HomeMy WebLinkAbout20220506Reply Comments - Redacted.pdfreHH.
DONOVAN WALKER
Lead Counsel
dwalker@ida hopower.com
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May 6, 2022
VIA ELECTRONIC FILING
Jan Noriyuki, Secretary
ldaho Public Utilities Commission
11331 W. Chinden BIvd., Bldg 8,
Suite 201-A (83714)
PO Box 83720
Boise, ldaho 83720-0074
Re Case No. IPC-E-2142
In the Mafter of ldaho Power Company's Application for Approval of Special
Contract and Tariff Schedule 33 to Provide Electric Service to Brisbie, LLC's
Data Center Facility
Dear Ms. Noriyuki
Attached for electronic filing, please find the REDACTED vercion of ldaho Power
Company's Reply Comments in the above entitled matter.
Please handle the confidentia! information in accordance with the Protective
Agreement executed in this matter.
Please fee! free to contact me directly with any questions you might have about
this filing.
Very truly yours,
An DACOTP Company
1.i:.1
Mzd*o -Donovan E. Walker
DEW:cd
Enclosures
DONOVAN E. WALKER (lSB No.5921)
ldaho Power Company
1221 West ldaho Stseet (83702)
P.O. Box 70
Boise, ldaho 837OT
Telephone: (208) 388-5317
Facsimile: (208) 388-6936
dmal ker@idahooower. com
Aftomey for ldaho Porver Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
!N THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
APPROVAL OF SPECIAL CONTRACT AND
TARIFF SCHEDULE 33 TO PROVIDE
ELECTRIC SERVICE TO BRISBIE, LLC'S
DATA CENTER FACILITY.
cAsE NO. |PGE-2142
IDAHO POWER COMPANY'S
REDACTED REPLY COMMENTS
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ldaho Power Company ('ldaho Powaf or'Companf) hereby respectftrlly submlts
the fullowlng Reply Comments ln rasponse to Commenb filed by Stafi ('Staf) of the
ldaho Public Utilities Commission ("Commlssion") in the matter of the Gompany's
application for approval of a special conbact and tan'fr schedule 33 b provide electic
seMce to Brisbie, LLC ('Brisbie').
The Company is gratetu! for the opportunity to offar Reply Comments in this case
and would like to extend special appreciation to Stafi for thelr time and thorghtfulness in
rcviewing the Company's Application on an accelerated timeline.
ldaho Pourer supports Staffs r€oommendation to approve the Brisbie Special
Contrac't-<r Energy Servlces Agreement fESA"). However, the Company respec{fully
IDAHO POIA'ER COMPANYS REDACTED REPLY COMMENTS. 1
disagrees with Staffs proposed ESA modifications and the rationale to support them. The
Company reviews each of StafFs 11 proposed recommendations in detail below and is
confident that some of the re@mmendations may no longer be necessary after
considering the Company's Reply.
ldaho Power recognizes that the Brisbie ESA constitutes a new framework<ne
that is necessary to incorporate the renewable resources that will support Brisbie's energy
requirements. This framework is distinctly different from traditional Special Contracts the
Commission has previously authorized. The ftamework is also distinctly differcnt from
projects under the Public Utility Regulatory Policies Act of 1978 ("PURPA") in that the
customer is bringing both load and resources.
The proposed Brisbie ESA, and the associated pricing and compensation structure
therein, is the result of approximately two years of negotiation between ldaho Power and
Brisbie. During negotiations, both the Company and Brisbie agreed that the top priority of
the Special Contract was to ensure fair treatment of all partles-Brisbie, ldaho Power,
and all other customers.
A key objective of Brisbie's pricing and compensation structure was not to establish
winners and losers, but, rather, ensure that the broader customer base would be
protected without penalizing Brisbie. ldaho Powe/s no-harm analysis validates that the
IDAHO POWER COMPANYS REDACTED REPLY COMMENTS - 2
pricing and compensation structure as proposed in the ESA has accomplished those
obiectives and does not shift costs to other ldaho Power customes. ln hct, the no-harm
analysis shows that the Brisbie anangement results in a benefit to other qrstomers over
the life of the contract. lf Staffs re@mmendations to modify the sedit components were
enacted, the benefits to other customers would grow while penalizing Brisbie in equal
measure.
Given the extensive efrort that ldaho Power and Brisbie undertook to ensure just
and rcasonable pricing and credit components, the Company respectfully requests that
the Commission approve the Brisbie ESA with acceptance of certain Statr
reoommendations, as explained in the sections below.
I. BACKGROUND
On December 22,202'l,ldaho Power filed its application with the Commisslon for
approval of a new Special Contract for Brisbie's data center facility, which will require
electric service in excess of 20,000 kilowatb fkW") or 20 megawatts fM\M). Per the
Commisslon's Order No. 33038 at 11,'eacfr specia! contr:act customer is considered a
sepanate class with different conditions and contract terms affecting their rates.,."
