20220512Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.9917
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )COMPANY'S APPLICATION TO EXPAND )CASE NO.IPC-E-21-40
OPTIONAL CUSTOMER CLEAN ENERGY )OFFERINGS THROUGH THE CLEAN )ENERGY YOUR WAY PROGRAM )COMMENTS OF THE
)COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission ("Staff'),by and through its Attorney
of record,Dayn Hardie,Deputy AttorneyGeneral,submits the followingcomments.
BACKGROUND
On December 2,2021,Idaho Power Company ("Company")applied for authority to
expand its optional clean energy offerings.The Company seeks to (1)rename the existing
Schedule 62-Green Power Purchase Program Rider (optional)to Clean Energy Your Way
("CEYW");(2)maintain and expand procurement options for the renewable energy certificate
("REC")offering under the name Clean Energy Your Way -Flexible ("CEYW Flexible"or
"Flexible");(3)establish a regulatory framework for a future voluntarysubscription green power
service offering named Clean Energy Your Way -Subscription ("CEYW Subscription"or
"Subscription");(4)offer a tailored renewables option to the Company's largest customers
(Special Contracts and Large Power Service)named Clean Energy Your Way -Construction
STAFF COMMENTS 1 MAY 12,2022
("CEYW Construction"or "Construction");and (5)procure associated program renewable
resources outside the Commission's current competitive bidding requirements.
On January 31,2022,the Commission issued a Notice of Application and Notice of
Intervention Deadline.Order No.35304.
The Industrial Customers of Idaho Power ("ICIP"),Idaho Conservation League ("ICL"),
Clean Energy Opportunities ("CEO"),City of Boise City ("Boise City"),and Walmart
intervened.See Order Nos.35285,35301,35311,and 35320.
At the Commission's March 8,2022,Decision Meeting,Staff represented that it had
informally conferred with the Parties and agreed to a public comment deadline of May 12,2022,
and a Company reply deadline of June 2,2022.
STAFF REVIEW
Staff reviewed the Company's Application,testimony and additional information
provided through discovery.Staff recommends the Commission:
1.Approve the renaming of the existing Schedule 62 Green Power Purchase
Program Rider (Optional)to the CEYW Program;
2.Approve the maintenance and expansion of the procurement options for the REC
offering under the name CEYW Flexible;
3.Require the Company to file annual CEYW Flexible reports prior to the
Company's annual power cost adjustment ("PCA")filing;
4.Allow the Company to proceed with the "general framework and concepts"of the
CEYW Subscription option with parameters subject to change pending
Commission approval when the Company files the second phase ("Phase II");
5.Require the Company to work with Staff to discuss potential avoided cost
methods that can be used for CEYW Subscription offering;
6.Approve the Company's proposed CEYW Construction offering framework and
modifications to Schedule 62 with the followingrequirements:
a.The cost-of-service ("COS")and rates used to recover costs from each
Construction customer be verified with each proposed Renewable Energy
Facility ("REF");
STAFF COMMENTS 2 MAY 12,2022
b.The Company will evaluate the effect of increased energy priced at
avoided cost in the Company's overall net power costs and evaluate
alternative methods for determining avoided cost of energy prior to more
CEYW programs customers being developedand integrated into the
Company's system;and
c.Every Construction customer REF contract [power purchase agreement
("PPA")or a resource construction agreement]be reviewed and
authorized by the Commission.
7.Require the Company to hold a workshop (consistent with Staff's
recommendation in Case No.IPC-E-21-42)to evaluate the full PCA treatment of
CEYW offerings,includinghow system-generated REC benefits are passed on to
CEYW customers in the PCA;
8.Require the Company to hold a workshop to discuss the accounting treatment of
costs,benefits,and loads (consistent with Staff's recommendation in Case
No.IPC-E-21-42)for all CEYW offerings prior to the next general rate case
("GRC");
9.Require the Company to provide supplemental information with each PCA filing
that details:
a.CEYW offering cost information that flows through the PCA;
b.The amount of consumption and generation from the renewable resources
serving CEYW Construction projects;
c.Annual CEYW Construction customer load forecasts compared to CEYW
Construction customers'annual generationforecast for all signed PPA's
(or resource construction agreements)broken down on a monthlybasis;
d.Annual CEYW Subscription enrollment;and
e.Forecasted CEYW Subscription enrollments and load.
10.Approve the Company's request to procure associated CEYW renewable
resources outside the Commission's current RFP competitive bidding
requirements.However,for CEYW Subscription offering,Staff recommends the
Company perform a thorough procurement process for the renewable resource(s),
which Staff will analyze in Phase II.
