20230607Comments of Commission Staff.pdf

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL .«
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.11714
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )COMPANY'S APPLICATION FOR )CASE NO.IPC-E-22-30
AUTHORITY TO ESTABLISH )
COMPENSATION FOR THE MANDATORY )
INTERRUPTION REQUIREMENTOF )COMMENTS OF THE
SCHEDULE 20 --SPECULATIVE HIGH-)COMMISSION STAFF
DENSITY LOAD )
Staff of the Idaho Public Utilities Commission,by and throughits Attorneyof record,
Michael Duval,Deputy AttorneyGeneral,and submits the followingcomments.
BACKGROUND
On December 28,2022,Idaho Power Company ("Company")applied to the Commission
for an order:(1)establishing a compensation rate for service interruptions under Schedule 20 or,
in the alternative,(2)deferring implementation of a compensation structure for service
interruptions under Schedule 20.Application at 1-2.The Company requested that the
Application be processed under Modified Procedure.
The matters at issue in this case are related to a case that was previouslydecided by the
Commission.See IPC-E-21-37.That case was initiated on November 4,2021,when the
Company applied to the Commission for authorityto establish a new electric service schedule
("Schedule 20")to serve speculative high-density load customers-specifically,large-scale
STAFF COMMENTS 1 JUNE 7,2023
cryptocurrency mining operators.'Schedule 20 incorporated the features of the Company's
existing Schedule 9 (Large General Service)and Schedule 19 (Large Power Service)rate design
but made three modifications:(1)implementation of mandatory,uncompensated fully
interruptibleservice during the summer peak season for up to 225 hours a year;(2)a reallocation
of the portion of cost-of-service derived summer generation capacity costs currentlycollected in
an on-peak demand charge;and (3)energy priced at marginal cost.2
The Commission initiallyapproved the implementation of Schedule 20,as filed.Order
No.35428 at 7.GeoBitmine LLC filed a Petition for Reconsiderationof Order No.35428.In its
Final Order on reconsideration,the Commission affirmed all three provisions of Schedule 20,
with one exception.Order No.35550 at 16.Specifically,the Commission found that the record
was "insufficient to support the uncompensated mandatory interruptabilityrequirement."Id.at
22.Althoughthe Commission believed that mandatory interruptibleservice during the summer
peaks season under Schedule 20 was reasonable,the Commission did not believe the record
supported implementation of an "uncompensated mandatory interruptibleservice provision."Id.
(emphasis in the original).Accordingly,the Commission directed the Company "to apply to the
Commission for a determination of a fair,just,and reasonable amount of compensation,if any,
for interruptabilityunder Schedule 20"by December 31,2022.Id.at 23.
The Company explains that Schedule 20 includes a requirement for mandatory,
uncompensated interruptionat the Company's discretion annuallybetween the hours of 1:00
p.m.to 11:00 p.m.,Monday through Friday,excluding Holidays,from June 15 through
September 15,with a maximum of 10 hours per interruptionevent and not to exceed 225 hours a
year.Application at 4.
The Company's Application seeks a Commission order prior to the start of the June 15 -
September 15 interruptionperiod:(1)establishing a compensation rate "of $0.0734 per kilowatt
("kW")per hour of interruptionfor Large General Service Rates,"under Schedule 20,"and
$0.0835 per kW per hour of interruptionfor Large Power Service Rates"under Schedule 20 "or,
alternatively,(2)defer[ring]implementation of any compensation structure for the mandatory
interruptionrequirement of Schedule 20 until evaluation of cost assignment responsibility for
i In the Matter of Idaho Power Company's Application for Authority to Establish New Schedule to Serve SpeculativeHigh-DensityLoad Customers,Case No.IPC-E-21-37,Applicationat 1-2 (Nov.4,2021).
2 Id.at 14.
STAFF COMMENTS 2 JUNE 7,2023
Schedule 20 is completed at a general rate case."Application at 1-2.The Company filed a
Scheduling Request on February 22,2023,after conferring with Staff,stating that it no longer
sought a Commission order in this case before the June 15,2023,interruption period.
Regarding Schedule 20,the Company states that its "primary recommendation"proposes
compensating Large General Service customers at a rate of $0.0734 per kW per hour of
mandatory interruptionand Large Power Service customers at a rate of $0.0835 per kW per hour
of mandatory interruption.Id.at 5 These rates,the Company explains,"were derived by
dividing the annual peak load functionalized per kW cost by the total potential hours of
interruption"-for Large General Service customers ($16.51 divided by 225 hours)and for Large
Power Service customers ($18.79 divided by 225 hours).Id.at 9-10.
The Company's alternative recommendationproposes forgoing compensation to
Schedule 20 customers until there is an evaluation of cost assignment responsibility at a general
rate case.
