20210831Reply Comments.pdf

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An[,^colPcomBrry
LISA D. NORDSTROII
Lead Counsel
[e-mail]
LDN:sg
Attachment
August 31,2021
VIA ELECTRONIC FILING
Jan Noriyuki, Secretary
ldaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg.8,
Suite 201-A(83714)
PO Box 83720
Boise, ldaho 83720-0074
Re: Case No. IPC-E-21-12
ln the Matter of ldaho Power Company's Application for a Determination
Acknowledging its North Valmy Power Plant Unit 2 Exit Date
Dear Ms. Noriyuki:
Attached for electronic filing, pursuant to Order No. 35058, is Idaho Power
Company's Reply Comments.
If you have any questions about the attached document, please do not hesitate to
contact me.
Very truly yours,
X*!(,*+r.*,
Lisa D. Nordstrom
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
lnordstrom@ idahopower. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR A
DETERM INATION ACKNO\A'LEDGI NG ITS
NORTH VALMY PO\A'ER PLANT EXIT
DATE.
CASE NO. IPC-E-21-12
IDAHO POWER COMPANY'S
REPLY COMMENTS
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ldaho Power Company ("ldaho Power" or "Company') respectfully submits the
following Reply Comments pursuant to Order No. 34838 in response to comments filed
by the Idaho Public Utilities Commission ("Commission") Staff ("Staff'), the ldaho
Conservation League ("lCL"), and the city of Boise City ("Boise City") on August 17,2021
(collectively, "Commenting Parties"). Idaho Power welcomes the parties' comments,
particularly acknowledging the Company's analysis supporting a December 31, 2025, exit
date from Unit 2 of the North Valmy power plant ("Valmy").
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
I. BACKGROUND
Valmy is a coal-fired power plant that consists of two units and is located near
Battle Mountain, Nevada. Unit 1 went into service in 1981 and Unit 2 followed in 1985.
ldaho Power owns 50 percent, or 284 megawattsl 1'MW'; (generator nameplate rating),
of Valmy. NV Energy is the co-owner of the plant with the remaining 50 percent ownership
and operates the Valmy facility. NV Energy and ldaho Power work jointly to make
decisions regarding Valmy. ldaho Power, in the Settlement Stipulation approved by the
Commission with Order No. 33771 in Case No. IPC-E-16-24, agreed to use prudent and
commercially reasonable efforts to end its participation in the operation of Unit 1 by year-
end 2019, and Unit 2 by year-end 2025.2 On December 31 , 2019, the Company's
participation in coal-fired operations at Unit 1 concluded. The remaining net dependable
capability available to ldaho Power from Valmy Unit 2is 134 MW.
Subsequent to Order No. 33771, the Company filed an application to increase its
rates to recover costs associated with Valmy in Case No. IPC-E-19-08. During review of
ldaho Power's Application in Case No. IPC-E-19-08, Commission Staff indicated that they
reviewed the Company's Unit 2 closure analysis but did not have adequate information
from ldaho Power at the time to determine whether the Company had completed a
thorough review of a unit withdrawal date of December 31 ,2025. Therefore, Order No.
34349 directed the Company to use best efforts to file within 21 days of the service date
of the order: (1 ) an analysis validating the December 31 , 2025, economic retirement date
1 For planning purposes, ldaho Power uses the net dependable capabili$ of 262 MW for the
Company's share of both units. lt should also be noted that the remaining capacity available to ldaho
Power is 134 MW due to the Company's exit of coal-fired operations at Unit 1 at year-end 2019.
2 ln the Matter of the Application of ldaho Power Company for Authority to lncrease /fs Rafes for
Electic Service to Recover Cosfs Assocrated with the Nofth Valmy Plant, Case No. IPC-E-I6-24, Order
No. 33771 (May 3'1 ,20'17).
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
of Unit 2, or (2) an analysis supporting a different economic retirement date of Unit 2.3
On June 27,2019, the Company filed a request for acknowledgement that it had
sufficiently validated the economic retirement date of Valmy Unit 2 as year-end 2025 in
Case No. IPC-E-19-18.4 However, during processing of the case, the Company
determined that further review of ldaho Power's 2019lntegrated Resource Plan ("lRP")
modeling was necessary. Because the 2019lRP modeling was also used to develop the
Valmy Unit 2 closure analysis, the case schedule was suspended while the review was
performed.s Ultimately, ldaho Power withdrew its Application in Case No. IPC-E-19-18
to perform the additional evaluation of both the economic and reliability impacts of an
early Valmy Unit 2 exit. As initially directed by Commission Order No. 34349,6 the
Company presented the results of the additional evaluation in this case.
