20220706Reply Comments.pdf

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DONOVAN WALKER
Lead Gounse!
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Enclosure
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July 6, 2022
VIA ELECTRONIC FILING
Jan Noriyuki, Secretiary
ldaho Public Utilities Commission
11331W. Chinden Blvd., Bldg 8,
Suite 201-A(83714)
PO Box 83720
Boise, ldaho 83720-0074
Re Case No. IPC-E-22-06
ln the Matter of Idaho Power Company's Application for Approval of a
Replacement Special Contract with Micron Technology, lnc. and A Power
Purchase Agreement with Black Mesa Energy, LLC
Dear Ms. Noriyuki:
Aftached for electronic filing is ldaho Power Company's Reply Comments in the
above-entitled matter.
Please feel free to contact me directly with any questions you might have about this
fi!ing.
Very truly yours,
Donovan E. Walker
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83701
Telephone: [phone]
Facsimile: [phone]
dwa ! ker@ i da hopower. co m
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
APPROVAL OF A REPLACEMENT
SPECIAL CONTRACT WITH MICRON
TECHNOLOGY, INC. AND A POWER
PURCHASE AGREEMENT WITH BLACK
MESA ENERGY, LLC.
CASE NO. |PC-E-22-06
IDAHO POWER COMPANY'S
REPLY COMMENTS
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ldaho Power Company ("ldaho Powef'or.Company") hereby respectfully submits
the following Reply Comments in response to Comments filed by Staff ('Staff) of the
ldaho Public Utilities Commission ("Commission") in the mafter of the Company's
application for approval of a replacement special contract with Micron Technology, lnc.
("Micron") and a power purchase agreement ("PPA') with Black Mesa Energy, LLC.
("Black Mesa").
The Company is grateful for the opportunity to offer Reply Comments in this case
and appreciates the review and considerations raised by Staff in this case, as well as the
two Clean Energy YourWay ('CEYW') dockets with similarframework principles currently
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
under review by the Commission.l Prospective and cunent ldaho Power customers such
as Micron have expressed a desire to pursue corporate clean energy goals and the
Company has worked diligently alongside these customers to develop a framework that
will meet their specific needs while at the same time safeguarding the interests of non-
participating customers. The Micron Energy Services Agreement ('ESA) mirrors the
regulatory framework set forth in the CEYW - Construction offering (as outlined in ldaho
Power's Application with the Commission in Case No. IPC-E-2140) and reflects both
Micron's system costs and benefits from participation.
As a point of initial clarification, ldaho Power would like to address Staffs
statement that "Black Mesa was one of the resource proposals submitted and selected
to meet the Company's 2023 deficit."2 Black Mesa's solar generation resour@ was not
selected by ldaho Power as a capacity resource to meet the 2023 deficit through the
request for proposal process; only the 40 megawatt ("MW') Black Mesa battery storage
component was selected. The 40 MW solar PPA added to ldaho Power's system will meet
Micron's renewable energy supply needs. Micron's participation in the CEYW program
provides value to all non-participants because Micron is paying for all output from that
energy resource that will fue! an ldaho Power-owned capacity resource (energy storage
project) serving allcustomers, and in tum Micron willappropriately receive benefitthrough
excess energy and capacity payments.
1 The Company filed an Application to Expand Optional Customer Clean Energy Offerings Through the
Clean Energy Your Way Program, Case No. IPC-E-2140, on December 2,2021which outlines the
overall pricing framework of the CEYW program.
ldaho Power filed an Application for Approval of Special Contract and Tariff Schedule 33 - Bisbie LLC
Data Center Facility, Case No. IPC-E-2142 which is the first customer application of the proposed CEYW
- Construction option.
2 Staff Comments, pg. 14
IDAHO POWER COMPANY'S REPLY COMMENTS.2
ldaho Power recognizes that Micron's ESA, and the broader proposed CEYW -
Construction option constitutes a new framework-one that is necessary to incorporate
the renewable resources options that customers are requesting of ldaho Power. This
framework is distinctly different from traditional Specia! Contracts the Commission has
previously authorized.
