HomeMy WebLinkAbout20080220final_order_no_30497.pdfOffice of the Secretary
Service Date
February 20, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
ROCKY MOUNTAIN POWER FOR AN ORDER REVISING CERTAIN
OBLIGATIONS TO ENTER INTO
CONTRACTS TO PURCHASE ENERGY
GENERATED BY WIND-POWERED SMALL
POWER GENERATION QUALIFYING FACILITIES
CASE NO. P AC-07-
ORDER NO. 30497
The Idaho Public Utilities Commission (Commission) has authority under Sections
201 and 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) and the
implementing regulations of the Federal Energy Regulatory Commission (FERC) to set avoided
costs, to order electric utilities to enter into fixed-term obligations for the purchase of energy
from qualifying facilities (QFs) and to implement FERC rules.
In early 2007 PacifiCorp dba Rocky Mountain Power (PacifiCorp; Company), Idaho
Power Company (Idaho Power), and Avista Corporation dba Avista Utilities (Avista) filed
petitions and wind integration studies recommending utility-specific wind integration
adjustments to the published avoided-cost rates. Case Nos. PAC-07-07 (4-23-07); IPC-07-
03 (2-07); and A VU-07-02 (4-07). The Commission in this Order addresses PacifiCorp
Petition and approves a comprehensive Settlement Stipulation of the issues presented. We
increase the published rate eligibility cap for intermittent QF wind projects from 100 kW to 10
aMW /month, establish a wind integration adjustment to published avoided-cost rates, and
eliminate the 90%1110% performance band for wind QFs that agree to provide a Mechanical
Availability Guarantee and share in the cost of wind forecasting services.
Background
On June 17, 2005 , in Case No. IPC-05-, Idaho Power requested a temporary
suspension of its purchase obligations for wind generation. PacifiCorp intervened and requested
similar treatment. On August 4, 2005, the Commission issued Order No. 29839 finding good
cause to conduct further proceedings to determine the appropriate amount of adjustment, if any,
to integrate wind generation resources. The Commission declined to suspend the Company
purchase obligation. The Commission instead reduced the published rate eligibility cap for
ORDER NO. 30497
intermittent QF wind projects from 10 aMW/month to 100 kW and required individual contract
negotiations for wind QFs larger than 100 kW. This action was taken to investigate system
reliability and avoided-cost issues regarding intermittent resources. In reducing the cap for
published rates for wind projects offering power on a non-firmed basis, the Commission found
that it had continuing authority to review PURP A rates in order to protect the public interest. 18
R. 99 292.304(a)(l)(i), (c)(l), (c)(3)(ii); Order No. 29839 p. 9. It was further established
that no utility is required to pay more than its avoided cost for QF purchases. PURP A 9 21 O(b).
In the IPC-05-22 case, Idaho Power advised the Commission that it intended to
perform a study to quantify the additional costs it would incur directly related to purchasing a
significant amount of wind generation (the Wind Integration Study; the Study). Idaho Power
further advised the Commission that upon completion of the Study, Idaho Power would provide
it to the Commission for its consideration. Pursuant to Commission direction, Idaho Power in
conjunction with PacifiCorp and Avista and in consultation with the other parties, scheduled and
held four workshops (August 29, September 20, October 10, and November 18, 2005) and a
settlement meeting (January 12, 2006). The parties were unsuccessful in reaching mutual
agreement on interim settlement issues. No additional meetings were scheduled until completion
of Idaho Power s wind integration study. See Phase II Workshop Final Report, January 31
