20201222Comments.pdf

MATT HLINTER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10655
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Street Address for Express Mail:
11331 W CHINDEN BVLD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION FOR APPROVAL OF
A CAPACITY DEFICIENCY PERIOD TO BE
USED FOR AVOIDED COST CALCULATIONS
CASE NO. PAC-E-20-13
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission ("Staff'), by and through its Attomey
of record, Matt Hunter, Deputy Attorney General, submits the following comments.
BACKGROUND
On October 6,2020, Rocky Mountain Power ("Company"), a division of PacifiCorp,
applied for Commission approval of a capacity deficiency period beginning July 2029, to be used
in avoided cost calculations under the Public Utility Regulatory Policies Act of 1978
("PURPA";.
Under PURPA, the Commission has established a surrogate avoided resource ("SAR")
methodology and an integrated resource plan ("IRP") methodology to calculate avoided cost
rates for qualiffing facilities ("QFs"). Under both methodologies, a QF receives capacity
payments only after the applicable capacity deficit date is reached. Order No. 32697.
STAFF COMMENTS DECEMBER2Z,2O2O
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The capacity deficiency period is determined through the IRP planning process and is
submitted to the Commission in a proceeding separate from the IRP docket. The capacity deficit
date determined in the IRP process is presumed to be correct as a starting point but will be
subject to the outcome of the capacity deficiency case. order No. 32697.
The Company filed its IRP in October 2019. The 20l9IRP showed a capacity deficiency
period beginning July 2028. The Company notes that Commission Staff critiqued the
Company's load and resource balance used for PURPA purposes, specifically the early
retirement of several thermal resources that were included in the load and resource balance. See
Case No. PAC-E-19-16, Staff Comments at 5. The Company explains in its Application that it
calculated its capacity deficiency date in the present docket by removing the early retirement of
the thermal resources noted by Staff in Case No. PAC-E-19-16 and updating the power purchase
agreements in its load and resource balance.
The Company states that these updates to the 2019 IRP result in a capacity deficiency
date in JuJy 2029.
STAFF ANALYSIS
Staff examined the peak-load forecast and resources in the Load and Resource Balance
("L&R") filed in this case. The L&R is used to determine the proposed capacity deficiency date
used in both the IRP and SAR methods.r Based on its analysis, Staff recommends the Company
update the L&R and the resulting capacity deficiency date by addressing the following: (1)
utilize the most recent peak-load forecast developed by the Company because the proposed load
forecast does not reflect current economic conditions; (2) the Company should assume that
expiring PURPA contracts are renewed after their current term is complete, unless the Company
has been notified from QFs that they will not renew their contracts; (3) the Company should
include any contract changes since the Application was prepared; and (a) the Company should
reflect coal plant derate adjustments in the appropriate years.
If Staffs recommendations are authorizedby the Commission, Staff proposes to update
published rates on the Commission's website after the Company files an updated L&R and
capacity deficiency date through a compliance filing. Details for each of the recommendations
are contained in the following sections.
I In the Company's Application, it appears the Company incorrectly references using the capacity deficiency date in
the SAR method only. see Application at 6; order Nos. 33377, 33rs9,33898, and 33933.
STAFF COMMENTS 2 DECEMBER 22,2020
Peak-Load Forecast
The peak-load forecast in the L&R was created in September 2018. Staff is concerned
that circumstances have changed since it was developed, especially given the COVID pandemic
that began in early 2020 and its potential impacts on customer consumption patterns that could
change the amount of load during system coincident peak. Staff believes changing economic
conditions generally result in changes to both energy and peak load. The Company,s energy
load forecast filed in Case No. PAC-E -20-16 when compared to the previous year,s filing
reflected a small reduction in energy due to the pandemic in the first few years of the forecast.
Although small, the reduction in energy indicates a change in consumption. Furthernore, an
energy forecast being an average, it may not reflect a shift in hourly consumption patterns, which
would be reflected in the peak load forecast. Because Staff believes the pandemic may have
influenced consumption patterns affecting peak loads, Staff recommends that the Company
recalculate the deficiency date using the Company's most recent peak-load forecast that
incorporates all changes in the business environment if one is available.
Resources in the L&R
Staff reviewed the resources the Company included in the L&R for determining the
capacity deficiency date. Resources can be represented either as resources serving load or
reflected as a reduction to the peak-load forecast in the L&R. In this year's review, Staff
performed a comparison of the different types of resources that were included in the L&R
between Idaho's three regulated electric utilities to develop consistency between the utilities.
