20201204Comments.pdf

EDWARD J.JEWELL
DEPUTY ATTORNEY GENERAL (2 \(pIDAHOPUBLICUTILITIESCOMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.10446
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )COMPANY'S ANNUAL COMPLIANCE )CASE NO.IPC-E-20-35FILINGTOUPDATETHELOADANDGAS)FORECAST COMPONENTS OF THE )INCREMENTAL COST INTEGRATED )COMMENTS OF THERESOURCEPLANAVOIDEDCOST)COMMISSION STAFFMETHODOLOGY)
The Staff of the Idaho Public Utilities Commission comments as follows on Idaho Power
Company's Application.
BACKGROUND
On October 15,2020,Idaho Power Company ("Idaho Power"or "Company")filed an
Application requesting authorization to update the load forecast,natural gas forecast,and
contracts used as inputs to calculate its incremental cost IntegratedResource Plan ("IRP")
avoided cost rates.The Company must update these inputs by October 15 of each year.Order
Nos.32697 and 32802.IRP avoided cost rates are available to qualifyingfacilities ("QFs")able
to generate above the resource-specific project eligibilitycap for published avoided cost rates
under Idaho's implementation of the Public Utility Regulatory Policies Act of 1978 ("PURPA").
The load forecast included in this Application predicts lower average loads than the load
forecast approved in last year's update.
STAFF COMMENTS 1 DECEMBER 4,2020
Idaho Power proposes to update the natural gas price forecast used in the model to reflect
the most recent U.S.Energy Information Administration Natural Gas Henry Hub Spot Price:High
Oil and Gas Resource and Technology forecast published on January 29,2020.This forecast
would result in a decrease to the average annual natural gas price forecast for each year in the
planning horizon compared to last year's update.
Idaho Power states it has three non-PURPA long-term power purchase agreements
currentlyonline for a total of 136 megawatts ("MW")of nameplate generating capacity:Elkhorn
Valley Wind at 101 MW,Raft River Geothermal at 13 MW and Neal Hot Springs Geothermal at
22 MW.Idaho Power also notes that it has another 120 MW of solar under contract from Jackpot
Holdings,LLC,scheduled to come online in December 2022.The Company states it has 134
PURPA contracts with a total nameplate capacity of 1,148 MW.
For this update,the Company states it has signed 14 replacement Energy Sales
Agreements ("ESA")totaling 18.98 MW,and one new hydro ESA for 0.8 MW.The Company
states that one 4.5 MW biomass QF ESA was terminated.Id.The Company states that ESA
updates,including completed ESA applications,are included in the IRP model on a continuous
basis.
STAFF ANALYSIS
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 the Company's
forecasts in last year's filing in Case No.IPC-E-19-31 and in the Company's 2018 annual filing in
Case No.IPC-E-18-13 and believes the updated forecast is reasonable.'The comparisons are
shown in Figure No.1 below.
I The 2019 IRP in IPC-E-19-19 used the same load forecast that was used in the 2018 Annual Update,Case No.IPC-E-18-13.
STAFF COMMENTS 2 DECEMBER 4,2020
Idaho Power Average Annual Load Forecast
2300
2200
2100 ,,M'
2000
1900
1800
1700
1600
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
-2020 Forecast --2019 Forecast 2018 Forecast
Figure No.1:Comparison of Load Forecasts over Past Three Years.
Staff calculated the average load from 2020 through 2036 for each forecast.The average
differences between the forecasts show that the Company's 2020 load forecast decreased by
0.629%compared to the 2019 filing and by 0.638%compared to the 2018 filing.Althoughthe
average reductions are partiallycaused by reductions during the years beyond 2030,Staff's
examination focused on the first few years of the forecast time horizon because new IRP-based
contract term lengths are limited to two years.
Compared to past forecasts,the Company is predicting reduced loads through 2022,but
starting in 2023,show a return to past forecasted levels until about the 2030 timeframe.Staff
believes this is reasonable because these differences in load can be explained by changes in the
Idaho economy from the effects of the coronavirus pandemic with an expectation that once the
pandemic is resolved,loads will return to past predicted levels.