The Company explains that there are currentlyno customers taking service under
Schedule 20.However,the Company notes that potential customers under Schedule 20 likely
operate with high load factors,often greater than 90%,which results in a "higher coincidence"to
the Company's system peak.These characteristics-energyuse and coincidence to system
peak-the Company claims,distinguish Schedule 20 customers from Schedule 9 and 19
customers.The Company explains that energy use and coincidence to system peak are two
factors largely comprising class cost assignment.The Company expresses concern that,until it
has Schedule 20 customers from which it can collect data and is able to evaluate cost assignment
responsibility at a general rate case,there is a potential that customers would overcompensate
Schedule 20 customers for mandatory interruption.
STAFF REVIEW
Staff believes the Company's proposed interim interruptiblecompensation for Schedule
20 is reasonable until a compensation structure based on actual Schedule 20 cost assignment is
evaluatedin a general rate case.Staff's conclusion is based on our review of (1)the need for
compensation,(2)the Company's proposals,and (3)comparisons to existing programs and
schedules.The details of Staff's analysis for each of these areas are provided in separate
sections below.
STAFF COMMENTS 3 JUNE 7,2023
Need for Interruptible Compensation
Staff believes there is sufficient justification for interruptiblecompensation for potential
Schedule 20 customers based on Schedule 9 (Large General Service)and Schedule 19 (Large
Power Service)rate structures since Schedule 20 was developedusing these schedules as a basis.
However,the rate and the method may need to be modified when the Company "evaluatescost
assignments based on usage characteristics and system requirements under Schedule 20 and then
assign cost and benefits incorporating interruptionrequirement parameters"as directed by the
Commission in Order No.35428.Order No.35428 at 7.
Schedule 20 was designed to allow the Company to serve Schedule 20 customers without
the need to invest in incremental capacity resources by includinginterruptible provisions in the
tariff to avoid the potential for stranded assets.However,under the current Schedule 20 rate
structure,customers will pay for some on-peak demand-relatedcost through the billing demand
charge.Therefore,Staff believes some form of interruptioncompensation is justified.
Furthermore,Staff believes that customer rates should be designed prospectively so that
when a Schedule 20 customer does come on to the system,rates are available to the customer
that are fair,just and reasonable by being based on the best information available.However,
Staff also believes that when Schedule 20 customer(s)do come on to the system,the Company
should evaluate actual customer data and the method and amount of compensation should be
modified based on actual usage characteristics and system requirements.
CompanyProposals
The Company proposed two alternatives,a primary and a secondary,to provide
interruptible compensation for Schedule 20 customers,if the Commission rules in favor of
providing compensation.The Company's primary proposal provides interim compensation
based on the value of avoiding embedded Schedule 9 and 19 peak-load resource costs,while the
Company's secondary alternative proposes to wait until actual Schedule 20 customer data is
available so it can be evaluatedand modified in a rate case.Staff recommends the Commission
authorize the Company's primary proposal of establishing interim compensation to Schedule 20
customers based on the value of avoiding embedded Schedule 9 and 19 peak-load resource costs.
Staff believes it is based on the best information available at this time and that it would not be
STAFF COMMENTS 4 JUNE 7,2023
fair to wait to provide compensation until Schedule 20 customers have been on the system before
a rate is established for reasons discussed earlier.
Staff reviewed the Company's method for determining interim compensation and
believes the method is fair,just,and reasonable for Schedule 20 customers while reducing the
risk of overcompensationthat could harm other customers.The rates are only paid if and when
interruptionunder the proposed parameters actuallyoccurs.The proposed values for
interruptiblecompensation are $0.0734 per kW per hour of interruptionfor Large General
Service and $0.0835 per kW per hour for Large Power Service.
Because these rates are based on Schedules 9 and 19 cost assignments,Staff believes
these values provide reasonable compensation until actual data for Schedule 20 customers is
available so that the rates can be validated.It is possible that Schedule 20 customers will have
higher load factors than Schedule 9 and 19 customers,resulting in higher cost assignment and
compensation values.However,until data from actual customers can be collected,Staff believes
these proposed values provide a fair,although conservativeestimate that decreases the risk of
overcompensatingSchedule 20 customers that could harm other customers.
The Company is also proposing that interruptible compensation costs be 100%
recoverable through the Power Cost Adjustment ("PCA").Staff believesthis is reasonable
because of the lack of the Company's ability to negotiatethese rates with individual customers
and because of the Company's obligation to provide service.
Staff reviewed the revised Schedule 20 tariff included as Attachment 2 in the Application
and believes the revised tariff accurately reflects the Company's proposed interruption
compensation.The revised tariff includes the Company's proposed measurement of load
reductions from interruptionevents.Staff believes this method is appropriatebecause the
measurement of load reductions utilizes similar interruption parameters and methods to the
Company's Flex Peak Program.