STAFF COMMENTS 3 MAY 12,2022
Flexible Offering
The Company's CEYW Flexible offering remains the same as the previous Green Power
Program with the exceptions of the following:(1)Limited Bulk Purchase Option;and (2)Option
3-Large Purchase Option added to Schedule 62.
For the Limited Bulk Purchase Option,the Company seeks approval to purchase RECs
prior to a customer's request with intent to sell the RECs to interested customers later.The
Company states,"[s]uch advance REC purchases shall not exceed $5,000 at any given time.
Additionally,the Company would not initiate the next bulk purchase until the prior batch had
been sold."Application at 8.Staff believes the Flexible option would benefit from the Limited
Bulk Option and the Company has established the necessary safeguards to minimize the risks
with advanced REC purchases;therefore,Staff recommends approval of the Company's request
to offer a Limited Bulk Purchase Option.
The Large Purchase Option is a tailored agreement for customers who wish to purchase
750 megawatt-hour ("MWh")of RECs or more per year.Prior to this filing,the Company's
customers could purchase Company-owned RECs exceeding 750 MWh,this filing would
officially formally incorporate the policy into the CEYW Flexible offering.The sales of the
Company-owned RECs would then pass throughthe PCA mechanism as a benefit to customers.
However,due to an increased demand for RECs,Company-owned RECs for 2022 are sold outi
leaving a void for customers seeking large quantities of RECs.To meet the increased demand,
the Company now seeks approval of the Large Purchase Option to include tailored agreements
for RECs exceeding 750 MWh to be procured from third parties.Staff initially had concerns
about a potential cost shift from tailored agreements to customers participating in Options 1 and
22 in the CEYW Flexible offerings.However,the Company stated it will have separate
accounting treatments for Options 1 and 2,for the Large Purchase Option of Company-owned
RECs,and for the Large Purchase Option of third-partyRECs.See Company response to
Production Request No.44.Staff supports inclusion of the Large Purchase Option to include
tailored agreements for REC purchases exceeding 750 MWh to be procured from third parties.
I See response to Production Request No.9 and 44.
2 Options 1 and 2 were part of the Green Power Program.See Schedule 62 for additional information.
STAFF COMMENTS 4 MAY 12,2022
Subscription Offering
In Order No.33638,Case No.IPC-E-16-14,the Commission approved a Settlement
Stipulation authorizing the Company to build a 500 kilowatt ("kW")communitysolar system in
the Treasure Valley and offer retail customers an opportunity to buy (subscribe)its generation
output.On April 26,2019,in Order No.34317,the Commission suspended the subscription-
based program on the Company's request because of insufficient enrollment.The Company is
now proposing a new renewable resource subscription offering-with a much larger renewable
resource this time.The Company represented in its response to Production Request Nos.1 and
29,that there are customers who want to purchase large blocks-up to 5 megawatts ("MW")-of
renewable energy.With a potential renewable resource being sized up to 100 MW,the
Company requests that the conceptual framework be approvedso it can move forward to select a
resource and begin creating a rate that will be fair,just,and reasonable.
The Company requests to process the CEYW Subscription offering in two phases.The
first phase ("Phase I")is a conceptual design or framework.If Phase I is approved,the actual
selection of a renewable resource will be made and a rate structure will be submitted for review
in Phase II.Following approval of Phase II,enrollment will commence.The expected timeline
of CEYW Subscription is as follows:
1.Phase I currentlysubmitted and pending Commission approval;
2.Phase II filed in the fourth quarter of 2022;
3.Open enrollment occurring in third quarter of 2023;and
4.The selected renewable resource is online towards the end of 2024.3
The Company seeks approval of the followingdesign concepts for the CEYW
Subscription offering:(1)waiver of procurement guidelines for resource(s);(2)CEYW
Subscription eligibility;(3)CEYW Subscription size;(4)CEYW subscriber term length;(5)
RECs;(6)CEYW Subscription pricing components;(7)CEYW Subscription charges;and (8)
Monthly billing.4
Staff believes that the framework will receive a fair analysis once a renewable resource
has been selected,size has been determined,and a rate structure is known.Currently,Staff only
3 See Company response to Production Request No.47.
4 The Company is not currently requesting approval of rates but is seeking approval of the conceptual framework.
STAFF COMMENTS 5 MAY 12,2022
supports the Company's intent to offer retail customers an opportunity to participate but does not
offer support for the proposed framework or the rate structure.
Staff filed Production Requests seeking a better understandingof the Company's
conceptual framework.However,the Company responded that it is only seeking approval of the
conceptual framework in Phase I and will present its findings in Phase II to illustrate whether the
proposed conceptual framework is functional along with any modifications that may be
necessary.In this filing,Staff cannot effectivelyanalyze whether the CEYW Subscription
option will benefit or harm other customers without actual data to support the proposed
framework and to show it will be in the public interest.
