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HomeMy WebLinkAbout20110711Comments.pdfNEIL PRICE DEPUTY ATTORNEY GENERAL IDAHO PUBLIC UTILITIES COMMISSION PO BOX 83720 BOISE, IDAHO 83720-0074 (208) 334-0314 BARNO. 6864 RECEivi:n. ,,_ w,_,_ 20 II JUl I I PH 2: I 9 .j '~ 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 PACIFICORP DBA ROCKY MOUNTAIN POWER'S 2011 INTEGRATED RESOURCE PLAN. ) ) CASE NO. PAC-E-ll-10 ) ) COMMENTS OF THE ) COMMISSION STAFF ) COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its attorney of record, Neil Price, Deputy Attorney General, and in response to the Notice of Filing and Notice of Modified Procedure issued in Order No. 32243 on May 13,2011, submits the following comments. BACKGROUND On April 1,2011, PacifiCorp dba Rocky Mountain Power ("PacifiCorp" or "Company") filed its 201 1 Integrated Resource Plan (IRP) with the Commission pursuant to the Commission's rules and in compliance with the biennial IRP filing requirements mandated in Order No. 22299. PacifiCorp serves approximately 70,000 customers in southeastern Idaho. The Company provides electric service to more than 1,700,000 customers in Utah, Wyoming, Oregon, Washington, California and Idaho. PacifiCorp's 2011 IRP was developed through a collaborative public process with paricipation from public stakeholders, including regulatory staff, advocacy groups, and other STAFF COMMENTS 1 JULY 11,2011 interested paries. The IRP, along with its 10-year business plan, provides a framework of futue actions to ensure PacifiCorp continues to provide reliable service at a reasonable cost with manageable risk to its customers. The key elements of the PacifiCorp 2011 IRP include a finding of resource need, focusing on the 1 O-year period 2011 -2020, a preferred portfolio of supply-side, demand-side and transmission resources to meet this need, and the resultant action plan that identifies the steps the Company wil take during the next 2 to 4 years toward implementation of the plan. The resources identified in the 201 1 IRP preferred portfolio are considered proxy resources that guide procurement efforts, and do not constitute the actual resources that would be acquired as part of future procurement initiatives unless otherwse stated. The resource need accounts for load growth, sales obligations, existing resources, and a 13% planing reserve margin. Based on an October 2010 load forecast, PacifiCorp experiences a capacity deficit beginning in 201 1, when the system wil be short by 326 MW. Comparatively, the 2008 IRP forecasted deficits to also occur beginning in 201 1, though at a higher level (498 MW). The Company attributes the difference to lower demand, especially in the industrial sector, due to the economic downtu. The deficit increases to 2,546 MW in 2015 and 3,852 MW by 2020. The capacity deficit is driven by a coincident system peak load growth rate of 2.1 % for 2011 -2020, taking into account energy efficiency savings. PacifiCorp's capacity position, which includes existing obligations, a 13% planning reserve, and reflects the loss of over 1,000 MW of expiring power purchase contracts, is shown below: Table ES.l- Paelf1Corp iO-year Capacity Position Forecst (Megawatts). JI11 102 203 JI4 JI1 208 207 JIe JI. 2l $irciefl Total Resours Sym OblgonRe.rv& (N.d on 13% target) Obllgiition + 13% Plnmng RMml8 !e P08on 12,46 11.97 1.97 12,79 (32) 11.60 n,97 1,430 13.40 (1,601) 11,81012, 1,470 13,735 (1..925) 11,404 12,256 1,52 13,778 (2,373) 11,39 12,40 1.54 13.94 (2.,54) 11.397 12.59 1.69 14,164 rZ,75D 11,412 12,728 1,82 14.310 (2, as) 11.433 12.961 1.11 14,57 l3,l39ì 11,95 13,145 1,3314,m ÇU83ì 11,192 13.76 1.68 15,04 \3,8521 On an energy basis, the system begins to experience short positions during heavy load hours beginning in 201 1, and on an anual basis in 2015. PacifiCorp's estimated energy need over the planing horizon is shown below: STAFF COMMENTS 2 JULY 11, 2011 Table A.9 - AnDual Load foreeasted (io Megawatt-houn) 2011 tIrougb 2020 63,131,207 14,96,933 4,579,565 954,604 26,106,815 10,611,408 3,721.679 2,188,202 64,958,489 15,487.788 4,676,478 969,067 26,746,468 11,04,46 3,804.258 2,233,885 66,88,59 15.669,033 4,703,107 972,280 27.389,581 11,451,701 3,937,679 .2,26,877 68,035,127 15,853,824 4,754,,79 982,164 28,151,361 11,883,924 4,106,332 2,303.143 69,442,054 16,038,453 4.809.526 991,17 8,805,998 12,220,507 4,234,971 2,341,424 71,110,972 16,283,652 4,880,687 1,002,20 29,650,389 12,54,966 4,357,547 2,387,412 72,151,308 16,419,176 4.921,94 1,00,109 30,196,191 1.2,770,304 4,415,978 2,417,998 73,424,134 16,602,014 4,977,007 1,018,716 30,840,594 13,055,537 4,473,%8 2,456,298 74,713,621 16,789,205 5,030,425 1,028,331 31,491,637 13,346,735 4,532,675 2,494,611 76,136,508 16,998,651 5,089,930 1,039,248 32,188,156 13,680,764 4,598,60 *SE-lD represents a contract with BPA that makes the Company responsible for BPA's south Idaho retail load. To determine how best to address the capacity and energy deficits, PacifiCorp developed 67 input scenarios for portfolio development, and utilzing a number of resource optimization models and its own discretion in resource procurement, decided on a preferred portfolio it believes achieves "a long-term resource plan that considers cost, risk, uncertainty, and the long-run public interest." (201 1 IRP, p. 19). The preferred portfolio of the new IRP contains a significant level of energy effciency measures, new gas-fired combined-cycle combustion tubines (CCCTs) in 2014,2016, and 2019, transmission additions, firm market purchases, and renewable resource additions throughout the planning horizon. STAFF ANALYSIS Staff has reviewed PacifiCorp's 2011 IRP and recognizes the Company's sustained efforts in