20171027Decision Memo.pdf

DECISION MEMORANDTJM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:CAMILLE CHRISTEN
DEPUTY ATTORNEY GENERAL
DATE: OCTOBER 2670t7
SUBJECT:THE APPLICATION OF ROCKY MOUNTAIN POWER TO UPDATE
THE LOAD AND GAS FORECASTS USED IN THE INTEGRATED
RESOURCE PLAN AVOIDED COST MODEL; CASE NO. PAC-E-I7-13.
On Ostober 13, 2017, Rocky Mountain Power, a division of PacifiCorp, applied to the
Commission to update the load forecast, natural gas forecast, and contact information
components of the ineremental cost [ntegrated Resource Plan (tRP) avoided cost methodolog'y
for qualifying facilities (QF) under the Public Utility Regulatory Policies Act (PURPA).
Application at l. Rocky Mountain Power indicates that the filing is in compliance with Order
Nos. 32697 and 32802. Id.
BACKGROT,IND
Under PURPA, electric utilities must purchase electric energy from qualiffing facilities
(QFs) at rates approved by the applicable state agency-in ldaho, this Commission. 16 U.S.C. $
824a-3; Idaho Power Co. v. Idaho PUC,l55 ldaho 780, 780, 316 P.3d 1278,128? (2013), The
purchase or "avoided sost" rate shall not exceed the "'incremental cost' to the purchasing utility
of power which, but for the purchase of power from the QF, such utility would either generate
itself or purchase from another source." Order No. 32597 at7, citing Rosebud Enterprises v,
Idaho PUC,l28 Idaho 624,917 P.Zd 781 (1996); l8 C.F.R. $ 292.101(bX6Xdefining "avoided
cost").
The Commission has established trvo methods of calculating avoided cost, depending on
thc size of the QF project: (l) the surrogate avoided resource (SAR) methodology, and (2) the
IRP methodology. ,See Order No, 32697 at 7-8. The Cornmission uses the SAR methodology to
IDECISION MEMORANDUM
establish what is commonly referred to as "published" avoided cost rates. /d. Published rates are
available for wind and solar QFsl with a design capacity of up to 100 kilowatts (kW), and for
QFs of all other resource types with a design capacity of up to l0 average megawatts (aMW).
For QFs with a design capacity above the published rate eligibility caps, avoided cost rates are
"individually negotiated by the QF and the utility using the IRP methodology]." Id. at1; Order
No. 32176. The IRP methodology "takes into account many different variables and produces a[n
avoided costl result based on each individual utility's need for cncrgy." Order No. 32697 at 17.
The IRP methodology's variables are at issue here.
The Commission stated "utilities must update fuel price forecasts and load forecasts
annually*between IRP filings We find it reasonable that all other variables and
assumptions utilized within the IRP Methodology remain fixed between IRP filings (every tw'o
years)." Id. at 22. The Commission direeted that the update to fuel price forecasts and load
forecasts should occtrr on October l5 of each year. OrderNo.32802 at 3. Thc Commission also
found it appropriate to consider long-term contract commitments, as well as PURPA contracts
that have terminated or expired, in the utility's load and resource balance. Order No. 3269? at
22.
THN APPLICATION
Rocky Mountain Power provides its updated load forecast, natural gas forecast, and
contract information, and explains that if approved, the information will be incorporated into
Rocky Mountain Power's IRP avoided cost model and that the model will be used as the starting
point for the negotiation of its contractual avoided cost rates as of October 15,2017. Application
at2.
Rocky Mountain Power's updated load forecast is from July 2017 and "shows a slight
decrease in load compared to the July 2016 load forecast provided in Case No. PAC-E-16-15 and
approved by the Commission in Order No. 33647." /d. Rocky Mountain Power provides both
theJuly20lTandtheJuly20lSloadforecastsforyears20lTthrough203T. Id.at3.
Rocky Mountain Power's updated natural gas forecast was prepared on September 29,
2017 and "indicates, on average, a slight increase in the average natural gas forecast prices over
the next 20 years in comparison to" the 2016 natural gas forecast used in its last update. Id. at 4.
I See Order No. 33785 (regarding banery storage facilities)
?DECISION MEMORANDUM
Rocky Mountain Power provides both the 20t7 and the 2016 forecasts for years 2017 through
2036. ld. at5.
Finally, Rocky Mountain Power summarizrs the contract termiuation, expiration and
additions it has experienced since its 2016 update. Id. at 4. The Company provides the new,
terminated, or expired contracts in Auachment A to the Application. /d.
Rocky Mountain Power requests the Commission issue an Order approving the updated
information in this Application for inclusion in the Company's IRP avoided cost calculations
with an October 15,2017 effective date.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Application and Notice of
Modified Procedure, with comments due December 1,2017 and reply comments, if any, due
December 15, 2017. The Company did not object to this proposed schedule.
COMMISSION DECISION
Does the Cornmission wish to issue a Notice of Applicalion and a Notice of Modified
Procedure, with comments due Decembcr 1,2017 and reply comments, if any, due December 15,
20t7?
Ut*t*
Camille Christcn
Deputy Attomey General
I \LcgIIUMEMOS\PACE I 7 I 3 *cc I -dccirion mcmo-not of aJp.doc
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3DECISION MEMORANDUM