20220921Comments.pdf

Eric L. Olsen (ISB# 4811)
ECHO HAWK & OLSEN, PLLC
505 Pershing Ave., Ste. 100
P.O. Box 6119
Pocatello,Idaho 83205
Telephone: (208) 47 8-l 624
Facsimile: (208) 47 8-167 0
Email: elo@)echohawk.com
Attornqtfor Intervenor ldaho lrrigation Pumpers Association, Inc.
BEFORE THE IDAIIO PTIBLIC UTILITIES COMNflSSION
IN TIIF' MATTER OF IDAIIO POWER
COMPANY'S APPLICATION TO
COMPLETE TIIE STUDY REVIEW PHASE
OF THE COMPREHENSIYE STI]DY OF
COSTS AI\D BENEFITS OF ON.SITE
CUSTOMER GENERATION & FOR
AUTHORITY TO IMPLEMENT CHANGES
TO SCHEDULES 6,8, AND 84 FOR NON-
LEGACY SYSTEMS
CASE NO. IPC.E.22-22
IDAHO IRRIGATION PTIMPERS
ASSOCIATION, INC.'S
TE STIMOI\TY/COMMENTS RE :
IDAHO POWER'S APPLICATION
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I. INTRODUCTION AND STIMMARY
PLEASE STATE YOTIR NAME AI\ID OCCUPATION.
My name is Lance D. Kaufinan. I am a consultant representing utility customers before
state public utility commissions in the Norttrwest and lntermountain West. I have a Ph.D.
in economics and have ten years of experience alloilyzng and testiffing on energy and
regulatory matters.
PLEASE IDENTIF'Y TIIE PARTY ON WIIOSE BEHALF YOU ARE
TESTIFYING.
I am testiffing on behalf of the Idaho Irrigation Pumpers Association (*IIPA'). IIPA is
an Idaho non-profit corporation fiade association representing farm interests in electric
utility rate matters affecting farmers in southern and central Idaho who use electricity to
pressurize their irigation systems.
IDAHO IRRIGATION PT MPERS ASSOCIATION, INC.'S COMMENTS [PC-E-22-22 - Pa4e I
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WIIAT IS TIM PURPOSE OF YOUR TESTIMOIYY?
I respond to IPC's request for comment on the following topics: compensation structure,
frequency ofupdates, recovery ofexport credit expenditures, project cap eligibility, and
transitional rates.
WIIAT ARE YOUR RECOMMENDATIONS INTENDED TO ACCOMPLISH?
My recommendations are intended to establish cost-based rates for self-generating
customers and to provide a framework that will allow economic self-generation
investment decisions by IPC's customers.
WHY IS IT IMPORTANT TO ESTABLISH COST BASED RATES AI\ID
PROYIDE TRANSPARENCY REGARDING LONG TERM EXPECTATIONS
ABOUT RATES?
Cost based rates are critical to ensuring that customers make economically efficient
decisions about investing in self generation. [n the short term it is possible to have small
programs with rates that are not cost based because the subsidies of small programs can
be spread over non-participating customers without tangible impacts. However, as these
programs grow subsidizationbegins to become burdensome and non-participating
customers will eventually demand fair teatnent. Customers who invested in self-
generation under a subsidized rate treatment may find themselves regretting their
investnent after subsidies have been removed.
Similarly, even with cost-based rates, utility customers may not be sufficiently
sophisticated to anticipate how energy markets, and thus net export rates, are expected to
evolve. Long term price forecasts in the Pacific Northwest have steeply declining energy
prices during hours of solar production. This is because Oregon and Washington state
IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS IPC-E-22-22 - Page 2
legislation is expected to lead to 50 GW of regional solar generation by 2030.1 This
massive growth in solar will depress power prices close to zero during periods of high
solar generation. This will greatly decrease the export credit of solar self generators. IPC
customers should be fully informed about expected decreases in long term export credits
prior to investing in self ge,neration.
The figure below illustrates expected annual average hourly shape of energy
prices by year. Note the sharp decrease in daytime prices from202L to 2026. Under this
price forecast the avoided energy cost can reasonably be expected to reduce by more than
50 percent by 2026.
ltlH-Columbil Avonge Hourly Pric:e
Hour
| 2021Norlhwest Power Planpage 73.
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EE93ild
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s30
$25
$20
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-----
I 2 3 tl 5 6 7 I 9 10 ll 12 t3 l{ tS 16 17 lE 192O?.J22?3?,4
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IDAHO IRRIGATION PITMPERS ASSOCIATION' INC.'S COMMENTS lPrC-E-22-22 - Palge 3
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[. COMPENSATION STRUCTURB
PLEASE SUMMERTZE YOUR COMMENTS REGARDING COMPENSATION
STRUCTURE.
