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HomeMy WebLinkAbout20221012Reply Comments.pdfEric L. Olsen (ISB# 4811) ECHO HAWK & OLSEN, PLLC 505 Pershing Ave., Ste. 100 P.O. Box 6119 Pocatello,Idaho 83205 Telephone: (208) 47 8 -1624 Facsimile: (208) 47 8-167 0 Email: elo@echohawk.com Attorneyfor Intervenor ldaho lrrigation Pumpers Association, Inc. BEFORE THE IDAIIO PUBLIC UTILITIES COMN{ISSION riICEIVED i;;; i;il l2 Pl'l 12: 58 I,i:'i ;,.1 PLIBLIi: i'nlIItl.r t- \.'llrllil sr0t.l (/ S IN THE MATTER OF IDAEO POWER COMPANY'S APPLICATION TO COMPLETE TIIE STTJDY REYIEW PHASE OF THE COMPROIIENSIVE STTJDY OF COSTS AND BENEFITS OF ONSITE GENERATION & FOR AUTHORITY TO IMPLEMENT CHANGES TO SCHEDTJLES CASE NO.IPC-8.22.22 IDAIIO IRRIGATION PT]MPERS ASSOCIATION, INC.'S REPLY COMMENTS RE: ICL,S & CROSSBORDER ENERGY'S REVIEW OF IPC'S VODER STUDY a. A. a. A. AND 84 FOR NON.LEGACY SYSTEMS INTRODUCTION AI\ID STJMMARY PLEASE STATE YOUR NAME AI\[D OCCUPATION. My name is Lance D. Kaufrnan. I am a consultant representing utility customers before state public utility commissions in the Northwest and Intermountain West. I have a Ph.D. in economics and have ten years of experie,nce analyzrng and testiffing on energy and regulatory maffers. PLEASE IDENTIFY TIIE PARTY ON WIIOSE BEHALF YOU ARE TESTIFYING. I am testiffing on behalf of the Idaho Inigation Pumpers Association ("IIPA"). IIPA is an Idaho non-profit trade association representing farm interests in electric utility rate matters affecting farmers in southem and cental Idaho who use electricity to pressurize their irrigations systoms. IDAHO IRRIGATION PUMPERS ASSOCIATION,INC.'S COMMENTS - Page I o. A. Wrra.*T IS THE PURPOSE OF YOUR TESTIMONY? I respond to comments filed in this docket by the Idaho Conservation League ("ICL"). The majority of IIPA's members are Idaho Power Company ("IPC") customers. As customers, our primary interest in this docket is to ensure that IPC's customer generation tariffs lead to safe, reliable, and economical rates. [n my initial comments, I voiced general support for IPC's VODER study, and provided specific recommendations for ensuring that rates paid for excess generation are fair and equitable to both generating customers and non-generating customers. I am concerned that the recommendations made in the ICL comments will not lead to fair and equitable rates. TIIE ICL COMMENTS ALLEGE THAT THE COMPANY'S USE OF DISCRESSION IN DEVELOPING TIIE VODER STUDY WERE DGRCISED IN rAVOR OF IPC'S PROGRAMATIC AI\ID BUSII\IESS AIMS AT THE EXPENSE OF DISTRIBUTED GENERATION DEYELOPMENT. DO YOU AGREE WITII THIS ASSESSMENT? ICL does not dispute the validity of the assumptions or modeling choices made by IPC in the VODER study, but ICL's comments state the IPC's modeling choices and assumptions disfavor distributed generation. The comme,nts further imply that the VODER study was biased in favor of IPC's business interests. The ICL's comments inappropriately frame this case as a process intended to develop distributed generation. The Commission should instead approach this issue with a focus on establishing mechanisms and rates that lead to safe, reliable, and affordable energy for customers. I believe that distributed energy, when properly priced and tariffed, can play an important role in the IPC's energy portfolio. But this role should be the outcome of economically supportable analysis, and not the outcome of a general policy goal to increase distributed generation for its own sake. a. A. IDAHO IRRIGATION PIIMPERS ASSOCIATION, [NC.'S COMMENTS -Ptge2 a. A. As I note in my initial comments, the results of the VODER study, and the specific model selections recommended in my comments, can be expected to result in a fair measure of the value and benefits of net generation. The [PC's motivation is a moot point if the outcome of the study is fair, just, and reasonable rates. AVOIDED ENERGY COSTS WIIA'T IS YOUR RESPONSE TO ICL'S STATEMENT THAT DISRUPTION TO FOSSIL FUEL MARKETS MAKES THE [VODERI STIIDY'S nPUTS AI\ID ESTIMATES OF AVOIDED COSTS OUTDATED AI\[D INSUFFICIENT TO MEAI\TINGFULLY INFORM TI{E COM}trSSION. The VODER study appropriately provided a range of market price measures, one of which, the EIM price, is supported by both the ICL and IIPA's initial comments. The ICL's support of one of the VODER study's proposed price measures, the EIM, is inconsistent with the ICL's assertion that the VODER study's price assumptions were inappropriate. The ICL notes that market prices are volatile and change yearly. I agree with ICL's assessment and addressed this iszue in my initial comments by recommending prices be updated and tnred up