20210909Final_Order_No_35158.pdf

ORDER NO. 35158 1

Office of the Secretary
Service Date
September 9, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IDAHO POWER COMPANY’S
APPLICATION TO UPDATE THE GAS
FORECAST IN THE INCREMENTAL COST
INTEGRATED RESOURCE PLAN AVOIDED
COST MODEL
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CASE NO. IPC-E-21-15

ORDER NO. 35158

On May 13, 2021, Idaho Power Company (the “Company”) applied to update the
natural gas forecast from the 2019 Integrated Resource Plan (“IRP”) that is utilized in the
Incremental Cost Integrated Resource Plan (“ICIRP”) avoided cost methodology. IRP avoided
cost rates are available to qualifying facilities (“QFs”) able to generate above the resource-specific
project eligibility cap for published avoided cost rates under Idaho’s implementation of the Public
Utility Regulatory Policies Act of 1978 (“PURPA”).
On June 16, 2021, the Commission set deadlines for interested persons to comment on
the Application, and for the Company to reply. See Order No. 35074. The Commission Staff
(“Staff”) filed comments on July 6, 2021, and was the only party to do so. The Company did not
file reply comments.
Having reviewed the record, the Commission grants the Company’s Application as set
forth in our findings below.
APPLICATION
The Company stated that in Order No. 32697, the Commission determined that the
inputs to the ICIRP avoided cost methodology, utilized for all proposed PURPA qualifying facility
(“QF”) projects that exceed the published rate eligibility cap, will be updated every two years upon
acknowledgement of the Company’s Integrated Resource Plan (“IRP”) filing, except for the load
forecast and the natural gas forecast-which is to be updated annually on June 1 of each year. The
Company stated this annual update was later changed from June 1 to October 15 of each year. See
Order No. 32802.
The Company represented that because of the 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 2017 IRP, which used the U.S. Energy Information Administration’s (“EIA”)

ORDER NO. 35158 2

Henry Hub High Oil and Gas Resource and Technology forecast as the source, but used the most
recent update of the forecast from EIA (published on January 29, 2020). The Company stated the
Commission approved the annual update in Order No. 34881.
The Company asserted that on March 16, 2021, the Commission issued Order No.
34959 acknowledging the Company’s 2019 IRP. The Company explains that the 2019 IRP uses a
natural gas forecast provided by S&P Global Platts (“Platts”). The Company represented that the
ICIRP avoided cost methodology has been updated to utilize inputs from the acknowledged 2019
IRP. The Company asserted however, because of the timing associated with the 2019 IRP review
and acknowledgement in relation to the October update, if the Company were to utilize the gas
forecast from the acknowledged 2019 IRP, it would be utilizing a forecast that uses a different
source (Platts) and is not as current as that approved in the 2020 October update, which was based
on the 2017 IRP. Thus, the Company believed that an out-of-cycle update to the gas forecast from
the acknowledged 2019 IRP should be approved and utilized in the ICIRP avoided cost
methodology. This would apply the same source for the natural gas forecast acknowledged for
resource planning and acquisition in the 2019 IRP (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). The Company stated it would apply the same source for the natural gas
forecast acknowledged for resource planning and acquisition in the 2019 IRP, Platts, and the most
recent information available for that gas forecast, the 2021 Platts forecast. The Company
represented that if the Commission approves this proposed update to the natural gas forecast, the
updated ICIRP avoided cost methodology will be the starting point for the negotiation of its
contractual avoided cost rates.
The Company requested that the Commission approve the use of the natural gas
forecast from the 2019 IRP, the Henry Hub and Sumas Basis Annuals from Platt’s Long-term
Forecast, updated to the published March 4, 2021, forecast. The Company represented the 2021
forecast indicates a 3% decrease in the average, annual natural gas forecast prices compared to the
2018 gas price forecast. The Company represented though that despite this decrease, the 2021
natural gas forecast contains yearly increases in 2021-2023 and 2039-2040 with the remaining
middle years being lower.

ORDER NO. 35158 3

STAFF COMMENTS
Staff believed that the 2021 Platts natural gas forecast that the Company is proposing
to use for determining avoided cost rates under the ICIRP method in future PURPA contracts is
reasonable. Staff's conclusion is based on its analysis of Platt’s forecast compared to other Idaho
utility natural gas forecasts, considering short-term market fundamentals occurring in the market,
and an assessment of Platts as the source of the forecast compared to the previous EIA source used
by the Company. Staff recommended that the Commission approve the use of the 2021 Platts
forecast in Confidential Attachment No. 1 to the Application for determining avoided costs to be
used in the ICIRP avoided cost method.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-501, -502
and -503. The Commission is empowered to investigate rates, charges, rules, regulations, practices,
and contracts of public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provision of law, and to fix the same by order. Idaho Code
§§ 61-502 and 61-503. The Commission also has authority under PURPA and Federal Energy
Regulatory Commission (“FERC”) regulations to set avoided costs, to order electric utilities to
enter fixed-term obligations for the purchase of energy from QFs, and to implement FERC rules.
Under the foregoing authority, we have reviewed and considered the record, including
the Company’s Application and Staff's comments. In Order No. 33957, the Commission stated,
“[w]e further find it appropriate, going forward, that if the Company changes its EIA base forecast,
it should provide a reasonable basis for such change.” Order No. 33957 at 3. To support its use
of the Platts forecast rather than the EIA forecast the Company provided a comparison as part of
the 2019 IRP of market forward prices and the 2018 EIA Reference Case and the 2018 EIA High
Oil and Gas Resource and Technology Case forecasts. The Company also explored other third-
party forecasts. See Response to Staff’s Production Request No. 1. The Company explained that
it chose the Platts forecast for the 2019 IRP because Platts’ forecast “appeared to more closely
align with the first several years of the forward market and then was in range with the others by
2026.” Id.
After reviewing these matters, the Commission finds that the Company has provided a
reasonable basis for using the 2021 Platts forecast (as opposed to EIA) for determining avoided

ORDER NO. 35158 4

costs in the ICIRP avoided cost method. Because the contracts that use the ICIRP method are
limited to two-year terms, accuracy in the near-term forecast is critical.
O R D E R
IT IS HEREBY ORDERED that the Commission approves the Company’s Application
to allow the Company to use the 2021 Platts forecast in Confidential Attachment No. 1 of the
Application in the ICIRP method.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 9th day
of September 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\ELECTRIC\IPC-E-21-15\orders\IPCE2115_final_jh.docx