20150807ID Conservation League.pdf

Benjamin J.Otto (ISB No.8292)
710 N 6th Street
Boise,ID 83701
Ph:[phone] x 12
Fax:[phone]
[e-mail]
Attorney for the Idaho Conservation League
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
)CASE NO.PAC-E-15-04
IN THE MATTER OF PACIFCORP DBA )ROCKY MOUNTAIN POWER’S 2015 )IDAHO CONSERVATION LEAGUE
INTEGRATED RESOURCE PLAN )
)COMMENTS
The Idaho Conservation League (ICL)submits the following comments on PacifiCorp’s
Integrated Resource Plan.Due to the geographic scope across the western United States,resource
stack covering most western coal plants,the vast scale of the transmission system,and the
wholesale market activities PacifiCorp’s actions stemming from this resource plan will have more
impact on Idaho than any other utility.Accordingly,the Commission must take a hard look at
the plan’s process and results to serve the best interest of all Idahoans.
ICL’s comments cover three main topics.ICL supports PaciflCorp’s treatment of demand
side resources because is truly gives equal and balanced treatment to demand and supply side.We
note the wind integration study shows the growing ease and lowering costs of integrating wind
resources.However,PacifiCorp’s modeling of potential Clean Power Plan and other coal
pollution costs is fundamentally flawed.Due to these flaws,ICL recommends the Commission
direct PaciflCorp to produce an IRP update that analyzes a mass based power plan compliance
strategy and allows the model to discover,rather than planners to assume,the least cost and least
risk path to deal with forthcoming coal pollution controls.
1.PacifiCorp Properly Models Demand Side Resources in the IRP
Idaho’s IRP development guidelines require utilities to give equal and balanced treatment
to supply-side resources,demand-side measures,and transmission resources.PacifiCorp’s
methodology for considering demand-side measures is more equal and more balanced than
Idaho Power’s or Avista’s.ICL recommends the Commission specifically acknowledge that
PacifiCorp’s method as the preferred method for all Idaho utilities.
ICL Comments
PAC-E-15-04
According to the Regulatory Assistance Project:“PacifiCorp is one of the only utilities in
the country that models energy efficiency resources as supply-side resources,rather than as load
modifiers.”1 This expert report explains that this method “provides the model with specific
quantities of energy efficiency at given costs,and allows those efficiency resources to compete
against other resources from which the model is able to select.”2 According to the State &Local
Energy Efficiency Action Network,this methodology is a best practice for encouraging
investment in cost-effective energy efficiency.3 This report compares three possible
methodologies:adjusting load forecasts with specific efficiency savings;comparing alternate load
forecasts resulting from different savings levels;and developing efficiency supply curves that can
compete against other supply-side options.The supply curve method is best because “this
approach will not only result in a true least-cost plan and (in most cases)high levels of energy
efficiency investment,it will also provide useful information about the true value of demand side
resources as an alternative to supply side resources.”4
The efficiency supply curve methodology begins with a demand side resource potential
study.5 The study identifies the types of efficiency measures by customer class and end use,the
amount of each type,and the cost for each type technically available in the service territory.From
this data,planners are able to develop efficiency supply curves consisting of bundles of efficiency
measures at various price points.These bundles have a load shape reflecting the timing,scale,and
durability of energy savings,and a cost range expressed in dollars per mwh.These load curves are
then directly comparable to supply side resources,which are also represented by a load shape and
the cost per mwh to acquire and deliver the resource.Based on this equally described and
comparable data the planning process can then compare efficiency resources to supply side
resources and “allow the model to choose and optimum level of investment.b
Regulatory Assistance Project,Best Practices in Electric Utility Integrated Resource Planning at p.
24,(June 2013).
2 Idat24—25.
State &Local Energy Efficiency Action Network,Using Resource Planning to Encourage
Investment in Cost-Effective Energy Efficiency Measures,at Table 1 p.vii (September 2011).
Available at:
https://www4.eere.energy.gov/seeaction/sites/default/files/pdfs/ratepayer_efficiency_irpportfolio
management.pdf
‘I Id at 4.
Idat6.