annually. A true up mechanism will ensure that unexpected price shocks do not unfairly be,nefit either IPC or net exporting customers. ARE ICL'S AVOIDED COST ESTIMATES REASONABLE? The ICL recommended value of net energy avoids $183 per MWh in utility costs and an additional $87.20 per MWh in avoided societal costs, for a total avoided cost of $270.20 per MWh. For context, the proposed avoided cost is nearly triple Idaho Power's average retail rate. This is an irational cost estimate, particularly when compared to other avoided cost measures across the country. ICL asserts that the "Crossborder [study] demonstrates that differing analytic choices by reasonable, competent industry professionals produce widely varying figures...." While the Crossborder study may have a. A. IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Page 3 been conducted by a reasonable, competent industry professional, the analytic choices thernselves are not reasonable and should not be adopted. I caution the Commission against attempting to find a middle ground between the VODER study and the Crossborder study. The Commission should instead disregard all aspects of the Crossborder study. [n my comments below I provide additional specific criticism of the assertions and proposals in the Crossborder study, however, given the length of this study and the scope available to me, I may not fully address every flaw in these comments. Omitted discussion of any aspect of the Crossborder study in my comments should not be interpreted as agreement with that aspect as these comments specifically note where I agree with ICL and the Crossborder study. ADDITIONAL RECOMENDATIONS a. DrD youR REvrEw oF THE CROSSBORDER STUDY CAUSE YOU TO HAVE AIIY ADDITIONAL RECOMMENDATIONS FOR THE COMMISSION? A. Yes, in my initial Comments I supported a decision to modifu participation caps and defened to IPC to craft appropriate changes. However, after reviewing the Crossborder study I have determined that there is some risk that the net generation tariffcould become a substitute for solar developers that currently rely on the Qualified Facilities tariffs for compensation. If size limits are modified for net generation are wholly divorced from the customer's load, I see a risk of Qualified Facility developers using the net generation tariffs to circumvent the safe guards put in place through the Qualified Facility tariff. I therefore recommend that any change in size limits be paired with additional safeguards to circumvent developers from avoiding the Qualified Facility framework. IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Page 4 a. A. AVOIDED GEI\IERATION CAPACITY THE ICL PROYIDES AN ALTERNATIVE CALCT]LATION FOR AVOIDEI) CAPACITY COSTS. WHAT CONCERNS DO YOU HAVE WITH THE ICL'S METHODOLOGY? I have the following concerns: The ICL's use of the peak capacity allocation factor ("PCAF") overestimates capacity contribution of solar. The ICL's use of a battery to price capacity misrepresents the avoided cost of capacity. The ICL's method inappropriately grosses up the cost of capacity bV the planning reserve margin. HOW DOES THE PCAF OVERESTIMATE CAPACITY CONTRIBUTION? The PCAF overestimates capacity contribution because it does not scientifically identiff hours where IPC is expected to be in capacity deficit. IIPA recenfly participated in an extensive analysis and revision of IPC's demand response programs. ln that process, the effective load carrying capacity was used as the measure of avoided capacity. As recipients of demand response payments, IIPA has an interest in maximizing the value of the demand response payments, but IIPA accepted the use of the ELCC because it is an accurate and appropriate measure of capacity contribution. I have participated in avoided cost proceedings, integrated resource planning proceedings, and cost allocation proceedings across the Pacific Northwest and the ELCC is a well vetted and widely accepted measure of capacity contribution. The peak capacity allocation factor, however, is neither widely used nor a mathematically sound measure of capacity contribution. I have never seen the peak capacrty allocation factor adopted by a Commission for either avoided cost calculations, a a a a. A. IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Page 5 capacity planning, or cost of service modeling. This lack of adoption is for good reason. The PCAF is not a mathematically sound measure of capacity contribution. During IPC's demand response proceeding, IPC provided convincing evidence that IPC's capacity shortfall occurs during evening hours when demand is declining. IPC modified the dispatch hours of