20231214Comments of the Commission Staff.pdf

ADAM TRIPLETT
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[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 )COMPANY'S APPLICATION FOR )CASE NO.IPC-E-23-27APPROVALOFTHECAPACITY)DEFICIENCY PERIOD TO BE UTILIZED )FOR AVOIDED COST CALCULATIONS )COMMENTS OF THE
)COMMISSION STAFF
COMMISSION STAFF ("STAFF")OF the Idaho Public Utilities Commission,by and
throughits Attorney of record,Adam Triplett,Deputy Attorney General,submits the following
comments.
BACKGROUND
On October 23,2023,Idaho Power Company ("Company")applied for approval of its
capacity deficiency period determination for avoided cost calculations under the Public Utility
Regulatory Policies Act of 1978 ("PURPA").Under PURPA,the Commission has established a
Surrogate Avoided Resource ("SAR")methodology and an integrated resource plan ("IRP")
methodology to calculate avoided cost rates for qualifying facilities ("QFs").Under both
methodologies,a QF receives capacity payments only after the first capacity deficit date.Order
No.32697.
STAFF COMMENTS 1 DECEMBER 14,2023
The capacity deficiency period is determined through the IRP planning process and is
submitted to the Commission in a proceeding separate from the IRP docket.The capacity deficit
date determined in the IRP process is presumed to be correct as a starting point but will be
subject to the outcome of the capacity deficiency case.Order No.32697.
In its Application,the Company anticipates its capacity deficiency period will begin
in July 2026.The Company asks that the Commission approve the capacity deficiency period.
STAFF ANALYSIS
Staff's review of the proposed deficiency date is focused on the Loss of Load Expectation
("LOLE")methodology,the proposed load forecast,and the proposed resources.Staff
recommends that the capacity deficiency period and amounts of deficiency for purposes of
determining when capacity payments should begin for new PURPA contracts be based on a
compliance filingthat reflects the following:
1.The Company file the most recent load forecast and explain the difference
between the latest load forecast and the proposed forecast;and
2.The Company exclude the WRAP capacity benefit of 14 Megawatts ("MW")in
determining the capacity deficiency period.
Staff also recommends that the Company use the latest load forecast for future capacity
deficiency filings as required by Order Nos.33958,34918,and 35415,and that the Company
provide evidence to substantiate its proposed Capacity Benefit Margin ("CBM")capacity size in
the next capacity deficiency case.
If the Commission accepts Staff's recommendation,Staff will review the Company's
compliance filing and reconcile any issues with the Company prior to submitting a decision
memo for approval of the capacity deficiency period and amounts of deficiency,the updated
SAR model that uses the capacity deficiency information,and resulting published avoided cost
rates.
LOLE Methodology
The Company used the LOLE methodology through the Reliability and Capacity
Assessment Tool ("R-CAT")to determine the capacity deficiency period.Staff believes this
STAFF COMMENTS 2 DECEMBER 14,2023
new methodology is more suitable for the Company's system,given the increasing penetration of
solar,wind,and other variable resources.
In the past,the Company used the deterministic load and resource balance ("L&R")
based on a peak-hour view to determine the capacity deficiency period.See Supplemental
Response to Staff's Production Request No.20 in Case No.IPC-E-23-23.This method
considers a resource's ability to meet peak load to ensure adequate resources are available to
meet the high-riskpeak load.Ellsworth's Direct Testimony at 4 in Case No.IPC-E-21-32.
However,as the penetration of solar,wind,and other variable resources has been
increasing,the high-risk hours are not aligned with the system peak hours.Id at 4.The high-risk
hours have shifted to later in the day when solar generation is reduced.Id at 5.The LOLE
methodology examines each hour's statistical likelihood of the system net load exceeding the
available generating capacity.Id at 4;the 2023 Integrated Resource Plan submitted in Case No.
IPC-E-23-23 ("the 2023 IRP")at 89.
The 2023 IRP and this case use the LOLE methodology to calculate annual capacity
positions.The resulting first capacity deficiency year starts in 2026.The 2023 IRP at 174.The
annual capacity position is calculated by averaging the size of a perfect generating unit required
to achieve a 0.1 event-days per year LOLE from six test years from 2017 through 2022.The
2023 IRP at 143;see also Response to Staff's Production Request No.2.The first deficiency
month is July,which is determinedby identifyingthe first month exceeding a 0.0083 event-days
per year LOLE (or 0.1 divided by 12)in 2026.The 2023 IRP at 174.