2006. See also September 6 2005 and November 7 2005 Status Reports.
On April 23, 2007, PacifiCorp in Case No. PAC-07-07 filed a Petition with the
Commission proposing a wind integration adjustment of $5.04/MWh to be applied as a
decrement to the published avoided-cost rates payable to non-firm wind QFs to compensate for
the increase in system costs due to wind variability.l The $5.04 per MWh represents the wind
integration cost included in the Company s 2004 Integrated Resource Plan (the 2004 IRP)
adjusted for inflation.2 The Company s proposal included the following additional elements and
conditions: elimination of 90%/110% performance band; sharing of costs for wind forecasting
1 On February 6, 2007, Idaho Power filed a Petition in Case No. IPC-07-03 proposing a wind integration
adjustment of $10.72 per MWh. In a Report Addendum filed with the Commission on October 31 2007, Idaho
Power presented an updated wind integration cost of $7.92/MWh. On April 2, 2007, Avista Corporation (Avista)
filed a similar Petition in Case No. A VU-07-02 proposing a wind integration adjustment to published avoided-
cost rates of 12%; and for QFs agreeing to deliver output on a fum hourly schedule, a percentage reduction of 6%.
2 PacifiCorp s 2004 IRP has now been superseded by its Commission-acknowledged 2007 IRP and a $5.10/MWh
estimated wind integration cost. Case No. PAC-07-, Acceptance of Filing (October 15, 2007).
ORDER NO. 30497
servIces; establishment of a "Mechanical Availability Guarantee" demonstrating physical
capability and availability of wind QFs to generate at full output during 85% of the hours in a
month, except for scheduled maintenance and events of force maj eure; and contingent on
acceptance of the foregoing, an increase in the published rate eligibility cap for intermittent QF
wind projects from 100 kW to 10 aMW/month.
On October 4, 2007, PacifiCorp and Renewable Northwest Project and NW Energy
Coalition (Renewable Coalition) filed a Joint Motion to Approve Settlement Stipulation. IDAP A
31.01.01.271-276. The Settlement (as amended) is a proposed resolution of the issues presented
in this case and is now signed and/or is supported by all parties except Exergy Development
Group of Idaho LLC (Exergy). The Settlement Stipulation provides for a wind integration
adjustment equivalent to the calculated cost of wind integration on a per MWh basis provided in
the Company s most recent Commission-acknowledged 2007 Integrated Resource Plan (IRP) -
, $5.10/MWh (Case No. PAC-07-11).
Parties of Record
The following parties requested and were granted intervenor status: Intermountain
Wind LLC; Exergy Development Group ofldaho LLC; Renewable NW Project and NW Energy
Coalition; Idaho Windfarms LLC; A vista Corporation; and INL Biofuels and Renewable Energy
Technologies.
Wind Integration Adjustment - Initial Filing and Petition
PacifiCorp s initial filing recommendation was that published avoided cost-rates for
purchases of wind generation by the Company be reduced by $5.04 per MWh, which amount is
derived from its 2004 IRP and represents the integration costs of that wind power. PacifiCorp
concludes that avoided-cost rates paid to wind-powered QF resources do not reflect the actual
costs the Company could avoid by the purchases and must be reduced to be in compliance with
PURPA. 18 C.R. 9 292.304(a)(2). Excluded from the Company s proposal are QF wind
developers who agree to deliver QF output to PacifiCorp on a firm hourly schedule. Attached as
Exhibit A to the Company s Petition is an excerpt from the "PacifiCorp - 2004 IRP Appendix J
- Renewable Generation Assumptions" in which PacifiCorp provides a description of the
methodology used and the results derived from PacifiCorp s analysis ofthe wind integration cost
issue as part of the 2004 IRP process.
ORDER NO. 30497
Based on its wind integration analysis, PacifiCorp requests a change in the
Company s PURPA obligations for wind QFs.PacifiCorp proposes increasing the cap on
entitlement to published avoided-cost rates for wind QFs from the current level of 100 kW to 10
aMW/month, subject to the following provisions.
Elimination of the 90%/110% Performance Band Requirement
PacifiCorp believes there is benefit to a level of consistency in the structure of
PURP A QF tariffs among Idaho s electric utilities. Consistent with the proposals of Idaho
Power in Case No. IPC-07-03 and Avista in Case No. A VU-07-, PacifiCorp recommends
that the 90%1110% performance band be eliminated in energy purchase contracts involving
intermittent wind QFs, provided QFs agree to the following three conditions.