Through Micron's no-harm analysis, ldaho Power validated that the pricing and
compensation structure as proposed in the ESA does not shift costs to other ldaho Power
customers. As noted by Staff, Micron's no-harm analysis shows the ESA could provide
up to $4.1 million of benefit to non-participating customers over a 2}-year period.3 The
Company acknowledges Staffs concern that the no-harm analysis relies on a single set
of input assumptions and that Staff would like to see a range of values for different risk
variables.a !t is important to recognize that the Company's no-harm analysis conducted
for the Micron ESA applies the same analytical rigor as that applied for the IRP process.
ln fact, ldaho Power's Micron ESA no-harm analysis used the 2021 IRP preferred portfolio
as a base case. The Company then, using the same 2021 IRP planning assumptions,
created an altemate future scenario with the Micron-specific resource added to develop
altemative portfolio costs for comparison purposes. Finally, by layering on the share of
revenue requirement assigned to Micron and all other customers with and without the
revised ESA to the respective portfolio cost scenarios, ldaho Power can reasonably
determine the present value system revenue requirement impact - in this case indicating
a positive benefit to the system. While ldaho Power is confident in its no-harm analysis
3 /d., p. 16
4 ld., p. 16
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
method and its results in this case, the Company anticipates coordinating with Staff to
better understand their concerns related to the no-harm analysis and will look to begin
those discussions in the near-term.
Given the extensive effort that ldaho Power and Micron undertook to ensure just
and reasonable pricing and credit components, the Company respectfully requests that
the Commission approve (1) the Micron ESA with acceptance of certain Staff
recommendations, as explained in the sections below, and (2) the Black Mesa PPA as
filed.
I. BACKGROUND
On March 10,2022, ldaho Power filed its application with the Commission for
approval of a (1) revised Special Contract for Micron, and (2) a renewable resource PPA
that has been executed on Micron's behalf. Micron is a current SpecialContract customer
of ldaho Power, first taking service under a Special Contract agreement in August 1995.
Micron's Special Contract has been amended, extended, and replaced to arrive at the
cunent Special Contract in effect since December 2009.
Micron has a renewable energy goal of using 100 percent renewable energy to
support its U.S. manufacturing operations by calendar year 2025. These forms of
renewable energy goals are increasingly oommon, albeit with varying compliance dates.
As proposed in the Company's Application, ldaho Power and Micron negotiated pricing
associated with existing retail electric service from the Company, cost and credit
components associated with the renewable resources that will support Micron's
operations, and the terms and conditions goveming the structure of incorporating the
CEYW- Construction option framework. To validate the proposed pricing structure, ldaho
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
Power conducted an analysis to validate that the provisions of the ESA would not shift
costs to other ldaho Power customers.
The Micron ESA is consistent with and minors the regulatory framework set forth
in the CEYW - Construction option, as outlined in ldaho Power's Application with the
Commission to establish new clean energy offerings for customers (Case No. IPC-E-21-
40). ln thatApplication, ldaho Power states its belief that it can workwith existing orfuture
Special Contract customers to integrate renewables into their service agreement with the
Company. Under the proposed CEYW - Construction option, Idaho Power will work with
customers to develop a Renewable Construction Agreement-the document that governs
all pricing for Company electric service and the customer's accompanying renewables.
For Micron, the Renewable Construction Agreement is incorporated into its proposed
ESA.
ln addition to approving the modified ESA and Schedule 26, ldaho Power
requested explicit approval of severa! specific components of a regulatory framework
designed to implement and administer Micron's Special Contract with its supporting
renewables: 1) authority to procure renewable resources for the purpose of supporting
Micron's energy use under a standard procurement agreement, 2) the cost basis and
pricing structure for the supply of retail electric servlce by ldaho Power, 3) the
compensation structure for excess renewable energy generation and capacity
contribution of the renewable resources, 4) authorization to treat bill credits provided to
Micron under the proposed compensation structure as prudently incuned expenses for
ratemaking purposes, and 5) the cost recovery mechanisms necessary to protect existing
ldaho Power customers from cost-shifting and ensure ldaho Power has an opportunity to
IDAHO POWER COMPANY'S REPLY COMMENTS - 5
recover its cost of service.
