20180619Comments.pdf

SIffi*.
JULIA A. HILTON
Senior Counsel
[e-mail]
JAH:csb
Enclosures
;'IECElVED
?tl8Jtjr* l9 PH L: ir9
An IDACORP Company
1221 W. ldaho 5t. (83702)
PO. Box 70
Boise, lD 83707
L
0f'l
June 19,2018
VIA HAND DELIVERY
Diane M. Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re Case No. IPC-E-17-16
Method of Recovery for Costs Associated with Participation in Energy
Imbalance Market - ldaho Power Company's Comments in Support of
Settlement Stipu lation
Dear Ms. Hanian:
Enclosed for filing in the above matter please find an origina! and seven (7) copies
of ldaho Power Company's Comments in Support of Settlement Stipulation.
Very truly yours,
Ju A
t
JULIA A. HILTON (lSB No. 7740)
ldaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
ihilton@idahopower. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
REC EIVED
i$if "1Ut{ l9 P}t tr: t+9
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER TO ESTABLISH A
METHOD OF RECOVERY FOR COSTS
ASSOCIATED WITH PARTICIPATION IN
THE WESTERN ENERGY IMBALANCE
MARKET
CASE NO. tPC-E-17-16
IDAHO POWER COMPANY'S
COMMENTS IN SUPPORT OF
SETTLEMENT STI PU LATION
)
)
)
)
)
)
)
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT STIPULATION - 1
I ,L'ii:il-lC
,-r.'1,,:'ilSSl0il
ldaho Power Company ("ldaho Power" or "Comp?ny"), by and through its
undersigned attorney, hereby submits to the ldaho Public Utilities Commission
("Commission") these Comments in the above-captioned proceeding. The Company's
Comments discuss the procedural history of the case, the agreed upon terms of the
Settlement Stipulation ("Stipulation") reached by all parties, and the public interest
benefits of the proposed Stipulation.
I. BACKGROUND
The California !ndependent System Operator ('CAISO') is the market operator of
the western Energy lmbalance Market ("ElM"), a five-minute market that uses an
automatic economic dispatch model to find and determine the least-cost energy
resources to serve real-time customer demand across a wide geographic area.
ldaho Power requested to defer the incrementa! operations and maintenance
("O&M") expenses associated with joining the western ElM, which was approved in Order
No. 33706, Case No. IPC-E-16-19. !n that order, the Commission concluded that the
Company's participation in the western EIM would provide an opportunity for benefits
greater than costs, thus a possibility of a net benefit to the Company's customers.
Additionally, the Commission found that it was reasonable and in the public interest for
the Company to join the western ElM. Order No. 33706 at 9.
While the Company did not request recovery of the incrementa! costs of
participation at that time, it indicated that it may be necessary to implement an interim
rate mechanism for cost recovery to provide proper matching of costs and benefits in
customer rates upon commencement of the Company's participation in the western ElM.
On November 14,2017, Idaho Power filed its Application in this case requesting
an order authorizing the Company to establish an interim method of recovery for costs
associated with participation in the western EIM through a temporary rate component in
Tariff Schedule 55, Power Cost Adjustment ("Schedule 55"). The proposed temporary
rate component was to be based on ldaho Power's annual estimate of the E|M-related,
ldaho-jurisdiction revenue requirement. The Application also included an EIM-related
adjustment to the Power Cost Adjustment ("PCA") forecast net power supply expenses
("NPSE"), a true-up to actual E|M-related revenue requirement, and a 1O-year
amortization of the upfront incremental O&M expenses approved for deferral in Order No.
33706.
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT STIPULATION - 2
On November 29, 2017 , the Commission issued an order providing notice of the
Application and setting a deadline for interventions. Order No. 33938. No petitions to
intervene were filed in this case.
On January 25,2018, the Commission issued an order providing notice of modified
procedure and establishing comment deadlines. Order No. 33970. Commission Staff
("Staff') conducted a review of the Company's filing. Staff issued, and the Company
responded, to 10 production requests.
