20181217final_order_no_34213.pdf

Office of the Secretary
Service Date
December 17,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.PAC-E-18-09
OF ROCKY MOUNTAIN POWER TO )UPDATE THE LOAD AND GAS FORECASTS )
USED IN THE INTEGRATED RESOURCE )ORDER NO.34213
PLAN AVOIDED COST MODEL )
On October 15,2018,Rocky Mountain Power,a division of PacifiCorp (Rocky
Mountain or the Company)filed its annual updates to certain components of its avoided cost rate
calculation for qualifying facilities (QFs)under the Public Utility Regulatory Policies Act of 1978
(PURPA).Specifically,Rocky Mountain updated the load forecast,natural gas forecast,and
contract information components that it uses to calculate avoided cost rates under the incremental
cost IntegratedResource Plan (IRP)method.
The Commission subsequently set deadlines for interested persons to comment on the
Application,and for the Company to file a reply,if necessary.See Order No.34185.Commission
Staff filed the only comments in the case,and supported the Company's Application.The
Company did not reply.
Having reviewed the record,the Commission issues this Order approving the
Application,as discussed below.
BACKGROUND
Under PURPA,electric utilities must purchase electric energy from QFs at rates
approved by the applicable state agency-in Idaho,this Commission.16 U.S.C.§824a-3;Idaho
Power Co.v.Idaho PUC,155 Idaho 780,780,316 P.3d 1278,1287 (2013).The purchase or
"avoided cost"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.32697 at 7,citing Rosebud Enterprises v.Idaho PUC,
128 Idaho 624,917 P.2d 781 (1996);18 C.F.R.§292.101(b)(6)(defining "avoided cost").
The Commission has established two methods of calculating avoided cost,depending
on the size of the QF project:(1)the surrogate avoided resource (SAR)method,and (2)the IRP
method.See Order No.32697 at 7-8.The Commission uses the SAR method to establish what
are commonly referred to as "published"avoided cost rates.Id.Published rates are available for
ORDER NO.34213 1
wind and solar QFsi 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 10 average megawatts (aMW).On the other hand,
if a QF's design capacity is above the published rate eligibilitycaps,the utility must use the IRP
method to negotiate a project-specific avoided cost rate with the QF.Id.at 2;Order No.32176.
The IRP method accounts for "many different variables and produces a[n avoided cost]result
based on each individual utility's need for energy."Order No.32697 at 17.The variables in
Rocky Mountain Power's IRP method are at issue in this case.
With respect to the IRP method,the Commission requires utilities to update fuel price
forecasts and load forecasts each year on October 15.Order No.32802 at 3.All other IRP method
variables and assumptions remain fixed between the biennial IRP filings.Order No.32697 at 22.
The Commission expects the utility's load and resource balance to account for long-term contract
commitments,and PURPA contracts that have terminated or expired.Id.
THE APPLICATION
In the Application,Rocky Mountain provided updates to its load forecast,natural gas
forecast,and contract information.The Company explained that if the Commission approved the
updates,the Company would incorporate them into its IRP avoided cost model and use the model
to begin negotiating contractual avoided cost rates as of October 15,2018.Application at 2.
The updated load forecast provided by Rocky Mountain is from July 2018 and "shows
a slight increase in load compared to the July 2017 load forecast provided in Case No.PAC-E-17-
13 and approved by the Commission in Order No.33952."Id Rocky Mountain Power also
provided both the July 2018 and the July 2017 load forecasts for years 2018 through 2038.Id at
4.
Rocky Mountain's updated natural gas forecast was prepared on September 28,2018,
and "indicates gas prices [in the Company's most recent Official Forward Price Curve]are down
slightly initially then a little higher over the remaining years compared to"its 2017 Official
Forward Price Curve.Id at 3.The Company provided both its 2018 and the 2017 forecasts for
years 2018 through 2037.Id.at 5.
Regarding contract additions and terminations,Rocky Mountain explained that it has
signed 16 long-term contracts,8 of which are with QFs,for a total nameplate capacity of 535.3
megawatts (MW).Id.at 3.Eleven long-term contracts have expired and two were terminated,for
i See Order No.33785 (regarding battery storage facilities).
ORDER NO.34213 2
a total nameplate capacity of 201.1 MW.Id Rocky Mountain provided a list of the contract
additions and terminations in Table 3 to the Application.Rocky Mountain indicated it
continuouslyincludes new power purchase agreements,terminated or expired contracts,and new
contract pricing in its avoided cost IRP model.Id.
STAFF COMMENTS
Staff reviewed the Company's forecasts and contract updates,and recommended the
Commission approve them.Staff Comments at 6.Staff noted the 2018 load forecast shows a
slight increase compared to the 2017 forecast.The Company claimed the higher load forecast for
2018 is related to increased:(1)industrial and commercial use;(2)air conditioning;(3)households
(concomitant with a decrease in household size);(4)electric vehicles;and (5)indoor agriculture.
Id.at 3.
To analyze the Company's 2018 gas price forecast,Staff compared that forecast to the
Company's 2017 forecast,as well as to the U.S.Energy Information Administration's natural gas
price forecast,and forecasts from Avista Utilities and Idaho Power Company.Staff said these
comparisons show the Company's 2018 forecast is acceptable and reasonable.Staff also reported
the Company's load and gas price forecasts reflect the most current estimates,and are consistent
with the methods used in the Company's IRP.
Finally,Staff verified the contract information in the Company's Application was
correct and based on the Commission-approved IRP methodology.Staff concluded the
Company's load and gas price forecasts and the long-term contract changes are consistent with
Order Nos.32697 and 32802.Accordingly,Staff recommended the Commission accept the
contract updates and information.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over Rocky Mountain and the issues raised in this
matter under Title 61 of the Idaho Code and PURPA.The Commission has authority under
PURPA and FERC regulations to set avoided costs,to order electric utilities to enter into fixed-
term obligations for the purchase of energy from QFs,and to implement FERC rules.Also,the
Commission is empowered to resolve complaints between QFs and utilities and to approve QF
contracts.
Pursuant to this authority,we have reviewed and considered the record in this case,
including Rocky Mountain's Application and Staff's recommendation.We find that Rocky
ORDER NO.34213
Mountain's filing complies with this Commission's directives in Order Nos.32697 and 32802.
Based on our review of the totalityof the updates,we find the updated inputs to Rocky Mountain's
IRP avoided cost calculation are reasonable,and we accept them.
ORDER
IT IS HEREBY ORDERED that Rocky Mountain Power's annual updates to its load
and gas price forecasts and long-term contract status for purposes of its incremental cost IRP
methodology are accepted,effective October 15,2018.
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
day of December 2018.
PAULKJELLA DER PRESIDENT
KIfIŠTINERAPER,C MISSIONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
I:\Legal\ELECTRIC\PAC-E-18-09\Orders\PACE1809Final sc.doc
ORDER NO.34213 4