20220429Tatum Direct.pdf

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF IDAHO POWER
COMPANY’S APPLICATION FOR A
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY TO ACQUIRE
RESOURCES TO BE ONLINE BY 2023 TO
SECURE ADEQUATE AND RELIABLE
SERVICE TO ITS CUSTOMERS.

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CASE NO. IPC-E-22-13

IDAHO POWER COMPANY

DIRECT TESTIMONY

OF

TIMOTHY E. TATUM

TATUM, DI 1
Idaho Power Company
Q. Please state your name, business address, and 1
present position with Idaho Power Company (“Idaho Power” or 2
“Company”). 3
A. My name is Timothy E. Tatum. My business 4
address is 1221 West Idaho Street, Boise, Idaho 83702. I 5
am employed by Idaho Power as the Vice President of 6
Regulatory Affairs. 7
Q. Please describe your educational background. 8
A. I received a Bachelor of Business 9
Administration degree in Economics and a Master of Busines 10
Administration from Boise State University. I have also 11
attended electric utility ratemaking courses, including 12
“Practical Skills for the Changing Electrical Industry,” a 13
course offered through New Mexico State University’s Center 14
for Public Utilities, “Introduction to Rate Design and Cost 15
of Service Concepts and Techniques” presented by Electric 16
Utilities Consultants, Inc., and Edison Electric 17
Institute’s “Electric Rates Advanced Course”. In 2012, I 18
attended the Utility Executive Course (“UEC”) at the 19
University of Idaho, and subsequently served as a member of 20
the UEC faculty from 2015 through 2019. 21
Q. Please describe your work experience with 22
Idaho Power. 23
A. I began my employment with Idaho Power in 1996 24
in the Company's Customer Service Center where I handled 25

TATUM, DI 2
Idaho Power Company
customer phone calls and other customer-related 1
transactions. In 1999, I began working in the Customer 2
Account Management Center where I was responsible for 3
customer account maintenance in the areas of billing and 4
metering. 5
In June of 2003, I began working as an Economic 6
Analyst on the Energy Efficiency Team. As an Economic 7
Analyst, I was responsible for ensuring that the demand 8
side management ("DSM") expenses were accounted for 9
properly, preparing and reporting DSM program costs and 10
activities to management and various external stakeholders, 11
conducting cost-benefit analyses of DSM programs, and 12
providing DSM analysis support for the Company's Integrated 13
Resource Plan. 14
In August of 2004, I accepted a position as a 15
Regulatory Analyst in the Regulatory Affairs Department. As 16
a Regulatory Ana1yst, I provided support for the Company's 17
various regulatory activities, including tariff 18
administration, regulatory ratemaking and compliance 19
filings, and the development of various pricing strategies 20
and policies. 21
In August of 2006, I was promoted to Senior 22
Regulatory Analyst. As a Senior Regulatory Analyst, my 23
responsibilities expanded to include the development of 24
complex financial studies to determine revenue recovery and 25

TATUM, DI 3
Idaho Power Company
pricing strategies, including the preparation of the 1
Company's cost-of-service studies. 2
In September of 2008, I was promoted to Manager of 3
Cost of Service and, in April of 2011, I was promoted to 4
Senior Manager of Cost of Service and oversaw the Company's 5
cost-of-service activities, such as power supply modeling, 6
jurisdictional separation studies, class cost-of-service 7
studies, and marginal cost studies. 8
In March 2016, I was promoted to Vice President of 9
Regulatory Affairs. As Vice President of Regulatory 10
Affairs, I am responsible for the overall coordination and 11
direction of the Regulatory Affairs Department, including 12
development of jurisdictional- revenue requirements and 13
class cost-of-service studies, preparation of rate design 14
analyses, and administration of tariffs and customer 15
contracts. 16
I. OVERVIEW 17
Q. What is the Company requesting in this case? 18
A. The Company is requesting the Idaho Public 19
Utilities Commission (“Commission”) issue an order granting 20
the Company a Certificate of Public Convenience and 21
Necessity (“CPCN”) to acquire 120 megawatts (“MW”) of 22
dispatchable energy storage necessary to meet the next 23
identified capacity deficit beginning in 2023. Approval of 24
this request is necessary to position the Company to meet 25

