20231122Final Comments.pdf

Kelsey Jae (ISB No. 7899)
Law for Conscious Leadership
920 N. Clover Dr.
Boise, ID 83703
Phone: (208) 391-2961
[e-mail]
Attorney for Clean Energy Opportunities for Idaho
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC SERVICE IN
THE STATE OF IDAHO AND FOR
ASSOCIATED REGULATORY TREATMENT
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CASE NO. IPC-E-23-11
CLEAN ENERGY
OPPORTUNITIES
for IDAHO
FINAL COMMENTS
As a party to this case, Clean Energy Opportunities for Idaho (CEO) signed the Settlement
Stipulation and supports its adoption without material change. In CEO’s opinion, the Stipulation
agreement represents a compromise that is just, fair, reasonable, and in the public interest.
This case represents the first time Idaho Power Company (Company) has requested a general rate
case in a dozen years. Given that extensive period between rate cases, this case presented a lot of
prudency issues, as well as a review of the current cost of capital. The appropriately heavy focus
on review of a lot of historical cost data didn’t leave much time to evaluate cost of service
methodology nor to carefully look at how the rate structure that comes out of this rate case
affects future affordability. In anticipation of future rate cases, the parties agreed to workshops
outside of this docket to consider, among other matters, improvements to class cost-of-service
study methodology 1 .
CEO believes that Company forecasts of heavy future load growth and several billion dollars of
associated future capital expenditures implies that future affordability of electric services used by
this state’s Idaho Power customers is at risk 2 . CEO submits these comments, not to modify the
2 IDACORP 2Q 2023 Earning call transcript page 7 suggested that capital expenditures during
the next 5 years will exceed $3.2 billion, nearly doubling the current total Idaho jurisdictional
rate base of $3.8 billion.
1 IPC-E-23-11, Stipulation and Settlement, pages 11 and 12.
IPC-E-23-11 - CLEAN ENERGY OPPORTUNITIES FOR IDAHO - FINAL COMMENTS - 1
RECEIVED
Wednesday, November 22, 2023 2:45:45 PM
IDAHO PUBLIC
UTILITIES COMMISSION
outcome of this rate case, but rather in support of utilizing additional, and thus potentially more
informative, cost-of-service analyses in future general rate cases in an effort to serve the public
interest and to prevent avoidable increases in energy costs 3 .
Optimizing costs requires an accurate understanding of costs. CEO has always been focused on
opportunities to increase the use of Idaho clean energy resources in ways that improve the
affordability of electricity for all customers. One such opportunity involves improvement in the
methods used to analyze cost drivers. In anticipation of a future rate case, CEO’s comments posit
four points:
1. Concerns for future affordability of energy in Idaho are warranted.
● Forecasts call for dramatic increases in system load over the next few years.
● Costs have grown faster than load over the past few decades.
2. The cost to serve load varies substantially by the time of day when that load is served.
3. To control cost growth, we need to understand cost drivers at an hourly level, not just at
monthly level
4. An hourly review of costs is needed, at minimum as a supplement to the traditional “one
data point per month” (12CP/4CP) method as a basis for future cost-to-serve analyses.
3 The Commission has in past dockets encouraged stakeholders to work through matters outside
of formal proceedings. CEO believes that the complexities of cost-of-service analysis and its
importance in the context of a general rate case merit review in an informal venue.
IPC-E-23-11 - CLEAN ENERGY OPPORTUNITIES FOR IDAHO - FINAL COMMENTS - 2
1. FORECAST LOAD GROWTH WARRANTS A CLOSE LOOK
AT AFFORDABILITY RISK
In its recently released 2023 IRP, the Company forecasts its total system load to grow as much in
the next five years as it has in the last 35 years (see Figure 1).
Figure 1
Source: 2023 Integrated Resource Plan, Appendix A, page 8
Historically, cost to the customer per kWh of power consumed has risen much faster than load.
Figure 2 shows that prices paid by the customer have grown 135% over the last 30 years while
load grew 39%.
IPC-E-23-11 - CLEAN ENERGY OPPORTUNITIES FOR IDAHO - FINAL COMMENTS - 3
Figure 2
Source: Idaho Power Company FERC Form One reports, page 304
Given the substantial capital expenditures the Company forecasts as necessary to meet forecasted
rapid load growth, careful analysis of how to control cost growth seems more important than
ever. Analyzing in which hours the Company faces the highest cost to serve load can be an
important tool in maintaining affordable power prices.
2. COST TO SERVE LOAD VARIES SUBSTANTIALLY WITH TIME OF DAY
Figures 3 and 4 below display two different perspectives on how the cost to serve load varies
with the time of day when that load occurs. Figure 3 displays market prices for transactions in
the EIM market, adjusted to reflect the locational value of power provided within the Company
service territory. The data show dramatic differences in the incremental cost of power purchased
(or revenue provided for power sold) across the diurnal cycle, with especially low power prices
on summer mornings and very high prices on summer early evening hours.
IPC-E-23-11 - CLEAN ENERGY OPPORTUNITIES FOR IDAHO - FINAL COMMENTS - 4
Figure 3
Source: IPC-E-23-14, Ellsworth testimony Exhibit 2
Figure 4 shows a similar temporal pattern is also present in a different cost driver.
Data provided to CEO via a production requests submitted in this docket, 4 utilizing load patterns
from six separate years and hourly loss of load probabilities for each of those hours, shows that
the timing of highest loss of load risk (summer season between 5 and 11pm) aligns well with the
highest market price hours as displayed in Figure 3.
