20221028Reconsideration Reply Comments.pdf

JAYME B. SULLTVAN
BOISE CITY ATTORNEY
Ed Jewell ISB No. 10446
Deputy City Attorney
BOISE CITY ATTORNEY'S OFFICE
150 N. Capitol Blvd.
P.O. Box 500
Boise,ID 83701-0500
Telephone: [phone]
Facsimile: (208) 384 -4454
Email : [e-mail]
Attorney for Petitioner
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BEFORE THE
IDAIIO PUBLIC UTILITIES COMMISSION
CaseNo. WC-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 WITH
BLACK MESA ENERGY, LLC
CITY OF BOISE CITY'S
RECONSIDERATION REPLY
COMMENTS
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), and pursuant to the Reconsideration Order, Order No. 35532, issued
by the Commission on September 19, 2022, hereby respectfully submits the following reply
comments and states as follows:
Boise City maintains that the Commission made numerous substantive errors in OrderNo.
35482 that must be corrected on reconsideration. The Commission's findings were not based on
substantial competent evidence in the record and resulted in discriminatory contract terms that
unduly burden Micron Technology, Inc. ("Micron") and future Clean Energy Your Way -
Construction Option ("CEYW-CO") participants. Taken individually and when applied in tandem,
CITY OF BOISE CITY RECONSIDERATION REPLY COMMENTS - I
the Commission's imposition of 95o/o cost sharing for excess generation credits ("EGCs") and
renewable capacity credits ("RCCs") and a "backstop mechanism" in the determination of EGCs
is discriminatory and results in rates that are unreasonable.
I 95% Cost Sharing is unnecessary to protect non-participating customers, does not
incentivize the Company to negotiate the least cost, and unduly burdens Micron.
Staff of the tdaho Public Utilities Commission ("Staff') asserts the "purpose of sharing
specific to non-PURPA PPAs is primarily to motivate the Company to achieve the best deal for
all customers during its negotiation prior to authorization for recovery." Staff Reconsideration
Comments at 6. While Boise City generally agrees with this characteization for non-PURPA
power purchase agreements ("PPAs") procured by the Company to meet its general power supply
needs, the responsibilities in the Micron Energy Services Agreement ("Micron ESA") and
supporting renewable resource procurement are fundamentally different than non-PURPA PPAs
and the structure between Micron, Idaho Power Company ("Company") and non-participating
customers, eliminates the need for 95Yo-5o/o cost-sharing.
Boise City contends that it is unreasonable to treat Micron or other CEYW-CO participants
as "suppliers," as proposed by Staff in its justification for the application of cost-sharing because
customers participating in CEYW-CO projects are not procuring resources and are not responsible
for the operation, maintenance, or any other aspect of electricity generation. Micron cannot "select
the renewable resource of its choice" because Micron is not the project developer or owner. See
Staff Reconsideration Comments at 6. This degree of retail choice is not permissible in Idaho's
model of regulated, vertically integrated utilities. Additionally, unlike other non-PURPA suppliers,
Micron cannot choose how or where electricity produced by the Black Mesa solar project is sold.
No direct contractual relationship is proposed or contemplated in the Company's Application
between Micron and the Black Mesa solar project. The renewable resource procured by the
CITY OF BOISE CITY RECONSIDERATION REPLY COMMENTS - 2
Company operates as a system resource, regardless of the virtual behind-the-meter accounting
ilrangement agreed to between Micron and the Company. If Micron had the ability to negotiate
and procure electricity directly from a renewable resource, without the panicipation of the
Company, or chose to develop a solar project and negotiate a PPA with the Company, then it would
be reasonable to consider it a supplier. However, the more accurate way to view Micron, as the
participating customer in this CEYW-CO project, is as a guarantor. Micron is assuming the risk
and costs of all kWh output from the Black Mesa facility, regardless of Micron's consumption.
Evaluating the actual costs to non-participating customers in the Company's application to
facilitate the development of the 40 IvtW Black Mesa solar project clearly demonstrates PCA cost-
sharing is unnecessary to yield the best deal possible for all customers. Non-participating
customers receive the benefit of and provide no compensation to Micron for the reduction in net
power supply expense due to the electicity from the Black Mesa solar project. The electricity
generated by the Black Mesa solar project will go directly to meeting the Company's system needs,
including charging co-located utility-scale batteries procured by the Company to meet capacity
deficitsr. All customers will gain the full operational benefits of this co-located solar facility at a
fraction of the cost, only paying the Commission approved RCC value in hours where the solar
output aligns with peak and premium peak hours. Reducing the value of the RCCs and EGCs
through PCA cost-sharing is not justified based on the actual negotiated values in the Company's
application. Additionally, PCA cost sharing is unnecessary when non-participating customers are
not fully compensating Micron for the value the solar output at Black Mesa provides and in the
context of the Company's overall resource procurement needs.