TATUM, DI 4
Idaho Power Company
its obligation to provide safe, reliable service to its 1
customers. 2
Q. How is the Company’s case organized? 3
A. My testimony begins with an overview of the 4
regulatory and operational considerations that guided the 5
Company’s time-limited resource procurement actions 6
presented in this case. I will provide a brief discussion 7
of the proposed 120 MW of Idaho Power-owned battery storage 8
facilities for which the Company is requesting a CPCN, 9
detail how Idaho Power has met the requirements of Idaho 10
Code § 61-526 to obtain a CPCN and present why the 11
Company’s request is in the public interest. 12
The direct testimony of Company witness Jared L. 13
Ellsworth presents the load and resource balance that 14
identifies Idaho Power’s 2023 capacity deficit. In 15
addition, Mr. Ellsworth describes the evaluation of 16
potential solutions for meeting the capacity deficiency and 17
identifies additional near-term peak capacity needs which 18
led to the solicitation through a Request for Proposals 19
(“RFP”) seeking to acquire up to 80 MW of peak-capacity 20
resources. 21
Mr. Eric Hackett’s direct testimony provides an 22
overview of the procurement process used to evaluate the 23
various resources that competed to provide a capacity 24
resource to help meet Idaho Power’s peak electric energy 25

TATUM, DI 5
Idaho Power Company
needs in 2023, and the resulting least-cost, least-risk 1
capacity resources selected through the fair and 2
competitive RFP process. 3
II. RESOURCE PROCUREMENT IN A DYNAMIC ENERGY LANDSCAPE 4
Q. Please describe the Company’s current energy 5
landscape. 6
A. Idaho Power has not added a supply-side, 7
dispatchable resource since 2012, with the construction of 8
the Langley Gulch combined-cycle, natural gas combustion 9
turbine, for which the Commission granted a CPCN with Order 10
No. 30892 in Case No. IPC-E-09-03. Idaho Power’s most 11
recently acknowledged1 Integrated Resource Plan (“IRP”), the 12
Second Amended 2019 IRP, did not show a first capacity 13
deficit until the summer of 2028. However, as described 14
more completely in the direct testimony of Mr. Ellsworth, 15
during the preparation of the 2021 IRP, an updated load and 16
resource balance analysis in May 2021 identified a first 17
capacity deficit of 78 MW in July of 2023, growing each 18
year through 2026, when the Boardman to Hemingway 500-19
kilovolt transmission line is expected to be operational. 20
Q. What drove the change in the capacity deficit? 21
A. The rapid change in deficit position was 22
caused by several dynamic and evolving factors, including 23
third-party transmission constraints, changes to the 24

1 Case No. IPC-E-19-19, Order No. 34959.

TATUM, DI 6
Idaho Power Company
assumptions in the load and resource balance regarding 1
transmission availability, an increasing population and 2
associated emergent demands on the Company’s system, 3
diminishing demand response resource effectiveness, and 4
lower generation effectiveness of variable resources during 5
critical demand hours. 6
Q. How do these factors and the dynamic energy 7
landscape impact the Company’s operations? 8
A. Under Idaho law, Idaho Power has an obligation 9
to provide adequate, efficient, just, and reasonable 10
service on a nondiscriminatory basis to all those that 11
request it within its service area. Idaho Power has 12
experienced and expects sustained load growth, thereby 13
requiring the addition of new dispatchable resources to 14
meet peak summer demand. To meet its obligation to 15
reliably serve customer load and fill the 2023 capacity 16
deficiency, the Company conducted a competitive 17
solicitation through an RFP seeking to acquire up to 80 MW 18
of Idaho Power-owned resources, to be online by June of 19
2023. 20
Q. Has the Company completed the competitive 21
resource procurement process identifying the resource 22
acquisitions? 23
A. Yes. The procurement process resulted in the 24
acquisition of least-cost, least-risk resources necessary 25

