20230629Final_Order_No_35834.pdf

ORDER NO. 35834 1

Office of the Secretary
Service Date
June 29, 2023
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 CALCUATIONS
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CASE NO. PAC-E-22-14

ORDER NO. 35834

On October 4, 2022, Rocky Mountain Power (“Company”), a division of PacifiCorp,
applied to the Idaho Public Utilities Commission (“Commission”) for approval of a capacity
deficiency period determination beginning in the summer of 2023, to be used in determining
avoided cost rates and payments for qualifying facilities (“QF”) under the Public Utility
Regulatory Policies Act of 1978 (“PURPA”).
On November 7, 2022, the Commission issued a Notice of Application and Notice of
Modified Procedure establishing public comment and Company reply deadlines. Order No. 35588.
On December 21, 2022, the Commission issued a Notice of Extension of Comment
Deadlines. Order No. 35637. Staff filed comments to which the Company replied. No other
comments were received.
Having reviewed the record, we now issue this Order approving the Company’s
Application subject to its compliance with the items outlined below.
BACKGROUND
Under the requirements of PURPA, the Commission established a Surrogate Avoided
Resource (“SAR”) method and an Integrated Resource Plan (“IRP”) method to calculate avoided
cost rates for QFs. Under both methods, a QF receives capacity payments beginning after the
applicable capacity deficit date is reached. Order Nos. 33377, 33159, and 33898.
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
date1 determined in the IRP process is presumed to be a correct starting point; however, it is subject
to the outcome of the capacity deficiency case. Order No. 32697.

1 The Commission has established a SAR method to calculate avoided cost rates for QFs. A QF receives capacity
payments only after the applicable capacity deficit date is reached. Order No. 32697.
ORDER NO. 35834 2

On June 8, 2023, the Commission issued Order No. 35810 changing the filing date for
future capacity deficiency date cases for Avista, Idaho Power, and Rocky Mountain Power to
“within thirty (30) days of filing its respective IRP.” Order No. 35810 at 3.
THE APPLICATION
The Company noted that the Commission ordered “all future [load and resource] Balances
included in the capacity deficiency date update for avoided costs must contain the most up-to-date
information available at the time of filing.” Application at 3 quoting Order No. 35415.
The Company noted that the Commission has ordered that the early retirement of coal
resources should not be accounted for in the load and resource balance (“L&R”) unless the
Commission has already approved the early retirement date. Application at 3. The Company stated
that the early retirement of coal resources incorporated into calculations found in the Application
are consistent with Order No. 34918. Id.
The Company filed its 2021 IRP on September 1, 2021, followed by the Company filing
errata to the 2021 IRP on a September 15, 2021, for the purpose of clarifying some changes that
did not “affect the analysis or outcomes of the 2021 IRP.” See Order No. 35271 at 1. On September
30, 2021, the Company filed a supplement to the 2021 IRP containing analysis detailing additional
sensitivity cases. On April 4, 2022, the Company filed the 2021 IRP Update which the Company
asserted provided “a number of updates including a description of resource planning, procurement
activities, an updated load and resource balance, an updated resource portfolio reflecting updates
to load forecast and other model inputs, and a status update on action plan items from the 2021
IRP.” Company’s Cover Letter attached to the 2021 IRP Update. On August 30, 2022, in Order
No. 35514 the Commission acknowledged the Company’s 2021 IRP.2 The Company states that
“[c]ertain adjustments are appropriate to account for committed and uncommitted resource
impacts, relative to the representation in the 2021 IRP Update, [including] . . . [r]emoving
uncommitted early coal retirements” as well as adding various contracts after the 2021 IRP,
demand response programs, and contracted front office transactions, the Company has adjusted its
capacity deficiency calculations. Id. at 5.

2 The Commission acknowledged the Company’s 2021 IRP including errata and updates the Company submitted in
September 2021. The 2021 IRP Update, although filed by the Company on April 4, 2022, prior to the final order, was
filed too late to be considered by Staff and by other parties in comments (comment due date was March 15, 2022) and
was not considered during deliberation for acknowledgement in Order No. 35514.
ORDER NO. 35834 3