6 Id.
ICL Comments
PAC-E-15-04
This method stands in stark contrast to treating efficiency as a load modifier where by the
utility selects a specific amount of efficiency and reduces the load forecast prior to the resource
selection process.This method also starts with an efficiency potential study.But instead of
finding the optimum level of energy savings,the planner pre-selects a level of savings deemed
“achievable”.Achievable savings levels are based on assumptions about program performance
and public acceptance that reduce the level of cost-effective efficiency potential even considered
in the planning process.In this method,supply-side resources do not get the same limiting
assumptions.Instead,once the planner identifies a supply-side need,the plan assumes the ability
to finance and procure that resource.PacifiCorp’s supply curve method for identifying optimal
levels of efficiency achievements applies equal and balanced assumptions for the achievability of
supply-side and demand-side resources.If the plan identifies more efficiency that current being
acquired,then the utility devises a plan to acquire that level,as PacifiCorp does in the Action Plan
on page 216 and more specifically in Appendix D of the 2015 IRP.By adopting the supply curve
methodology regulators will benefit customers by ensuring the utility will devise methods to
overcome assumed hurdles and actually pursue all cost-effective energy efficiency.
2.The 2014 Wind Integration Study Reflects Falling Costs to Integrate Wind
ICL includes the following comments filed by Renewable Northwest with the WUTC
regarding PacifiCorp’s 2015 IRP because they accurately and clearly explain the issue—
PacifiCorp’s modeling shows that adding 417 MW of wind caused regulating margins to increase
by only 1 MW.7
PacifiCorp’s 2014 Wind Integration Study8 (“WIS”)calculated wind integration
costs used for IRP modeling,incorporating the additional 417 MW of wind projects on
the Company’s system since the 2012 WIS.9 A comparison of the wind regulating
margin—the incremental amount of reserves anticipated to accommodate deviations in
wind from forecasts—required in the 2012 WIS to the level required in the 2014 WIS
reveals PacifiCorp’s increasing ability to integrate variable resources into its system.The
Available at:
http://www.utc.wa.gov/_layouts/CasesPublicWebsite/Caseltem.aspx?item=document&id=38&ye
ar=20 1 4&docketNumber=140546
ICL notes this study is included as Appendix H to PacifiCorp’s 2015 IRP.
PacifiCorp,2015 IRP,Public Input Meeting 3,August 7—8,2015,slide 70
www.pacificorp.com/content/dam/pacificorp/doc/Energy_Sources/Integrated_Resource_Plan/20
1 5IRP/PacifiCorp_20 1 5IRP_PIMO3_8-7-8-20 1 4.pdf
ICL Comments 3
PAC-E-15-04
wind regulating margin remained relatively flat,increasing from 185 MW in 2011 (2012
WIS)to 186 MW in 2013 (2014 WIS),while the wind capacity increased 417 MW from
2,135 MW in 2011 to 2,552 MW in 2013.10 Looking to the next IRP,Renewable Northwest
welcomes PacifiCorp’s intention to use data from the Energy Imbalance Market to inform
future wind integration studies.
3.Modeling Errors in the 2015 IRP
The following comments regarding modeling errors for the Clean Power Plan and coal
unit retirement were developed by the Sierra Club with the technical assistance of Synapse Energy
Economics and filed before the Washington UTC regarding PaciflCorp’s 2015 IRP.”Because
they accurately and clearly explain the issue,ICL is including the relevant portions here with
some alterations and notes regarding changes to the final Clean Power Plan.
I.The Clean Power Plan
a.Background
PacifiCorps 2015 IRP models a version of the Clean Power Plan (CPP),EPA’s proposed
rule to reduce carbon dioxide (C02)emissions from existing power plants.The CPP is EPA’s
2014 proposal to meet C02 emissions limitations from existing sources using a Best System of
Emissions Reductions (BSER).A version of the CPP is expected to be finalized in mid-summer
2015,after EPA received over 8 million comments on the proposal.’2 As PacifiCorp has pointed
out numerous times,the proposed CPP is exactly that —a proposal,subject to change in
mechanism,assumptions,and stringency.Yet PacifiCorp has oriented around one specific
interpretation of the CPP,using one specific compliance mechanism.This narrowness of focus
leaves PacifiCorp in the position of structuring many of its assumptions and operational
restrictions around a single expectation of the regulation,and does not comport with reasonable
‘°PacifiCorp,2015 IRP,Public Input Meeting 3,August 7—8,2015,slide 73
www.pacificorp.com/content/dam/pacificorp/doc/EnergySources/Integrated_ResourcePlan/20
1 5IRP/PacifiCorp_20 1 5IRPPIMO3_8-7-8-2014.pdf
“Available here:
http://www.utc.wa.gov/jayouts/CasesPublicWebsite/GetDocument.aslix?doclD=42&year=2014
&docketNumber=140546
12 ICL notes that EPA released the final CPP on August 3,2015,which made several changes from
the draft.These changes reinforce the main point of these comments--PacifiCorp unreasonably
constrained the evaluation of compliance options and the modeling tools used to assess these
options.