developing a sophisticated, thorough planing document amid an uncertain economic backdrop. The Company continues to refine its modeling approach, specifically in regard to demand side resources, and capabilties to expand the analytical scope of the document. While the IRP does not take the place of the Company's annual ten-year business plan with respect to specific resource acquisition, the alignment of the two (instituted in 2008) provides stakeholders with a more transparent view of the planing process. Staff does not intend for its comments to be all-inclusive of the document, but rather wil focus on a number of issues it deems importnt to the Company's ten-year action plan. STAFF COMMENTS 3 JULY 11,2011 The economic planing environment continues to be stagnant when compared to the period used to develop PacifiCorp's 2009 IRP, which utilzed a February 2009 load forecast. Both system peak and system load are projected to grow at an annual rate of2.1 % over the ten-year planing horizon. 1 These projected growth rates are high when compared to other utilties within the state and around the nation. For example, Idaho Power projected a 1.8% annual growth in system peak and 1.4% anual growth in average load in its 2011 IRP. Signs ofload degradation within PacifiCorp's service terrtory appear to have diminished relative to the previous IRP filing, softening the reduction in forecasted load and peak. The Company cites growth in the residential and commercial sectors, mainly for the East-side of its system, and potential large new industrial customers (namely large data centers located around the Salt Lake City area) as other reasons load and peak continues to grow at a moderate pace over the planing horizon. Staff notes that predicting additional large new load during poor economic times is a risky proposition; for example, there is the possibilty that at least one of the presumed new large customers may be delaying or abandoning their facilty in Salt Lake City. Given long lead times on large generation facilities, such as the Lakeside 2 (CCCT) curently under construction, the Company may find itself long on capacity in the near-term, and in need of deviating from its Action Plan. The 2011 forecast, developed in October 2010, nearly mimics that of the 2009 IRP update forecast2, developed in November 2009. Both forecasts are lower than that used in the 2009 IRP throughout the timeframe. For planing purposes, the impact is greater on system peak than energy. In 2018, the comparable out-year of the forecasts, the Company predicts system coincident peak to be roughly 2.6%, or 328 MW, below that projected in the 2009 IRP, and system load to be roughly 1.2% lower than the 2009 IRP forecast. Staff does not believe the reductions are inconsequential, and may affect the timing of resource additions. That said, it does not appear that the relative magnitude of resource additions is materially affected over the IRP timeframe. lOver the twenty-year horizon, system peak and loads are projected to grow at an average of 1.9% annually. 2 PacifiCorp fied an update to the 2009 IRP on March 31,2010. The 2009 lRP was fied with the Commission on May 29,2009. STAFF COMMENTS 4 JULY 11, 201 1 PacifiCorp notes that the political environment has changed since its last IRP filing. Though the various State initiatives governing climate change and renewable portfolio standards remain in place, there is a reduced likelihood for federal climate change legislation in the near-term. The Company continues to monitor developments at the federal level, and includes the impacts of carbon and greenhouse gas regulations in its portfolio modeling and selection process. Staff concurs that it is appropriate to consider the possibilty of federal climate change legislation in its portfolio evaluation process, and is satisfied that the Company has adequately addressed the issue. PacifiCorp does recognize that there are potential consequences stemming from various EPA regulations on the operations of its generation fleet, especially its coal-fired facilties, which have prompted expenditures in pollution control equipment. Price Forecasts One other aspect of the planing paradigm that has changed since the 2009 IRP has been the significant decrease in natural gas and wholesale electricity prices. In recent years, market prices for electrcity in the West have been tied closely to natural gas prices as gas-fired generation tends to be the marginal resource, especially during high load hours. This trend is predicted to continue in the foreseeable future.3 Staff acknowledges the recent decline in natural gas prices but notes that the fuel has shown significant volatilty over the past ten years. PacifiCorp points out on page 27 of the 2011 IRP that day-ahead prices at Henry Hub have fluctuated between a low of $1.72 per MMBtu (November 16, 2001) to a high of$18.41 per MMBtu (February 25, 2003). Recently, prices have somewhat settled below $5.00 per MMBtu, presumably on the premise that demand is lower and domestic supplies from shale have increased. Many are optimistic that expansion of unconventional domestic supplies wil continue to put downward pressure on gas prices. Staff is cautious to overestimate reliance on emerging natural gas resources. One need only to look a few years back when it was thought that liquefied natural gas would fill the supply-demand gap. Due to global competition and the increased domestic production, that has not materialized. Also, demand for natural gas can be presumed to grow significantly over the planing horizon, with the U.S. Energy Information Agency predicting 3 To date, 2011 is running contrary to view, mainly due to extraordinarily high runoff