20180619Comments.pdf

BRANDON KARPEN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
IDAHO BAR NO. 7956
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.
RECEIVED
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. IPC-8.I7-I6
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission submit the following
comments in Case No. IPC-E-17-16.
BACKGROUND
In November 2014, the California Independent System Operator (CAISO) and PacifiCorp
formed the western Energy Imbalance Market ("EIM"). The westem EIM is a five-minute
market that uses an automatic model to identify the least-cost energy resources to serve real-time
customer demand. By way of summary, 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. According to the Company, the
western EIM "allows EIM entities to retain all balancing responsibilities and transmission
provider duties." See Application at 2. Idaho Power began participating in the western EIM in
April 2018. At that time, EIM participants included CAISO, PacifiCorp, NV Energy, Inc.,
Arizona Public Service Company, Portland General Electric, and Powerex Corp.
ISTAFF COMMENTS JI.INE T9,2OI8
In Case No. IPC-E-16-19, the Commission found that the Company's EIM participation
"would provide an opportunity for benefits greater than costs" and possibly provide a net benefit
to customers. Order No. 33706. The Commission authorized the Company to track the
incremental operations and maintenance (O&M) costs ofjoining the EIM in a deferral account
with a ten-year amortization period. Id. at 1 1.
In its Application, the Company requested an Order authorizing the Company to establish
an interim method to recover costs associated with participation in the EIM through a temporary
rate component in Tariff Schedule 55, the Power Cost Adjustment. Application at l. On
February 13,2018, Staff notified the Commission that it had reached a settlement in principal
with the Company. On May 24,2018, the Company filed a settlement stipulation, and requested
approval by June 29,2018.
STAFF REVIEW
In the Company's Application, it proposed a methodology for cost recovery that uses a
series of estimated costs and true-ups that would take two PCA cycles before the estimates are
fully adjusted to actuals. Staff believes that using estimates is an onerous process. Using actual
expenses accomplishes the same result - recovery of the prudently incurred EIM operating and
maintenance costs. Staff believes it is better to work with actual costs. Staff met with the
Company in January and proposed using actual costs rather than estimates. The Settlement
Stipulation is the result of that collaboration.
The Stipulation
The proposed recovery method in settlement eliminates the need to forecast EIM
participation costs by using actual costs. Because the Company has a deferral mechanism for
power supply costs in the PCA, EIM benefits will automatically flow into the PCA deferral
accounts. The Settlement Stipulation allows participation costs to be recovered at 95o/o,the same
percentage as benefits are included.
EIM Participation Cost Recovery
Item 8 of the Settlement Stipulation sets out the key provisions related to EIM
participation cost recovery as summarized below:
2STAFF COMMENTS JUNE I9,2OI8
a Idaho Power will not include forecasted EIM participation costs or benefits in the
forecast component of its Schedule 55, as proposed in its Application. Rather, the
Company will add a calculated ElM-related monthly revenue requirement to its
monthly Power Cost Adjustment deferral calculation based on actual EIM
participation costs;
Actual ElM-related benefits will be reflected in Idaho Power's monthly net power
supply expenses;
As of April1,2018, the Company will cease deferring incremental EIM
participation operations and maintenance start-up costs and will begin deferring
the monthly revenue requirement associated with EIM participation to the PCA
deferral account;
A portion of the deferred tax non-cash reduction approved by the Commission in
Order No. 34071 will be used to offset the EIM Regulatory Asset account. The
entire EIM deferral amount will be offset in 2018;
The EIM revenue requirement calculation will include rate base (return on and
return of) and operations costs incurred; and
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.
The Company and Staff have agreed to include the actual EIM participation costs in the
monthly Power Cost Adjustment deferral calculation. EIM benefits will be reflected in Idaho
Power's actual net power supply expenses that are included in the Power Cost Adjustment
monthly deferral. With the methodology in the Settlement, actual costs will be matched with
actual benefits of participation. Actual costs can be verified, and will not require estimates that
need to be trued up at a later date. The Settlement will allow Staff to review EIM costs and
benefits during the annual review of the PCA defenal mechanism.
Staff and the Company agree that the annual EIM benefits, as reported in the CAISO
Western EIM Benefits Report will be used to set a soft cap for the actual annual EIM revenue
requirement included in the PCA deferral. Any actual amounts that exceed benefits on an annual
basis will be identified in the annual PCA filing. The Company will have an opportunity to
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JSTAFF COMMENTS JUNE 19,2078
justiff these excess costs and, if determined to be prudent by the Commission, will have an
opportunity to recover those costs in excess of benefits. All costs will be reviewed annually, and
excess costs must be found to be prudently incurred prior to recovery from customers. In
addition the Company has been directed to provide a report to the Commission after one year of
EIM participation describing the costs and benehts of participation. Order No. 33706.
Deferral Balance
The Commission authorized a deferral account to track the incremental O&M expenses
associated with joining the EIM. Id. In Case No. GNR-U-18-01, Idaho Power was authorizedto
offset the EIM O&M deferral balance using funds from federal tax cuts. Order No. 34071.
As part of the audit process, Staff will review the deferral balance for accuracy and
prudency. Staff recommends the Commission order completion of this audit and that Staff verify
the final accounting entries offsetting the deferred costs.
RECOMMENDATIONS
Staff recommends that the Commission approve the Settlement Stipulation as filed.
Respectfully submitted this LTL day of June 2018
Deputy Attorney General
Technical Staff: Kathy Stockton
Rachelle Farnsworth
Michael Eldred
4STAFF COMMENTS JUNE 19,2OI8
I
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19th DAY OF JI.]NE 2018,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-17-76, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
JULIA A HILTON
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOrSE rD 83707-0070
E-mail : j hilton@idahopower. com
dockets@idahopower. com
TAMI WHITE
IDAHO POWER COMPANY
PO BOX 70
BOrSE rD 83707-0070
E-mail : [e-mail]
SECRE Y
CERTIFICATE OF SERVICE