20121114Comments.pdf

NEIL PRICE RECEIVED
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION 2012 NOV I4 AM 8 18 P0 BOX 83720
BOISE, IDAHO 83720-0074
[phone] UTILI E
IDAHO BAR NO. 6864
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 APPLICATION OF )
PACIFICORP DBA ROCKY MOUNTAIN ) CASE NO. PAC-E-12-12
POWER TO CANCEL SCHEDULE 17 AND )
IMPLEMENT A PARTIAL REQUIREMENTS ) COMMENTS OF THE
TARIFF. ) COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Neil Price, Deputy Attorney General, and in response to the Notice of
Application, Notice of Modified Procedure and Notice of Intervention Deadline in Order No.
32666 issued on October 17, 2012, submits the following comments.
BACKGROUND
On August 13, 2012, PacifiCorp dba Rocky Mountain Power ("Rocky Mountain" or
"Company") filed an Application, pursuant to Idaho Code §§ 61-301, 61-307, 61-622, and
61-623, with the Commission seeking authorization to cancel electric service Schedule No. 17,
Standby Service, and replace it with a new electric service Schedule No. 31, Partial
Requirements Service. Rocky Mountain states that its partial requirements service is designed
for customers with on-site generation, or whose electric service requirements are obtained from
any service other than the Company including back-up, supplementary, excess and maintenance
power.
STAFF COMMENTS 1 NOVEMBER 14, 2012
The Company states that a customer can contract for Schedule 31 partial requirements
service for a minimum of one year. Schedule 31 service is not required where on-site generation
is used only for emergency supply in case of utility outage. Schedule 31 service would be
available to high voltage customers with loads up to 15,000 kW. Consistent with Schedule 9,
General Service - High Voltage, customers with loads in excess of 15,000 kW will require a
special contract.
The Company states that its proposed Schedule 31 rates are based on and aligned with
current Schedule 9 rates and the cost of service results from the Company's last general rate
case, Case No. PAC-E-1 1-12. According to the Company, this assures consistency between
Schedule 31 and the corresponding full requirement rates on Schedule 9, under which eligible
customers would otherwise take service.
Based on a recent Idaho customer inquiry, the Company believes that Idaho customers
would benefit from a partial requirements service option currently available in the Company's
other jurisdictions. According to the Company, Schedule 17 has not been updated for the last
several rate cases because no customers have been on the schedule for at least 15 years. The
Company states that significant modifications are necessary in order to make Schedule 17
compatible with the Company's other jurisdictions. Thus, the Company proposes to cancel the
current standby service Schedule 17 and implement a new partial requirement service as
Schedule 31.
STAFF REVIEW
Staff reviewed the Application and accompanying testimony and is generally supportive
of the Company's proposal. Staff believes the new standby service rate design and partial
requirements service option will better fit the needs of eligible customers, and will enable on-site
generation by large customers.
Proposal to Cancel Schedule 17
The proposed Schedule 31 differs from the existing Schedule 17, most notably by
removing barriers to participation for high voltage customers and by allowing customers a partial
requirements service option. Backup service under Schedule 17 has always been limited to
customers with contract demand up to 2,500 kW. Schedule 31, on the other hand, has been
STAFF COMMENTS 2 NOVEMBER 14, 2012
designed for high voltage transmission customers taking three phase Service supplied at 44,000
volts or 69,000 volts or greater, with demand up to 15,000 kW.
Staff believes it is reasonable that Schedule 31 be modeled to accommodate high voltage
customers because they are most likely to self generate. The Company's Schedule 135 - Net
Metering accommodates eligible self-generation up to 25kW for smaller customers, or 100kW
for all other customers. There is no minimum contract demand under Schedule 31, but the
proposed voltage requirement precludes small customers from taking service, creating a situation
where customers may not be eligible for either schedule. Staff believes the Company's net
metering tariff will accommodate the needs of most small customers with on-site generation, but
customers self-generating at over 100kW and under 44,000 volts will not be eligible for either
Schedule 135 or Schedule 31. Staff encourages the Company to consider how this potential
group of customers could be accommodated in the future.
Schedule 17 has never allowed for partial requirements service, meaning the tariff
prohibited customers from generating power or obtaining power from other sources when the
Company was providing power. Schedule 31 allows customers to take service from the
Company in parallel with their own generation or while obtaining power from other sources,
which means customers may have more flexibility when designing their self-generation system
to meet load. Overall, Staff believes the Company's proposal is an improvement from Schedule
17 because it makes standby service available to high voltage customers and provides an option
for partial requirements service.
Proposed Tariff Design
The tariff is comprised of several billing components, most of which assure consistency
between Schedule 31 and the corresponding full requirement rates under Schedule 9. This is
primarily because Schedule 9 has similar eligibility requirements and is the tariff under which
customers would otherwise take service. Each billing component is shown in the table below
with a brief description of how the rate was developed.
