20221012Reply Comments.pdf

Street Address for Express Mail:
I I331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE,ID 837I4
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
RILEY NEWTON
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. II2O2
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION TO
COMPLETE THE STUDY REVIEW PHASE
OF THE COMPREHENSIVE STUDY OF
COSTS AI{D BENEFITS OF ON.SITE
CUSTOMER GENERATION & FOR
AUTHORITY TO IMPLEMENT CHANGES
TO SCHEDULES 6. 8. AND 84
iiICIIVED
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CASE NO. IPC.8.22.22
REPLY COMMENTS OF THE
COMMISSION STAFF
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Staff of the Idaho Public Utilities Commission, by and through its Attorney of record,
Riley Newton, Deputy Attorney General, submits the following Reply Comments.
BACKGROUND
Idaho Power ("Company" or ooldaho Power") offers net energy metering ("NEM")
programs under which customers can generate electricity to meet their own demand and export
any excess electricity back to the Company's grid in exchange for an energy credit that can offset
the customer's monthly energy consumption. Currently, customers who wish to install on-site
generation can interconnect an exporting system under the terms of Schedule 6 - Residential
Service On-Site Generation ("Schedule 6"), Schedule 8 - Small General Service On-Site
Generation ("Schedule 8"), and Schedule 84 - Commercial, Industrial, and lrrigation ("Schedule
84").
ISTAFF REPLY COMMENTS ocToBER t2,2022
On May 9,2018, in Case No. IPC-E-I7-13, the Commission ordered the Company to
prepare and file a credible and fair study on the costs and benefits of on-site generation to the
Company's system, as well as proper rates and rate design, transitional rates, and related issues
of compensation for net excess energy provided as a resource to the Company. Order No. 34046
at3l.
On December20,2019, in Case No. IPC-E-I8-15, the Commission clarified that the
study: (l) must use the most current data possible and must be readily available to the public, and
in the Commission's decision-making record; (2) must be designed in coordination with the
parties and the public, and the Commission will determine the final scope of the study; and (3)
the study must be written so it is understandable to an average customer, but its analysis must be
able to withstand expert scrutiny. Order No. 34509 at 9.
On June 28,2021, in Case No. IPC-E-27-21, the Company filed an application to initiate
a multi-phase process for the study of costs, benefits, and compensation of net excess energy
associated with customer on-site generation. Included in the application was a proposed study
scope and a study design schedule including time for public workshops. In that case, the
Commission received intervening party and public comments on the different elements included
in the scope. Based on those comments, the Commission provided additional direction and
specific requirements for each element to be included in the study. Order No. 35284.
On June 30,2022, the Company submitted an application to "Complete the Study Review
Phase of the Comprehensive Study of Costs and Benefits of On-Site Customer Generation and
for Authority to Implement Changes to Schedules 6, 8, and 84 ("Application")".
The following entities were granted intervention in this case: ABC Power, Clean Energy
Opportunities of Idaho ("CEO"), the city of Boise City ("Boise City"), Industrial Customers of
Idaho Power ("ICIP"), ldaho Conservation League ("lCL"), Idaho Hydroelectric Power
Producers Trust ("ldaHydro"), Idaho Irrigation Pumpers Associations, Inc. ("IIPA"), Idaho Solar
Owners Network ("ISON"), Richard E. Kluckhohn and Wesley A. Kluckhohn, pro se,
("Kluckhohns"), and Micron Technology. See Order Nos. 35472,35493,35499, and 35505.
On September 21,2022, Commission Staff ("Staff'), and four of the ten Intervenors
submitted comments ("Initial Comments") regarding the Value of Distributed Energy Resource
Study ("VODER Study" or "Study"). In addition, over 600 public comments had been received.
2STAFF REPLY COMMENTS ocToBER 12,2022
STAFF REVIEW
Staff s Initial Comments, filed September 21,2022, addressed whether the VODER
Study complied with the Commission's directives in Order No. 35284 on the Study's Scope.
These Comments also addressed the feedback received from the public at the public workshops
and from the comments filed with the Commission. With these Reply Comments, Staff further
analyzes the areas in the VODER Study and addresses some Parties' Initial Comments.
