20211215Comments.pdf

. !.'-j_ii'r!r!_r'{, .'- ,v '1 I 'i f, LJ
JOHN R. HAMMOND, JR.
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.0074
(208) 334-03s7
IDAHO BAR NO. 5470
iii-iillll i5 Pil Z:89
i!sioru
Street Address for Express Mail:
I I33I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN TIM MATTER OF TIIE APPLICATION
OF ROCKY MOT'NTAIN POWER TO
T]PDATE CONTRACTS, LOAD AI\D GAS
FORECASTS USED IN THT' INTEGRATEI)
RESOT'RCE PLAI\ AVOIDED COST MODEL
CASE NO. PAC-E..2I.20
COMMENTS OF TITE
COMMISSION STAFF
STAFF OF the Idatro Public Utilities Commission, through its attorney of record, John R.
Hammond, Jr., Deputy Attorney General, submits the following comments.
BACKGROI.]NI)
On October27,202l, Rocky Mountain Power, a division of PacifiCorp ('Company")
applied to the Commission in compliance with Order Nos. 32697 arfl32802 to update the load
forecas! natural gas forecast, and long-term contracts used in the Integrated Resource Plan
("IRP"; avoided cost model.
Order No. 32697 specified that the inputs to the IRP methodology calculation, utilized to
determine the avoided cost for Public Utility Regulatory Policies Act of 1978 (*PURPA")
qualifring facilrty (*QP') projects that exceed the published rate eligibility cap, will be updated
every two years upon the utility's IRP filing except for the load and the natural gas forecasts to be
)
)
)
)
)
)
)
STAFF COMMENTS DECEMBER 15,2O2I
updated annually by June I of each year. Subsequently, Order No. 32802 changed the due date of
the annual update from June I to October 15 of each year.
STATF'ANALYSIS
Staffhas reviewed the Company's Application and recommends approval of the proposed
load forecast and the natural gas forecast to be used in the IRP methodology to determine avoided
cost rates in contracts signed on or after January 1,2022, until the effective date of the next
annual update. Staff also recommends that the contract changes in the Application be approved
after removirg the inclusion of the redundant Sunny Bar Ranch extension contract while
including the proposed long-term contract in Case No. PAC-E-21-10. Finally, Staffrecommends
that the effective date of the load and natural gas forecast, and contract changes should occur on
January l, for this and atl future filings.
Load Forecast
Staffcompared the load forecast in this case to the load forecast in Case No. PAC-E-20-16
as illustrated in Figure No. I below. The overall increase is driven by expansions of load for
large customers in the Company's system and a faster recovery from the COVID-I9 pandemic
impacts. The increase over the next three years is also driven by increased load in the residential
sector. See Response to Staffs Production Request No. l. Staffbelieves that the proposed load
forecast is reasonable and reflects load trends within the Company's service tenitory.
2STAFF COMMENTS DECEMBER 15,2O2I
Fisure No. 1: Comparison of Load Forecasts
Rocky Mountain Power's Annual Load Forecast
80000
70000
60000
50000
!3 40000(9
30000
20000
10000
0
"-f dP
".of ".dI ror9 rd," rd "^&. "d "..g" "dl rdP
".o&
r&" rd "&" rd rd "&" ".""
ooe too )Q)Q Forecast in PAC-E-20-16
-2021Forecast
in PAC-E-21-20
Natural Gas Forecast
Staffbelieves that the Company's proposed naturat gas price forecast is reasonable based
on performing two types of comparisons: one comparing this year's gas forecast to last year's gas
forecast and one comparing the Company's forecast to the forecast used by Avista Corporation
(*Avista").
Staffcompared this year's Henry Hub natural gas price forecast to the Company's forecast
submitted in last year's update in Case No. PAC-E-20-16 illustrated in Figure No. 2. The
comparison shows this year's forecast is higher than last year's forecast for the next tbree years,
and lower than last year's forecast thereafter. These differences are driven in the near term by an
economy that continues to recover from the COVID-I9 pandemic and the demand for energy
which has increased faster than the return of naturd gas production. See Response to Staff s
Production Request No. 2. Over the long term, lower gas prices, compared to last year's forecast,
will be driven by increased natural gas production from continued development of shale gas and
tight oil plays, which is projected to outpace gas consumption.
JSTAFF COMMENTS DECEMBER 15,2O2I
Fisure No.2: Comparison of Henry IIub Natural Gas Price Forecasts
Rocky Mountain Power's Henry Hub Natural Gas Price Forecast
.aaa""o"tt"""t""""""'o""
tototttotttttttt'
oroooooooorot'oo
8
7
6
=q.coE+
!D5
2
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
oooooo lQlQ Forecast in PAC-E-20-16
-?02l
Forecast in PAC-E-21-20
Staffalso compared Henry Hub forecasts submitted by Avista and the Company in their
annual update as illustrated in Figure No. 3. The two utilities use two different methodologies
and sources to determine nafural gas forecasts. Avista uses a blend of two national price
forecasting consultant's most rec€nt forecasts, the U.S. Energy Infomration Administration's
Annual Energy Outlook forecast, and forward market prices. The Company uses a combination
of third-party forecasts and forward market prices.
