20071015acceptance_of_filing.pdf

Office of the Secretary
Service Date
October 15 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FILING BY
ACIFICORP DBA ROCKY MOUNTAIN
POWER OF ITS 2007 INTEGRATED
RESOURCE PLAN (lRP)ACCEPTANCE OF FILING
CASE NO. P AC-07-
On May 30, 2007, PacifiCorp dba Rocky Mountain Power filed its 2007 Integrated
Resource Plan (IRP) with the Commission pursuant to the biennial filing requirement mandated
in Order No. 22299, as modified in Order No. 30262. On August 17 2007, the Company filed
an "Errata to 2007 IRP" in order to correct errors in its original IRP filing.
On July 2, 2007, the Commission issued a Notice of Filing, Notice of Modified
Procedure and Notice of Comment Deadline and solicited comments on the IRP. Subsequently,
the Staff, along with Monsanto Company and one member of the public, filed comments within
the comment period.
THE 2007 INTEGRATED RESOURCE PLAN
Prior to submitting its IRP, PacifiCorp studied 12 separate portfolios in order to
identify a portfolio that demonstrated, through projected statistical analysis superior
performance in terms of estimated cost, customer rate impact, cost versus risk balance across five
different CO2 cost adder levels and supply reliability. See PacifiCorp 2007 IRP at 6, 139.
Ultimately, the Company settled upon a preferred portfolio that would include the acquisition of
the following energy resources:
- 2 000 MW of renewable resources by 2013
100 MW ofload controls beginning in 2010
West-side combined cycle combustion turbine ("CCCT") in 2011
- High-capacity-factor base load resources to PacifiCorp s eastern system in
2012 and 2014
Eastern system CCCTs in 2012 and 2016
Firm market purchases to meet system needs beginning in 2010
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Transmission Additions/Upgrades between 2010-2014 to support
resources
Id. at 7.
A. Forecast Load Growth
PacifiCorp estimates that customer loads will grow at an average rate of 2.
annually from 2007 to 2016. Id. at 4 (Figure 1.1). PacifiCorp s eastern system (Idaho, Utah and
Wyoming) continues to display a significantly higher rate of energy growth than its western
system, with an annual average energy growth rate of 3.2% and 0., respectively. The annual
growth for the Idaho service area over that same 10-year period is estimated to be 1.3%. Id. at 3
(Table 1.1).
The Company currently forecasts a summer peak resource deficit beginning in 2008
to 2010 depending on whether a 12% or 15% planning reserve ("PR") margin is used. Id.
2009, the Company will become energy deficient on an annual basis, based on a 12% planning
reserve margin. Id. Beginning in 2010, its system will operate at a 791 MW deficiency, again
based upon a 12% PR margin. Id. The energy resource deficit will increase to 2 400 MW by the
year 2012 and 3 000 MW by 2016. Id.
B. Modeling and Risk Analysis
1. IRP Modeling
PacifiCorp employed two distinct modeling tools during its portfolio analysis: (1)
Capacity Expansion Module (CEM); and (2) Planning and Risk (PaR) Module. Id. at 5. The two
analytical models assisted the Company in arriving at the "least-cost optimization (ofJ resource
options" and developing "risk-adjusted portfolio performance measures.Id. The Company
modeling approach consisted of "resource screening, risk analysis portfolio development and
detailed production cost and stochastic risk analysis.Id.
In order to predict the most desirable resource options, PacifiCorp used the CEM to
develop and analyze 16 separate "alternative future scenarios" involving a mixture of several
variables, including potential CO2 regulatory costs, natural gas prices . wholesale electricity
prices, retail load growth and the scope of renewable portfolio standards. Id. at 6, 139. The
Company views the preferred resource portfolio as one that manifests itself under a "reasonably
wide range of potential. future" scenarios. Id. Once those resource option portfolios were
effectively identified, the PaR Module was then used to simulate the potential risk and cost of
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each through a random sampling process of the following variables: loads, commodity natural
gas prices, wholesale power prices, hydro energy availability and thermal unit availability. Id.
