20231206Comments of the Commission Staff.pdf

ADAM TRIPLETT VED
DEPUTY ATTORNEY GENERAL Mi 10:La |IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074 MMiBOON
[phone]
IDAHO BAR NO.10221
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 )CASE NO.IPC-E-23-25
COMPANY'S ANNUAL COMPLIANCE )FILING TO UPDATE THE LOAD AND GAS )FORECASTS IN THE INCREMENTAL COST )COMMENTS OF THE
INTEGRATED RESOURCE PLAN AVOIDED )COMMISSION STAFF
COST MODEL )
COMMISSION STAFF ("STAFF")OF the Idaho Public Utilities Commission,by and
through its Attorneyof record,Adam Triplett,Deputy Attorney General,submits the following
comments.
BACKGROUND
On October 13,2023,Idaho Power Company ("Company")made a compliance filing
("Filing")to update "the load forecast,natural gas forecast,and long-term contract changes used
in the Incremental Cost Integrated Resource Plan ("ICIRP")avoided cost methodology."Filing
at 1.The Company must update these inputs by October 15 of each year.See Order Nos.32697
and 32802.The Filing also updates the Peak and Premium Peak Hours used to calculate the
avoided capacity costs energy storage qualifying facilities ("QF").ICIRP avoided cost rates are
available to QFs that are above the resource-specific project eligibilitycap for published avoided
STAFF COMMENTS 1 December 6,2023
cost rates under Idaho's implementation of the Public Utility Regulatory Policies Act of 1978
("PURPA").
The Company has updated its peak and premium peak hours for 2024 using the
method directed by the Commission in Order No.34913.Peak hours in 2023 are as follows:
July 1:00 p.m.to 10:00 p.m.;and August 3:00 p.m.to 8:00 p.m.Premium peak hours in 2024
are as follows:July 5:00 p.m.to 10:00 p.m.;and August 5:00 p.m.to 8:00 p.m.
STAFF ANALYSIS
Staff has reviewed the Filing and recommends the following:
1.The proposed load forecast be approved;
2.The proposed natural gas forecast be approved;
3.The proposed Peak Hours and Premium Peak Hours be used to calculate capacity
payments for energy storage QFs using ICIRP avoided cost rates;and
4.The proposed Peak Hours be used to calculate capacity payments for energy
storage QFs using Surrogate Avoided Resource ("SAR")based rates.
Load Forecast
Althoughthe Company did not use the load forecast from the 2023 Integrated Resource
Plan ("IRP"),Staff believes the proposed load forecast is reasonable.Staff's conclusions were
based on comparisons between the proposed energy load forecast and last year's load forecast in
Case No.IPC-E-22-26 and between the proposed energy load forecast and the 2023 IRP energy
load forecast.
Comparison to 2022 Annual Update
The Company compared last year's load forecast in Case No.IPC-E-22-26 and the
proposed load forecast in this case.The proposed load forecast is 4.86 percent lower than last
year's load forecast.See Figure No.1.The 4.86 percent was calculated by "determining the
annual percent change from the 2022 load forecast to the 2023 load forecast for each year from
2023 through 2042,and then calculating the average of those annual percent change values."
See Response to Staff Production Request No.1 (a).Staff believes that the justifications
provided by the Company for the decrease in load from last year's load forecast are reasonable.
STAFF COMMENTS 2 December 6,2023
Annual Load Forecast
3,500
3,000
2,500
2,000
m 1,500
1,000
500
0
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043
Year
--October 2022 (aMW)---September 2023 (aMW)
Figure No.1:Load Forecast Comparison (Filing at 5)
According to the Company,there are two reasons that cause the reduction.First,several electric
service agreements,such as Meta and Micron lowered their load forecasts.See Response to
Staff Production Request No.1 (d).Second,the load forecast was adjusted downward to ensure
a smooth transition between the actual load and the forecasted load.See Response to Staff
Production Request No.1 (e).
Comparison to 2023 IRP Load Forecast
Staff compared the proposed energy load forecast to the forecast submitted in the 2023
IRP as shown in Figure No.2 below.The major difference between the two forecasts is that the
2023 IRP uses the 70*percentile energy load,while load forecast proposed in this case uses the
50*percentile load,which Staff believes is appropriate for the purpose of establishing an
avoided cost of energy for PURPA contracts.
STAFF COMMENTS 3 December 6,2023
Proposed50th Percentile vs.70th Percentile from
2023 IRP
3500
m 1500
1000
500
0
00000000000000000000
--Proposed 50th Percentile --70th Percentile from 2023 IRP
Figure No.2:Comparison between Proposed 50th Percentile of Load and 70th Percentile of Load
from 2023 IRP
Order No.32697 states that the ICIRP methodology should utilize inputs determined
throughthe utilities'"IRP"planning process.Order No.32697 at 22.However,Staff believes
that the 50*percentile load forecast proposed in this case is appropriate for the purpose of
determining IRP-based avoided cost rates because the 50th percentile energy load reflects
expected load under normal conditions and represents the cost of energy that the Company will
likely avoid.The Company used the 70*percentile load in the 2023 IRP,because the purpose of
the load forecast in the IRP is to ensure sufficient resources are identified necessary for
reliability.Using the 70*percentile load for the purposes of this case would likelyoverestimate
the avoided cost of energy and customers would no longer be held neutral.'
