significant component of the apparent variation between the numbers in
the two lRPs is that for the 2017 IRP analysis, the Company assumed that the
transmission capacity on the ldaho-Nevada path would be available for peak-hour
market purchases following ldaho Power's exit from coal-fired operations at North
Valmy Unit 1 year-end 2019 and North Valmy Unit 2 year-end 2025. The assumed
peak-hour generating capacity of North Valmy is 263 MW, split evenly between the two
units; thus, for the 2017 lRP, the exit from each North Valmy coal unit is assumed to
make available for peak-hour market purchases half of the 263 MW of transmission
capacity (approximately 131 MW for Ju$ 2A24 and July 2025 and 263 MW in July
2026). Discussion of the assumed peak-hour market purchases on the ldaho-Nevada
path is found on pages 68-69 of the 2017 lRP.
While the 2015 IRP preferred portfolio reflected ldaho Power's exit from coal-
fired operations at North Valmy year-end 2025, the Company's analysis did not include
an assumption that capacity on the ldaho-Nevada path would be available for peak-hour
market purchases in 2026.
Another component of the apparent variation between the transmission values
reflected in the 2015 and 2017 lRPs is that in ldaho Power's assessment of the regional
transmission interconnections for the 2017 lRP, the Company determined that an
additional 77 MW of transmission capacity on the ldaho-Montana path could be
assumed available for peak-hour market purchases in July 2024-2026. For the 2015
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
lRP, no transmission capacity on the ldaho-Montana path was included in the load and
resource balance.
The response to this Request is sponsored by Pete Pengilly, Customer Research
and Analysis Leader, ldaho Power Company, and Phil DeVol, Lead Planning Analyst,
ldaho Power Company.
DATED at Boise, ldaho, this 11th day of September 2017.
E. WALKER
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF.6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 11th day of September 2017 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF upon the following named
parties by the method indicated below, and addressed to the following:
ldahydro
C. Tom Arkoosh
ARKOOSH TAW OFFICES
802 West Bannock Street, Suite 900
P.O. Box 2900
Boise, ldaho 83701
X Hand Delivered
_U.S. Mail
_Overnight Mail
FAX
x Email camille.christen@puc. idaho.qqv
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
erin. ceci l@arkoosh. com
Christa Bea rry,Legal nt
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE COMMISSION STAFF - 7
Commission Staff
Camille Christen
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-0074
,4
1