Staff's concerns with the Company's proposal are discussed in detail below:
1.Resource Procurement:The Company requests a waiver of Oregon Public Utility
Commission ("OPUC")Request for Proposals ("RFP")guidelines and rules;
2.Subscription:The Company was unable to subscribe 500 kW in 2019,but expects
to subscribe 50 MW now;
3.Avoided Cost:The Company has not identified a method for determining the
avoided cost that will be applied to the conceptual framework;
4.Accounting Treatment:The Company made no mention of the proposed
accounting treatment except that the unsubscribed portions will be passed through
the PCA,and additional details of how the CEYW Subscription costs,benefits,
and loads may be incorporated into base rates;and
5.Approval of conceptual framework:The Company's is seeking approval of the
conceptual framework without providing supporting data.
Resource Procurement Guidelines
The Company is requesting a waiver from the OPUC RFP guidelines and rules to procure
renewable resource(s)for the CEYW Subscription offering.The Company states that it intends
to follow some aspects of the OPUC RFP guidelines,OAR 860-089-0010 et.seq.("OPUC
Resource Procurement Rules").Application at 6.During Phase II,Staff will evaluate the
proposed procurement process for the resource(s)selected to ensure the resource(s)is least cost,
and/or that participants and non-participants will not be negatively impacted.
STAFF COMMENTS 6 MAY 12,2022
Staff has concerns with a waiver to acquire a renewable resource(s)for the CEYW
Subscription offering.If the Company does not fully subscribe the CEYW Subscription
resource,the Company proposes to recover the unsubscribed portions through the PCA.This
authorization would allow recovery of a resource that is potentiallyunnecessary and unvetted.
This is unlike the Company acquiring resources to provide reliable service to its retail
customers."If the Company utilizes the OPUC Resource Procurement Rules,it will increase the
chance customers will be paying for a least cost resource.However,the timeline of the CEYW
Subscription offering will be delayed.Staff recommends that the Company perform a thorough
procurement process for the renewable resource(s),which Staff will analyze in Phase II.
Subscription
The Company did not fully address how it plans to subscribe up to 50 MW (up to 100
MW)when it was previouslyunable to subscribe 500 kW through the Community Solar Program
developedin Case No.IPC-E-l 6-14.The Company stated that it performed surveys and had
discussions with customers but offered little evidence that the program could be fully subscribed.
If not fully subscribed,Staff believes it would pass costs onto non-participants.Staff is unable to
fully address concerns identified in Phase I without an analysis of a proposed pricing structure
and without a resource being selected,increasing the probability of additional costs being shifted
to non-participating customers.Thus,Staff is concerned that approval of the conceptual
framework in this filing may harm non-participating customers and may not be in the public
mterest.
Avoided Cost
The Company stated it has not identified and did not specify what method it will use to
calculate a proper avoided cost for CEYW Subscription offerings.See Response to Production
Request No.48.Prior to filing Phase II,Staff recommends that the Company work with Staff to
discuss potential methods that can be used to calculate a reasonable avoided cost that benefits
potential participants and will not harm non-participants.
6 See IPC-E-22-13 Application for a Certificate of Public Convenience and Necessity.
STAFF COMMENTS 7 MAY 12,2022
Accounting Treatment and Recovery
The Company requests to recover costs for the unsubscribed portion of the selected
renewableresource through the PCA.In addition to and consistent with issues identified with
the CEYW Construction offering in Case No.IPC-E-21-42,Staff recommends that the Company
combine the workshop recommended in that case to address the full PCA treatment including
treatment of RECs from the renewable resources and the allocation of RECs generated by the
rest of the system.Specific to CEYW Subscription offerings,the workshop needs to address
treatment of administration and marketing costs expected to be embedded,6 and the potential
inclusion of CEYW Subscription offering in base rates if not fully subscribed.
Staff also recommends that the Company combine the workshop Staff recommended in
Case No.IPC-E-21-42 to discuss the treatment of costs,benefits,and loads in base rates for all
CEYW offerings prior to the next GRC.
Approval of Conceptual Framework
After the Commission approved Schedule 63,Order No.33638,the Company enrolled
15.3 percent of a 500 kW renewable resource.'Three years followingthe suspension of
Schedule 63,the Company is optimistic it has enough interest to fully subscribe a 50 MW
resource.Due to the uncertainty and history of Schedule 63,Staff is concerned that the CEYW
Subscription conceptual framework could potentiallycause upward pressure on non-participants'
rates.Without data or a resource selected,the Company is unable to ensure that the framework
is in the public interest and will result in fair,just,and reasonable rates.Staff believes that the
general framework is a good starting point for the CEYW Subscription option but should include
more definition.As such,the Subscription option should be subject to additional review when
the Company selects a renewableresource and files Phase II for approval.At this time,Staff
supports the Company proceeding to Phase II but believes the Framework may require
modifications after an analysis is completed to ensure it does not harm non-participants.
