20200903Motion and Reply Comments.pdf

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DONOVAN WALKER
Lead Counsel
dwa! [e-mail]
September 3,2020
VIA ELECTRONIC FILING
Jan Noriyuki, Secretary
ldaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, Idaho 83714
Re Case No. IPC-E-20-02
Idaho Power Company's Petition to Establish Avoided Cost Rates and Terms
for Energy Storage Qualifying Facilities under PURPA
Dear Ms. Noriyuki:
Attached for electronic filing in the above matter is ldaho Power Company's Motion
and Reply Comments. lf you have any questions about the enclosed documents, please
do not hesitate to contact me.
Very truly yours,
A*€ae,(L
Donovan Walker
DEW/ cld
Enclosures
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@ida hopower.com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO ESTABLISH
AVOIDED COST RATES APPLICABLE TO
PURPA ENERGY STORAGE QUALIFYING
FACIL!TIES.
oASE NO. |PC-E-20-02
IDAHO POWER COMPANY'S
MOTION AND REPLY
COMMENTS
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t. MoTroN
ldaho Power Company ("ldaho Power" or "Company"), in accordance with RP 56
and RP 2O1, et seg., as well as the ldaho Public Utilities Commission's ("|PUC" or
"Commission") Notice of Modified Procedure in this matter, Order No. 34699, hereby
respectfully moves the Commission to allow Reply Comments from ldaho Power, and
submits the same herewith. ldaho Power, as the Petitioner, is traditionally allowed to
respond to issues raised by the other party/parties. Because both ldaho Power and
Commission Staff ("Staff') filed follow-up comments simultaneously on August 27 ,2020,
ldaho Power did not know what Staffs final recommendations would be and has not had
an opportunity to respond to those final recommendations.
IDAHO POWER COMPANY'S
MOTION AND REPLY COMMENTS - Page 1 of 9
ln ldaho Power's initial comments, filed on July 16,2020,ldaho Power stated that
it had no objection to Staffs recommended "enhanced" modified procedure (which called
for initial comments from ldaho Power and Staff, solicitation of input from other parties,
and then follow-up comments from ldaho Power and Staff) with the reservation that ldaho
Power may seek leave to file Reply Comments to any new items raised by Staff in its
August 27 ,2020, follow-up comments. ldaho Power Comments, July 16,2020, p 4, n 2.
ldaho Power's Reply Comments, submitted herewith, are brief and have been submitted
one week after the Follow-up Comments, which is the customary response timeline
employed by the Commission in modified procedure cases.
ldaho Power respectfully requests the Commission grant leave for ldaho Power to
file the accompanying Reply Comments to Staffs Revised Comments in order for the
Commission to have a fulland complete written record on Modified Procedure upon which
to issue its Order.
I. INTRODUCTION, BACKGROUND, AND FACTS
On January 21,2020, ldaho Power filed a Petition to initiate a proceeding to
determine the proper avoided cost rates, as well as contract terms and conditions
applicable to, and to be included in PURPAI contracts requested by energy storage
Qualifying Facilities ("QF" or"QFs"). ldaho Power's Petition, p 1. On July 16, 2020,ldaho
Power filed initial comments, as did Commission Staff ("Staff'). On Augusl6,2020, three
parties: Renewable Northwest, Idaho Conservation League, and Clenera, LLC filed
comments in response the request for public input and the Commission's Notice of
Modified Procedure Order No. 34699. ldaho Power's initialcomments from July 16,2020,
I Public Utility Regulatory Policies Act of 1978 ('PURPA')
IDAHO POWER COMPANY'S
MOTION AND REPLY COMMENTS - Page 2 of 9
recite the procedural history and background underlying the request to determine the
proper avoided cost rates and contract term applicable to energy storage PURPA QFs
including the Memorandum Decision and Order issued January 17, 2020, in Franktin
Energy Sforage One et al. v. Kjellander et a/., Case No. 1:18-cv-00236-REB. Again,
rather than repeat those facts and background here, ldaho Power incorporates herein by
this reference the lntroduction and Background from its initial comments filed on July 16,
2020, as well as the Background and facts from its initial Petition in this matter.
II. REPLY COMMENTS
Staff filed Follow-up, Revised Comments on August 27, 2020, recommending
adoption of a 100 kW published rate eligibility cap for battery storage QFs, as well as a
10 year contract term for battery storage QF above the 100 kW published rate cap. Staff
Revised Comments, Aug. 27,2020, p 26. Staff also recommends that the Commission
direct revisions to the way in which capacity payments for battery storage QFs are made,
and also recommends a follow-up case to align battery storage QF treatment across
utilities and make additional refinements to the avoided cost methodology. ld. ldaho
Power greatly appreciates Staffs consideration, investigation, discussion, and its
recommendation to limit the application of the SAR2 methodology to battery storage QFs
below a published rate eligibility cap of 100 kW. This will require larger battery storage
QFs to utilize the more accurate lClRP3 avoided cost pricing methodology and aligns with
the Company's request to do the same to combat potential disaggregation, as well as
aniving at a more accurate approximation of avoided costs - protecting customers.
