20220822Petition for Reconsideration.pdf

JAYME B. SULLTVAN
BOISE CITY ATTORNEY
Ed Jewell ISB No. 10446
Deputy City Attomey
BOISE CITY ATTORNEY'S OFFICE
150 N. Capitol Blvd.
P.O. Box 500
Boise,ID 83701-0500
Telephone: [phone]
Facsimile: [phone]
Email: BoiseCityAttorney@cityofboise. ore
ei ewel l@cityofboise. ore
Attorney for Petitioner
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CaseNo. PC-E-22-06IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR APPROVAL
OF A REPLACEMENT SPECIAL CONTRACT
WITH MICRON TECHNOLOGY, TNC. AND A
POWER PURCHASE AGREEMENT WTTH
BLACK MESA ENERGY, LLC
CITY OF BOISE CITY'S
PETITION FOR
RECONSIDERATION
COMES NOW, the city of Boise City, herein referred to as "Boise City," and pursuant to
Rules 331 through 340 of the Rules of Procedure of the Idaho Public Utility Commission (IDAPA
31.01.01.331 - 31.01.0.340), hereby respectfully submits its Petition for Reconsideration of Order
No. 35482. As grounds, Boise City states as follows:
The ldaho Public Utilities Commission ("Commission") made numerous substantive errors
in Order No. 35482 that must be corrected on reconsideration. The Commission erred by making
programmatic decisions for the as-of-yet unapproved Clean Energy Your Way progftrm
("CEYW"), despite a separate docket open for such decisions and the lack of adequate notice in
this docket for programmatic CEYW decisions. The Commission's findings were not based on
. ?'': i.' l Li!-.- ii ' I )
substantial competent evidence in the record and resulted in discriminatory contract terms that
unduly burden Micron Technology, lnc. ("Micron") and future Clean Energy Your Way -
Construction Option ('CEYW-CO") participants. The Commission's decision will unfairly deter
participation in CEYW-CO despite system-wide benefits created by a reasonable CEYW-CO.
L The Commission chose the wrong d.ocket to make progtammatic decisions for the
Clean Energt Your Way program.
Idaho Power filed an application for Commission approval of the Clean Energy Your Way
("CEYW") program on December2,202l,which initiated docket WC-E-21-40. Idaho Power filed
its application in this docket for approval of the Micron energy sales agreement *Micron ESA"
and the Black Mesa power purchase agreement ("PPA") on March 10,2022. The proper place for
the Commission to make programmatic decisions on CEYW is IPC-E-21-40; not this docket. The
Commission's Notice of Application and Notice of Modified Procedure in this docket did not
provide notice that generally applicable CEYW-CO decisions would be made in this docket. ,See
Order No. 35367. This is a violation of due process for entities such as the City of Boise that may
wish to participate in the CEYW-CO program in the future but were unaware that CEYW-CO
decisions would be made in this docket rather than IPC-E-21-40.
The fundamental holding of this case explicitly applies to other CEYW-CO projects. In
justiffing its change to the pricing components, the Commission stated, "However, we find that
traditional principles of[cost ofservice] and avoided cost based on historical data and approved
by the Commission provide a reasonable and proven framework for analyzing the pricing and
compensation structure under the Micron ESA and other CEYW-CO projects." Order No. 35482
at 15 (emphasis added). The Commission made numerous findings that it explicitly stated will
apply to other CEYW-CO projects and made other findings that will apply to other CEYW-CO
projects by establishing precedent. For example, the Commission stated its capacity findings in
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this docket will "create methodological consistency between CEYW-CO projects[.]" Order No.
35482 at 17. Also in this docket, the Commission determined it would review other future CEYW-
CO project PPAs individually. Id. at 17-18. The result is a deprivation of due process for other
potential CEYW-CO project participants and a decision that appears to be made, at least in part,
based on the records ofother dockets.
il. The Commission's justiJication for disregarding the pricing agreed upon by the
parties is not based on evidence in the record
The crux of the Commission's finding is that the Company's 'No-Harm Analysis" was
insufficient because it relied on a single set of assumptions and did not provide a range of values
for different risk variables. Order No. 35482 at 15. The Commission stated,
The gist of the Company's argument against applying many of
StafPs recommendations is that the Company's no-harm analysis
validated that the pricing and compensation structure under the
Micron ESA would not harm other customers. However, the
Company acknowledged that its analysis relied on a'single set of
input assumptions' and did not, as Staff noted, provide a 'range of
values for different risk variables.' [Company Reply Comments] at
3. The Company explained that its analysis did rely on methods
associated with the IRP forecast.ld.