6 See Company Response to Production Request No.19.
7 See Advice No.19-02 Suspension of Schedule 63,Community Solar Pilot Program (Optional),(approved andeffectiveApril26,2019.
STAFF COMMENTS 8 MAY 12,2022
Construction Offering
Staff reviewed the Company's proposed framework and modifications to Schedule 62
which seeks authorityto offer tailored renewables to Schedule 19 and Special Contract
customers through the CEYW Construction offering and recommends approving the framework
and modifications to Schedule 62 with the followingconditions:
1.100 percent of the cost of the REFs is passed through to the CEYW Construction
customers;
2.Energy is netted on an hourly basis to capture the difference in value depending
on the time of day and to determine within each hour whether the energy is being
consumed by the customer from the Company's system or energy is exported to
the Company's system;
3.Net consumption is based on COS;and
4.Net production exported to the Company's system is valued based on avoided
cost.
Staff believes the Company's proposed framework is reasonable because it provides a
consistent structure but allows for some elements of the offerings to be negotiated on a case-by-
case basis to match customers unique,individual requirements.In addition,the Company's
framework proposes each offering be subject to Commission approval,to ensure other customers
will not be harmed.
The proposed framework allows the Company to procure enough renewable resources to
meet up to 110 percent of CEYW Construction customers annual energy requirements.The
primary criteria Staff used to evaluate the proposed framework is whether the structure of the
framework and-in particular-thedesign of the rates will prevent cost shiftingand/or harm to
the Company's other retail customers.
This is especially critical for the followingreasons:
1.The acquisition of Construction resource(s)will bypass the Company's
established process used for planning and selecting the Company's other
STAFF COMMENTS 9 MAY 12,2022
resources"that ensure the Company's resource acquisitions are needed for the
system and are least-cost to customers;"
2.The resource(s)will be connected to the system and will be used to serve system
load as though it is a Company resource,but 100 percent of the energy attributes
(i.e.RECs)will likelybe claimed by Construction customers;and
3.The eligible customers for the CEYW Construction offering are the Company's
largest customers with a large impact to the Company's system and cost structure,
increasing the overall risk to other customer classes.
Staff's Standard of Analysis
Staff developed an ideal rate framework to evaluate the Company's rate framework to
ensure it will not harm other customers.Staff's ideal framework,as depicted in Diagram A,is
based on a "virtual behind the meter"framework,as if Construction customer's resource(s)are
generating into its own load.
Diagram A -Staff's Ideal Framework
CUSTOMERSYSTEM Virtual Meter Boundary IPC SYSTEM
Resource Customel
LoadGenerationr--i l¯
\
I I Total Resource Cost I
I I I
I I I
|Total Resource Generation Excess Generation (Net Energy &Capacity)
I I I Credit to Customer for Excess Generation (Net Energy &Capacity Value)
I I I
l I I
Supplemental Generation (Net Energy &Capacity)
I l I Payment to IPC for Supplemental Generation (Net Energy &Capacity Value)L__I L
Legend:
Physical Flows
Financial Flows
*The only exception are must-take Public Utility Regulatory Policies Act of 1978 ("PURPA")projects.
Resources procured for the Subscription and Construction offeringswould be acquired for the sole purpose of
implementing optional energy service offerings.Applicationat 16.
STAFF COMMENTS 10 MAY 12,2022
It is appropriateto hold other customers harmless for two reasons.First,the structure
requires 100 percent of the renewable resource cost to be passed throughto CEYW Construction
customers before credits for Excess Generationand charges for SupplementalGenerationare
applied.This is like other large customers that own and pay for the cost of their generation
capability and generate into their own load.'°It is important because the resources are proposed
to be selected based on the CEYW Construction customers'preferences and dedicated for their
benefit.These resources will not be selected as a least cost resource for the benefit of all
customers.
Althoughthe REF(s)the Company will procure for CEYW Construction customers will
likely connect directly to the Company's system separate from the location of CEYW
Construction customer's load,"the consumption and the production from its REF(s)should be
netted mathematically using metered data.
Second,utilizing a "virtual behind the meter"framework is ideal for the CEYW
Construction offering because:(1)net consumption ("Supplemental Generation")can be
analyzed to ensure that the rates charged for electricity delivered to CEYW Construction
customers from the Company's system are based on principles of COS;and (2)net production
("Excess Generation")exported to the Company's system from CEYW Construction customers
can be analyzed based on principles of avoided cost.
