20180105final_order_no_33957.pdf

Office of the Secretary
Service Date
January 5,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OÈ'THE ANNUAL )CASE NO.IPC-E-17-15
COMPLIANCE FILING OF IDAHO POWER )COMPANY TO UPDATE THE LOAD AND )ORDER NO.33957
GAS FORECASTS IN THE INCREMENTAL )COST INTEGRATED RESOURCE PLAN )AVOIDED COST MODEL )
Pursuant to the Public Utility Regulatory Policies Act of 1978 (PURPA)and the
implementing regulations of the Federal Energy Regulatory Commission (FERC),the Idaho
Public Utilities Commission (Commission)has approved an incremental cost Integrated
Resource Plan (IRP)methodology,and a Surrogate Avoided Resource (SAR)methodology to
calculate avoided cost rates paid to certain PURPA qualifying facilities (QFs).The avoided cost
rate is the purchase price paid to QFs for purchases of QF energy and capacity.
To ensure that avoided costs most accurately reflect utilities'true avoided cost,the
Commission has directed utilities to "update fuel price forecasts and load forecasts annually-
between IRP filings,"and to update the Commission about its "long-term contract commitments
because of [their]potential effect ...on a utility's load and resource balance."Order No.32697
at 22 (timing of filing changed from June 1 to October 15 of each year,in Order No.32802 at 3).
On October 13,2017,per the Commission's directives,Idaho Power Company filed its
annual updates for fuel prices and load forecast and information about new and expiring
contracts.The Commission issued a Notice of Application and Notice of Modified Procedure.
Order No.33925.Staff timely filed the only comments,and the Company did not reply.The
Commission now accepts and approves Idaho Power's filing.
COMPLIANCE FILING
Idaho Power provided its updated load forecast,natural gas forecast,and contract
information,explaining the information was incorporated into its IRP avoided cost model to be
used as the starting point for negotiation of its contractual avoided cost rates as of October 15,
2017.Filing at 2.Idaho Power provided the October 2017 and October 2016 average annual
load forecasts for years 2017 through 2034.Id.at 2-3.The updated load forecast "shows,on
average,an increase in [the Company's]customer loads when compared to the October 2016
load forecast."Id
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ORDER NO.33957
The Company's updated natural gas forecast is the Energy Information Administration's
(EIA)Natural Gas HenryHub Spot Price:High Oil and Gas Resource and Technology forecast,
published January 5,2017,which it used in its 2017 IRP process (adjusted for pricing at Sumas
and transport for Idaho City Gate delivery).Id at 4.The Company explained the 2017 forecast
shows "a decrease in the average annual natural gas prices over the remaining period"compared
to the 2016 forecast.Id at 4-5.
Idaho Power also summarized its contract terminations,expirations and additions since
its 2016 update.Id at 6-7 (see also Attachment 1 to Application).
Idaho Power asked the Commission to accept its updated load forecast,natural gas
forecast,and contract information.
STAFF COMMENTS
Staff reviewed the Company's filing and attachments.Staff found the Company's
updated load forecast to be reasonable.Staff Comments at 2.Staff also verified that the
Company's contract information updates were accurate.Id at 3.
Staff noted that the Company changed the natural gas forecast from its prior update,
which used the EIA's Natural Gas HenryHub Spot Price Reference Case,to the Henry Hub Spot
Price High Oil and Gas Resource and Technology Case.Id The Company's updated gas price
forecast reflects some of the lowest possible gas price forecasts,estimated to be in the 5 to 10
percentile range.See id at 3.Staff conceded "it is difficult to determine the accuracy of any
forecast,especially a forecast with a 20-year time horizon."Id In discovery,Idaho Power
asserted its choice of forecast is supported by future trading prices from the Intercontinental
Exchange (ICE).Id Staff reiterated its concern from comments on Idaho Power's IRP (which
the Commission has yet to acknowledge)(Case No.IPC-E-17-11),that the ICE transactions
"reflect the price for which today's market players are willing to buy and sell options over the
next seven years,rather than a reflection of actual future spot market prices over the 20-year
forecast period."Id Staff stated,"using a gas price forecast estimated to be in the 5 to 10
percentile range,reflecting some of the lowest possible gas price forecasts is in stark contrast to
the Company's water and load assumptions in the 70 to 95 percentile range,reflecting some of
the highest possible water and load conditions."Id Staff recommended accepting the
Company's proposed gas forecast,but urged the Company "to look closely at the assumptions
and caveats the EIA uses to develop the various gas price forecasts."Id
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ORDER NO.33957
Based on its review,Staff recommended the Commission approve the updated load
forecast,natural gas forecast,and long-term contracts to be used in the IRP methodology.Id.at
4.Staff also recommended,if the Company uses a different EIA forecast as its base forecast,it
"must justify the change including an examination of the underlyingassumptions that EIA or
other third party entities used to develop that forecast."Id.at 4.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over Idaho Power and the issues raised in this matter
under Title 61 of the Idaho Code and PURPA.The Commission has authority under PURPA
and FERC regulations to set avoided costs,to order electric utilities to enter into fixed-term
obligations for the purchase of energy from QFs,and to implement FERC rules.
Pursuant to this authority,we have reviewed and considered the record in this case,
including Idaho Power's filing and attachments and Staff's Comments.We find that the
Company's filing complies with the directives issued by this Commission in Order Nos.32697
and 32802.Based on our review,we accept the updated inputs to Idaho Power's IRP avoided
cost calculation for filing.We further find it appropriate,going forward,that if the Company
changes its EIA base forecast,it should provide a reasonable basis for such change.
ORDER
IT IS HEREBY ORDERED that Idaho Power's annual update to its load and gas price
forecast and long-term contract status for purposes of its incremental cost IRP methodology are
accepted,effective October 15,2017.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §61-626.
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ORDER NO.33957
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of January 2018.
PAU KJELLÃNÍÈR,PRESIDENT
KRIS ÏNE RAPER,CO MISSIONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
I \Legal\LORDERS\lPCEI715djhl_ORDER.doc
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ORDER NO.33957