I make the following recommendations regarding compensation structure:
o Use sub-hourly measurement and pricing intervals,
o Use 2021ldaho IRP or other Idatro specific measure of locational price for measuring
avoided energy cost,
o Use Idaho Power specific ELCC when calculating avoided capacity,
o Adopt IPC's method of calculating avoided distribution and tansmission,
o Add tansmission charge consistent with adopted pricing, and
o Use avoided line loss consistent with adopted pricing.
a. Sub-hourlY pricine intervals
WHAT MEASTIRING AND PRICING INTERVAL DO YOU RECOMMEND?
I recommend that exports be measured and priced on the sub-hourly interval. This
recommendation is conditional on the use of a rate design that ensures the base rate of
exporting customers is sufficient to cover the customer's cost of service.
WHY DO YOU RECOMMEND SUB.HOURLY PRICING?
Idaho Power is a participant in the Westerr Energy Imbalance Market. As a market
participant Idaho Power's system is economically dispatched to sub-hourly market based
on cost-minimizing algorithms. This means that the sub-hourly pricing and generation
provides the most accurate representation of value for exported energy.
WHY IS YOUR RECOMMENDATION CONTINGENT ON APPROPRIATE
RATE DESIGN?
The recommendations in my testimony assume that the export credit rate only measures
the value of exported energy and makes no adjustments or deductions to account for the
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IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS IPC-E-22-22 - Prge 4
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cost of the exporting customer in periods when the customer is consuming energy from
the utility. The recommendations also assume that none of the costs for the utility
ffiastructure used to receive and deliver the exported energy are netted against the value
of the exported energy. Under these assumptions and calculations, if other rates are not
designed to fully collect the cost of serving the customer with energy, or with facilities to
receive energy, the exporting customer will be subsidized by non-generating customers.
WHY DO YOU RECOMMEND ASSUMING THAT THE COST OF SERVING
CONSUMED ENERGY IS EXCLUDED FROM TIIE EXPORT RATE?
Clearly separating the cost of serving energy from the value of exported energy ensures
no double counting or under counting of costs. [f some costs of serving energy to the
customer were included in the export rate it would be unclear what residual costs remain
to be collected through base rates.
b. Idaho Pricine for Avoided Enensy Cost
WrrA*T PRICE DO YOU RECOMMEND BE USED TO VALUE AVOIDED
ENERGY COSTS?
I recommend that prices be set prospectively using the IPC IRP hourly price forecast and
that avoided energy cost be trued up annually based on a sub-hourly locational marginal
price from the EIM be used to value avoided energy. This provides an accurate valuation
of avoided energy cost that matches the recommended granularity of the measurement
interval.
HOW WOULD YOUR RECOMMENDATION BE IMPLEMENTED?
As part of IPC's annual power cost update IPC would identi$ the difference between the
forecasted and actual avoided energy cost based on the actual LMP. The next year's
export credit would be adjusted by an amount suflicient to recover the difference.
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IDAHO IRRIGATION PUMPERS ASSOCTATION' INC.'S COMMENTS IPC-E-22-22 - Page 5
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c. Avoided Capacitv Contribution
WHAT CAPACITY CONTRIBUTION SIIOULD BE USED TO MEASURE
AVOIDED CAPACITY COSTS?
The sub-hourly ELCC of the exported generation should be used to measure capacity
contribution. This methodology is consistent with the treatment of IPC's demand
response programs.
WHY DO YOU RECOMMEND USING THE SUB-HOURLY ELCC RATHER
THAN THE HOURLY ELCC?
The hourly ELCC offsets sub-hourly generation with sub-hourly energy consumption.
The use of an hourly ELCC would be inconsistent with the assumption that the cost of
serving energy consumption is addressed through base rates.
d. Avoided Transmission and Distribution Investment
WHAT IS YOTTR RECOMMENDED TREATMENT OF AVOIDED
TRANSMISSION AI\ID DISTRIBUTION INYESTMENT?
I support the method presented in the VODER study.
e. Transmission Charse
DOES THE VODER STUDY ADDRESS TITE COST TO MOYE EXPORTEI)
ENERGY TO MARKET?
No, the VODER study appears to assume that all exported energy is consumed on
system. However, in periods when IPC is selling into the market IPC may incur
transmission costs to move energy to markets. If a locational marginal price is used
transmission constraints and costs should be accounted for. If a price is used that does not
account for transmission constraints or costs, a tansmission charge should be added to
the calculation of the export credit in hours when IPC is selling excess energy into ttre
market.