The principles of COS ratemaking are generally accepted by the Commission as the
method for determining fair,just,and reasonable customer rates.If the Company bases its rates
for Supplemental Generationfrom the Company's system on these same principles,Staff
generally assumes rates are reasonable.
However,for energy exported or "sold"to the Company,a principle established in Public
Utility Regulatory Policies Act of 1978 ("PURPA")for holding customers harmless is to base
the rates on avoided cost.Under PURPA,utility customers must be economically indifferent to
purchases of QualifyingFacility ("QF")power by paying no more for power than the amount
they would have paid but for the purchase from the QF.12
10 Examples include Clearwater Paper in Avista's system and Amalgamated Sugar in the Company's system."See Application Attachment 1 Schedule 62 Tariff,SECTION 2:CLEAN ENERGY YOUR WAY -
CONSTRUCTION,APPLICABILITY.
12 Indep.Energy Producers Ass'n,Inc.v.Cal.Pub.Utils.Comm'n,36 F.3d 848,858 (9th Cir.1994)("If purchase
rates are set at the utility's avoided cost,consumers are not forced to subsidize QFs because they are paying the
same amount they would have paid if the utility had generated energy itself or purchased energy elsewhere.")
STAFF COMMENTS 11 MAY 12,2022
Diagram A,above,illustrates the boundary between the CEYW Construction customer's
system and the Company's system and the transactions across that boundarythat Staff used to
evaluate the Company's proposed framework.Ideally,the amount of energy and capacity
consumed and exported by CEYW Construction customers would occur on a net basis to
minimize any asymmetry or double counting of its value.The Company proposes to track and
price energy production and consumption on a net basis.However,in the case of capacity and
capacity-driven costs,the Company proposes to effectivelypurchase 100 percent of the capacity
contribution from Construction customer's resources(s),while providing 100 percent of the
customer's capacity needs from the system.
Energy Treatment
Staff believes the Company's proposed framework is congruent with Staff's ideal
framework for energy treatment because:(1)the proposed framework requires Construction
Customers to pay all cost associated with the REFs;"(2)the energy for consumption and for
export to the Company's system is netted on an hourly basis;14 and (3)the net consumption is
based on COS.
The Company proposes to use the rate design for consumption from the customers'
existing service schedules,which are based on COS.Staff believes that the load shape of an
existing customer can significantlychange when up to l 10 percent of its annual energy usage is
offset by REF generation,thereby necessitating a change in that customer's cost to be served.
Staff recommends that the COS and rates used to recover costs from each CEYW Construction
customer be verified with each proposed REF and that each REF contract be submitted to the
Commission for approval.
The Company's proposal does not address how excess energy credits will be determined;
however,Staff believes that the value and rates need to be based on principles of avoided cost.
AlthoughStaff believes the principles of avoided cost are appropriate,Staff is concerned with
increased amounts of the Company's net power costs being based on it.
"See ApplicationAttachment 1 Schedule 62 Tariff,SECTION2:CLEAN ENERGY YOUR WAY -
CONSTRUCTION,RESOURCE PROCUREMENT.
14 See ApplicationAttachment 1 Schedule 62 Tariff,DEFINITIONS.
STAFF COMMENTS 12 MAY 12,2022
Upward Pressure on Net Power Cost and Customer Rates
Staff's greatest concern is the increase in the proportion of energy priced at avoided cost
that make up the Company's net power costs.Because the avoided cost of energy is priced at the
margin,it is higher than the Company's average embedded energy cost,which is used to
determine customer rates.Staff believes when CEYW Construction offerings are combined with
other CEYW program offerings,Distributed Energy Resources,and the significant number of
PURPA projects already on the Company's system-allpriced at avoided cost-there will be
increased upward pressure on customer rates.
AlthoughStaff believes it is appropriateto use the principles of avoided cost to determine
whether a single program or energy source in isolation will hold other customers harmless,Staff
recommends the Company evaluate this overall effect in combination with alternative methods
for determining avoided cost of energy to mitigate it before more of these programs with
customers are implemented.The Company has shared these same concerns when discussing
average avoided cost for PURPA QFs being higher than historical market prices.
Capacity Treatment
The Company's proposed treatment for capacity is incongruent with Staff's vision
because the capacity contribution of CEYW Construction customer's resources is not netted
from the capacity needed to serve the customer's load.The Company proposes to purchase 100
percent of the capacity contribution from Construction customer's resources,while providing
100 percent of the customer's capacity needs from the system.While the treatment of capacity is
not netted like it would be in Staff's ideal framework,Staff believes a separate evaluation of
excess capacity contribution of a REF and use of the Company's system to meet the capacity
needs of the customer can still accomplish Staff's priority of holding other customers harmless,
especially if determined on a case-by-case basis for each CEYW Construction customer
arrangement.