From Parties' Initial Comments, Staff identified areas within the VODER Study that need
additional clarity and analysis that should be considered by the Commission. The Company also
recognizes that, based on the feedback received, parts of the VODER Study may need additional
clarity and analysis. The Company anticipates submitting an amended Study with its Final
Response Comments on October 26,2022, that responds to the recommendations received from
Parties and the public on the VODER Study.r The discussion below identifies areas that may
need additional analysis in the Company's Final Response Comments and/or through an
amendment to the VODER Study filed by the Company.
Export Credit Rate ("ECR")
ICL's Initial Comments state that, "while Idaho Power's analysis generally complies with
the Commission's direction to study individual components of the ECR, it consistently does so
with assumptions and methodologies that minimize estimated value of solar generation." ICL
Initial Comments at 3. In ICL's Attachment A-Crossborder Energy Study ("CE Study")-the
authors state, "we conclude that Idaho Power's choice of assumptions and calculation methods
significantly undervalue the five components that the utility quantified. In addition, the VODER
Study fails to quantifu important benefits of distributed solar that the Commission directed the
utility to analyze in OrderNo. 35284." ICL Initial Comments, Attachment A at l.
Staff reiterates that the VODER Study broadly complied with the Commission's orders
with a few minor exceptions that the Company may address in an amended VODER Study.
However, alternative methods of valuation are possible for various components of the ECR, the
reasonableness of which are discussed below. Recommendations in support of one particular
method will be reserved for the implementation phase.
I See Company Initial Comments at 6
JSTAFF REPLY COMMENTS ocToBER 12,2022
Avoided Enerey Value
ICL states, "the VODER Study estimates avoided energy costs with dated price
assumptions. Without accounting for this lasting shift in energy markets, the VODER Study
fails to present an accurate or meaningful estimate of avoided energy costs." ICL Initial
Comments at 4. Staff recognizes that although current energy prices have changed from the
prices in the VODER Study, the Company should not be expected to incorporate data that
develops during production of the Study and after its release. The importance of the VODER
Study should be placed on the method for deriving the ECR and not on the specific values. The
appropriate data will be incorporated once decisions are made regarding the method, the source
ofthe data, and frequency ofupdates.
IIPA claims the VODER Study does not address the cost to move exported energy to
market. See IIPA Initial Comments at 6. The Company mentioned the issue in the VODER
Study stating, "the non-firm energy provided under Schedule 86 is further discounted by an
adjustment factor of 85o/o to account for the transmission and transaction related costs." VODER
Study at 43. However, in response to Staff s Production Request No. 39, the Company
explained that it is a net energy importer, and therefore it did not consider the cost to move
exported energy to market. The Company did not explain why it dismissed this consideration.
The Company also did not consider when exports from customer-generators occur relative to
when the Company exports energy outside of its system. Staff recommends the Company amend
the VODER Study with an analysis of the cost to move exports to the market during the
timeframe that customer-generators export onto the Company's system.
ICL and Boise City both commented on the benefits of customer exported energy as a
hedge to fuel-cost risk. ICL states, "the VODER Study is incomplete without substantive
discussion of fuel hedging benefits from DER development." ICL Initial Comments at 9. Boise
City states, "the ECR should incorporate the long-term nature of the price-risk hedge benefit
provided by customer-generator export, separate from the energy market variability captured in
the VODER Study." Boise City Initial Comments at 3. Both parties suggest a valuation method
included as a benefit through a case heard by the Maine Public Utilities Commission ("Maine
PUC"). Staff recommends the Company amend the VODER Study with a detailed discussion on
the fuel-cost hedge benefit. The discussion should explain how fuel-cost hedge benefits relate to
4STAFF REPLY COMMENTS ocToBER 12,2022
each ofthe proposed sources for energy valuation, as well as the advantages and disadvantages
of the Maine PUC valuation method.
