20220829Answer to Petitions for Reconsideration.pdf

RILEY NEWTON
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. II2O2
Street Address for Express Mail:
11331 W. CHINDEN BLVD, BLDG 8, STE.2O1-A
BOISE, IDAHO 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
:1 r1,r: t. L_;j i": il. :u
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
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CASE NO. IPC.E-22.06
STAFF'S AIISWER TO
PETITIONS FOR
RECONSIDERATION
BACKGROT]ND
On March l0,2022,Idaho Power Company ("Company" or "Idaho Power") applied to the
Commission for an order approving a revised Special Contract for electric service ("ESA" or
"Micron ESA") between the Company and Micron Technology, Inc. ("Micron") and a 20-year
Power Purchase Agreement ("PPA" or "Black Mesa PPA") between the Company and Black Mesa
Energy, LLC ("Black Mesa") to facilitate the provision of energy to the Company under the ESA.
On April 6,2022,the Commission issued Notice of the Company's Application and Notice
of Modified Procedure setting deadlines for interested persons to comment and for the Company
to reply.
Industrial Customers of Idaho Power ("ICIP") intervened in this case. Order No. 35406.
Staff filed comments to which the Company replied. No other comments were received.
On August 1,2022,the Commission issued Order 35482,therein approving the Black Mesa
PPA, as filed, and directing the Company to file an updated ESA and Schedule 26 addressing the
Commission's modifications to the methodologies used for calculating Excess Generation Credits
ISTAFF'S ANSWER AUGUST 29,2022
and Renewable Capacity Credits ("RCC"). In addition, the Commission found "it fair, just, and
reasonable that the credits for excess energy and capacity included in power supply expense be
subject to 95o/o sharing in the [Power Cost Adjustment ("PCA")]." Order No. 35482 at 18.
On August 22, 2022, the City of Boise City ("Boise City") filed a petition for
reconsideration arguing that the Commission improperly made "programmatic changes" in Order
No. 35482 to the Clean Energy Your Way program, which is the subject of Case No. IPC-E-21-
40. Boise City further argued that the Commission lacked adequate justification for disregarding
the pricing structure of the ESA negotiated by Micron and the Company and that the Commission
imposed discriminatory pricing components.
On August 22, 2022, the Company filed a petition for clarification and reconsideration.
The Company requests the Commission clariff how Renewable Capacity Credits ("RCC") under
the Micron ESA are to be quantified. The Company requests the Commission reconsider its finding
that excess renewable energy and capacity credits included in the Company's power supply
expenses be subject to 95Yo sharing in the PCA.
In this answer to the petitions for reconsideration, Staff responds to Idaho Power's petition
for clarification and reconsideration ("Petition"), and briefly addresses Boise City's petition for
reconsideration.
STAFF ANALYSIS
I. Staff believes the RCC should be based on a resource's actual generation during peak
and premium peak hours and that Staff and the Company should work together to
develop a new RCC rate structure to be filed as a compliance filing.
The Company points to the Commission's directive that the RCC utilize the rate and
payment structure for Public Utility Regulatory Policies Act of 1978 ("PURPA") Integrated
Resource ("IRP")-based energy storage projects. Petition at 2. The Company had proposed that
the rate structure for the RCC be based on the capacity contribution of all variable energy limited
resources in the Company's 2021 IRP. Company Reply Comments at 12. The Company mentions
that to calculate the RCC it is necessary to determine the Capacity Contribution Factor ("CCF").
However, the Company notes that both Staff and the Commission were silent on the method for
determining the CCF. Thus, the Company requests the Commission clarifu whether it intended the
Company modiff just the manner in which RCC payments are made or whether it intended the
Company modiff both the RCC calculation and the method for determining the CCF.
2STAFF'S ANSWER AUGUST 29,2022
Staff generally agrees with the Company's representations regarding Staff s position on
the IRP-based methodology for determining the CCF and application of a "time of output" rate
structure for payments for the RCC. Petition at 3. Staff also agrees with the Company's statement
that the annual value of Micron's RCC would be "paid on a dollars-per-kWh basis for energy
delivered in peak and premium peak hours as identified by the PURPA IRP-based storage project
methodology." Id.
