20191203Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, rDAHO 83120-007 4
(208) 334-03t2
IDAHO BAR NO. 9917
Street Address for Express Mail:
II33I W CHINDEN BLVD, BLDG 8, SUITE 201-4
BOISE, ID 83714
Attomey for the Commission Staff
BEFOR.E THE IDAHO PUBLIC UTILITIES COMMISSION
RECEIVED
319 DEC -3 il't l0: 05
,. . 1 -' !'11 !/r, ,,! ll-!lrll ru:" .rlj-c,lu!',llSSl0N
IN THE MATTER OF IDAHO POWI'R
COMPANY'S ANNUAL COMPLIANCE
FILING UPDATING THE LOAD AND GAS
FORECASTS IN THE INCREME,NTAL COST
INTEGRATED RESOURCE PLAN AVOIDED
COST MODEL
CASE NO. IPC-E-19-31
COMMENTS OF THE
COMMISSI()N STAI'}'
)
)
)
)
)
)
)
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On October 15, 2019, Idaho Power Company ("Company") filed its annual update to
certain components of its avoided cost rate calculation for qualitying facilities ("QFs") under the
Public Utility Regulatory Policies Act of 1978 ("PURPA"). Specifically, the Company updated
the load forecast, natural gas forecast, and contract information components it uses to calculate
avoided cost rates under the incremental cost lntegrated Resource Plan ("IRP") method, and
asked the Commission to accept the updated information for filing.
With respect to the IRP method, the Commission requires utilities to update fuel price
forecasts and load forecasts each year on October 15. Order No. 32802. All other IRP method
variables and assumptions remain fixed between the biennial IRP filings. The Commission
expects the utility's load and resource balance to account for long-term contract commitments,
STAFF COMMENTS DECEMBER 3,2019I
and PURPA contracts thai have terminated or expired. Order No. 32697. The Commission has
determined that all long-term contract information should be updated lor the IRP merhodology
when contracts are signed, terminated, or expired, in order to maintain the most up{o-date
avoided cost. Order No. 32691. The Company explains that the information has been
incorporated into its IRP avoided cost model and that it will use the model to negotiate
contractual avoided cost rates as of October 15, 2019.
STAFF REVIEW
Staff has reviewed the Company's Application and recommends approval of the updated
load forecast, natural gas forecast, and long-term contracts to be used in the IRP methodology for
avoided costs.
Updated Load Forecast
Staff compared the Company's annual system load forecast in this filing to last year's
filing-Case No. IPC-E- I 8- 13-finds the new forecast reasonable and acceptable. The
comparison shows that the Company's 2019load forecast decreases by only 0.037o, which is
consistent with the fact that no significant change of economic conditions have taken place in
Idaho Power's service territory during the past year. If the Commission authorizes the load
forecast, the small size of the reduction should not have a significant effect on resource needs or
avoided cost rates in future IRP-based contracts.
Updated Natural Gas Forecast
Staff believes that the Company's proposed natural gas price forecast is reasonable for
purposes of determining avoided cost in IRP-based PURPA contracts. Because Idaho Power's
2019 lntcgrated Resource Plan has been delayed (Case No. IPC-E-19-19), the Company will
continue to use the 2017 IRP as the basis for its Incremental Avoided Cost IRP (lClRP) model.
Since the Company used the Energy Information Administration's (EIA) High Oil and Gas
Resource and Technology natural gas forecast for Henry Hub in the 2017 IRP and the forecast
was approved by the Commission in thc 2018 annual update hling, Staff believes it is reasonable
to use the same source of the forecast as approved previously. As was done in last year's annual
update, the Company updates the forecast with the data released by EIA adjusted for Sumas
2STAFF COMMENTS DECEMBER 3. 20I9
differentials and transportation costs. Staffbelieves the forecast is reasonable according to the
two comparisons below.
Staff compared this year's natural gas price forecast to last year's filing in Case No.
IPC-E-18-13. The difference between the 2019 forecast and the 2018 forecast ranges from
(17.69Eo) to 2.52Vo for years from 2019 through 2036 (see Figure l). Because natural gas market
conditions are predicted to continue to be favorable for low future gas prices, Staff believes that
the Company's long-term natural gas forecast is acceptable.
ldaho Power
6
4
E
E
1
0
20L9 2020 2021 2022 2021 2024 202s 2026 2027 2028 2029 2030 2037 2032 2033 2034 2035 2036
-
2019 - - 2018
Figure I ldaho Power's 2019 Natural Gas Forecast and 201E Natural Gas Forcca.st
Staff also comptred Henry Hub forecasts used by ldaho Power, Avista, and Rocky
Mountain Power, and results show a similar trend that natural gas prices at Henry Hub increase
over time (see Figure 2). Idaho Power uses Energy lnformation Administration's (EIA) High Oil
and Gas Resource and Technology natural gas forecast for Henry Hub, while Avista and Rocky
Mountain Power use a combination of third party forecasts over the long term and gas futures
market prices for the short term. Despite different methodologies and sources, all three forecasts
reflect a high level of similarity, especially for the first two years. This is important because
IRP-based PURPA projects are capped at a two-year contract length, and the avoided costs in
STAFF COMMENTS DECEMBER 3,20I9
5
3
3
any new contract now will capture the trend of the first two years. Based on the comparison,
Staff believes Idaho Power's Henry Hub natural gas forecast is reasonable.
Henry Hub Natural Gas Forecasts Used by
ldaho Power, Avista, and Rocky Mountain Power
fPco
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
E
E :-,,.'..t<tt
2020 2021 2022 2023 2024 202s 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
-ldahopower -
Avista "..,., Rocky Mountain power
Iigure 2 Comparing Herr, IIub N8turd Gas Forecask by Tbree Ulilitie;
Contract Terminations, Expirations, and Additions
Since the 2018 annual filing, Idaho Power signed contracts with Jackpot Holdings, LLC
for 120 MW, one new Oregon solar QF, and nine renewal QFs. Staff has verfied the contract
information and finds it accurate.
STAFF RECOMMENDATIONS
Staff believes the load forecast, the natural gas forecast, and the contract information
updated by Idaho Power comply with the Order Nos 3269'1 and 32802. Staff recommends
approval of the updates to be used in the Comptury's IRP methodology with an effective date of
October 15,2019.
4STAFF COMMENTS
':': .1
DECEMBER 3,2019
Respectfully submitted this 3*day of December 201 9.
Hardie
Deputy Attorney General
Technical Staff: Yao Yin
Travis Culbertson
Rachelle Farnsworth
irumisc/conrments/ipcc | 9.3 I dhyytncrf comments
5STAFF COMMENTS DECEMBER 3,20I9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3RD DAY OF DECEMBER 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-19-3I, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
SECRETAR
CER III.ICATI OF SF,RVICE
DONOVAN WALKER
REGULATORY DOCKETS
IDAHO POWERCOMPANY
PO BOX 70
BOISE rD 83707-0070
E-mail: dwalker[@idahopower.com
d ocketsfg)i dahopowe r. c om
1