TATUM, DI 7
Idaho Power Company
to fill the 2023 capacity deficiency. The Company 1
performed a qualitative and quantitative evaluation of the 2
project proposals submitted through the RFP process as well 3
as a parallel investigation into different configurations 4
of Company-owned and constructed battery storage systems. 5
The request to acquire 120 MW of dispatchable energy 6
storage is the result of those efforts. 7
Q. How did the results of the RFP process help to 8
inform the Company’s request in this case? 9
A. The successful RFP bid included a combination 10
solar photovoltaic (“PV”) Power Purchase Agreement (“PPA”) 11
plus a build-transfer battery storage proposal. However, 12
through subsequent negotiations, the Company was informed 13
by the developer that they were no longer interested in 14
pursuing the build-transfer battery storage component. 15
Instead, the developer offered that if the solar PV PPA was 16
approved and moved forward to implementation, it would be 17
willing to negotiate an agreement with Idaho Power to 18
coordinate with the Company on a battery storage facility 19
that Idaho Power would procure on its own and located 20
adjacent to the developer’s solar PV site. 21
Q. What were the resulting least-cost/least-risk 22
resources selected through the competitive procurement 23
process necessary to meet the 2023 capacity deficiency? 24
A. The 2023 capacity deficiency will be met with 25

TATUM, DI 8
Idaho Power Company
projects consisting of a total of 120 MW of battery 1
storage. Mr. Hackett will discuss potential configurations 2
of these resources in his testimony. 3
Q. You indicated the Company is requesting a CPCN 4
for a resource acquisition of a combined battery storage 5
capacity of 120 MW. Is Idaho Power also requesting 6
approval of the referenced solar PV PPA in this case? 7
A. No. The successful bidder of the 80 MW 8
resource RFP was Black Mesa, Energy, LLC (“Black Mesa”). 9
Black Mesa proposed a 20-year PPA for the output of 40 MW 10
from a solar PV generation facility that will supply energy 11
to the Company’s system and is envisioned to be combined 12
with an Idaho Power-owned 40 MW battery storage facility. 13
Because a CPCN is only required for company-owned 14
resources, Idaho Power requested approval of the Black Mesa 15
solar PV PPA in Case No. IPC-E-22-06 filed on March 10, 16
2022. 17
Q. Are there any other reasons the Company chose 18
to include the solar PV PPA approval request in Case No. 19
IPC-E-22-06 rather than this case? 20
A. Yes. At the time Idaho Power was evaluating 21
the RFP project bids, the Company was simultaneously 22
negotiating with a current special contract customer to 23
provide modified special contract provisions to allow the 24
customer to cover up to 100 percent of their annual energy 25

TATUM, DI 9
Idaho Power Company
use with a new renewable resource consistent with the 1
proposed Schedule 62 Clean Energy Your Way – Construction 2
option proposed in Case No. IPC-E-21-40. 3
Idaho Power viewed the timing of the customer 4
interest in a new renewable resource and Idaho Power’s 5
system capacity needs as a potential “win-win” opportunity. 6
That is, the PPA with Black Mesa will provide for the 7
earliest renewable resource option available to meet the 8
customer’s needs, while at the same time allowing Idaho 9
Power to utilize the energy output from Black Mesa’s solar 10
PV facility to fuel energy storage, with 100 percent of the 11
solar output costs being paid for by the special contract 12
customer. Because of the relationship of the agreement and 13
the PPA, the Company is requesting approval of both the 14
modified special contract and the solar PV PPA in Case No. 15
IPC-E-22-06. 16
Q. Why is the Company requesting a CPCN for a 17
resource acquisition of a combined battery storage capacity 18
of 120 MW? 19
A. The 2021 IRP indicates an expected capacity 20
deficit of 101 MW in 2023. As explained in more detail in 21
the direct testimony of Mr. Hackett, the RFP resulted in a 22
standalone 40 MW solar PV plus 40 MW energy storage project 23
which will not be sufficient to fully meet the 2023 24
capacity need identified during the 2021 IRP process. 25

