20230309Replacement Comments of Staff - Redacted.pdf

Idaho Public Utilities Commission BradLittle,Governor
P.O.Box 83720,Boise,ID 83720-0074 -/i Eric Anderson,President
John R.Hammond,Jr.,Commissioner
Edward Lodge,Commissioner
March 9,2023
Via Email
Jan Noriyuki
Commission Secretary
Idaho Public Utilities Commission
11331 W.Chinden Blvd.,Bldg.8
Suite 201-A
Boise,ID 83720
Re:Case No.IPC-E-21-42
In the Matter of Idaho Power Company's Application for Approval of Special Contract andTariffSchedule33toProvideElectricServicetoBrisbie,LLC's Data Center Facility
Dear Ms.Noriyuki:
Attached for electronic filing,please find Idaho Public Utility Commission Staff's
Replacement Redacted Comments in the above matter.No language was added to or modified in
these Comments;the only change is the level of confidentiality.
The confidential,unredacted version of Commission Staff's Comments was previously
sent in a separate encrypted email to the parties who signed the Protective Agreement in this
matter.
Please feel free to contact me directly with any questions you might have about this filing.
Sincerely
Ril Newton
Deputy AttorneyGeneral
RN:kjh
Enclosure(s)
I \Legal\ELECTRIC\lPC-E-21-42Brisbie\20230308 Ltr re Staffcomments docx
11331 W.Chinden Blvd.,Building 8 Suite 201-A,Boise ID 83714
Telephone:[phone] Facsimile:[phone]
RILEY NEWTON
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.11202
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )COMPANY'S APPLICATION FOR )CASE NO.IPC-E-21-42
APPROVAL OF SPECIAL CONTRACT AND )TARIFF SCHEDULE 33 TO PROVIDE )ELECTRIC SERVICE TO BRISBIE,LLC'S )REPLACEMENT REDACTEDDATACENTERFACILITY)COMMENTS OF THE
)COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission,("Staff')by and
through its Attorneyofrecord,RileyNewton,Deputy AttorneyGeneral,and submits the following
comments.
BACKGROUND
On December 22,2021,Idaho Power Company ("Company")applied to the Idaho Public
Utilities Commission ("Commission")seeking approval of a special contract for electric service
("Special Contract")between the Company and Brisbie,LLC ("Brisbie").
Because Brisbie will be taking electric service greater than 20,000 kilowatts ("kW"),-
20 megawatts ("MW")-the Company and Brisbie have entered into a Special Contract.
Application at 2.As outlined in Order No.33038 at 11,"each special contract customer is
REDACTED STAFF COMMENTS 1 MARCH 9,2023
considered a separate class with different conditions and contract terms affecting their rates..."
Id.at 2.The Special Contract is referred to as the Energy Services Agreement ("ESA").Id.at 2.
The Special Contract was negotiated with the intent to help Brisbie achieve its goal of
being served by 100%renewable energy.The Company and Brisbie have negotiatedan ESA the
Company believes is in the public interest and supports Brisbie's objective of serving 100%of
its energy requirements with renewable energy.The Special Contract includes provisions that
outline a modified pricing framework that will cover the costs of adding Brisbie to the system.
The Company presents a No-Harm Analysis that potentiallyshows that the Special Contract with
Brisbie will benefit or hold retail customers harmless.
The Special Contract is similar in nature to the framework proposed in the Clean Energy
Your Way -Construction ("CEYW-Construction")offering,as outlined in Company's pending
Application.See Case No.IPC-E-21-40.The Company proposes to offer CEYW-Construction
options to current or future customers,providing an opportunity to buy or access renewable
resources to meet some or all their energy requirements.Brisbie is the first customer proposing
to take service under the framework of the CEYW-Constructionoption.
Proposed Tariff Schedule 33
The Company last filed for a base rate increase case in 2011.See Case No.IPC-E-11-08.
The Company has not established a new base revenue requirement or updated its cost-of-service
("COS")methodology since then,but the Company has received Commission approval to adjust
its base rate revenue requirement since Case No.IPC-E-11-08.The proposed Schedule 33
includes attributes similar to other Special Contract customers,includingHoku Materials
("Hoku")and J.R.Simplot Company's Caldwell Facility,Schedule 32.See Tatum Direct at 10.
Power Purchase Agreement ("PPA")
The Application includes a draft PPA for procurement of renewable resources.In the
Company's confidential response to Production Request No.3 and during discussion with the
Company,Staff learned the PPA is a draft that outlines the agreements for each "new"renewable
resource.Each subsequent PPA will remain confidential,will not be provided to the
Commission,and will be covered in full by Brisbie.The Parties agree that each PPA will
REDACTED STAFF COMMENTS 2 MARCH 9,2023
provide energy directly to the Company's system and will be used to serve Brisbie.For each
signed PPA (or a resource construction agreement'),the Company will update Schedule 33.