Due to these updates to the 2021 IRP, the Company stated “the first capacity deficiency of
296 megawatts occurs in the summer of 2023. . . . After a larger deficiency in 2024, a period of
sufficiency occurs from 2025 through 2027.” Id. at 5.
COMMENTS
Staff Comments Generally
Staff reviewed the Application and recommended that the Company submit a compliance
filing incorporating several changes into its proposed L&R and First Capacity Deficiency Date.
Staff identified 11 separate issues regarding this filing listed below followed by Staff’s analysis
and the Company’s reply for each issue. Staff believed the Company should:
1. [Use the] capacity deficiency period . . . to determine when capacity payments
begin for both IRP-based and SAR-based contracts;
2. Provide the L&R using the 20-year IRP planning horizon, instead of the 9-year
timeframe submitted with the Company’s filing;
3. Provide the L&R reflecting both summer and winter peak;
4. Use the 2021 IRP [m]ethod, instead of the 2021 IRP Update [m]ethod, to
determine capacity contributions of all resources;
5. Assume renewal of PURPA projects located in the State of Idaho, unless the
Company has information from specific [QFs] to the contrary;
6. Update the L&R to include all contracts executed by the date of the Commission
order that are eligible for rate recovery;
7. Include the additional 3% contingency reserves above the Front Office
Transaction (“FOTs”) limit only if it increases the amount of available FOTs
that the Company can rely on to meet its load obligations;
8. Include projected growth in existing Demand Response (“DR”) programs;
9. [Only include] DR programs from the 2021 Request for Proposals (“RFP”),
[that are] approved programs in the L&R;
10. Include existing DR programs and approved new DR programs consistently in
the L&R such that they are both treated either as a decrement to load or as a
resource; and
11. Verify the value of the existing Energy Efficiency (“EE”) in the load forecast,
ensuring 68 MW is used.
ORDER NO. 35834 4

Staff Comments at 2-3.
Company Reply Comments Generally
The Company believed its responses to Staff’s production requests negate the need for a
compliance filing. The Company stated the issues not already addressed in its production responses
do not require a compliance filing because the Environmental Protection Agency’s Ozone
Transport Rule and the war in Ukraine have already placed the Company’s load forecast higher
than its 2021 IRP and IRP Update contemplated.
The Company then addressed each of Staff’s concerns.
COMMISSION FINDINGS AND DECISION OVERVIEW
The Commission has jurisdiction over this matter under Idaho Code §§ 61-501, 61-502,
and 61-503. The Commission is vested with the power to “supervise and regulate every public
utility in the state and to do all things necessary to carry out the spirit and intent of the [Public
Utilities Law].” Idaho Code § 61-501. The Commission is empowered to investigate rates, charges,
rules, regulations, practices, and contracts of public utilities and to determine whether they are just,
reasonable, preferential, discriminatory, or in violation of any provision of law, and to fix the same
by order. Idaho Code §§ 61-502 and 61-503. In addition, the Commission has authority under
PURPA and FERC regulations to set avoided costs, to order electric utilities to enter fixed-term
obligations for the purchase of energy and capacity from QFs, and to implement FERC rules. The
Commission may enter any final order consistent with its authority under Title 61 and PURPA.
The Commission’s approval of this filing is conditioned upon certain requirements as
discussed below. Generally, these requirements center on the need for the Commission to have
clear and consistent data to allow for careful and deliberate consideration of the issues presented.
Accordingly, the Commission orders the Company to file a compliance filing that conforms to the
Commission’s requirements herein. Relatedly, the Company’s submitted L&R must provide a
clear breakdown of its loads and resources to ensure that all the requirements of the compliance
filing can be verified.
Discussed below are each of the eleven points raised by Staff in its Comments, the
Company’s Reply Comments and our decisions on each of these eleven items.

ORDER NO. 35834 5

Staff Comments on Issue 1
The capacity deficiency period should be used to determine when capacity payments begin
for both IRP-based and SAR-based contracts/Determination of the First Capacity Deficit
Date through the L&R.
Staff summarized its concern as follows: “the Company requested that the capacity
deficiency period be used only for SAR-based contracts . . . [.] However, prior Commission orders
require the capacity deficiency period to be used for both SAR- and IRP-based contracts. See Order
Nos. 33377, 33159, 33898, and 33933.” Staff Comments at 3 internal citation omitted). Staff
asserted that “[r]egardless of the method, QFs should only begin receiving capacity payments
starting on the First Capacity Deficit Date authorized at the time when a contract is executed.” Id.
Company Reply: The Company agreed the capacity deficiency period determined in this case
should be used regardless of whether the contract is an IRP- or SAR-based contract. Because this
case will establish a capacity deficiency period, the Company did not believe a compliance filing
was necessary.

Commission Decision: The Commission has previously ordered that public utility companies use
the capacity deficiency period to determine capacity payments for IRP- and SAR-based contracts
to ensure QF’s are only compensated for costs they avoid in the Company’s system. See Order
Nos. 33377, 33159, 33898, and 33933. The Commission reiterates the need for the Company to
do so in this case through a compliance filing.