ICL Comments 4
PAC-E-15-04
least cost planning in the face of uncertainty.In this section,we describe how PacifiCorp’s review
of a single interpretation of the CPP may [producej’3 poor planning results.
EPA has structured the CPP around four fundamental “building blocks”that represent
possible means for achieving the established emissions standard:(1)increasing existing coal plant
efficiency,(2)displacing coal generation with existing natural gas,(3)increasing renewable
energy acquisitions,and (4)implementing energy efficiency programs.’4 Taken together,EPA
estimates that these programs will reduce emissions by a certain amount in each state.By default,
EPA’s targets for each state are set as a rate,measured in pounds of C02 per megawatt-hour
(lbs/MWh))’The rate has been a source of confusion to many parties:it represents both
projected emissions from existing sources and generation from covered sources,as well as new
renewable energy {].The CPP sets forth two basic routes for reducing state C02 emissions from
existing sources:states can either meet the rate-based target using a combination of the building
blocks or other programs,or meet an alternate mass-based target,measured in total tons of C02.
EPA’s proposal allows states to choose the metric by which they measure compliance.
The rate-based mechanism is a fairly unique measure of compliance,while the mass-
based system is similar to the result of a cap-and-trade scheme,currently employed for national
sulfur dioxide (S02)emissions under the Acid Rain Program,regionally for nitrogen oxides
(NOX)budget trading program,and for C02 in California and Regional Greenhouse Gas
Initiative (RGGI)states.The rate-based approach,at least as used in EPA’s target-setting,assigns
credit for renewable energy []implemented by entities in the state,apparently regardless of their
impact.The mass-based approach assigns credit for stack-based emissions reductions.
From the perspective of resource planning,the rate mechanism is a far more difficult
measure to use in planning.It is also the mechanism that PacifiCorp has chosen to utilize in
almost every one of the core cases.
b.Rate-Based Compliance is Not Optimal in PacifiCorp Modeling
ICL changed this word from “result”to “produce”for clarity.
14 ICL notes the final CPP removes building block four when calculating state emission targets,
but allows efficiency to be used for compliance.In the remainder of these comments,ICL
removed references to building block 4 or energy efficiency in reference to setting the state targets
that appeared in Sierra Club’s WUTC comments filed before the final CPP was released.The
removals are indicated with empty brackets:to wit [j.
‘ICL notes the final CPP establishes both a rate-based and equivalent mass-based target.
ICL Comments 5
PAC-E-15-04
The rate-based compliance approach is,by all measures,far harder to model when
optimizing for least cost on a net present value basis.The mass-based approach is far simpler.
Since at least the mid-i 990s with the advent of S02 (acid rain)and NOX trading programs,
energy planners have understood that it was appropriate to model mass emissions caps using an
opportunity cost for generators,regardless of whether emissions allowances were tradable.Every
ton of emissions avoided by reducing generation eases compliance and thus has monetary value.
In “hard cap”mass-emissions reduction modeling,emissions have a shadow price —i.e.the cost
of incrementally shifting production to lower emissions sources,on a per ton basis.In a tradable
credit program,the emissions have a direct monetary value,but the meaning is the same.In both
cases,the cost of emissions is typically considered a variable cost —i.e.higher costs should result
in lower production for high emissions resources.’6
The rate-based trading mechanism is much more confounding from a forward modeling
perspective,requiring some form of rate-based credits,wherein resources that are higher
emissions than a target rate pay an incremental amount,and resources that are below the target
rate receive an incremental financial incentive.17 While this type of trading can be constructed
within a model setup,most off-the-shelf dispatch and capacity expansion models are not set up
for this mechanism.
