20070907final_order_no_30423.pdf

Office of the Secretary
Service Date
September 7, 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF PACIFICORP DBA
ROCKY MOUNTAIN POWER'S PETITION
TO REVISE THE PUBLISHED AVOIDED
COST RATES TO INCLUDE MONTHLY
PRICE MULTIPLIERS TO DIFFERENTIATE
FOR ENERGY DELIVERED DURING
HEAVY LOAD HOURS AND LIGHT LOAD
HOURS
CASE NO. PAC-07-
ORDER NO. 30423
On June 18, 2007, PacifiCorp dba Rocky Mountain Power (PacifiCorp; Company)
filed a Petition with the Idaho Public Utilities Commission (Commission) requesting authority to
revise its published avoided cost rates for qualifying facilities (QFs) under Sections 201 and 210
of the Public Utility Regulatory Policies Act of 1978 (PURP A) to include monthly price
multipliers to recognize the monthly difference in value between energy delivered by QFs during
heavy load hours (HLH) and energy delivered during light load hours (LLH). As reflected in the
Company s Petition, this revision would not change the computation of avoided cost but could
change the total revenues received by QFs depending on which month and when during the day
they deliver energy. The Commission in this Order grants PacifiCorp s Petition and approves
monthly price multipliers for avoided cost rates.
PacifiCorp notes that Idaho Power Company in Case No. IPC-07-04 requested that
its published avoided cost rates be adjusted to include a daily load shape. Idaho Power already
has in place recognition of its seasonal load. 1 PacifiCorp notes further that Avista Corporation
requested, and the Commission approved, a similar daily shape adjustment in Case No. A VU-
06-04 (Order No. 30111).
As reflected in PacifiCorp s Petition, at the present time, the Company pays the same
price to a QF that delivers energy entirely during light load hours as it pays to a QF that delivers
entirely during heavy load hours. Likewise, the Company pays the same price to a QF that
delivers entirely in a peak load month as it pays to a QF that delivers entirely in a non-peak load
month. PacifiCorp believes that the existing payment structure is inappropriate, as it does not
On September 7, 2007, the Commission issued Order No. 30415 approving a daily load shape adjustment for Idaho
Power.
ORDER NO. 30423
provide proper incentives to QFs, and is neither fair to customers nor to the QF because it could
result in either under- or over-payments for the value ofthe power.
The Company s proposed heavy load hour and light load hour monthly price
multipliers are reflected below.
Month Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
HLH 103%105%95%95%92%94%121%121%109%115%110%129%
LLH 94%97%80%76%63%65%92%106%99%105%96%120%
Note: These monthly price multipliers are derived from:
(1) 48 months of historical daily Dow Jones firm market data for the COB
Four Comers, Mid-Columbia and Palo Verde wholesale market hubs.
The 48 months reflected in this analysis is from April 1 , 2003 through to
and including March 31 2007; and
(2) 48 months of system-balancing data extracted from two GRID scenarios;
a Base Case and an Avoided Cost Case. The 48 months reflected in these
studies is from January 1 2007 through to and including December 31
2010.
These multipliers are subject to change if different 48-month periods are selected.
On June 27, 2007, the Commission issued Notices of Petition and Modified
Procedure in Case No. PAC-07-13. The deadline for filing written comments was July 27
2007. Commission Staff was the only party to file comments. Staff recommends approval of
PacifiCorp s Petition.
Like the other two utilities, Avista in Commission Order No. 30111 issued in Case
No. A VU-06-04 and Idaho Power in Case No. IPC-07-, Staff states that PacifiCorp is
seeking to implement a series of monthly price multipliers that will recognize seasonal
differences in energy value as well as daily differences between heavy and light load hours.
Staff notes that PacifiCorp s proposal differs slightly from that of the other two
utilities in two respects. First, rather than breaking the year into two or three seasons, PacifiCorp
is proposing a different price multiplier for each month. Second, rather than a fixed difference
between heavy and light load hour rates, the Company proposes monthly differences. Thus
there are two different price multipliers for each month - one for heavy load hours and one for
light load hours, or a total of 24 different price multipliers throughout the year. The price
ORDER NO. 30423
multipliers have been derived from an analysis of historical price differences at four trading hubs
where PacifiCorp frequently transacts business.
The price multipliers proposed by PacifiCorp, Staff observes, range from a low of
63% during light load hours in May to a high of 121% during heavy load hours in July.
average over the course of the year, the difference in heavy and light load hour prices is $7.18.
This compares closely to Staffs proposed daily shape adjustment for Idaho Power of $7.28, and
is not too different from the $5.00 per megawatt hour daily shape adjustment approved for
A vista. Staff notes several possible disadvantages to the price multipliers proposed by
PacifiCorp. First, the price multipliers could introduce greater uncertainty in the monthly
payments QFs would receive because some, particularly wind generators, have no way of
accurately knowing how many kilowatt hours their projects will produce either on a monthly
basis or in on-peak vs. off-peak hours. Another disadvantage is the need for hourly metering
capability at all future projects. Finally, the adoption of a series of 24 price multipliers
introduces additional complexity into an already fairly complex system of avoided cost rates.
Despite these possible disadvantages, however, Staff is supportive of the concept of
seasonal and daily price multipliers because, although only approximate, they create rates that
more closely match avoided cost rates to the true value of power at the time of delivery.
Commission Findings
The Commission has reviewed and considered the filings of record in Case No. PAC-
07-, including comments and recommendations of Commission Staff.We have also
reviewed our Order No. 30111 in Case No. A VU-06-04 and Order No. 30415 in Case No.
IPC-07-04 wherein we approved daily shape adjustments for Avista Corporation and Idaho
Power. Based on our review, we continue to find it reasonable to process this case and the issues
presented pursuant to Modified Procedure, i.e., by written submission rather than by hearing.
IDAPA 31.01.01.204.
PacifiCorp in this case is seeking to implement a series of monthly price multipliers
that will recognize seasonal differences in energy value as well as daily differences between
heavy and light load hours. The Company has never had either seasonal or daily adjustments in
its avoided costs rates before in Idaho.
PacifiCorp proposes using a different price multiplier for each month of the year.
Rather than a fixed difference between heavy and light load hour rates, the Company proposes
ORDER NO. 30423
monthly differences. What results is a series of 24 price multipliers. While this introduces
additional complexity, we are persuaded that the end result is a rate that more closely matches
the true value of power at the time of delivery and better serves the public interest.
CONCLUSIONS OF LAW
The Commission has jurisdiction over PacifiCorp dba Rocky Mountain Power, an
electric utility, and the issues presented in Case No. PAC-07-13 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, IT IS HEREBY ORDERED and the Commission
does hereby approve the monthly price multipliers for published avoided cost rates proposed by
PacifiCorp dba Rocky Mountain Power.
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 recon~ideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30423
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this Ht.
day of September 2007.
DER, PRESIDENT
~~
4J AR HA H. SMI H, COMMISSIONER
ATTEST:
~8eil
Commission Secretary
bls!N:PAC-07-13 sw
ORDER NO. 30423