20161215Comments.pdf

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December 14, 2016
To: Idaho Public Utilities Commission
From: Wendy Wilson, Executive Director, Snake River Alliance
Re: Snake River Alliance Comments In the Matter of the Application of Idaho Power Company for
Deferral and Recovery of Costs Associated with Participation in an Energy Imbalance Market
On behalf of our members in Idaho Power's service territory, the Snake River Alliance appreciates this
opportunity to provide comments on the above-referenced case. These comments are submitted to the
Commission in response to its Notice of Modified Procedure and Notice of Comment Deadline, ORDER
NO. 33627, issued October 14, 2016.
Introduction
After a lengthy analysis, Idaho Power in this docket seeks a PUC finding that the Company's participation
in the proposed Energy Imbalance Market (EIM) is in the best interest of the Company and its customers.
Idaho Power also seeks recovery of the costs associated with EIM participation in a "future rate
proceeding" and approval of a deferral account to track incremental costs associated with participating in
the EIM.
The Snake River Alliance supports Idaho Power's application in IPC-E-16-19 and offers the following
comments for Commission consideration:
Idaho Power Customers Will Benefit from EIM Participation
The still-developing western EIM, formed by the California Independent System Operator (CAISO) and
PacifiCorp, presents Idaho Power and its customers with the best opportunity to participate in a regional
energy imbalance market. In fact, at present it is the only viable regional EIM available to Idaho Power.
Participating in a regional EIM will benefit Idaho Power customers by integrating Idaho Power into the
sub-hourly, five-minute market administered by the CAISO as it will provide Idaho Power with additional
opportunities to satisfy short-term needs, and five-minute access to the market to meet real-time changes
in customer demand.
Box 1731 D Bo1sE. ID 83701 I 208.344.9161 Box 425 I POCATELLO, ID 83204 I 208.233.7212
WWW .SNAKERIVERALLIANCE.ORG
Participation in this EIM should not impair Idaho Power's "balancing responsibilities and transmission
provider duties" (ORDER NO. 33627, P. 2). The Alliance agrees with Idaho Power's assertion, referenced
in ORDER NO. 33627, that "The Company claims that the western EIM will benefit customers through
economic efficiency ... savings due to diversity of loads and variability of resources within the expanded
(EIM) footprint, reduced operational risk ... and ability to better support the integration of renewable
resources ... " Id.
The Alliance agrees with Idaho Power that its participation in the CAISO EIM could result in a net power
supply expense saving of between $4.1 and $5.1 million per year. While we cannot independently assess
those figures, as represented in more detail in Idaho Power's testimony in support of its application, we
anticipate such savings will be made clear during the course of these proceedings.
Value of Energy Imbalance Market Participation
In its Application, supporting testimony, and responses to Commission staff production requests, Idaho
Power and E3 amply describe the benefits of utility EIM participation.
Properly constructed, EIMs have the potential to deliver myriad benefits to utility customers. Chief
among them are the utility's ability to defer or avoid certain plant investments that would otherwise be
required to satisfy short-term customer demands, as well as access to affordable short-term supply-side
resources in a far shorter time-frame (minutes rather than hours) than available in earlier energy
imbalance scenarios.
We also believe that participation in a well-designed EIM can enhance the value of Idaho Power's current
demand response offerings to the extent Idaho Power's D-R and EIM efforts are properly synchronized to
leverage the value of both. The Alliance concurs with Idaho Powers assertion (APPLICATION, P. 2) that:
The western EIM is a five-minute market administered by a single market operator, CA/SO, which
uses an automatic economic dispatch model to find and determine the least-cost energy resources to
serve real-time customer demand across a wide geographic area. The western EIM is different from
the regional market that is currently being discussed between CA/SO and other utilities because the
western EIM focuses solely on real-time imbalances and allows EIM entities to retain all balancing
responsibilities and transmission provider duties. In addition, it uses generating resources from
market participants to meet real-time load efficiently and cost-effectively across the entire western
EIM footprint.
A successful regional EIM such as that proposed here will also encourage greater renewable energy
investments, inter-utility cooperation and communications, and transmission benefits that include
reduced transmission constraints but also a reduced need for certain new transmission investments.
We would appreciate the Commission directing Idaho Power to more thoroughly define the "non­
financial benefits associated with increased reliability or potential financial benefits due to anticipated
reductions in reserves" (APPLICATION, P. 4). There are obvious non-financial benefits associated with
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EIM participation, and we would like to see those memorialized or acknowledged in the Commission's
final order.