PacifiCorp’s System Optimizer model is not configured to determine a least cost plan for
rate-based compliance.It is readily configured to determine a least cost plan for mass-based
compliance.
To overcome the barrier that System Optimizer cannot search for a least cost rate-
compliant plan,PacifiCorp fundamentally misuses the tool,manually choosing and excluding
resources in order to meet targets in different states.PacifiCorp developed the “111(d)”tool
specifically to develop user-specified portfolios that meet rate-based compliance.By developing
each individual portfolio manually,PacifiCorp undermines System Optimizer’s ability to find
least cost plans.
16 This mechanism is described in fair detail in a paper from Resources for the Future from 2008:
Burtraw,D and D.Evans.2008.Tradable Rights to Emit Air Pollution.Resources for the Future
Discussion Paper.RFF DP 08-08
‘A version of which is described by Western Resource Advocates in 2014:Michael,S and 1.
Nielson.2014.Carbon Reduction Credit Program:A State Compliance Tool for EPA’s Clean
Power Plan Proposal.Western Resource Advocates.
ICL Comments 6
PAC-E-15-04
As far as Sierra Club is aware,PacifiCorp is the first (and still only)utility to model rate-
based compliance with the CPP.From the perspective of national policy,we can thank
PacifiCorp for forging down this path and pointing out the difficulties of finding optimal
compliance on a rate basis.However,from the perspective of ratepayers and concerned groups
who rely on PacifiCorp’s planning to evaluate real risk,we do not support PacifiCorp’s exclusion
of mass-based compliance.
c.PacifiCorp’s CPP Modeling Is Narrowly Defined
PacifiCorp’s failure to model mass-based CPP compliance (i.e.“cap-and-trade”)and the
narrow definition of rate-based compliance used by the Company leaves PacifiCorp’s customers
vulnerable to contrary state and federal decisions.PacifiCorp,despite being one of the most
expansive utilities in the Western Interconnect,will not (and should not)determine the form of
111(d)compliance that will ultimately be used by Oregon,Utah,Washington,California,or
Idaho,much less Arizona,Colorado,or Montana.PacifiCorp cannot know today if those states
will pursue rate or mass-based compliance,and while the utility can hope for consistent (and
possibly cooperative)treatment by those states,it is just as likely (if not more likely)that a mass-
based compliance scheme based on California’s trading mechanism will be employed as a rate-
based scheme.
Having chosen a rate-based scheme for compliance,PacifiCorp further narrowed its
treatment by pre-determining its specific path to compliance rather than modeling a least cost
plan.Within the construct of the proposed CPP,states could either be required to use energy
efficiency and renewable energy (EE/RE)from in-state sources or allowed to procure EE/RE from
other states through rate or mass-based trading.’8 Both of these outcomes are equally likely.
Parties have proposed interstate trading mechanisms that would credit (or penalize)resources
relative to their respective state targets,and EPA’s proposal certainly doesn’t exclude such
mechanisms.
‘ICL notes the final CPP retains energy efficiency as a compliance option,allows states to choose
a rate or mass based system,and increases the options,while reducing the barriers,to engage in
interstate trading.See this compliance option chart produced by EPA:
http://www2.epa.gov/sites/production/files/20 1 5-O8/documents/flow_chartv6aug5.pdf
ICL Comments 7
PAC-E-15-04
To be clear,PacifiCorp’s treatment of 111(d)and the Clean Power Plan isn’t necessary
wrong—it is just so narrowly defined that it fails to allow for other options that could leave
PacifiCorp in a very different space after states find their best compliance outcomes.
d.PacifiCorp’s Deterministic Rate-Based Approach Undervalues Coal Conversion and
Retirement
PacifiCorp today stands at a crossroads.Ongoing regional haze compliance,increasing
coal costs,low gas prices (and forecasts),and rapidly falling renewable energy prices all suggest
that PacifiCorp should be proactively reviewing all possible opportunities to reduce its
dependency on coal when such actions are cost-effective.In modeling the Clean Power Plan,
PacifiCorp specifically excluded mechanisms that would provide consumer benefits for the
retirement or conversion of coal.
Under a mass-based approach,each ton of C02 emitted has a cost —either a direct
trading price or a shadow price (i.e.opportunity cost).By extension,each ton of C02 that is not
emitted has a monetary benefit,either as an allowance that is not retired or not purchased.
