20131016SAR Application.pdf

ROCKY MOUNTAIN
POWER
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Salt Lake City, Utah 84111
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October 15,2013
YIA IAND DELIWRY
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472W. Washington
Boise,lD 83702
Re: CASE NO. PAC-E-13-12
IN THE MATTER OF ROCKY MOUNTAIN POWER'S APPLICATION FOR
APPROVAL OF SURROGATE AVOIDED RESOURCE METHODOLOGY
UPDATE
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of Rocky Mountain Power's
Application in the above-referenced matter, along with a CD containing Appendix A and B
in their original format.
All formal correspondence and regarding this Application should be addressed to:
Ted Weston Daniel E. Solander
Rocky Mountain Power Rocky Mountain Power
201 South Main, Suite 2300 201 South Main Sheet, Suite 2300
salt Lake city, Utah 84111 salt Lake city, utah 8411I
Telephone: [phone] Telephone: [phone]
Fax: [phone] Fax: [phone]
Email: [e-mail] Email: [e-mail]
Communications regarding discovery matters, including data requests issued to Rocky
Mountain Power, should be addressed to the following:
By E-mail (preferred): [e-mail]
By regular mail: Data Request Response Center
PacifiCorp
825 NE Multnomah St., Suite 2000
Portland, OR97232
Idaho Public Utilities Commission
October 15,2013
Page2
Informal inquiries may be directed to Ted Weston, Idaho Regulatory Manager at (801) 220-
2963.
Verytnrly yours,
X#3CLL*e{/,4/B(JdfteyK. Larsen
Vice President Regulation & Govemment Affairs
Enclosures
Mark C. Moench 0SB# 8946)
Daniel E. Solander (ISB# 8930)
201 South Main Street, Suite 2300
salt Lake city, Utah 841I I
Telephone No. [phone]
Facsimile No. [phone]
mark.moench@paci fi corp.com
daniel. solander@pacifi corp.com
Attorneysfor Rocky Mountain Power
IN THE MATTER OF ROCKY
MOUNTAIN POWER'S
APPLICATION FOR APPROVAL OF
SURROGATE AVOIDED RESOURCE
METHODOLOGY UPDATE
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. PAC.E-I3.I2
APPLICATION
Comes now, Rocky Mountain Power ("Company") and in accordance with Order Nos.
32697 and 32802 respectfully submits this Application for approval by the ldaho Public Utilities
Commission (the "Commission") of the capacity deficiency period determination to be utilized
in its Surrogate Avoided Resource ("SAR") Methodology. As more fully described below, this
update identifies Rocky Mountain Power's deficiency periods for summer capacity, winter
capacity, and energy, and explains how these deficiency periods were identified. The Company
is also providing its most current updated load forecasts, gas price forecasts, a list of new and
terminated PURPA contracts, and a list of new or terminated long term power purchase
agreements.
In support of its Application, Rocky Mountain Power states as follows:
l. Rocky Mountain Power is authorized to do and is doing business in the state of
Idaho. The Company provides retail elecffic service to approximately 72,300 customers in the
state and is subject to the jurisdiction of the Commission. Rocky Mountain Power is a public
utility in the state of ldaho pursuant to Idaho Code $ 6l-129.
2. Communications regarding this Application should be addressed to:
Ted Weston
Daniel E. Solander
201 South Main, Suite 2300
Salt Lake City, Utah 841I I
Telephone : (80 l) 220 -29 63
Fax: [phone]
Email: [e-mail]
daniel. solander@oacifi corp.com
In addition, the Company respectfully requests that all data requests regarding this matter
be addressed to one or more of the following:
By e-mail (preferred)
By regular mail
datareque st@nac i fi corp. com
Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 2000
Portland, OR 97232
BACKGROUND
3. On November 5, 2010, Idaho Power Company, Avista Corporation, ffid
PacifiCorp d/b/a Rocky Mountain Power filed a Joint Petition requesting that the Commission
initiate an investigation to address various avoided cost issues related to the Commission's
implementation of PURPA.
4. The Commission noticed the joint application, GNR-E-10-04, and subsequently
ruled to temporarily reduce the eligibility cap for published avoided cost rates from 10 aMW to
100 kW for wind and solar projects.l Thus, the eligibility cap for published avoided cost rates for
wind and solar QF projects was set at 100 kW effective December 14,2010.
5. On February 25, 2011, consistent with the Commission's stated intent to
investigate the issue of disaggregation, the Commission issued a combined Notice of Inquiry,
Notice of Intervention Deadline, Notice of Scheduling, and Notice of Technical Hearing.2
Specifically, the Commission solicited information and initiated an investigation of a published
avoided cost rate eligibility cap structure that: (l) would allow small wind and solar QFs to avail
themselves of published rates for projects producing l0 aMW or less; and (2) would prevent
large wind and solar QFs from disaggregating into small projects in order to obtain published
avoided cost rates that exceed a utility's actual avoided cost.