Load Forecast
The Company's overall load forecast determined the deficit date decrements for on-site
generation,Energy Efficiency ("EE"),and Demand Response ("DR")capacity contributions
from a pure end-use customer forecast.Staff s review includes a review of the overall forecast
and each of the components in the final load forecast.
1.Overall Forecast
Compared to the load forecast used in the last capacity deficiency case,the proposed load
forecast is higher primarily due to Energy Service Agreement load requirements from Meta
Platforms and Micron Technology.See Response to Staff Production Request No.1 (d).Staff
STAFF COMMENTS 3 DECEMBER 14,2023
believes the difference between the two forecasts is reasonable.However,Staff recommends
that the Company file the most recent load forecast through a compliance filing and explain the
difference between the latest load forecast and the proposed forecast.Staff also recommends
that the Company always use the latest load forecast for future capacity deficiency filings.
Commission Order Nos.33958,34918,and 35415 required utilities to use the most up-to-
date information to determine the capacity deficiency period.Althoughthe Company states that
it uses the most recent information in this case (Application at 4),Staff believes the proposed
load forecast is not the most recent forecast.The proposed load forecast was created in the
second quarter of 2023,which was used in the 2023 IRP.See Response to Staff's Production
Request No.l.The Company has updated its load forecast at least once since then:Case No.
IPC-E-23-25 used a load forecast created in September of 2023.
2.On-site Generation
The Company includes forecasted levels of on-site generationin the load forecast.See
Response to Staff Production Request No.15.Staff believes it is reasonable to include
forecasted on-site generation to offset forecasted load in the R-CAT model.
3.EE
Cost-effective EE is included in the R-CAT model as a reduction to load forecast.Staff
believes it is reasonable to include cost-effective EE,because utilities are expected to pursue all
cost-effective EE.Order Nos.32426 and 33917.
4.DR
The Company includes existing DR program at the current levels in the R-CAT model,
which does not reflect forecasted changes in the participation level or additions of new DR
programs.See Response to Staff Production Request No.13.Staff believes that this is
reasonable.First,for new DR programs,until such programs are implemented,the amount of
capacity is speculative.Second,Order No.33159 allows current DR participation to be used as a
reasonable estimation of participation into the future for existing programs.
STAFF COMMENTS 4 DECEMBER 14,2023
Resources
Staff's review of resources focused on the end date of Valmy Unit 2,firm transmission
capacity,non-firm transmission capacity,PURPA contract renewals,non-PURPA contract
renewals,Boardman-to-Hemmingway Transmission Line ("B2H"),resources proposed in Case
No.IPC-E-23-05,resources proposed in Case No.IPC-E-23-20,and the Western Resource
Adequacy Program's ("WRAP")capacity.Staff believes that only resources with certainty (i.e.
existing,approved,signed if a pre-approval is not required,reserved,etc.)should be counted in
determining the capacity deficiency for the purpose of avoided cost rates.
Exit Date of Valmy Units
The Company has continued to assume an exit from operation of Valmy Unit 1 at the end
of 2019 and an exit from operation of Unit 2 at the end of 2025 for purposes of establishing the
deficiency date.Staff believes these assumptions are reasonable even though the Company has
included natural gas conversion of both Valmy Units by summer of 2026 in its 2023 IRP
preferred portfolio.See Response to Staff Production Request No.12.Also see Response to
Staff Production Request No.20 in Case No.IPC-E-23-23.Althoughthe Company is currently
investigating a possible natural gas conversion of both Units 1 and 2 with NVEnergy,the owner-
operator of the facility,the Company has not yet developedan agreement.Staff believes that if
an agreement is reached,the capacity contribution of the facility can be included for determining
the deficiency date in the next deficiency date case.
Firm Transmission Capacity
The Company requires that transmission used for imports must have a corresponding firm
third-partytransmission reservation between an energy market hub and the Idaho Power
transmission system,except for Four Corners,where PacifiCorp will provide Idaho Power a
direct transmission ownership path from the Four Corners dessert southwest market hub to Idaho
Power.See Response to Staff Production Request No.8.Staff believes the firm transmission
capacity in the R-CAT model is reasonable.
