20091030Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 1895
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2009 OCT 30 AM 10: 05
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LITIUl'lES
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
PACIFICORP DBA ROCKY MOUNTAIN
POWER FOR AN ORDER REVISING THE
WIND INTEGRATION RATE FOR WIND-
POWERED SMALL POWER GENERATION
QUALIFYING FACILITIES
)
) CASE NO. P AC-E-09-07
)
)
) COMMENTS OF THE
) COMMISSION STAFF
)
)
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of
Petition, Notice of Modified Procedure and Notice ofComment/rotest Deadline issued on
September 23, 2009 submits the following comments.
BACKGROUND
On September 11,2009, PacifiCorp dba Rocky Mountain Power fied a Petition with the
Idaho Public Utilties Commission (Commission) for an Order increasing the published avoided
cost wind integration rate from $5.10 to $9.96 per MWh. Avoided cost rates are the purchase
price paid to qualifying small power production facilities (QFs) for purchases of QF capacity and
STAFF COMMENTS 1 OCTOBER 30, 2009
energy. i The wind integration rate is an amount that is subtracted from the published avoided
cost rates to account for the utility's cost of integrating intermittent wind generation. The
proposed change wil be applicable to purchases by Rocky Mountain Power of electric power
from wind-powered QFs with Idaho contracts and points of delivery, except in those
circumstances where the QF developer agrees in the power purchase agreement to deliver QF
output to Rocky Mountain Power on a firm hourly schedule.
STAFF ANALYSIS
History of Wind Integration Charges
The issue of wind integration costs first arose in 2005 when Idaho Power Company filed
a Petition with the Commission requesting a temporary suspension of Idaho Power's obligation
under PURPA to enter into new contracts with QFs pending an investigation of the impacts of
adding substantial amounts of wind-powered generation projects to the utilty's system.
(lPC-E-05-22). Based on the record developed in that case, the Commission found reason to
believe that wind generation presents operational integration costs to a utilty different from
other PURP A qualified resources. Furher, the Commission found that the unique supply
characteristics of wind generation and the related integration costs provide a basis for adjustment
to the published avoided cost rates, a calculated figure that may be different for each regulated
utilty. Reference Order No. 29839.
Furher proceedings in that docket were ordered to determine the appropriate amount of
adjustment and the identification of what studies, if any, needed to be performed to provide such
a number. PacifiCorp and Avista were directed to paricipate in those proceedings. In
accordance with the Commission's directive, four workshops and one settlement meeting were
conducted over the next six months to try to develop consensus on some of the issues. The
paries were unsuccessful in reaching mutual agreement on interim settlement issues. No furher
meetings were scheduled pending completion of wind integration studies by the three utilties.
In early 2007, nearly two years after the original docket was opened, PacifiCorp, Idaho
Power, and A vista completed their respective wind integration studies and fied petitions
recommending utilty-specific wind integration adjustments to the published avoided-cost rates.
i Reference Sections 201 and 210 ofthe Public Utilty Regulatory Policies Act of 1978 (PURPA) and the
implementing regulations of the Federal Energy Regulatory Commission (FERC).
STAFF COMMENTS 2 OCTOBER 30, 2009
In Case No. IPC-E-07-03, Idaho Power proposed a wind integration adjustment of$10.72/MWh.
Later, in a Report Addendum fied with the Commission, Idaho Power presented an updated
wind integration cost of$7.92/MWh. Avista fied a similar Petition in Case No. AVU-E-07-02
proposing a wind integration adjustment to published avoided cost rates of 12 percent; and for
QFs agreeing to deliver output on a firm hourly schedule, a percentage reduction of 6 percent.
PacifiCorp, in Case No. PAC-E-07-07, proposed a wind integration adjustment of$5.04/MWh.
PacifCorp's Settlement Stipulation
In the wind integration cases for all three utilties, separate Settlement Stipulations were
developed and submitted to the Commission for approval. The Settlement Stipulation approved
for PacifiCorp in Order No. 30497 provided the following with regard to establishment of a wind
integration charge:
Settlement Stipulation ~ 3
(a) (PacifiCorp's) published avoided-cost rates for Wind QFs wil be adjusted
to recognize an assumed cost of integrating the energy generated by Wind
QFs as a par of the Company's generating resource portfolio. The
integration charge wil 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 (lRP) . . . the
estimated cost of wind integration in the 2007 IRP . . . is $5.1 O/MWh.
