20191106Comments.pdf

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November6,2019
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, ldaho 83714
Re Case No. IPC-E-18-15
Study of Costs, Benefits, and Compensation of Net Excess Energy Supplied
by Customer On-Site Generation
ldaho Power Company's Comments in Support of Settlement
Dear Ms. Hanian
Enclosed for filing in the above matter please find an original and seven (7) copies
of ldaho Power Company's Comments in Support of Settlement in the above matter. The
enclosed disk contains the workpapers described in Attachment 1 to the Comments. While
the parties will have access to the workpapers that have been uploaded to the FTP site,
ldaho Power will provide the executable Excel files contained in these workpapers to
members of the public upon request.
lf you have any questions about the enclosed documents, please do not hesitate to
contact me.
Very truly yours,
Lisa D Nordstrom
LDN.KKt
Enclosures
An TDACORP Company
LISA D. NORDSTROM
Lead Counsel
[e-mail]
X*-Q:1*n r*-,^-,
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
RECEIVED
lll! ll0Y -6 Pl{ !: 37
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION TO STUDY
THE COSTS, BENEFITS, AND
COMPENSATION OF NET EXCESS
ENERGY SUPPLIED BY CUSTOMER ON-
SITE GENERATION.
oASE NO. |PC-E-18-15
IDAHO POWER COMPANY'S
COMMENTS IN SUPPORT OF
SETTLEMENT
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ldaho Power Company ("ldaho Power" or "Company"), by and through its
undersigned attorney, hereby submits to the ldaho Public Utilities Commission
("Commission") these comments in support of the proposed Motion to Approve
Settlement Agreement and Settlement Agreement submitted in the above-captioned
proceeding on October 1 1 , 2019 ("Settlement Agreement"). The Company believes that
the proposed Settlement Agreement represents a reasonable compromise of the issues
raised by parties and that Commission approval of the Agreement is in the public interest.
The Company and parties participated in eight confldential settlement meetings to discuss
issues related to the costs and benefits of customer-generation on ldaho Power's system,
proper rates and rate design, transitional rates, and related issues of compensation for
net excess energy provided as a resource to the Company. Over the course of those
meetings, the Company and parties collaboratively worked through each issue to
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT - ,1
LISA D. NORDSTROM (lSB No.5733)
ldaho Power Company
1221 West ldaho Street (83702)
P O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
determine where areas of compromise were reasonably achieved. The results of those
discussions and ultimate compromise are presented in the Settlement Agreement filed by
the Company and the Commission Staff on October 11,2019.
The Company presents the following comments in support of the Settlement
Agreement as follows:
Section I - provides procedural background;
Section ll - summarizes the Company's position on the issues absent settlement;
Section lll - provides an overview of the Settlement Agreement and the
Company's rationale for agreeing to its key terms; and
Section lV - summarizes why the Settlement Agreement is fair, just and
reasonable, and in the public interest.
I. PROCEDURALBACKGROUND
A. Case No. IPC-E-17-13
ln Case No. IPC-E-17-13, ldaho Power explained that the rates charged to net
metering customers were not designed to reflect the value of the service being provided
to them and that the inaccuracies in pricing could result in cost shifting between customers
who choose to rnstall on-site generation and those who do not. ldaho Power asked to
first establish new customer classes for Residential and Small General Service
("R&SGS') customers with on-site generation and then to subsequently establish a
compensation structure for customers with on-site generation to ensure that ldaho
Power's service offering for customers with on-site generation was fair-priced, scalable,
and sustainable into the future.
ln Order No. 34046, the Commission closed Schedule 84 to R&SGS customers
with on-site generation and created new tariff Schedule 6, Residential Service On-Site
Generation, and new tariff Schedule 8, Small General Service On-Site Generation. The
IDAHO POWER COMPANY'S COIVMENTS IN SUPPORT OF SETTLEMENT.2
Commission also ordered ldaho Power to initiate a docket to comprehensively study the
costs and benefits of on-site generation on ldaho Power's system, as well as proper rates
and rate design, transitional rates, and related issues of compensation for net excess
energy provided as a resource to the Company. Order No. 34046 at 31.