Each "new"renewable resource will be signed by the Company and Brisbie and will be
directly assigned to Brisbie.The Company will procure resources for Brisbie,and requests that
each "new"renewable resource not follow the Commission's procurement guidelines.2 With
Brisbie paying for 100%of each PPA,the Parties have agreed that Brisbie will receive a credit
for the value from each "new"renewable resource.With each "new"renewable resource added,
the Company will incorporate it into the base planning analysis of each subsequent integrated
resource plan ("IRP").See Tatum Direct at 13.
Energy Sales Agreement
The Special Contract and the ESA are used in conjunctionwith each other.The ESA
includes cost and credit components associated with retail electric service served to Brisbie.The
terms and conditions in the ESA include provisions that it will hold other customers harmless.
See Application at 2.
Within the ESA,the Company and Brisbie have included a proposed rate schedule that
outlines a two-block rate structure.In Case No.IPC-E-08-21,the Commission approved a two-
block pricing structure for Hoku.Similarly,the ESA for Brisbie includes a two-block pricing
structure that includes a marginal cost of energy rate for energy consumption exceeding 20 MW.
The marginal cost of energy rate covers the additional cost of "marginal"generation and/or
market purchases required of the Company when Brisbie consumes more than 20 MW.3 See
Goralski Direct at 5-8.
STAFF REVIEW
Staff reviewed the Application to ensure that other customers will not be harmed by
providing electrical service to Brisbie.Staff's review focused on:(1)the overall structure and
design of the rates;(2)the Company's No-Harm Analysis;(3)cost recovery for the construction
i The resource construction agreement referenced here is not the same as the Construction Agreement for
transmission upgrades included in the Application.This resource construction agreement refers to a contractual
agreement in case the Company builds a resource for a CEYW-Construction customer.
2 The current guidelines are currently the same as Oregon's guidelines.However,IPC-E-21-41 seeks to change
those guidelines for upcoming Request for Proposals.
3 See confidential response to Production Request No.5.
REDACTED STAFF COMMENTS 3 MARCH 9,2023
of related transmission facilities to connect Brisbie's data center to the Company's system;(4)
the treatment of Renewable Energy Credits ("REC")generated by Brisbie's renewable resources
and the allocation of system-generated RECs in the Power Cost Adjustment ("PCA");(5)the
provisions in the ESA mitigating risk;(6)treatment of the costs and benefits in the PCA and in
base rates;and (7)the need for renewable resource PPAs to be authorized.
1.Rate Structure -The overall rate design framework provides a reasonable approach
for payments to the Company for supplemental generationprovided to Brisbie for
electrical service and for credits to Brisbie for excess renewable generation exported
from Brisbie's renewable resource(s)to the Company's system with the following
exceptions:
a.An additional 85%adjustment should be applied to the proposed Excess
Generation Credit rate;4
b.The Excess Energy Generation Credit rate should be based on the lower of the
Excess Generation Credit Price or actual Mid-C market price (withoutthe
85%adjustment)in each hour;
c.The Renewable Capacity Credit rate should be based on when the Company's
system becomes capacity deficient and not be paid until that date occurs;
d.The Renewable Capacity Credit rate should utilize the rate structure for IRP-
based energy storage projects (See Order No.34913),which would provide
Brisbie avoided capacity cost payments on a dollar per kilowatt-hour ("kWh")
basis and only for energy delivered to the Company's system during system
peak and premium peak hours;
e.For Renewable Capacity Credits,the resource(s)used as a surrogate to
determine avoided capacity cost should be identified using the most recently
acknowledged IRP at the time that the PPA (or a resource construction
agreement)is signed and should use the lowest cost capacity resource
included for selection within the IRP;
f.For Renewable Capacity Credits,the peak and premium peak hours that are
authorized in the Load and Natural Gas Forecast Annual Update for Public
Utility Regulatory Policy Act of 1978 ("PURPA")as required by Order No.
4 See Order No.29093.
REDACTED STAFF COMMENTS 4 MARCH 9,2023
34913 should be used to update the peak and premium peak per kWh rate on
the same schedule as the other IRP updates utilizing the peak and premium
peak hours authorized at the time of the IRP updates;and
g.The Company should provide a separate filing for the approval of the Avoided
Cost Averagesand all other rate components determined from the IRP.This
filing should be submitted for Commission approval soon after the IRP is filed
so the Commission can process the application in parallel with the IRP filing
and the Commission can authorize them soon after IRP acknowledgment.
