20181026Decision Memo.pdf

DECISION MEMORANDUM
TO COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:EDITH PACILLO
DEPUTY ATTORNEY GENERAL
DATE: OCTOBER 25, 2018
SUBJECT:THE ANNUAL COMPLIANCE FILING OF IDAHO POWER COMPANYTO UPDATE THE LOAD AND GAS FORECASTS IN THE
INCREMENTAL COST INTEGRATED RESOURCE PLAN AVOIDED
COST MODEL; CASE NO. IPC-E-I8-13.
On October 15,2018, Idaho Power Company filed updated load and natural gas forecasts
and contract information for the incremental cost Integrated Resource Plan (lRP) avoided cost
method for qualifying facilities (QF) under the Public Utility Regulatory Policies Act (PURPA).
Application at 1. Idaho Power indicates that the filing complies with Order Nos. 32697 and32802.
rd.
BACKGROUND
Under PURPA, electric utilities must purchase electric energy from qualifying facilities
(QFs) at rates approved by the applicable state agency-in ldaho, this Commission. 16 U.S.C. $
824a-3; Idaho Power Co. v. Idaho PUC,l55 Idaho 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 Enterprises v. Idaho
PUC,128 Idaho 624,917 P.2d78l (1996); l8 C.F.R. 5292.101(bX6) (defining "avoided cost").
The Commission uses two methods to calculate avoided cost, depending on the size of the
QF project: (l) the surrogate avoided resource (SAR) method, and (2) the IRP method. See Order
No. 32697 at7-8. The Commission uses the SAR method to establish "published" avoided cost
IDECISION MEMORANDUM
rates. Id. Published rates are available for wind and solar QFsl with a design capacity of up to
100 kilowatts (kW), and for QFs of all other resource types rvith a design capacity of up to l0
average megawatts (aMW). For QFs with a design capacity above the published rate eligibility
caps, avoided cost rates are "individually negotiated by the QF and the utility using the IIRP
method]." Id.at2;OrderNo.32lT6.ThelRPmethod"takesintoaccountmanydifferentvariables
and produces a[n avoided cost] result based on each individual utility's need for energy." Order
No. 32697 at 17. The IRP method's variables are at issue here.
The Commission stated, "utilities 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 two years)." Id. at
22. The Commission directed that the update to fuel 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 contracts that have
terminated or expired, in the utility's load and resource balance. Order No.32697 at22.
THE 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 as the starting point for the negotiation of its
contractual avoided cost rates as of October 15,2018. Application at 2.
Idaho Power's updated load forecast is from October 2018 and "shows, on average, a
decrease in its customer loads when compared to the October 2011 load forecast that was provided
to the Commission for the 2017 update in Case No. IPC-E- 17 -15 and approved by the Commission
in Order No. 33957." Id. ar2-3. Idaho Power provides both the October 2017 and the October
2018 average annual load forecasts for years 2018 through 2036. Id. at3.
Idaho Power's updated natural gas forecast is the Energy Information Administration's
(EIA) Natural Gas Henry Hub Spot Price: High Oil and Gas Resource and Technology forecast,
published on February 6,2018. Id. at 4. Idaho Power uses the same forecast, adjusted for pricing
at Sumas and transport for Idaho City Gate delivery, in its 2018lRP process. Id. lnthe2017
update, Idaho Power used the EIA Reference Case forecast for Natural Gas Henry Hub Spot Price.
Id. The Company explains that the 2017 forecast shows "a decrease in the average annual natural
I See Order No. 33785 (regarding battery storage facilities).
2DE,CISION MEMORANDUM
gas prices over the remaining period" compared to the 2017 forecast. Id. at4-5. Idaho Power
provides both the 2017 and the 2018 forecasts for years 2018 through2036. Id. at 5.
Finally, Idaho Power summarizes the contract termination, expiration and additions it has
experienced since its 2017 update. Id. at 5-6. The Company provides the new, terminated, or
expired contracts in Attachment 1 to the Applicatron. Id.
Idaho Power asks the Commission to accept for filing its updated load forecast, natural gas
forecast, and contract information.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Application and Notice of
Modified Procedure, with comments due November 27th,2078 and reply comments, if any, due
December 4rh,2018. The Company did not object to this proposed schedule.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and a Notice of Modified
Procedure, with comments due November 27th, 2018 and reply comments, if any, due December
4th,2ol9?
Pacillo
Deputy Attomey General
l:\Legal\ELECTRIC\IPC-E- I 8- I 3\memoslPC-E- I 8- I I decision memo_not of app docx
aJDE,CISION MEMORANDUM