Despite different methodologies and sources, both Henry Hub forecasts reflect a high level
of similarity, especially for the first few years. This is important because avoided cost rates
determined in the IRP methodology are only needed for the first few years due to IRP-based
contracts being limited to a two-year contract length. Based on the two analyses abovg Staff
believes the Company's natural gas forecast is reasonable.
7
0
4STAFF COMMENTS DECEMBER I5,2O2I
Fieure No.3: Henlv Hub Natural Gas Forecasts Used bv Avista and Rockv Mountain Power
Henry Hub Natural Gas Forecasts Used by
Avista and Rocky Mountain Power
aaaaottt""
a
co
.ua
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
-flsnry
Hub Forecast in AVU-E-21-14 ...... Henry Hub Forecast in PAC-E-21-20
Contract Terminations, Expirations, and Additions
Staffhas reviewed the proposed contract changes in Table 3 of the Application and
believes that the changes are correct except for Sunny Bar Ranch PURPA project. Staff
recommends all contract changes included in the Application be approved after removing the
inclusion of the redundant Sunny Bar Ranch extension contract and only including the proposed
long-term contact in Case No. PAC-E-21-10.
The Sunny Bar Ranch project is listed twice in Table No. 3: Line No. 7 with a one-year
extension to the original contract which the Company filed and withdrew in Case No. PAC-E-20-17,
and Line No. 17 with a 2O-year contact term, which the Company filed in Case No. PAC-E-21-10.
The Company stated in Response to Staffs Production Request No. 3 that the long-term QF contract
will be effective when approved by the Commission and will supersede the legacy QF contract. The
Company also stated in Response to Staffs Production Request No. 4 that the capaclty for Sunny Bar
Ranch is only included once at any point in time in the Company's IRP model used to develop
avoided cost rates.
6.00
5.00
4.00
3.00
2.00
1.00
0.00
5STAFF COMMENTS DECEMBER 15,2O2I
Because the Stmny Bar Ranch project is one projecL Staffagrees that the project should be
included in the Company's IRP model once at any point time in time; however, Staffbelieves the
infonnation about the project should be based on the proposed long-terrr contract instead of the
original contact or the one-year extension, since the original contact expired on April 30,2021, and
the extension request was withdrawn. Although the long-term contract has not been approved by the
Commission, Schedule 38t allows QFs to enterthe queue of the IRP model as of the date the Company
has confirmed receipt of all project inforrnation required in Paragraph I.B.2 of the schedule.
Therefore, Staffrecommends thd the Commission approve contract changes proposed in the
Application except for the Sunny Bar Ranch project.
Effective Dete
Order No. 32802 requires that three utilities in Idaho should update natural gas and load
forecasts for each utility's IRP Methodology on October 15 of each year. Since Order No. 32802
was issued, the three utilities have filed their annual update cases by October 15, and the
Commission's authorizations utilized the same effective date as the deadline for the filing. To
allow for adequate time to review each utility's filing and prevent having a filing deadline that is
the same as the effective date, Staffrecommends that all three utilities continue to file their annual
update cases by October 15 but establish a fixed effective dafe of January I of the following year in
this case and in future annual update cases.
STAIT' RECOMMEIYDATIONS
Staffrecommends that the Commission approve the following updates to be used in the
Company's IRP model for determining avoided cost rates:
1. The proposed load forecast as filed;
2. The proposed natural gas forecast as frled; and
I The Commission determind in Order N o- 32697 trat all long-terrr contract information should be updated for the
IRP methodolory when contracts are signed, terminated, or expired in order to maintain the most upto-dde avoided
cost. Later, Order No. 33357 eliminated the *sigtred contracf'requirement of Order No. 32697 to allow utilities to
updare their incremental pricing for QFs in their PURPA queue and directed Rocky Mountain Power to file a
schedule to include specific criteria for management of the queue. In response, the Company filed Schedule No. 38,
which was subsequently approved by the Commission in Order No. 33474.
6STAFF COMMENTS DECEMBER 15,2O2I
3. All contact changes as filed except forthe Srmny Bar Ranch extension contacL
which should be removed and only include the proposed long-term contract as
documented in Case No. PAC-E -21-10.
In addition, Staffrecommends thatthe effective date ofthis filing be January 1,2022,and
on January I for all future arnual Wdate filings.
Respectfully submitted this day ofDecember 2021
R. Hammond, Jr.
Attorney General
Technical Staff: Yao Yin
Travis Culbertson
irmisc:commemfuacc2 l2Ojhyymc comrents
7STAITF COMMENTS DECEMBER I5,2O2I
CERTIFICAIT OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS I5M DAY OF DECEMBER 202I,
SERVED TIIE FOREGOING COMMENTS OF TIIE COMMISSTON STAFF, IN CASE
NO. PAC.E.2I-20, BY E-MAILING A COPY TIIEREOF, TO TIIE FOLLOMNG:
TED WESTON
ROCKY MOI.'NTAIN POWER
I4O7 WEST NORTII TEMPLE STE 330
SALT LAKE CIry UT 84116
E-MAIL: [e-mail]
DATA REQI.JEST RESPONSE CENTER
E-MAIL OITLY:
datarequest@f ac i f i corp. com
EMILY WEGENER
ROCKY MOI.'NTAIN POWER
I4O7 WN TEMPLE STE 320
SALT LAKE CITY UT 84I 16
E-MAIL: [e-mail]
llnrr*/n,*t',*
SECRETARY
CERTIFICATE OF SERVICE