the irrigation load control programs to allow for curtailment in the late evening to specifically account for this shift in their capacity need. This shifting of curtailment windows into late evening places hardship on irrigators because late evening curtailment disrupts their irigation schedule more than early evening curtailment. However, the Irrigators accepted this shift of curtailment in order to provide a more valuable product to IPC. The PCAF does not account for the fact that IPC's capacity shortfall does not fall on peak hours, but rather occurs on shoulder hours when non-dispatchable solar resources do not produce. The measure of capacity contribution should be consistent across IPC's various resource planning and procurement processes, including qualified facility rates, demand response rates, and net exporting customer rates. More importantly, these measures should be consistent with treatment in the IRP process. The same avoided capacity measure should be used to pay avoided costs as used to make planning decisions. That measure is the ELCC. If the PCAF were used to measure capacity contribution, it would result in a subsidy of non-generating customers to net-exporting customers. IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Page 6 o. A. WHY DOES TIIE USE OF BATTERY COSTS OVERVALUE CAPACITY COSTS? There are two reasons for this. First, net generating customers retain the Renewable Energy Certificates of their self-generation. A renewable energy certificate carries all environmental attributes of the renewable generator. ICL implies that IPC's use of batteries in its IRP is related to its carbon goals. If this is correct, and the selection of batteries is due to carbon goals, then pricing capacity using a battery would be the equivalent of offering net generators a payment for renewable capacity, or renewable enabling capacity. This is inconsistent with the customer's retention of RECs. If the net generator was required to surrender the RECs associated with their facilities to IPC, it may be appropriate to consider some form of renewable avoided capacity cost. However, even in this scenario, additional adjushents are needed to isolate the capacity cost of batteries from the other services that bafferies provide. In addition to capacity, batteries provide substantial arbitrage benefits as well as load shaping and other services. If batteries are used to value capacity, the cost of the battery should be apportioned between all the services that a battery provides and not fully atributed to capacity. WHY IS IT INAPPROPRIATE TO GROSS TIIE VALUE OF CAPACITY UP BY THE RESERVE MARGIN? ln resource planning, a planning reserve is added to forecasted load by multiplying forecasted load with a planning reserve margin. Generating resources are then procured to meet the load plus reserves. Net generation is a resource. To the extent that IPC uses net generation in their planning process, I expect it to be incorporated in their resource stack, not as an offset to native load. If net generation is incorporated in IPC's resource a. A. IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Page 7 a. A. stack there is a one-to-one correspondence between each MW of capacity contribution from net generation and capacity contribution from IRP resources. TRANSMISSION AND DISTRIBUTION DEFERRAL DOES THE REGRESSION ANALYSIS CONDUCTED IN THE CROSSBORDER STI'DY DEMONSTRATE AVOIDED TRANSMISSION AI\[D DISTRIBUTION COSTS? No, there are numerous issues with the ICL's regression approach to avoided cost. ICL's analysis fails account for how distributed generation is expected to impact an existing, built out transmission and distribution system. The data underlying the ICL analysis has several critical flaws. First, the cost metric of transmission additions come from FERC Form l, and thus do not reflect transmission capacity addition, but overall transmission plant additions. This is an important distinction because a large share of plant additions is attributable to retirement and replacement of aging ffiastructure. Because retired infrastructure has a cost basis from 50 or more years ago the replacement plant is expected to have a larger total capital expense than the retired plant. The coefficient in this regression is thus over-estimated because it is absorbing the natural inflation-driven growth in transmission plant. Second, the independent variable "Peak Load" is distinctly different from "net export energy". This is important because Crossborder fails to demonstrate that net energy capacity reductions have the same incremental impact on tansmission expense as load growth. To understand