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IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS IPC-E-22-2,2 - Pa;ge 6
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f. Line loss
WHA'T IS YOUR RECOMMENDATION REGARDING LINE LOSS?
Line loss treatnent should be consistent with pricing and other cost calculations. If a
locational marginal price is used, line losses should only be calculated to deliver energy
to the location or aggtegation point. The line loss rates used in the VODER study appear
to include all line losses on IPC's systerr, including transmission line losses that may
already be reflected in the LMP or LAP prices.
III. FREQUENCY OF TJPDATES
WHAT IS YOUR RECOMMENDATION REGARDING TREQTIENCY OF
UPDATES?
I recomme,nd avoided energy component of the export credit rate be updated annually
and that all other components be updated on Idaho Power's Integrated Resource Plan
cycle.
WHY DO YOU RECOMMEND THAT THE AVOIDED ENERGY COMPONENT
OF TIIE EXPORT CREDIT RATE BE UPDATED ANI\ruALLY?
The avoided energy cost is the largest component of the export credit rate, is easily
updated, and is expected to vary siguificantly from year to year. Thus updating this
component on a yearly basis keeps costs in line with benefits with minimal administrative
burden.
WHY DO YOU RECOMMEND THAT ALL OTIIER COMPONENTS BE
UPDATED ON IDAIIO POWER'S INTEGRATED RESOURCE PLAI\ CYCLE?
The other components of the export credit either directly rely on IRP inputs and results
or, as is the case for avoided distribution, implement some form of planning analysis and
thus are more administratively complex to update.
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IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS lPrC-E-22-22 - Prge 7
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IV. RECOYERY OF EXPORT CREDIT EXPEIYDITT]RES
HOW DO YOU RECOMMEND TIIAT EXPORT CRBDIT EXPENDITURES BE
RECOVERED?
I recommend that the export credit expenditures be recovered through the power cost
adj ustrnent mechani sm.
WHY DO YOU RECOMMEND THAT TI{E EXPORT CREDIT EXPENDITURES
BE RECOYERED THROUGH THE POWER COST ADJUSTMENT
MECHANISM?
The export credit reflects the purchase of excess power by IPC. Power purchases are
appropriately recovered through the power cost adjustment mechanism.
Y. PROJECT ELIGIBILITY CAP
WtrA*T IS YOUR RECOMMENDATION REGARDING THE PROJECT
ELIGIBILITY CAP?
I recommend softening the project eligibility caps to allow IPC greater discretion in
determining project eligibility. However, this recommendation is contingent on both
export credit and base rates being designed to minimize subsidization of self-generating
customers. In addition, to the extent that IPC makes system investnents to accommodate
large projects, these investments should be directly charged to the participating customer.
If the Commission does not anticipate addressing subsidies of self-generation customers
within base rates, the project eligibility cap should not be lifted.
WHY DO YOU RECOMMEND THAT SYSTEM INYESTMENTS MADE TO
ACCOMMODATE LARGE PROJECTS BE CHARGED TO THE
PARTICIPATING CUSTOMER?
IPC indicated in a workshop that accommodating customers above the 100-kW cap
introduces additional grid management diffrculties that could require distribution or
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IDAIIO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS IPC-E-22-22 - Pxge I
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transmission upgrades to appropriately accommodate the load.2 If eligibility caps are
removed there is greater risk that system investnents made to accommodate larger
projects could be recovered from non-participating customers. IPC's line extension rules
currently protect existing customers from investments made to accommodate new
customers. These rules should apply to IPC investment made to accommodate self-
generation.
VI. TRANSITIONAL RATES
WHAT IS YOUR RECOMMENDATION REGARDING TRANSITIONAL
RATES?
No transition period is needed beyond the existing transition allowed under Order No.
34892.
WHY DO YOU RECOMMEND NO ADDITIONAL TRANSITION?
Transition rates are appropriate to accommodate customer investrnents that would be
rendered uneconomic by modified policy. ln Case No. IPC-E-20-26 the Commission
established a transition process for existing customers. That case also provided notice to
potential new self generation customers that self-generation rules and rates would be
changing in the near future. Because the currently contemplated changes were signaled to
customers in IPC-E-20-26, customers not covered by transition rates in Order No. 34892
made investment decisions on a time frame that allowed consideration of the impact of
revised rates on the economics of self-generation.
DOES THIS CONCLUDE YOUR RESPONSE TESTIMONY?
Yes.