Staff Comments on Issue 2
The Company should provide the L&R using the 20-year IRP planning horizon, instead of
the 9-year timeframe submitted with the Company’s filing/Peak Load Forecast and Future
Obligations for Incremental Resources.
The Company’s proposed L&R used “a 9-year timeframe from 2023 through 2031”. Staff
Comments at 3. Regarding this, Staff noted the following:
Staff recommended that the timeframe of the L&R be aligned with the planning
horizon used in the IRP because the SAR model uses not only the first deficit year
information (i.e., when capacity payments will be made), but also deficit values of
each year. For example, if a deficit value is smaller than a QF's capacity size, partial
capacity payments will be made. Ideally, 20 years of surplus/deficit values are
available for a contract term of 20 years.
ORDER NO. 35834 6

Id. Staff also pointed out that the Company only included a L&R for summer peaks in its
Application. Id. at 4. Staff asserted that Order No. 34918 required the Company to file a L&R for
summer and winter peaks. Id. Staff recommended that the Company file an updated L&R for
summer and winter peaks in a compliance filing. Id.

Company Reply: The Company stated that its “IRP uses a 20-year planning horizon, the 9-year
timeframe submitted with the Company’s filing clearly establishes a deficiency period beginning
July 2023. Any analysis and adjustments beyond 9 years will have no influence on the deficiency
period proposed.” Company Reply Comments at 5.

Commission Decision: The Company submitted an L&R that was compiled using a 9-year
timeframe and argued that forecasting data further than 9 years out would not ultimately be
utilized. However, although this specific L&R may not necessarily need more than 9 years to
determine the deficit date in this case, the SAR model requires the amount of deficit in subsequent
years following the first deficit date. The Commission expects, as a matter of practice for this
filing, a full 20-year L&R matching what is provided in the Company’s IRP. As loads and existing
resources change, providing 20-years of information will ensure sufficient information necessary
to set SAR-based rates, and it will provide visibility of deficits based on resources that have
regulatory certainty/approvals, such as coal plant retirements, which is not always provided by the
L&R in the Company’s IRP. See Order No. 34918 at 6. The Commission orders the Company to
provide the L&R using the 20-year IRP planning horizon in a compliance filing.

Staff Comments on Issue 3
Provide the L&R reflecting both summer and winter peak.
Staff was concerned that the Company failed to comply with Order No. 34918 (which
requires an L&R that provides data for both summer and winter peaks) the Company only provided
an L&R for the summer peaks. Staff recommended that this issue be corrected in a compliance
filing.

ORDER NO. 35834 7

Company Reply: The Company stated: “[t]he L&R reflecting both summer and peak load
resources has been provided in response to [Staff Production Request] 1 and included here as
Exhibit No. 1.” Company Reply Comments at 5.

Commission Decision: The L&R provided by the Company, in this case, only included the peak
during the summer. The Commission directs the Company to submit a compliance filing that
provides both summer and winter peaks in its L&R as ordered by the Commission in Case No.
PAC-E-20-13. Order No. 34918 at 6.

Staff Comments on Issue 4
Use the 2021 IRP method, instead of the 2021 IRP Update method, to determine capacity
contributions of all resources/Capacity Contribution Determination.
In the proposed L&R, some resources like larger contracts use the 2021 IRP Update
method, while other resources like smaller contracts use the regular 2021 IRP method. “Staff
believes that only one method should be used for all resources for consistency and recommends
that the Company use the 2021 IRP [m]ethod, because the 2021 IRP Update [m]ethod has not been
fully vetted.” Staff Comments at 5. Staff argued the regular 2021 IRP method should be used
because it “uses significantly more hours beyond the top 5 percent net load hours used in the 2021
IRP Update” and because the 2021 IRP Update method was filed after the Idaho parties submitted
comments in the IRP case. See Case No. PAC-E-21-19. Staff stated the 2021 IRP Update was not
subject to rigorous vetting. Id. Staff recommended that this issue be corrected in a compliance
filing.

Company Reply: The Company stated the “2021 IRP Method and 2021 IRP Update Method use
the same capacity contribution from the Company’s coal and gas fleet, which comprises most of
its capacity. . . .” Company Reply Comments at 5. The Company stated the 2021 IRP Update
method is more consistent with the Western Resource Adequacy Program (“WRAP”) and full
implementation of the WRAP will help the Company “meet demand during extreme events.” Id.
at 6.

ORDER NO. 35834 8

Commission Decision: The Commission is persuaded that because the 2021 IRP Update method
was not robustly vetted, the capacity contribution of some of its resources using this method lacks
confidence. The Commission orders the Company to use the 2021 IRP method instead of the 2021
IRP Update method for determining capacity contribution of its resources in the L&R. The
Commission orders the Company to address this issue in a compliance filing.