throughout the Nortwest and depressed loads associated with cooler weather and slower economic activity. In fact, there were periods during light load hours when wholesale prices at Northwest trading hubs dipped below $0 per MWh. STAFF COMMENTS 5 JULY 11,2011 60% of electric generation from 2010-2035 wil come from natural gas-fired facilties. Future volatilty in natural gas prices increases the risk in variable fuel costs borne by customers. Resource Options Staff maintains that PacifiCorp continues to do an admirable job capturing the various operating characteristics and costs when screening resources in the modeling process. PacifiCorp relies on a number of third-pary studies, along with its own experience, to estimate capital costs throughout the planing horizon. PacifiCorp evaluated a number of renewable resources for inclusion in portfolio modeling, including wind on the east and west sides of its system, geothermal, pumped storage, and various solar technologies. The Company notes that capital costs have generally decreased since 2009 due to the slowdown in the economy. Additionally, the Company states that certain unproven technologies, such as integrated gasification combined cycle (IGCC) plants and certain renewables display greater cost and operating uncertainty relative to more traditional resources. With much of its generating units located in solar-intensive areas, Staff encourages PacifiCorp to investigate the feasibilty of augmenting or retrofitting its gas and coal facilties with a solar hybrid design in future IRPs. Aside from the benefits associated with utilzing the existing infrastructure, it is assumed that as these technologies mature, market conditions may accelerate reductions in capital costs. PacifiCorp continues to refine its analysis of wind resources for portfolio modeling. In this IRP, adjustments were made to the topology bubbles to allow the System Optimizer model to select wind resources sited outside of transmission-constrained areas in Wyoming. Staff believes this adjustment provides greater flexibilty for the model to select additional wind should it prove to be a preferred resource. These 'wind only' bubbles are also assigned an incremental transmission cost, which Staff considers appropriate to better approximate the true cost of wind resources. An adjusted wind resource cost is then determined for modeling purposes, taking into account capital, fixed O&M, wheeling and integration costs. Staff notes that the Company included a wind integration charge of$9.70/MWh in its analysis, a figure supported by its Wind Integration Study completed in September 2010. Staff believes that PacifiCorp is well-positioned to integrate wind given its resource diversity and geographic footprint. The Company has done an excellent job developing its demand-side management (DSM) resources into distinct supply curve bundles to allow competitive model selection of DSM and supply-side resources. The basis for DSM development was a potential study conducted by the STAFF COMMENTS 6 JULY 11,2011 Cadmus Group in 2007, which provided estimates of size, type, location and cost for resources that were updated using a 2009 study. Staff is aware that a recent potential study has been completed (March 2011), and recognizes that this information was not available at the time the 2009 IRP was created. Staff expects any new findings from the recent study wil be incorporated in the 2011 IRP Update. For the 2011 IRP, fifty discrete supply curves were developed for both Class 1 and Class 3 DSM.4 PacifiCorp continued the practice introduced in its 2009 IRP of creating supply curves Class 2 DSM that are bundled by cost across each state within its jurisdiction. 5 In total, nine Class 2 DSM bundles were created for each state.6 The System Optimizer model is capable of selecting any set of bundles throughout the twenty-year timeframe. Staff believes that the Company has adequately characterized supply and demand-side resources, as well as transmission options and market transactions, which leads to equitable treatment in the resource selection process. Portfolio Modeling and Selection As noted earlier, PacifiCorp created 67 portfolio cases or scenarios that cover an array of assumptions regarding, among other things, C02 regulation, natural gas prices, and alternative load forecasts. For this IRP, the Company specified several cases that evaluate partial and total construction of the Company's planed Energy Gateway Transmission Project (Gateway Project). The defined cases are then optimized in the Company's System Optimizer capacity expansion model to develop resource portfolios, which then go through a Monte Carlo production cost simulation to evaluate stochastic risk. Based on its assessments of costs and risks, PacifiCorp selects the top performing portfolios for furher evaluation. The stochastic measures are broken into three categories: 1) Cost Mean present value of revenue requirements (PVRR), Risk adjusted mean PVRR, and 10-year customer rate impact; 4 PacifiCorp classifies Class 1 programs as fully dispatchable, such as the Idaho Irrigation Load Control Program. Class 3 programs represent 'buydown' programs such as critical peak pricing and commercial/industrial demand buyback. 