B. Case No. IPC-E-18-15
As directed by Order No. 34046, on October 19, 2018, ldaho Powerfiled a Petition
("Petition") requesting that the Commission initiate the instant docket. On November 9,
2018, the Commission issued a Notice of Petition and Notice of lntervention Deadline in
Order No. 34189, noticing the public and setting forth a deadline for intervention 21 days
from its issuance. Petitions to lntervene were filed by the ldaho Conservation League,
ldaho lrrigation Pumpers Association, ldaho Hydroelectric Power Producers Trust
("ldaHydro"), Rocky Mountain Power, Vote Solar, City of Boise, ldaho Clean Energy
Association, ldaho Sierra Club, Snake River Alliance, NW Energy Coalition, Micron
Technology lnc., the lndustrial Customers of ldaho Power, and Russell Schiermeier.
Snake River Alliance subsequently withdrew as an intervening party
Parties met on January 9, 2019, for a prehearing conference and subsequently
held eight settlement conferences that resulted in the following settlement of issues
related to the Company's Petition in this docket. Commission Staff and ldaho Power
jointly filed a Motion to Approve Settlement Agreement and corresponding Settlement
Agreement on October 11,2019. All parties to the proceeding agreed to either sign the
Settlement Agreement or to not oppose the Settlement Agreement. The Settlement
Agreement was signed by the Company, Commission Staff, ldaho lrrigation Pumpers
Association, lnc., ldaHydro, City of Boise, ldaho Sierra Club, ldaho Clean Energy
Association, lndustrial Customers of ldaho Power, and Russell Schiermeier, hereafter
referred to jointly as "Signing Parties."
IDAHO POWER COMPANY'S COMI\4ENTS IN SUPPORT OF SETTLEMENT - 3
On October 17, 2019, the Commission issued a Notice of Motion to Approve
Settlement Agreement, a Notice of Briefing, and a Notice of Schedule in Order No. 34460,
establishing a comment deadline on the proposed Settlement Agreement of November
1 , 2019. These Comments in support of the Settlement Agreement are filed in response
to this Order,
II. SUMMARY OF IDAHO POWER'S POSITION ABSENT SETTLEMENT
The combination of the billing and compensation structure applicable to R&SGS
customers (net monthly billing) and the existing rate design creates the potential for an
under-recovery of fixed costs from the on-site generation customers, ultimately resulting
in cost shifting to other R&SGS customers. Absent a settlement, the Company's
advocacy would include: (1) modifying the rate design to separate the cost of the energy
generated from the cost of fixed and other reliability related services, (2) shortening the
measurement interval of consumption and exports to increase the accuracy and separate
the measurement of the usage of the grid services from the amount of exported energy,
and (3) compensating exported energy at a rate that reflects the Company's avoided
costs.
III. SETTLEMENT AGREEMENT
The terms of the Settlement Agreement filed October 11, 2019, represent a
reasonable compromise among differing points of view. As evidenced by the arguments
made in Case No. IPC-E-17-13, considerable disagreement initially existed between the
parties. Concessions were made by each of the Signing Parties to strike an appropriate
balance between the interests of the Company, its customers, and the Settlement
Agreement signatories.
A. Rate Desiqn and Rate Stabilitv
Section lV. F. of the Settlement Agreement provides that:
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEI\4ENT - 4
Except for the biennial updates to the Export Credit Rate
according to the methodology established in this Agreement,
ldaho Power will not propose to modify rates or rate design
for customers on Schedule 6 or Schedule 8 until the next
proceeding in which the Commission determines whether to
change rates or rate designs for all customer classes.
ldaho Power believes modifying the rate design applicable to customers with on-
site generation is necessary to better align revenue collection with the assignment of
costs and to reduce intra-class subsidies. As part of a compromise to reach settlement,
and as a compromise position, the Company acknowledges that Case No. IPC-E-18-16
and future rate proceedings provide an opportunity for parties to present positions related
to rate design and spread of fixed costs for the Commission's consideration. The Signing
Parties agreed that the Company would not file a case seeking to modify rates for only
Schedule 6 and I customers, but that any proposed rate design changes would be part
of a broader case that evaluated rate design for all customer classes.
B. Net Hourly Billinq
ln Section lV.A. of the Settlement Agreement, the Signing Parties agreed to
implement Net Hourly Billing, where "at the end of each hour, consumption and exports
within the hour will be netted and net hourly exports will be compensated at the Export
Credit Rate."