(PacifiCorp) 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 wil remain fixed throughout
the term of the contract and will be applied as a decrement to the
applicable published rate. (emphasis added)
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.
(c) (PacifCorp) wil review its expected cost of wind integration in light of
the best available scientific data and actual operating experience.
Expected wind integration cost information wil 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.
(emphasis added)
STAFF COMMENTS 3 OCTOBER 30,2009
(d) (PacifiCorp) currently provides public input meetings for its IRP
assumptions. Idaho wind developers wil 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. (emphasis added)
In accordance with the terms of the Settlement Stipulation, PacifiCorp has updated its
study of wind integration costs as part of the development of its 2009 IRP. Rocky Mountain
Power submits as Exhibit A to its Petition, an excerpt from PacifiCorp's 2009 IRP Appendix F-
"Wind Integration Costs and Capacity Planning Contributions" in which PacifiCorp provides a
description of the methodology used and the results derived from PacifiCorp's analysis of the
wind integration cost issue. The Company's 2009 IRP wind integration cost analysis identifies
its wind integration cost to be in the range of $9.96 to $11.85 per MWh depending on what
assumption is used regarding the future cost of C02 compliance.
The Company fied its 2009 IRP with the Commission on May 29, 2009 in Case No.
PAC-E-09-06. A Notice of the Company's IRP filing was issued on June 24, 2009; the deadline
for filing written comments was July 31, 2009. Commission Staff was the only party to file
comments. Notably, no other pary submitted comments regarding the wind integration
appendix of the Company's IRP. On September 15,2009, the Commission issued an acceptace
and acknowledgement of the Company's 2009 IRP filing.
Throughout the development of its 2009 IRP, PacifiCorp conducted public input
meetings just as it has done for past IRPs. However, Appendix F, the wind integration costs
study, was not discussed in any of the public input meetings because it was not completed until
just before the IRP was finalized and submitted to the Commission for approval. Nonetheless,
on August 31, 2009, three months after the IRP was fied with the Commission, PacifiCorp
conducted a public meeting to describe its wind integration study and to accept comments from
interested paries. All of the interested parties in Case No. PAC-E-07-07, the Company's initial
wind integration docket, were invited to participate. Staff paricipated in the meeting by
telephone, but notes that few of the parties in Case No. PAC-E-07-07 paricipated.
Several participants in the meeting expressed concerns with some of the assumptions and
analysis methods used by PacifiCorp in computing its wind integration costs. PacifiCorp,
however, believes that its assumptions were reasonable and its analysis accurate, and stands by
STAFF COMMENTS 4 OCTOBER 30, 2009
the wind integration costs presented in the 2009 IRP. Nevertheless, the Company did agree to
reexamine its assumptions and analysis in future studies as more information becomes available
and better analysis techniques are developed.
Idaho Power's and Avista's Settlement Stipulations
Although the Settlement Stipulations of Idaho Power and A vista in their respective wind
integration cases were very similar to PacifiCorp's, they differed on one key aspect. Unlike
PacifiCorp's Stipulation that includes a fixed wind integration charge of $5.1 O/MWh, Idaho
Power's and A vista's Settlement Stipulations contain wind integration charges that are stated as a
percentage of the published avoided cost rates. The percentage ranges from 7 percent to 9
percent and is based on three "tiers" representing levels of wind generation development on each
utilty's system. Most importantly, however, is the fact that Idaho Power's and Avista's wind
integration charges are subject to a cap of $6.50/MWh. Based on the avoided cost rates currently
in place, the wind integration charges for Idaho Power and A vista range from about $4.30/MWh
to the maximum cap of$6.50 depending on details of the specific contract.
PacifiCorp's Proposed Wind Integration Charge
The $9.96/MWh wind integration cost proposed by PacifiCorp in this case is nearly
double the $5.1 O/MWh cost curently in place. In addition, it is significantly higher than the
$6.50 wind integration charge cap imposed on Idaho Power and A vista.
On the other hand, the $9.96 is in the same general range as the wind integration costs
identified in Idaho Power's and A vista's wind integration studies. Moreover, more recent studies
completed by Portland General Electric and BP A also computed wind integration costs in a
range closer to those in PacifiCorp's recent study.