5 Class 2 DSM programs are defined as non-dispatch able programs, namely energy efficiency measures such as See Ya Later Refrigerator and CFL giveaways that have lifetime load reduction impacts. Class 2 DSM is bundled due to the voluminous permutations that could be generated from all potential programs.6 A tenth bundle, representing a compact florescent bulb program, was included for 201 i and 2012. Due to changes in Federal lighting standards, the bundle was not made available for selection in subsequent years. STAFF COMMENTS 7 JULY 11,2011 2) Risk Ulper-tail mean PVRR, 5t and 95th percentile PVRR, and Production cost standard deviation; and 3) Supply reliabilty Average anual energy not served (ENS), Upper-tail ENS, and Loss of load probabilty The selected portfolios then undergo fuher optimization to test for deterministic risk, such as varing gas and electricity prices for final portfolio selection, which is fine-tuned by the Company based on an "analysis of key resource acquisition and regulatory compliance risks." (2011 IRP, p. 202) Staff notes that in this IRP, PacifiCorp included a lO-year customer rate impact measure of stochastic risk. According to the IRP, the "focus of the rate impact review (is L the stabilty of year- to-year percentage of full revenue requirement impacts, as well as the cumulative 10-year impact." (Ibid, p. 192) While results from this measure var slightly from the other PVRR-based metrics, Staff believes it is appropriate to evaluate the approximate year-to-year impact of each portfolio. That said, Staff notes that this represents a year-to-year outlook on revenue requirement, and does not capture the yearly rate instabilty associated with volatile market prices and fuel costs captured in the Company's energy cost adjustment mechanism (ECAM). After initial screening, the Company selected eight top performing portfolios for further evaluation, Upon review, two of the eight were selected for deterministic analysis.7 It is unclear as to the criteria used by the Company to determine the portfolio finalists, as there was little difference in portfolio cost metrics (for example, there was less than a 1 % difference in ratepayer impact for all but one of the portfolios under various scenarios), and the finalists performed near the bottom in carbon risk and supply availabilty. The Company needs to do a better job explaining its portfolio decisions when there does not appear to be clear best options. The final screening consists of assessment for acquisition risk and environmental compliance risk mitigation. PacifiCorp adjusted the final portfolio to delay procurement of a CCCT in 2015 to 2016, citing undesirable rate impacts and corporate budgeting issues due to a planed CCCT 7 Initially, three portfolios were selected for furter analysis. Due to similarities between two of the portfolios, PacifiCorp opted to screen only two. STAFF COMMENTS 8 JULY 11,2011 addition in 2014. The Company also removes 105 MW of geothermal resources (selected in all scenarios) due to development cost recovery uncertainty. A recent report by the Glacier Partners Corp. suggests that nearly 55% of construction costs are associated with exploration and drilling, and there is a high probabilty that a site may not be suited for utilty-scale power production. If the utilty expends the capital to develop a geothermal resource to no avail, it risks disallowance of recovery in rates by regulators. PacifiCorp states that until there is a clear signal from regulators on cost recovery, it views geothermal as an alternate resource to procure, but not one to include in its IRP. The geothermal resources were replaced with an equivalent amount of wind for final screening.8 Staff does not consider the two resources to be similar in any maner other than being considered 'renewable.' Wind is an intermittent resource with a low capacity factor, and contributes little to the Company's capacity need. Geothermal is considered a baseload resource due to its high capacity factor and reliabilty. Staff does not believe the portfolio selection process accurately captures these dissimilarities. Given the extreme operating differences between wind and geothermal, Staff wonders to what extent the final portfolio determination is affected by this ad hoc adjustment so late in the process. Staff expects the Company will refine its approach toward treatment of geothermal resources in future IRP filings. As a way to mitigate the impact of more stringent renewable resource policies, the Company then opted to increase the quantity of wind to 2,100 MW. The basis for this value was an average of the top three performing portfolios under alternate C02 tax scenarios. It should be noted that only one of the eight portfolios from the initial screening cut was included in the calculation, and none from those selected for furher screening. Based on what it considers a reasonable acquisition schedule, the Company fixed the wind resource availability and amount to the 2018 through 2029 timeframe. With these adjustments, PacifiCorp re-optimized the portfolio to determine what it considers the preferred portfolio shown below: 8 Using capacity factors for each resource, the Company was able to calculate 572 MW of equivalent wind, which was added to 139 MW included in the finalist portfolio. STAFF COMMENTS 9 JULY 11, 2011 475 18 8 ro 300 200 200 200 100 20 100 100 100 100 100 5 5 5 5 20 97 .5 1"124 126 120 12 125 125 13 m 139 140 14\m 135 141 145 3 . Mi Sø. Watw Bu'.. . 4 4: 4 4 4.hGtOf ~ lJP/ 11~ 715 821 967 695 m 700 756756 156 750 750\J~e; 11 95 20! 250 54 71 SIB 975NoI'...~(bii~)ai¡m_l1~-.¡i,ai.._àd..~_..û:io_..~N..1i ìill_ii ØP1i lIl"'pilllllR lInifl.iy..ll_p1_lI ÌI1l_W~6tIl Plmpl. 47 65 2.100 104 252~ 19 3- NA WA The preferred portfolio represents PacifiCorp's best efforts to meet its obligations in a low-cost manner when accounting for various sources of risk and uncertainty. While the process may not be completely transparent, Staff believes the Company utilzed its best judgment given the most curent information in developing this portfolio. 