Based on this analysis, Staff agrees with all resources the Company included in its L&R-except
the absence of PUPRA contract renewals, the use of out-of-date contract information. and the
inappropriate treatment of derate adj ustments.
PURPA Renewals
Staff compared the resources included in the L&R in the most recent capacity deficiency
filings by PacifiCorp (current filing), Avista (AVU-E-20-03), and Idaho power (IpC-E-19-20).
Staff also examined the rationale each Company used for determining what and how resources
should be included in its L&R. StafPs objective in making these comparisons was to develop a
common standard for what should be included in the L&R for each type of resource. In Order
STAFF COMMENTS DECEMBER22,2O2O.,
No. 29880, the Commission made it clear that consistency is important between the three
regulated utilities:
The Commission develops its PURPA contract standards and requirements in
generic methodology, ratesetting[,] and complaint cases. ...It is reasonable for QFs
to expect that the contract requirements of Idaho regulated electric utilities will be
similar and that a QF will not be disadvantaged by choosing to sell to one utility
rather than another.
OrderNo. 29880 at 10.
After identiffing differences between the utilities, Staff used the justifications and
rationales obtained through production requests, meetings with utilities, and the Staff s
evaluation of resources to document resources that are "available" and/or "existing" to include in
the L&R.2 A summary of these common standards for each resource type are included in
Attachment A.
After developing common standards, Staff compared them to the resources the Company
included in its L&R for establishing its proposed capacity deficiency date. Staff used the
common standards as a default; if the Company's proposal deviated from the standard but the
Company provided sufficient evidence, an exception could be made. The only difference
between Staff s common standards and the resources included in the Company's proposed L&R
was the treatment of PURPA contract renewals. Because the Company assumes that PURPA
contracts, except for co-generation contracts, are not renewed at the end of the contract term, the
Company excluded PURPA contract renewals from its L&R. However, Staff believes that
almost all PURPA contracts will seek renewals and will be "available" to serve the Company's
load for three reasons. First, utilities are mandated by PURPA to take energy produced by a
facility determined to be a QF. 18 C.F.R. 5 292.303. Second, since these facilities are already
"existing" and currently in operation, the roadblocks to establishing a renewal contract are
minimal. Third, there were 26 projects in total that were scheduled to expire in2019 and2020.
Only two of them have expired without establishing a renewal. In every case, every facility
continuing operation after its contract expired has established another contract with the same
utility. Therefore, Staff believes the Company should assume expiring PURPA contracts are
2 The Commission expressed its expectation for focusing on "available" and/or "existing"
resources when deciding whether transmission capacity should be included in the L&R in Order
No. 33425.
STAFF COMMENTS DECEMBER22,2O2O4
renewed after their current term is complete, unless the Company has been notified by a QF that
its contract will not be renewed.
Contract Changes Since Development of Application
Since the preparation of the Application, there have been several contract changes. For
example, the Company has entered into two non-PURPA contracts for solar resources, totaling
200 megawatts (MW) of nameplate capacity. See Attachment B (Response to Production
Request No. 18 (c)). While Staff recognizes that utilities may add (or remove) resources during
the comment period in capacity deficiency cases, and it would be inefficient and impractical to
require utilities to update their L&R for each resource change prior to the Commission's final
order, the amount of capacity added by the Company since the Application date is significant
enough to impact the proposed deficiency date. Staff recommends the Company update the
amount of capacity contribution in the L&R for recent resource contracts since the Application
was developed.
Coal Plant Retirements and Derates
The Company's proposed L&R removes the early retirement of thermal resources, which
includes Craig Unit Nos. I and2, Colstrip Unit Nos. 3 and 4, Naughton Unit Nos. I and2, and
Jim Bridger Unit Nos. I and2, to reflect these resources' useful life. This is consistent with
Staff s common standards for company-owned resources and Staff s recommendation in Case
No. PAC-E-19-16. These thermal resources are currently "available" and/or "existing" resources
and any early retirements may be delayed to maintain reliability. Staff s ongoing evaluations to
retire coal units early are based on economic decisions and since economic retirements may be
delayed it does not create deficits until commified and approved.
Removing early retirement of thermal resources required the Company to also back out
coal-plant derates associated with these plant closures. To accomplish this, the Company
lumped the cumulative amount of coal plant derates into the deficit year. To ensure the proper
amount of derates are backed out of the L&R so that accurate deficiency years and amounts can
be determined, Staff recommends each derate adjustment be reflected independently in the
appropriate year,regardless of the deficit year, as was done in response to Staff Production
Request No. 18.
