20171128final_order_no_33937.pdf

Office of the Secretary
Service Date
November 28,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.PAC-E-17-11
OF ROCKY MOUNTAIN POWER )COMPANY FOR AUTHORIZATION TO )REVISE THE WIND INTEGRATION RATE )ORDER NO.33937
AND IMPLEMENT A SOLAR )
INTEGRATION RATE FOR SMALL POWER )
GENERATION QUALIFYING FACILITIES )
On August 28,2017,PacifiCorp dba Rocky Mountain Power (Rocky Mountain or the
Company)applied to the Commission for an order authorizing it to (1)decrease its wind
integration rate for power purchase agreements with wind-powered qualifying facilities (QF),
from $3.06 to $0.57 per megawatt-hour (MWh),and (2)implement a solar integration rate for
purchases from solar-powered QFs of $0.60 per MWh.Application at 1.
The Commission issued an order providing Notice of the Application,setting a
deadline for interventions,and directing the parties to confer about a proposed schedule and
report their proposal to the Commission.Order No.33871.The Commission received no
petitions to intervene.After conferring with the Company,Staff proposed a comment schedule
to the Commission,which the Commission adopted in a Notice of Modified Procedure.Order
No.33905.Commission Staff timely submitted comments.No other comments were received.
The Commission now enters this Order approving the Application,as described further below.
BACKGROUND
Rocky Mountain's wind integration charge offsets the published avoided cost rates
(calculated under the surrogate avoidable resource methodology)the Company pays for power
under the Public Utility Regulatory Policies Act (PURPA).The charge reduces published
avoided cost rates to account for the costs of integrating wind QFs into the Company's system.
See Order No.30497 at 6.When a utility has agreed to buy power from a QF under PURPA,the
rates for such power must not exceed the utility's "avoided cost"-what the utility would have
incurred had it generated or acquired the power elsewhere.If the costs of integrating wind into
the Company's system are not calculated and properly allocated to the PURPA project
developers,those costs will be impermissibly passed on to utility customers in the avoided cost
rates.
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This Commission first approved Rocky Mountain's wind integration charge in 2008.
Order No.30497.The charge was set forth in a settlement stipulation between parties in Case
No.PAC-E-07-07,which the Commission approved.Id at 6,12-13.Rocky Mountain's current
wind integration charge,$3.06 per MWh,was last updated in 2016.Order No.33475 (Case No.
PAC-E-16-08).
THE APPLICATION
The Company explained that "in compliance with Order No.30497,"it now applies
to "update its wind integration rate and implement a solar integration rate that can be deducted
from the published avoided cost rates to determine a purchase and sale price established for the
duration of the power purchase agreement with a QF."Application at 2-3.The Company stated
that reducing the avoided cost rates "is intended to reflect the cost of integrating wind and solar
generation into the Company's electrical system."Id at 3.The Company filed its 2017
Integrated Resource Plan (IRP)with this Commission on April 4,2017,in Case No.PAC-E-17-
03.Id The Company attached IRP Appendix F,the Flexible Reserve Study (2017 Study),as
Exhibit A to its Application.Id The 2017 Study explained "the methodology used and results
derived from PacifiCorp's analysis of wind and solar integration costs."Id
The 2017 Study estimated the regulation reserve required to maintain PacifiCorp's
system reliability and comply with North American Electric Reliability Corporation (NERC)
reliability standards.Id It also estimated the additional cost of this regulation reserve.Id In
addition,it compared PacifiCorp's overall operating reserve requirements,including both
regulation reserve and contingency reserve,to its flexible resource supply over the IRP study
period.Id The Application further described the methodology used in the 2017 Study,including
changes from the method used in the 2014 study of wind reserve requirements.Id.4-6.
The 2017 Study was based on operational data for load,wind,and non-variable
energy resources from January 2015 through December 2015,and used proxy base schedules for
solar resources.Id at 3;Exhibit A at 109.The Company explained that solar generation on its
system was insignificant in 2015,but was expected to exceed 1,000 MW by the end of 2017.
Application at 3.The Company also analyzed how varying levels of wind and solar affect its
system.Id.;see Exhibit A at 108-116.
The 2017 Study produced an hourly forecast of regulation reserve requirements for
the Company for a range of scenarios,to ensure the reliability of the transmission system and
ORDER NO.33937 2
compliance with NERC and Western Electricity Coordinating Council reliability standards.
Application at 4-5.The forecast covered the combined deviations of the load,wind,solar,and
other resources on the Company's system,and varied as a function of the wind and solar
capacity on the system,as well as forecasted wind and solar output.Id at 4.The 2017 Study
also considered the impact of Energy Imbalance Market participation.Id.at 5.
The 2017 Study estimated two categories of flexible resource costs--one for meeting
intra-hour regulation reserve requirements,and one for inter-hour system balancing costs
(associated with committing gas plants using day-ahead forecasts of load,wind,and solar).Id.at
6.The proposed wind integration and solar integration charges are the sum of these two
categories of costs for wind resources and for solar resources.See id.Table F.2.
Ultimately,the Company requested that the Commission issue an order (1)reducing
the wind integration rate for the Company's purchases of electric power from wind-powered QFs
from $3.06 per MWh to $0.57 per MWh and (2)implementing a solar integration rate of $0.60
per MWh for the Company's purchases of electric power from solar-powered QFs.Id.at 7-8.
The Company explained these amounts represent the wind and solar integration costs that will
offset published avoided cost rates unless the QF developer agrees with the Company to schedule
and deliver,via a transmission provider,the QF output to the Company on a firm hourly basis.