2011 IRP Action Plan PacifiCorp's 2011 Action Plan is included in Staffs comments as Attachment A. The Action Plan details the steps that the Company intends to take in order to acquire the identified resources and further improve the IRP process. In the near term, PacifiCorp plans to issue a Request for Proposals (RFP) for a baseload facility that corresponds with the identified 597 MW CCCT identified in the preferred portfolio to go along with the 637 MW Lakeside 2 plant, due online in 2014. The Company intends to acquire 80 MW of Class 1 DSM in the 2012-2013 timefrare, with the remaining 170 MW acquired over the next ten years. The Company indicates that it wil acquire 1,200 MW of Class 2 DSM through an ongoing DSM RFP process. Based on the portfolio results, the Company will pursue 800 MW of wind resources by 2020, and steadily add more wind over the next nine years. PacifiCorp includes a separate transmission expansion action plan in the 2011 IRP, which details the continuing efforts toward completion of the Gateway Project. The Company has broken the transmission project into eight segments, listed below: STAFF COMMENTS 10 JULY 11,2011 Planed In-Service Segment Name Segment Notation Desciip~i("n Date Wallula to McNary A 230 kV,single circuit 2012-2013 Mona to Limber 500 kV,single circuit 2013 Limber to Oquirrh C 345 kV, double circuit 2013 Oquirrh to Terminal 345 kV, double Circuit 2014 Windstar to Aeolus 2-230 kV,single D circuit 2015-2017 Aeolus to Populus 500 kV, single circuit Populus to Hemingway E 500 kV, single circuit 2015-2018 Aeolus to Mona F 500 kV, single circuit 2017-2019 Sigurd to Red Butte G 345 kV,single circuit 2014 Hemingway to H 500 kV,single circuit unkown Capitan Jack A map showing the general locations of the projects is included as Attachment B ofStafts comments. Of the eight, three segments (A, C, G) are well into the permitting process, and have anticipated online dates in the 2012-2014 timeframe. Three more (D, E, F) are in initial scoping or permitting status, with estimated online dates ranging from 2014 to 2019. The Company has partnered with Idaho Power on segments D and E. A final segment (H) is currently under review as to the most economic strategy for development, i. e., should the Company parner with other utilties (namely Idaho Power and Portland General Electric) for joint development and ownership of the project or self-build and maintain sole ownership.9 Staff wil continue to monitor the Company's progress toward completion of the Gateway Project, and fully expects the Company to continue to evaluate the economics of the endeavor. Prudency assessment or approval of specific resources cited in either action plan is beyond the scope of the IRP review. Staff and the Commission will address such issues in a more suitable foru, such as a general rate case. While not endorsing the selected portfolio, Staff nonetheless believes the identified course of action seems reasonable given the assumptions, analysis and conclusions of the Company as presented in the IRP. STAFF COMMENTS 11 JULY 11,2011 Acknowledgement In Idaho, as in most states, the Commission "acknowledges" or "accepts for fiing" rather than "approves" a utility's IRP. Other states where PaCifiCorp serves have similar IRP requirements and provisions for acknowledgement; however, "acknowledgement" may be viewed differently in some states than in others. Staff believes it is helpful to explain what it presumes is meant by acknowledgement in Idaho. The following policy on integrated resource planing, adopted by the Commission in Order No. 25260, Case No. GNR-E-93-03 is provided as a way of explanation: POLICIES ADDRESSING INTEGRATED RESOURCE PLANNING. Each electric utilty regulated by the Idaho Public Utilities Commission with retail sales exceeding 500,000 kilowatt hours in a calendar year shall employ integrated resource planning. Each electric utility's integrated resource plan must be updated on a regular basis (no later than biennially), must provide an opportunity for public participation and comment, and must be implemented. This plan constitutes the base line against which the utility's performance wil ordinarily be measured. The requirement for implementation of a plan does not mean that the plan must be followed without deviation. The requirement of implementation of a plan means that an electric utilty, having made an integrated resource plan to provide adequate and reliable service to its electric customers at the lowest system cost, may and should deviate from that plan when presented with responsible, reliable opportunities to fuher lower its planed system cost not anticipated or identified in new existing or earlier plans and not undermining the utilty's reliability. I n order to encourage prudent planing and prudent deviation from past planing when presented with opportunities for improving upon a plan, an electric utilty's plan must be on fie with the Commission and available for public inspection, but the fiing of the plan does not constitute approval or disapproval of the plan having the force and effect of law, and the deviation from the plan would not constitute violation of the Commission's orders or rules. The prudence of a utilty's plan and the utility's prudence in following or not following a plan are matters that may be considered in a general rate proceeding or other proceeding in which those issues have been noticed. Furhermore, the Commission explicitly stated in Order No. 22299 its role in the IRP process: "...the Resource Management Report (now the IRPJ is not designed to turn the IPUC into a planning agency nor shall the Report constitute pre-approval of a utilty's proposed resource acquisitions." It is through these Orders that Staff constitutes its view of acknowledgement. 