1. Wind QFs Agree to Fund Their Share of Wind Forecasting Services
PacifiCorp supports the concept that wind QFs should participate in funding wind
forecasting services, as a condition of not being bound by the 90%1110% performance band
requirement. Wind forecasting services, the Company notes, are specific to any given wind farm
and therefore may not be able to be shared with other wind farms within the same geographic
area. To the extent that PacifiCorp is able to use the same wind data, the Company would
propose to share such expense on a pro rata basis with QFs that are selling their power to
PacifiCorp under long-term contracts. QFs would pay a portion of the wind forecasting expenses
proportional to their percentage share of the wind-generator capability being supplied to
PacifiCorp from that geographic region.
2. Wind QFs Agree to Provide a Mechanical Availability Guarantee
In lieu of a performance band requirement, PacifiCorp supports the concept of
establishing a Mechanical Availability Guarantee by the QF. Wind QFs would be required to
demonstrate each month that except for scheduled maintenance and events of force majeure or
uncontrollable force, the wind project is physically capable of generating at full output during
85% of the hours in the month. This guarantee would encourage wind developers to ensure that
the maintenance is performed on the wind turbines and that they maintain the readiness of their
equipment throughout the full duration of the long-term contract. PacifiCorp has successfully
implemented a Mechanical Availability Guarantee in power purchase agreements with other
wind-powered QFs and continues to support this method.
ORDER NO. 30497
3. Intermittent Wind QFs Agree to a Wind Integration Adjustment to Published Avoided-
Cost Rates
PacifiCorp believes that its proposed discount captures, as best as can be determined
presently, the cost of integrating wind generation into the Company s system and, therefore to
some degree, takes into account the inherent difficulty of accurately forecasting the availability
of wind. The establishment of the discount, it contends, will in large measure account for the
variability of wind, and thereby diminish the need for a performance band for wind.
Settlement Stipulation (October 4, 2007, as amended)
Following the filing of the Company s Petition, a series of public and settlement
workshops were held. Efforts to obtain a common generic wind integration adjustment and
comprehensive settlement in Case Nos. PAC-07-, IPC-07-, and AVU-07-02 were
unsuccessful. Apprised of the impasse, the Commission on August 22, 2007 issued a Notice of
Modified Procedure and established September 21 and October 5, 2007 comment and reply
deadlines to bring the matter to closure. In a Motion to Vacate Comment Deadlines filed on
September 14, 2007, the Commission was notified that Renewable Northwest Project/NW
Energy Coalition had reached a settlement agreement in principle with two of the three utilities
and believed that an agreement in principle could be achieved with the third utility. Additional
time was requested to complete settlement discussions, to solicit support from other parties and
to prepare settlement documents. On September 19 , 2007, the Commission issued a further
scheduling Order establishing deadlines for presentation of settlement documents and the filing
of comments. Settlement Stipulations were filed in the three wind integration dockets.
The Commission then scheduled a consolidated prehearing conference of the parties
in PacifiCorp Case No. PAC-07-, Idaho Power Case No. IPC-07-, and Avista Case No.
A VU-07-02 for December 11 2007. The purpose of the prehearing conference was to identify
what issues remained, to determine at what point (if any) consensus existed, and to determine the
scope and timeline of further proceedings. The following parties appeared by and through their
respective representatives and counsel: PacifiCorp - Jordan White, Esq.; Idaho Power - Barton
L. Kline, Esq.; Avista Corporation - Michael G. Andrea, Esq.; Commission Staff - Scott D.
Woodbury, Esq.; Exergy - Peter J. Richardson, Esq.; Renewable Northwest Project & NW
Energy Coalition - William M. Eddie, Esq.; Ridgeline Energy - Rich Rayhill; Idaho Windfarms
ORDER NO. 30497
- Glenn Ikemoto; Cassia Gulch Wind Park & Cassia Wind Farms & Intermountain Wind - Dean
1. Miller, Esq.; Gerald Fleischman; Renaissance Engineering & Design - Brian D. Jackson; and
Blue Ribbon Energy - M. J. Humphries.