STAFF COMMENTS 5 DECEMBER 14,2023
Non-Firm Transmission Capacity
The only non-firm transmission capacity included in the R-CAT model is the CBM,
which is only used by the Company during an energy emergency.See Response to Staff
Production Request No.8;the 2023 IRP at 82.For the 2023 IRP,the Company reduced the
CBM capacity from "330 MW for all seasons"to "200 MW in the summer and 0 MW in the
winter."The 2023 IRP at 82.The reduction to 200 MW in the summer is "in response to
continued transmission market limitations beyond the Idaho Power border because CBM
capacity does not have correspondingthird-partytransmission reservations to the Mid-C
market."Id.Also,the Company assumes 0 MW of CBM in the winter season due to wholesale
energy market depth concerns during winter in the Pacific Northwest.Id.Staff believes it is
reasonable to lower the CBM capacity from the 330 MW level due to the transmission market
limitations in the summer and the wholesale energy market depth in the winter.However,Staff
recommends that the Company provide evidence to substantiate its proposed amount of CBM
capacity based on a reasonable level of certainty in its next capacity deficiency case.
PURPA Contract Renewals
The Company assumes that all PURPA projects will renew,except for wind,based on the
Company's experiences and discussions with QFs.See Response to Staff Production Request
No.10.Staff believes this assumption is reasonable.
Non-PURPA Contract Renewals
The Company assumes that non-PURPA contracts are not renewed in the R-CAT model,
because these projects "have no right nor obligation to continue selling to Idaho Power once the
existing contract expires."See Response to Staff Production Request No.11.Staff agrees and
believes that these projects can sell to any buyer once their contracts expire.
B2H
The Company includes B2H in the R-CAT model as a resource,similar to market
purchases.See Response to Staff Production Request No.16.B2H was approvedin Order No.
35838.Staff believes it is reasonable to include B2H in the R-CAT model.
STAFF COMMENTS 6 DECEMBER 14,2023
Resources proposed in Case No.IPC-E-23-05
The Company includes resources proposed in Case No.IPC-E-23-05 in the R-CAT
model.See Response to Staff Production Request No.17.Case No.IPC-E-23-05 proposed a 60
MW energy storage facility,a 12 MW energy storage facility,and a 100 MW solar facility.
These resources were approved in Order No.35900.Staff believes it is reasonable to include
these resources in the R-CAT model for purposes of determining the deficit date.
Resources proposed in Case No.IPC-E-23-20
The Company includes resources proposed in Case No.IPC-E-23-20 in the R-CAT
model.See Response to Staff Production Request No.18.Case No.IPC-E-23-20 proposed a
150 MW leased energy storage facility,a 77 MW Company-owned energy storage facility,and a
24 MW Company-owned energy storage facility.These resources were approved in Order No.
36011.Staff believes it is reasonable to include these resources in the R-CAT model.
WRAP
The Company includes WRAP capacity benefit of 14 MW beginning in 2027 and for the
remaining 20-year planning horizon.However,until the Company makes a binding
commitment,Staff believes it should not be included for determining the capacity deficiency
period.
STAFF RECOMMENDATION
Staff recommends that the capacity deficiency period and amounts of deficiency for
purposes of determining when capacity payments should begin for new PURPA contracts be
based on a compliance filing that reflects the following:
1.The Company file the most recent load forecast and explain the difference
between the latest load forecast and the proposed forecast;and
2.The Company exclude the WRAP capacity benefit of 14 MW in determining the
capacity deficiency period.
Staff also recommends that the Company use the latest load forecast for future capacity
deficiency filings as required by Order Nos.33958,34918,and 35415,and that the Company
STAFF COMMENTS 7 DECEMBER 14,2023
provide evidence to substantiate its proposed CBM capacity size in the next capacity deficiency
case.
Respectfully submitted this 14th day of December 2023.
Adam4rÏple
Deputy AttorneyGeneral
Technical Staff:Yao Yin
i:umisc/comments/IPC-E-23-27 Comments
STAFF COMMENTS 8 DECEMBER 14,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14*DAY OF DECEMBER 2023,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TOIDAHOPOWERCOMPANY,IN CASE NO.IPC-E-23-27,BY E-MAILING A COPYTHEREOF,TO THE FOLLOWING:
DONOVAN E WALKER CAMILLE CHRISTENMEGANGOICOECHEAALLENENERGYCONTRACTSIDAHOPOWERCOMPANYIDAHOPOWERCOMPANYPOBOX70POBOX70BOISEID83707-0070 BOISE ID 83707-0070E-MAIL:[e-mail] E-MAIL:[e-mail]
[e-mail] [e-mail]
dockets idahopower.com
SECRETARY
CERTIFICATE OF SERVICE