20220201Comment(1)_1.pdf

Clean Energy Opportunities for Idaho
January 31, 2022
Reference: Case No. IPC-E-21-41
Subject: Comments by Clean Energy Opportunities for Idaho
First, may we offer our congratulations to Commissioners Chatburn & Hammond on your
appointments. As you both may know, Clean Energy Opportunities for Idaho strives to serve the
long-term interests of Idaho by providing a check & balance to utilities’ assumptions and analyses in
PUC dockets, thereby allowing a more informed vetting of matters which impact clean energy.
With regard to IPC-E-21-41, CEO is not addressing the Company’ first two requests for relief at this
time. Our comments below are organized within three sections:
(1)CEO asks to dismiss the Company’s request #3;
(2)CEO asks, given the urgency for additional resources, to apply a sense of urgency to matters raised
by CI&I customers poised to invest in customer-owned generation; and
(3)We raise concerns with the manner in which certain matters are presented in the application.
1)CEO asks to dismiss the Company’s request #3, in which the Company asks to affirm support for
the utility’s “ownership of the necessary generation, transmission and distribution utility functions,
with limited exceptions.” The request is overly broad, unnecessary, and unjustified.
•Inadequate Scope & Notice. Within the context of this docket regarding a near-term capacity
deficit, the Company is asking for a broad policy decision for which the public has not been
adequately noticed and which the application is not scoped to address.
The depth and transparency of analysis needed to analyze potential alternatives for meeting the
upcoming resource requirements is not served by the Company’s narrow and – in Attachment 5 -
highly redacted analysis comparing PPA’s to utility-owned infrastructure. Nor does the docket
capture the breadth of issues - is this the forum to compare customer-owned generation to
utility-owned? Further, not all forms of competition are “useless”. The benefits of competition
often manifest in pressure to control costs, adapt to changing technologies, and innovate new
approaches.
The Company seems to be asking that the Commission approach future decisions with a bias
favoring utility ownership rather than an objective consideration of the alternatives. IPC-E-21-41
does not adequately enable the Commission to pre-determine what forms of ownership will best
serve the public interest in future matters.
•Unnecessary. As one example, the Company asserts that
“PPAs are of very limited value to meet capacity deficits when the generation generally
cannot be controlled, dispatched, curtailed, available, or economically managed for the
benefit of customers and the company in the same manner as utility-owned generation.”
(Application p24)
PPAs are just a form of contract, and in this instance, many of the PURPA required contractual
terms mentioned above are not at issue. If the Company feels that curtailment and availability
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issues are important (and CEO agrees that they are) those terms can be negotiated in a PPA. If
the balance between energy and capacity is important (again, it is) then attention can be given to
bids which combine, for example, both generation and storage.

• Unjustified. As justification for its arguments against “the various incarnations of competition and
eroded monopolies subjected to undue competition by modern forces” (Application p22) the
Company directs our attention to a more than one-hundred-year-old case noting that it is not in
the best interests of the people for “as many persons as might desire to put up wires in the
streets” (Application p 22). IPC-E-21-41 has nothing to do with duplicating wires to customer
locations. This docket is about proceeding promptly to address shortfalls with additional
energy/capacity resources.

The Company requests generalized protection from “competition in its service area” (Application
p23), yet the Company does not demonstrate any threat of duplicative distribution system level
competition.

Meanwhile, the Company participates on a daily basis in a west-wide market of energy to address
utility imbalances. A couple of weeks ago the Company submitted a letter to Commission staff
detailing its plans for a large-scale exchange of transmission rights between itself, BPA and
PacifiCorp.

Much has changed in the 108 years since the Bloomquist case that Company counsel relies upon
was issued. No longer are all resources used by an electric utility to serve its customers
necessarily owned by that utility. At the generation and transmission system levels, Bloomquist
fails to justify the need for sole utility resource ownership, and this docket does not provide
evidence of threats at the distribution level.

2) CEO asks that, given the urgency the Company has conveyed to identify additional resources, a
sense of urgency should also be applied to matters raised by CI&I customers who value access to
customer-owned generation. In its response to a motion filed by Idahydro, Idaho Power agreed that
the imminent resource shortfall warrants something of an “all hands-on deck” approach, stating:

“It is likely that the Company will need all available resources - company-owned, PURPA,
third-party non- PURPA, and any generation that can be developed and brought online in time
to meet these deficits”. (Response to Idahydro motion, p 8)

As noted by a farmer in a representative comment from IPC-E-20-26, “I and my agribusiness friends
are ready to invest in producing energy as another way to save money and become more energy
efficient.” The 100kW project eligibility cap, for example, is an unnecessary economic deterrent
which could be expeditiously resolved. The Company has raised the urgency of identifying resources,
we ask that the 100kW project eligibility cap be more urgently resolved.

3) CEO raises concerns with the manner in which the Company has presented matters.

Idaho’s regulatory process relies heavily on the electric utility to inform the Commission of issues
and alternatives. We recognize that, as a for-profit corporation, the inherent interests of the utility
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make it a less-than-objective source of information. However, this docket is particularly troubling
regarding the manner in which information is presented and omitted. For brevity, we highlight a
couple of examples at this time.
In its application describing the Company’s concerns with PPA’s, the Company informed the
Commission of the following (p 30):
For example, in June 2021 Moody’s put Idaho Power on negative watch, which is the first step
towards a down grade in Moody’s credit ratings for the company. There are many factors that
impact credit ratings, and the imputed debt is one of those factors.
Imputed debt was not among the factors that Moody’s enumerated in its 10 June 2021 Credit
Opinion. The Company asserts that its credit rating is relevant, Moody’s credit rating concerns
include the Company’s hesitance to seek a general rate case, its exceptionally high unfunded
pension obligations, and its high cash need for capital spending and dividends to shareholders:
However, IPC's credit is challenged by weak financial metrics, such as cash flow to debt ratios
expected to be between 13-15% over the next few years, driven by 1) investments made, but
unrecovered since the company's last general rate case in 2011, 2) a large underfunded pension
obligation that represents about 23% of total adjusted debt, 3) slower investment recovery than
peers, due to IPC's long-lived hydro generation assets which are depreciated over 50 to 60 years
and 4) growing cash uses for capital spending and dividends with no equity issuance or rate case
activity expected to provide financing relief in 2021. (10 June 2021 Credit Opinion page 1)
In another example, while describing its concerns with imputed debt, the Company informs the
Commission: “Depending on the perceived credit exposure of a PPA, the rating agency may apply
risk factors that typically range from 0 to 50 percent – but can be as high as 100 percent.” The risk
factor is driven by the utility’s cost recovery mechanism, and a risk factor of 100% does not apply
to a regulated utility. The Company could have instead informed the Commission of the risk factor
associated with Idaho Power. This substitute of information is particularly troubling in that the
Company then suggests that the Commission should add specific costs related to imputed debt
(which depends on the Company’s risk factor) when evaluating PPA’s. We have further concerns
with the manner in which the Company analyzes and compares PPA’s to alternative resource
options.
In these matters, CEO respects the Company’s duty to create shareholder value. CEO opposes
portions of the application which overly narrows issues and options to the detriment of the public
interest. The Company’s request to affirm support for vertical integration should be denied.
Respectfully,
Courtney White
Managing Director, Clean Energy Opportunities for Idaho