Id at 8.
STAFF COMMENTS
Staff reviewed the Application and the 2017 Study and recommended the
Commission authorize the Company's proposed wind integration rate of $0.57 per MWh and the
proposed solar integration rate of $0.60 per MWh.Staff Comments at 3.
Staff explained that several factors drove the reduction in the wind integration rate.
Id at 3-5.For example,a change in the NERC reliability standard regarding regulation reserves
led to a greater supply of regulation reserves and a reduced cost of those reserves.Id at 4.
Similarly,the 2017 Study "used a portfolio wide approach to determine the overall regulation
reserve requirements"and considered solar,non-variable energy resources,and wind.Id The
previous study,conducted in 2014,calculated reserve requirements for a smaller amount of wind
only.Id Looking at the entire portfolio reduces the total reserves needed because the "largest
deviations in load,wind,and solar tend not to occur simultaneously"and sometimes occur in
offsetting directions.Id
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The 2017 Study also accounted for the Company's participation in the Energy
Imbalance Market,which reduced reserve requirements because participating balancing authority
areas can pool variability amongst themselves and therefore carry less reserves individually than
they would be required to otherwise.Id.Staff also explained that market prices have declined
since the previous study,leading to a reduction in the cost of reserves and the integration charge.
Id at 5.Finally,according to the Company,transmission congestion has increased (primarily
due to additional solar generation).Id at 5.The Company assumed that if resources capable of
providing regulation reserves are backed down (and unable to export electricity out of the
Company's system)due to transmission congestion,then those resources can be used to balance
wind and solar inside the Company's system at no additional cost.Id Staff believed this
assumption to be reasonable.Id
Regarding the proposed solar integration rate,Staff explained that the Company used
proxy data in its 2017 Study because solar data was limited.Id Before 2015,solar generation on
the Company's system was insignificant,but is expected to amount to over 1,000 MW by the end
of 2017.Id Staff believed that using proxy data in this study was reasonable,given the limited
data,but recommends the Company to perform additional analysis as more actual solar data
becomes available.1d Finally,Staff recommended that in the future,the Company file any
integration charge updates after the IRP has been acknowledged.Id
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§61-502 and
61-503.The Commission has the express statutory authorityto investigate rates,charges,rules,
regulations,practices,and contracts of public utilities and to determine whether they are just,
reasonable,preferential,discriminatory,or in violation of any provision of law,and may fix the
same by order.Idaho Code §§61-502 and 61-503.In addition,the Commission has authority
under PURPA and the implementing regulations of the Federal Energy Regulatory Commission
(FERC)to set avoided costs,to order electric utilities to enter into fixed-term obligations for the
purchase of energy from qualified facilities and to implement FERC rules.The Commission
may enter any final order consistent with its authorityunder Title 61 and PURPA.
Based on our review of the record,we find that the Company's request to reduce its
wind integration rate to $0.57 per MWh and implement a solar integration rate of $0.60 per
MWh is reasonable.Regarding the wind integration rate,we find that the analysis in the
ORDER NO.33937 4
Company's 2017 Study supports the reduction.We appreciate the updated information the
Company has provided.Regarding the solar integration rate,the record indicates that solar
generation on PacifiCorp's system is expected to grow significantly and amount to over 1000
MW by the end of 20 17.In these circumstances,we find the implementation of a solar rate
based on proxy data to be reasonable.However,we expect the Company to update its analysis
with actual solar data as it becomes available.
Finally,we find reasonable Staff's request that the Company file any future updates
to its integration charges after the Commission has acknowledged the Company's IRP.Filing
any updates after the IRP is acknowledged will be consistent with the stipulation approved in
Order No.30497.That stipulation said,in part,"[t]he integration charge will be equivalent to
the calculated cost of wind integration on a per MWh [basis]provided in the Company's most
recent Commission-acknowledged ...IRP...."Order No.30497 at 6.Filing any updates after
the IRP is acknowledged will allow Staff and other parties to review the factors impacting the
integration rates as a part of their overall analysis of the IRP.
For the foregoing reasons,we approve the Application and the new wind integration
rate of $0.57 per MWh applicable to purchases of power from wind-powered QFs and the new
solar integration rate of $0.60 per MWh applicable to purchases of power from solar-powered
QFs.
ORDER
IT IS HEREBY ORDERED that the Company's Application,requesting
authorization to (1)reduce the wind integration rate for the Company's purchases of electric
power from wind-powered QFs from $3.06 MWh to $0.57 per MWh and (2)implement a solar
integration rate of $0.60 per MWh for the Company's purchases of electric power from solar-
powered QFs,is approved.These rates apply against published avoided cost rates under
PURPA,unless the QF developer agrees in the power purchase agreement to schedule and
deliver,via a transmission provider,the QF output to the Company on a firm hourlybasis.
IT IS FURTHER ORDERED that the Company is to update its studies with actual
solar data as such data becomes available.
IT IS FURTHER ORDERED that the Company is to file any future updates to its
integration rates after the Commission has acknowledged the IRP supporting the updates.
ORDER NO.33937 5
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order with regard to any
matter decided in this Order.Within seven (7)days after any person has petitioned for
reconsideration,any other person may cross-petition for reconsideration.See Idaho Code §61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 7
day of November 2017.
PÀti KJEL AN El PRESIDENT
KR INE RAPER,C MMIŠSIONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
I:\Legal\LORDERSìPACEl711 cc3 finalorder.doc
ORDER NO.33937 6