20171124Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER ITAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DAPHNE HUANG
DBPUTY ATTORNEY GENERAL
DATE: NOVEMBER 20,2017
SUBJECT:THE APPLICATION OF IDAHO POWER COMPANY TO ESTABLISH A
METHOD OF RECOVERY FOR COSTS ASSOCIATED WITH
PARTICIPATION IN THE WOSTERN ENERGY IMBALANCE
MARKOT, CASE NO. IPC-E-I7-I6.
On November 14,2017, Idaho Power Company applied to the Commission for an Order
authorizing the Company to establish an interim method of recovery of costs associated with
participation in the western Energy lmbalance Market (EIM) through a temporary rate
component in TariffSchedule 55, the Power Cost Adjustment. Application at l. Thc Company
asks that the Application be processed by Modified Procedure and requests & case schedule that
would allow for an order to be issued on or before March 3l, 2018. Id. at 6.
BACKGROUNI)
In November2Al4, the California Independent System Operator (CAISO) and PacifiCorp
formed the western EIM. The westem EIM is a five-minute market administered by CAISO.
The market utilizes an automatic model to identi$ the least-cost energy resources to serve real-
time customer demand. The wcstern EIM "focuses solely on real-time imbalances and allows
EIM entities to retain all balancing responsibilities and transmission provider duties." Id. at 2.
EIM participants bid resources into the market and the operator dispatches those resources based
on the marginal price for energy imbalances factoring in load, available generation, and
transmission congestion. ld. Idaho Power plans to begin participating in the western EIM in
April 2018. Id. EIM participants by that time will include PacifiCorp, the California
Independent System Operation (CAIS0), NV Energy, Inc., Arizona Public Service Company,
Portland General Electric Company, and Powerex Corp. /d.
1DECISION MEMORANDUM
In a previous case, Case No. IPC-E-16-19, the Company sought to defer costs related to
joining the EIM in a regulatory asset until they could be amortized into rates after the Company's
EIM participation begins. Order No. 33706 at 2. The Commission found that the Company's
EIM participation "would provide an opportunity for benefits grcater lhan costs" and thus the
possibility of a net bcnefit to customers. Id. at 9. The Commission concluded 'that the
Company's joining the EIM is reasonable and in the public interest." Id. The Commission
authorized ldaho Power to track the incrcmental operations and maintenance (O&M) expenses of
joining the EIM in a deferral account with a ten-year amortization period. /d. at I l.
THE APPLICATION
Idaho Power now "seeks authorization to establish an interim method of recovery for the
incremental costs associated with joining the EIM." Id. at 3. Specifically, the Compury
proposes to include the revenue requirement associated with the incremental costs of EIM
participation as a tcmporary rate component in Tariff Schedule 55, the Power Cost Adjustment,
until these costs and benefits can be reflected in base ntes. Id. According to Idalro Power, this
will allow it to "more closely rnatch the timing of benefrts and costs of participation" in the EIM,
and "allows for administrative efficiencies and utilizes the same tariff schedule that ElM-related
benefits will ultimately be reflected in." /d.
STAFT'RECOMMENDATION
Staff recommends that the Commission issuc a Notice of Application and set a l4day
deadlinc for petitions to intervene, affer which Staff would confer with parties about a schedule
for processing the case.
COMMISSION DICISION
Does the Commission wish to issue a Notice of Application and Order setting a l4day
deadlinc for petitions to intervene?
Deputy Attorney
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DECISION MEMORANDUM 2