On January 31 , 2018, Staff and ldaho Power met to discuss the Company's
Application and models prepared in support of the Application. Based on this discussion,
Staff and the Company ("Signing Parties") agreed to the terms and conditions set forth
herein as a compromise of their respective positions and for other considerations as set
forth below. On February 13, 2018, the Signing Parties notified the Commission of
settlement and requested the Commission vacate the comment schedule and stay further
discovery. On February 20, 2018, the Commission issued an order vacating the
schedule. Order No. 33989. After a second meeting on May 17, 2018, to finalize the
details of the Stipulation, on May 24, 2018, the parties filed the Stipulation with the
Commission.
II. TERMS OF THE SETTLEMENT STIPULATION
!n the Stipulation, the Signing Parties agreed to the following modifications to the
proposed recovery mechanism:
o ldaho Power will not include forecasted EIM participation costs or
benefits in the forecast component of its Schedule 55.
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT STIPULATION - 3
o ldaho Power will add a calculated E|M-related monthly revenue
requirement to its monthly PCA deferral calculation based on actual EIM participation
costs. Actual ElM-related benefits will be reflected in ldaho Power's actual monthly
NPSE.
. ldaho Power will add lines to its PCA deferral report to record its actual
monthly revenue requirement associated with EIM participation. ldaho Power will also
provide the detail showing the underlying revenue requirement calculation. The actual
EIM revenue requirement for April 2018 was provided as confidential Attachment 1 to the
Stipulation. ln future years, ldaho Power wil! use this method to recover the actual EIM
revenue requirement until these costs are included in base rates in a future filing.
o As of April 1, 2018, ldaho Power will cease deferring incremental EIM
participation O&M costs. lnstead, upon Commission approval of the Stipulation, the
Company will begin deferring the monthly revenue requirement associated with EIM
participation to the PCA deferral account.
o The EIM Regulatory Asset deferral account, approved in Order No.
33706, will be offset by a portion of the deferred tax non-cash reduction established
subsequent to Commission approva! of the settlement stipulation filed in GNR-U-18-01,
related to the U.S. Tax Cuts and Jobs Act, Order No. 34071 issued on May 31, 2018.
The entire EIM deferral amount will be offset in 2018, and was therefore not included in
confidentialAttachment 1 to the Stipulation.
o The EIM revenue requirement calculation will include rate base (return
on and return of) and operating costs incurred. The revenue requirement will be
recalculated monthly using actual balances and allocated to ldaho based on jurisdictional
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT STIPULATION - 4
allocation percentages determined in the Company's last general rate case. Amounts
associated with rate base will represent one-twelfth of the current month's annual revenue
requirement for those elements.
. Annual EIM benefits from each PCA year (April through March), as
reported in the CAISO Western EIM Benefits Report ("Benefits Report"), will be used to
set a soft cap forthe actual annual EIM revenue requirement included in the PCA deferral.
Any amount associated with the actual annual EIM revenue requirement that exceeds the
annual benefits from the Benefits Report will be identified by the Company in its annual
PCA filing. The Company's discussion of these costs will address the factors that led to
costs exceeding benefits over the PCA year, provide justification for these costs, and
include a comparison of the actual annual EIM costs from the PCA year to the original
cost estimate provided in Case No. IPC-E-16-19. The Company's filing will also provide
a proposal for recovery of any annual costs in excess of annual benefits.
. Except for Public Utility Regulatory Policies Act of 1978 expenses and
demand response incentive payments, the PCA allows the Company to pass through to
its customers 95 percent of the difference between actual NPSE and base level NPSE.
These accounts are referred to as "95 percent sharing accounts." EIM participation costs
will be treated in the same manner as costs included in the 95 percent sharing accounts,
with 95 percent of the EIM participation costs deferred for future recovery through the
PCA deferral.
. Amounts included in the new EIM participation cost section of the PCA
deferral report will be reviewed by Staff in conjunction with the normal annual review of
the PCA deferral.
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT STIPULATION .5
. EIM participation costs will continue to be reported as an element of
actual power supply costs on the PCA deferral report until such costs are transferred into
base rates in a future rate proceeding. .
o Upon approval by the Commission, the above provisions will be effective
as of the beginning of the April 2018 PCA deferral period.