5STAFF COMMENTS DECEMBER22,2O2O
STAFF' RECOMMENDATION
Staff recommends that the Commission order the Company to file an updated L&R for
both summer peak and winter peak with capacity deficiency dates and amounts through a
compliance filing. If authorized, Staff recommends that the updated L&R for both summer peak
and winter peak should include:
1. The most recent peak-load forecast;
2. The assumption that all current PURPA contracts will be renewed, unless the Company
has information about specific contracts to the contrary;
3. All contract changes since development of the Application; and
4. The appropriate derate adjustments for each year.
Respectfully submitted this Z>n4 day of December 2020.
Matt Hunter
Deputy Attorney General
Technical Staff: Yao Yin
Rachelle Farnsworth
i :umisc/comments/pace20. I 3hyyrf comments
6STAFF COMMENTS DECEMBER22,2O2O
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z Attachment A
Case No. PAC-E-20-13
Staff Comments
12122120 Page2 of 2
PAC-E-20-13 / Rocky Mountain Power
December 4,2020
IPUC Data Request 18
IPUC Data Request 18
Please provide updated system capacity Load and Resource Balances for both
summer peak and winter peak that meet the following criteria:
(a) The most recent load forecast completed in June 2020 and mentioned in
Response to Staffls Production Request No. 10 that reflects the COVID-19
pandemic.
(b) Updated planning reserves based on the load forecast discussed above.
(c) The latest contract information of both PURPA contracts and non-PURPA
contracts as of filing the response to this request. In addition, please explain
the difference between the latest contract information and the contract
information used in the Application.
(d) Cumulative coal plant derate adjustments that would be applied in each year,
independently, so that the "Sufficiency/Deficiency wlo Early Retirements" are
accurate for each year, instead of only providing cumulative derates for 2029.
Response to IPUC Data Request 18
Please refer to Confidential Attachment IPUC 18.
(a) The change in the June 2020load forecast, relative to the 2019 Integrated
Resource Plan (lRP) forecast, is calculated within Confidential Auachment
IPUC 18, tab "Load Forecast Update".
(b) The change in the load forecast, grossed up for the impact of the 13 percent
planning reserve margin (PRM), is shown in row 64 oftabs "Tbl5.l2" (for
summer) and o'Tbl 5.13" (for winter). This amount is subtracted from the
"SAR Sufficiency/Deficiency" calculation on row 69 of both tabs.
(c) Row 68 oftab "Tbl5.12" (for summer) and tab "Tbl5.l3" (forwinter) has
been updated to include signed contracts through November 30, 2020. Since
the Application in this proceeding was prepared, the Company has entered
into two non-qualiffing facility (QF) Public Utility Regulatory Policies Act
(PURPA) power purchase agreements (PPA) for solar resources, totaling 200
megawatts (MW) nameplate capacity, and has extended two existing QF
PURPA PPAs for Idaho small hydro resources totaling 0.8 MW. The
Company has also entered or extended four non-firm (NF) QF PURPA
contracts with 64 MW of nameplate capacity, which do not impact the
capacity load and resource balance.
(d) Please refer to row 80 of "Tbl 5. I 2" (for summer) and "Tbl 5. I 3" (for winter).
Attachment B
Case No. PAC-E-20- 13
Staff Comments
l2l22l2o Page 1 of 2
PAC-E-20-13 / Rocky Mountain Power
December 4,2020
IPUC DataRequest 18
confidential information is provided subject to protection under IDAPA
31.01.01.067 and31.01.01.233, the Idaho Public Utilities Commission's Rules of
Procedure No. 67 - Information Exempt from Public Review, and further subject
to any subsequent Non-Disclosure Agreement (NDA) executed in this proceeding.
Recordholder:
Sponsor:
Dan MacNeil
To Be Determined
Attachment B
Case No. PAC-E-20-13
Staff Comments
12/22/20 Page2 of 2
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 22ND DAY oF DECEMBER 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-20-13, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
TED WESTON
EMILY WEGENER
ROCKY MOUNTAIN POWER
I4O7 WEST NORTH TEMPLE STE 330
SALT LAKE CMY UT 84116
E-MAIL: ted.weston @pacificorp.com
emily.wegener @pacificorp.com
RON SCHEIRER
PACIFICORP
825 NE MULTNOMAH STE 600
PORTLAND OR 97232
E-MAIL: [e-mail]
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
datarequest @ paci fi corp.com
SECRETAR
CERTIFICATE OF SERVICE