At the commencement of proceedings on December 2007, clarification was
sought from the Commission that the Settlement Stipulation was still being considered. The
Commission was informed that, with the exception of Exergy, all parties of record in the
multiple dockets recommended that the Commission approve the Settlement Stipulations. The
following terms of Stipulation in Case No. PAC-07-07 were proposed as a fair, just and
reasonable compromise of the issues raised:
Settlement Stipulation ~ 3
(a) (PacifiCorp sJ published avoided-cost rates for Wind QFs will be
adjusted to recognize an assumed cost of integrating the energy generated
by Wind QFs as a part of the Company s generating resource portfolio.
The integration charge will be equivalent to the calculated cost of wind
integration on a per MWh provided in the Company s most recent
Commission-acknowledged Integrated Resource Plan (IRP) . the
estimated cost of wind integration in the 2007 IRP . . . is $5.1 O/MWh.
(PacifiCorp J shall hereafter file notice with the Commission of any
changes to its wind integration charge as reflected in subsequent changes
to its IRP. The integration charge will remain fixed throughout the term
of the contract and will be applied as a decrement to the applicable
published rate.
The term "applicable published rate" means the applicable avoided-cost
rate approved by the IPUC and updated periodically for purchases of
power from QFs producing less than 10 aMW, for the relevant contract
year and time period of energy generation.
(b) The 90%/110% performance band approved by the Commission in Order
No. 29632 will be eliminated from the template Firm Energy Sales
Agreement for future Wind QFs. The 90%1110% performance band will
be replaced in future FESAs by the integration charge described in
paragraph 3(a) above, a mechanical availability guarantee (MAG) as
described in (PacifiCorp sJ Petition in this case and a wind forecasting
charge as described in paragraph 3(e) below.
(c) (PacifiCorp J will review its expected cost of wind integration in light of
the best available scientific data and actual operating experience.
Expected wind integration cost information will be included in the
Company s integrated resource planning (IRP) process in the same way
that costs for other generating resources are included in the IRP.
ORDER NO. 30497
(d) (PacifiCorpJ currently provides public input meetings for its IRP
assumptions. Idaho wind developers will be notified as part of the public
meeting process and can contribute their input at those meetings to
discuss PacifiCorp s wind integration study and new data related to wind
integration costs prior to the publishing of the Company s next (2009)
IRP.
(e) (PacifiCorpJ will have the option to include the specific wind QF in its
existing contract with a qualified wind energy production forecasting
vendor. The cost of adding the QF project to this forecasting service will
be attributed to the individual Wind QF and will be shared equally
between (PacifiCorpJ and the Wind QF, with an annual cap on the Wind
QFs maximum liability for such costs set at 0.1 % of the total energy
payments (PacifiCorp J made to the Wind QF under the applicable FESA
during the previous Contract Year. During the first Contract Year, the cap
will be set at 0.1 % of the Wind QFs estimated total energy payments
based on the Wind QFs original estimate of energy production in their
FESA. (PacifiCorpJ will deduct the Wind QFs calculated share during
the first eleven months of each year and subsequently refund any
overpayment (payments that exceed the cap) in the December invoice. It
is (PacifiCorp sJ intent that the wind energy-forecasting program be
practical and cost effective.
As reflected in the Joint Motion, QFs with existing Firm Energy Sales Agreements
with PacifiCorp that include the 90/110 performance band can elect to amend their contracts to
conform with Settlement terms.