Differentiation between classes of customers is permissible when it is based on cost of
service, quantity of electicity used, difhrences in conditions of seryice, or the time,
nature, and pattem of the customers' use.1
ln addition to its large load service requirements in excess of 20 MW, Brisbie has
a sustiainability objective to support 100 percent of its operations with new, inqementa!
1 Building Confradors Associafbn of Southwestem ldaho, lnc. v. ldaho Public Uliflies Comm'n,128 ldaho
534,539,9'16 P.2d 1259,12il (1996); AgicultunlProdudsCor4,-v.Wah tuwer&Light@.,9S ldaho
23, 557 P.zd 617 (1976); and ldaho Slate Homebuilders v. Wbshington Waler Power, '107 ldaho 41 5,
420, 690 P.2d 350, 355 (1984).
IDAHO POWER COMPANYS REDACTED REPLY COMMENTS . 3
rcnewable resources added to ldaho Powefs system. As proposed in the Company's
Application, ldaho Power and Brisbie negotiated pricing assoclated with retail electric
service from $e Company, ost and credit @mponents associated with the renewable
resouroes that will support Brisbie's operations, and the terms and conditions goveming
the structurc of this new anangement. To validate the proposed pricing strucfure, ldaho
Power conducted an analysis to ensure that the provisions of the ESA would not shift
costs to other ldaho Power customers.
The Brisbie ESA is consistent wih and minors the regulatory ftamework set forth
in the Clean Energy Your Way fCEYW") - Construction oftring, as outlined in ldaho
Power's Application with the Commission to establish new clean energy offerings for
qrstomers underthe CEYW Program (Case No. IPC-E-2140). ln hatApplication, ldaho
Power states its belief that it can work with existing orfuture Special Contract customers
to integrate rcnewables into their service agreement with the Company. To that end, the
Brisbie Special Contract is the first representation of the CEYW - Construction option.
ln addition to the ESA and tarifr schedule 33, ldaho Power requested explicit
approval of severa l specifi c components of a regulatory framework desig ned to lm plement
and administer Brisbie's Special Contract with its supporting renewables: (1) authority to
procure renewable resources for the purpose of supporting Brisbie's energy use under a
standard procurement agreement, (2) the cost basis and pricing structure for the supply
of retail electric service by ldaho Power, (3) the compensation structure for excess
rcnewable energy generation and capacity contribution of the rcnewable resources, (4)
authorization to trcat bill credits provided to Brisbie under the proposed compensation
structure as prudently incuned expenses for ratemaking purposes, and (5) the cost
IDAI.IO POWER COMPANYS REDACTED REPLY COMMENTS.4
reoovery mechanisms neoessary to protect existing ldaho Power customers from cost-
shifting and ensure ldaho Power has an opportunlty to recovery its cost of service.
On April 27,2022, Staff submitted Comments in this case re@mmending approval
of Brisbie's ESA contingent on several prcposed modifications. Clean Energy
Opportunities for ldaho, the only intervenor in this case, did not submit comments. The
Company did not receive public commenF on its Application.
II. REPLY COMMENTS
ln its Comments, Staff recommends approval of the Brisbie ESA oontingent on
several modifications. Considering the complexity of the Brisbie ESA, ldaho Power was
enoouraged that Staff and the Company are aligned on the majority of the componenE
and constructs in the Brisbie anangement.
Stafr is supportive of the pricing oomponents related to energy service (that is, the
rates that Brisbie will pay forservice from ldaho Power), the guarantees provided in each
Power Purchase Agreement ('PPA"), and accounting treatment in the Power Cost
Adjustment (PCA'). But Staffproposes substantial revision to crediting components that
Brisbie will receive for the ngnewable rcsouroes to support their load.
Beforc addressing Staffs recommended modifications in detail, the Company
highlights the overarching goalof the Brisbie Special Contract to ensure that the intended
purpose of the arangement is not overshadowed by the detailed mechanics of the
arangement. As negotiated, the ESA is a ftamework to support 100 percent of Brisbie's
operations with renewable resources, and 0re ESA does so in a way that balanoes he
@ncem for other customers while still recognizing he costs and benefitrs Brisbie<nd
their associated renewables-bring to ldaho Powe/s system.