2.Company's No-Harm Analysis -The Company's No-Harm Analysis indicates the
Brisbie contract will hold other customers harmless but does not provide sufficient
evidence on its own.
3.Transmission Facility Construction Cost -The Company's proposed method for
recovering the cost of transmission to connect Brisbie to the Company's system to
enable electric service as contained in the separate Construction Agreement should
ensure other customers are held harmless.
4.REC Ownership -Brisbie should retain 100%of the RECs generated by its
renewable resource(s).Staff believes a workshop is needed to determine the
appropriate allocation for the value of system-generated RECs for Brisbie and for
future CEYW-Construction offering customers.
5.Analysis of Provisions in the ESA -The provisions and guarantees in the ESA are
sufficient to mitigate stranded-asset cost risk and Brisbie's financial ability to pay.
6.Accounting Treatment in the PCA and the next General Rate Case -The Company
did not propose treatment of Schedule 33 costs,revenues,and loads in the
development of future base rates.To ensure timely processing of the next general
rate case,Staff recommends scheduling a workshop to discuss the treatment of
Schedule 33 costs,revenues,and loads.
7.Authorization of Renewable Resource PPAs by the Commission -The Company
only included a draft PPA while seeking blanket approval for future PPAs without
Commission review of any signed PPA.
a.The Company should file each new PPA for review and approval by the
Commission.
REDACTED STAFF COMMENTS 5 MARCH 9,2023
b.The Company should provide the followingitems annuallywith the PCA
filing:(1)the amount of consumption and generation from the renewable
resources serving Brisbie and future CEYW -Construction projects,and (2)an
annual Brisbie load forecast that is compared to Brisbie's annual generation
forecast for all signed PPA's broken down on a monthlybasis.
Analysis of Rate Structure and Design
The Company plans to procure enough renewable resources to meet Brisbie's initial
annual energy requirements in the short-term (first tranche)througha PPA and to procure or
build additional resources to meet Brisbie's energy requirements going forward.As discussed
earlier,the primary criteria Staff used to evaluate the ESA is whether the structure of the deal
and-in particular-thedesign of the rates will prevent cost shiftingto the Company's other
retail customers.This is especially critical for the followingreasons:
1.The acquisition of Brisbie's resource(s)will bypass the Company's established
process used for planning and selecting the Company's other resources6 that
ensure the Company's new resources are needed for the system and are least-cost
to customers;6
2.The resource will be connected to the system and will be used to serve system
load as though it is a Company resource,but 100%of the energy attributes (i.e.
RECs)will be claimed by Brisbie;
3.impact to the
Company's system and cost structure,increasing the overall risk to customers;
and
4.The rate design for this contract will likelybe used as a model for other CEYW-
Construction customers further increasing the risk of potential impacts to
customers in the future.
One of Staff's greatest concerns is the amount of excess energy from this and other
CEYW-Construction projects.Although,Staff believes this should be priced at the Company's
*The only exception are must-take PURPA projects.
6 The Company is requesting to procure Brisbie's renewable resources without seeking Commission approvalthatwouldotherwiserequireadeterminationofprudencebytheCommission.Applicationat 4.
REDACTED STAFF COMMENTS 6 MARCH 9,2023
avoided cost,the avoided cost of energy-whichis priced at the margin-is higher than the
Company's average embedded energy cost.Due to the size of Brisbie and future CEYW-
Construction renewable resources,Staff believes there will eventuallybe upward pressure on all
customer rates as the penetration of these projects become a greater proportion of the Company's
overall energy cost.
Staff's Standard of Analysis
The capacity of the renewable resource(s)is being sized to meet 100%of Brisbie's
annual energy requirements.Because Brisbie will have relativelysteady load during the day and
its resource (Staffassumes solar)will not be able to produce during many of those hours,Brisbie
will need to lean on the Company's system when its resources are not meeting its demand.
Application at 5.
As depicted in Diagram A,the Company's proposed rate design can be analyzed based
on a "virtual behind the meter"framework,as if Brisbie's resource is generating into its own
load.