I!. REPLY COMMENTS
ln its Comments, Staff recommends (1) approval of the Micron ESA contingent on
several proposed modifications to the ESA or Schedule 26, and (2) approval of the Black
Mesa PPA. Considering the unique nature of the Micron ESA to incorporate the CEYW -
Construction option framework in Micron's existing ESA, ldaho Power was encouraged
that Staff and the Company are aligned on the majority of the components and constructs
in the Application.
BIack Mesa PPA
Wth respect to the Black Mesa PPA, the Company appreciates Staffs
re@mmendation for approval.s Because nearly the entirety of Staffs Comments is
centered on re@mmendations for the ESA or future PPAs, the Company highlights a
critical requirement in the Black Mesa PPA for Commission approval by August 1,2022,
otherwise the Scheduled Commercial Operation Date may be at risk. The Black Mesa
PPA is not projected to generate Excess Generation, a concern Staff raised with respect
to Excess Generation being substantial with the potential for Micron to meet 110 percent
of their annual energy requirements through the CEYW offering.G This concem is not
applicable to the initial Black Mesa 40 MW resource in this filing; in the Company's
evaluation of energy requirements there were no hours of Excess Generation based on
Micron's Ioad and the 40 MW Black Mesa solar resource. Hearing no objection from Staff
for approval of the Black Mesa PPA, and because con@rn is associated with future
5 Staff Comments, pg. 5.
6Id., pg. 10.
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
Commission PPA authorization, the Company respectfully requests the Commission
approve the Black Mesa PPA before oron August 1,2022 to meetthe critical timing
necessary for resource in-service by June 1,2023. Should the Commission determine
there are additional considerations for treatment of future PPAs or that modifications to
the Micron ESA are necessary, ldaho Power recommends the Commission order ldaho
Power to address those items and file a replacement ESA and Schedule 26 within g0
days following a Commission orderfor approval of the BIack Mesa PPA. This process will
ensure that concerns related to future PPAs orterms contained in the ESA do not impede
Black Mesa from meeting the June 1 ,2023 in-service date.
Micron ESA and Schedule 26
ldaho Power supports Staffs recommendation to approve the Micron ESA.
However, as the Company has outlined in both the CEYW and the Brisbie cases, the
Company respectfully disagrees with some of Staffs proposed modifications and the
rationale to support them.
Though the Company's position for specific application of certain elements of the
CEYW pricing framework dlffers from Staffs recommendations, it should be noted that
ldaho Power and Staff are generally aligned on overarching pricing philosophy which
includes: 1) continued collection of system costs consistent with cost-of-service
principles, 2) attribution of renewable resource Renewable Energy Certificates ("REC") to
the CEYW participant, 3) provisions in the PPA to mitigate stranded-asset risk and
financial ability to pay, and 4) recognition that a CEYW renewable resource provides
system energy and capacity value for which the participant should be compensated. ln
this case, Straff recommends several modifications to the CEYW framework presented in
IDAHO POWER COMPANY'S REPLY COMMENTS - 7
the ESA that are generally consistent to its positions in the CEYW and Brisbie cases. As
such, ldaho Power's responses, rationale, and positions in support of the proposed
framework in this case are similar to those raised in the CEYW and Brisbie cases, where
applicable.
For the new components of this ESA necessary to incorporate renewable resource
procurements, namely, compensation for those renewable resources, ldaho Power
sought to establish crediting mechanisms that would reasonably and fairly reflect the
energy and capacity value of the new resources to Idaho Power's system. The Company
shares Staffs desire to apply some Ievel of methodological consistency when valuing
energy and capacity on ldaho Power's system. However, in the development of the
proposed ESA, the Company was also mindfu! that the transaction with Micron is
dissimilar to power purchases under PURPA.