IDAHO POWER COMPANYS REDACTED REPLY COMMENTS. s
ldaho Power sought a pdcing framework that, to the extent possible and
reasonable, bonowed from previously approved construcB. For example, the two-block
pricing struc'ture that includes embedded and marginal cosF supported by Staff is
grounded in the structure of previously approved Special Contracts for Hoku Materials
and J.R. Simplot Company's Caldwell Facility.2
For new components of this ESA-namely, compensation for the renewable
resouroes-ldaho Power sought to establish crediting mechanisms that would reasonably
and fairly reflec't the energy and capacity value of the new resources to ldaho Powe/s
slatem. The Company shares Staffs desire to apply some level of methodological
consistency when valuing energy and capacity on ldaho Powe/s system. However, in the
development of the proposed ESA, the Company was also mindful that the transaction
wlth Brisbie is dissimilarto power purchases under PURPA.
Unlike PURPA projects, the Brisbie-associated resources will be fully negotiated
additions to the Company's generation portblio. These resour@s will be procured like
tsaditional system resouroes (Brisble's associated rcsouroes will either be secured with a
PPA or Company-owned) and distinctly different from PURPA projects, in which the
Company has limited to no negotiating power. Further, the Brisbie arangement-and any
other CEYW - Construction arangements-involves a customer that will be financially
supporting heir accornpanying renewable resoulues. Separating these renewable
resoutoes ftom the customer that necessitated them is not a reasonable way to identify
resource value. While certiain aspects of PURPA pricing may be apprcpriately applied to
the Brisbie ESA and other CEYVI/ - Construction agreements, Staffs proposed changes
2 Tatum Direct at 10.
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS.6
to move the ESA compensation strucfure closer to a PURPA-like valuation methodology
are misapplied.
!n addition to assessing Brisbie's resouroes as PURPA projects,
ldaho Power will manage the
generation from the Brisbie-associated resour@s just as it does its other system
resources-and Brisbie will be served with electricity in the exact manner as all other
customers. The resources to support Brisbie are not directly interconnected to serve
Brisbie. Considering the specific dynamics of the Brisbie ESA and other CEYW -
Construction armngements, the treatment of and accounting for renewables under these
anangements are most appropriately viewed as financial exchanges, not direct
exchanges of electrons.
IDAHO POWER COMPANYS REDACTED REPLY COMMENTS - 7
combination of new
customer load and supporting renewable resource generation in no way acts like or
minors the characteristics of PURPA projects, which only include generation
interconnected to ldaho Power's system. Rather than viewing the Brisbie ESA in the
context of PURPA, the anangement is best characterized as a noveland fair approach
to serving a stable, Iarge load customer and supporting that customer's renewable
resouroe needs in a way that enhances ldaho Power's system to the benefit of all
customers.
III. RESPONSE TO STAFF'S RECOTIIMENDATIONS
Staffs final recommendations on page 20-21 include 11 specific proposals, some
of which involve overlapping topics. ldaho Power addresses each recommendation below
and has grouped the discussion by the relevant topic.
A. Pricinq Updates
Recommendation 1. ln its first recommendation, Staff proposes that all pricing
components of the Brisbie ESA stemming frcm
B. Excess Enerov Generation Credlt
Staffs second and third re@mmendations address the credit to Brisbie for any
excess energy generation-that is, the amount ldaho Power would credit Brisbie for any
renewable resouroe
Recommendation 2.
IDAHO POWER COMPANYS REDACTED REPLY COMMENTS - 8
As noted in the introduction to these Reply
Comments, ldaho Power's goal in negotiating the Brisbie ESA was to create a structure
that fairly balances Brisbie's sustainability and energy requirements against the need to
ensure no harm to other customers. lf the Commission accepts Staffs recommendation,
it risks disrupting the careful balance between these two principles.
Recommendation 3.
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 9
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 1O
G. Benewable Capacitv Gredit
Staff's Recommendations 4 through 7 all address the Renewable Capacity Credit.
Recommendation 4.
ldaho Power and Staff are aligned in achieving the same outcome (capacity costs
accurately reflecting capacity value) but disagree on approach
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS . 11
Recommendation 5.
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 12
Recommendation 6.
Recommendation 7
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 13
D. Ulorkehoos
Staffs eighth and ninth re@mmendations involve ldaho Power hosting workshops
on topics related to the Brisbie ESA.
Recommendation 8. Staff recommends that the Company host a workshop to
discuss treatnent of Brisbie's costs (as specified in Schedule 33) prior to the Company's
next general rate case ("GRC'). ldaho Power is uncertain whetherStaffis recommending
a public urcrkshop or a workshop limited to parties in this case. Regardless, the Company
would be happy to host a workshop at an appropriate time and with the appropriate level
of confidentiality for the intended audience before the Compant's next GRC.
Recommendation 9. Staff also recommends that the Company hold a workshop to
"evaluate" the allocation of "systemgenerated'Renewable Energy Certificates ("REC")
to Brisbie and other CEYW - Construction customers. Stafr at21.
However, the Company disagrees with Staffs inference that Brisbie (and other CEYW -
Construction customers) should not receive the benefit of systemgenerated REC sales
that pass through the PCA.
