20210513Application.pdf

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An IDACOnP Company
DONOVAN E. WALKER
Lead Counsel
[e-mail]
May 13,2021
VIA ELECTRONIC MAIL
Jan Noriyuki, Secretary
ldaho Public Utilities Commission
11331 West Chinden Blvd., Building 8
Suite 201-A
Boise, ldaho 83714
Re: Case No. IPC-E-21-15
ldaho Power Company's Application to Update the Gas Forecast in the
lncremental Cost lntegrated Resource PlanAvoided Cost Model
Dear Ms. Noriyuki:
Attached for electronic filing is ldaho Power Company's Application in the above
entitled matter. lf you have any questions about the aftached documents, please do not
hesitate to contact me.
Attachment No. 1 to the Application is confidential. Please handle the confidential
information in accordance with the Protective Agreement to be executed in this matter.
Very truly yours,
2ilatl<-
Donovan E. Walker
DEW:cld
Enclosures
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DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221 West ldaho Street (837021
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@ idahopower. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IDAHO POWER COMPANY'S
APPLICATION TO UPDATE THE GAS
FORECAST IN THE INCREMENTAL
COST INTEGRATED RESOURCE PI.AN
AVOIDED COST MODEL
CASE NO. !PC-E-21-15
APPLICATION
ldaho Power Company ("ldaho Power") hereby respectfully applies to the ldaho
Public Utilities Commission ("Commission") to update the natural gas forecast from the
acknowledged 2019 lntegrated Resource Plan ("lRP') that is utilized in the lncremental
Cost lntegrated Resource Plan ("lClRP') avoided cost methodology.
I. INTRODUCTION
ln its final Order No. 32697, the Commission determined that the inputs to the
ICIRP avoided cost methodology, utilized for all proposed Public Utility Regulatory
Policies Act of 1978 ('PURPA) Qualiffing Facility ("QF') projects that exceed the
published rate eligibility cap, wil! be updated every two years upon acknowledgement of
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APPLICATION . 1
the utility's lntegrated Resource Plan ("lRP") filing, with the exception of the Ioad forecast
and the natural gas forecast-which is to be updated annually by October 15 of each
year. The Commission stated:
We find that, in order to maintain the most accurate and up-
to-date reflection of a utility's true avoided cost, utilities must
update fuel price forecasts and load forecasts annually -
between IRP filings. For the sake of consistency, these
annual updates should occur simultaneously with SAR
updates - on June 1 of each year. ln addition, it is appropriate
to consider Iong-term contract commitments because of the
potentialeffect that such commitments have on a utility's load
and resource balance. We find it reasonable to include long-
term contract considerations in an IRP Methodology
calculation at such time as the QF and utility have entered into
a signed contract for the sale and purchase of QF power. We
further find it appropriate to consider PURPA contracts that
have terminated or expired in each utility's load and resource
balance. We find it reasonable that all other variables and
assumptions utilized within the IRP Methodology remain fixed
between IRP filings (every two years).
Order No. 32697, p.22. The date for the annual update was later changed from June 1
to October 15 of each year. Order No. 32802.
Because of significant delay in reaching acknowledgement of the 2019 IRP, the
October 2020 update of the gas and load forecast for the ICIRP methodology was based
upon the last acknowledged IRP which was the 2017 lRP. On October 15, 2020, the
Company applied to the Commission to update the load forecast and naturalgas forecast
used in the ICIRP avoided cost methodology which utilized ldaho Power's 2017 IRP as
the basis of the methodology and the source of the 2017 IRP gas forecast was the U.S.
Energy lnformation Administration's ("ElA") Henry Hub High Oil and Gas Resource and
Technology forecast. See Case No. IPC-E-20-35. The Commission approved the annual
update in Order No. 34881 issued on December 29, 2020.
APPLICATION .2
On March 16,2021, the Commission issued Order No. 34959 in Case No. IPC-E-
19-19 that acknowledged the Company's 2019 lRP. The 2019 IRP uses a natural gas
forecast provided by S&P Global Platts ("Plafts"). The ICIRP avoided cost methodology
has been updated to utilize inputs from the acknowledged 2019 lRP. However, because
of the timing associated with the 2019lRP review and acknowledgement in relation to the
October update, if the Company were to utilize the gas forecast from the acknowledged
20191RP, it would be utilizing a forecast that both uses a different source and is not as
current as that approved in the 2020 October update. The Company believes that an out-
of-cycle update to the gas forecast from the acknowledged 2019 should be approved and
utilized in the ICIRP avoided cost methodology. This would apply the same natural gas
forecast acknowledged for resource planning and acquisition in the 2019lRP (S&P Global
Platts), as well as using the most up-to-date information available for that gas forecast
(2021 Platts forecast vs. 2018 Platts forecast from the acknowledged 2019 IRP).
Consistent with the Commission's prior orders, should this update to the natural
gas forecast by approved by the Commission, the updated ICIRP avoided cost
methodology will be utilized by ldaho Power as the starting point for the negotiation of its
contractual avoided cost rates.
II. NATURAL GAS PRICE FORECAST
ldaho Power requests the use of the natura! gas forecast from the acknowledged
2019lRP, the Henry Hub and Sumas Basis Annuals from S&P GIobal Platt's Long-term
Forecast, updated to the published March 4,2021, forecast. Use of this forecast indicates
an approximate 3% overall decrease in the average annual natural gas forecast prices
over the remaining period in comparison to the 2018 natural gas price forecast from the
APPLICATION - 3
acknowledged 2019 lRP. Although the updated Platts naturalgas forecast shows a slight
decrease overall, it does contain yearly increases in 2021-2023 and 2039-2040. The
remaining middle years are all lower. Because the Platts forecast is subscription-based
and proprietary, this information has been included herewith as ConfidentialAttachment
No. 1. Confidential Attachment 1 contains Table 1 which is a comparison of the yearly
(2021-2040) natural gas forecast from the 2019 lRP and the 2021 updated gas forecast
for the S&P Global Platts Long-term Natural Gas Forecast, and Table 2, which is a
graphical representation of the same numbers.
III. CONCLUSION
The Commission established an annua! update to the natural gas forecast utilized
in the ICIRP methodology specifically and expressly, "to maintain the most accurate and
up-to-date reflection of a utility's true avoided cost, utilities must update fuel price
forecasts and load forecasts annually - between IRP filings." Order No. 32697, p.22. ln
maintaining consistency with the principle that the most up-to-date information be utilized
for the establishment of avoided cost pricing, the Commission has allowed utilities to
update the gas forecast in the ICIRP consistent with the basis and methods utilized in its
lRPs, and to update those forecasts to the most current forecasts. See, Case No. AVU-
E-20-10. Because of the unusual delay in the 2019!RP, updating to the acknowledged
2019 natural gas forecast would be significantly out of date.
ldaho Power hereby respectfully submits this updated natural gas forecast
information in compliance with the Commission's directives in Order Nos. 32697 and
32802 and asks the Commission to approve use of the gas forecast from the
APPLICATION .4
acknourledged 2019 lRP, the Henry Hub and Sumas Basis Annuale ftom S&P Global
Platt's Long-term Fore@st, updated to the published Marcfi 4,2021, forecast.
Respectftrlly submitted this 13s day of May,2021.
C,,*2ilt4-
DONOVAN E. \AIALKER
Aftomey for ldaho Power Company
APPLICATION .5