Althoughthe Company proposed to wait for actual customer data before setting rates as
an alternateproposal,Staff believes that this analysis should be performed regardless,and as a
matter of standard practice,in determining customer rates in a subsequent general rate case.In
Case No.IPC-21-37,Staff recommended the parameters for interruptible service be carefully
reviewed in the next general rate case or after Schedule 20 customers are established and data
has been collected to determine the amount,frequency,and timing of interruptions in service that
STAFF COMMENTS 5 JUNE 7,2023
occur.Case No.IPC-E-21-37,Staff Comments at 5.Staff's position on this topic has not
changed and still believes actual Schedule 20 customer data is most appropriate for determining
interruptibleparameters and rates.
Comparisons to ExistingPrograms and Schedules
In order to better evaluate the Company's interim compensation proposal,Staff reviewed
several existing alternatives with similar design or intent.These alternatives include the
Company's existing Flex Peak demand response program and existing tariff schedules from
other utilities.These comparisons provide context on the Company's proposal relative to
existing options.
Flex Peak Demand Response Comparison
The most direct comparison is to the Company's Flex Peak demand response program.
This program is offered for Schedule 9 and Schedule 19 customers and,outside of a special
contract,most closely resembles the Schedule 20 interruptionparameters.The Company's Flex
Peak program provides incentives to the Company's commercial and industrial customers in
exchange for load reduction during peak summer months.The incentive structure uses a fixed
and variable component to calculate incentive amounts based on the amount of subscribed
demand and the individual customer's performance.
For the Flex Peak program,the fixed incentive component provides $3.25 for each kW
subscribed to the program for each week of the season.This portion of the incentive is paid to
customers even if no load reduction events are called.However,when events are called,this
incentive can be adjusted to reflect actual demand reduction.The Company's proposed interim
compensation does not contain a similar component.
When events are called,the Flex Peak program's variable component provides an
additional $0.20 payment for each kilowatt-hour ("kWh")of reduction during the event.The
Company's proposed interim compensation corresponds to the 0.0734 $/kWh and 0.0835 $/kWh
for Schedule 20 Large General Service Rates and Large Power Service Rates,respectively.
From the inclusion of a fixed incentive component and the large variable incentive
component,the Company's Flex Peak program is designed to encourage participation in a
voluntaryprogram that will only operate on a limited basis for no more than 60 hours a year.
STAFF COMMENTS 6 JUNE 7,2023
Because interruptionis mandatory under Schedule 20,interim compensation based on flex peak
incentive values could overcompensate potential Schedule 20 customers.From this comparison,
Staff believes that the interim compensation amounts based on the embedded cost of a peak-load
serving resource presents less risk of overcompensationwhile still allowingsome form of
compensation until the Schedule can be evaluated with actual customer data in a general rate
case.
Existing Schedules Comparisons
In addition to the Company's existing programs,Staff reviewed several existing
schedules with comparable design and purpose used by other utilities.Reviewed tariffs include
(1)Black Hills Energy Blockchain InterruptibleService,(2)Rocky Mountain Power
InterruptibleService Pilot,and (3)Montana-Dakota Utilities Company High Density Contracted
Demand Response Rate.Of these schedules,two contain service term agreements,negotiated
components,and commission filings similar to the Company's existing special contracts.The
remaining schedule is an optional pilot program and is similar to the Company's current demand
response program.Staff's review of these tariff schedules discovered that they do not provide a
reasonable comparison to the Company's proposed Schedule 20 interruption compensation.
Customer and Intervenor Comments
As of Tuesday,June 6,2023,there have been no Customer Comments received for this
case.
STAFF RECOMMENDATIONS
Staff recommends the Commission approve the Company's proposed interruption
compensation as filed for Schedule 20 of $0.0734 per kW per hour of interruptionfor Large
General Service and $0.0835 per kW per hour of interruptionfor Large Power Service.
STAFF COMMENTS 7 JUNE 7,2023
Respectfullysubmitted this day of June 2023.
ael Du
Deputy Attorney General
Technical Staff:Michael Eldred
Jason Talford
Chris Hecht
Jon Kruck
i:umisc/comments/ipce22.30mdmejtchtncml comments
STAFF COMMENTS 8 JUNE 7,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 7th DAY OF JUNE 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN
CASE NO.IPC-E-22-30,BY E-MAILING A COPY THEREOF,TO THE
FOLLOWING:
MEGAN GOICOECHEA ALLEN CONNIE ASCHENBRENNER
LISA NORDSTROM PAUL GORALSKI
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
E-MAIL:[e-mail] E-MAIL:[e-mail]
[e-mail] [e-mail]
dockets idahopower.com
SECRETARY
CERTIFICATE OF SERVICE