20050413Comments.pdf

KIRA DALE PFISTERER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 6571
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, ID 83702-5983
Attorney for the Commission Staff
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BEFORE THEJDAHO PUBLIC UTILITIES COMMISSION
IN THE MATfER OF THE APPLICATION OF
ACIFICORP FOR APPROV AL OF A NEW,
VOL UNT ARY RENEWABLE ENERGY BULK-
PURCHASE OPTION TARIFF.
CASE NO. P AC-O5-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Kira Dale Pfisterer, Deputy Attorney General, and in response to the Notice
of Application, Notice of Modified Procedure and Notice of Comment/Protest Deadline issued in
Order No. 29731 on March 16, 2005 , submits the following comments.
BACKGROUND
On February 22 2005, PacifiCorp dba Utah Power & Light Company filed an
Application with the Commission requesting approval of a new renewable energy tariff
Schedule 73 - New Wind, Geothermal and Solar Power Rider -Bulk-Purchase Option. Under
the proposed program, PacifiCorp would offer its customers the ability to make bulk renewable
energy purchases at a reduced rate. The proposed program is designed to provide businesses
with a less expensive alternative to the standard "Blue Sky" option that is currently available.
ST AFF COMMENTS APRIL 13, 2005
The renewable energy purchases resulting from the proposed program would be in addition to
those PacifiCorp will make under the Company s Integrated Resource Plan.
The proposed program is similar to the standard "Blue Sky" option currently offered to
residential and non-residential customers as authorized by the Commission in August 2003. See
Order No. 29329; Electric Service Schedule No. 70. Under the standard Blue Sky option
customers are charged a premium of$1.95 per 100 kWh block to purchase newly developed
wind, geothermal, and solar power energy. PacifiCorp uses the revenues raised from the Blue
Sky program to operate and market the program and to purchase either bundled renewable
energy or tradable renewable credits (TRCs). TRCs, also known as green tags, green certificates
tradable renewable certificates, and renewable energy credits, are created when a renewable
energy facility generates electricity. TRCs represent the amount of renewable kilowatt/hours
sent to grid, displacing less environmentally friendly energy.
Although nearly 700 Idaho residential customers have signed up for the standard Blue
Sky program since April 2004, only 10 non-residential customers are enrolled in the program.
According to PacifiCorp, the biggest obstacle to increasing non-residential participation is the
price of the program. The proposed bulk-purchase option is an effort to present these non-
residential customers with a discount for bulk purchases of renewable energy. Nonetheless, the
proposed program would be available to both residential and non-residential customers.
Under the standard Blue Sky option, customers are charged $1 ~95 per 100-kilowatt-hour
block of renewable energy. The customers may enter or leave the standard Blue Sky program at
any time and customers may choose the number of blocks of renewable energy to purchase.
contrast to the standard Blue Sky program, the proposed bulk-purchase option requires a
minimum one-year enrollment commitment and a minimum annual purchase of 121.2 megawatt-
hours (121 200 kWh or 1 212 blocks/year or 101 blocks per month). Customers with multiple
sites within PacifiCorp s Idaho service territory would be allowed to aggregate their purchases to
meet the minimum purchase amount.
The Company estimates that the fixed cost of the program is $1 500 per year per
customer ($125 per month), plus the variable cost of$7.00 per MWh ($0.70 per 100 kWh block)
purchased. The fixed cost is designed to cover costs associated with program management
customer contract, enrollment processing, fulfillment costs, materials/tools and mailings specific
to this option. Fixed costs associated with development, advertising and public relations are not
included, which is consistent with the standard Blue Sky program. The charge of $0.70 per
ST AFF COMMENTS APRIL 13 , 2005
block is based on the cost to purchase renewable energy (e., wind power tags can be purchased
for $7/MWh). Thus, the minimum annual proposed charges for the bulk-purchase option is
348.40 ($1 500 fixed cost and $848.40 for the 1 212 MWh) or $195.70 per month (1.94 per
100 kWh block).
Currently, PacifiCorp offers this bulk-purchase option in Oregon and Utah. In addition
PacifiCorp has recently received approval to offer a bulk-purchase option in Washington and
Wyoming. System wide the Company has about 36 000 customers participating in one of its
Blue Sky options. This represents just over 2% of the Company s participant base.
AN AL YSIS
PacifiCorp first proposed the Blue Sky program on March 10, 2000 in Case No.
PAC-OO-O1. The premium proposed by the Co. in that case was $4.75 per 100 kWh block.
That application was denied by the Commission. Then on July 11 , 2003 in Case No.
P AC-03-, the Company filed an application for essentially the same program but with the
premium reduced to $1.95 per 100 kWh block. That program was approved and is the standard
Blue Sky program currently in place. The majority of the $1.95 price premium is for the fixed
cost associated with administration and marketing. Only about 38% of the premium is for the
variable cost of the renewable energy.
The Blue Sky bulk-purchase option proposed in this case would separate the fixed cost
from the variable cost of the renewable energy. The Company calculates the fixed annual cost of
the program to be $1 500 and would recover that amount from participating customers with an
annual charge. The variable cost of the renewable energy would be billed at $0.70 per 100 kWh
block per month. Participating customers would be required to purchase a minimum of 1212
blocks per year (101 per month). For customers taking the minimum required amount of energy
the effective rate would be $1.94 per 100 kWh block. This is essentially the same amount
customer pay for a 100 kWh block under the existing standard Blue Sky program. However
under the proposed bulk-purchase option, the effective rate would drop as more blocks are
purchased. For example, if a customer purchased 150 blocks per month their effective rate
would drop to $1.53 per 100 kWh block.
STAFF COMMENTS APRIL 13, 2005
RECOMMENDATION
Although the fixed costs associated with the proposed Blue Sky bulk-purchase option are
still high, Staff believes this proposal is a move in the right direction. It provides a lower cost
alternative to customers desiring large amounts of renewable energy. The cost of large quantities
of renewable energy under the proposed bulk-purchase option could be substantially less than
under the standard Blue Sky program. Furthermore this is a voluntary, self-funded program and
non-participating customers should be unaffected by it. Staff recommends approval of this
proposed tariff.
Respectfully submitted this /in,day of April 2005.
!!iP
Deputy Attorney General
Technical Staff: Dave Schunke
i :umisc:comments/paceO5 .3kdpdes
STAFF COMMENTS APRIL 13 2005
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 13TH DAY OF APRIL 2005
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-05-, BY MAILING A COpy THEREOF POSTAGE PREPAID, TO
THE FOLLOWING:
BOB LIVELY
ACIFICORP
201 S MAIN ST SUITE 2300
SALT LAKE CITY UT 84140
LISA NORDSTROM
OFFICE OF THE GENERAL COUNSEL
ACIFICORP
825 NE MUL TNOMAH SUITE 1800
PORTLAND OR 97232
DATA REQUEST RESPONSE CENTER
ACIFICORP
825 NE MUL TNOMAH SUITE 800
PORTLAND OR 97232
MAILED TO datarequestCillpacificorp.com
CERTIFICATE OF SERVICE