2 Surrogate Avoided Resource ('SAR') methodology.3 lncrementalCost lntegrated Resource Plan ("lClRP') methodology
IDAHO POWER COMPANY'S
MOTION AND REPLY COMMENTS - Pase 3 of 9
Contract Term
ldaho Power believes it is premature to adopt a contract term longer than the
current maximum of 2 years for projects that exceed the published rate eligibility cap. The
Commission made the determination to limit the maximum contract term to two years for
all QFs that exceed the published rate eligibility cap in order to protect customers given
the restriction and inability to make adjustments to, or update, the avoided cost rates
during the term of the contract
Based upon our record, we find that 2O-year contracts
exacerbate overestimations to a point that avoided cost rates
over the long-term period are unreasonable and inconsistent
with the public interest. We find shorter contracts reasonable
and consistent with federal and state law for multiple reasons.
First, shorter contracts have the potential to benefit both the
QF and the ratepayer. By adjusting avoided cost rates more
frequently, avoided costs become a truer reflection of the
actual costs avoided by the utility and allow QFs and
ratepayers to benefit from normalfluctuations in the market...
This Order shortens the length of IRP-based PURPA contract
in order to maintain a more accurate avoided cost ... This
Order strikes a balance between just and reasonable rates for
ratepayers, the public interest and interests of QFs, as is
mandated by PURPA and FERC regulations.
Order No. 33357, p.23,32. As mentioned in ldaho Power's Follow-up Comments, FERC
has now revised its rules and specifically authorized state Commissions to allow the
energy rate to be updated throughout the term of the mandatory purchase or contract.
FERC referred to, and quoted, the ldaho Commission in its order adopting this revision
Further, the Commission [FERC] pointed to evidence that the
desire to limit the effect of fixed QF contract rates had directly
led to PURPA implementation issues that affected QF
financing in other respects, particularly with respect to length
of QF contracts. For example, a commissioner of the ldaho
IDAHO POWER COMPANY'S
MOTION AND REPLY COMMENTS - Page 4 of 9
Commission testified at the Technical Conference that the
ldaho Commission's decision to limit QF contracts to a two-
year term was based on the ldaho Commission's concern that
longer contract terms at fixed rates would Iead to payments
above avoided costs.
172 FERC t[ 61 ,041 , Qualifying Facility Rafes and Requirements, lmplementafion /ssues
UnderthePublicUtilityRegulatoryPoliciesActof 1978, FERCDocketNo. RM 19-15-000
and AD 16-16-000, Order No. 872,11243, p 145 (citing n384 (citing Technical Conference
Tr. at 142-43 (ldaho Commission)("No matter the starting point, allowing QFs to fix their
avoided cost rates for long terms results in rates which will eventually exceed and
overestimate avoided cost rates into the future. The longer the term, the greater the
disparity. ... [he ldaho Commission] recently reduced PURPA contract lengths to two
years in order to correct the disparity. We didn't reduce contract Iengths to kil! PURPA.
We did it to allow periodic adjustment of avoided cost rates.")).
The IPUC made a hard and unpopular decision to implement two-year contracts
and defended that decision all the way up to the national level in order to protect
customers from being saddled with a long-term lock-in of rates and paying more than they
otherwise should to comply with the mandates of PURPA. As ldaho Power stated in its
Follow-up Comments, it may be appropriate to authorize contracts for a term longer than
two years - but only if - there is an accompanying provision or mechanism that allows
for the periodic update of avoided cost rates during the term of the contract. This would
be consistent with the authority granted by FERC's revised rules, as well as the !PUC's
determination to protect customers from the long-term lock-in of avoided cost rates for
the entire duration of the contract or legally enforceable obligation required of PURPA's
mandatory purchase requirements.
IDAHO POWER COMPANY'S
MOTION AND REPLY COMMENTS - Page 5 of 9
Staffls rationale of promoting battery storage QF development with a more
favorable, financeable contract term does not outweigh the customer impact and harm
that arises from the long-term lock-in of avoided cost rates estimated by imperfect
methodologies at the time of contracting for the entire duration of the contract with no
provision or ability to update or adjust those rates during the term of the contract. ldaho
Power, given its size and total system load, has a very large penetration of QF
development that operates daily on its system. Idaho Power has a total of 1,148 MW of
PURPA generation under contract with a system that peaks at approximately 3,400 MW
and has minimum loads around 1,100 MW. PURPA development on ldaho Power's
system has not died. Renewable development in ldaho has not died. ldaho Power has
a total of 134 individua! contracts with PURPA QFs including 627 MW of wind, 319 MW
of solar, 69 hydro QFs for 150 MW, and several various other QF technologies for 52
MW. Since 2010,ldaho Power has entered into 131 individual PURPA QF contracts,
some of which have been terminated, were replacement contracts, or were not approved
by the Commission. Since 2018,ldaho Power has entered into 30 contracts with PURPA
QFs, which include new and replacement contracts, three of which are currently pending
approval at the IPUC. Between Franklin and Black Mesa, ldaho Power has recently had
over 165 MW of battery storage QF generation seeking PURPA contracts. Additionally,
ldaho Power has currently had more than 2,000 MW of wind and solar generation apply
for interconnection to its ldaho system as network resources, which eventually may seek
to sell generation to ldaho Power.