Therefore,under a mass-based trading approach,avoiding emissions from coal-fired resources
has clear monetary benefit.To fully secure this benefit,PaciflCorp would have to allow its fossil
units to both ramp down (i.e.re-dispatch)and even retire in the face of high emissions costs.
PacifiCorp neither modeled a mass-based approach,nor allowed units to retire economically,
and thus captured none of this outcome.
Under a rate-based approach,resources that emit less than states’rate targets have value,
while resources that emit more than states’rate targets incur penalties.The degree to which a
resource emits less than state targets determines its value —if the rate commensurate with a gas-
fired emissions rate (e.g.near 1,100 lbs/MWh),gas-fired units have no value to helping the state
meet its rate goals,and coal-fired units should be penalized.If the rate is between gas and coal
(e.g.1,700 lbs/MWh)then gas-fired units have a moderate value,and coal units are penalized less.
In some states,a target below gas-fired emissions rates (e.g.700 lbs/MWh)incurs penalties for
both coal and gas-fired resources,while crediting EE/RE measures.19 This differential crediting
can be modeled as a specific penalty towards high emissions resources and credit towards low
emissions resources.To capture this process may have required significant modifications to the
19 ICL notes the final CPP allows states to use energy efficiency towards compliance.
ICL Comments 8
PAC-E-15-04
System Optimizer framework,or workarounds by PacifiCorp,but would have resulted in more
cost effective outcomes.Instead,PacifiCorp did all of its rate-based modeling outside of System
Optimizer,realizing no incremental benefits for EE/RE programs and no incremental penalties
for the dispatch of existing coal units.
e.PacifiCorp’s Modeling of 111(d)is a Detriment to Ratepayers
PacifiCorp should be one of many stakeholders when Washington,Oregon,California,
Idaho,Utah,Wyoming,Montana,Arizona,and Colorado design their respective 111(d)plans.If
any of those states chose to pursue a mass-based compliance route with tradable allowances (e.g.
RGGI-styled cap and trade),PacifiCorp’s fossil-fired units will (or should)incur incremental
operational costs (i.e.a dispatch adder for CO2 costs).Depending on which states engage in such
a process,and how trading is structured,PacifiCorp’s coal-fired units could see a substantial
incremental variable cost —a cost that renders some of those units non-economic in the face of
ongoing capital expenditures.The retirement of existing resources can change which resources
PacifiCorp choses to pursue today and the shape of PacifiCorp’s action plan.By excluding
reasonable modeling of mass-based 111(d)compliance,PaciflCorp has excluded consideration of
cost-effective outcomes under a mass-based approach,and endangers ratepayers should
PacifiCorp states choose to pursue a mass-based compliance approach.
PacifiCorp’s exclusive choice of a rate-based approach could be read as the utility’s bid to
control and structure 111(d)compliance for their states,with an outcome that may neither favor
ratepayers nor state environmental policies.It is not reasonable that a single monolithic company
be granted the power to shape state environmental policy simply via fiat.
[]20
g.Modeling Mass-Based 111(d)Compliance is Consistent with Past IRPs
Ten months ago,while the IRP modeling was still in its infancy,Sierra Club openly
requested that PacifiCorp also model mass-based compliance with 111(d).21 The request,before
the Oregon PUG,detailed many of the concerns in these comments,and noted that mass-based
compliance is readily modeled by PacifiCorp.
20 ICL removed subsection “f’from Sierra Club’s comments filed with the Washington UTC.
That section dealt with RECs under the CPP and compliance with Oregon and Washington law.
The Final CPP includes a non-REC emission reduction credit system.ICL is still reviewing this
portion of the final plan.
21 Technical Workshop.August 6,2014.Oregon Public Utilities Commission
ICL Comments 9
PAC-E-15-04
Mass-based compliance is built into the System Optimizer framework,and can be
executed by either applying a system-wide cap,or using a proxy cost for C02 emissions
allowances.Both mechanisms had been used by PacifiCorp in past IRPs and are still available in
the current implementation of the Company’s model.PaciflCorp simply elected to disable this
functionality in System Optimizer,no reason given.