The CE Study states, "fuel hedging benefits should be included for customer solar
generation that is self-consumed rather than exported." ICL Initial Comments, Attachment A at
I 1. This position is contrary to Order No. 35284. Order No. 35284 states:
we find it reasonable to base the capacity value on the energy exported
rather than the total generator installed capacity. Capacity and energy offset
by customer generation behind the meter is not measured. This does not
mean that the value is not realized by the on-site generator. Net-metering
customers get 1: I kwh benefit for all energy produced and used behind the
meter.
Order No. 35284 at 18.
Avoided Capacity Value
The CE Study proposes four recommendations to determine the value of avoided
generation capacity value:
l. lnclude self-consumed energy;
2. Use the Peak Capacity Allocation Factor ("PCAF") instead of the Effective Load
Carrying Capability ("ELCC") to calculate the capacity contribution of customer
generation;
3. Use battery storage as the surrogate resource because it is the next resource
selected in the IRP instead of a simple-cycle combustion turbine ("SCCT"); and
4. Include the 15.5oh planning reserve margin ("PRM") as an adder.
Regarding the first recommendation, Order No. 35284 states the "value be limited to
exported energy, not energy consumed behind the meter." Id at 18. Staff disagrees with the CE
Sfudy's first recommendation and does not recommend the Company analyze self-consumed
energy within the VODER Study.
Regarding the second recommendation, the PCAF concentrates value around the peak
load of the system, while the ELCC concentrates value around periods of critical capacity need
for the system. With the proliferation of variable energy resources ("VERs"), there is a growing
divergence between the system peak load and periods of critical capacity need. For this reason,
Staff believes that the ELCC method is more robust for determining capacity contribution of
customer exports. However, Staff recommends the Company amend the VODER Study with an
5STAFF REPLY COMMENTS ocroBER 12,2022
analysis of the strengths and weaknesses for determining capacity contribution using several
different methods, including the PCAF.
Regarding the third recommendation, Staff does not agree with using the next selected
resource included in the Integrated Resource Plan ("lRP") preferred portfolio as the surrogate
resource, which, in this case, is battery storage. Battery storage is not the least fixed-cost
dispatchable resource that the Company would consider strictly for capacity. The IRP selects
resources for its portfolios using an algorithm that considers both the cost of capacity and the
cost of energy. Since the objective is to identifu a surrogate for determining the value of
capacity separate from all other avoided costs, it is more accurate to base the surrogate on the
least-cost capacity resource, which is a SCCT.2 If the IRP selected resource was used as the
surrogate, as recommended through the CE Study, the capacity benefits and the energy benefits
of this resource would need to be separated in order to isolate capacity benefits and to avoid
double-counting energy benefits. However, Staff recommends the Company amend the VODER
Study with a discussion on why it chose the SCCT resource for valuing capacity.
Regarding the final recommendation, Staff believes that the 15.5% PRM should not be
included in the capacity valuation of customer exports. The PRM is applied as an additional
obligation to the system load in the IRP, for which the Company must plan sufficient resources.
The capacity value of any resource used to satisfy this load - including customer exports - is not
magnified by the PRM. The capacity value is determined on a one-for-one basis by the surrogate
resource that is displaced. Although Staff disagrees with the CE Study recommendation, to
provide additional transparency to Parties and the public, Staff recommends the Company amend
the VODER Study with a discussion about the PRM and its non-relevance in valuing capacity
contributions.
Avoided Transmission and Distribution ("T&D") Capacity Costs
CEO states, "consideration is merited of altemative methods which take a smoother,
more probabilistic approach to valuing avoidable T&D cost over time. The VODER Study
should reflect those alternative methodologies." CEO Initial Comments at 3. ICL states,
"[r]egression models can account for marginal T&D costs and the value of infrastructure avoided
2 The least-cost selectable capacity resource in the 2019 IRP is a reciprocating internal combustion engine. A
SCCT was the least-cost surrogate resource in the 2021 IRP.
6STAFF REPLY COMMENTS ocroBER 12,2022
by reducing peak loads." ICL Initial Comments at 7. The CE Study proposes a regression
model that correlates a utility's investment in transmission and distribution with changes in peak
demand. See ICL Initial Comments, Attachment A at 5. The Company's method for valuing
avoided cost of transmission uses a bottom-up approach to valuing avoided T&D investment cost
while CEO and ICL advocate a top-down probabilistic approach using statistical regression.