Unlike PURPA projects, the Micron-associated resources will be fully negotiated
additions to the Company's generation portfolio. These resources will be procured like
traditiona! system resources (Micron's associated resources will either be secured
through a PPA or Company-owned) and distinctly differentfrom PURPA projects, in which
the Company has limited to no negotiating power. Further, the overarching CEYW -
Construction aftlngement involves a customer that will be financially supporting their
accompanying renewable resources. While certain aspects of PURPA pricing may be
appropriately applied to the Micron ESA and other CEYW - Construction agreements,
such as re-pricing on a two-year cadence, Staffs proposed changes to move the ESA
compensation structure closer to a PURPA-like valuation methodology are misapplied.
IDAHO POWER COMPANY'S REPLY COMMENTS - 8
III. RESPONSE TO STAFF'S RECOMMENDATIONS
Staffs final recommendations on pages 20-22 include 12 specific proposals, some
of which involve overlapping topics. ldaho Poweraddresses each recommendation below
and has grouped the discussion by the relevant topic.
A. Pricinq Updates
Recommendation 7. ln its first recommendation, Staff proposes that all pricing
components of the Micron ESA stemming from the Company's lntegrated Resource Plan
('lRP') be filed in parallelwith, or shortly following, submission of the !RP.
ldaho Power agrees and supports this re@mmendation. The Company envisions
that it would submit an advice filing to update the components of Micron's Schedule 26
that are related to the lRP.
B. Excess Enerqv Generation Credit
Staffs second and third recommendations address the credit for any excess
energy generation-that is, the amount ldaho Power would credit Micron for any
renewable resource generation above Micron's load in a given hour.
Recommendation 2. Staff proposes approving the method for calculating the
excess energy generation credit in the ESA but with "an additional 85% adjustment
consistent with Schedule 86.'7 ldaho Power respectfully disagrees with this
recommendation. ldaho Power's economic analysis of Micron's ESA demonstrates there
is no harm to ldaho Powe/s other customers, and in fact goes beyond 'no harm" and
shows positive benefits to ldaho Power's other customers of $4.1 million over a period of
20-years. Rather than protecting other customers from cost shifts, ldaho Power is
7 Staff Comments, pg. 20
IDAHO POWER COMPANY'S REPLY COMMENTS - 9
concemed an additional adjustment to the excess energy component would increase the
benefits other customers would receive at Micron's expense. ldaho Powe/s CEYW goal
was to create a structure that fairly balances customer sustrainability and energy
requirements against the need to ensure no harm to other customers.
Recommendation 3. Staff proposes that the excess energy generation credit be
the "lower of'the Excess Generation Price (with the 85% adjustment) or the actual high
or low load hour Mid-C market price (without any adjustments) for each hour. Staff at21.
ldaho Powerdisagreeswith the recommendation and believes price risk should be
symmetrically applied. One of Staffs arguments for the "lesser of' concept is the
introduction of risk from customers paying forecast Mid-C prices which are above actual
market Mid-C prices for excess generation. ldaho Power agrees with Staff there is
potential risk that the Mid-C forecast exceeds actua! hourly Mid-C prices; however, Staffs
"lower of' recommendation does not provide symmetrical treatment for that risk and
instead shifts all downside risk to Micron, while affording customers all of the benefit of
actual Mid-C prices that are higher than the forecast rate contemplated by the ESA. Actual
Mid-C market prices may be lower or higher than forecast Mid-C prices, and the
Company's use of an AuRoRA-generated market forecast provides stability and
predictability to both Micron and the Company, with each party knowing the amount for
compensation in every hour for the next two years. Price risk should be symmetrical,
achieved through either compensating Micron's excess energy at the Mid-C forecast
price, or at actual Mid-C price, not through an artificial ceiling from the "lower of concept.