Staff acknowledges that it did not consider the specific calculations of the RCC rates and
the determination of the CCF. Staff understands that the PURPA energy storage payment
structure-the structure which Staff recommends the Company implement--{eparted from
previous PURPA rate structures when it was initially developed in Case No. IPC-E-20-02. The
hallmark of this payment structure is its pricing for production delivered during "peak" and
"premium peak hours."
Peak and premium peak hours are, essentially, the hours within time periods that define the
need for future capacity on the Company's system. To determine the avoided capacity cost requires
a survey of the fixed costs of future capacity resources through the Company's IRP process. Since
the energy storage payment structure was implemented, new methods in the IRP process for
determining the amount of capacity resources can contribute to the system and identif,ing critical
times of need have been developed. Staff believes that the RCC rate structure that it recommends
the Company implement in this case constitutes a synthesis of the new information and methods
developed in the Company's most recent IRP with the methods for determining the PURPA energy
storage capacity rate structure. Because this approach requires integration with the updated IRP
methods and information, Staff believes the Company should work with Staff to develop a RCC
rate structure which it can then provide to the Commission as a compliance filing in this case.
II Staff believes the records supports the Commission's determination regarding the
PCA.
Staff believes the record, including Staff s comments, supports the Commission's finding
that credits for excess energy and capacity included in power supply expenses be subject to 95o/o
sharing in the PCA. However, Staff is willing to submit written comments if the Commission
wishes to reconsider this issue.
JSTAFF'S ANSWER AUGUST 29,2022
III. Boise City's Petition for Reconsideration
Staff has no comment on Boise Crty's assertion that the Commission "chose the wrong
docket to make programmatic decisions for the Clean Energy Your Way program." Boise City
Petition at 2. Staff reiterates its conclusionthatthe Company'sNo-Harm Analysis was insufficient.
Id. at 3. Staff maintains its belief that the pricing components under the Micron ESA are fair and
reasonable . Id. at 5. However, Staffis prepared to file additional comments should the Commission
grant reconsideration of the issues raised by Boise City's Petition.
IV. Conclusion
Staff recommends the Company work with Staff to develop an RCC rate based on the
PURPA energy storage capacity rate structure and the methods used in the Company's most recent
IRP then file a compliance filing. Staff believes the Commission's decisions on the issues in the
Company's and Boise City's petitions for reconsideration were adequately supported by the
record. However, Staff is prepared to fill additional comments on any issues the Commission
wishes to reconsider.
Respectfully submitted this [lf day of Aug ust2022
Riley Newton
Deputy Attomey General
i:umisc/commefisl ipce22.6m answer to petition
4STAFF'S ANSWER AUGUST 29,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 29th DAY OF AUGUST 2022,
SERVED THE FOREGOING COMMISSION STAFF'S AI\SWER TO PETITIONS
FOR RECONSIDERATION, IN CASE NO. IPC-E-22-06, BY E-MAILING A COPY
THEREOF, TO THE FOLLOWING:
DONOVAN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
dockets@ idahopower.com
PETER J zuCHARDSON
RICHARDSON ADAMS PLLC
5I5 N 27TH ST
PO BOX 7218
BOISE TD 83702
E-MAIL: [e-mail]
ED JEWELL
DEPUTY CITY ATTORNEY
BOISE CITY ATTORNEYS OFF
PO BOX 500
BOISE ID 83701-0500
E-MAIL : ejeu,[e-mail]
TIM TATUM
CONNIE ASCHENBRENNER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
caschenbrenner@ idahopower. com
DON READING
6070 HILL ROAD
BOISE ID 83703
E-MAIL : [e-mail]
wIL GEHL
ENERGY PROGRAM MANAGER
BOISE CITY DEPT OF PUBLIC WORKS
PO BOX 500
BOISE ID 83701
E-MAIL: weehl@,cityofboise.org
SECRE Y
A fboise
CERTIFICATE OF SERVICE