Recovery of Capacity-related Cost
The Company proposes that existing customers who request a CEYW Construction
offering use their existing rate schedule to recover the cost for their use of capacity from the
*See Case No.IPC-E-18-07,Idaho Power's cross-petition,pp.10-12.
STAFF COMMENTS 13 MAY 12,2022
Company's system.Staff believes this is appropriate because their use of capacity is not likely
to change since these customers need that capacity to be available,whether their resource(s)is
producing or not.
However,recovery of capacity-related cost is normallyaccomplished through demand
charges and through the volumetric rate.Because a portion of the Company's capacity cost is
recovered through the volumetric rate,any production from their resource(s)consumed by the
CEYW Construction customer will cause the Company to under recover capacity cost allocated
through the volumetric charge.The Company proposes CEYW Construction customers be
charged a fixed cost charge for energy from their resource(s)that offsets their consumption.
Without this fixed cost charge being applied to energy from Construction resources,Staff
believes Construction customers will under pay on their use of capacity from the system-
ultimately shifting cost to other customers.Staff believesthe proposed fixed cost charge
provided in Attachment 1 to the Application is reasonable because these charges are determined
based on embedded costs using the most recent COS information.
Capacity Creditfor Exports to the Company System
The Company's proposal does not address how the CEYW Construction resource
capacity credits will be determined.Staff believes avoided cost principles provide the best
standard of comparison for determining capacity credits for avoiding capacity cost.Staff also
recommends the followingfor determining the capacity credit:(1)capacity credit payments
should not begin until the capacity contribution from its resource(s)begin avoiding capacity cost,
which only occurs when the system first becomes capacity deficient;(2)the surrogate used to
determine the value of the capacity credit should be based on the lowest-cost capacity resource;
and (3)the credit should only be paid for exports of energy to the Company's system during
system peak hours,which the Company determines as the hours when additional capacity is
needed for the system and capacity cost can be avoided.
Other Important Framework Elements
As discussed earlier,Staff's review of the Company's proposed framework for the
CEYW Construction offering focused on ensuring other customers will not be harmed by the
STAFF COMMENTS 14 MAY 12,2022
Company providing this offering.Besides issues already discussed,Staff identified five
additional elements that will help ensure other customer classes will not be harmed.
First,the Renewable Construction Agreement ("RCA"),which is the contractual
agreement between the Company and customer(s)governing the terms,conditions,and pricing
of the CEYW Construction arrangement,16 is subject to Commission approval.II The RCA being
subject to Commission approval allows the Commission to evaluate each offering on an
individual basis and ensure other customers will not be harmed by these offerings.
Second,Construction customers must include a financial guarantee to cover the stranded
REF costs in the event of default,dissolution,and/or relocation.18 This guarantee will be
negotiated and based on the value of CEYW Construction customer's resource.Staff believes
this is an important element to protect other customers from stranded asset costs.
Third,the CEYW Construction customer will need to pay 100 percent of the construction
costs associated with transmission and distribution upgrades and for the interconnection costs
needed to connect the REF to the Company's system.
Fourth,Staff believes that the selection of the resource and rates in a REF contract will
not need to be reviewed by the Commission if 100 percent of the cost of a REF contract is passed
through to the CEYW Construction customer and if rates for import and export of capacity and
energy between the CEYW Construction customer are reasonable and based on the COS and
avoided cost.However,there are other elements within a REF contract that Staff believes should
be reviewed and authorized by the Commission-includingthe interconnection agreement within
a REF contract -to ensure no costs are passed on to the general body of ratepayers.
Fifth,the size of REFs cannot be greater than 110 percent of the CEYW Construction
customer's annual energy requirements.'"This framework element is important because it will
limit customers from becoming net producers of energy,which could result in a cost shift to
other customers.As discussed in the Reporting section,below,Staff recommends certain
16 See ApplicationAttachment 1 Schedule 62 Tariff,DEFINITIONS.
17 See Application Attachment 1 Schedule 62 Tariff,SECTION2:CLEAN ENERGY YOUR WAY -
CONSTRUCTION,TERMS AND CONDITIONS."See ApplicationAttachment 1 Schedule 62 Tariff,SECTION 2:CLEAN ENERGY YOUR WAY -
CONSTRUCTION,TERMS AND CONDITIONS."See ApplicationAttachment 1 Schedule 62 Tariff,SECTION 2:CLEAN ENERGY YOUR WAY -
CONSTRUCTION,RESOURCE PROCUREMENT.