Natural Gas Forecast
Staff believes the proposed natural gas forecast is reasonable,and Staff recommends its
approval.Staff's conclusion is based on comparing the proposed HenryHub forecast to last
i The neutrality principlerequires PURPA rates be set at the utility's avoided cost.Indep.Energy Producers Ass'n,
Inc.v.Cal.Pub.Utils.Comm 'n,36 F.3d 848,858 (9th Cir.1994)."If purchase rates are set at the utility's avoided
cost,consumers are not forced to subsidize QFs because they are paying the same amount they wouldhave paid if
the utility had generated energy itself or purchased energy elsewhere."
STAFF COMMENTS 4 December 6,2023
year's annual update and Rocky Mountain Power's HenryHub forecast over the next two years,
given that IRP-based contracts are limited to two years.2 See Order No.33357.
Comparison to 2022 Annual Update
This year's HenryHub natural gas forecast is lower than last year's forecast for the next
two years as shown in Figure No.3 in Confidential Attachment A to the Company's responses to
Staff s Production Requests.The Company stated that the forecast is generally lower during this
timeframe because the impact from the Russia and Ukraine conflict that was affecting European gas
supply driving up U.S.gas prices has decreased.See Response to Staff Production Request No.2.
Comparison to Rocky Mountain Power's HenryHub Forecast
Staff compared the Company's proposed HenryHub natural gas forecast to Rocky
Mountain Power's Henry Hub forecast as shown in Figure No.4 in Confidential Attachment A
to the Company's responses to Staff's Production Requests.The similarity between the two
forecasts over the next few years lends additional support to Staff s conclusion.
Contract Updates
Contract updates are incorporated into the IRP model on a continuous basis,but the
annual filing provides an opportunityfor the Commission to review and monitor these updates.
The Company provided the followingnew contracts since the last annual update filing,and Staff
believes the contract updates included in the Filing are reasonable.
Lowline #2
Bypass
Dietrich Drop
Pleasant Valley Solar
Franklin Solar
Kuna Battery Energy Storage System
2 Avista did not file updated natural gas forecast this year.See Case No.AVU-E-23-13.
STAFF COMMENTS 5 December 6,2023
Peak and Premium Peak Hours
The Company proposed new Peak Hours and Premium Peak Hours to be used to
calculate and pay capacity payments for energy storage QFs.Staff reviewed the Company's
methodology used to update the Peak and Premium Peak Hours for 2024 and determined that the
Company used the same method as last year's annual filing.Therefore,Staff recommends
approval of the proposed Peak Hours and Premium Peak Hours to be used to calculate and pay
capacity payments for energy storage QFs using IRP-based avoided cost rates.Staff also
recommends approval of the Peak Hours to be used to calculate capacity payments for energy
storage QFs using SAR-based rates.
The proposed Peak Hours for July in 2024 are 1:00 pm to 10:00 pm;the proposed Peak
Hours for August in 2024 are 3:00 pm to 8:00 pm.This results in the same number of total Peak
Hours (434 hours)overall within a year.The proposed Premium Peak Hours for July are 5:00
pm through 10:00 pm;the proposed Premium Peak Hours for August are 5:00 pm through 8:00
pm.
Unlike IRP-based energy storage avoided cost rates where the Premium Peak Hour rates
are 20%higher than the Peak Hour rates,the SAR energy storage capacity payments are only
paid for generationduring Peak Hours without any premium.Althoughthe timeframe of Peak
Hours has changed in this filing compared to those currentlyauthorized,the total of 434 Peak
Hours over a year have not changed.Because the avoided cost of capacity in the SAR Model is
calculated by dividing the annual capacity value of a Combined Cycle Combustion Turbine plant
by the total number of Peak Hours in a year,avoided cost of capacity for energy storage will not
be affected.However,QFs will receive capacity payments for generation output during different
hours if the proposed Peak Hours are approvedby the Commission.
STAFF RECOMMENDATION
Staff recommends the following:
1.The proposed load forecast be approved;
2.The proposed natural gas forecast be approved;
3.The proposed Peak Hours and Premium Peak Hours be used to calculate capacity
payments for energy storage QFs using ICIRP avoided cost rates;and
STAFF COMMENTS 6 December 6,2023
4.The proposed Peak Hours be used to calculate capacity payments for energy
storage QFs using Surrogate Avoided Resource ("SAR")-based rates.
Respectfully submitted this 6th day of December 2023.
Adam Triplett '/
Deputy AttorneyGeneral
Technical Staff:Yao Yin
Kevin Keyt
i:umisc/comments/IPC-E-23-25 Comments
STAFF COMMENTS 7 December 6,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 6*DAY OF DECEMBER 2023,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TOIDAHOPOWERCOMPANY,IN CASE NO.IPC-E-23-25,BY E-MAILING A COPYTHEREOF,TO THE FOLLOWING:
MEGAN GOICOECHEA ALLEN
DONOVAN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL:[e-mail]
dwalker idahopower.com
dockets idahopower.com
Ida Elmasian
CERTIFICATE OF SERVICE
IPC -E-23-25
Confidential AttachmentA
Redacted
Confidential Attachment A
IPC-E-23-25
Staff Comments
December 6,2023