Rate Recovery of EIM Expenses
The Alliance believes recovery of Idaho Power's EIM expenses, as outlined in its Application and in
supporting testimony, and including the projected $1.73 million in start-up costs and EIM market entry
fee and software integration costs, appear to be prudent and in the best interest of the company and its
customers.
While we support in principle Idaho Power's request for authorization to recover EIM-related costs "in a
future rate proceeding" (APPLICARTION, P. 3), we recommend the Commission address this cost­
recovery issue in more detail in its final order so Idaho Power customers can have a better understanding
of the timing and magnitude of future rate impacts as a result of this case. This is all the more important
in light of the fact that the timing and nature of any future Idaho Power general rate case, or power cost
adjustment case, or any other future case with the potential to impact rates, remains unknown, at least
outside of Idaho Power, which acknowledges in its APPLICATION (P. 5):
Recognizing the unique nature of the costs and benefits of EIM participation, the Company asks hat
the Commission issue an order acknowledging the expected customer benefits resulting from its
participation in the Western EIM, authorizing the Company to defer its Idaho jurisdictional share of
incremental costs related to participation in the western EIM, and authorizing the Company to
recover, in a future rate proceeding, the estimated incremental costs of joining the EIM.
Idaho Power witness Tatum's direct testimony provides helpful and important analyses on possible rate
and other impacts related to this case, particularly regarding reductions in the annual Net Power Supply
Expenses. We recommend the Commission's order in this case refer to the extent required to Mr. Tatum's
testimony, and also that of Company witness Anderson, for the same purpose.
Conclusion
The Alliance again appreciates this opportunity to comment on PacifiCorp's Application in this case. We
commend the Company for its stakeholder involvement efforts and efforts to explain the EIM process to
its customers. We recommend the Commission grant Idaho Power's Application.
While we embrace many of Idaho Power's underlying arguments in support of its Application, we
continue to differ with the Company in certain areas, notably its assertion that "The capability of Idaho
Power's system to integrate intermittent sources of generation is finite" (RESPONSE TO FIRST
PRODUCTION REQUEST (NO. 10) OF THE COMMISSION STAFF). We question the relevance, for purposes
of this case, of the 2013 Wind Integration Study Report as a predicate for the Company's alleged inability
to absorb appreciable amounts of renewable energy and note that Idaho Power's substantial hydro power
generation resources are included in its portfolio of "intermittent" generation resources. We are likewise
unconvinced by Idaho Power's allegation that "balancing reserve violations occur during periods of over­
generation when Idaho Power generating resources are reduced to safe operating levels, yet Company
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generation plus the intermittent (i.e., wind and solar powered) generation exceeds customer load. Given
Idaho Power's heavy reliance on hydropower generation, we do not question that over-generation occurs
during certain times of the year, such as spring and heavy hydropower production, but we reject the
premise that non-hydro renewable energy is the sole culprit for this annual and now predictable
phenomenon. We believe this inappropriate attribution to episodic over-generation to non-hydro clean
energy resources is best left out of this case as it detracts from Idaho Power's underlying argument. If
there are "significant violations of balancing reserve requirements during the spring" (RESPONSE TO
FIRST PRODUCTION REQUEST (NO. 10) OF THE COMMISSION STAFF), the reasons for those violations
are more complex than Idaho Power's explanation that renewable energy generation is largely to blame.
We don't believe this docket is the best forum to re-litigate Idaho Power's long-standing arguments
pitching the relative merits and value of certain renewable energy resources against each other, and we
believe a detailed discussion of Idaho Power's over-generation challenges is best left for another docket.
We commend Idaho Power for its decision to engage Energy and Environmental Economics (E3) to
analyze the potential of Idaho Power's EIM participation and in particular the evaluation of Net Power
Supply Expenses savings. The Alliance has high regard for E3's work in Idaho, including in the
development of the state's 2007 Idaho Energy Plan, and we found E3's presentation at the Idaho Power
EIM workshop earlier this year valuable and helpful in explaining EIM concepts and this Application in
particular.
Wendy Wilson
Executive Director
Snake River Alliance
P.O. Box 1731
Boise, ID 83701
[phone]
[e-mail]
Hand Delivered
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83702
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Via E-Mail
Julia A Hilton
Matt Larkin
Idaho Power Company
jhilton @idahopower.com
dockets @idahopower.com
[e-mail]
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