Diagram A -Staff's Ideal Framework
BRISBIE SYSTEM Virtual Meter Boundary IPC SYSTEM
Brisbie Brisbie
.Data CTRGeneration
r --1 I
I ITotal Solar PPA Passthru Cost I
I I I
I I I
|Total Solar PPA Generation |Excess Solar Generation (Net Energy &Capacity)
i i i I
I I I |Credit to Brisbie for Excess Solar Generation (Net Energy &Capacity Value)
I I I (
I I I ¡
l Supplemental Generation (Net Energy &Capacity)
I I I i
Payment to IPC for Supplemental Generation (Net Energy &Capacity Value)L__I L 1
Legend:
Physical Flows
Financial Flows
This is appropriatefor two reasons.First,the structure of the ESA requires 100%of the
renewable PPA costs to be passed through to Brisbie similar to other large customers that have
REDACTED STAFF COMMENTS 7 MARCH 9,2023
generationcapability and generate into their own load.'Second,although the renewable
resource(s)the Company will procure for Brisbie will connect directly to the Company's system
separate from the Brisbie's data center,the data center consumption and the production from its
renewable resource can and will be
Utilizinga "virtual behind the meter"framework for Staff's analysis is ideal because:(1)
net consumption ("Supplemental Generation")can be analyzed to ensure that the rates charged
for electricity delivered to Brisbie from the Company's system should be based on principles of
COS;and (2)net production (Excess Solar Generation)exported to the Company's system from
Brisbie should 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.As long as the Company bases
its rates for SupplementalGeneration from the Company's system on these same principles,Staff
generally assumes rates are reasonable.
However,for energy exported or "sold"to the Company,the principles established
through 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."
Diagram A illustrates the boundary between Brisbie's system and the Company's system
and the transactions across that boundary that Staff used to evaluate both Excess (solar)
Generationrates and Supplemental Generationrates.Ideally,the amount of energy and capacity
consumed and exported by Brisbie would occur on a net basis to minimize any asymmetry or
double counting of its value.As discussed below,the Company proposes to track and price
energy production and consumption on a net basis.In the case of capacity and capacity-driven
costs,the Company proposes 100%of Brisbie's resource(s)capacity contribution be sold to the
Company's system,while 100%of Brisbie's capacity-relatedneeds for consumption are to be
sourced from the Company's system.
7 Examples include Clearwater Paper in Avista's system and Amalgamated Sugar in the Company's system.
*Indep.Energy Producers Ass'n,Inc.v.Cat 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 itselfor purchased energy elsewhere.")
REDACTED STAFF COMMENTS 8 MARCH 9,2023
Energy Treatment
The Company's proposed treatment for energy is consistent with Staff's ideal framework
since the amount of renewable generation and Brisbie's consumption are netted
Diagram B,below,depicts the energy treatment in Brisbie's Special Contract and is
consistent with Staff's ideal framework for rates.
Diagram B -Energy Treatment
BRISBIE SYSTEM Virtual Meter Boundary IPC SYSTEM
.BrisbieBrisbieDataCTRGenerationr-,I \
l ITotal Solar PPA Passthru Cost||
|I I i
i i I ITotalSolarPPAGeneration Excess Solar Generation (Net Energy Only)
I Credit to Brisbie for Excess Solar Generation (Net Energy Value Only)
I I I ¡
\I \
Supplemental Generation (Net Energy Only)
Payment to IPC for Supplemental Generation (Net Energy Only)L_I L--J
Legend:
Physical Flows
Financial Flows
The Company plans to track the and has
developed its rate proposals for SupplementalEnergy generation and Brisbie's excess solar
generation (net exports to the Company's system)reflecting the differences in
depending on whether Brisbie is a net consumer or net producer.Staff supports the netting of
energy to capture differences in the value of energy
and if the energy is being imported to or exported from Brisbie.
SupplementalEnergy
Staff reviewed the Company's proposed method for determining Supplemental Energy
rates and recommends approving the method as proposed.Staff believes the proposed method is
Although the time of day drives the largest differences in the value of electricity because of the amount of solargenerationpresentinthemarketandcustomerconsumptionpatterns,day of the week and seasons are alsodifferentiatedintherates.
REDACTED STAFF COMMENTS 9 MARCH 9,2023
reasonable because it is based on COS incorporating attributes from approved special contracts
but also includes needed to appropriately charge Brisbie for its energy use
supplied from the Company's system.
The Company's proposed method for determining SupplementalEnergy rates is based on
a two-block pricing structure.The first 20 MW of energy load falls into the Company's Block 1
pricing and is priced at current Schedule 19T energy rates.Schedule 19T rates are capped at 20
MW and are based on embedded average cost determined in the last rate case.All load greater
than 20 MW is considered Block 2
The Commission approved a pricing structure in the Hoku special contract based on two
blocks using embedded and marginal cost rates.'°In the Hoku contract,Block 1 embedded rates
were based on Schedule 19 retail rates and Block 2 marginal rates were based on PURPA
published avoided cost rates.The load limit threshold between the two blocks in the Hoku
contract was 25 MW,which was the size limit under Schedule 19 when the Hoku contract was
negotiated.