We appreciate the Company's IRP-based analysis and its openness
to working with Staffto understand its concems. However, we find
that taditional principles of [cost of service] and avoided cost based
on historical data and approved by the Commission provide a
reasonable and proven framework for analyzing the pricing and
compensation stucture under the Micron ESA and other CEYW -
CO projects. As the Company collects additional data from these
types of projects, we anticipate the Company working with Staffto
refine a no-harm analysis that supports a fair and mutually agreeable
pricing and compensation structure.
Order No. 35482 at 15. The Commission did not examine the assumptions or the values used for
the risk variables and did not find they were unreasonable. The Commission did not find any actual
fault with the Integrated Resource Plan ("[RP") based analysis, which is forward-looking and relies
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on model runs of future scenarios. The Commission's rejection of the No-Harm Analysis appears
to be a pretext to impose its own pricing.
The only evidence available in the decision-making record suggests the Micron ESA would
result in a $4.1 million benefit to other ratepayers. Commission StaffComments state,
The Company compiled the net present value results of Aurora
production cost model runs both with and withoutthe [Micron ESA]
with the Black Mesa PPA. The results of the Company's analysis
show that the system with the [Micron ESA] could provide a $4.1
million benefit to customers over a2}-year period.
However, Staff believes the analysis is insufficient because the
analysis relies on a single set of assumptions that could change over
the life of the Micron conhact. Because the analysis does not
evaluate a range of values for the different risk variables that could
affect the results of the analysis, Staffdid not rely on the results of
the No-Harm Analysis as a primary consideration in detennining a
recommendation for the Company's rate proposals.
Commission Staff Comments at 16 (citing StaffProduction Request No. 1) for the $4.1 million
figure. From the publicly available infonnation, it is unclear whether Staffrequested the Company
to run additional No-Harm Analyses that would comply with Stafls expectations. Commission
StafPs 12 recommendations do not include a request for additional No-Harm Analysis.
Commission Staff Comments at 20-22. Idaho Power's reply comments do not respond to any
request for additional No-Harm Analysis, and in related passages where one would expect a
response if the question was raised regardrng the adequacy of the No-Harm Analysis, there is no
mention. In its reply comments, Idaho Power states,
Idaho Power's economic analysis of Micron's ESA demonstrates
there is no harm to ldaho Power's other customers, and in fact goes
beyond ono harm' and shows positive benefits to Idaho Power's
other customers of $4.1 million over a period of 20-years. Rather
than protecting other customers from cost shifts, Idaho Power is
concerned an additional adjustnent to the excess energy component
would increase the benefits other customers would receive at
Micron's expense.
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Idaho Power Company's Reply Comments at 10. While it may be possible that additional No-
Harm Analysis is warranted, it is not fair to Micron, the Company, or other potential future CEYW-
CO participants to announce a heightened standard after the record is closed, rely on the standard
to reject the proposed pricing of the agreement, and not establish what the standard is.
After discarding the No-Harm Analysis despite no evidence on the record to suggest any
harm to other ratepayers, the Commission imported pricing concepts from different regulatory
schemes, namely the Public Utilities Regulatory Policy Act of 1978 ("PURPA") for avoided cost
pricing. The Commission did not analyze the similarities and differences between CEYW-CO and
PURPA that may or may not justify the use of the same terms in the different programs.
Additionally, the Commission applied PURPA pricing components even more stringently than it
does under PURPA. For example, the Commission imposed the o'lower of'two market costs to
determine the Excess Generation Credits.