2. CO2 Emissions
PacifiCorp s IRP also addressed the potential costs/effects of CO2 emIssIon
compliance. !d. at 6. According to the Company, the costs associated with CO2 emission
compliance are not normally amenable to statistical analysis. Id. Thus, rather than attempting to
ascertain a specific cost, the Company elected to treat the potential emission costs as "a scenario
risk" in its overall IRP analysis. !d. The initial risk/analysis portfolios were analyzed under five
different CO2 cost adder levels - $O/ton, $8/ton, $ 15/ton, $38/ton, and $61/ton (adjusted for
projected 2008 dollars) - in order to determine which portfolio was most prevalent across a
reasonably wide range of potential futures.Id.
C. Action Plan
Prior to the 2011-2012 period, PacifiCorp plans to address its projected resource
deficits through the procurement of additional renewable resources, demand-side programs and
market purchases. Id. at 3. The Company has made requests for proposal ("RFP") for additional
base load resources, renewable resources and demand-side resource programs benefiting the
eastern portion of its service area. Id.
Faced with the likelihood of energy deficiencies, PacifiCorp has taken recent steps
toward increasing its resource production. In June 2006, PacifiCorp converted its Currant Creek
facility from a single cycle combustion turbine to a combined cycle combustion turbine
CCCT"
).
Id. at 61. It will add another CCCT to its Lake Side facility this month. Id. These
additions will be offset by the expiration of two resource procurement contracts, a 400 MW
agreement with TransAlta Energy Marketing and a 575 MW BPA peaking contract, in June 2007
and August 2011 , respectively. !d.
The IRP professes the Company s commitment to the following additional measures
in order to meet future resource needs:
Wind Renewal:
Continue to develop renewable resources, including wind power. PacifiCorp
has acquired 346 MW of wind power toward the fulfillment of its 2004 IRP
goal of procuring 400 MW by 2007. The Company states that it will
continue to acquire additional renewable resources on its way toward
procuring a total of 1 400 MW of renewable resources by the year 2010 and
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000 MW by the year 2013. PacifiCorp has recently added two wind
projects, Leaning Juniper 1 and Marengo.
Energy Efficiencies:
Increase its commitment to so-called "energy efficiency" initiatives. The
Company will continue to run programs to acquire 250 aMW of cost-
effective energy efficiency and an additional 200 aMW if cost-effective
initiatives can be identified.
Load Control:
Expand upon its existing load control programs. PacifiCorp anticipates a
system-wide average load growth of 2.5 percent per year from 2007 through
2016 throughout its service area. Average load growth from its Idaho
customers should be around 1 percent per year. The Company anticipates
further expansion of its existing 150 MW of irrigation and air conditioning
load control program in Utah and Idaho. In 2010, a 100 MW irrigation load
control program will be added and will be split between its eastern and
western systems.
Integrated Environmental Issues:
Continue to study and address contemporary environmental issues. The
Company asserts that it will assume a leadership role in discussions with
stakeholders involving global climate change issues; and continue to
investigate the development of carbon reduction technology, specifically
clean coal, sequestration and nuclear power.
Transmission:
Address existing problems affecting transmission of resources to customers.
The Company plans an expansion of its transmission system and an upgrade
in its transmission infrastructure and flexible resources, such as natural gas
in order to meet the anticipated customer loads found in the preferred
portfolio.
Diversification:
Diversification of base load and intermediate load resources. The Company
reiterated its desire to add approximately 1 700 MW of base load resources, a
mix of thermal resources and market purchases, to its eastern system between
2012 and 2014. Further, it will seek to acquire an additional 200 to 1 300
MW of thermal and market purchase resources to benefit its western system
between 2010 and 2014.
!d. at 10, 221 , 224-27(Table 8.2).
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ACCEPTANCE OF FILING
Based upon our review, we. find it reasonable to accept and acknowledge
PacifiCorp s filed 2007 Electric Integrated Resource Plan. Our acceptance of the 2007 IRP
should not be interpreted as an endorsement of any particular element of the plan, nor does it
constitute approval of any resource acquisition contained in the plan.
DATED at Boise, Idaho this /6-rf\ day of October 2007.
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MARSHA H. SMITH, COMMISSIONER
ATTEST:
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D. Jewell
Commission Secretary
N:PAC-07-
ACCEPTANCE OF FILING