Staff believes a top-down approach has merit, especially to validate the Company's
analysis, provided the results of the top-down probabilistic approach: (l) identifu the other major
drivers of reduced T&D investment; (2) meet a reasonable level of statistical confidence; and (3)
there is a recognition that this approach only provides a historical perspective, even though the
value of contributed capacity from customer exports are costs avoided in the future and should
only be taken into account when T&D capacity is deficient. Thus, Staff recommends that the
Company amend the VODER Study with discussions of additional methods that may be used in
valuing avoided T&D capacity costs.
Avoided Line Loss
ICL states, "avoided line loss estimates fail to account for top marginal increases in load
and rely on a decade old study that does not anticipate projected growth." ICL Initial Comments
at 8. The CE Study states, "marginal resistive losses are roughly double average losses. This
means that the marginal impact on losses of reducing a kW of load on the T&D system is
significantly greater than the average loss at that moment." ICL Initial Comments, Attachment
A at7 . Staff disagrees with the CE Study's proposal to double the line loss percentage because
of marginal line losses. The Company's 20l2Line Loss study determined the line loss
percentage over a long period (energy losses) and the line loss percentage during the peak load
hour (peak losses). The miniscule difference between the two circumstances suggests that a
doubled percentage for marginal line loss is not accurate. Staff recommends the Company
clarifu in an amended VODER Study the concepts of marginal line losses, average line losses,
peak line losses, and energy line losses, to resolve any ambiguity and overlap between these
concepts.
7STAFF REPLY COMMENTS ocToBER 12,2022
Implem entation Considerations
Communication Material
The Company outlined in the VODER Study that it may need additional time to reach out
to the on-site generation industry and update communication materials before it implements any
changes to the NEM program. Current and future customer-generators may be under the
impression that the current NEM program would not change. In Order No. 34509, the
Commission unequivocally advised "stakeholders in the on-site generation industry, [(which
include, but may not be limited to, the Parties, solar installers, solar advocates, and the
Company)] to be completely transparent with potential investors that a utility's rate schedule,
including program fundamentals, is subject to change." Id at 13. Idaho Code $ 48-1805,
Contents of Disclosure Statement for any Solar Agreement, clearly outlines that on-site
generation participants need to be notihed that the NEM program may change, and cost savings,
or incentives, are also subject to change. Staff anticipates that meetings between the Company
and interested parties will be necessary to discuss how current and future customer-generators
may be notified of future program changes.
PUBLIC INPUT
Since the Initial Comments from Parties were filed on September 21,2022,the
Commission received an additional 55 comments for a total of 620.3 Of the total amount of
comments, 207 (33% of total) were received from customers who acknowledged owning a solar
system and being enrolled in NEM. Staff has included Table No. 1 to show the topics that the
public has mentioned in their comments. The table does not include input from Parties and may
not be all-inclusive. Some public comments have provided information that may need to be
considered during the implementation phase. Such topics include tax implications of changing to
a net billing program; maintain the current NEM and have a subscription to participate; and the
impact of increasing the monthly service charge for current and future customer-generators.
There has been no change from StafPs Initial Comments, which identihed the top five topics
(See bold text in Table No. l):
3 As of October 3,2022,620 public comments have been submitted to the Idaho Public Utilities Commission
8STAFF REPLY COMMENTS ocToBER t2,2022
Topics Topic
Countl
Count
Percentage
of Total
Relative
to
VODER
Study
Requested Public Hearing(s)430 690
Compensation and Structure 429 69"/"Section 6
Environmental And Societal Costs or Benefits 334 54"/.Section 4
Reject Study or Have Third Party Conduct study 163 26Y.