II. IDAHO POWER'S REPLY
ldaho Power acknowledges and appreciates the Commenting Parties' extensive
review of the Valmy Unit 2 exit date analyses, which began as part of the long-term
planning process of the Second Amended 20191RP, and continued with the development
of near-term system reliability and economic analyses, assessing an exit between 2022
and 2025, as presented in this case. The result of the evaluations is the most reliable and
economic path toward an exit from coal-fired operations of Valmy Unit 2. The
Commenting Parties acknowledge that, based on the information known today, an exit
from Valmy Unit 2 on December 31,2025, is appropriate and that the Company has
3 ln the Matter of the Application of ldaho Power Company for Authori$ to lncrease /fs Rafes for
Electric Serwbe to Recover Cosfs Assocrated with the Nofth Valmy Power Plant, Case No. IPC-E-19-08,
Order No. 34349 at 4-5 (May 31, 2019).
4 ln the Matter of the Application of ldaho Powerfor a Validated Economic Closure Date for North
Valmy Power Plant Unit 2, Case No. IPC-E-19-18.
5 /d , Notice of Vacated Comment Deadlines, Order No. 34724 (July 16, 2020).
6 Order No. 34349 at 4.
IDAHO POWER COMPANY'S REPLY COMMENTS.3
complied with Order No. 34349. The remainder of these Reply Comments will respond
to comments regarding the continued evaluation of the exit from Valmy Unit 2.
A. The Economic and Reliability Analyses Presented in this Case Reflect the
Most Comprehensive and Currently Available lnformation at the Time of
Their Completion.
ln their comments, parties expressed concern that, with updated inputs, there is a
potential for a retirement date prior to December 31 , 2025, that would be more economical
while also maintaining system reliability. Boise City contends ldaho Power should
reevaluate the Valmy Unit 2 exit date using the results of the Company's all-source
Request for Proposal ("RFP"), for the purchase of products for up to 80 MW of electric
generating capacity, issued on June 30, 2021.7 Commission Staff agrees that, while
reasonable at the time ldaho Power filed its Application, potentia! new alternative lower
cost options, including a natural gas conversion of the Jim Bridger Power Plant, could
provide a lower cost alternative compared to an exit date of Valmy Unit 2 on December
31,2025.8 Similarly, lCL wishes to continue to work with the Company to "explore options
to maintain system reliability while pursuing lower cost energy resources" to replace
Valmy.e
Mr. Ellsworth, in his Direct Testimony, stated that the Valmy Unit 2 reliability and
economic impact analyses were performed simultaneously to the development of the
2021 lRP, therefore the Company used the most up-to-date cost information available at
the time for the Valmy Unit 2 exit analyses and for timely compliance with Order No.
7 Boise City Comments, page 3I Staff Comments, page 4.
s ICL Comments, page 2.
IDAHO POWER COMPANY'S REPLY COMMENTS -4
34349.10 Based on the information known at this time, the appropriate exit date from
Valmy Unit 2 is December 31, 2025.
The Company conducted focused, near-term system reliability and economic
analyses on the timing of a Valmy Unit 2 exit between 2022 and 2025, using current
operating budgets and up-to-date economics. The results of the reliability analysis made
it clear that Idaho Power is unable to meet reliability requirements if participation in coal-
fired operations of Valmy Unit 2 ceases in 2022 without procuring an alternate source of
peak capacity.tt The Company identified four potential and feasible alternatlves to
delaying a Unit 2 exil of Valmy until 2025 and performed an economic analysis on the
resulting portfolio costs, identiffing the portfolio that is least-cost and least-risk to the
Company and its customers.12
Staff expressed uncertainty about whether the alternatives considered provided "a
comprehensive assessment of all potential resource options that could be considered
through the AURORA long-term capacity expansion model over the full 2O-year IRP
planning time horizon" and indicated that, because the economic analyses did not look
past December 31,2025, potential future resource acquisitions were not considered.l3 lt
is important to note that the intent of the Company's case is to determine the appropriate
exit date for Valmy Unit 2 and its associated 134 MW of firm capacity. Under the
Settlement Stipulation approved by the Commission with Order No. 33771, the parties
agreed ldaho Power would use prudent and commercially reasonable efforts to end its
1o Ellsworth Dl, page 15,11.7-12.
11 /d., page 27,1l..7-16.