4 CEO submitted the relevant production request before the Company’s 2023 IRP was available.
Nonetheless, the analysis CEO performed aligns very well with a similar analysis the Company
performed regarding the timing of highest risk hours. (See 2023 IRP Appendix C, page 93).
IPC-E-23-11 - CLEAN ENERGY OPPORTUNITIES FOR IDAHO - FINAL COMMENTS - 5
Figure 4
3. ANALYZE COSTS BY HOUR, NOT JUST BY MONTH
In IPC-E-23-11 the Company presented a traditional cost of service analysis performed in a
manner consistent with advice provided by NARUC in 1992. A lot has changed since 1992,
including a much finer temporal resolution on customer usage, more pronounced seasonality in
load patterns and dramatic shifts in generation technology. For example:
● Back in the 1990s consumption data was collected by monthly meter readings. One
reading per month data was the finest level of resolution that was broadly available. Now
the Company has nearly universal customer data collection via automated readings with
resolution at an hourly or finer level of detail.
● Load patterns now show much more seasonality compared to the 1990s. Now heating in
the winter and cooling and irrigation in the summer drive two distinct seasonal peaks
with loads in the spring and fall much less likely to stress system requirements (and thus
much less likely to cause a need for new capital expenditures).
● In 1992 (or even in 2011 when the Company filed its most recent general rate case
application) Company generating resources were predominantly Hydro powered or
fueled by coal or natural gas combustion. Now the Company relies on substantial
amounts of solar and wind powered generation. Back then high loads in any hour carried
a higher fuel cost associated with dispatch of lower heat rate “peaker” generation. Now
we face both higher marginal costs as well as higher loss of load risk during hours later
on that system peak summer evening when load has declined some from its peak that day
but solar production has fallen off even faster.
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The cost of service analysis employed in IPC-E-23-11 utilized a stratified sample size of twelve
observations out of the universe of 8,760 available load observations. That sampling method
chose the highest system load of the month, not the hour when the highest risk and marginal
costs present. That “one hour per month” method also does not give weight to the hours
immediately surrounding its highest load reading. Or, for that matter, hours in the days
immediately before and/or after that monthly peak where a cold or hot snap could have made
those days also have high cost to serve hours. The use of 12 monthly sample readings not only
under-weights the higher costs to serve during the multiple high cost hours in the summer and
winter months, it over-weights load served during the shoulder spring and fall periods.
We now have the ability to analyze the cost to serve in all hours of the year, rather than rely upon
a small, non-random, biased sample size using just .1% of the available data. We should utilize
the remaining 99.9% of the data set to inform future decisions.
4. SUPPLEMENT 12CP WITH AN HOURLY REVIEW OF COSTS
IN FUTURE RATE CASES
CEO believes that there shouldn’t be another rate case filed by the Company that is not informed
by a cost to serve analysis reflecting the costs to serve load in all hours of the test year.
Recognizing the principle of gradualism as it affects rate design, CEO believes the public interest
would be served by the Company including both a traditional 12CP/4CP cost to serve analysis
and an hourly (8,760) cost to serve analysis to inform the class cost to serve allocations and rate
design proposals in future rate case applications.
To help prepare for such a submittal, CEO has volunteered 5 to work, outside of this docket, with
PUC Staff, the Company and interested parties in leading productive and collaborative
workshops reviewing the issues associated with developing an hourly informed class cost of
service methodology.
/s/ Michael Heckler
____________________
Michael Heckler
Policy Director
Clean Energy Opportunities for Idaho
5 IPC-E-23-11, Stipulation and Settlement, pages 11 and 12.
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CERTIFICATE OF SERVICE
I hereby certify that on this 22nd day of November, 2023. I delivered true and correct
copies of the foregoing FINAL COMMENTS to the following persons via the method of service
noted:
Electronic Mail Delivery
Idaho Public Utilities Commission
Jan Noriyuki
Commission Secretary
[e-mail]
Idaho PUC Staff
Dayn Hardie
Chris Burdin
Deputy Attorney General
Idaho Public Utilities Commission
[e-mail]
[e-mail]
Idaho Power Company
Megan Goicoechea Allen
Lisa D. Nordstrom
Donovan E. Walker
Timothy Tatum
Connie Aschenbrenner
Matt Larkin
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
City of Boise
Ed Jewell
Darrell Early
Wil Gehl
[e-mail]
[e-mail]
[e-mail]
[e-mail]
IPC-E-23-11 - CLEAN ENERGY OPPORTUNITIES FOR IDAHO - FINAL COMMENTS - 8
Federal Executive Agencies
Peter Meier
Dwight Etheridge
[e-mail]
[e-mail]
Industrial Customers of Idaho Power
Peter J. Richardson
Dr. Don Reading
[e-mail]
[e-mail]
Idaho Conservation League
Brad Heusinkveld
Matthew Nykiel
[e-mail]
[e-mail]
IdaHydro
Tom Arkoosh
[e-mail]
[e-mail]
Idaho Irrigation Pumpers Association, Inc.
Eric L. Olsen
Lance Kaufman
[e-mail]
[e-mail]
Micron Technology, Inc.
Jim Swier
Austin Rueschhoff
Thorvald A. Nelson
Austin W. Jensen
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
IPC-E-23-11 - CLEAN ENERGY OPPORTUNITIES FOR IDAHO - FINAL COMMENTS - 9
Northwest Energy Coalition
F. Diego Rivas
Benjamin J. Otto
[e-mail]
[e-mail]
Walmart Inc.
Steve W. Chriss
Norman M. Semanko
Justina A. Caviglia
[e-mail]
[e-mail]
[e-mail]
_____________________________
Kelsey Jae
Attorney for CEO
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