TATUM, DI 10
Idaho Power Company
Idaho Power also identified an additional 80 MW energy 1
storage resource through the investigation into different 2
configurations of Company-owned and constructed battery 3
energy storage systems performed in parallel to the RFP 4
process. The combined two projects, the 40 MW solar PV 5
plus 40 MW energy storage and the 80 MW battery storage 6
facility, will provide the resources necessary to fill the 7
2023 capacity deficiency. 8
III. REGULATORY CONSIDERATIONS FOR RESOURCE ACQUISITIONS 9
Q. The Commission, in Case No. IPC-E-10-03, 10
initiated a case seeking to establish competitive bidding 11
guidelines for the RFP process. What was the result of 12
that case? 13
A. In 2013, the Commission closed Case No. IPC-E-14
10-03 without establishing Idaho-specific resource 15
procurement guidelines, but rather directing Idaho Power to 16
follow the RFP guidelines applicable to its Oregon service 17
territory. The Oregon RFP guidelines to which the 18
Commission referred were later codified into the 19
administrative rules of the Public Utility Commission of 20
Oregon (“OPUC Resource Procurement Rules”).2 21
Q. Was the RFP the Company issued soliciting the 22
acquisition of up to 80 MW of peak capacity resources 23
subject to the Oregon RFP guidelines for competitive 24

2 Oregon Administrative Rule (“OAR”) 860-089-0010 et. seq.

TATUM, DI 11
Idaho Power Company
bidding requirements? 1
A. No. The OPUC Resource Procurement Rules 2
impose competitive bidding requirements upon an electric 3
utility for the “acquisition of a resource or a contract 4
for more than an aggregate of 80 MWs and five years in 5
length,” among other requirements.3 With a solicitation for 6
the acquisition of dispatchable resources up to 80 MW, the 7
competitive bidding guidelines were not applicable to the 8
Company’s RFP. 9
Q. Did the Company consider whether the OPUC 10
Resource Procurement Rules applied once it became aware the 11
2023 deficiency had increased? 12
A. Yes, but given the timeframe between the 13
identification of the increased capacity deficit, the need 14
to have resources online to meet that deficit, and given 15
supply chain constraints, it was apparent that there was 16
insufficient time to reissue the RFP under the OPUC 17
Resource Procurement Rules and ensure adequate resources 18
were available to provide reliable service to customers. 19
Additionally, the load and resource balance performed as 20
part of the 2021 IRP that indicated Idaho Power’s capacity 21
deficit in 2023 increased to 101 MW, also identified 22
additional capacity deficits in 2024 and 2025. 23
Q. What regulatory action did Idaho Power take in 24

3 OAR 860-089-0100(1)(a)

TATUM, DI 12
Idaho Power Company
light of the increased capacity deficits identified for 1
2023, 2024, and 2025? 2
A. Because there was insufficient time to 3
complete the procurement process contemplated by the OPUC 4
Resource Procurement Rules, and because the capacity 5
deficits were identified over a three-year period, Idaho 6
Power requested authorization from the OPUC to move forward 7
expeditiously with resource procurements for all three 8
years, 2023, 2024, and 2025, waiving the obligation to 9
comply with the competitive bidding requirements in favor 10
of a competitive, but expedited process.4 11
Q. What was the outcome of this request? 12
A. At a Public Meeting held March 8, 2022, the 13
OPUC adopted an OPUC Staff Memo recommending denial of the 14
Company’s request for a broad waiver. However, in its memo 15
OPUC Staff suggested that Idaho Power consider the OPUC 16
Resource Procurement Rule exception process for the 17
resource acquisitions needed to meet the shortfalls 18
identified in the Company’s request. 19
Q. Please describe the OPUC Resource Procurement 20
Rules exceptions. 21
A. There are certain exceptions to the 22
applicability of the OPUC Resource Procurement Rules, 23