Staff compared other Schedule 19T customer load shapes to Brisbie's load shape net of
its renewable generationto determine if Schedule 19T rates would be reasonable to use for Block
1 rates.Staff discovered that Brisbie's load factor net of renewable generationcan be lower and
more variable than other 19T customers during certain periods.However,Staff believes it is
reasonable to use Schedule 19T rates for Block 1 rates because the 20 MW load threshold in
Block 1 contains the most stable pattern of consumption of Brisbie's load shape.
Staff believes using
10 See Case No.IPC-E-08-21.
REDACTED STAFF COMMENTS 10 MARCH 9,2023
By paying full price,Staff believes it will minimize upward pressure on the average
cost of energy used to establish the embedded average cost of energy for all other ratepayers.
Staff reviewed the method for determining used in Block 2 pricing
and believes it is a reasonable proxy for
Staff's main concern is that the costs are derived as a
This method deviates
from customer rates that are typically derived from a test year and approved through a rate case.
Additionally,the IRP is only acknowledged by the Commission.However,the proposed rates
will be updated every two years upon acknowledgment of the IRP and only the first few years of
will be utilized.Staff believes these rates should be relatively
accurate given that the inputs and assumptions use the latest historical data as a basis.
Because the IRP is not a Commission-approved document,Staff recommends that the
along with all other pricing components from the IRP be filed for
Commission approval soon after the IRP is filed so the Commission can process the application
in parallel with the IRP filing and authorize them soon after IRP acknowledgment.
Excess Energy Generation
Staff reviewed the Company's proposed method for determining the rates used to pay
Excess Energy Generation (generation net consumption)credits and recommends approving the
method as proposed in the Application,but with an additional 85%adjustment consistent with
Schedule 86.Because these are
Staff believes should also be backstopped by actual Mid-C prices so the price for
the energy credits is determined by the lower of the proposed Aurora-based rates (with the
additional 85%adjustment)or the actual Mid-C market prices.
The Company's proposed method for determining is
based on the
adjusted by 82.4%to determine a non-firm energy market price.The
82.4%non-firm adjustment mirrors the non-firm adjustment in the Company's Cogeneration and
REDACTED STAFF COMMENTS 11 MARCH 9,2023
Small Power Production Non-Firm Energy -Schedule 86."Staff believes the
provides a reasonable avoided cost of energy price for non-firm energy
when adjusted by the 82.4%adjustment factor as proposed;however,Staff believes that the 85%
adjustment consistent with Schedule 86 needs to also be included
The value of generation for Schedule 86 is determined using the monthlyaverage daily
Intercontinental Exchange ("ICE")Mid-C Peak Avg and Mid-C Off-Peak Avg index prices.
These prices are discounted by 82.4%to adjust for non-firm energy and discounted again by
85%to adjust for transmission,losses,and transaction costs associated with moving non-firm
energy to sell into the market.The adjustment was originallyproposed by the Company in Case
No.IPC-E-01-40.In that case,the Company stated the followingreasons for establishing the
discount:
By establishing the purchase price as a percentage discount from the Mid-
C Index,Idaho Power's customers can be confident that non-firm energy
Idaho Power is obligated to purchase under Schedule 86 can be resold in
the wholesale market at a price that will recover Idaho Power's purchase
costs plus transmission costs.Conversely,the Company contends that when
Idaho Power desires to retain the non-firm energy delivered by a seller
under Schedule 86,Idaho Power can be assured that the purchase price will
be at least as beneficial as a wholesale non-firm market purchase.12
Staff believes the Company's reasons for proposing the adjustment for Schedule 86 are
applicable in this case because the Company is obligated to take the excess generationfrom
Brisbie's renewable resource(s).In the case of Brisbie,this amount could be very large given the
potential for up to of nameplate capacity for its renewable resource(s)while Brisbie's
This would require the Company
Includingthe 85%adjustment factor would
ensure customers are not harmed by these circumstances.
Staff is also concerned with the risk of the used to determine
being accurate.Staff believes it should be compared to the actual
Mid-C market price to safeguard customers from overpaying for excess
generation from Brisbie's renewable resources.
"See Response to Staff's Production Request No.29.
12 See Application at 3 in Case No.IPC-E-01-40.
REDACTED STAFF COMMENTS 12 MARCH 9,2023
The Company's proposal in this case uses in place of the
Using
introduces a source of risk that could cause other customers to pay more than their avoided
cost.Using the lower of the and actual Mid-C prices would safeguard other
customers from overpaying for excess generation from Brisbie's renewable resources.