[122
II.Removal of Endogenous Power Plant Retirements
a.Background
PacifiCorp’s coal fleet has faced,and continues to face,a variety of new environmental
regulations that impose costs and operating restrictions.Since 2008,PacifiCorp has engaged in
significant capital and operating expenditures to comply with regional haze obligations and the
mercury and air toxics standards (MATS)rule.Going forward,PacifiCorp’s coal units will likely
see costs for additional regional haze obligations,and may see impacts of National Ambient Air
Quality Standards (NAAQS),as well as coal combustion residual (CCR)rule,and COZ emissions
costs for 111(d).
In the 2011 IRP (March 2011),PacifiCorp effectively ignored impending environmental
regulations for the purposes of the IRP,assuming that existing coal units would continue
operations unabated.This IRP conducted a “proof-of-concept modeling of coal unit
replacements,23 “but disclosed little about the study or its specific results.The study was not used
to inform the action plan or concurrent capital expenditures.
Around 2011,Ventyx (now ABB),the model vendor for System Optimizer,upgraded the
ability of the capacity expansion model to allow for “endogenous”coal retirements.In other
words,the model became capable of choosing if existing thermal units should be operated,
retired,or changed (i.e.converted to natural gas),independent of user choice.This capacity had
not been-used by PacifiCorp in the 2011 IRP,but under regulatory pressure,PacifiCorp
expanded the study in the 2011 IRP Update (March 2012)to review investments at Naughton,
Jim Bridger,Hunter,Craig,and Hayden.24 In this study,PacifiCorp reviewed the economics of
retiring or retrofitting individual units.In addition,PacifICorp began testing the model’s ability
to endogenously retire coal units.
22 ICL removed the final paragraph in this subsection because it deals with Washington state law.
23 Termed the “coal plant utilization study.”2011 IRP,p180
2011 IRP Update,p67.
ICL Comments 10
PAC-E-15-04
In the 2013 IRP,PacifiCorp expanded the endogenous retirement capability of System
Optimizer.Each unit was allowed to continue operation,.or retire or convert to natural gas.25
Sierra Club filed comments in response to this IRP commending the significant improvement in
modeling capability,and the disclosure of important results,and recommending refinements to
the process.The same endogenous retirement capacity was then used by PaciflCorp to examine
investments in individual coal units for the purposes of Certificates of Public Convenience and
Necessity in Wyoming and Pre-Approvals in Utah.
In the current 2015 IRP,PacifiCorp has completely eliminated the endogenous retirement
capacity of System Optimizer in all but one core case (C 14a).In the remainder of the IRP,
PacifiCorp simply chooses a ttRegional Haze Scenario”in which some units are retrofit and others
are converted or retired early.In every case,PacifiCorp simply programs in the retirement
schedule,denying the opportunity for the model to choose an optimal path under environmental
constraints.This complete turnaround is a massive shortfall in the 2015 IRP,and represents a
significant step backwards by the utility in finding a least cost plan to meet environmental
compliance requirements.
b.PacifiCorp’s has not Justified Eliminating Endogenous Retirement
PacifiCorp announced during early stakeholder meetings that it would eliminate
endogenous retirement from the current IRP.Sierra Club suggested that this change would
undermine the core meaning of the IRP,and would prevent PacifiCorp from finding anything
close to a least cost plan.PaciflCorp did not disagree that the process was non-optimal,but
suggested that the endogenous retirements posed more difficulties than they understood how to
deal with.PacifiCorp indicated that long term coal contracts with liquidated damages were
2013 IRP,p161 “Building upon modeling techniques developed in the 2011 IRP and 2011 IRP
Update,environmental investments required to achieve compliance with known and prospective
regulations at existing coal resources have been integrated into the portfolio modeling process for
the 2013 IRP.Potential alternatives to environmental investments associated with known and
prospective compliance obligations are considered in the development of all resource portfolios.
Integrating potential environmental investment decisions into the portfolio development process
allows each portfolio to reflect potential early retirement and resource replacement and/or
natural gas conversion as alternatives to incremental environmental investment projects on a
unit-by-unit basis.This advancement in analytical approach marks a significant evolution of the
IRP process as it requires consideration of potential resource contraction while simultaneously
analyzing alternative resource expansion plans.”
TCL Comments 11
PAC-E-15-04
difficult to model in an endogenous retirement framework,and that some units might be able to
trade off against each other in alternative regional haze scenarios.