Expand Grandfathering beyond December 20, 20202 142 23Y"
Current Net Metering Customer 207 33%
Sierra Club / KNOW Who Template tt4 t8%
Measurement Interval 45 7%Section 3
ECR 42 7%Section 4
Include Crossborder Energy Study 36 6%
Effect On Demand (Peak Loads)29 5%
Carbon Capture - Carbon Emissions 26 4%Section 4
Billing Structure - Transfer of Credits 24 4%Section l0
Recovering ECR 20 3%Section 8
Frequency of ECR Updates t4 2%Section 5
Class Cost of Service l2 2%Section 7
Project Eligibility Cap 5 t%Section 9
Implementation Considerations 8 t%Section 1 I
Power During Outages 6 t%
I Public Comments can discuss more than one topic.
2 See Idaho Code 48. I 805.c regarding public comments that mention that the current NEM participants being told
that NEM would not change.
Table No. 1: Public Comments
Staff will continue to review public comments and looks forward to hearing further
feedback from the public about the VODER Study.
STAFF RECOMMENDATIONS
Staff believes the Study complies with Order Nos. 34046,34509, and 35284 and
recommends Commission approval, contingent on the Study being amended to include the
9STAFF REPLY COMMENTS ocToBER 12,2022
modifications recommended in Staff s Initial Comments and the additional modifications, as
outlined below:
1. ECR.
a. Avoided Energy Value - provide additional explanation and analysis for: (1)
cost to move exports to the market during the timeframe that customer-
generators export onto the Company's system; and (2) the fuel-cost hedge
benefit and explain the benefits that relate to each proposed sources for energy
valuation, as well as the advantages and disadvantages of the Maine PUC
valuation method.
b. Avoided Capacity Value - provide additional analysis and explanation for: (1)
strengths and weaknesses for determining capacity contribution using all the
different methods, including the PCAF; (2) the basis for selecting the proper
surrogate resource for valuing capacity; and (3) the PRM and its non-
relevance in valuing capacity contributions.
c. Avoided T&D Costs - provide additional methods that may be used in valuing
avoided T&D capacity costs.
d. Avoided Line Losses - clarifu the concepts of marginal line losses, average
line losses, peak line losses, and energy line losses, due to ambiguity and
potential overlap between each concept.
Respectfully submitted this
Technical Staff: Travis Culbertson
Chris Hecht
Jolene Bossard
Matt Suess
Yao Yin
Joseph Terry
i :umisc/commentsl ipce2z.zzr:l.tncchjbmsyyjt reply comments
tZ{" day of octo ber 2022
Riley Newton
Deputy Attorney General
STAFF REPLY COMMENTS 10 ocToBER 12,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 12th DAY OF OCTOBER 2022,
SERVED THE FOREGOING REPLY COMMENTS OF THE COMMISSION STAFF,
IN CASE NO. IPC-E-22-22, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWNG:
LISA NORDSTROM
MEGAN GOICOECHEA ALLEN
TDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-MAIL : [e-mail]
m [e-mail]
dockets@ idahopower. com
C TOM ARKOOSH
AMBER DRESSLAR
ARKOOSH LAW OFFICES
PO BOX 2900
BOISE ID 8370I
E-MAIL: [e-mail]
amber. dresslar@arkoosh. com
KELSEY JAE
LAW FOR CONSCIOUS LEADERSHIP
920 N CLOVER DR
BOISE ID 83703
E-MAIL: [e-mail]
ERIC L OLSEN
ECHO HAWK & OLSEN PLLC
PO BOX 6l 19
POCATELLO ID 83205
E-MAIL: [e-mail]
TIMOTHY TATUM
CONNIE ASCHENBRENNER
GRANT ANDERSON
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-MAIL: ttatum@,idahopower.com
[e-mail]
[e-mail]
MICHAEL HECKLER
COURTNEY WHITE
CLEAN ENERGY OPPORTI-INITIES
3778 PLANTATION RIVER DR
SUITE IO2
BOISE ID 83703
E-MAIL:
mike@cleanenergyopporJunit ies.com
courtney @.cl eanenergyopportunities. com
ELECTRONIC ONLY
ERIN CECIL
E-MAIL: [e-mail]
LANCE KAUFMAN PhD
4801 W YALE AVE
DENVER CO 80219
E-MAIL: [e-mail]
C
ARY
CERTIFICATE OF SERVICE