20210115Decision Memo.pdf

DECISION MEMORANDUM 1

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: MATT HUNTER
DEPUTY ATTORNEY GENERAL

DATE: JANUARY 14, 2021

SUBJECT: 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

On October 6, 2020, Rocky Mountain Power (“Company”), a division of PacifiCorp,
applied for Commission approval a capacity deficiency period beginning July 2029, to be used in
avoided cost calculations under the Public Utility Regulatory Policies Act of 1978 (“PURPA”).
On October 29, 2020, the Commission issued a Notice of Application and Modified
Procedure, setting a December 22, 2020 comment deadline and a January 12, 2020 reply comment
deadline. The Notice also established a 21-day intervention deadline. Order No. 34826. Idaho
Hydroelectric Power Producers Trust dba IdaHydro and the Renewable Energy Coalition
(“Intervenors”) each petitioned to intervene. The Commission granted these petitions to intervene
on December 3, 2020. Order No. 34856.
On December 21, 2020, the Intervenors jointly filed written comments and protest,
requesting a technical hearing1 under procedural Rule 203. See IDAPA 31.01.01.203. Commission
Staff filed timely comments. The Company did not file reply comments.
BACKGROUND
Under PURPA, the Commission has established a surrogate avoided resource (“SAR”)
methodology and an integrated resource plan (“IRP”) methodology to calculate avoided cost rates

1 While the Intervenors’ request for a hearing did not state whether the intervenors want a technical or a customer
hearing, Commission Staff understands the intervenors’ request (based on context) to be for a technical hearing. See
IDAPA 31.01.01.241.04.
DECISION MEMORANDUM 2

for qualifying facilities (“QFs”). Under both methodologies, a QF receives capacity payments
only after the applicable capacity deficit date is reached. Order No. 32697.
The capacity deficit date is determined through the biennial 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. See Case No. PAC-E-19-16. The 2019
IRP showed a capacity deficiency period beginning July 2028. Staff critiqued the Company’s load
and resource balance used for PURPA purposes, specifically the early retirement of several
thermal resources (including Craig Unit Nos. 1 and 2, Colstrip Unit Nos. 3 and 4, Naughton Unit
Nos. 1 and 2, and Jim Bridger Unit Nos. 1 and 2). Staff noted:

The load and existing resource balance identifies resource deficiencies in
the Company’s system acting as a starting point for developing and evaluating
future resource portfolios. A decision to close a plant early must be evaluated
against other alternatives that maintain system reliability and should be made as
part of the portfolio development and evaluation phase of the IRP.

Case No. PAC-E-19-16, Staff Comments at 5. In short, Staff disagreed with a load and resource
balance that reflects an early retirement for these thermal resources because early retirement of
these resources has not yet been evaluated and approved by the Commission. Early retirement
remains optional and is not currently a requirement in Idaho.
THE APPLICATION
In its Application, the Company explained that it calculated its capacity deficit date in
the present docket by removing from its load and resource balance 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 stated that these updates to the 2019
IRP result in a capacity deficit date in July 2029.
THE COMMENTS
1. Staff Comments
Staff supported the Company’s proposed load and resource balance, which removes
the early retirement of select thermal resources. Staff Comments at 5. “These thermal resources
are currently ‘available’ and/or ‘existing’ resources and any early retirements may be delayed to
DECISION MEMORANDUM 3

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
committed and approved.” Id. Staff described the default standard for utility-owned generation
resources in the load and resource balance for determining capacity deficiency to be as follows:
“Existing resources reflect their authorized useful life, unless early retirements are authorized.
Future resources and their useful life are included when authorized.” Id., Attachment A.
2. Intervenors’ Joint Comments, Protest, and Request for Hearing
The Intervenors disagreed with the Company not including the early retirement of its
thermal resources in its load and resource balance when calculating its capacity deficit date.
Intervenors’ Comments at 2. The Intervenors argued that not including the early retirement of the
thermal resources would be inconsistent with the Commission’s directives in Order No. 32697 and
illogical. Id. at 3-8. The Intervenors requested a hearing under procedural Rule 203 so that “the
Commission [can] review the matter on a fully developed record after complete discovery.” Id. at
9.
The Intervenors cited extensively to Case No. GNR-E-11-03, Order No. 32697, in
which the Commission laid the framework for the PURPA avoided cost methodologies. Id. at 3-8.
The Intervenors pointed out that the Commission recognized the capacity deficit date determined
in a utility’s biennial IRP would “be the starting point” for determining the capacity deficit date
utilized in the SAR methodology, and “will be presumed to be correct subject to the outcome of
the proceeding.” Id. at 5; see Order No. 32697 at 23. The Intervenors noted that the Commission
only established a second proceeding for determining the capacity deficit date utilized in avoid
cost calculations because PURPA sellers were concerned that the variables in the IRP planning
process could be manipulated by a utility to push out the capacity deficit date. Intervenors’
Comments at 5. The Intervenors argued that the Company, in response to Staff’s comments in
Case No. PAC-E-19-16, is using this proceeding to push out its capacity deficit date—a result
counter to the Commission-intended purpose of the proceeding. Id.
The Intervenors argued it is inconsistent with Order No. 32697 and illogical to keep all
of the Company’s IRP planning assumptions except the Company’s planned early retirement of its
thermal resources when calculating the Company’s capacity deficiency date to be used in avoided
cost calculations. Id. at 6.

DECISION MEMORANDUM 4

[The Intervenors] recognize that any specific planning assumption may or may
not occur; however, there is no reason to assume that [the Company]’s actual plans
for coal retirements is less accurate than its assumptions regarding other loads and
resources. [The Company]’s avoided cost plans should be based on its plans
assumed in the IRP, unless it can be demonstrated that those plans are
unreasonable….

Id. The Intervenors asserted that if the Company’s Application is approved, PURPA sellers in the
Company’s resource stack will be denied capacity payments during a year in which the Company
is in fact capacity deficient. Id. at 8.
The Intervenors requested a hearing. Id. at 9. “It is respectfully submitted that if the
Commission is disposed to entertain the request to displace PURPA avoided cost pricing with
Staff’s proposal of a ‘least cost alternative’ derived from a ‘combined resource decision,’ that the
Commission review the matter on a fully developed record after complete discovery.” Id.
STAFF RECOMMENDATION
Staff believes a technical hearing is unnecessary in this proceeding, and that the record
is sufficiently developed for the Commission to make a decision. The contested issue can be stated
as follows: whether the Company’s planned early retirement of thermal resources should be
reflected in the Company’s load and resource balance when calculating the Company’s capacity
deficit date for PURPA avoided cost calculations. This is primarily a question of law, and the
Commission may examine the question in light of its prior orders. See IDAPA 31.01.01.263 (“The
Commission may officially note…in its orders…its own orders, notices, rules, certificates and
permits….”). With the Company’s Application, Staff’s comments, and the Intervenors’ comments,
the record is sufficiently developed. Additional discovery and a technical hearing serve no
practical purpose.
Should the Commission decide the record should be developed further, Staff
recommends the Commission use Modified Procedure and establish new comment deadlines.
///

DECISION MEMORANDUM 5

COMMISSION DECISION
Does the Commission wish to:
1. Grant the Intervenors’ request for a technical hearing?
a. If no, does the Commission wish to set new comment deadlines?
i. If yes, does the Commission wish to direct the parties and Staff regarding
how the record should be developed?

Matt Hunter
Deputy Attorney General

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