Exergy
In an October 19, 2007, filing with the Commission, Exergy recommended that the
Joint Motion to Approve Settlement Stipulation be denied. Exergy contends that the proposed
settlement is not supported by an adequate record and is contrary to the public interest. Exergy
contends that the Commission is being asked to proceed in the face of "widely" varying
integration costs that are based on a study with "minimal documentation" and using
assumptions for numerous variables" with "imprecision and uncertainty." To do so , Exergy
states, would result in a wind integration adjustment that is, by definition, arbitrary.
Joint Reply
The Renewable Coalition and PacifiCorp dispute Exergy s contention that a wind
integration adjustment must be set at zero until the utility can demonstrate actual integration
costs based on actual wind generation on the Company s system. The parties to the Settlement
submit that the wind integration costs reflected in the Stipulation are within the range of
ORDER NO. 30497
reasonable estimated wind integration costs based on current conditions and information. Joint
Reply p. 3.
Commission Staff
On October 5, 2007, in comments filed in support of the Settlement Stipulation, Staff
recommends that the wind integration adjustment and other Settlement terms be approved. Staff
contends the proposed adjustment represents a reasonable approximation of the wind integration
costs over the 20-year term of new PURP A contracts.Under the terms of the PacifiCorp
Stipulation the amount of the integration charge is fixed and will not increase with increases in
avoided-cost rates nor will it change with the amount of wind online. Staff expects that over
time integration costs should decrease as markets mature, geographic diversity improves
technology advances, and experience is gained in operation and forecasting. Yet it is also
generally believed that as penetration levels increase, integration costs will increase. Whether
the factors causing integration costs to increase completely offset the factors causing integration
costs to decrease remains to be seen. Periodic reviews as provided for in the Stipulation, Staff
contends, will provide opportunities to revise the wind integration adjustment if downward and
upward pressures on wind integration costs get out of balance.
Staff notes that PacifiCorp performed its own wind integration study using its own
staff as part of its Integrated Resource Plan (IRP) process. The Company has never prepared a
report presenting the details and results of its study. Instead, a description of the study and
results is attached as an appendix to its IRP. PacifiCorp s IRP study preceded Idaho Power
and Avista , Staff states, and may lack some of the sophistication of the latest studies and may
not fully account for all components of wind integration costs.With such minimal
documentation, Staff believes it is difficult to judge its accuracy or to contrast its results with the
studies of Idaho Power or A vista.
It is reasonable, Staff contends, to expect wind integration costs to differ from one
electrical system to the next, just as electric rates differ between systems. Direct comparisons
between integration costs for various utilities are often invalid, Staff contends, unless they
recognize differences in generation fleets, resources available to integrate wind, the size and
resources in the utility s control area, the structure of the real-time market, and most importantly,
the difference in value of generation that is moved from on-peak to off-peak times, both on a
daily and a seasonal basis to integrate wind. ... The costs of wind integration, Staff states, are
ORDER NO. 30497
driven by not so much the costs of the dispatchable resource used for integration, but are instead
driven more by the difference in cost between the dispatchable resource and the market price at
the time integration takes place. On a hydro-based system, wind integration, Staff contends, is
primarily achieved by moving extremely low-cost hydro-generation from hours when it is most
valuable to hours when it is least valuable. In a thermal-based system where gas is primarily
used for integration, there is much less "opportunity cost" in shifting gas-fired generation from
high value hours to low value hours.
The wind studies performed by PacifiCorp, Idaho Power and Avista, Staff contends
each relied on the best available analysis tools and expertise. While not directly comparable
other studies, Staff contends, do demonstrate that wind integration costs can be lower in systems
where there is greater geographic diversity, larger control areas, greater amounts of dispatchable
thermal generation, and shorter real-time markets. The other studies can also serve to provide
indications that integration costs could become less in Idaho if conditions change in the future.