4 Idaho Power Company’s Application for Waiver of Competitive Bidding
Rules, Docket No. UM 2210.

TATUM, DI 13
Idaho Power Company
including the exception used for executing the Jackpot 1
Solar power purchase contract5: “There is a time-limited 2
opportunity to acquire a resource of unique value to the 3
electric company’s customers.”6 The rules also contain 4
exceptions for emergencies, OPUC acknowledgement of an 5
alternative acquisition method in the utility’s IRP, and 6
exclusively acquiring transmission assets or rights.7 7
Q. Does the Company plan to proceed with 8
requesting an exception under one or more of the allowable 9
reasons as stated in your previous response? 10
A. Yes. Idaho Power filed an exception request 11
with the OPUC on March 18, 2022. 12
Q. You indicated under Idaho law, Idaho Power has 13
an obligation to provide adequate, efficient, just, and 14
reasonable service. Please expand on this regulatory 15
mandate. 16
A. Idaho Code §§ 61-302, 61-315, and 61-507 17
define Idaho Power’s obligation that the Company provide 18
adequate, efficient, just, and reasonable service on a non-19
discriminatory basis to all those that request it within 20
its service area. As part of the regulatory compact, Idaho 21
Power must serve all customers in the service area, in 22
exchange for its exclusive right to provide retail electric 23

5 Case No. IPC-E-19-14
6 OAR 860-087-0100(3)(b)
7 OAR 860-089-0100(3)(c)

TATUM, DI 14
Idaho Power Company
service within the service area. The compact provides Idaho 1
Power the opportunity to earn a reasonable return on its 2
investment of capital into the resources and systems 3
necessary to perform its service obligation. At the same 4
time, the Commission has oversight of the provision of that 5
service and must assure that the rates Idaho Power charges 6
its customers and that the rules and regulations by which 7
it provides service are just, reasonable, 8
nondiscriminatory, and non-preferential. 9
In order to comply with its continuing obligations 10
to serve customers, the Company must at times acquire 11
additional resources to meet the identified capacity 12
deficits on its system with whatever urgency arises, and 13
potentially outside of the formalized IRP process. While 14
the IRP provides insight into resource procurement, it is a 15
biennial process, and circumstances can change in the 16
interim, as in 2021, that can make resource procurement for 17
reliable load service more urgent. 18
Q. How did the urgency of the 2023 capacity 19
deficiency impact the procurement process in this case? 20
A. Given the short turn-around to construct a 21
resource to meet deficits identified in 2023, coupled with 22
global supply-chain disruptions stemming from the COVID-19 23
health crisis, it was imperative that the Company move 24
forward quicky on the resource procurement process. It was 25

TATUM, DI 15
Idaho Power Company
also important that Idaho Power consider the risks and 1
benefits of differing ownership structures and operation of 2
resources either as stand-alone projects or in connection 3
with energy storage projects. Given the limited time 4
available to procure resources necessary to meet the 2023 5
capacity deficit, it quickly became clear that many of 6
potential third-party providers were either unwilling or 7
unable to meet the required timeline. Idaho Power remained 8
mindful of its obligation to provide its customers with 9
reliable service and to the risks of relying on a third-10
party resource developer to timely meet its obligation. At 11
the same time the Company did not lose sight of its need to 12
maintain its financial health and remain a viable, going-13
concern, as a regulated entity in the state of Idaho. 14
IV. IDAHO POWER’S COMPETITIVE RESOURCE PROCUREMENT PROCESS 15
AND THE NEED FOR RELIABILITY AND RISK-REDUCTION 16
17
Q. Was Idaho Power’s resource acquisition 18
procurement process fair and competitive? 19
A. Yes. The direct testimony of Mr. Hackett 20
details the evaluation of the respondents’ proposals to the 21
RFP, which included a quantitative and qualitative 22
evaluation with an objective scoring methodology to 23
reasonably evaluate the price and non-price attributes of 24
each bid, providing evidence of a fair and competitive 25
procurement process. 26