III. SETTLEMENT IS FAIR, JUST, AND REASONABTE
AND IN THE PUBLIC INTEREST
ldaho Power supports the Stipulation in this case because it: (1) provides for a
reasonable resolution of ratemaking treatment of the incremental costs and benefits of
participation in the western EIM for the Company and customers; (2) offers timely
recognition and proper matching of the costs and benefits of ldaho Power's participation
in the western EIM by incorporating these amounts into the PCA deferral mechanism
effective April 2018, coincident with the Company's full participation in the western EIM;
and (3) achieves a result that limits the potential negative financial impact on the
Company and aligns with the Commission's decision in Case No. IPC-E-16-19.
A. Fair and Balanced Provision of Benefits to Customers.
The Stipulation in this case was developed through multiple discussions with Staff.
Through these discussions, the Signing Parties developed the Stipulation that results in
the costs and benefits being provided to customers in a manner that reasonably reflects
the actual changes to the Company's NPSE and revenue requirement resulting from its
participation in the western ElM. Additionally, the Stipulation allows for annual
Commission review of the EIM costs incurred and benefits received. Therefore, the future
rate impact resulting from the Stipulation is fair and balanced for both ldaho Power and
its customers.
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT STIPULATION - 6
B. Timelv Recoqnition of Benefits and Costs.
lf approved, the Stipulation will result in the timely recognition and proper matching
of benefits and costs in customer rates. These costs and benefits wil! be included in the
Company's PCA mechanism deferral calculation for the April 2018 to March 2019 PCA
year, with the deferrat balance at March 31,2019, requested for recovery beginning June
1,2019. This allows for the recovery of actual costs and the provision of benefits in
customer rates as soon as administratively feasible without requiring the use of estimates.
Additionally, the recognition of benefits commenced in April 2018, coincident with ldaho
Power's entry into the ElM. The proposed interim rate mechanism provides proper
matching of costs and benefits in customer rates.
C. Limited Nesative lmpact to ldaho Power CoLrstslent with Qase l{o.
tPc-E-16-19.
lf approved, as is consistent with the Commission's reasoning and order in Case
No. IPC-E-16-19, the Stipulation will limit negative impacts on ldaho Power resulting from
its participation in the western ElM. As discussed in that case, under current regulatory
practices, most of the benefits of reduced NPSE (95 percent of the ldaho jurisdictional
share) that occur due to ldaho Power's participation in the EIM will automatically flow
directly to customers through the PCA mechanism. Aligning the recovery of the additional
costs associated with EIM participation with the benefits of EIM participation and applying
the same 95 percent sharing ratio is consistent with the Commission's reasoning in Case
No. IPC-E-16-19 and limits the negative impacts of the costs on the Company's results of
operations and cash flows. Thus, the ratemaking treatment proposed in the Stipulation
provides reasonable support for ldaho Power's decision to join the western EIM to obtain
benefits for customers in the form of reduced NSPE.
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT STIPULATION - 7
IV. CONCLUSION
ldaho Power believes the terms agreed to in the Stipulation represent a
compromise of the respective positions of the Signing Parties, balancing the interest of
customers and ldaho Power by providing the benefits and costs of EIM participation to
customers and ldaho Power in a reasonable manner.
For all the reasons presented in these Comments, ldaho Power urges the
Commission to adopt the Stipulation submitted in this proceeding as filed, without
modification, and to issue an order authorizing the terms of the Stipulation. The Company
respectfully requests that the Commission issue an order on or before June 29,2018,
authorizing the terms of the Stipulation.
DATED at Boise, ldaho, this 19th day of June 2018.
LIA A.HI TON
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT STIPULATION - 8
(
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 19th day of June 20181 served a true and correct
copy of IDAHO POWER COMPANY'S COMMENTS lN SUPPORT OF SETTLEMENT
STIPULATION upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Brandon Karpen
Deputy Attorney General
ldaho Public Utilities Commission
47 2 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
X Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
Christa Bearry, Legal
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT STIPULATION - 9