20161215Comments.pdf

Benjamin J. Otto (ISB No. 8292)
710 N 61h Street
Boise, ID 83701
Ph: [phone] x 12
Fax: [phone]
[e-mail]
Attorney for the Idaho Conservation League
RECE IVED
2016 DEC IS PM 2= 58
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY'S APPLICATION FOR
DEFERRAL AND RECOVERY OF
COSTS ASSOCIATED WITH
PARTICPATION IN THE ENERGY
IMBALANCE MARKET.
CASE NO. IPC-E-16-19
THE IDAHO CONSERVATION
LEAGUE
COMMENTS
The Idaho Conservation League ("ICL") recommends the Commission approve Idaho
Power's request to join the Energy Imbalance Market ("EIM"). Joining this growing, organized,
real-time, economically dispatched, voluntary market will benefit Idaho Power customers by
improving reliability and providing power cost benefits. ICL supports Idaho Power's
participation in the growing EIM because it will facilitate integrating renewable energy across the
western states so as to protect the air we breathe and the climate stability our society relies upon
while delivering direct benefits to Idaho Power customers.
To quantify the benefits to customers, Idaho Power provided a study conducted by
Energy and Environmental Economics ("E3 Study") showing a range of $4.1 to $5.1 million
annually just in power supply cost benefits.1 ICL's analysis of this study concludes it is a
conservative estimate of the benefits Idaho Power customers can expect in at least three ways.
First, the base case study assumes a 33% Renewable Portfolio Standard in California and 15%
share of renewables in the northwest region resulting in $4.5 million of annual benefit to Idaho.2
The E3 Study includes a high renewables scenario assuming 40% RPS in California and 20% in
our region would increase these benefits to $5.1 million.3 This increase occurs because it "creates
1 Anderson Direct, Exhibit 4, page 7.
2 Anderson Direct, Exhibit 4, page 12-13.
3 Id, Exhibit 4, page 31 (scenario detail), page 35 (quantifying benefits).
IPC-E-16-19
ICL COMMENTS 1 December 15, 2016
increased revenue opportunities for IPC's flexible hydro generation in the real-time market."4
Since the study, California enacted Senate Bill 350 setting a 50% RPS by 2030 and Oregon
enacted Senate Bill 1547 setting a 50% RPS by 2040. This expanding penetration of renewable
energy in other states will increase Idaho Power's opportunities to sell flexible resources into the
market and deliver even more benefits to customers.
Second, the E3 Study considered only the net power supply cost impacts from Idaho
Power's participation in the EIM. However, accessing a real-time, 5 minute ahead, economically
dispatched market with a wide diversity of resources and geography can only increase the
opportunities to find the least cost resources to maintain system stability. Maintaining a reliable
system is important to Idahoans and it is common sense that accessing a wider diversity of
resources to meet this need will lead to lower costs for customers.
Third, the E3 Study discusses the potential for reducing Idaho Power's need for flexible
reserves to maintain system reliability.5 While E3 did not quantify this benefit for Idaho Power,
the sources of potential savings -reducing inefficient thermal unit commitment and freeing up
hydro generation to meet native loads-appear highly applicable to the Company's system. The
E3 Study explains the EIM market operator, CAISO, is developing products that could enable
Idaho Power to monetize these benefits. By joining the market Idaho Power accesses
opportunities to further improve reliability while reducing costs.
Beyond these conservative assumptions, the E3 Study also considered two other scenarios
-early coal plant retirement and non-participation by other utilities.6 The coal retirement
scenario removes Valmy, and other coal plants slated for closure, from the base generation mix
and showed a benefit to customers of $4.1 million. 7 The non-participation scenario assumed
Portland General Electric and Arizona Public Service do not join the EIM as planned and resulted
in $4.2 million benefit to customers. 8 Because either scenario results in benefit within 10% of the
base case, E3 concludes the difference is "fairly insignificant, indicating that model results for
identified IPC savings are robust to participation and coal resource retirement."9 In terms of
broad utility participation in the EIM, PGE filed an implementation agreement with the Federal
4 Id., Exhibit 4 page 39 -40.
5 Id, Exhibit 4. Page 20 -22.
6 Id., Exhibit 4, page 30 -31.
7 Id., Exhibit 4, page 29 (listing the assumed early coal retirements), and page 35 (showing benefits).
8 Id., Exhibit 4, page 30.
9 Id., Exhibit 4, page 39.
IPC-E-16-19
ICL COMMENTS 2 December 15, 2016
Energy Regulatory Commission on November 23, 201510, and APS is already participating in the
market." Further, since Idaho Power filed this application, at least two other utilities not induced
in the E3 scenarios have committed to join the EIM -the Sacramento Municipal Utility District,
as of October 21, 2016 and Seattle City Light as of December 13, 2016 -further expanding the
opportunity to realize benefits. Combined with the three conservative assumptions described
above, the Commission should feel confident Idaho Power customers will benefit from joining
the growing EIM regardless of the timing or fate of Valmy.
ICL also supports Idaho Power's proposals to defer the costs of joining the EIM and
amortize these costs over ten years when collected from customers.12 Any new effort requires
investing in resources and infrastructure. In this case, the benefits of $4 -$5 million annually
could in just two to three years outweigh the onetime startup costs expected to be $11.08 million.
Going forward these benefits will vastly outweigh the ongoing expense of staffing and licensure of
just $1.6 million. Because the market is designed to operate indefinitely into the future, this
investment is a sound method to access new opportunities to increase reliability and realize
power costs benefits far into the future. ICL looks forward to further process to determine the
appropriate way to incorporate these costs and benefits into base rates. But for now, ICL supports
deferring costs into a regulatory asset, applying the deposit rate, and allowing the benefits to flow
through the Power Cost Adjustment.
Like Idaho Power, utilities across the west recognize that real-time, broad, diverse markets
can benefit customers by creating more opportunities to find least cost resources to meet energy
needs and maintain reliability. ICL urges the Commission to agree and approve this application.
Respectfully submitted,
A ~
Benjamin J. Otto
Idaho Conservation League
10 See: https://www .portlandgeneral.com/our-company/news-room/news-releases/2015/11-23-2015-portland­
general-electric-formalizes-agreement-to-join-eim
11 See: https://www .rtoinsider.com/eim-arizona-public-service-puget-sound-energy-32467 I
12 Tatum Direct, pages 11, line 11 -page 12, line 14.
IPC-E-16-19
ICL COMMENTS 3 December 15, 2016
CERTIFICATE OF SERVICE
I hereby certify that on this l{th day of December 2016, I delivered true and correct
copies of the foregoing COMMENTS to the following persons via the method of service noted:
Hand delivery:
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
427 W. Washington St.
Boise, ID 83702-5983
(Original and seven copies provided)
Electronic Mail:
Idaho Power
Julia A. Hilton
Matt Larkin
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
[e-mail]
[e-mail]
[e-mail]
ICIP
Peter J. Richardson
Richardson Adams, PLLC
515 N. 27th Street
Boise, ID 83702
[e-mail]
Don Reading
6070 Hill Road
Boise, ID 83703
[e-mail]
Snake River Alliance
Ken Miller
PO Box 1731
Boise, ID 83701
[e-mail]
IPC-E-16-19
ICL COMMENTS
a ~
Benjamin J. Otto
4 December 15, 2016