Staff believes that the larger service territory of PacifiCorp, which reduces the
limitations on available resources, justifies a somewhat smaller integration cost adjustment than
Idaho Power or A vista.Staff further believes it is reasonable to fix the wind integration
adjustment as proposed by PacifiCorp rather than escalate the rate at increasing wind penetration
levels, given that the proposed PacifiCorp rate adjustment already assumes a 20% wind
penetration level. Staff supports the rationale that both parties benefit from forecasting and
therefore should share the costs. Staff also supports the terms of the Settlement Stipulation that
give PacifiCorp sole discretion for determining whether forecasting is necessary or desirable.
Commission Findings
The Commission has reviewed and considered the filings of record in Case No. PAC-
07-07 including PacifiCorp s initial filing in this docket, the Joint Motion for Approval of
Settlement Stipulation (as amended), the supporting comments of Commission Staff, the
opposition filing of Exergy, and the joint reply filing ofPacifiCorp and the Renewable Coalition.
We have reviewed public comments supportive of wind power and critical of utility and
regulatory policies that the commenters contend have stymied the development of wind farms in
Idaho. We have reviewed the transcript of the December 11 , 2007, Joint Prehearing Conference
in Case Nos. PAC-07-, IPC-07-, and AVU-07-02. We have also reviewed our
Orders in Case No. IPC-05-22 and the workshop reports filed in that docket, our mechanical
ORDER NO. 30497
availability guarantee Order in Case No. PAC-05-(Schwendiman), our 90%/110%
performance band Orders in Case Nos. IPC-04-8/04-, and the Company s 2007 Integrated
Resource Plan (and included Appendix Wind Resource Methodology) in Case No. PAC-07-
11.
In this case the Commission is presented with a comprehensive Settlement
Stipulation and terms of agreement that include a wind integration adjustment to published
avoided-cost rates. The parties to the Stipulation believe that the integration charge will provide
long-term stability for QF development and will provide flexibility to protect customers from
published rates that are too high. The Exergy Development Group is the only party to this case
that opposes the Stipulation.At the consolidated prehearing conference in this matter the
Commission inquired of Exergy as to the nature of the case it would intend to introduce if
granted a hearing. Based on Exergy s representations, we are satisfied that the principal
arguments that it would advance have already been addressed in its written filings of record. Tr.
p. 22. We consider and find this case to be fully submitted and find it reasonable to process this
matter without further hearing or notice. IDAP A 31.01.01.204.
Exergy contends that the Commission is legally prevented from determining a wind
integration adjustment to published avoided-cost rates based on models, forecasts, projections
and assumptions. Exergy contends that wind integration costs must be based on "actual" wind
penetration on the Company s system. We find Exergy s argument to be unsound and evidence
of a misunderstanding of both "avoided cost" as defined in 18 C.R. 99 292.101(b)(6) and
292.304 and this Commission s authority and jurisdiction under PURPA and the implementing
regulations of the Federal Energy Regulatory Commission. In establishing avoided-cost rates
this Commission acts pursuant to federal, not state law. Avoided costs are the incremental costs
to an electric utility of electric energy, capacity, or both, which absent purchase from a QF, the
utility would generate itself or purchase. 18 c.F.R. 9292.101(b)(6). FERC does not prescribe a
specific methodology for the calculation of avoided costs. The QF rates we establish for long-
term firm contracts are forecast values and estimates and it has long been understood that the
avoided-cost concept is not violated by use of such estimates. 18 C.R. 9 292.304(b )(5).
The Commission also finds umeasonable Exergy s contention that utility contracts
with wind generators cannot, in advance of the projects coming online, be factored into the
Company s calculations of wind penetration on its system. To adopt such a position presupposes
ORDER NO. 30497
that a contractual obligation of a wind developer to bring a project online by a certain date is
without consequence and results in no reciprocal obligations on the part of the utility or duty to
plan for the delivery of the power.