Capacity Treatment
The Company's proposed treatment for capacity is inconsistent with Staff's ideal
framework because the capacity of Brisbie's renewableresource is not
The Company assumes 100%of the capacity needed for the
Brisbie data center will be provided by the Company's system and that 100%of the contribution
of capacity from its renewable resources will be provided to the Company's system and
Staff believes the can still accomplish Staff's
main principle of holding other customers harmless.
Diagram C -Capacity Treatment
BRISBIE SYSTEM Virtual Meter Boundary IPC SYSTEM
.BrisbieBrisbie
Data CTRGenerationr--1
I 100%of Solar Generation Capacity Value
Credit to Brisbie for 100%of Solar Generation Capacity
100%of Capacity Supplied by IPC System
Payment for 100%of Capacity Supplied by IPC System
i I I
I I I ¡L_I L _J
Legend:
Physical Flows
Financial Flows
The capacity treatment in the Brisbie contract has
REDACTED STAFF COMMENTS 13 MARCH 9,2023
Staff believes that PURPA provides the most
appropriate standard to evaluate the Company's
Renewable Capacity Credit
Staff reviewed the Company's proposed method for determining the Renewable Capacity
Credit rate structure and recommends the credit be based on a different method than proposed by
the Company.Staff recommends two changes.First,Brisbie should not receive any payments
for avoiding capacity cost until the Company's system is capacity deficient.Second,payments
for the contribution of capacity should be based on -
The Company's proposed method for determining the -
The Commission does not allow PURPA projects to receive capacity payments for
avoided capacity cost until the Company's system first becomes capacity deficient.13 This is
well established when the Commission stated:
In calculating a QF's ability to contribute to a utility's need for capacity,we
find it reasonable for the utilities to only begin payments for capacity at
such time that the utilitybecomes capacity deficient.If a utility is capacity
surplus,then capacity is not being avoided by the purchase of QF power.
By including a capacity payment only when the utility becomes capacity
deficient,the utilities are paying rates that are a more accurate reflection of
true avoided cost for the QF power.
Order No.33159,p.7.
As stated earlier,Staff believes PURPA provides the best standard of comparison for
compensating Brisbie for avoiding capacity cost.Since the Application proposes to compensate
"See Order Nos.33377,33159,and 33898.
REDACTED STAFF COMMENTS 14 MARCH 9,2023
Brisbie it is like the of a QF through
PURPA.Staff recommends that the payment for the should not
begin for any tranche of capacity procured for Brisbie until the authorizedfirst capacity
deficiency date occurs.The deficiency date used should be the date authorized through the
Company's biannual PURPA deficiency date filing at the time the PPA--or a resource
construction agreement-issigned by both the Company and Brisbie.
Staff also recommends that the rate structure for based on the
avoided capacity cost rate and payment structure used to compensate PURPA IRP-based energy
storage QF projects as approvedin Case No.IPC-E-20-02.14 Staff believes that the
of this rate structure should be used because the
is This rate structure only allows
during peak and premium peak hours,which are determined through the Load and
Natural Gas Forecast Annual Update filings.The peak and premium peak hours are the hours in
the year that determine the need for incremental capacity in the Company's system.By only
allowing capacity payments for energy delivered during these hours,resources are compensated
for the capacity avoidance they deliver ensuring accountability for their compensation.
Staff recommends that the should
be based on the
resource and its avoided capacity cost should not change for the life of the
contract.Staff further recommends that this
the peak and premium peak hours authorized in the Load and
Natural Gas Forecast Annual Update for PURPA could change
Because the structure of the ESA
Staff recommends
14 See Order Nos.34794 and 34913.*See Order Nos.32262,32697,and 34794.
REDACTED STAFF COMMENTS 15 MARCH 9,2023
Staff believes its proposed rate and payment structure is appropriate for several reasons.
As discussed earlier,this structure ensures that Brisbie's resources are compensated for the
they deliver providing accountability.Second,this rate and payment
structure was developed to provide compensation for
and the ESA mentions could potentiallybe
added in the future.See Tatum,Direct,Exhibit 1 at 13.
are likely to occur in the future,this structure can be applied
regardless of its source because it is based on the and not on the
As the Company provides additional CEYW-Construction offerings in the future,the use
of this rate structure can provide consistency across similar projects.
Demand Charges
Staff reviewed the Company's proposed method for determining demand charges and
recommends approving the demand charges as proposed.Staff believes the proposed demand
charges are reasonable because the methods used to determine the charges are like other
approved special contracts and are based on COS.
The Company's proposal for
Block 1 demand charges are consistent with Schedule 19T demand
charges.
See Goralski Direct at 14.