why these two distinct measures would have a different impact on transmission and distribution plant on must consider the underlying mechanics of how each affects plant additions. Peak load growth is typically due to buildout. Over the last 20 years, use per customer has been declining. This is because of efficiency gains in equipment and other energy saving measures. Load growth is primarily due to new IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Page 8 a. A. constnlction of residential buildings and corresponding growth in commercial and industrial customer accounts. This buildout drives distibution and transmission spending because it requires extending lines to new areas. Net export energy does not reduce the need to build out ffansmission and distribution, it simply offsets the load on existing distribution. As the constaint on existing infrastructure decreases there is no way for the IPC to recoup the existing investnent. Thus the only avoided cost is through avoiding upgrades to existing distribution and fansmission buildout. Upgrades to existing transmission and distribution buildout is caused by infill, which is a much smaller share of plant inveshent and is appropriately modeled ming the bottom-up approach proposed by IPC. WHAT ASPECTS OF TIIE CROSSBORDER TRANSMISSION ANI) DISTRIBTIITON ANALYSIS DO YOU FIND RELEVAI\IT? The Crossborder study correctly notes that distributed generation is unlikely to be uniformly spread across all IPC's feeders. For example, IIPA is aware that many of the larger net generation customers are on rural feeders due to the low land cost involved in large solar installations. It is possible that a well-placed and sufficiently large, distributed generation system could have a material impact on avoiding additional distribution or transmission, but this would require multiple coincidental factors. Because this tlpe of avoided cost is fact specific, it is not appropriate to build these avoided costs into a generic rate. However, IPC could consider incorporating custom avoided distribution cost studies into its assessment of large-scale projects to account for this. The Commission could also consider authorizing Idaho Power to proactively notiff large customers that are situated in such locations of the potential for additional avoided cost benefits. IIIAHO IRRIGATION PUMPERS ASSOCIATION' INC.'S COMMENTS - Page 9 a. A. AVOIDED LII\TE LOSSES IS THE CROSSBORDER STUDY CORRECT THAT LINE LOSSES HAVE INCREASED SINCE THE LAST LINE LOSS STUDY? No, the Crossborder study provides no supporting evidence and utilizes flawed logic. While loads have grown since the last study, so have distribution and transmission capacity; line losses are a function of both load and capacity. Under the Crossborder logic, line losses double every ten years. The Crossborder study assumes that line losses double from 5.8 percent in2012 to 11.6 percent lrn2022. This leads to the absurd result that line losses will be 23 .4 percent in 2032 and nearly I 00 percent by 2052 . IIPA' s initial comments contain additional discussion on line losses and the appropriateness of applying line losses to various cost calculations. WHAT IS YOUR RESPONSE TO THE CROSSBORDER'S RECOMMENDED LINE LOSS ESTIMATE? The Crossborder study notes that a2O2l IRP case with extensive battery additions shows an integration cost of $0.64 per MWh, which is lower than the 2020 ntegration study of $2.93 per MWh used in the VODER study. The Crossborder study attibutes the decrease in integration costs to the modeled investnent in batteries. As I noted earlier in my testimony, batteries provide multiple functions beyond capacity, one of those functions is integration. I also note earlier in these comments that the cost of a battery installation should be apportioned between all the functions that the battery performs. It is inappropriate to use the $0.64 per MWh figure proposed in the Crossborder study because that measure relies on the free provision of battery services by the utility to the net exporter. a. A. IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Page 10 a. A. ENVIRONMENTAL ATTRIBUTE S DOES TI{E CROSSBORDER STUDY ACURRATLY REPRESENT TIIE VALUE OF IIEDGING? No, the Crossborder study indicates that the value of reducing fuel price risk is $23 per MWh. Note that hedging eliminates both up-side and down-side risk and does not impact the expected fuel cost. Thus, a$23.40 per MWh payment to reduce fuel price risk constitutes a pure price adder to expected energy costs. It is absurd to claim that IPC customers are willing to double their energy costs in order to achieve less fuel price risk. DO