As proposed in the ESA, the forecast (and the associated excess energy
generation credit amounts at the more granular hourly interval) would be updated every
IDAHO POWER COMPANY'S REPLY COMMENTS - 1O
two years with the Company's IRP to ensure alignment with the most current forecast of
the Mid-C market and to eliminate out-year variation and escalation that naturally occurs
in a 20-year forecast.
Should the Commission determine the additiona! 85% adjustment consistent with
Schedule 86, Staffs recommendation 2, is appropriate for Micron's excess energy, the
Company believes adding a second discounting Iayer from the "lessor of' Mid-C forecast
or market recommendation 3 would punitively reduce Micron's excess energy
compensation by shifting all downside price risk to Micron. Striking a careful balance
between consistency of Schedule 86 application and faimess in assigning price risk is an
important consideration.
C. Renewable Gapacitv Credit
Staffs Recommendations 4 through 7 alladdress the Renewable Capacity Credit.
Recommendation 4. Staff agrees the Black Mesa PPA receive capacity credit
starting July 2023, consistent with the capacity deficiency date in IPC-E-21-09.8 For any
future Micron PPA, Staff recommends the Renewable Capacity Credit Eligibility ('RCCE")
date should be based on the first capacity deficiency date approved by the Commission
at the time the PPA or a resource construction is executed by the Company. Staff at 21.
The Company and Staff have similar goals for determination of RCCE, that for an
existing customer such as Micron, capacity credit is provided on the Company's capacity
deficient date. Staff argues the method for the Micron ESA follow the same determination
as Qualiffing Facilities ("QF") through PURPA, which are authorized through the
Company's biannual PURPA deficiency date filing. The Company agrees with this
8 Staff Comments, p. 13.
IDAHO POWER COMPANY'S REPLY COMMENTS - 11
re@mmendation and supports using the deficiency date for QFs as the PURPA update
schedule provides for more frequent updates and may reflect more current circumstances
and information than the most recently acknowledged lRP.
ldaho Power notes that no change is required to either the ESA or Schedule 26 to
support this recommendation as the RCCE date is determined and listed on Schedule 26
at the time of PPA execution.
Recommendation 5. Staff argues that the rate structure for the renewable capacity
credit should be based on the avoided capacity rate and payment structure used to
compensate PURPA QF storage projects.
ldaho Power's disagrees with this recommendation. First and foremost, CEYW-
associated resources are not-and should not be viewed-as PURPA storage projects.
The Company's proposed method of calculating each resource's capacity credit is
consistent with the determination of the capacity contribution of al! variable energy limited
resources within the Company's20211RP. Suggesting the credit payment be determined
based on a dispatchable capacity resource (such as storage)-vtthich is capable of
responding to economic price signals-will result in a mischaracterization of a non-
dispatchable resource's capacity contribution and creates inconsistency with IRP
methodology. ln comparison, the Company's Effective Load Carrying Capability ('ELCC)
method already evaluates when a resource will provide capacity with respect to ldaho
Power's highest risk hours, versus a storage QF, for which the Company must make
assumptions about the amount and duration of dispatch at peak to develop capacity
contribution and must receive the correct economic signal to ensure that dispatch occurs
at peak value time periods. The ELCC method also evaluates the interaction of all
IDAHO POWER COMPANY'S REPLY COMMENTS - 12
resources on ldaho Power's system and determines capacity contribution based on their
interplay; capacity contribution reduces as more of the same non-dispatchable resource
is added to the generation mix (however, this assumption is only true when no other
resource types are included in the generation mix). Finally, Staffs recommendation is
inconsistent with either the Surrogate Avoided Cost ("SAR"), or lncrementa! Cost IRP
('|CIRP") method for payment of capacity value to solar or wind PURPA resources. For
those PURPA resources, capacity value is spread across all hours of forecast generation
over the year. lnstead of providing capacity value in each kilowatt-hour ("kWh"), the flat
monthly credit endeavors to recognize the same value to ldaho Power's system, and over
a multi-year time horizon to smooth for annual fluctuations in generation, is likely to
achieve similar capacity credit compensation versus incorporating that value in each kwh.