STAFF COMMENTS 3 NOVEMBER 14, 2012
Billing Component Description
Customer Service Charge Schedule 9 Customer Service Charge
Supplementary Power Rate Schedule 9 Seasonal Power Rate
Back-up Facilities Rate Demand Related Costs
(transmission + 13% generation)
Back-up Power Rate Difference between Supplementary Power Rate
and Back-up Facilities Rate
Excess Power Rate 2 Times the Supplementary Power Rate
Supplementary & Back-up Energy Rate Schedule 9 Energy Rate
Maintenance Service Rate One-half of Back-up Power Rate
The Company has designed its Schedule 31 rates so that if a standby service customer does not
self generate but has a load profile similar to the average Schedule 9 customer, the customer's
bill would be the same as if they were on Schedule 9. In other words, for a customer with a load
profile similar to the average Schedule 9 customer, the combination of the Back-up Facilities
Rate and the Back-up Power Rate add up to what would have been paid under the Schedule 9
Power Rate. Staff supports the Company's proposal to keep consistency between the two rate
schedules when customers do not self generate. This allows the Company to recover the fixed
costs of providing service but does not unnecessarily penalize customers for not self generating.
For purposes of these Comments, Staff will primarily focus on the billing determinants
not taken directly from Schedule 9, which include the: (1) Back-up Facilities Rate; (2) Back-up
Power Rate; (3) Maintenance Service Rate; and (4) Excess Power Rate.
Back-up Facilities Rate
Under the proposed tariff, customers specify a predetermined amount of contract demand
from the Company which can be used during unexpected outages or prescheduled plant
maintenance. The Back-up Facilities Rate is a charge per kW of contract demand the Company
makes available, whereas the Back-up Power Rate is a charge per kW of contract demand
actually used by the customer during the billing month. The proposed Back-up Facilities Rate is
calculated based on the Schedule 9 allocations from the last cost-of-service study (i.e. - Case No.
PAC-E-11-12). Specifically, the rate includes the demand-related transmission costs on a per
unit basis, plus 13% of the demand-related generation costs on a per unit basis. The Company
believes that the 13% planning reserve margin used in the 2011 Integrated Resource Plan (IRP)
STAFF COMMENTS 4 NOVEMBER 14, 2012
and applied to the demand-related generation costs reasonably approximates the costs incurred to
back-up the customer's generation. The planning reserve margin is intended to account for
operating reserves, load forecast errors, and other long term resource adequacy planning
uncertainties. Since standby service is designed to meet unplanned outages at the customer's
generation facility and is not reflected in the Company's load obligation for resource planning,
the Company believes its methodology is appropriate.
The Company's approach to calculating the demand related costs necessary to provide
standby service is subjective. Staff believes that the 13% planning reserve margin applied to the
demand-related generation costs on a per unit basis is a somewhat arbitrary proxy for estimating
the costs of providing future customers standby service. The demand-related generation costs
necessary to serve standby customers is heavily dependent on each standby customer's load
profile, outage probability, and the Company's load/resource balance position at the time back-
up power is requested. Consider, for example, a customer who has on-site generation but rarely
utilizes its contract demand other than for prescheduled maintenance. In this situation, it may
never be necessary for the Company to make use of the planning reserve margin to provide
standby service, particularly if the customer's contract demand were utilized during the shoulder
season and off-peak periods when the Company already has available capacity. On the other
hand, if a customer generator regularly utilizes its contract demand, it might be necessary for the
Company to make use of the planning reserve margin to provide standby service, particularly if
the contract demand were utilized during the system's peak period.
In the Company's Wyoming standby service tariff, the back-up demand charge only
applies to the on-peak periods, which is also consistent with the on-peak period specified in its
high voltage schedule. Staff believes the Company's proposed standby service rates might be
more accurate by incorporating time-of-use (TOU) pricing, but recognizes that implementing
TOU pricing would require the Company depart from the current Schedule 9 rate structure. Staff
supports the Company's Back-up Facilities Rate, given that the rate structure incorporates the
seasonal price differentials set forth in Schedule 9, which reflect higher prices during months
when the utility normally pays more to provide service. If in the future the Company evaluates
the load profiles of standby service customers and determines the demand-related generation
costs necessary to serve them deviates from what was anticipated, the Company can revisit the
rate design.
STAFF COMMENTS 5 NOVEMBER 14, 2012
Back-up Power Rate
Back-up power is determined for each day of the billing period and is measured based on
a customer's greatest daily kW usage during a fifteen minute period. The rate is calculated as a
per day rate and is developed to capture the difference between the Supplemental Power Rate
and the Back-up Facilities Rate. The proposed Back-up Facilities Rate is approximately 60% of
the Supplementary Power Rate, whereas the Back-up Power Rate on a monthly basis is
approximately 40% of the Supplementary Power Rate.'
In order to align the proposed Back-up Power Rate with Schedule 9, the Company had to
compare the demand of Schedule 9 customers on a daily basis to their demand on a monthly
basis. This is because the Power Rate for Schedule 9 is determined for each billing period based
on the customer's greatest monthly kW usage during a fifteen minute period, not the greatest
daily kW usage like the Back-up Power Rate. The Company evaluated the loads of its Schedule
9 customers and discovered total demand on a daily basis averaged approximately 80% of total
demand on a monthly basis. The Company used these results to develop a daily Back-up Power
Rate that is estimated to recover the full monthly difference between the Supplemental Power
Rate and the Back-up Facilities Rate.