A review ofthe filings in IPC-05-, IPC-07-, and this docket reveals that the
process of workshops and dialogue has resulted in constructive benefits to PacifiCorp and all
parties. The Commission finds that the costs of wind integration are real, not illusory. A wind
integration adjustment recognizes that variable wind generation presents operational integration
costs to a utility that are different from other PURP A-qualified resources. PacifiCorp s study
approach is different from that of Idaho Power and Avista. While PacifiCorp provides only a
summary of its analyses, we consider the reasonableness of the Company s study and wind
integration adjustment in the context of the wind studies presented in the Idaho Power and
A vista dockets and the comments presented in this case. Additionally, we note that the wind
integration studies of PacifiCorp, Idaho Power and Avista are not the only studies occurring in
the Northwest. As reported in PacifiCorp s 2007 IRP , in March 2007, Northwest Power and
Conservation Council released the Northwest Wind Integration Action Plan.
...
The report lists
the key findings of studies of northwest utilities to quantify the full cost of integrating wind
energy into existing systems. All of the studies (PacifiCorp, Avista, Idaho Power, Puget Sound
Energy and Bonneville Power) find that the cost of integrating wind starts low as the variability
of small quantities of wind generation is lost in the volatility ofthe system load and grows as the
amount of wind resources increases. Collectively the studies list the size of the control area in
relation to the amount of wind, the geographic diversity of the wind locations, the amount of
flexibility of the receiving utility, and the access to robust markets as key factors affecting the
cost of integrating wind energy.
We have reviewed the Company s 2007 IRP - Appendix J - Wind Resource
Methodology and estimated $5.10/MWh wind integration cost. PacifiCorp believes that the
$5.10/MWh integration charge is within a reasonable range of estimates of the Company s costs
of integrating wind resources. The wind adjustment proposed in the Settlement is a result
compromise and negotiation. Settlement ~ 3(a). As reflected in the Joint Motion to Approve the
Settlement, the proposed wind integration cost represents the average cost of wind integration for
the Company s full IRP portfolio of wind generation. PacifiCorp presently integrates 400 MW
of installed wind capacity to its system, and has entered final agreements to integrate an
ORDER NO. 30497
additional 530 MW. In addition, the Company anticipates acquiring another 400 MW of wind
generation during calendar 2008-2009 through asset ownership or power purchase agreements.
Joint Motion, p. 6. As reflected in the Company s 2007 IRP, Appendix PacifiCorp s estimated
of wind integration costs are among the lowest of estimated costs in the region. Only Bonneville
Power ranked lower. PacifiCorp attributes its low integration cost to be the likely result of the
Company s opportunity to maximize the use of each of the key factors affecting the cost of
integrating wind energy. We find the use of the adjustment as a decrement to the published
avoided-cost rate for wind QFs results in net rates that represent the full avoided cost of wind
generation; rates that are fair, just and reasonable. 18 c.F.R. 99 292.101(b )(7); 292.304(a).
The Commission finds the Settlement Stipulation presented in this case and all of its
components to be fair, just and reasonable and in the public interest. In our u.S.
Geothermal/Lewandowski Orders in Case Nos. IPC-04-8/04-, the Commission stated its
belief that a legally enforceable obligation translates into reciprocal contractual obligations for
both parties; a quid pro quo. It is not just a lock-in of avoided-cost rates, but is also an obligation
to deliver. Asked to make a decision regarding eligibility between firm and non-firm resources
we defined firmness as "predictability on a monthly basis.In establishing a 90%/110%
performance band requirement, a majority of the Commission defined the minimum degree of
predictability required for published rate eligibility. The Commission found the performance
requirement to be necessary to assure that the Company s customers received the generation
product that they were paying for. In our later Schwendiman Order in Case No. PAC-05-
we found that the mechanical availability guarantee did not alone provide a reasonable or
equivalent substitute for the 90%/110% performance band, and was not in itself sufficient to
protect ratepayers from overpaying. The wind forecasting and mechanical availability guarantee
in conjunction with other provisions of the Settlement in this case, we find, make elimination of
the 90%/110% performance band reasonable. We accept that the Stipulation is based on best
available data and analysis and expect that as experience and data increases, the ability to
calculate wind integration costs will improve. Our acceptance of the Stipulation is contingent on
a continuing and close monitoring of integration costs by PacifiCorp.