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS . 14
Under the Company's REC Management Plan, all Companyowned RECs
(including RECs from PURPA projects) are sold, with proceeds passing hrough the PCA.
That is, the proceeds from REC sales result in a reduction of power supply costs, Brisbie,
and all future CEYW - Construction customers, are not unlike oher customers-they will
continue to pay for energy service fnom ldaho Power. These customers should have the
same right to a PGA reduction as every other customer. The pursuit of a CEYW -
Construction agreement (or Subscription participation) should not penalize this subset of
customers from experiencing the same reduction of power costs as all other customers.
While ldaho Power would be happy to hold a workshop to discuss REC-related
transactions and PCA impacts of 'systemgenerated RECs," the Company does not
believe there is anything to evaluate on this topic. Reduced power supply costs from ldaho
Power REC sales should be enjoyed and shared by allcustomers.
E. Future Renewable Gonstruction Agreements
Recommendation 10. Staffs penultimate re@mmendation is that every CEYW -
Construction agreement'customer PPA" be reviewed and authorized bythe Commission.
Staff at 21. This re@mmendation appears to be in response to the Company's request
for authority to procure neoessary resour@s for Brisbie (as contemplated within the ESA)
without seeking individual Commission approval of eact such resource. Tatum Direct at
16.
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 15
F. Annual PCA Treatment
Recommendation 17. Staffs eleventh and final recommendation is that the
Company include Brisbie's load, as well as its "consumption and generation from the
renewable resources serving Brisbie" in the PCA. Staff recommends similar requirements
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 16
for all future CEYW - Construction agreements. ldaho Power supports this
recommendation and can provide the rcquested information-with the appropriate
safeguards for confidentialityin the PCA upon Brisbie taking service from ldaho Power.
tv. coNcLustoil
ldaho Power again would llke to thank Staff fortheirtime and effort in expeditiously
reviewing thls case. The Company supports Staffs broad recommendation to apprcve
the Brisbie ESA. Additionally, ldaho Power supports several of Staffs re@mmendations
that will provide more information and additional transparency around Brisbie and other
CEW/ - Construction agreements, including: filing updates to Brisbie's pricing atthe time
of filing the lRP (recommendation 1), holding workshops on updates to Brisbie's Schedule
33 (recommendation 8) and on the treatment of RECs under the CEWV Program
(recommendation 9), and the inclusion of Brisbie's load and associated generation in the
annual PCA filing (recommendation 1 1).
The Company rcspectfr.rlly disagrees with Staffon several of the r1e@mmendations
associated with changing the credit components of the Brisbie arxangement. The
proposed credit oomponents in the ESA-that is, the crediting for excess energy and
renewable resouroe capacity-were developed between ldaho Power and Brisbie with
the specific objective of fair and equitable compensation. Through the no-harm analysis,
which included the impact of the ctediting @mponents in question, the Company
validated that the Brisbie arangement will not shift costs to other customers. Staffs
proposed modifications to the oediting mechanisms have been made without
demonstnating that these changes will result in a more equitable anangement than what
was originally proposed.
IDAHO POWER COMPANYS REDACTED REPLY COMMENTS. 17
Considering the Reply Comments herein, ldaho Power requests that the
Commission approve the Brisbie ESA without modiftcation. The Company also requests
that, in mnjunction with ESA approval, the Commission approve Stafrs first, eighth, ninth,
and elevenh recommendations, each of wtricfr is intended to facilitate transparency
around Bdsbie and future CEYW - Constructlon arnangements.
Respectfr,rlly submitted this 6h day of May 2022.
fueddu+-
DONOVAN E. WALKER
Atbmey for ldaho Power Company
IDAFIO POWER COMPANYS REDACTED REPLY COMMENTS. 18
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 6th day of May 2022,1 served a true and correct
copy of the foregoing ldaho Power Redacted Reply Comments upon the following named
parties by the method indicated below, and addressed to the following:
Taylor Brooks
Dayn Hardie
Deputy Aftorney General
!daho Public Utilities Commission
Po Box 83720
Boise, ldaho 83720-0074
Clean Energy Opportunities for ldaho
Michae! Heckler
Courtney \Mite
CLEAN ENERGY OPPORTUNITIES
FOR IDAHO !NC.
3778 Plantation River Drive, Suite 102
Boise, ldaho 83703
Kelsey Jae
Law for Conscious Leadership
920 N. Clover Dr.
Boise, lD 83703
Emailed to:
Tavlor. Brooks@puc. idaho.qov
davn. hardie@ouc. idaho.oov
Emailed to:
m ike@cleanenerovopportu n ities.com
cou rtnev@cleanenergyopportu n ities.com
Emailed to:
kelsev@kelseviae.com
Christy Davenport
Legal Admin istrative Assistant
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 19