Staff believes that the Company's approach for determining the Back-up Power Rate is
reasonable. Even though the high voltage customers used to develop rates might not have the
same load profile as a potential standby service customer, Staff believes the Company's
approach offers a reasonable estimate given there are currently no Idaho customers taking
standby service. If in the future the Company evaluates the load profiles of standby service
customers and determines Schedule 31 is not aligned with Schedule 9, the Company can revisit
the rate design.
Maintenance Service Rate
Maintenance service provides customer generators electric service when generation
equipment needs to be taken down for scheduled maintenance or servicing. The customer's
proposed maintenance schedule for each month must be submitted to the Company in writing by
The Back-up Power Rate as a percent of the Supplemental Power Rate is calculated based on the load profile of an
average Schedule 9 customer on a monthly basis. The Company used the average load profile of Schedule 9
customers to develop the Back-up Power Rate calculated on a per kW day basis. The rate per kW day is estimated
to capture the monthly difference between the Back-up Facilities Rate and Supplemental Power Rate.
STAFF COMMENTS 6 NOVEMBER 14, 2012
September of each subsequent year for each month of an 18-month period beginning January
1st of the following year. Customers are allowed to receive maintenance service for 30 days as
one continuous period or two 15 day periods. The Company may cancel a scheduled
maintenance outage anytime with seven days notice prior to the beginning of a scheduled
maintenance outage. The Company's proposed rate for Scheduled Maintenance Power is half
the Back-up Power Rate.
Staff supports the Company's proposal to provide customers a discount for scheduled
back-up maintenance power because the Company's costs of providing service would generally
be less when planned for in advance. Staff believes the Company's proposal to have the
Scheduled Maintenance Power Rate be half the Back-up Power Rate is reasonable. This is
consistent with the Company's other jurisdictions and can be reevaluated in the future once
customers take service under this schedule. Staff believes the prescheduled maintenance
provisions are reasonable, and according to the Company, have not been problematic in its other
jurisdictions. If the proposed maintenance provisions become problematic to customers and the
Company anticipates having capacity available when prescheduled maintenance has been
requested, Staff encourages the Company to consider reevaluating the maintenance provisions to
allow for more flexibility.
Excess Power Rate
Excess service is the power supplied by the Company in excess of the total contract
power for supplementary service and back-up or maintenance service. The proposed rate is
calculated at twice the Supplementary Power Rate, similar to the Company's other jurisdictions.
According to the Company, the rate is designed to encourage customers to establish accurate and
appropriate contract levels to protect other customers and the Company from higher potential
costs as a result of serving load in excess of the contract demand. Staff believes the Excess
Power Rate is reasonable, but encourages the Company to monitor the rate's impact on
customers' behavior once they begin taking service under Schedule 31. It is important to protect
other customers from higher costs as a result of the Company meeting excess loads it has not
planned for, particularly when it is capacity constrained.
STAFF COMMENTS 7 NOVEMBER 14, 2012
STAFF RECOMMENDATION
After a careful examination, Staff recommends that the Commission accept the
Company's Application for authority to cancel Schedule No. 17 Standby Service, and implement
Schedule No. 31 Partial Requirements Service - High Voltage.
Respectfully submitted this \ November 2012.
Neil Price
Deputy Attorney General
Technical Staff: Mart Elam
1 :/umise/comments/pacel 2.1 2npme comment. doe
STAFF COMMENTS 8 NOVEMBER 14, 2012
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14TH DAY OF NOVEMBER 2012,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. PAC-E-12-12, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
TED WESTON
ID REGULATORY AFFAIRS MANAGER
ROCKY MOUNTAIN POWER
201 S MAIN ST STE 2300
SALT LAKE CITY UT 84111
E-MAIL: [e-mail]
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
datareguest(pacificorp.com
TIM BULLER
AGRIUM US INC/NU-WEST
INDUSTRIES
3010 CONDA RD
SODA SPRINGS ID 83276
E-MAIL: tbu11eragrium.com
BRUBAKER & ASSOCIATES
16690 SWINGLEY RIDGE RD
#140
CHESTERFIELD MO 63017
E-MAIL: [e-mail]
DANIEL E SOLANDER
SENIOR COUNSEL
ROCKY MOUNTAIN POWER
201 5 MAIN ST STE 2300
SALT LAKE CITY UT 84111
E-MAIL: [e-mail]
RONALD L WILLIAMS
WILLIAMS BRADBURY PC
1015 WHAYS ST
BOISE ID 83702
E-MAIL: [e-mail]
RANDALL C BUDGE
RACINE OLSON NYE BUDGE
& BAILEY
P0 BOX 1391
POCATELLO ID 83204
E-MAIL: [e-mail]
JAMES R SMITH
MONSANTO COMPANY
E-MAIL ONLY:
im.r. [e-mail]
S"fCRETARY
CERTIFICATE OF SERVICE