PacifiCorp’s justifications do not hold water.While regional haze scenarios involving
multi-plant compliance could be more difficult to model,(a)these tradeoffs are relatively limited
to plants in near proximity,and (b)total,multi-unit emissions caps could be captured through
mechanisms within the System Optimizer framework.26 With regards to coal contracts,
PacifiCorp has sufficient information to know their expected damages for early withdrawal from
take-or-pay contracts on an annual basis,and this information is readily modeled.
c.Endogenous Retirements Allow for Lower Resource Costs
Allowing the model to choose to retire units optimally results in a lower cost plan than
when retirements are guessed by planners.PacifiCorp confirms this outcome for the case in
which a C02 cost is also imposed:“When allowing endogenous coal unit retirements beyond
those assumed for Regional Haze scenarios (core case C 14a),costs are lower than the C14
portfolios developed with specific timing for assumed coal unit retirements.”27 Since PacifiCorp
did not test any scenarios in which coal units were allowed to retire endogenously even without
their “high C02 cost,”we are unable to determine how much more cost effective such a portfolio
would have been.
d.Coal Resources Are Artificially Constrained to Operate
In the IRP,there is a small note indicating that “for coal resources,PacifiCorp assumes
that annual generation levels cannot fall below an equivalent 70%annual average capacity
factor.”28 No explanation for this constraint is provided.In our experience,this is the first time
that we have seen such a constraint explicitly applied in any utility.In some cases,utilities believe
that their coal units are equivalent to “must run,”even if there is no specific reliability constraint
on the unit.In no case have we seen a constraint that requires a unit to operate at an elevated
capacity factor regardless of its economic dispatch requirements.
26 System Optimizer allows units to be clustered into “technology groups,”where one unit may
occupy multiple groups simultaneously.Emissions caps and other constraints may be applied to
technology groups.The same rough estimation that PacifiCorp used to evaluate unit tradeoffs
can be replicated in a total technology group emissions cap.
27 ICL notes this statement is on page 210 of PacifiCorp’s 2015 IRP.
28 ICL notes this statement is on page 145 of PacifiCorp’s 2015 IRP.
ICL Comments 12
PAC-E-15-04
The 70%capacity factor limit is belied by PacifiCorp’s coal units’actual operations.In
2014 alone,Dave Johnston 2,Hunter 1,Jim Bridger 1 &4,Huntington 1,and Craig 1 all
operated below the 70%threshold.In 2012,when gas prices were particularly low,about half of
PacifiCorp’s coal fleet violated this threshold (Dave Johnston 1,2 &3,Naughton 1,Hunter 2,Jim
Bridger 2 &4,and Hayden 1 &2).
Implementing an artificial capacity factor limit on units that may,in fact,be economically
constrained in the future would certainly result in a higher cost plan than required.
4.Conclusion
PacifiCorp is among the largest utility systems in the western interconnect.By virtue of
their geographic spread,resource stack,transmission system,and coordination with other
utilities,PacifiCorp’s future resource plans will have more impact on Idaho than any other utility.
They control most of the coal fleet serving the west,which faces growing pollution control costs.
They plan to greatly expand the regional bulk transmission system.And they plan to both sell and
buy vast quantities of energy into wholesale markets,both traditional as well as newly forming
markets for energy imbalance and links to NVEnergy and the California ISO.These plans will
directly impact PacifiCorp customers in Idaho as well as utility customers throughout the state.
The Commission must take a hard look at PacifiCorp’s planning practices and results to ensure a
low cost least risk future for all Idahoans.
Respectfully submitted this 7th day of August 2015,
Benjamin J.Otto
Idaho Conservation League
CERTIFICATE OF SERVICE
I hereby certify that on this 7 th day of August 2015,I delivered true and correct copies of
the foregoing COMMENTS to the following persons via the method of service noted:
Hand delivery:Electronic Mail:
Jean Jewell Ted Weston
Commission Secretary Yvonne Hogle
Idaho Public Utilities Commission Rocky Mountain Power
427 W.Washington St.201 5.Main St.,One Utah Center,23rd Fl
Boise,ID 83702-5983 Salt Lake City,UT 84111
[e-mail]
[e-mail]
ICL Comments 13
PAC-E-15-04