Recommendation 6. For Renewable Capacity Credits, Staff recommends the
resource(s) used as a surrogate to determine avoided capacity cost should be identified
using the lowest-cost selectable resource from the most recently acknowledged IRP at
the time of PPA execution.
The Company believes that Staffs recommendation has merit, but the
determination of a sunogate resource is best handled in the context of establishing the
Demand-Side Management ('DSM") alternate cost contained in the lRP. lf the capacity
cost basis is changed in the lRP, the ESA as written will adopt the new method for future
PPAs, making it unnecessary and premature to make such a change in this case.
Effectuating the change to the sunogate resource to determine avoided capacity cost in
the context of DSM alternate cost is critical to provide consistent treatment between
supply and demand-side resources.
IDAHO POWER COMPANY'S REPLY COMMENTS - 13
Recommendation 7. Staff recommends only providing Micron with capacity credit
during peak and premium peak hours, consistent with PURPA QF storage projects. Staff
at21.
ldaho Power disagrees with Staffls recommendation and assessment. As
articulated in the Company's response to Staffs Recommendation 5, the flat monthly
capacity credit endeavors to provide similar capacity credit compensation as is provided
to PURPA solar and wind resources under either the SAR or ICIRP methods, and it would
be inappropriate to credit a non-dispatchable resource under rates developed to provide
appropriate price signals to dispatchable storage resources.
D. Meetinss with Staff and Workshops
Staffs eighth and ninth recommendations involve ldaho Power hosting
discussions with Staff, or workshops on topics related to Micron CEYW framework
considerations in a general rate case, and treatment of system-generated RECs.
Recommendation 8. Staff re@mmends that the Company schedule a meeting with
Staff to discuss the treatment of Schedule 26 costs, revenues, and loads in base rates
prior to the next ldaho Power general rate case.
ldaho Power supports this recommendation. Meeting with Staff in advance of the
next general rate case will provide an opportunity for the Company to share with Staff
approaches for incorporation of Micron's CEYW framework prior to being subject to the
procedural timeline of a genera! rate case.
Recommendation 9. Staffs recommendation 9 asks that the Company hold a
workshop to evaluate the allocation of system-generated RECs to CEYW - Construction
customers. Staff a121.
IDAHO POWER COMPANY'S REPLY COMMENTS - 14
The Company disagrees with Staffs inference that CEYW - Construction
customers should not receive the benefit of system-generated REC sales that pass
through the Power Cost Adjustment ("PCA"). While ldaho Power continues to believe
that CEYW customers should have the same right to a PCA reduction for system REC
sales as every other customer, the Company wil! schedule a workshop to discuss REC-
related transactions and PCA impacts of system-generated RECs.
E. Future Renewable Construction Aqreements
Recommendation 10. Staffs tenth recommendation is that every CEYW -
Construction custome/s PPA or resource construction agreement be reviewed and
authorized by the Commission. Staff at21.
The Company disagrees with Staffs recommendation that each PPA should be
individually reviewed and authorized by the Commission. Staff notes in their Comments
that 100% of the PPA cost will be paid by Micron and due to this payment responsibility,
agrees selection of renewable resources and rates in the PPA do not need to be
authorized by the Commission.e The Company agrees with this as the selection, size, and
other details of Micron's supporting resources are not necessary for the Commission to
review so long as Micron pays in full for those resources, which is precisely what the ESA
requires.