STAFF COMMENTS 15 MAY 12,2022
CEYW Construction customer information be provided in the annual PCA filing to ensure these
customers remain in compliance with the l 10 percent limit.
Reporting
In Order No.33570 at 3,the Commission ordered the Company to submit biennial Green
Energy Prudence Reports,which includes:
1.Customer count under each participation option,by schedule;
2.Monthly RECs purchased;
3.Monthly revenue and expenses for Schedule 62;
4.Updated costs associated with re-certifyingthe RECs prior to retirement;
5.Summary of marketing activities and expenses;
6.Solar 4R Schools expenses;
7.Percentage of RECs purchased within Idaho Power's service territory;and
8.Monthly funds transferred to the PCA from Idaho Power-owned REC purchases.
With the changes to the program name to CEYW,Staff recommends the Company
continue to provide the same requested information above for the Flexible Option.Additionally,
Staff recommends the Company include the followingitems in the reports for the Flexible
Option:
1.Information on advanced procurement purchases and if any remaining RECs from
those REC purchases will carry over into the next year;
2.Information on all tailored agreements for third-partyRECs in Flexible Option
3-Large Purchase Option including,but not limited to:(a)REC purchase
agreement price and quantity requested;(b)quantity and price of RECs procured
for the customer;(c)monthlyrevenue and expenses;and (d)provide proof of
separate accountmg treatment;
3.Provide balance of uncommitted/excess funds to be carried over into the next
year;and
4.Provide the monthlybalance of the rider for Schedule 62.
Due to an increase in funds transferred to the PCA from Company-owned REC purchases
and other costs being passed through the PCA from the CEYW Subscription and CEYW
Construction options (addressed below),Staff recommends the Company be required to provide
STAFF COMMENTS 16 MAY 12,2022
their reporting on an annual basis-as opposed to biennially-priorto the Company's annual
PCA filing on April 15.
In the CEYW Subscription offering,the Company proposed to dispatch unsubscribed
energy to the Company's system with cost of that energy to be included in customer rates and/or
in the PCA mechanism.20 Similarly,in Case No.IPC-E-21-42,the Company proposes to pass
the cost of purchasing excess generation from Brisbie through the PCA mechanism.For all
CEYW offerings that will have cost passed through the PCA,Staff recommends the Company
include supplemental information in the PCA filings regarding CEYW offerings.Specifically,
Staff would like the followingsupplemental information for the CEYW Subscription and CEYW
Construction offerings filed with each PCA:
1.CEYW offering cost information that flows through the PCA;
2.The amount of consumption and generation from the renewable resources serving
CEYW Construction projects;
3.Annual CEYW Construction customer load forecasts compared to CEYW
Construction customer's annual generation forecast for all signed PPA's broken
down on a monthly basis;
4.Annual CEYW Subscription enrollment;and
5.Forecasted CEYW Subscription enrollments and load.
Staff may request additional information when the Company files phase II of the CEYW
Subscription option and on a case-by-case basis after contractual agreements for the CEYW
Construction options are submitted for approval.
Schedule 84 Cap
The CEYW Subscription and CEYW Construction options proposed in this Application
will provide Commercial,Industrial,and Irrigator ("CI&I")customers additional opportunities to
procure clean energy to offset their energy consumption.Prior to this Application,CI&I
customers only had two options for generating clean energy to offset their energy consumption.
These customers could:(1)become a QF under PURPA,but the total amount of nameplate
capacity would be limited to 80 MW;or (2)participate in Schedule 84 to generate electricity to
20 See Applicationat 12-13.
STAFF COMMENTS 17 MAY 12,2022
offset their monthly energy usage.However,due to limitations of Schedule 84,CI&I customers
can only operate a Generation Facility with a nameplate capacity of 100 kW or smaller.
In Order No.35284,the Commission ordered the Company to study and provide an
analysis of the pros and cons of setting a customer's eligibilitycap at 100 or 125 percent of a
customer's demand as opposed to the predetermined 25 kW or 100 kW cap currentlyset in
Schedule 84.The results of this study are to be presented in 2022.Staff notes that the results of
the study could result in changes to the current eligibilitycap,21 and thus provide CI&I customers
the ability to acquire generationfacilities greater than 100 kW to offset their energy
consumption.Potential changes to the 100 kW cap in Schedule 84 could impact participation in
the CEYW Subscription and CEYW Construction options;however,it could provide CI&I
customers the ability to own and operate a generation facility without a requiring a contractual
agreement.