Staff supports the
proposed by the Company because they are consistent with past approved
special contracts and appropriately recovers
REDACTED STAFF COMMENTS 16 MARCH 9,2023
Company's No-Harm Analysis
Staff reviewed the Company's No-Harm Analysis and believes it indicates that the
Brisbie contract will hold other customers harmless but does not provide sufficient evidence on
its own.
The Company compared the net present value results of Aurora production cost model
runs both with and without the Brisbie ESA.The results of the Company's analysis show that
the system with the Brisbie contract could provide a -
However,Staff believes the analysis is insufficient because the analysis relies on a single
set of input assumptions that could change over the life of the Brisbie contract.Because the
analysis does not evaluate a range of values for the different risk variables that could affect the
results of the analysis,Staff did not rely on the results of the No-Harm Analysis as a primary
consideration in determining a recommendation for the Company's rate proposals.
Transmission Facility Construction Costs
Staff reviewed the Construction Agreement included as Confidential Exhibit No.2 and
believes that the costs necessary to provide ongoing electric service to the Brisbie data center,
including transmission construction cost and ongoing operation and maintenance cost up to the
point of delivery,will not be borne by other ratepayers.
REC Ownership and Treatment of System-Generated RECs
According to the ESA,any environmental attributes (also known as RECs)associated
with the output from the renewable resources acquired by the Company for Brisbie will be
transferred directly from the project or developerto Brisbie.According to the Company,this is
one of the primary purposes of the CEYW-Construction offerings,which Staff generally
supports.
However,Brisbie plans to annuallysupply 100%of its energy requirements from its
renewable resources.To accomplish its goal,Brisbie is theoretically using the Company's
system as a battery.Therefore,any energy it generates with its own resources,stores on the
Company's system,and then redistributes back to Brisbie will have RECs already owned by
Brisbie based on when it was originally generated.Given this perspective,Staff questions
REDACTED STAFF COMMENTS 17 MARCH 9,2023
whether it is fair for Brisbie to receive REC value from the system in the same way as other
customers receive REC value through the PCA.Because this question was never addressed in
the Application,Staff recommends the Company hold a workshop with Staff and other interested
parties to evaluate how REC benefits in the PCA should be allocated to Brisbie and other
CEYW-Construction offering customers before they begin generating renewable energy and
derive the associated environmental attributes.
Analysis of Provisions in the ESA to MitigateRisk
For each CEYW-Construction customer,Staff recommends that each ESA include parent
guaranties for the life of the PPA.Each guaranty is to protect the Company's other customers
from any potential cost shifting that may arise when a contract terminates.The Company and
Brisbie have written into the ESA additional provisions that should financiallyprotect customers.
See Tatum Direct at 10-11.
With these in place,the ESA should protect other retail customers.Staff
would like to see similar in future CEYW-Construction
contracts for "new"and existing customers.
Accounting Treatment in the PCA and the next General Rate Case
Staff supports the Company's proposed accounting treatment for Schedule 33 in the
PCA.However,the Company did not propose treatment of Schedule 33 costs,revenues,or loads
in the development of future base rates.Staff recommends setting up a workshop to discuss the
treatment of Schedule 33 costs,revenues,and loads to ensure timely processing of the next
general rate case.
REDACTED STAFF COMMENTS 18 MARCH 9,2023
The Company will pay the contract rate for the PPA,which will be recorded to Account
555.Brisbie will pay 100%of the output-matchingthese costs with correspondingrevenue
recorded to Account 442.Because Brisbie's payment will fully offset the cost of the PPA,this
amount will be excluded from the PCA.
In the event that the PPA facility
The costs will therefore be recorded to Account 555 and treated as other net
power supply expenses and flow through the PCA.
Block 1 energy and capacity,which are comprised of consumption for the first 20 MW
are priced at Schedule 19T rates.Block 1 energy will be included in the PCA in the same
manner as other retails sales.Block 2
which will also be recorded in the same manner as other retail
revenues.
Block 2
While this block will also be recorded to Account 442,for
ratemaking treatment,it will be included in the revenue requirement and PCA as surplus sales,
offsetting total Net Power Supply Expense.Therefore,Block 2 energy sales will be excluded
from the Sales Based Adjustment Rate.
Authorization of Renewable Resource PPAs by the Commission
In the Application,the Company proposes that future PPA's with Brisbie will not be filed
for review or approval by the Commission.For the followingreasons,Staff recommends the
Company file all CEYW-Construction PPA contracts with the Commission for its review and
approval.