TATUM, DI 16
Idaho Power Company
Q. Did the RFP process allow for third-party 1
ownership of the needed resources? 2
A. Yes. The RFP allowed for third-party ownership 3
under a PPA for wind and solar resources, provided the 4
proposals included a build-transfer agreement (“BTA”) for 5
any associated storage resources. 6
Q. Why did Idaho Power require a BTA for storage 7
resources under the RFP? 8
A. Because of the very short procurement window 9
to satisfy the near-term peak capacity needs, Idaho Power 10
did not believe it could adequately address several 11
important operational and policy concerns with third-party 12
ownership of battery storage resources. One of the primary 13
features of an owned peak capacity resource is the ability 14
to configure, reconfigure, maintain, operate, and 15
economically and operationally dispatch the unit without 16
application of the confines of the terms and conditions of 17
a PPA with a third party. For a utility such as Idaho 18
Power, which is seeking to meet near-term capacity 19
deficits (as opposed to merely energy deficits), as well 20
as maximize customer value via Energy Imbalance Market 21
(“EIM”) and other off-system sale opportunities, the 22
Company believes that its ownership and operation of the 23
battery storage resources will reduce the risk of 24
potential operational limitations that could exist under a 25

TATUM, DI 17
Idaho Power Company
PPA and ensure the resource is operational in time to meet 1
identified capacity deficits. 2
For a utility-scale battery storage facility in 3
particular, PPA arrangements may introduce additional 4
complications and risks, particularly when operating in the 5
EIM where dispatch changes are made real-time within an 6
hour. If the Company were to execute a PPA for a battery 7
storage facility, certain terms such as the 8
dispatchability, curtailment, maintenance, security, 9
mandatory payment, and operational terms, conditions, and 10
limitations, would likely be pre-defined for the term of 11
the PPA, which would eliminate flexibility. While these 12
issues could conceivably be addressed through an agreement 13
with a third-party provider, the Company was not convinced 14
that such contract terms were actually achievable, 15
especially in the limited time available for the resource 16
procurement at issue in this case. 17
Q. Does Idaho Power have other concerns related 18
to third-party ownership of dispatchable capacity 19
resources? 20
A. Yes, Idaho Power has other concerns regarding 21
third-party ownership of dispatchable capacity resources 22
that are more policy in nature. Idaho Power has been 23
purposefully and thoughtfully designated to serve a unique 24
role to provide an essential service to the public. This 25

TATUM, DI 18
Idaho Power Company
role is guided by the regulatory compact under which a 1
utility has the obligation to provide safe, reliable, 2
affordable energy to customers in its franchise service 3
areas in exchange for recovery of prudently incurred costs 4
and a fair rate of return for investors. This model of 5
regulation has worked well for customers for over 100 6
years and should not be confused as bias or an unfair 7
advantage that needs correction. Third-party owners do not 8
operate under the regulatory compact and therefore have no 9
obligation to serve other than what can be included in a 10
contract as performance requirements and damages 11
provisions. However, damages payments under a contract do 12
not equate to reliability. These concerns do not suggest 13
that circumstances where third-party ownership may be the 14
best option for customers do not, or will not, exist; 15
however, careful examination of all price and non-price 16
factors must occur. 17
Going forward, the Company recognizes that a 18
competitive procurement process that appropriately 19
considers the full range of costs and benefits of 20
differing ownership structures may ultimately best serve 21
the public interest. To that end, Idaho Power is committed 22
to working with Commission Staff and other interested 23
parties to explore competitive procurement practices that 24
result in a comprehensive and fair evaluation of price and 25

TATUM, DI 19
Idaho Power Company
non-price attributes of various resource ownership 1
structures, as well as being flexible enough to 2
accommodate short turn-around times, difficult procurement 3
and construction circumstances, and support the 4
reliability of service requirements of the regulated 5
utility. 6
Q. What specific areas of resource procurement 7
policy does the Company believe warrants further 8
discussion with Staff and other interested parties? 9
A. The Company believes resource procurement 10
decisions should be informed by evaluating the full range 11
of costs and benefits of utility ownership versus third-12
party ownership, both quantitative and qualitative. Such 13
an evaluation must certainly focus on price, but also 14
focus on other risks and benefits related to reliability, 15
system operation, long-term operation and maintenance of 16
facilities, financial viability of the utility, long term 17
impacts of imputed debt from PPAs, the efficacy of legal 18
remedies, economic dispatch in changing energy markets, 19
and adaptation for environmental policies. 20
Q. Are there any examples of states that have 21
reduced regulatory oversight of generation resources with 22
the goal of increasing competition? 23
A. Yes. Recent system reliability events in Texas 24
offer a cautionary tale regarding the risks associated with 25