Staff believes that PacifiCorp's most recent wind integration study is probably more
accurate than its initial study. Furthermore, Staff believes that actual wind integration costs are
likely greater than the $5.10 curently in place for PacifiCorp. At the same time however, Staff
acknowledges that there is stil much uncertainty about the results of various wind integration
studies, that wind integration costs are likely different for each utility, and that the results of
various wind integration studies are not necessarily comparable. In addition, Staff is aware that
there are regional efforts underway that may eventually decrease wind integration costs, but
STAFF COMMENTS 5 OCTOBER 30,2009
conversely, that wind integration costs may increase as greater amounts of wind are added to
utilities' systems.
In any case, Staff believes that some increase in PacifiCorp's wind integration charge is
waranted based on the study described in its 2009 IRP, but that the wind integration charge
should not be increased to $9.96/MWh as requested by the Company. Although Staff is not
suggesting that PacifiCorp's proposed wind integration cost is inaccurate, we do believe that the
wind integration charge for PacifiCorp should be fairly close to the charges approved for Idaho
Power and Avista. The charge proposed by PacifiCorp is in the same range as the charges
initially proposed by Idaho Power and A vista, yet the charges ultimately adopted for Idaho
Power and A vista were substantially below both companies' initial proposals. The curent wind
integration charges for all three utilities, including the caps of $6.50/MWh for Idaho Power and
A vista, were based on Settlement Stipulations developed after many months of contentious
negotiations. Even then, not all paries could agree. In Staffs opinion, it would be unlikely that
interested paries could agree on a negotiated wind integration charge based on PacifiCorp's most
recent study, and that any attempt to reach consensus amongst interested parties could drag on
for months.
In addition, there is currently an open docket (Case No. GNR-E-09-03) involving all
three utilties in which the reasonableness of continuing to use a gas-fired combined cycle
combustion turbine as the basis for computing avoided cost rates is being examined. One
possible outcome of the case is that a wind SAR could be adopted, making determination of
wind integration charges unecessary.
Because of the uncertainty associated with computation of wind integration costs, the
contentiousness and delay likely if agreement of interested parties is sought, the possibilty that
determination of wind integration costs may not be necessary in the future, and for consistency
with other utilties, Staff proposes that the Commission approve a wind integration charge for
PacifiCorp of $6.50/MWh, the cap currently applied to Idaho Power and A vista.
RECOMMENDATIONS
Staff recommends that the Commission not approve PacifiCorp's request to increase its
wind integration charge from $5.10/MWh to $9.96/MWh. Instead, Staff recommends that the
Commission approve a wind integration charge for PacifiCorp of $6.50/MWh. A wind
STAFF COMMENTS 6 OCTOBER 30, 2009
integration charge of$6.50/MWh is consistent with the cap for Idaho Power and Avista that was
established through extensive negotiation between interested paries.
Respectfully submitted this ý" day of October 2009.
Scott Woodbury
Deputy Attorney General
Technical Staff: Rick Sterling
i:umisc:commentsipace09.7swrps comments
STAFF COMMENTS 7 OCTOBER 30, 2009
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 30TH DAY OF OCTOBER 2009,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-09-07, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
DANIEL SOLANDER
SENIOR COUNSEL
ROCKY MOUNTAIN POWER
201 S. MAIN ST., SUITE 2300
SALT LAKE CITY, UT 84111
E-MAIL: daniel.solander(fpacificorp.com
ANN ENGLISH GRAVATT
POLICY DIRECTOR
RENEWABLE NORTHWEST PROJECT
917 SW OAK ST STE 303
PORTLAND OR 97205
E-MAIL: an(frnp.org
TED WESTON
ID REGULATORY AFFAIRS
ROCKY MOUNTAIN POWER
201 S. MAIN ST., SUITE 2300
SALT LAKE CITY, UT 84111
E-MAIL: ted.weston(fpacificorp.com
SUZANNE LETA LIOU
SR POLICY ADVOCATE
RENEWABLE NORTHWEST PROJECT
917 SW OAK ST STE 303
PORTLAND OR 97205
E-MAIL: Suzane(frnp.org
~~
SECRETARY .~
CERTIFICATE OF SERVICE