20191122Decision Memo.pdf

DECISION N,IENIORANDUN,{
'I'o CON'INIISSIONER KIELLANDER
CONIMISSIONER RAPER
C0MI\IISSIONER ANDI.]RSON
COMNIISSION SECRETARY
CONINIISSION STAFI]
I'RONt:DAYN HARDIE
DEPUTY ATTORNEY GENERAI,
DATII: NOVITNIBER 14,2079
STiB.IEC'I:ROCKY MOUNTAIN Po!VI.]R'S PETITION TO UPDATE THE I,0AI)
AND GAS F'ORECASTS USED IN ITS INTEGRATED RESOTIRCF], PI,AN
AVOIDED COST N{ODEL: CASE NO. PAC-E-19-18.
On November 7, 2019, Rocky Mountain Power ("Company"), a division of PacifiCorp,
applied to thc Cor.nmission to update its load forecast, natural gas forecast, and contract
information components of the incremental cost Integrated Resource Plan ("IRP") avoided cost
methodology for qualifying facilities ("QF') under the Public Utility Regulatory Policies Act of
1978 ("PURPA"). Application at 1. The Company indicates that the filing complies with Order
Nos. 32697 and32802. Id.
BACKGROUND
Under PURPA, electric utilities must purchase electric energy from QFs at rates
approved hy the applicable state agency-in ldaho, this Commission. l6 U.S.C. $ 824a-3; Idaho
Pov'er Co. t,. 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 itsclf or
purchase from another source." Order No. 32697 at7, r:itittg Rosebud Enterprises y. ldaho PUC,
128 ldaho 624,911 P.2d781 (1996); l8 C.F.R. $ 292.101(bX6Xdefining "avoided cost").
The Commission has established two methods of calculating avoided cost, depending
on the size ofthe QF project: (l) the surrogate avoided resource ("SAR") methodology, and (2)
the IRP methodology. See Order No. 32697 at 7-8. The Commission uses the SAR methodology
to establish what is commonly referred to as "published" avoided cost rates. 1zl. Published rates
DECISION MEMORANDUN{
are available for wind and solar QFsr u'ith 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. at 2; 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 energy." Order No. 32697 aL 17.
The IRP methodology's variables are at issue here.
Thc 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 two years]." /d. at
22. The Commission directed that the update to fuel price forecasts and load forecasts should occur
on October [5 of each year. Order No. 32802 at 3. The Commission also found it appropriate to
consider long-term contract commitments, as well as PURPA contracts that havc terminated or
expired, in the utility's load and resource balance. Order No. 32697 at22.
THE APPI,ICATION
The Company providcs its updated load forecast, natural gas fbrecast, and contract
information, and explains that if approved, the information will be incorporated into the
Company's IRP avoided cost model and that the model will be used as the stafiing point for the
negotiation of its contractual avoided cost rates as of October I 5, 2019. Application at 2.
The Company's updated load forecast is fiom July 2019 and "shows a slight increase
in load compared to thc July 2018 load forecast provided in Case No. PAC-E-18-09 and approved
by the Commission in Order No. 34213." /r/. The Company also provides both the July 2019 and
the July 2018 load forecasts for years 2019 through 2039. .9ee Table l.
The Company's updated natural gas forecast was prepared on September 30, 2019
using the Official Forward Price Curve ("OFPC") as reference which indicates a slight decrease
in the average natural gas forecast prices over the next 20 years compared to the September 28,
2018 OFPC. ld. at 3; See Table 2. The Company provides both the 2019 and the 2018 forecasts
for years 2019 through 2038. ,lee Table 2.
I Se., Order No. -13785 (rc8arding haltery storage facilitics)
lDECISION MEMORANDLIM
Finally, the Company summarizes the contract termination, expiration, and additions it
has experienced since its 2018 update. Id. at 3. The Company provides the new and terminatcd or
expired contracts in Table 3 to the Application. Id. at7.
Thc Company requests the Commission issue an order approving the updatcd
information in its Application for inclusion in the Company's IRP avoided cost calculations with
an October 15, 2Ol9 effective date.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Noticc of Application and Notice of
Modified Procedure, with comments due December 17,2Ol9 and reply comments, if any, due
December 24, 2019.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and a Notice of Modified
Procedure, with comrncnts due December 17 ,2019 and reply comments, if any, due Dccember 24,
20t9'!
Hardie
Dcputy Attorney Ceneral
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3DECISION MEMORANDUN,I