9 The segment not listed is the Populus to Terminal line, which was completed prior to submission of the 20 i i IRP. STAFF COMMENTS 12 JULY 11,2011 STAFF RECOMMENDATIONS Staff believes that the Company has adequately met the Commission's requirements in regard to the 2011 IRP. While not endorsing the proposed action plan, Staff believes that PacifiCorp has performed extensive analyses, given equivalent consideration of supply- and demand-side resources, provided acceptable opportunities for public input, and that the end result is representative of the Commission's directives toward integrated resource planing. Staff therefore recommends that the Commission acknowledge the Company's 2011 IRP. Respectfully submitted this 'l~ day of July 2011. JtJ2~~' 'Neil Price Deputy Attorney General Technical Staff: Bryan Lanspery i: umisc:comments/pace l i .1 Onprpsbl comments STAFF COMMENTS 13 JULY 11,2011 -- t i U l ( ) ) : .. . r t I l r t I- I l o i r t 1- t " H ' ( f 1 l .. 1 l H ' ( ) ~~ ( ) ~ § ~ O . ( f lt t " § l t ~ ~i . ~ ~ ) : (f r t I oi t x I- I I- o I - H' I I- .i 0 PA C I F I C O R P - 2 0 1 1 I R CH A T E R 9 - A C T I O N P L A N Ta b l e 9 . 1 - I R A c t i o n P l a n U p d a t e " " Ac t i o n i t e m s a n t i c i p a t e d t o e x t e n d b e y o n d t h e n e x t t w o y e a r s , o r o c c u r a f t e r t h e n e x t t w o y e a r s , a r e i n d i c a t e d i n b l u e i t a l i c f o n t . Tr a n s m i s s i o n a c t i o n n l a n i t e m s h a v e b e e n m o v e d t o C h a n t e r " 1 O . T r a n s m i s s i o n A c t i o n P l a n . 1 Re n e w a b l e s / Di s t r i b u t e d Ge n e r a t i o n Wi n d · A c q u i r e u p t o 8 0 0 l l f W o f w i m l r e s o u r c e s b y 2 0 2 0 , d i c t a t e d b y r e g u l a t o r y a n d m a r k e t d e v e l o p m e n t s s u c h a s (1 ) r e n e w a b l e / c l e a n e n e r g y s t a n d a r d s , ( 2 ) c a r b o n r e g u l a t i o n s , ( 3 ) f e d e r a l t a x i n c e n t i v e s , ( 4 ) e c o n o m i c s , ( 5 ) na t u r a l g a s p r i c e f o r e c a s t s , ( 6 ) r e g u l a t o r y s u p p o r t f o r i n v e s t m e n t s n e c e s s a r y t o i n t e g r a t e v a r i a b l e e n e r g y re s o i i r c e s , a n d ( 7 ) t r a n s m i s s i o n d e v e l o p m e n t s . T h e 8 0 0 - m e g a w a t t l e v e l i s s u p p o r t e d b y c o n s i d e r a t i o n o f re g u l a t o r y c o m p l i a n c e r i s k s a n d p u b l i c p o l i c y i n t e r e s t i n c l e a n e n e r g y r e s o u r c e s . Ge o t h e r m a l · T h e C o m p a n y i d e n t i f i e d o v e r 1 0 0 M W o f g e o t h e r m a l r e s o u r c e s a s p a r o f a l e a s t - c o s t r e s o u r c e p o r t f o l i o . Co n t i n u e t o r e f i e r e s o u r c e p o t e n t i a l e s t i m a t e s a n d u p d a t e r e s o u r c e c o s t s i n 2 0 1 1 - 2 0 1 2 f o r f u e r e c o n o m i c ev a l u a t i o n o f r e s o u r c e o p p o r t t i e s . C o n t i u e t o i n c l u d e g e o t h e r m a l p r o j e c t s a s e l i g i b l e r e s o u r c e s i n f u t u e al l - s o u r c e R F P s . So l a r · E v a l u a t e p r o c u r e m e i 1 o f O r e g o n s o l a r p h o t o v o l t a i c r e s o u r c e s i n 2 0 1 1 v i a t h e C o m p a n y ' s s o l a r R F P . " · A c q u i r e a d d i t i o n a l O r e g o n s o l a r r e s o u r c e t h r o u g h R F P s o r o t h e r m e a n s i n o r d e r t o m e e t t h e C o m p a n y ' s 8. 7 1 l W c o m p l i a n c e o b l i g a t i o n . · W o r k w i t h U t a p a r e s t o i n v e s t i g a t e s o l a r p r o g r a m d e s i g n a n d d e p l o y m e n t i s s u e s a n d o p p o r t t i e s i n l a t e 20 1 1 a n d 2 0 1 2 , u s i n g t h e C o m p a n y ' s o w n a n a l y s i s o f Wa s a t c h F r o n t r o o f t o p s o l a r p o t e n t i a l a n d e x p e r i e n c e wi t h t h e O r e g o n s o l a r p i l o t p r o g r a m . A s r e c o m m e n d e d i n t h e C o m p a n y ' s r e s p o n s e t o c o m m e n t s u n d e r D o c k e t No . 0 7 - 0 3 5 - T 1 4 , t h e C o m p a n y r e q u e s t e d t h a t t h e U t a h C o m m i s s i o n e s t a b l i s h " a p r o c e s s i n t h e f a l l o f 2 0 1 1 t o de t e r m n e w h e t h e r a c o n t i n u e d o r e x p a n d e d s o l a r p r o g r a m i n U t a h i s a p p r o p r i a t e a n d h o w t h a t p r o g r a m m i g h t be s t r c t u e d . , , 7 4 " · I n v e s t i g a t e , a n d p u r s u e i f c o : ~ t - ~ f f e c t i v e f r o m a n i m p l e m e n t a t i o n s t a n d p o i n t , c o m m e r c i a l / r e s i d e n t i a l s o l a r ho t w a t e r h e a t i n g p r o g r a m s . Th e 2 0 1 1 1 R P p r e f e r r e d po r t f o l i o i n c l u d e s 3 0 1 l W o f s o i a r h o t wa t e r h e a t i n g r e s o u r c e s b y 2 0 2 0 ( 1 8 21 1 W i n t h e e a s t s i d e a n d 1 2 1 l W i n t h e w e s t s i d e ) . Co m b i n e d H e a t & P o w e r ( C H P ) · P u r s u e o p p o r t u n i t i e s f o r a c q u i r i n g b i o m a s s C H P r e s o u r c e s , p r i m a r i l y t h r o u g h t h e P U R P A Q u a l i f i n g Fa c i l t y c o n t r a c t i n g p r o c e s s . 20 1 1 - 2 0 2 0 74 R o c k y M o u n t a i P o w e r , " R e : D o c k e t N o . 0 7 - 0 3 5 - T 1 4 - T h r e e y e a r a s s e s s m e n t o f t h e S o l a r I n c e n t i v e P r o g r " , D e c e m b e r 1 5 , 2 0 1 0 . 