Updated Natural Gas Forecast
Staff believes that the Company's proposed natural gas price forecast is reasonable.Idaho
Power continues to use the U.S.Energy Information Administration's (EIA)High Oil and Gas
Resource and Technology natural gas forecast for Henry Hub for this filing,which is the planning
STAFF COMMENTS 3 DECEMBER 4,2020
case natural gas forecast in the most recently acknowledgedIRP (2017 IRP).The EIA forecast
was also used in the Company 2018 and 2019 annual filings.
Staff compared this year's natural gas price forecast to the Company's 2019 annual filing
in Case No.IPC-E-19-31 and to the Company's 2018 annual filing in IPC-E-18-13.The annual
difference between the 2020 forecast and the 2019 forecast range from a decrease of 9.97%to
19.71%from 2020 through 2036.The difference between the 2020 forecast and the 2018 forecast
range from a decrease of 14.52%to 27.88%from 2020 through 2036.See Figure No.2.The
reduction in the natural gas price forecast compared to previous forecasts indicate market
conditions that support continued low natural gas prices into the future.
EIA Natural Gas Henry Hub Spot Price:
High Oil and Gas Resource and Technology
6
2
1
Û
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
-2020 Forecast -2019 Forecast 2018 Forecast
Figure No.2:Comparison of EIA HenryHub Forecasts over Past Three Years
Staff also compared Henry Hub forecasts used by Idaho Power,Avista,and Rocky
Mountain Power,and the results show similar trends between the three utilities.See Figure No.3.
The three utilities use three different methodologies and sources to determine natural gas
forecasts.Idaho Power uses EIA's High Oil and Gas Resource and Technology natural gas
forecast.Avista uses a blend of two national consultants'forecasts,EIA's forecast,and forward
market prices,and Rocky Mountain Power uses a combination of third-partyforecasts and
forward market prices.For annual update filings,all three utilities include a Henry Hub Forecast
STAFF COMMENTS 4 DECEMBER 4,2020
that Staff used to illustrate relative comparisons between each utility'sforecasts.Despite
different methodologies and sources,all three HenryHub forecasts reflect a high level of
similarity,especially for the first two years.This is important because avoided cost rates
determinedin the IRP methodology are applied to two-year contracts.Because natural gas
market conditions are predicted to continue to be favorable supporting low natural gas prices,and
because of similarities to Avista and Rocky Mountain Power's Henry Hub forecasts,especially
during the first few years,Staff believes Idaho Power's natural gas forecast is reasonable.
Henry Hub Natural Gas Forecasts Used by
Idaho Power,Avista and Rocky Mountain Power
6
2
1
o
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
-idaho Power --Avista Rocky Mountain Power
Figure No.3:Comparison of Henry Hub Forecasts for Three Idaho Electric Utilities
Contract Terminations,Expirations,and Additions
Since last year's annual filing,Idaho Power has signed fourteen replacement Energy Sales
Agreements for existing Idaho PURPA projects totaling 18.98 MW and one Energy Sales
Agreement for a new hydro PURPA project of 0.8 MW.Additionally,one biomass PURPA
contract of 4.5 MW was terminated.Staff verified the contract information and represents it is
accurate.
STAFF COMMENTS 5 DECEMBER 4,2020
STAFF RECOMMENDATIONS
Staff believes the load forecast,the natural gas forecast,and the contract information
updated by Idaho Power comply with the Order Nos.32697 and 32802.Staff recommends
approval of the updates to be used in the Company's IRP methodology with an effective date
of October 15,2020.
Respectfully submitted this day of December 2020.
Edward J.Je l
Deputy Attorn G neral
Technical Staff:Yao Yin
i:umisc/commentslipce20.30ejmmtncrfcomments
STAFF COMMENTS 6 DECEMBER 4,2020
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 4TH DAY OF DECEMBER 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN CASE
NO.IPC-E-20-35,BY E-MAILING A COPY THEREOF,TO THE FOLLOWING:
DONOVAN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL:dwalker idahopower.com
docketsigdahogower.com
SECRETARY
CERTIFICATE OF SERVICE