TATUM, DI 20
Idaho Power Company
a restructured electric generation sector.8 In 1996, the 1
Electric Reliability Council of Texas (“ERCOT”) was 2
established as the Independent System Operator (“ISO”) in 3
the state of Texas (approximately 10 percent of Texas is 4
not served by ERCOT), as provided for in Senate Bill 373. 5
Subsequently in 2002, vertically integrated electric 6
utilities were required to restructure by separating their 7
generation, transmission, and distribution functions into 8
separate entities. One of the goals of this restructuring 9
was to create competition in the wholesale electric energy 10
market. 11
Ultimately, the state regulator, the Public Utility 12
Commission of Texas (“PUCT”), determined the prudence of 13
those investments. Under a restructured market, 14
independent generation operators do not have the same 15
regulatory oversight or financial incentives, which may 16
have led to underinvestment in the Texas generation fleet, 17
thereby compromising system reliability. 18
Q. What were the consequences of this policy 19
decision in Texas? 20

8 Source information for this section: The Timeline and Events of the
February 2021 Texas Electric Grid Blackouts A report by a committee of
faculty and staff at The University of Texas at Austin July 2021,
attached hereto as Attachment 3, and incorporated herein by this
reference.

TATUM, DI 21
Idaho Power Company
A. In February 2021, much of the ERCOT system was 1
being impacted by extreme cold weather associated with 2
Winter Storm Uri, which resulted in prolonged power outages 3
during the week of February 14. More than 4.5 million 4
homes and business lost power during this event, and at 5
least 210 people died as a direct result of those outages. 6
The outages occurred despite ERCOT’s best efforts in the 7
days prior to deploy operating reserves, load shedding, and 8
other conservation measures. 9
By February 15, 2021, ERCOT experienced generation 10
outages of over 50,000 MW, or approximately 40 percent of 11
total ERCOT nameplate generating capacity. Of those 12
outages, approximately 30,000 MW, representing 167 13
generating units, experienced weather-related outages. 14
These weather-related issues included, but were not limited 15
to, wind turbine icing, frozen water intakes, and freezing 16
of other general equipment. 17
The financial fallout from this event was also 18
severe. The financial pain caused by these events impacted 19
all categories of market participants, including wholesale 20
energy suppliers, retail energy suppliers, and retail 21
customers. Wholesale energy prices reached $9,000/MWh. 22
Extremely high prices led to unpaid power payments within 23
ERCOT of nearly $3 billion by May 2021. Retail providers 24
experienced negative financial impacts in the billions of 25

TATUM, DI 22
Idaho Power Company
dollars, with several bankruptcies occurring in the 1
aftermath. 2
Q. What was the PUCT’s level of involvement and 3
oversight of these events? 4
A. All of the operational and financial chaos 5
brought on by this extreme weather event occurred with 6
relatively little transparency or oversight by the PUCT, 7
even though Texas law requires the PUCT to analyze and 8
report on the preparedness of generating units to operate 9
during extreme weather events. The last such report was 10
filed with the legislature in 2012. The reduced regulatory 11
oversight and changed business model that exists in Texas 12
is a clear reminder of the risks that exist in deregulated 13
electric markets. Deregulated power generators serving 14
ERCOT did not have the incentive to invest in systems to 15
address extreme weather events, as presumably they were 16
single-mindedly focused on maximizing profits instead of 17
providing reliable service to customers in Texas. Given the 18
magnitude of the reported losses, it is conceivable that 19
the legal remedies available to the utilities against the 20
power generators will be inadequate. These tragic events 21
serve as a cautionary example that the economic signals to 22
unregulated market participants may not sufficiently incent 23
the investments that are necessary to ensure reliability 24
during those events. 25