25 4 PA C I F I C O R P - 2 0 1 1 I R P CH A P E R 9 - A C T I O N P L A N En e r g y S t o r a g e · P r o c e e d w i t h a n e n e r g y s t o r a g e d e m o n s t r a t i o n p r o j e c t , s u b j e c t t o U t a h C o m m i s s i o n à p p r o v a l o f th e Co m p a n y ' s p r o p o s a l t o d e f e r a n d r e c o v e r e x p e n d i t u e s t h o u g h t h e d e m a n d - s i d e m a n a g e m e n t s u r c h a r g e . · I n i t i a t e a c o n s u l t a n t s t u d y i n 2 0 1 1 o r 2 0 1 2 o n i n c r e m e n t a l c a p a c i t y v a l u e a n d a n c i l a r s e r v i c e b e n e f i t s o f en e r g y s t o r a g e . Re n e w a b l e P o r t f o l i o S t a n d a r d C o m p l i a n c e · D e v e l o p a n d r e f i n e s t r a t e g i e s f o r r e n e w a b l e p o r t f o l i o s t a n d a r d c o m p l i a n c e i n C a l i f o r n i a a n d W a s h i n g t o n . · A è q u i r e a c o m b i n e d - c y c l e c o m b u s t i o n t u b i n e r e s o u r c e a t t h e L a k e S i d e s i t e i n U t a h b y t h e s u m e r o f 2 0 1 4 ; th e p l a n t i s p r o p o s e d t o b e c o n s t r c t e d b y C H 2 M H i l E & C , I n c . ( " C H 2 M H i l " ) u n d e r t h e t e r m s o f a n en g i n e e r i n g , p r o c u r e m e n t , a n d c o n s t r c t i o n ( E P C ) c o n t r a c t . T h s r e s o u r c e c o r r e s p o n d s t o t h e 2 0 1 4 C C C T pr o x y r e s o u r c e i n c l u d e d i n t h e 2 0 1 1 I R p r e f e r r e d p o r t o l i o . · I s s u e a n a l l - s o u r c e R F P i n l a t e 2 0 1 1 o r e a r l y 2 0 1 2 f o r a c q u i s i t i o n o f pe a k i n g / i n t e r m e d i a t e /b a s e lo a d r e s o u r c e s by t h e s u m e r o f 2 0 1 6 . - T h i s a c q u i s i t i o n c o r r e s p o n d s t o t h e 5 9 7 M W 2 0 1 6 C C C T p r o x y r e s o u r c e ( F C l a s s 2 x l ) . · P a c i f i C o r p w i l r e e x a m i n e t h e t i m i n g a n : : t y p e o f p o s t - 2 0 1 4 g a ~ r e s o u r c e s a n d o t h e r r e s o u r c e c h a n g e s a s p a r of t h e 2 0 1 1 b u s i n e s s p l a n i n g p r o c e s s a n d p r e p a r t i o n o f t h e 2 0 1 1 I R U p d a t e . Co n s i d e r s i t i n g a d d i t i o n a l g a s - f r e d r e s o u r c e , y i n l o c a t i o l l o t h e r t h a n U t a h . I n v e s t i g a t e r e s o u r c e tn ' a i / a b i l t y i s s u e s i n c l u d i n g w a , t e r a v a i l a b i l i t y , p e r m i t t i n g , t r a n s m i s s i o n c o n s t r a i n t s , a c c e s s t o n a t u r a l ga s , a n d p o t e n t i a l i J n p a c t ~ o f e l e v a t i o n . · A c q u i r e u p t o 1 , 4 0 0 M W o f e c o n o m i c f r o n t o f f i c e t r a n s a c t i o n s o r p o w e r p u r c h a s e a g r e e m e n t s a s n e e d e d u n t i l th e b e g i n n n g o f s u m e r 2 0 1 4 , u n l e s s c o s t - e f f e c t i v e l o n g - t e r m r e s o u r c e s a r e a v a i l a b l e a n d t h e i r a c q u i s i t i o n i s in t h e b e s t i n t e r e s t s o f c u s t o m e r s . 20 1 1 - 2 0 2 0 I - R e s o u r c e s w i l b e p r o c u e d t h o u g h m u l t i p l e m e a n s , s u c h a s p e r i o d i c m i i - R F P s t h a t s e e k r e s o u r c e s l e s s th a n f i v e y e a r s i n t e r m a n d b i l a t e r a l n e g o t i a t i o n s . · C / , o s e l y m o n i t o r t h e n e a r - t e r m a n d l o n g - t e r m f t e e d f o r f r o n t o f f c e t r a n s a c t i o n s a n d a d j u s t p l a n n e d ac q u i s i t i o n s a s a p p r o p r i a t e b a s e d o n m a r k e t c o n d i t i o n s , r e s o u r c e c o s t s , a f t d l o a d e x p e c t a t i o n s . 2 In t e r m e d i a t e I Ba s e - l o a d Th e r m a l Sn p p l y - s i d e Re s o u r c e s 20 1 4 - 2 0 1 6 3 Fir m Ma r k e t Pu r c h a s e s .. t ¡ ( J ( ) : i ,. r t l l r t I- l l l ' r t I- t " H i C D I I 'I l H l ( ) I- : : Z æ 1- l ' ( ) O ~ 0 . Æ~ l ~ ~ CD r t I l' t i tv I I- o I - HI I I- ,¡ 0 Th e pr e f e r r e d p o r t f o l i o c o n t a i n s 5 2 M W o l C H P r e s o u r c e s l o r 2 0 1 1 - 2 0 2 0 ( 1 0 M W i n t h e e a s t s i d e a n d 42 M W i n t h e w e s t s i d e ) 4 Pl a n t Ef f c i e n c y Im p r o v e m e n t s · C o n t i n u e t o p u r s u e e c o n o m i c p l a n t u p g r a d e p r o j e c t s - s u c h a s t u b i n e s y s t e m i m p r o v e m e n t s a n d r e t r o f i t s ~ an d u n i t a v a i l a b i l t y i m p r o v e m e n t s t o l o w e r o p e r a t i n g c o s t s a n d h e l p m e e t t h e C o m p a n y ' s f u t u e C O 2 a n d . 20 1 1 - 2 0 2 0 I o t h e r e n v i r o ~ e n t a l c o m p l i a n c e r e q u i r e m e n t s . Su c c e s s f u l l y c o m p l e t e t h e d e n s e - p a c k c o a l p l a n t t u b i n e u p g r a d e p r o j e c t s s c h e d u l e d f o r 2 0 1 1 a n d 2 0 1 2 , to t a l i n g 3 1 M W ' 25 5 , . .. t i u i n : J .. . r t l l r t i- I I r n r t i- t " H i C D I I .. i l H i . . C l i- : : . . : : i- r n n 0 3 ~ 0 · C D ;; ~ ~ ~ ~ \Q : : n : J CD r t I rn i : w I i- o i - Hi I i- .i 0 PA C I F I C O R P - 2 0 1 1 I R CH A E R 9 - A C T I O N P L A N 5 Cl a s s 1 D S M 20 1 1 - 2 0 2 0 20 1 1 - 2 0 2 n 20 1 1 - 2 0 2 0 Co m p l e t e t h e r e m a i n i n g t u r b i n e u p g r a d e p r o j e c t s b y 2 0 2 1 , t o t a l i n g a n i n c r e m e n t a l 34 . 2 M W , s u b j e c t t o co n t i n u i n g r e v i e w o f pr o j e c t e c o n o m i c s . Se e k t o m e e t t h e C p m p l Ì 1 i y ' s u p d a t e d a g g r e g a t e c o a l p l a n t n e t h e a t r a t e i m p r o v è m e n t g o a l o f 4 7 8 Bt U / k W h b y 2 0 1 9 / 5 , Co n t i n u e t o m o n i t o r t u r b i n e a n d o t h e r e q u i p m e n t t e c h n o l o g i e s f o r c o s t - e f f e c t i v e u p g r a d e o p p o r t u n i t i e s ti e d t o f u t u r e p l a n t m a i n t e n a n c e s c h e d u l e s . Ac q u i r e u p t o 2 5 0 M W o f c o s t - e f f e c t i v e C l a s s 1 d e m a n d - s i d e m a n a g e m e n t p r o g r a m f o r i m p l e m e n t a t i o n i n t h e 20 1 1 - 2 0 2 0 t i e f r a m e . · F o r 2 0 1 2 - 2 0 1 3 , p u r s u e u p t o 8 0 M W o f th e c o m m e r c i a l c u r a i l m e n t p r o d u c t ( w h i c h i n c l u d e s c u s t o m e r - o w n e d st a d b y g e n e r a t i o n o p p o r t i t i e s ) b e i n g p r o c u r e d a s a n o u t c o m e o f th e 2 0 0 8 D S M R F P . ' · D e p e n d i n g o n f i n a l e c o n o m i c s , p u r s u e t h e r e m a i n i n g 1 7 0 M W f o r 2 0 . 