20191217Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
[phone]
IDAHO BAR NO. 9917
RECEIVED
0l9 BtC l 7 At{ il: il
CsstoN
Street Address for Express Mail:
I I33I W CHINDEN BVLD, BLDG 8, SUITE 20I.A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION TO UPDATE THE
LOAD AND GAS FORECASTS USED IN ITS
INTEGRATED RESOURCE PLAN AVOIDED
COST MODEL
CASE NO. PAC.E.I9.18
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hudie, Deputy Attorney General, submits the following comments.
BACKGROUND
On November 7, 2019, Rocky Mountain Power ("Company"), a division of PacifiCorp,
applied to the Commission to update its load forecast, natural gas forecast, and contract
information components ofthe incremental cost Integrated Resource Plan ("IRP") avoided cost
methodology for qualifying facilities ("QF') under the Public Utility Regulatory Policies Act of
1978 ('PURPA"). The Company indicates its filing complies with Commission Order Nos.
32697 and 32802. The Company asked the Commission to issue an order approving the updated
information for inclusion in the Company's IRP avoided cost calculations with an October 15,
20i9 effective date, which if approved, it will use to negotiate contractual avoided cost rates
through the IRP avoided cost model as of the effective date.
STAFF COMMENTS DECEMBER 17,2OI9
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The Company's updated load forecast is from July 2019 and shows a slight increase in
load compared to (he July 2018 load forecast provided in Case No. PAC-E-18-09 and approved
by the Commission in Order No. 34213. The Company provides both the July 2019 and the July
2018 load forecasts for years 2019 through 2039.
The Company's updated natural gas forecast was prepared on September 30, 2019 using
the Official Forward Price Curve C'OFPC') as reference, which indicates a slight decrease in the
average natural gas forecast prices over the next 20 years compared to the September 28,2O18
OFPC. The Company provides both the 2Ol9 and the 2018 forecasts for years 2019r through
2038.
The Company provides a list ofthe contract additions and terminations in its Application.
The Company has signed l9 long+erm contracts, l5 of which are with QFs, for a total nameplate
capacity of 680.8 megawatts ("MW"). Four long-term contracts, with a combined nameplate
capacity of 57.4 MW, have terminated. The Company indicates it continuously includes new
power purchase agreements, terminated or expired contracts, and new contract pricing in its
avoided cost IRP model.
STAFtr'REVIEW
Staff has reviewed the Company's Application and recommends approval of the updated
load forecast, natural gas forecast, and long{erm contracts to be used in the IRP methodology.
The Commission has determined that long-term contract information should be updated for the
IRP methodology when contracts are signed, terminated, or expired, in order to maintain the
most up-to-date avoided cost. Order No. 32697.
Updated Load Forecast
Staff has compared the Company's annual system load forecast in this filing to last year's
filing in Case No. PAC-E-18-09 and believes the new forecast is reasonable based on the
comparison. The comparison shows that the Company's 2019 system load forecast has increased
by 3.83Vc, which is consistent with the fact that the economic conditions in Rocky Mountain
Power's service territory have not changed significantly fiom the previous year. The etlbct of
this increase should not result in a significant change in IRP-based avoided cost rates.
I The OFPC provided in thc Company's Applicalion forccasts 2019 gas prices for Novembcr and Decenrber only
STAFF COMMENTS DECEMBER 11.2OI9)
Updated Natural Gas Forecast
Staff believes that the Company's natural gas price forecast is reasonable for puqposes of
determining avoided cost in IRP-based PURPA contracts. Staff s conclusion is based on two
types of analysis: (l) a comparison of the Company's proposed forecast to last year's forecast in
Case No. PAC-E-18-09; and (2) a comparison of the Company's Henry Hub forecast to the other
two Idaho regulated electric utilities' Henry Hub forecasts.
The comparison between the 2019 Henry Hub forecast and the 2018 forecast shows
annual differences that range from -7.8970 to -23.1O9o from years 2019 through 2038, which are
illustrated in Figure l. The overall 2019 forecast is lower than the overall 2018 forecast. Staff
believes this can be attributed to increased natural gas production from continued development
of shale gas and tight oil plays, which is projected to outpace gas consumption. Staff believes
that the change in the Company's long-term natural gas forecast is reasonable.
Rocky Mountain Power
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2019 Henry Hub - - 2018 Henry Hub
Figure I Rocky- llountairl Po$er's 2019 Forecasl {nd 2018 Forecast for He rJ Ilul,
Staff also compared Henry Hub forecasts used by Idaho Power, Avista, and Rocky
Mountain Power, and results show a similar trend that natural gas prices at Henry Hub increase
over time (see Figure 2). ldaho Power uses Energy Information Administration's (EIA) High Oil
and Gas Resource and Technology natural gas forecast for Henry Hub, while Avista and Rocky
Mountain Power use a combination of third party forecasts over the long-term forecasts and gas
3STAFF COMMENTS DECEMBER 17,2OI9
futures market prices for thc short-term forecasts. Despite different sources, all three forecasts
reflect a high level of similarity, especially for the first two years. This is important because
IRP-based PURPA projects are capped at a two-year contract length, and the avoided costs in
any new contract now will capture the trend of the first two years. Based on the comparison,
Staff believes Rocky Mountain Power's Henry Hub natural gas forecast is reasonable.
Henry Hub Natural Gas Forecasts Used by
ldaho Power, Avista, and Rocky Mountain Power
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Avista ...,", RockyMountainpower
Figurc 2 Comparing Henry Hub Nstursl cas Forecasts by Three UtiUtics
Contract Terminalions, Expirations, and Additions
Since the last annual filing, the Company has signed l9long-term contracts. Four long-
term contracts have expired without renewal, and three long-term contracts were terminated. In
addition, the Company has had several changes to its owned assets. Staff has verified the
information and believes it is accurate.
STAFF RECOMMENDATIONS
Staff believes the load forecast, the natural gas forecast, and the contract intbrmation
updated by Rocky Mountain Power comply with Commission Order Nos. 32697 and 328O2.
Staff recommends the Commission approve the updates to be used in the Company's IRP
methodology with an effective date of October 15, 2019.
STAFF COMMENTS DECEMBER 17,2OI94
Respectfully submitted this nv day of Decemher 2019
Deputy Attorney General
Technical Staff: Yao Yin
Travis Culbertson
Rachelle Farnsworth
i:umisc/commcnts/pacc I 9. I Sdhyytncrf commcnls
5STAFF COMMENTS DECEMBER 17,2019
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE'IHIS ITTH DAY OF DECEMBER 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E.19.18. BY MAILING A COPY TTIEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON
ROCKY MOUNTAIN POWER
I4O7 WN TEMPLE STE 330
SALT LAKE CITY UT 84I I6
E-MAIL: ted.weston@paci llcorp.com
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
Ltcs
DANIEL E SOLANDER
SENIOR COTINSEL
ROCKY MOUNTAIN POWER
I4O7 WN TEMPLE STE 320
SAI-T I-AKE CITY T]T 84I I6
E-MAIL: daniel.sol nacificorn
.l-.,4r//oyt
SECRETARY
.com
/
CERTIFICATE OF SERVICE