YOU RECOMMEND THAT IPC OR OTIIER UTILITIES IN GENERAL HEDGE TUEL PRICE RISK? No, I have never advocated for fuel price hedging and have actively argued against long term fuel price hedging. This does not bring value to customers. SHOULD AVOIDED CARBON EI\,IISSIONS BE CONSIDERED IN AI\t EXPORT RATE CALCIJLATION? No, environmental attributes should be considered when pricing net export rates. This includes avoided carbon emissions and all other environmental considerations listed in the Crossborder study. All environmental attributes of the net exporter should be retained by the net exporter. As such, no environmental attributes should be incorporated into the net export rate. This would constitute a double counting of these atEibutes. DOES THIS CONCLUDE YOTIR RESPONSE TESTIMONY? Yes. a. A. a. A. a. A. IDAHO IRRIGATION PUMPERS ASSOCIATION' INC.'S COMMENTS - Page 11 CERTIFICATE OF SERYICE I HEREBY CERTIFIY that on this 12tr day of October,2022,I served a true, correct and complete copy of the Comments of Idaho Irrigation Pumpers Association, lnc. to each of the following, via U.S. Mail or private courier, ernail or hand delivery, as indicated below: Jan Noriyuki, Secretary Idaho Public Utilities Commission P.O. Box 83720 11331 W. ChindenBlvd. Building 8, Suite 201-A Boise,ID 83714 i an.norivuki@puc. idaho. eov Lisa D. Nordstrom Megan Goicoechea Allen Idaho Power Company 1221 West ldaho Sfreet(83702) P.O. Box 70 Boise,Idaho 83707 lnordstrom(@ idahopower.com mgoicoecheaallen(@idahopower.com dockets@idahopower. com Timothy Tatum Connie Aschenbrenner Grant Anderson Idaho Power Company 1221 West Idaho Street (83702) P.O. Box 70 Boise,Idaho 83707 ttatum@ idahopower. com caschenbrenner@ idahopower. com ganderson@idahopower. com Riley Newton, Deputy Attorney General Chris Burdin Idaho Public Utilities Commission I l33l W. Chinden Blvd., Bldg No. 8, Suite 201-4 (83714) PO Box 83720 Boise, D 83720-0074 riley. newton(a)puc. idaho. sov U.S. Mail Hand Delivered Ovemight Mail Telecopy (Fax) Elecffonic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Ovemight Mail Telecopy (Fax) Electronic Mail (Email) trntrnx trtr chris.burdin@puc. idaho. sov IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Prge 12 Michael Heckler Courtney White Clean Energy Opportunities for Idaho Inc. 3TTSPlantation River Dr., Suite 102 Boise,ID 83703 mike(rD cl eanenergyopportunities. com courtney(Ecleanenergyopportunities. com Kelsey Jae Law for Conscious Leadership 920 N. Clover Dr. Boise,ID 83703 kelsev@kelseyiae.com Tom Arkoosh Amber Dresslar Arkoosh Law Offices 913 W. River St., Suite 450 P.O. Box 2900 Boise,ID 8370 tom. arkoosh(Earkoosh. com amber. dresslar@ arkoosh. com erin.cecil@ arkoosh. com Lance Kaufrnan, Ph.D. 4801 W. Yale Ave. Denver, CO 80219 I ance(g)bardwellconsultin s. com Marie Kellner Idaho Conservation League 710 N. 6th Street Boise, ID 83702 mkellner(d idahoconservation. ore Peter J. Richardson Richardson, Adams, PLLC 515 N. 27th Street PO Box 7218 Boise,lD 83702 p eterf@ ric hardsonad ams. c om U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) trx trtrtrtrtr IDAHO IRRIGATION PUMPERS ASSOCIATION,INC.'S COMMENTS - Page 13 Dr. Don Reading 6070 Hill Road Boise,ID 83703 dreadine(A mindsprin s. com Mary Grant, Deputy City Attorney Boise City Attorney's Oflice 150 N. Capitol Blvd. PO Box 500 Boise,ID 83701-0500 mrerant(rD citvofboi se. ore boisecityattornev(dcitvofboise. ore Wil Gehl Energy Program Manager Boise City Dept. of Public Works 150 N. Capitol Blvd. PO Box 500 Boise, ID 83701-0500 w gehl (E citvo fboi se. ors Richard E. Kluckhohn,pro se Wesley A. Kluckhohn,pro se 2564W. Parkstone Dr. Meridian,ID 83646 kluckhohn@email.com wkluckhohn(Emac.com Jim Swier Micron Technology,Inc 8000 South Federal Way Boise,ID 83707 jswier(Emicron.com Austin Rueschhoff Thorvald A. Nelson Austin W. Jensen Holland & Hart, LLP 555 lTth Street Suite 3200 Denver, CO 80202 d arue s chho ff(D ho I I andhart. com tnelson@hollandhart. com awj ensen@hollandhart.com ac lee(Ehollandhart. com U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Elecffonic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) trtrtrtrx Dtrtrnx trtrntrX IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Page t4 Joshua Hill Idaho Solar Owners Network 1625 S. Latah Boise, ID 83705 solarownersnetwork@ smail. com tottens@amsidaho.com Ryan Bushland ABC Power CompanyrLLc 184 W. Chrisfield Dr. Meridian,ID 83646 ryan.bushland@ abcpower. co sunshine@abcpower.co trntrtrx ntrtrtra U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) Electronic Mail (Email) ERIC L. OLSEN IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.'S COMMENTS - Page 15