2 tPC September 12ft Technical Workshop
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IDAHO IRRJGATION PUMPERS ASSOCIATION, INC.'S COMMENTS lP C-E-22-22 - Pase 9
DATED this 21s day of September,2022
lslLanceKau_foao
LAI.ICE KAITFI\{AN
ERIC L. OLSEN
IDAf,O IBIGATION PUMPERS AIISOCXATION, INC.'S COMMENTS IPC-V22-22 - Pege 10
CERTIFICATE OF SERVICE
I HEREBY CERTIFIY that on this 2l$ day of September, 2022,Lserved a true, correct
and complete copy of the Petition of Idaho lrrigation Pumpers Association, Inc. Comments in IPC-
E-22-22 to each of the following, via U.S. Mail or private courier, email or hand delivery, &s
indicated below:
Jan Noriyuki, Commission Secretary
Idaho Public Utilities Commission
P.O. Box 83720
Boise,ID 83720-0074
j an. noriyuki (dpuc. idaho eov
Riley Newton, Deputy Affomey General
Chris Burdin, Deputy Attorney General
Idaho Public Utilities Commission
P.O. Box 83720
11331 W. Chinden Blvd.
Building 8, Suite 201-A
Boise, TD 837L4
riley.newton(dpuc. idaho. gov
chris.burdin@puc. idaho. eov
Lisa D. Nordstrom
Megan Goicoechea Allan
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise,ID 83707
lnordstromfd idahopow er. com
[e-mail]
dockets (d. i d ahopo w er. com
Timothy E. Tatum
Connie G. Aschenbrenner
Grant Anderson
Idaho Power Company
P.O. Box 70
Boise, lD 83707
ttatum (a) i dahopo w er. co m
caschenbrenner(E idahopower. com
sanderson(Eidahopower. com
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IDAHO IRRIGATION PUMPERS ASSOCIATION' INC.'S COMMENTS IPC-E-22-22- Page ll
Lance Kaufrnan, Ph.D.
Idaho Irrigation Pumpers Association, Inc.
2623 NW Bluebell Place
Corvallis, OR 97330
lance(Ewestemecon. com
Courtney White
Mike Heckler
Clean Energy Opportunities for Idaho
3778 Plantation River Dr., Ste 102
Boise,ID 83703
courtney(@ cl eanenersyopportunities. com
mike@cl eanenereyopportunities.com
Kelsey Jae
Law for Conscious Leadership
920 N. Clover Dr.
Boise,ID 83703
kelsev(Ekelsevi ae. com
Tom Arkoosh
Amber Dresslar
Arkoosh Law Offices
IdaIIydro
913 W. River St, Ste 450
P.O. Box 2900
Boise,ID 83701
tom.arkoosh(Darkoosh. com
amber. dresslar@ arkoosh. com
erin. cecil@ arkoosh.com
Marie Kellner
Idaho Conservation League 710
N. 6th Street
Boise, ID 83702
mkellner(d idahocon servation. org
Peter J. Richardson
Richardson Adams, PLLC
ICIP
515 N 27ft St.
Boise, lD 83702
p eterfd ri chardsonadam s. c om
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IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS llc-E-22-22-Ptge 12
Dr. Don Reading
ICIP
280 S. Silverwood Way
Eagle,ID 83616
dreadin e (a).mindsprin e. co m
Mary Grant
Boise City Attorney's Office
150 N. Capitol Blvd.
PO Box 500
Boise,ID 83701-0500
boisecitvattorney@cityofboise. ors
mrerant@ cityofboise. org
Will Gehl
Energy Program Manager
Boise City Dept of Public Works
150 N. Capitol Blvd.
PO Box 500
Boise,ID 83701-0500
w eehl@citvofboise. ore
Richard E. Kluckhobn,pro se
Wesley A. Kluckhobn,pro se
2564W. Parkston Dr.
Meridian,ID 83646
[e-mail]
[e-mail]
Austin Rueschhoff
Thorvald A. Nelson
Austin W. Jensen
Holland & Hart, LLP
Mcron Technologyr lnc.
555 17d'Street, Suite 3200
Denver, CO 80202
darueschho ff(d hollandhart. com
[e-mail]
awj [e-mail]
[e-mail]
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IDAHO IRRIGATION PUMPERS ASSOCIATION,INC.'S COMMENTS IPC-E-22-22- Page 13
Jim Swier
Micron Technology, Inc.
80000 South Federal Way
Boise, D 83707
[e-mail]
Ryan Bushland
ABC Power Co. LLC
184 W. Chrisfield Dr.
Meridian,ID 83646
Rvan. bushland@ abcpower. co
[e-mail]
Joshua Hill
Idaho Solar Owners Network
1625 S. Latah St.
Boise,ID 83705
solarownersnetwork@ email. com
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ERIC L. OLSEN
IDAHO IRRIGATION PT MPERS ASSOCIATION,INC.'S COMMENTS IPC-B-22-22- Page 14