20201214Comments.pdf

EDWARD JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.10446
Street Address for Express Mail:
11331 W CHINDEN BVLD,BLDG 8,SUITE 201-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 )CASE NO.PAC-E-20-16CONTRACTS,LOAD AND GAS FORECASTS )USED IN THE INTEGRATED RESOURCE )COMMENTS OF THE
PLAN AVOIDED COST MODEL )COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission,by and through its Attorneyof record,
Edward Jewell,Deputy AttorneyGeneral,submits the followingcomments.
BACKGROUND
On October 29,2020,Rocky Mountain Power,a division of PacifiCorp ("Rocky Mountain
Power"or "Company")applied to update the load forecast,natural gas forecast,and contract
information it uses to calculate the incremental cost IntegratedResource Plan ("IRP")avoided cost
rates for qualifyingfacilities ("QF"or "QFs")under the Public Utility Regulatory Policies Act of
1978 ("PURPA").
The Company's updated load forecast anticipates a slight decrease in load over the first
three years of the forecast,but an overall increase in load compared to the load forecast approved in
PAC-E-19-18.The Company's natural gas price forecast shows a slight increase over its 2019
forecast over the next five to ten years,but a slight decrease over its 2019 forecast in the years
thereafter.The Company states it has signed 24 long-term contracts,including 13 long-term
contracts with QFs,for a total of 916.1 megawatts ("MW")of nameplate capacity since its last
STAFF COMMENTS 1 DECEMBER 14,2020
update in PAC-E-19-18.In that timeframe,ten long-term contracts have expired without renewal
and seven long-term QF contracts were terminated with a total nameplate capacity of 462.4 MW.
The Company states it has 30 non-PURPA contracts with a nameplate capacity of 2,532 MW,and
157 PURPA QF contracts with a nameplate capacity of 2,348 MW.
STAFF ANALYSIS
Staff has reviewed the Company's Application and recommends approval of the updated
load forecast,natural gas forecast,and long-term contracts to be used in the IRP methodology for
avoided costs.
Updated Load Forecast
Staff calculated the average of annual load from 2020 through 2038 and compared the
Company's annual system load forecast in this filing to the Company's forecasts in last year's filing
in Case No.PAC-E-19-18 and in the Company's 2019 IRP in Case No.PAC-E-19-16.This year's
forecast is 1.25%higher than last year's forecast and is 7.72%higher than the forecast in the 2019
IRP.The 2020 load forecast has slightly decreased in the first few years of the time horizon since
last year's forecast.The Company explained in its Response to Staff's Production Request No.3
that it is due to adverse economic impacts resulting from the COVID-19 pandemic.The Company
further explained that a higher forecast in the later years is driven by projected residential demand,
transportation electrification,and commercial customer demand from data centers.Staff believes
this load forecast is reasonable,especially for the first few years,which is the time period that will
be used for determining avoided cost rates in new/renewal IRP-based contracts due to contract term
lengths limited to two years.The comparison of the three forecasts is shown in Figure No.1 below.
STAFF COMMENTS 2 DECEMBER 14,2020
Figure No.1:Comparison of Load Forecasts.
PacifiCorp's Annual Load Forecast
72000
70000
68000
66000 .....
64000 ..
62000 ..
60000 --
58000
56000
54000
52000
2020202120222023202420252026202720282029203020312032203320342035203620372038
-2020 Forecast in PAC-E-20-16 2019 Forecast in PAC-E-19-18
-2019 IRP Forecast in PAC-E-19-16
Updated Natural Gas Forecast
Staff believes that the Company's proposed natural gas price forecast is reasonable based on
performing two types of comparisons:one comparing this year's forecast to historical PacifiCorp
forecasts and a second that compares this year's forecast to recent forecasts by Idaho's two other
regulated electric utilities.
Staff compared this year's Henry Hub natural gas price forecast to the Company's 2019
annual filing in Case No.PAC-E-19-18 and to the Company's 2018 annual filing in PAC-E-18-09.1
Overall,this year's forecast is lower than the 2018 forecast and the 2019 forecast.Althoughthis
year's forecast is higher than last year's forecast in 2021 and 2022,Staff believes it is reasonable
because the Company uses forward market prices for the first 36 months of the forecast.Staff
believes that forward market prices are the best indicator of natural gas prices in the short-term.See
Figure No.2.
I The Company's 2019 IRP used the same Official Forward Price as in the 2018 annual update filing in PAC-E-18-09.
STAFF COMMENTS 3 DECEMBER 14,2020
Figure No.2:Comparison of Henry Hub Natural Gas Price Forecast over Past Three Years
PacifiCorp's Henry Hub Natural Gas Price Forecast
8
2
1
0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038
-2020 Forecast in PAC-E-20-16 2019 Forecast in PAC-E-19-18 -2018 Forecast in PAC-E-18-09
Second,Staff compared HenryHub forecasts used by Idaho Power,Avista,and Rocky
Mountain Power,and the results show similar trends between the three utilities.See Figure No.3.
The three utilities use three different methodologies and sources to determine natural gas forecasts.
Idaho Power uses EIA's High Oil and Gas Resource and Technology natural gas forecast.Avista
uses a blend of two national consultants'forecasts,EIA's forecast,and forward market prices.
Rocky Mountain Power uses a combination of third-partyforecasts and forward market prices.For
annual update filings,all three utilities include a Henry Hub forecast that Staff used for comparison.
Despite different methodologies and sources,all three Henry Hub forecasts reflect a high level of
similarity,especially for the first few years.This is important because new contract avoided cost
rates determined using the IRP methodology only use the first two to three year of the forecast due
to contract lengths limited to two years.Because of similarities to Avista and Idaho Power's Henry
Hub forecasts,Staff believes Rocky Mountain Power's natural gas forecast is reasonable.
STAFF COMMENTS 4 DECEMBER 14,2020
Figure No.3:Comparison of Henry Hub Forecasts for Three Idaho Electric Utilities
Henry Hub Natural Gas Forecasts Used by
idaho Power,Avista and Rocky Mountain Power
6
2
1
0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
-Idaho Power --Avista Rocky Mountain Power
Contract Terminations,Expirations,and Additions
Since last year's annual filing,Rocky Mountain Power has signed 24 long-term contracts,
including 13 long-term contracts with QFs,for a total nameplate capacity of 916.1 megawatts.Ten
long-term contracts have expired without renewal and seven long-term qualifying facility contracts
were terminated,for a total nameplate capacity of 462.4 megawatts.New contracts,terminated
contracts,or expired contracts are all updated in the IRP model on a continuous basis.Staff
verified the contract information and determined it accurate.
STAFF RECOMMENDATIONS
Staff believes the load forecast,the natural gas forecast,and the contract information
updated by Rocky Mountain Power comply with the Order Nos.32697 and 32802.Staff
recommends approval of the updates to be used in the Company's IRP methodology with an
effective date of October 15,2020.
STAFF COMMENTS 5 DECEMBER 14,2020
Respectfully submitted this day of December 2020.
Edward Jew
Deputy Attor eneral
Technical Staff:Yao Yin
Bentley Erdwurm
i:umisc/comments/pace20.16ejyybecomments
STAFF COMMENTS 6 DECEMBER 14,2020
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14th DAY OF DECEMBER 2020,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN CASE
NO.PAC-E-20-16,BY E-MAILING A COPY THEREOF,TO THE FOLLOWING:
TED WESTON EMILY WEGENER
ROCKY MOUNTAIN POWER ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330 1407 WN TEMPLE STE 320
SALT LAKE CITY UT 84116 SALT LAKE CITY UT 84116
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