20210817Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03t2
IDAHO BARNO.9917
. i j lj.l !r: 0lj
Street Address for Express Mail:
1I331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR A
DETERMINATION ACKNOWLEDGING ITS
NORTH VALMY POWER PLANT EXIT
DATE
CASE NO. IPC-8.2I.12
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the tdaho Public Utilities Commission ("Staff'), by and through its Attorney
of record, Dayn Hardie, Deputy Attomey General, submits the following comments.
BACKGROUND
On April 30,2021, Idaho Power Company ("Company") applied for Commission
acknowledgment that its December 31,2025, exit date from the North Valmy Power Plant
("Valmy") Unit 2 is appropriate based on available information.
To determine the appropriate timing of the Valmy Unit 2 exit, the Company asserts it
"conducted focused system reliability and economic analyses...." Application at 5. Regarding
its system reliability analysis, the Company noted that in its Second Amended 2019 lntegrate
Resource Plan ("[RP"), the Company projected that it could exit from Valmy Unit 2 by year-end
2022. But this conclusion assumed that Valmy Unit2 could be replaced with capacity purchases
south of the Company's service area. The Company explains that "market conditions have
changed dramatically in the south because of ripple effects stemming from the energy emergency
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ISTAFF COMMENTS AUGUST I7,2O2I
event in California in August 2020." Id. at 6. The Company notes that the market has become
constrained, and the Company is testing market availability with a market request for proposals
("RFP"). "[T]he Company will evaluate the various proposals received and supplement its filing
in this case in June2021to inform stakeholders of proposals received." 1d
As part of the economic analysis, the Company modeled the cost of exiting Valmy Unit2
at the end of 2022 and replacing it with a resource. The Company looked at four resource
portfolios that could reasonably replace Valmy Unit 2. The Company compared the cost of each
portfolio to the cost of exiting Valmy Unit2 by year-end2025. The Company asserts that each
replacement resource portfolio option results in "costs in the range of approximately $15.89 -
$30.78 million more than the base portfolio, the Valmy Unit 2 exit of 2025." Id. at7.
The Company concluded, based on its system reliability and economic analyses, that the
appropriate exit date from Valmy Unit 2 is December 31, 2025. The Company asks that the
Commission acknowledge this date as the appropriate exit date from Valmy Unit2 based on the
information known at this time.
STAFF REVIEW
Staff reviewed the Company's Application, including supporting testimony, and
subsequent responses to production requests. Based on this review, Staffrecommends the
Commission acknowledge the Company's analysis supporting a December 31,2025, exit date
from Valmy Unit 2, based on information known at the time of the Application and as
supplemented by the Company. This will allow the Company to comply with the previous Order
No. 34349, dated May 3l,2Ol9.l
Because of a dynamic planning environment and the limited scope of the Company's
analysis performed for its Application, Staff recommends the Commission direct the Company to
continue its analysis of the Valmy Unit2 exit date in the 2021 IRP and in subsequent IRPs.
I Order No. 34349, Directed the Company to "use best efforts to file, within 2 I days of the service date of [the]
Order; ( I ) an analysis validating the December 31,2025 economic retirement date of Unit 2; or (2) an analysis
supporting a different economic retirement date of Unit 2."
2STAFF COMMENTS AUGUST 17,2O2I
Comparyt Anabtsis
In its Application, the Company provided a targeted analysis of four altemative resource
options with approximately equivalent amounts of capacity to replace an early exit of Valmy
Unit2 (134 Megawatts) as compared to allowing Valmy Unit2 to continue operating until the
end of 2025. The Company indicated these four options are the only feasible resource options to
allow for an earlier exit of Valmy Unit 2.2 Because of the limited scope of the study compared to
the analysis performed in the Company's IRP, Staff believes the Company should continue to
analyze an early exit of Valmy Unit 2 in the 2021 IRP and in subsequent IRPs.
The economic analysis for the four alternative options was based on replacement capacity
beginning in year 2023. This timing provided the required l5-month notice to the operating
partner, NV Energy, as negotiated in the Framework Agreement. In the Company's analysis,
each of the options show higher relative costs compared to a December 3l , 2025 , exit date of
Valmy Unit2, as can be seen in the table below.
VALMY UNIT 2 . ECONOMIC ANALYSN DIFFERENCE*
Solar and Battery Storage $28.1 million
Battery Storage $30.8 million
Expanded Demand Response Program $23.7 million
Delayed Exit of Bridger Unit $15.9 million
*Difference Compared to a December 31,2025, Exit Date
Although the four alternatives used for comparison are reasonable, Staff is uncertain they
provide a comprehensive assessment of all potential resource options that could be considered
through the AURORA long-term capacity expansion model over the fuII2O-year IRP planning
time horizon. For example, because the time horizon of the study did not look past December
31,2025, the potential to pull in future resource acquisitions to meet near-term needs was not
considered.