12 ld.,page36, l. 13-page 37,1.11
13 Staff Comments, page 3.
IDAHO POWER COMPANY'S REPLY COMMENTS. S
participation in the operation of Unit 2 by year-end 2025.1a Therefore, the analyses
evaluated options for the effective replacements of 134 MW of firm capacity at Valmy Unit
2 in 2022, 2023 and 2024.
ln addition to the four alternatives the Company identified to delaying a Unit 2 exit
of Valmy until 2025, on April 26,2021, ldaho Power issued an RFP for the delivery to
ldaho of firm capacity and energy as a potentia! resource replacement of Valmy Unit 2
during the summer months through 2025.1s The Company intended to use the results of
the RFP to calculate an associated market purchase portfolio cost to compare to a Valmy
Unit 2 exit in 2025. However, ldaho Power received no bids.16 The Company evaluated
all potential and feasible future acquisitions for the replacement of Valmy Unit 2 prior to
2025.
B. ldaho Power's 2021 IRP will Provide a Timely Economic and Reliability
Analysis to Further lnform the Appropriate Exit Date for Valmy Unit 2.
The Company agrees with the Commenting Parties that updated inputs and/or new
resource options may result in an exit date of Valmy Unit 2 prior to December 31, 2025,
that is lower cost while continuing to meet reliability requirements. ldaho Power would
Iike to reiterate its commitment to evaluate alternative exit dates of Valmy Unit 2 prior to
2025 using updated cost inputs or resource options as part of the 2021 lRP.
As indicated by the Commenting Parties, cost inputs and potentialfuture resource
options are constantly changing, potentially offering a lower cost alternative to a Valmy
Unit 2 exit of December 31,2025. ln their comments Boise City discussed ldaho Power's
issuance of an all-source RFP on June 30, 2021, for the purchase of products for up to
1a Case No. IPC-E-16-24, Settlement Stipulation fl 11
1s Application Supplement (June 30,2021).
16 ld.
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
80 MW of electric generating capacity, as a potential replacement of the capacity of Valmy
Unit 2 prior to December 31, 2025.12 The Company will analyze any bids received in
response to the RFP and the associated pricing through the norma! long-term planning
process, currently the 2021 lRP, which is under development.
The 2021 IRP will include updated cost inputs for a// resources, including any
potential replacement resource alternatives. The continued analysis of a Valmy Unit 2
exit as part of the 2021 lRP will consider more current operating budgets and up-to-date
economics to inform a decision that will minimize costs for customers while also
maintaining system reliability. ln addition, the timing of the 2021 IRP appropriately aligns
with ldaho Power's notification requirement to NV Energy beyond the September 2021
deadline should the results indicate an exit at year-end 2023 or 2024 is least-cost and
continues to meet reliability requirements. The 2021 IRP will provide a comprehensive
and timely analysis to support the continued evaluation of the appropriate Valmy Unit 2
exit date.
ilt. coNcLUStoN
ldaho Power appreciates the opportunity to respond to comments filed in this case
and for the Commenting Parties' support in acknowledgement that, based on the
information known at this time, December 31, 2025, is the appropriate exit date of Valmy
Unit 2. The Company respectfully requests that the Commission issue an order, no later
than September 29,2021, acknowledging the appropriate exit date from the Valmy Unit
2 as December 31,2025, based on information known today. ldaho Power will continue
to evaluate the appropriate exit date of Valmy Unit 2 as part of the 2021 lRP.
17 Boise City Comments, page 3.
IDAHO POWER COMPANY'S REPLY COMMENTS. T
DATED at Boise, ldaho, this 31$ day of August, 2021
X,;!.ff"t-t.*,
LISA D. NORDSTROM
Attorney for ldaho Power Company
IDAHO POTTVER COMPANIY'S REPLY COMMENTS - 8
CERTIFICATE OF SERVICE
! HEREBY CERTIFY that on the 31st day of August 2021 I served a true and correct
copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Dayn Hardie
Deputy Attorney General
ldaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg No. 8,
Suite 201-A(837141
PO Box 83720
Boise, lD 83720-0074
lndustrial Customers of ldaho Power
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 N.6th Street
Boise, ldaho 83701
Micron Technology, lnc.
Austin Rueschhoff
Thorvald A. Nelson
Holland & Hart LLP
555 17th Street, Suite 3200
Denver, CO 80202
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tnelson@ holland hart. com
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IDAHO POWER COMPANY'S REPLY COMMENTS.9
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Jim Swier
Micron Technology, lnc.
800 South FederalWay
Boise, ldaho 83707
City of Boise
Mary Grant
Deputy City Attorney
Boise City Attorney's Office
150 N. Capitol Blvd.
P.O. Box 500
Boise Idaho 83701-0500
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boisecityattornev@citvofboise. orq
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Stacy Gust, Regulatory Administrative
Assistant
IDAHO POVVER COMPANY'S REPLY COMMENTS.lO