Rationale provided by Staff to require review and authorization by the Commission
include: 1) ensuring interconnection costs are not passed to the general body of
customers, 2) CEYW - Construction customers are not being favored with lower cost
resources that could potentially be used for the system, and 3) that contract provisions
e Staff Comments, pg. 19
IDAHO POWER COMPANY'S REPLY COMMENTS - 15
are included to protect customers from unnecessary risks.lo
As noted by the Company in a previous filing,11 interconnection agreements do not
live within PPAs and that, further, non-PURPA generation interconnection agreements
are not Commission jurisdictional. To the extent Staffs concerns are related to a concern
that interconnection and transmission upgrades for new resources under the Micron ESA
could result in cost shifts, it should be noted that ldaho Power will require new resources
to procure Network Resource lnterconnection Service. This requirement helps to ensure
that a new resource will be responsible for upgrade costs that Micron will ultimately pay
for through PPA prices.
Staffs concern CEYW - Construction customers may be favored with lower cost
resources that could potentially be used as ldaho Power system resources is better
addressed through the Company's competitive bidding process when the Company files
for a Certificate of Public Convenience and Necessity ('CPCN") to procure a new
resource. The Commission and Staff have the opportunity to review bid competitiveness
and the Company's methodologies in resource selection to ensure fairness among all
customers as part of a CPCN filing.
Staffs own analysis of the Micron ESA deems it sufficient with respect to stranded-
asset cost risk mitigation, and Micron's financial ability to pay.12 Risk considerations to
protect all customers can be addressed in the Special Contract or Energy Services
Agreement. From ldaho Power's perspective, the requirement of Micron to pay in full for
10 Staff Comments, pg. 19.
rr Case No. IPC-E-21-42, Reply Comments, pg. 16
12 Staff Comments, pg. 4.
IDAHO POWER COMPANY'S REPLY COMMENTS - 16
all its associated resources should make it unnecessary for each individual PPA to be
reviewed and approved by the Commission.
F. Annual PCA Treatment
Recommendation 7 7. Staffs eleventh recommendation is that the Company
include Micron's Ioad, as well as its "consumption and generation from the renewable
resources serving Micron," in the PCA. ldaho Power supports this recommendation for
Special Contract customers, such as Micron, and can provide the requested information
in the PCA.
While not enumerated in Staffs recommendations on pages 20-22, the Company
strongly disagrees with Staffs recommendation that the credits for excess energy and
capacity credits included in net power supply cost collected through the PCA be subject
to 95% sharing.l3
It is inappropriate to consider a sharing mechanism when ldaho Power has no
ability to influence the performance of power supply expense, as in the case of the ex@ss
energy and capacity credits. ln all other instances where the Company makes payments
to customers at predetermined avoided cost, such as demand response, all those
payments are recovered at 100o/o. The same 100o/o recovery applies to PURPA costs in
power supply expense. Once the Commission authorizes the terms of Micron's and other
CEYW customers' compensation for excess energy generation and capacity, there is no
opportunity for ldaho Power to influence or reduce these payments. Staffs
recommendation to introduce the 95% sharing mechanism is disconnected from ldaho
Power's ability to influence or reduce these payments, and the Company does not stand
13 Staff Comments, pg. 18.
IDAHO POWER COMPANY'S REPLY COMMENTS - 17
to gain or lose through customer participation in the CEYW offering.
G. Solar Supplv Chain Concerns
Recommendation 72. Staffs final recommendation is that the Company notiff and
update the Commission if there are changes or issues regarding supply of solar cells
and/or solar modules for the BIack Mesa project. Statf at22.
Staff raises @ncem around supply chain risks from the Department of
Commerce's investigation to consider whether additional duties should be levied on
imported solar cell and modules sourced from Cambodia, Malaysia, Thailand, and
Vietnam. While that investigation anticipated a preliminary decision by August 29,2022,
on June 6,2022, President Biden paused tariffs for two years while the investigation
continues. The Company recognizes that even with tariffs paused for two years, there
have been industry supply chain impacts from the investigation. lf the Commission
determines it necessary, ldaho Power will provide written notification to the Commission
at the time the Company receives information of any material supply chain disruptions or
of the developer's inability to meet the terms of the Black Mesa PPA.
tv. coNcLUStoN
ldaho Power thanks Staff for their time and effort in expeditiously reviewing this
case to meet the Company's request the Commission issue an Order before August '1,
2022, critically, the required approvaldate in the Black Mesa PPA to ensure the resource
is in-service by June 1,2023.