The current net metering billing construct allows customers to use the excess
generation from any hour to offset consumption from any other hour within the billing
month. Any excess generation remaining at the end of the billing period can then be
carried-forward to offset consumption in subsequent months. Shortening the interval for
offset is a more accurate representation of the customer use of the grid. While the
Company's meters and billing system are capable of separately recording all deliveries of
energy and all receipts of exported energy instantaneously, as a compromise position, the
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT. 5
Company agreed to implement netting on an hourly basis as part of the settlement in the
case
C. Value-Based Export Rate
ln Section LB. of the Settlement Agreement, the Signing Parties agreed the initial
methodology to determine the export credit would be comprised of three primary
components:
1. Avoided Enerqv Value is the two-year levelized energy-
weighted average of the Demand-Side Management
(.DSM') Alternate Cost obtained from the pricing periods
set forth in the most recently acknowledged lntegrated
Resource Plan ("lRP") calculated as the summation of the
product of hourly energy exports and the DSM price
divided by Total Annual Energy Exports for the class. The
energy value will be decreased by 10 percent to reflect the
non-firm nature of the energy provided by on-site
generators.
2. Avoided Capacitv Value will be the product of the DSM
Capacity Resource Value, Nameplate Capacity, and the
Peak Contribution Factor divided by the Total Annual
Energy Exports. The 25-year levelized cost calculation will
not include any avoided capacity cost recognition until the
first capacity deficit year most recently approved by the
Comm ission.
3. Avoided Transmission & Distrib &D"Lin L ES
are included to reflect the avoidance of transmission and
primary distribution level line losses.
The Company believes that the value customers are compensated for their excess
energy should reflect those costs avoided when customers export excess energy to the
grid. While the Company initially presented a non-firm market-based rate, adjusted for
line losses, avoided T&D capacity, and integration costs, in an effort to reach
compromise, the Company ultimately agreed to an export credit rate methodology that
utilizes the same basis for avoided energy and capacity as is used to determine cost-
effectiveness of energy efficiency, adjusted to account for line losses and to reflect the
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT.6
non-firm nature of the energy provided by the on-site generators. The workpapers
supporting calculation of the Settlement Agreement's Export Credit Rate can be found in
Attachment 1. The Signing Parties agreed that other costs and benefits (avoided T&D
capacity, integration costs, and environmental benefits) may be measurable, but agreed
not to include those costs or benefits as part of the Settlement Agreement.
D. Export Credit Rate Expense
During the transition period, as described in Section lV.E. of the Settlement
Agreement, the difference between the Export Credit Rate and the Blended Base Energy
Rate will be collected through the Fixed Cost Adjustment ("FCA"). After the transition
period, the Export Credit Rate will be recovered 100 percent through the Power Cost
Adjustment ('PCA').
The Signing Parties agreed that the Export Credit Rate expense is appropriately
collected through the Company's PCA mechanism. Because Signing Parties agreed to
the transition period described in the following paragraph, the Signing Parties agreed that
compensation for exported energy in excess of the Export Credit Rate should continue to
be collected through the Company's FCA mechanism to minimize cost shifting to other
customer classes.
E. Transition Period
Section lV.G. of the Settlement Agreement provides for an 8-year transition period
from each class-specific Blended Base Energy Rate to the class-specific Export Credit
Rate, with an update occurring every two years concurrent with the Company's IRP cycle
(as outlined in Section lV.C. of the Settlement Agreement).
The Company's initial position included immediate implementation of a value-
based Export Credit Rate. However, ldaho Power is sensitive to those investments made
by R&SGS customers under the existing net metering billing conshuct and believes a
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT - 7
transition period applicable to all R&SGS customers is a reasonable way to mitigate the
negative financial impact a Residential or Small General Service customer may
experience from transitioning from net metering to net hourly billing.
IV. SETTLEMENT IS FAIR. JUST. AND REASONABLE
AND IN THE PUBLIC INTEREST
The Company believes that the proposed Settlement Agreement is a reasonable
resolution of the complex issues it addresses and is in the public interest. The Company
would like to acknowledge its appreciation for the willingness by the Commission Staff
and other parties to consider and discuss the merits of the Company's position and to
reach mutually agreeable terms for the Settlement Agreement.