Staff agrees that the selection of the resource and rates in the PPA do not need to be
authorized by Commission because the cost of the PPA will be 100%passed throughto Brisbie
and because Staff believes
are reasonable if Staff's modifications are implemented.However,
there are other elements within the PPA Staff believes should be reviewed and authorized by the
REDACTED STAFF COMMENTS 19 MARCH 9,2023
Commission-includingthe interconnection agreement within the PPA-to ensure no costs are
passed on to the general body of ratepayers.
Second,Staff is concerned that the the Company will be
To ensure that Brisbie meets this criterion and does not overproduce,Staff
recommends that the Company provide the followingitems annuallywith the PCA filing:(1)the
amount of consumption and generation from the renewable resources serving Brisbie and other
CEYW-Construction projects;and (2)an annual Brisbie load forecast that is compared to
Brisbie's annual generation forecast for all signed PPA's broken down on a monthly basis.The
recommended items will allow Staff and the Commission to ensure that Brisbie does not become
a net producer of energy,which could result in a cost shift to other retail customers.
STAFF RECOMMENDATIONS
Staff recommends approval of the ESA between the Parties contingent on the following
modifications if approved by the Commission as outlined below:
1.All pricing components determinedfrom the IRP should be filed separately for
Commission approval soon after the IRP is filed so the Commission can process
the application in parallel with the IRP filing and authorize them soon after IRP
acknowledgement;
2.For Excess Energy Generation credits,apply an additional 85%adjustment
consistent with Schedule 86;
3.For Excess Energy Generation credits,utilize the lower of the proposed Aurora-
based rates (with the additional 85%adjustment)and actual Mid-C market prices
on an hourlybasis;
4.For Renewable Capacity Credits,Brisbie not receive any payments for avoiding
capacity cost until the Company's system is capacity deficient;
5.For Renewable Capacity Credits,the rate structure should be based on the
avoided capacity cost rate and payment structure used to compensate PURPA
IRP-based energy storage QF projects as approved in Case No.IPC-E-20-02;
6.For Renewable Capacity Credits,the resource(s)used as a surrogate to determine
avoided capacity cost should be identified using the most recently acknowledged
REDACTED STAFF COMMENTS 20 MARCH 9,2023
IRP at the time that the PPA (or a resource construction agreement)is signed and
should use the lowest cost capacity resource included for selection within the IRP;
7.For Renewable Capacity Credits,the peak and premium peak hours that are
authorized in the Load and Natural Gas Forecast Annual Update for PURPA as
required by Order No.34913 should be used to update the peak and premium
peak per kWh rate on the same schedule as the other IRP updates utilizing the
peak and premium peak hours authorized at the time of the IRP updates;
8.Schedule a workshop to discuss the treatment of Schedule 33 costs,revenues,and
loads in base rates prior to the next general rate case;
9.The Company hold a workshop to evaluate how system-generated REC benefits
are passed on to CEYW-Construction customers in the PCA;
10.Every CEYW-Construction customer PPA-or a resource construction
agreement-bereviewed and authorized by the Commission;and
11.The Company provides the followingitems annuallywith the PCA filing:(1)the
amount of consumption and generationfrom the renewableresources serving
Brisbie and other CEYW-Construction projects;and (2)an annual Brisbie load
forecast that is compared to Brisbie's annual generation forecast for all signed
PPA's broken down on a monthly basis.
Respectfully submitted this day of March 2023.
Riley Newton
Deputy AttorneyGeneral
Technical Staff:Travis Culbertson
Michael Eldred
Kathy Stockton
i:umisc/comments/ipce2l.42tbtncklsttmecomments
REDACTED STAFF COMMENTS 21 MARCH 9,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 9th DAY OF MARCH 2023,SERVED THE FOREGOING REPLACEMENT REDACTED COMMENTS OF THECOMMISSIONSTAFF,IN CASE NO.IPC-E-21-42,BY E-MAILING A COPYTHEREOF,TO THE FOLLOWING:
DONOVAN E WALKER TIM TATUM
IDAHO POWER COMPANY VP REGULATORY AFFAIRS
PO BOX 70 IDAHO POWER COMPANYBOISEID83707-0070 PO BOX 70
E-MAIL:[e-mail] BOISE ID 83707-0070
[e-mail] E-MAIL:[e-mail]
MICHAEL HECKLER KELSEY JAE
COURTNEY WHITE LAW FOR CONSCIOUS LEADERSHIPCLEANENERGYOPPORTUNITIESFOR920N.CLOVER DR.
IDAHO INC BOISE,ID 83703
3778 PLANTATION RIVER DR SUITE 102 E-MAIL:kelsev kelseviae.com
BOISE,ID 83703
E-MAIL:[e-mail]
[e-mail]
CERTIFICATE OF SERVICE