L IPC-E-22-L3 Application at 5
CITY OF BOISE CITY RECONSIDERATION REPLY COMMENTS - 3
Boise City believes the unique relationship between Micron, and other future CEYW-CO
participants, the Company, and renewable resource developers more than adequately motivates the
Company to secure the best deal for all customers without PCA cost sharing. Under the CEYW-
CO program, Micron is reliant on the Company to negotiate and secure the renewable resource at
the most competitive price possible, leveraging its experience identiffing affordable, least-risk,
and reliable resources. The Company must keep the renewable resource price low to ensure
customer participation. The Company must also ensure non-participnling customers are held
harmless to receive Commission approval of all future CEYW-CO project agreements. OrderNo.
35482 at 17 .lnthis case, there is a demonstrated $4 million benefit to non-participating customers
from the agreement presented by the Company to the Commission. The 95% cost sharing would
only serve to create a cost-recovery shortfall for the Company or increase costs passed on to
Micron. The practical effect will be to penalize the customer by 5% for no justified reason.
il. Determination of the EGC is unreasonable and discriminatory.
The Commission's adoption of Staff s proposed o'backstop" methodology is not needed to
protect non-participating customers, unreasonably burdens Micron, and discriminatorily applies a
pricing sffucture that only serves to punish the participating customer. The "backstop" applied in
determining EGCs, where the hourly energy price paid to Micron is the lower of a double
discounted lntegrated Resource Plan ("[RP") market price forecast or actual Mid-C market price,
is an unfair solution to the inherent reality of relying on a forecasted price.
Analysis completed by Staff asserts that, using 2019 data, "the backstop would come into
play less than l0% of the time (819 hours out of 8760 hours)." Staff s Reconsideration Comments
at 7. While Staff presents this analysis to show the limited application of the "backstop" pricing,
the analysis more clearly demonstrates a lack of need for the "backstop" altogether. lgnoring the
significant shanges in the energy market since 2019, this analysis shows the double discounted
CITY OF BOISE CITY RECONSIDERATION REPLY COMMENTS - 4
IRP market price forecast under-compensates Micron more than 90o/o of the time. The "backstop"
is not necessary to protect customers and is discriminatorily applied to further reduce the economic
incentive for customers to participate in CEYW-CO.
If the Commission, or Staff, found the double discounted IRP market price forecast
inaccurate or too risky for non-participating customers, a reasonable compensation framework
might be to compensate Micron at an actual market price framework, where both Micron and non-
participating customers are equally exposed to market price risk. Alternatively, a band approach
where Micron would be compensated at the discounted market price forecast when it is within an
acceptable range of actual market prices, 15% above or below as an example, and the actual price
market price when the difference between the forecast is outside of the acceptable range might
also be reasonable and non-discriminatory. However, the method advocated by Staff and chosen
by the Commission unjustifiably penalizes Micron and is not reasonable.
ilI Conclusion,
Micron, and other customers interested in CEYW-CO, have clearly established
expectations as customers for their electric utility to supply increasingly clean energy to reduce
exposure to risk associated with volatile fossil fuel prices, climate change, and greenhouse gas
emissions. Establishing reasonable terms in CEYW-CO agreements is an essential opportunity for
the Company to meet customer demand and bring additional, required system resources online at
a benefit to all customers.
The Commission should reconsider the application of the 95% - 5%PCA cost sharing to
EGCs and RCCs and the methodology used to determine the EGCs. Individually these
modifications to the Company's proposed compensation structure unreasonably burden Micron
and, when combined, produce a result that requires CEYW-CO participants to unreasonably
CITY OF BOISE CIry RECONSIDERATION REPLY COMMENTS - 5
zubsidize other ratepayers. Without reconsideration" the Commission's decision will unfairly,
unjustly, and uoreasonably place undue burden on Mcron and future customem who wish to meet
their own demand with a dedicated clean e,nergy resouree.
DATED this 28th day of October 2022.
EdJ
Deputy
CMY OF BOISE CITY RECONSIDERATION REPLY COMMENTS.6
CERTIFICATE OF SERVICE
I hereby certiff that I have on this 28th day of October 2022, served the foregoing
documents on all parties of record as follows:
Jan Noriyuki
Commission Secretary
Idaho Public Utilities Commission
I l33l W. Chinden Blvd., Ste. 201-A
Boise, ID 83714
i [e-mail]. eov
RileyNewton
Deputy Attorney General
Idaho Public Utilities Commission
I l33l W. Chinden Blvd., Ste. 201-A
Boise,ID 83714
ri ley.newton(dpuc. idaho. gov
Donovan E. Walker
Idaho Power Company
PO Box 70
Boise,ID 83707
d wa I ker(rD i da hopower. c om
[e-mail]
Tim Tatum
Connie Aschenbrenner
Idaho Power Company
PO Box 70
Boise, ID 83707
ttatum (d i dahopower. com
[e-mail]
Peter J. Richardson
lndustrial Customers of Idaho Power
Richardson Adams, PLLC
515 N. 27th St.
Boise,lD 83702
pe t erC@ ri c h ard s ona dam s. c om
Dr. Don Reading
Industrial Customers of Idaho Power
6070 Hill Road
Boise,ID 83703
drea di n e(a) rn indspri n e. corn
tr U.S. Mailtr Personal Deliverytr Facsimileg Electronictr Other:
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Michelle Steel,
Paralegal
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