For all the reasons presented in these comments, ldaho Power urges the
Commission to adopt the Settlement Agreement submitted in this proceeding as filed,
without modification, and to issue an order authorizing the terms of the Settlement
Agreement.
DATED at Boise, ldaho, this 6th day of November 2019.
D. NO D OM
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT . 8
L SA
CERTIFICATE OF SERVICE
Commission Staff
Edward Jewell
Deputy Attorney General
ldaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A (83714)
P.O. Box 83720
Boise, ldaho 83720-0074
ldaHydro
C. Tom Arkoosh
ARKOOSH LAW OFFICES
802 West Bannock Street, Suite LP 103
P.O. Box 2900
Boise, ldaho 83701
ldaho Conservation League and NW
Energy Coalition
Benjamin J. Otto
ldaho Conservation League
710 North 6th Street
Boise, ldaho 83702
NW Energy Coalition
F. Diego Rivas
NW Energy Coalition
1101 8th Avenue
Helena, Montana 59601
ldaho lrrigation Pumpers Association, lnc.
Eric L. Olsen
ECHO HAWK & OLSEN, PLLC
505 Pershing Avenue, Suite 100
P.O. Box 6119
Pocatello, ldaho 83205
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IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT.9
I HEREBY CERTIFY that on the l8thday of October 2016 I served a true and
correct copy of IDAHO POWER COMPANY'S COMMENTS lN SUPPORT OF
SETTLEMENT upon the following named parties by the method indicated below, and
addressed to the following:
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Mail
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tavlor. [e-mail]
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Anthony Yankel
12700 Lake Avenue, Unit 2505
Lakewood, Ohio 44107
Vote Solar
Briana Kobor
Vote Solar
358 South 700 East, Suite 8206
Salt Lake City, Utah 84102
David Bender
Earthjustice
3916 Nakoma Road
Madison, Wisconsin 5371 1
City of Boise
Abigail R. Germaine
Deputy City Attorney
Boise City Attorney's Office
'150 North Capitol Boulevard
P.O. Box 500
Boise, ldaho 83701-0500
ldaho Clean Energy Association
Preston N. Carter
GIVENS PURSLEY LLP
601 West Bannock Street
Boise, ldaho 83702
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Al Luna
Nick Thorpe
1625 Massachusetts Avenue, NW, Suite 702
Washington, DC 20036
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Mail
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IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT - 1O
ldaho Sierra Club
Kelsey Jae Nunez
KELSEY JAE NUNEZ LLC
920 North Clover Drive
Boise, ldaho 83703
Zack Waterman
Michael Heckler
ldaho Sierra Club
503 West Franklin Skeet
Boise, ldaho 83702
PacifiCorp d/b/a Rocky Mountain Power
Yvonne R. Hogle
Rocky Mountain Power
1407 West North Temple, Suite 320
Salt Lake City, Utah 84116
lndustrial Customers of ldaho Power
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 72'18
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
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IDAHO POWER COIVIPANY'S COIVIMENTS IN SUPPORT OF SETTLEMENT . 11
Ted Weston
Rocky Mountain Power
1407 West North Temple, Suite 330
Salt Lake City, Utah 841 16
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michael. p. h eckle r@q m a il. com
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Micron Technology, lnc.
Austin Rueschhoff
Thorvald A. Nelson
Holland & Hart, LLP
555 Seventeenth Street, Suite 3200
Denver, Colorado 80202
Jim Swier
Micron Technology, lnc.
8000 South Federal Way
Boise, ldaho 83707
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lndividual
Russell Schiermeier
29393 Davis Road
Bruneau, ldaho 83604
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4**ut)To^url
x i m
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rY row{, Exebu tive Ass i sta nt
IDAHO POWER COMPANY'S COMMENTS IN SUPPORT OF SETTLEMENT - 12
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tnelson@hollandhart. com
aclee@ holland hart.com
[e-mail]
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC.E.18-15
IDAHO POWER COMPANY
COMMENTS IN SUPPORT
OF SETTLEMENT
ATTACHMENT 1
WORKPAPERS
(PROVTDED ON CD)