The Commission did not apply its own No-Harm Analysis to determine if the resulting
contract terms it imposed were fair, just, reasonable, and non-discriminatory. Nor could it apply
its own No-Harm Analysis because there is no standard behind the No-Harm Analysis. The
Commission instead deferred to Commission Staffand the Company to deterrnine, at a later date,
what a sufficient No-Harm Analysis would entail. The Commission merely assumed that because
it imposed asymmetrical risk and reduced the economic value of participation on Micron and
future CEYW-CO participants, the resulting contract terms meet its arbitrary threshold for holding
other customers harmless over a sufficient number of future scenarios. While managing future risk
is a worthy goal, doing so by putting excessive costs on specific participants without an analysis
showing the adjustnents mitigate harm to other customers is discriminatory.
ill. The pricing components the Commission imposed are discriminatory.
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If structured reasonably, the Micron and other future CEYW-CO agreements will provide
unique benefits to the Company and other customers. The renewable energy projects are directly
interconnected to the Company's system, operate as system resources, and can be brought online
more quickly than other projects because of the financial risk assumed by the participating
customer. The CEYW-CO agreements help mitigate risk for Idaho Power by guaranteeing a
revenue stream to refund the specific investments and allow additional resources to be brought
online without contributing to rate base. The CEYW-CO agreements allow companies to meet
their climate and clean energy goals without having to leave ldaho Power's service territory and
without forcing customers to purchase renewable energy or RECs from other sources that provide
no benefit to Idaho's utilities, economy, or utility customers.
Despite the unique benefits associated with CEYW-CO agreements, the Commission's
pricing components force Micron to unreasonably subsidize the system benefits provided by the
Black Mesa solar energy resource. Each adjustrnent the Commission made to the pricing
components negatively impacts the economic rationale to participate in the program. These
discriminatory pricing adjustments are particularly unfair in the context of the $4.1 million benefit
to other ratepayers identified in the Company's No-Harm Analysis. The potential application of
these pricing components to other future CEYW-CO agreements will negatively impact the
economics of these agreements for other customers. These negative impacts will force customers
to consider different approaches to achieve their clean energy goals.
a. Excess Generation Credits.
The Commission determined that CEYW-CO Excess Generation Credits should be "the
lower of the Excess Generation Price (with the 85% adjustnent) and the actual high or low load
hour Mid-C market price (without any adjustment) for each hour of excess energy delivered."
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Order No. 35482 at 15. The "Excess Generation Price" is defined by Commission Staff as
"determined by taking the hourly Mid-C price forecast from the IRP, assumed to be a firm-energy
market price, and then adjusted by 82.4o/o to determine a non-firm energy market price. The 82.4%
non-firm adjustment mirrors the non-firm adjustment in the Company' [PURPA Schedule -
Schedule 86]." Staff Comments at 9. Staff goes on to explain, 'oThese prices are discounted by
82.4% to adjust for non-firm energy and discounted again by 85o/o to adjust for transmissiorq
losses, and transaction costs associated with moving non-firm energy to sell into the market." Staff
Comments at 10.
Staffrecommends using the lower of the two numbers because, "Using forecasted prices
instead of actual market prices intoduces a risk that could cause other customers to pay more than
their avoided cost." StaffComments at 10. While it is tnre that market prices may e,nd up being
lower than assumed in the forecast, it is also true that market prices may end up being higher than
assumed in the forecast. To require Micron, and other future CEYW-CO contracting parties to take
the downside forecast risk without providing them the opportunity to receive the upside forecast
risk is discriminatory.
b. Renewable Capacity Credit and the Renewable Capacity Credit EligibiHty
date.
The Commission replaced the Renewable Capacity Credit agreed upon by the parties and
instead applied a method developed for energy storage projects under PURPA. Order No. 35482
at 17. The Commission ignores that the solar energy produced by the facility will serve system
needs, either directly charging the adjacent battery, meeting system demand, or sold to produce
net-benefit. The Commission confuses the billing mechanism determining excess generation with
the actual energy output delivered by the Black Mesa solar resource. See Order No. 35482 at 16.
While Micron's electricity demand will exceed the 40 MW nameplate capacity from Black Mesa
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in every hour, the capacity benefit as a system resource is consistently delivered, regardless of
Micron's load.