Although ldaho Power has not entered into any PURPA QF solar contracts in ldaho
since the implementation of two-year contract terms, the Company has entered into a
IDAHO POWER COMPANY'S
MOTION AND REPLY COMMENTS - Pase 6 of 9
Commission-approved, non-PURPA contract with Jackpot Solar for the purchase of 120
MW of solar generation. Jackpot Solar was initially developed as a PURPA QF project,
and ldaho Power was able to negotiate a non-PURPA energy sales agreement with a 20-
year term containing nation-wide low rates, at that time, that were and are far below the
approved avoided eost rates and methodologies in place today. The Company also has
non-PURPA renewable energy contracts for 101 MW of wind and 35 MW of geothermal
generation that were procured competitively and approved by the Commission.
Before the Commission considers extending the cunent maximum two-year
contract term - particularly for reasons related solely to promotion of QF development and
financing - the Commission should assure that a mechanism is also in place protecting
customers to update or adjust the rates contained in those contracts during the extended
term.
Further Proceedinos
Staff also recommends a "follow-on docket to examine refinement or alteration of
avoided cost rate methodologies for battery QFs for all electric utilities in ldaho ..." Staff
Comments, p 3. ldaho Power believes that a follow-up docket should be opened, but the
scope should be broadened to look at the possible revision, refinement, alteration, or
abandonment of the existing avoided cost methodologies and establishment of a more
refined and accurate avoided cost methodology applicable to all QFs that examines
incorporation of the expressed expanded authority granted to state commissions by the
recently directed FERC PURPA rule changes.
Staff's recommendation for a longer contract term could be more appropriately
considered along with a corresponding provision providing for the periodic update of the
IDAHO POWER COMPANY'S
MOTION AND REPLY COMMENTS - Page 7 of 9
avoided cost rates. Staffs recommendations regarding changes to the capacity
component of avoided cost rates could be considered holistically along with revisions to
the avoided cost methodology/methodologies and their application to contractual
provisions between utilities and QFs. This would also allow opportunity to potentially
adopt and conform - or reject changes in implementation authorized by FERC's revision
of its PURPA regulations.
III. CONCLUSION AND REQUESTED RELIEF
To meet the current need for project pricing and requests for contract, ldaho Power
requests that the Commission establish a 100 kW published rate cap and application of
the current avoided cost pricing methodologies and two-year contract terms on an interim
basis for energy storage QFs - and conespondingly open a general PURPA avoided cost
methodology docket to examine possible revision of the avoided cost methodologies and
incorporation of the new FERC PURPA rules. ldaho Power acknowledges that it may be
appropriate to authorize contracts for a term longer than two years - but only if - there is
an authorized provision that allows for the update of avoided cost rates during the term
of the contract.
Respectfully submitted this 3'd day of September 2020.
furdalL-
DONOVAN E. WALKER
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S
MOTION AND REPLY COMMENTS - Page 8 of 9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 3'd day of September 2020,1 served a true and
correct copy of the within and foregoing IDAHO POWER COMPANY'S MOTION AND
REPLY COMMENTS upon the following named parties by the method indicated below,
and addressed to the following:
Edward Jewell
Deputy Attorney General
ldaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. No. 8
Suite 201-A(83714
PO Box 83720
Boise, lD 83720-0074
_Hand Delivered
_ U.S. Mail
_Ovemight Mail
_FAXX Email
edward. iewell@ouc. idaho.qov
Max Greene
Sashwatt Roy
Renewable Northwest
421 SW Sixth Ave. #975
Portland, OR 97204
(no email indicated in Comments)
Hand DeliveredX U.S. Mail
Overniqht Mail
FAX
Email
Benjamin J. Otto
ldaho Conservation League
710 N. 6th Street
Boise, lD 83701
Hand Delivered
U.S. Mail
Overnioht Mail
FAXX Email
botto@ id a h ocon servatio n. o ro
Clenera, LLC
800 W. Main St., Suite 900
Boise, lD 83702
(no email or author indicated in
Comments)
Han DeliveredX U.S.ItIail
ioht t\Iail
FAX
Email
IDAHO POWER COMPANY'S
MOTION AND REPLY COMMENTS - Page 9 of 9
Christy Davenport, Legal Assistant