HomeMy WebLinkAbout20220218Comments on Petition for Clarification.pdfRILEY NEWTON
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-0318
IDAHO BAR NO. II2O2
:14j ! .- r.^,E it.-,i,,*'r
Street Address for Express Mail:
I I33I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 837T4
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S ANNUAL COMPLIANCE
FILING TO UPDATE THE LOAD AND GAS
FORECASTS IN THE INCREMENTAL COST
INTEGRATED RESOURCE PLAN AVOIDED
COST MODEL
CASE NO. IPC.E.21.35
COMMENTS OF THE
COMMISSION STAFF ON
PETITION FOR
CLARIFICATION AND/OR
RECONSIDERATION
STAFF OF the Idaho Public Utilities Commission, by and through its Attomey of
record, Riley Newton, Deputy Attorney General, submits the following comments.
BACKGROUND
On February ll,2022,Idaho Power Company ("Company") filed a Petition for
Clarification and/or Reconsideration ("Petition"), requesting: (l) clarification whether the
Commission intended for it to use New York Mercantile Exchange ("NYMEX") forwards as of
October 15,2021, for the first three years of the natural gas forecast ("Forecast") to be used to
develop avoided cost prices using the Incremental Cost Integrated Resource Plan ("ICIRP")
avoided cost model; (2) confirmation that the Commission intended to direct the Company to file
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ISTAFF COMMENTS FEBRUARY 18,2022
an updated 2}-year gas price forecast; and (3) confirmation of the methods to be used after the
first three years.
STAFF REVIEW
Staffls review focused on the vintage of NYMEX forwards for the first three years, the
term of natural gas price forecast, and the methods used after the first three years. Staff agrees
with the Company's proposals set fonh in the Petition in all three of these areas.
Vintage of NYMEX Forwards for First Three Years
Staff believes it is reasonable to use the NYMEX forwards as of October 15, 2021,
because, as stated in Order No. 35294, this case is intended to annually update load and gas
forecasts by October 15 of each year. In addition, Order No. 35294 rejects the Company's
proposal to use the Platts' December 2021 forecast, which was generated after October 15.
Term of Natural Gas Price Forecast
Staff agrees with the Company that a term of natural gas price forecasts longer than three
years is needed. Although the ICIRP avoided cost methodology is used for contracts with a
maximum term of two years, a project can request pricing that may not start for several years.
This circumstance requires gas forecasts to be longer than three years to provide pricing for a
future 2-year term contract; therefore, Staff recommends that the Company f/,e a2D-year
forecast.
Methods used After the First Three Years
The Company proposes to transition to the July 2021vintage of the Platts' forecast in
year four by averaging the NYMEX and Platts' prices, and then only use the Platts' prices for
years five through twenty. Staff believes this is a reasonable approach for several reasons.
First, Staff believes averaging the two forecasts for year four is appropriate since it is
during this time frame that economic fundamentals start to become a beffer predictor of future
natural gas prices. Second, Staff believes using the Platts' forecast exclusively for years five
2STAFF COMMENTS FEBRUARY 18,2022
through twenty is appropriate because it is comparable to the other two Idaho utilities' forecastsl
and to the Platts' updated December 2021 forecast submitted by the Company in its reply
comments for the same period.
STAFF RECOMMENDATIONS
Staff recommends that the Commission authorize the Company to use NYMEX forwards
as of October 15, 2021, to develop the 2O-year forecast used in the ICIRP avoided cost model.
In addition, Staffrecommends the following:
1. Use years 2022,2023, and2024 NYMEX forwards for the Forecast;
2. Use an average of the 2025 NYMEX forwards and year 2025 of the JuJy 2021
vintage Platts' forecast, as proposed in the Company's Petition, for year 2025 of
the Forecast;
3. Use years 2026 throngh2}4l of the JuJy 2021vintage Platts' forecast for the
remaining years of the Forecast; and
4. Submit the updated 20-year Forecast as a compliance filing.
Respectfully submitted this t611^ day of Feb ruary 2022
Riley Newton
Deputy Attorney General
Technical Staff: Yao Yin
i:umisc/comments/ipce2l.35rn11'tnc comments
I See Figure No. 4 in Staff s Comments filed on December 21,2021, and Case Nos. AW-E-21-14 and PAC-E-21-20
for the individual utility forecasts.
3STAFF COMMENTS FEBRUARY 18,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 18th DAY OF FEBRUARY 2022,
SERVED THE FOREGOING COMMEI{TS OF TIIE COMMISSION STAFF ON
PETrrroN FOR CLARITICATTON AND/OR RECONSTDERATION, IN CASE
NO. IPC-E-21.35, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
DONOVAN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-MAIL : dwalker@idahopower.com
dockets@idahopower.com
ARY
CERTIFICATE OF SERVICE