20191101Decision Memo.pdf

DECISION ]\{EI\,IORANDUNT
'l'o:COMMISSIONER KIELLANDER
COMNIISSIONER RAPI'R
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAT'I-
DAYN HARDIE
DEPUTY ATTORNEY GENITRAL
DA'l'Fl: OCTOBER31,2019
ST]B.IEC I':IN THE NIATTI.]R OI,' IDAHO POWER CONIPANY'S ANNUAL
COMPI,IANCE F'II,ING UPDATING THE I,OAD AND GAS FORECASTS
IN THE INCREIIIENTAL COST INTEGRATED RESOURCE PLAN
AVOIDED COST MODEL; CASE NO. IPC-E-19-31.
On October 15,2019, Idaho Power Company ("Company") made a filing with the
Conrmission to update its load forecast, natural gas forecast, and contract information components
ofthe incremental cost Intcgrated Resource Plan ("IRP") avoided cost methodology for qualifying
facilities ("QFs") under the Public Utility Regulatory Policies Act of I978 ("PURPA").
Application at l. Idaho Power indicates that the filing complies with Order Nos. 32697 and 32802.
Id.
BACKGROUND
Under PURPA, electric utilities must purchase electric energy from QFs at rates
approved by the applicable state agency-in Idaho, this Commission. l6 U.S.C. i 824a-3; ldaho
Po*'er Co. r'. Idaho PUC, 155 Idaho 780, 780, 316 P.3d 1278, 1287 (2013). The purchase or
"avoidcd 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 ar7, citing Rosebtul Enterprises v. Idaho PUC,
128 Idaho 624,917 P.2d 781 (1996); l8 C.F.R. $ 292.101(bx6xdefining "avoided cost").
The Commission has established two methods of calculating avoided cost, depending
on the size of the QF project: ( I ) the surrogate avoided resource C'SAR") methodology, and (2)
the IRP methodology. .See Order No. 32697 at 7-8. The Commission uses the SAR methodology
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F'RONI:
to establish what is conmonly referred to as "published" avoided cost rates. /d. Published rates
are available for wind and solar QFsr with a design capacity of up to 100 kilowatts ("kW"), and
for QFs of all other resource types with a design capacity of up to l0 average megawatts ("alvM").
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 [IRP methodoloCyl;' Id. at 2; Order
No.32176. The IRP methodology 'takes into account many different variables and produces a[n
avoided costl result based on each individual utility's need for energy." Order No. 32691 at 17.
The IRP methodology's variables are at issue herc.
The Commission stated "utilities must update fucl 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)." /d. at
22. The Commission directed that the update to fuel price forecasts and load forecasts should occur
on October l5 of each ycar. Order No. 32802 at 3. The Commission also found it appropriate to
consider long-term contract commitmcnts, as well as PURPA contracts that have terminatcd or
expired, in the utility's load and resource balancc. Ordcr No. 32697 at22.
THEAPPLICATION
Idaho Power provides its updated load forecast, natural gas forecast, and contract
information, and explains that the information has been incoqporated into ldaho Power's IRP
avoided cost model and that the modcl will be used as the starting point for the negotiation of its
contractual avoided cost rates as of October 15, 2019. Application at 2.
Idaho Power's updated load forecast is from October 2019 and "shows, on avcrage over
the remaining period of the 2Ol7 IRP, no change in its customer loads when compared to the
October 2018 load tbrecast that was provided to the Commission for the 2018 update in Case No.
IPC-E-18-13 and approved by the Commission in Order No. 34217." ld. at 2-3. Idaho Power
provides both the October 2019 and the October 2018 average annual load forecasts for years 2019
through 2036. Id at 3.
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 January 24,2019.|d. at4.The 2019 forecast shows "a minor decrease in the average
I Sez Ordcr No. l17ti5 (rcgardin-s batlcry storagu laciliries)
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annual natural gas prices over the remaining period" compared to the 2018 forccast. [d. at 4, Idaho
Power provides both the 2018 and the 2019 forecasts for ycars 2019 through 2036. Id. at 5.
Finally, Idaho Powcr summarizes thc contract tcrmination, expiration and additions it
has experienced since its 2018 update. Id. at6-7. The Company provides the new, terminated, or
expired contracts in Attachment I to the Application. Id
Idaho Power asks the Commission to accept for filing its updated load forecast, natural
gas forccast.. and contract information.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Application and Notice of
Modified Procedure, with comments due in 2l-days and any reply comments due in 28-days.
COMMISSION DECISION
Does the Commission u'ish to issue a Notice of Application and a Notice of Modified
Procedure, with commcnts due in 2l-days and any reply comments due in 28-days?
Hardic
Deputy Attorney General
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3DECISION MEMORANDUM