6. After careful consideration, the Commission ultimately determined that it was
appropriate to maintain the 100 kW eligibility cap for published avoided cost rates for wind and
solar QFs.3 Wind and solar projects larger than 100 kW are still entitled to PURPA contracts
with avoided cost rates calculated through use of the IRP Methodology. The Commission found
that any attempt to implement criteria in an effort to prevent disaggregation would be met by
attempts to circumvent such criteria. The Commission emphasized that PURPA and this State's
published rate structure were never intended to promote large scale wind and solar development
to the detriment of utility customers.o The Commission further found that a 100 kW threshold for
wind and solar QFs would provide a certainty to the parties in negotiations that disaggregation
criteria would not.
I Order No. 32212.
2 Phase II, GNR-E-I l-01, OrderNo.32195.
3 Order No. 32262.
a Order No. 32697.
7. At the conclusion of the Phase II case the Commission stated its intent to initiate
additional proceedings to allow the parties to investigate and analyze both the SAR Methodology
and the IRP Methodology.s On Septemb er l,2Ol1, the Commission issued a Notice of Review to
investigate the standard terms of PURPA power purchase agreements.
8. The Commission initiated Phase III to investigate various PURPA topics
including, but not limited to: the surrogate avoided resource (SAR) methodology, the [ntegrated
Resource Planning (RP) Methodology, the dispatchability of varying resources, curtailment
options, integration costs, renewable energy credits, delay securrty and liquidated damages,
timing and schedule of negotiations, and consideration of contract milestones.
9. At conclusion of Phase III the Commission found that,
"in order to maintain the most accurate and up-to-date reflection of a utility's true
avoided cost, utilities must update fuel price forecasts and load forecasts annually -
between IRP filings. For the sake of consistency, these annual updates should occur
simultaneously with SAR updates - on June I of each year. In addition, it is appropriate
to consider long-term contract commitments because of the potential effect that such
commitments have on a utility's load and resource balance. We find it reasonable to
include long-term contract considerations in an IRP Methodology calculation at such
time as the QF and utility have entered into a signed contract for the sale and purchase of
QF power. We further find it appropriate to consider PURPA contracts that have
terminated or expired in each utility's load and resource balance. We find it reasonable
that all other variables and assumptions utilized within the IRP Methodology remain
fixed between IRP filings (every two years)".
10. After reconsideration the Commission determined that the annual updates to the
IRP and SAR methods should be filed on October 15.6
REOUEST TO ESTABLTSTT SAR DEFICIENCY PERIOD
11. On April 30,2013 Rocky Mountain Power filed its 2013 IRP with the
Commission. The 2013 IRP includes the results of the Company's capacity balance in Table 5.12
on page 99. The capacity balance is calculated for summer peak loads only. The capacity
s cNR-g-tt-03, Phase IIL
6 OrderNo. 32082.
balance is developed by determining firm resource capacity available at the annual system peak
load hour, plus a 13 percent planning reserve margin. The study reports that the Company is
capacity deficit in 2013. The capacity deficit is 824 MW starting in 2013 with the deficit
increasing to 2,308 MW by 2022. Table 5.12 from the 2013 IRP is provided in Appendix B.
12. The 2013 IRP includes Figure 5.5 on page 103 which demonstrates the
Company's energy balance. The figure shows a snapshot of how existing system resources could
be used to meet forecasted load across on-peak and off-peak periods given IRP planning
assumptions and wholesale power and natural gas prices. It shows expected monthly energy
production from resources in relation to load assuming no additional resources are added to
PacifiCorp's system. Periods where all available resource energy falls below forecasted loads
are indicative of short energy positions absent the addition of incremental resources to the
portfolio. On page 102 of the 2013 IRP the Company states, "During on-peak periods, the first
energy shortfall appears in July 2018 and by 2022 available system energy falls short of monthly
loads in January, July , August, and October." Figure 5.5 from the 2013 IRP is provided in
Appendix B.
13. Updating the peak and energy balances to reflect the Company's most recent load
forecast and for recent changes in long term contracts, provided in Appendix A, would not alter
the identified deficit years.
14. Rocky Mountain Power submits that this update meets the requirements set forth
in Commission Order Nos. 32697 and 32802, and requests that the Commission approve this
Application establishing the capacity deficiency period to be utilized in its SAR calculation.
WHEREFORE, Rocky Mountain Power respectfully requests that the Commission
approve this Application for Approval of Rocky Mountain Power's SAR methodology update
and that this Application be processed pursuant to Modified Procedure.
DATED this l5m day of October,2}l3.
ROCKY MOI.INTAIN POWER
V(rr!-6W("*!*-
Mark C. Moench
Daniel E. Solander
201 South Main Street, Suite 2300
Salt Lake City, Utah 841I I
Telephone No. [phone]
Facsimile No. [phone]
mark.moench@Jracifi corp.com
daniel. solander@nacifi com.com