PacifiCorp agrees to continue to review its wind integration study and update its
study to include the results of available scientific data and actual operating experience. The
Company is continuing to explore methodologies to confirm and quantify wind variability with
ORDER NO. 30497
respect to the need for operating reserves. In particular, sub-hourly data is being captured to test
the impact of deviations within the hour. The Company proposes including a wind integration
review in the Company s biennial Integrated Resource Plan. This Commission has continuing
oversight and we expect PacifiCorp to provide wind integration analysis and results to the
Commission separate from its biennial IRP filing. We expect the Company in conjunction with
its IRP planning process to address wind integration as a discrete part of its plan and to extend
participation to Commission Staff and the parties of record in Case No. P AC- E-07 -07. Regional
wind integration efforts, improvements in wind forecasting, regulatory changes and actual
hands-on" experience will all have an impact on the cost of integrating wind energy. The
Commission is interested in the day-to-day mechanics of how wind is integrated into the
Company s system; the day-to-day impact on scheduling; and the ramifications of the Area
Control Error (ACE) Diversity Interchange sharing on integration costs. We expect annual
review by the Company and proposed adjustments (up or down) when warranted. We expect the
additional data provided will be very important to our continued support of a wind integration
adjustment. As with variables in the underlying avoided-cost methodology, parties can petition
the Commission at any time to open a docket to review and update wind integration costs if
those costs are believed to be outdated or inaccurate.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over PacifiCorp dba Rocky
Mountain Power, Idaho Power Company, and Avista Corporation dba Avista Utilities, electric
utilities, pursuant to the authority and power granted it under Title 61 of the Idaho Code and the
Public Utility Regulatory Policies Act of 1978 (PURP A).
The Commission has authority under PURP A and the implementing regulations of
the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric
utilities to enter into fixed term obligations for the purchase of energy from qualified facilities
(QFs) and to implement FERC rules.
ORDER
In consideration of the foregoing and as more particularly described and qualified
above, IT IS HEREBY ORDERED and the Commission does hereby approve the Settlement
Stipulation filed in Case No. PAC-07-07.
ORDER NO. 30497
IT IS FURTHER ORDERED and the Commission hereby authorizes PacifiCorp to
enter into new contracts with wind QFs utilizing the charges, terms and conditions contained in
the Settlement Stipulation. The resultant adjusted rates for QF wind projects are attached to this
Order. The rates are derived from the avoided-cost rates included in Order No. 30480. These
rates include the application of heavy and light load hour differentials , seasonalization factors
and wind integration adjustments. Rates are shown for 2008 online dates only. For later online
dates, contact the Commission Staff or the utility. The wind integration adjustments approved in
this Order shall also be applied to future avoided-cost rates as they may be changed due to
changes in gas prices or other input data variables.
We will also permit wind QFs with existing Firm Energy Sales Agreements with
PacifiCorp to amend their contracts to replace the 90%/110% performance band with
Mechanical Availability Guarantee should they also agree to fund their share of wind forecasting
services and accept a wind integration adjustment. Amendments must be signed by the QF and
utility and submitted for Commission review and approval.
published rate in existing contracts will be authorized.
No change to the underlying
IT IS FURTHER ORDERED and the Commission hereby increases the published
rate eligibility cap for intermittent QF wind projects from 100 kW to 10 aMW /month.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
ORDER NO. 30497
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho thisd-D
day of February 2008.
RSHA H. SMITH, COMMISSIONER
ATTEST:
~a V;wz.-- ~A2I
ar ara Barrows
Assistant Commission Secretary
bls/O:PAC-O7-07 sw3
ORDER NO. 30497
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