20171027Decision Memo.pdf

DECISION MEMORANDI.,M
TO:COMMISSIONER KJELLANDER
COMMISSIOI\TER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:CAMILLE CHRISTEN
DEPUTY ATTORNEY GENERAL
DATE: OCTOBER 26,2017
SUBJECT:THE ANNUAL COMPLIANCE FILING OT IDAHO POWER COMPATTIYTO UPDATE THE LOAI} AND GAS FORECASTS IN TTTE
INCREMENTAL COST INTEGRATED RESOURCE PLAN AVOIDED
COST MODEL; CASE NO. IPC-E-17-15.
On October 13, 2AlT,Idaho Power Company made a filing with the Commission to
update the load forecas! natural gas forecast, and contract information components of the
incremental cost Integrated Resource Plan (lRP) avoided cost methodology for qualifying
facilities (QF) under the Public Utility Regulatory Policies Act (PURPA). Application at I.
Idaho Power indicates that the filing is in compliance with Order Nos. 32697 and32802. ld.
BACKGROTJND
Under PUPJA, electric utilities must purchase electric energy from quali$ing facilities
(Qf$ at rates approved by ttre applicable state agency-in ldaho, this Comrnission. l6 U.S.C. $
824a-3; Idaho Power Co. v. Idaho PUC, 155 ldaho 780, 780, 316 P.3d 1278, 1287 (2013). The
purchase or "avoided cost" rate shall not exceed the "'incremental cost' to the purchasing utility
of power which, but for the purchase of power from the QF, such utility would either generate
itself or purchase from another source." Order No. 32697 at7, citing Rosebud Enlerprises v.
Idaho PUC,l28 ldaho 624,917 P.zd 781 (1996); 18 C.F.R $ 292.101(bX6Xdefining "avoided
cost").
The Commission has established two methods of calculating avoided cost, depending on
the size of the QF project: (l) the surrogate avoided resource (SAR) methodology, and (2) the
IRP methodology. See Order No. 32697 at 7-8. The Commission uses the SAR methodology to
IDECISION MEMORANDUM
establish what is comrnonly referred to as "published" avoided cost rates. /d. Published rates are
available for wind and solar QFsr with a design capacity of up to 100 kilowatts Gqf), and for
QFsof all otherresourcetypeswithadesigncapacityof upto l0averagemegawatts(aM$|.
For QFs with a design capacity above the published rate eligibility caps, avoided eost rates are
"individually negotiated by the QF and the utility using the IRP rnethodology]." Id. atl; Order
No. 32175. The IRP methodology "takes into account many different variables and produces a[n
avoided costJ result based on each individual utility's need for energy." Order No. 32697 at 17.
The IRP rnethodology's variables are at issue here.
The Commission stated 'ltilities must update fuel price forecasts and load forecasts
annually-between IRP filings We find it reasonable that all other variables and
assumptions utilized within the IRP Methodology remain fixed between IRP filings (every tw'o
years)." Id. at 22. The Commission directed that the update to firel price forecasts and load
forecasts should occur on October 15 of each year. Order No. 32802 at 3. The Commission also
found it appropriate to consider long-term contract commitments, as well as PURPA conmcts
that have terminated or expired, in the utility's load and resource balance. Order No. 32697 at
22.
TTIE APPLICATION
Idaho Power provides its updated load forecast, natural gas forecast, and contract
information, and explains that the information has been incorporated into Idaho Power's IRP
avoided cost model and that the model will be used the starting point for the negotiation of its
contractual avoided cost rates as of October 15, 2017. Application at 2.
Idaho Power's updated load forecast is from October 2017 and "shows, on average, an
increase in its customer loads when compared to the October 2016 load forecast that was
provided to the Commission for the 2016 update in Case No. IPC-E-16-22 and approved by the
Commission in Order No. 33646." Id. at 2-3. Idaho Power provides both the October 2017 and
the October 2016 average annual load forecasts for years 2017 through2034. Id. at3.
Idaho Power's updated natural gas forecast is the Energy Information Administration's
(EIA) Natural Cas Henry Hub Spot Price: High Oil and Gas Resource and Technology forecast,
published on January 5,2017. Id. at 4. Idaho Power uses the same forecas! adjusted for pricing
at Sumas and transport for ldaho Ciry Gate delivery, in its 2017 IRP process. Id. In the 2016
I See Order No. 33785 (regarding battery storage facilities).
2DECISION MEMORANDUM
update, ldaho Power used the EIA Reference Case forecast for Natr,ral Gas Henry Hub Spot
Price. Id. The Company explains that the 2017 forecast shows "a deuease in the average
annual natural gas prices over tlte remaining period" in comparison to the 2016 forecast. Id. at 4-
5. Idaho Power provides both the 2017 and the 2016 forccasts for years 2017 through2014. ld.
at 5.
Finally, Idaho Power summarizes the contract termination, expiration and additions it has
experienced since its 2016 update. Id. at 6-7 . The Company provides the new, terminated, or
expired contracts in Attachment 1 to the Application. /d.
Idaho Power asks the Commission lo accept for filing its updated load forecast, natural
gas forecast and contract information.
STAFF RECOMMENDATION
Staff recommends that the Cornmission issue a Notice of Application and Notice of
Modified Procedure, with comments due December 7,2017 and reply comments, if any, due
December 21,2017. The Company did not objcct to this proposed schedulc.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and a Notice of Modified
Procedure, with comments due December 7,2017 and reply comments, if any, due December 21,
20t7?
C*r,il& U^"^**
Camille Cbristen
Deputy Attorney General
I [cgol\LMEMOSI|PCElTlS-ccl-.dccr:ioo memo-nor of spp.doc
DECISION MEMORANDUM