The Commission determined the Renewable Capacity Credit Eligibility date ("RCCE
date") should be "based on the first capacity deficiency date approved by the Commission at the
time the PPA or a resource construction agreement is executed by the Company." Order No. 35482
at 16. As of the date of OrderNo. 35482, the capacity deficiency date was July 1, 2023.However,
as of the date the Black Mesa PPA and the Micron ESA were signed, the capacity deficiency date
was July 1,2026. Thus, the RCCE date is not based on actual contribution of the resource to system
capacity but is based on an outdated model run that has been superseded by a more recently
acknowledged capacity deficiency date. Additionally, the PPA with the facility and the resource
construction agreement with the CEYW-CO participant will likely occur on different dates,
introducing additional uncertainty and discriminatory risk to the participants.
c. Power Cost Adjustment.
While Boise City agrees that the Company broadly has the responsibility to manage its
overall power supply expense cost structure,the 95o/o cost sharing mechanism is discriminatorily
applied to the excess energy and capacity credits in this situation. While the intent of the 95% cost
sharing mechanism is to encourage the Company to minimize its power supply expense, the
application of the cost sharing mechanism here does nothing to encourage the Company to mitigate
its power supply expenses and instead passes back the cost to Micron or the future CEYW-CO
participating customer by further reducing the value of excess energy and capacity credit costs.
The Commission has the opportunity to review and approve each future CEYW-CO agreement,
supporting PPA(s) and pricing elements, including the value of excess energy and capacity credits,
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so it is not necessary to impose additional discriminatory costs to further increase the renewable
resource benefits to non-participating customers through a cost-sharing mechanism.
U. Conclusion.
ln conclusion, the Commission exceeded its authority by arbitrarily dismissing the No-
Harm Analysis with no evidence to support its decision. After dismissing the No-Harm Analysis
that was presented, the Commission imposed discriminatory contract terms borrowed from a
different context and applied more stringently. Each term imposed by the Commission negatively
affects the economic rationale to participate in the CEYW-CO program and the cumulative result
is to require CEYW-CO participants to unreasonably subsidize other ratepayers. The Commission
merely assumed that the resulting terms it imposed would satisff the No-Harm Analysis it relied
on to invalidate the proposed terms. The Commission made these decisions in the improper docket.
Without reconsideration, the Commission's decision will unfairly, unjustly, and unreasonably
place undue burden on Micron and future customers who wish to meet their own demand with a
dedicated clean energy resource.
For the above reasons, Boise City believes Order No. 35482 is unreasonable. If the
Commission grants Boise City's petition for reconsideration, Boise City intends to present
argument and evidence as to why the Commission's decisions in this docket were unfair,
unreasonable, and discriminatory. Boise City requests reconsideration by written comments. Boise
City is prepared to present oral argument if ordered by the Commission.
DATED this 22nd day of August2022.
94"'tt
Ed Je$rell,
Deputy City Attorney
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CERTII'ICATE OT' SERVICE
I hereby certiff that I have on this 22nd day of August 2022, served the foregoing
documents on all parties of record as follows:
Jan Noriyuki
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Ste. 201-A
Boise, ID 83714
i an.noriyuki6Dpuc.idaho. eov
RileyNewton
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Ste.20l-A
Boise,ID 83714
riley. newton(rDpuc. idaho. sov
Donovan E. Walker
Idaho Power Company
PO Box 70
Boise,ID 83707
d wa I ker(d i dahop o wer. c om
[e-mail]
Tim Tatum
Connie Aschenbrenner
Idaho Power Company
PO Box 70
Boise,ID 83707
[e-mail]
caschenbrenn er@i dahopower. com
Peter J. Richardson
Industrial Customers of ldaho Power
Richardson Adams, PLLC
515 N.27n St.
Boise,ID 83702
peter@richardsonadam s.com
Dr. Don Reading
Industrial Customers of Idaho Power
6070 Hill Road
Boise,ID 83703
drea di n e(a) m i ndsprin e. com
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Michelle Steel,
Paralegal
r0