2 Production Request - Response No. 4
aJSTAFF COMMENTS AUGUST I7,2O2I
Tr ans mi s s i on Av ai I ab il i t.v
Staff agrees with the Company's assessment that transmission capacity will be limited
during the peak load month of July from2022 through 2025. This constraint limits potential
resources to those that could be directly interconnected to the Company's existing transmission
system. The constraint became more apparent when the Company issued a request for firm
transmission capacity in late April202l for the Company's peak capacity resource needs, but
then received no bids to its RFP. Staff believes the result of this RFP is an indication that firm
transmission markets have tightened considerably, especially during the Company's peak
demand periods and that the assumptions of market availability to southern hubs used in the
Second Amended 2019 IRP are no longer valid.
Recent Developments
Although the alternatives considered in the Company's economic analysis may have been
reasonable at the time of the Application, potential options can change based on circumstance.
Staff believes the Commission should direct the Company to continue its analysis of an early exit
of Valmy Unit 2 within the Company's IRPs to determine the most economic exit date between
now and December 31,2025. In addition, short term developments identified in the Company's
operational plans that may affect the Valmy Unit 2 exit date should be communicated to the
Commission.
Since this filing, another potentially lower cost option was not considered, which could
ultimately provide a lower cost altemative compared to a December 31,2025 Valmy Unit 2 exit
date. On August 6,2021, during the PacifiCorp IRP stakeholder meeting, PacifiCorp identified
several portfolios that included a natural gas conversion of Jim Bridger Power Plant ("Bridger")
Units 1 and2 by the year 2024. Since this option was not considered in the Company's analysis,
Staff believes it should also be considered.
The Company owns one-third of the Bridger plant, and its likely that any modification to
the units would require agreement between the Company and PacifiCorp. During the
Company's Integrated Resource Plan Advisory Council meeting on August l0,202l,the
Company indicated that it will include a natural gas conversion of Bridger Units I and 2 as a
resource that can be selected in its IRP.
4STAFF COMMENTS AUGUST I7,2O2I
The Company's operational plans are used to optimize cost and make trade-offs between
the Company's resources and markets. Changes in short-term market conditions are often
identified during operational planning. If market conditions and the availability of firm
transmission changes, Staff believes this could drive a different exit date for Valmy Unit 2.
STAFF RECOMMENDATIONS
As a result of its analysis, Staff recommends the Commission:
l. Acknowledge the Company's analysis reflecting a December 31,2025, exit date
for Valmy Unit 2 based on the information available at the time of the Company's
Application;
2. Direct the Company to continue to evaluate the appropriate exit date for Valmy
Unit 2 through December 31,2025, as part of the Company's IRPs; and
3. Direct the Company to notifu the Commission of any change to the Company's
operating plan that supports a Valmy Unit 2 exit date prior to December 31,2025.
Respecttully submitted thirfl tl'day ofAugust 2021.
,A'
Deputy Attorney General
Technical Staff: Rick Keller
Kathy Stockton
i: umisc/comments/ipce2 l. l2dhrkkls comments
5STAFF COMMENTS AUGUST I7,2O2I
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS ITth DAY OF AUGUST 2021,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-21-12, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWNG:
LTSA NORDSTROM
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
[e-mail]
PETER J zuCHARDSON
RICHARDSON ADAMS PLLC
515 N 27TH STREET
BOISE TD 83702
E-MAIL: [e-mail]
BENJAMIN J OTTO
ID CONSERVATION LEAGUE
7IO N 6TH ST
BOISE TD 83702
E-MAIL: [e-mail]
JIM SWIER
MICRON TECHNOLOGY INC
SOOO S FEDERAL WAY
BOISE ID 83707
ELECTRONIC ONLY
ac lee(@ ho I I andhart. com
gl garganoamari (@ hol I andharl. com
MATT LARKIN
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-MAIL: mlarkin(Di opower.conl
DR DON READING
6070 HILL ROAD
BOISE ID 83703
E-MAIL: dreadins@)mindsprinu.com
MARY GRANT
DEPUTY CITY ATTORNEY
BOTSE CITY ATTORNERY OFF
PO BOX 500
BOISE ID 8370I
AUSTIN RUESCHHOFF
THORVALD A NELSON
HOLAND & HART LLP
555 17TH ST STE 32OO
DENVER CO 80202
CERTIFICATE OF SERVICE