STAFF RECOMMENDATIONS
Staff recommends the Commission:
1.Approve the renaming of the existing Schedule 62-Green Power Purchase
Program Rider (Optional)to the Schedule 62-Clean Energy Your Way Program;
2.Approve the maintenance and expansion of the procurement options for the REC
offering under the name CEYW Flexible;
3.Require the Company to file annual CEYW Flexible reports prior to the
Company's annual PCA filing;
4.Allow the Company to proceed with the "general framework and concepts"of the
CEYW Subscription option with parameters subject to change pending
Commission approval when the Company files Phase II;
5.Require the Company to work with Staff to discuss potential avoided cost
methods that can be used for CEYW Subscription offering;
6.Approve the Company's proposed CEYW Construction offering framework and
modifications to Schedule 62 with the followingrequirements:
21 In Case No.IPC-E-22-12,Clean Energy Opportunities For Idaho Petitioned For An Order To Modify The
Schedule 84 100kW Cap.
STAFF COMMENTS 18 MAY 12,2022
a.The COS and rates used to recover costs from each CEYW Construction
customer be verified with each proposed REF;
b.The Company will evaluate the effect of increased energy priced at
avoided cost in the Company's overall net power costs and evaluate
alternative methods for determining avoided cost of energy prior to more
CEYW programs with customers being developedand integrated into the
Company's system;and
c.Every CEYW Construction customer REF contract (PPA or a resource
construction agreement)be reviewed and authorized by the Commission;
7.Direct the Company to hold a workshop (consistent with Staff's recommendation
in Case No.IPC-E-21-42)to evaluate the full PCA treatment of CEYW offerings,
includinghow system-generated REC benefits are passed on to CEYW customers
in the PCA;
8.Direct the Company to hold a workshop to discuss the accounting treatment of
costs,benefits,and loads (consistent with Staff's recommendation in Case
No.IPC-E-21-42)for all CEYW offerings prior to the next GRC;
9.Require the Company to provide the followingsupplemental information with
each PCA filing:
a.CEYW offering cost information that flows through the PCA;
b.The amount of consumption and generationfrom the renewable resources
serving Construction projects;
c.Annual CEYW Construction customer load forecasts compared to CEYW
Construction customer's annual generation forecast for all signed PPA's
broken down on a monthly basis;
d.Annual CEYW Subscription enrollment;and
e.Forecasted CEYW Subscription enrollments and load;
10.Approve the Company's request to procure associated CEYW renewable
resources outside the Commission's current RFP competitive bidding
requirements.However,for CEYW Subscription offering,Staff recommends the
Company perform a thorough procurement process for the renewable resource(s),
which Staff will analyze in Phase II.
STAFF COMMENTS 19 MAY 12,2022
Respectfully submitted this \day of May 2022.
Deputy AttorneyGeneral
Technical Staff:TaylorThomas
Travis Culbertson
Michael Eldred
i:umisc/comments/ipce21.40dhtttncme comments
STAFF COMMENTS 20 MAY 12,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 12th DAY OF MAY 2022,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN
CASE NO.IPC-E-21-40,BY E-MAILING A COPY THEREOF,TO THE
FOLLOWING:
LISA NORDSTROM ALISON WILLIAMS
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
E-MAIL:[e-mail] E-MAIL:[e-mail]
[e-mail] [e-mail]
PETER J RICHARDSON DON READING
RICHARDSON ADAMS PLLC 6070 HILL ROAD
515 N 27TH ST BOISE ID 83703
PO BOX 7218 E-MAIL:[e-mail]
BOISE ID 83702
E-MAIL:[e-mail]
BENJAMIN J OTTO NORMAN M.SEMANKO
EMMA E SPERRY PARSONS BEHLE &LATIMER
ID CONSERVATION LEAGUE 800 WEST MAIN STREET SUITE 1300
710 N 6TH ST BOISE ID 83702
BOISE ID 83702 E-mail:[e-mail]
E-MAIL:botto idahoconservation.ore
esperry idahoconservation.ore
VICKI M BALDWIN Electronic Service Only:
PARSON BEHLE &LATIMER STEVE W CHRISS
201 SOUTH MAIN STREET SUITE 1800 DIRECTOR ENERGY SERVICES
SALT LAKE CITY UT 84111 WALMART INC
E-mail:[e-mail] E-mail:[e-mail]
ED JEWELL WIL GEHL
DEPUTY CITY ATTORNEY ENERGY PROGRAM MANAGER
BOISE CITY ATTORNEYS OFF BOISE CITY DEPT OF PUBLIC WORKS
PO BOX 500 PO BOX 500
BOISE ID 83701-0500 BOISE ID 83701
E-MAIL:[e-mail] E-MAIL:[e-mail]
BoiseCityAttornev citvotboise.org
S CRE RY
CERTIFICATE OF SERVICE