TATUM, DI 23
Idaho Power Company
V. IDAHO POWER HAS MET THE STANDARD FOR ISSUANCE OF A 1
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY 2
3
Q. How does the Commission ensure the Company’s 4
resource acquisition is in the best interest of its 5
customers? 6
A. The Commission has oversight of resource 7
procurements to ensure the Company is prudently investing 8
its capital, with express authority to order a utility to 9
build new structures, or upgrade and/or improve existing 10
plant and structures, in order to secure adequate service 11
or facilities.9 A CPCN represents the exercise by the 12
Commission of this foundational authority and principles 13
that are necessary in Idaho’s system of permitting 14
regulated, vertically integrated public utilities to exist 15
and to provide necessary services to the public. 16
Q. When is a CPCN required? 17
A. Under Idaho Code § 61-526, a CPCN from the 18
Commission is required for the construction or extension of 19
a line, plant, or system by any street, railroad, gas, 20
electrical, telephone, or water corporation. In addition, 21
a CPCN is required to construct a new generation resource 22
or plant but is not required to increase the capacity of 23
existing generating facilities. While it may be 24
questionable whether battery storage should be classified 25

9 Idaho Code § 61-508.

TATUM, DI 24
Idaho Power Company
as a generation resource, the Company recognizes that a 1
CPCN provides a broad mechanism for considerable regulatory 2
oversight into the resource - one that is fundamental to 3
Idaho Power’s system of regulation and has historically 4
been exercised for the benefit of both the utility 5
customers and the utility. 6
Q. Idaho Power’s request for a CPCN for the 7
Langley Gulch Power Plant included a request for binding 8
ratemaking treatment. Is the Company requesting binding 9
ratemaking treatment for the investments in the 120 MW 10
battery storage facilities? 11
A. No. Due to the urgency of the 2023 capacity 12
deficiency and the issuance of the resulting RFP, Idaho 13
Power is still in the process of negotiating a number of 14
agreements necessary for the construction, installation, 15
and maintenance of both projects. As a result, a number of 16
contractual terms have not been executed. Therefore, the 17
Company’s request in this case is that the Commission find 18
Idaho Power has met the requirements of Idaho Code § 61-526 19
and issue an order granting a CPCN to acquire 120 MW of 20
energy storage necessary to meet the identified capacity 21
deficiency in 2023. The Company will make a future filing 22
to address the cost recovery associated with these 23
projects. 24
// 25

TATUM, DI 25
Idaho Power Company
VI. CONCLUSION 1
Q. Please summarize your testimony. 2
A. Idaho Power has an obligation to reliably 3
serve customer load. During the spring of 2021 while 4
refreshing the load and resource balance during development 5
of the Valmy Unit 2 exit analysis, as directed by the 6
Commission in Order No. 34349, an updated load and resource 7
balance analysis identified a capacity deficiency of 78 MW 8
in July of 2023. To meet its obligations to customers and 9
fill the 2023 capacity deficiency in a very short window of 10
time, the Company conducted a competitive solicitation 11
through an RFP seeking to acquire up to 80 MW of resources 12
to meet peak capacity needs. Resource needs subsequently 13
increased to 101 MW during development of the 2021 IRP. 14
The resulting combined projects will provide for the 15
acquisition of 120 MW of Idaho Power-owned battery storage 16
facilities to meet forecasted peak capacity needs. Idaho 17
Power has met the requirements of Idaho Code § 61-526 and 18
is requesting the Commission issue a CPCN. 19
Q. Does this complete your testimony? 20
A. Yes, it does. 21
// 22

TATUM, DI 26
Idaho Power Company
DECLARATION OF TIMOTHY E. TATUM 1
I, Timothy E. Tatum, declare under penalty of 2
perjury under the laws of the state of Idaho: 3
1. My name is Timothy E. Tatum. I am employed 4
by Idaho Power Company as the Vice President of Regulatory 5
Affairs. 6
2. On behalf of Idaho Power, I present this 7
pre-filed direct testimony in this matter. 8
3. To the best of my knowledge, my pre-filed 9
direct testimony is true and accurate. 10
I hereby declare that the above statement is true to 11
the best of my knowledge and belief, and that I understand 12
it is made for use as evidence before the Idaho Public 13
Utilities Commission and is subject to penalty for perjury. 14
SIGNED this 29th day of April 2022, at Boise, Idaho. 15
16
Signed: 17
18