The Company supports Staffs broad recommendation to approve the Micron ESA.
Additionally, ldaho Power supports several of Staffs recommendations that will provide
more information and additional transparency around Micron and other CEYW -
IDAHO POWER COMPANY'S REPLY COMMENTS.lS
Construction agreements, including: filing updates to Micron's pricing at the time of filing
the IRP (recommendation 1), for future PPAs use of a capacity deficiency date approved
by the Commission, (recommendation 4, which does not require ESA or Schedule 26 to
be modified to accept Staffs recommendation), holding workshops on treatment of
Micron's Schedule 26 costs, revenues, and loads in base rates prior to the next general
rate case (recommendation 8) and on the treatment of RECs under the CEYW Program
(recommendation 9), the inclusion of Micron's load and associated generation in the
annual PCA filing (recommendation 11), and notifying the Commission when the
Company receives notification of any materia! Black Mesa project-related supply chain
disruptions or inability to meet the terms of the Black Mesa PPA (recommendation 121.
The Company respectfullydisagreeswith Staff on severalof the re@mmendations
associated with changing the credit components of the Micron arrangement. The
proposed credit components in the ESA-that is, the crediting for excess energy and
renewable resource capacity-were developed between ldaho Power and Micron with
the specific objective of fair and equitrable compensation. Through the no-harm analysis,
which included the impact of the crediting components in question, the Company
validated that the Micron arangement will not shift costs to other customers using a
method that has the same analytical rigor as applied in the IRP process. Staffs proposed
modifications to the crediting mechanisms have been made without demonstrating that
these changes will result in a more equitable arrangement than what was originally
proposed.
The Company also disagrees with Staffs recommendation that credits for excess
energy and capacity credits included in net power supply expense and recovered through
IDAHO POWER COMPANY'S REPLY COMMENTS - 19
the PCA be subject to 95% sharing. Upon Commission approval of the ESA, contractual
terms govem payments to Micron with no ability by ldaho Power to reduce these
payments to the benefit of customers. The sharing mechanism incentivizes the Company
to minimize power supply expense for components it is able to influence and should not
be applied to power supply expenses that are contractually set.
Considering the Reply Comments herein, ldaho Power requests that the
Commission approve the Micron ESA without modification. The Company also requests
that, in conjunction with ESA approva!, the Commission approve Staffs first, fourth,
eighth, ninth, eleventh, and twe!fth recommendations, each of which is intended to
facilitate transparency around the Micron and future CEYW - Construction arrangements,
but do not modiff the ESA or Schedule 26. Finally, ldaho Power respectfully requests the
Commission approve the Black Mesa PPA by August 1,2022 to maintain the necessary
timeline for a June 1,2023 in-service date. !f the Commission determines it cannot issue
an order approving the Micron ESA and/or Schedule 26, the Company respectfully
requests the Commission direct it to address those concerns and file an updated ESA in
the 90 days subsequent to a Commission order.
Respecttully submitted this 6th day of July 2022
A,*?datt4-
DONOVAN E. WALKER
Attomey for ldaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 20
CERTIFICATE OF SERVICE
! HEREBY CERTIFY that on the 6th day of July 2022,1 served a true and correct
copy of the foregoing ldaho Power Reply Comments upon the following named parties by
the method indicated below, and addressed to the following:
Gommission Staff
Riley Newton
Deputy Aftomey General
Idaho Public Utilities Commission
Po Box 83720
Boise, ldaho 83720-0074
Industrial Customers of ldaho Power
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27h Street (83702)
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, lD 83703
Emailed to:
riley.newton@ouc. idaho.qov
Emailed to:
peter@ richa rdsonadams. com
Emailed to:
d read [e-mail]
&r"t.
Stacy Gust, Regulatory Administrative
Assistant
IDAHO POWER COMPANY'S REPLY COMMENTS - 21