1 - 2 0 2 0 , c o n s i s t i n g o f a d d i t i o n a l cu r t a i l m e n t o p p o r t u n i t i e s a n d i r r i g a t i o n / r e s i d e n t i a l d i r e c t l o a d c o n t r o l . · A c q u i r e u p t o 1 , 2 0 0 M W o f c o s t - e f f e c t i v e C l a s s 2 p r o g r i i m s b y 2 0 2 0 , e q u i v a l e n t t o , i b o u t 4 , 5 3 3 G W / i . T h i s in c l u d e s p r o g r a m s i n O r e g o n a c q u i r e d t h r o u g h t h e E n e r g y T r u s t o f Or e g o n . Pr o c u r e t h r o u g h t h e c u r r e n t l y a c t i v e D S M R F P a n d s u b s e q u e n t D S M R F P s . · A p p l y t h e 2 0 1 1 I R . c o n s e r v a t i o n a n a l y s i s a s t h e b a s i s f o r t h e C o m p a n y ' s ' n e x t W a s h i n g t o n 1 - 9 3 7 c o n s e r v a t i o n ta g e t s e t t g s u b m i t t a l t o t h e W a s h i g t o n U t i l t i e s a n d T r a n s p o r t t i o n C o m m i s s i o n f o r th e 2 0 1 2 - 2 0 1 3 bi e n n u m . T h e C o m p a n y m a y r e f i n e , t h e c o n s e r v a t i o n a n a l y s i s a n d u p d a t e t h e c o n s e r v a t i o n f o r e c a s t a n d bi e n n i a l t a r g e t a s a p p r o p r i a t e p r i o r t o s u b m i t t a l b a s e d o n f m a l a v o i d e d c o s t d e c r e m e n t a n a l y s i s a n d o t h e r n e w in f o r m a t i o n . · L e v e r a g e t h e d i s t r i b u t i o n e n e r g y e f f i c i e n c y a n a l y s i s o f 1 9 d i s t r i b u t i o n j e e d e r s i n W a s h i n g t o n ( c o n d u c t e d f o r Pa c i f C o r p b y C o m m o n w e a l t h A s s o c i a t e s , I n c . ) f o r a n a l y s i s o f p o t e n t i a l d i s t r i b u t i o n e n e r g y e f f c i e n c y i n ot h e r a r e a s o f P a c i f C o r l ) ' s s y s t e m . r i 1 i e W a s h i n g t o n d i s t r i b u t i o n e n e r g y e f f c i e n c y s t u d y f i n a l r e p o r t i s sc h e d u l e d f o r c o m p l e t i o n b y t h e e n d o f Ma y 2 0 1 1 . ) · C o n t i u e t o e v a l u a t e C l a s s 3 D S M p r o g r a m o p p o r t i t i e s . Ev a l u a t e p r o g r a m s p e c i f i c a t i o n a n d c o s t - e f f e c t i v e n e s s i n t h e c o n t e x t o f I R P p o i t f o 1 i o m o d e l i g 7 6 , a n d mo n i t o r m a r k e t c h a n g e s t h t m a y r e m o v e t h e v o l u n t a r n a t u e o f C l a s s 3 p r i c i n g p r o d u c t s . 6 Cl a s s 2 DS M 75 P a c i f C o r p E n e r g y H e a t R a t e I m p r o v e m e n t P l a n , A p r i 1 2 0 1 0 . , 76 S u p p l y c w " V e d e v e l o p m e n t i n d i c a t e s t h a t w h e n t h e s t a c k i g e f f e c t o f C l a s s 1 a n d C l a s s 3 r e s o u r c e i n t e r a c t i o n s a r e c o n s i d e r e d , t h e s e l e c t e d r e s o u r c e s w i t h i bo t h C l a s s e s o f D S M d i m i s h . ' 7 ci å s s 3 D S M 25 6 PA C I F I C O R P - 2 0 1 1 I R CH A 9 - A C T I O N P L A N 8 Pl a n n i n g a n d Mo d e l i n g Pr ò c e s s Im p r o v e m e n t s . C o n t i n u e t o r e f i n e t h e S y s t e m O p t i m i z e r m o d e l i n g a p p r o a c h f o r a n a l y z i n g c o a l u t i z a t i o n s t r t e g i e s u n d e r va r i o u s e n v i r o n m e n t a l r e g u l a t i o n a n d m a r k e t p n c e s c e n a r o s . . C o n t i n u e t o c o o r d i n a t e w i t h P a c i f i C o r p ' s t r s m i s s i o n p l a n i n g d e p a r e n t o n i m p r o v i n g t r a n s m i s s i o n 20 1 1 - 2 0 1 2 I i n v e s t m e n t a n a l y s i s u s i n g t h e I R m o d e l s . . I n c o r p o r a t e p l u g - i n e l e c t r i c v e h i c l e s a n d S m a r t G r i d t e c h n o l o g i e s a s a d i s c u s s i o n t o p i c f o r t h e n e x t I R . . C o n t i n u e t o r e f i n e t h e w i n d i n t e g r a t i o n m o d e l i n g a p p r o a c h ; e s t a b l i s h a t e c h n i c a l r e v i e w c o m m i t t e e a n d a sc h e d u l e a n d p r o j e c t p l a n f o r t h e n e x t w i n d i n t e g r a t i o n s t u d y . .... .. t l U l ( ) : J ,. r t O J r t I- l l ( J r t f- i : i - C D I I 'I l i - . . ( ) f- : : " " : : f- ( J ( ) 0 3 '" o . C D ó9 ~ m ; g ¡ : I. : : n : J CD f r ~ ~ I f- o f - i- I f- ~ 0 25 7 Energy Gateway Transmission Expansion Project PacifiCorp semce a rea PlannedtrnsmissÎOn lines: - sa kV minimum voltae - J4!i kV minimum volta -- 230 k V miniinumVQliail - - lines undr consídentioi o Tranmiìssion hub . FiiSlìng subitaôoo N TAN A N E DA COLORADO ARIZO N MEXICO This map Is for general refe~e only and re1lca current plans. It may not rqflect thi flnal rolltlX. conçtrur: srø lIli!OCq 0 r qx:ct lin. conflguratlon. N""..,,.2010 Attachment B Case No. PAC-E-11-10 Staff Coiments B. Lanspery 7/11/11 CERTIFICATE OF SERVICE I HEREBY CERTIFY THAT I HAVE THIS 11TH DAY OF JULY 2011, SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE NO. PAC-E-ll-lO, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE FOLLOWING: TED WESTON ID REGULATORY AFFAIRS MGR ROCKY MOUNTAIN POWER 201 S MAIN ST STE 2300 SALT LAKE CITY UT 84111 E-MAIL: ted.weston(fpacificorp.com DANIEL E SOLANDER REGULATORY COUNSEL ROCKY MOUNTAIN POWER 201 S MAIN ST STE 2300 SALT LAKE CITY UT 84111 E-MAIL: daniel.solander(fpacificorp.com DATA REQUEST RESPONSE CENTER E-MAIL ONLY: datarequest(fpacificorp.com i~..:.Kk SECRETARY CERTIFICATE OF SERVICE