Staff Comments on Issue 5
Assume renewal of PURPA projects located in the State of Idaho, unless the Company has
information from specific QFs to the contrary.
The Company’s L&R does not assume that PURPA contracts will be renewed. Staff argued
that Order No. 34918 required that the Company take the default position that the PURPA contract
will be renewed unless the Company has information to the contrary. Staff recommended that this
issue be corrected in a compliance filing.

Company Reply: The Company stated that it did not incorporate the renewal of nine PURPA
contracts because the contracts have not been renewed. The Company stated the fact that those
PURPA contracts were not incorporated into its analysis did not matter because the Company
expected larger loads than it did when this case’s Application was filed; the Company also stated
the nameplate capacity for the nine contracts is less than 20 MW which the Company believed
“would not impact deficiency period timing.” Id.

Commission Decision: The Company’s L&R did not assume the renewal of PURPA contracts
which was required by Order No. 34918. The Company argues that the relevant PURPA contracts
were not incorporated because the renewal of those agreements had not currently been formalized.
Given that the likelihood that a majority of PURPA contracts will be renewed, the renewal of these
contracts should be incorporated into the Company’s L&R “unless the Company has information
about specific contracts to the contrary.” Order No. 34918. The Commission now reiterates this
requirement and orders the Company to address this issue in a compliance filing.

ORDER NO. 35834 9

Staff Comments on Issue 6
Update the L&R to include all contracts executed by the date of the Commission order that
are eligible for rate recovery.
Staff recommended the Company include all approved contract updates in the L&R since
the case was filed. If a contract requires pre-approval from the appropriate state commission, it
should not be included in the updated L&R unless authorized. If a contract does not require
preapproval from a commission, it should be included if it is executed by both parties and is eligible
for rate recovery. Staff recommended that this issue be corrected in a compliance filing.

Company Reply: The Company did not believe that it should update some variables and not others.
The Company noted that it will update its L&R with its 2023 IRP filing.

Commission Decision: The Company shall update the L&R to only include approved contracts
where pre-approval is necessary, or executed contracts where pre-approval is unnecessary, but the
contract is signed by the parties. Since the deficit date is used to set rates for QFs, which impacts
customer rates, until contracts are approved or have a high level of certainty, costs are not known
and measurable and should not be included in the Company’s L&R. The Commission orders the
Company to address this issue in a compliance filing.

Staff Comments on Issue 7
Include the additional 3% contingency reserves above the FOTs limit only if it increases the
amount of available FOTs that the Company can rely on to meet its load obligations.
Staff stated that the additional 3% contingency reserves should not be included in the
Company’s L&R unless “it increases the amount of available FOTs that the Company can rely on
to meet its load obligation. It should not be included in the L&R, if the 3% is only used to ensure
the available FOTs can be delivered on a firm basis.” Staff Comments at 6.

Company Reply: The Company disagreed with Staff’s suggestion regarding the treatment of FOTs
and believed that FOTs should be treated like other resources. The Company provided an example
illustrating that the power purchased would functionally need to equate to 103% of the power
ORDER NO. 35834 10

generated. The Company stated it provided for this in its FOT capacity calculations provided to
Staff.

Commission Decision: The Company was able to sufficiently explain how these reserve amounts
are an obligation held by the counterparty or ultimate source of the generation. Accordingly, the
Commission is willing to allow the Company to proceed to count 3% FOT contingency reserves
in the Company’s L&R; however, the Company should provide the Commission with clear
evidence in its next filing that these reserves can be reliably counted upon to provide contingency
reserves.

Staff Comments on Issue 8
Include projected growth in existing DR programs.
Staff stated the Company included current existing DR programs in its proposed L&R but
did not include any data related to the projected growth of those programs. Staff believed the
projected growth for each of the existing DR programs should be incorporated into the Company’s
proposed L&R. Staff stated that the inclusion of such estimations was approved in Order No.
33159 in Case No. IPC-E-14-22. Staff recommended that this issue be corrected in a compliance
filing.

Company Reply: The Company stated: “As explained in the 1st Supplemental Response to item
(c) in [Staff’s Data Response3] 9, the projected growth of existing DR programs is already included
in our L&R as ‘New Demand Response.’” Company Reply Comments at 7.

Commission Decision: After reviewing the Application, the Commission was not able to see “New
Demand Response” in the L&R. The Company shall include growth in existing DR programs that
is clearly labeled so that the L&R in the Compliance filing can be verified.

3 In this Order, “DR” refers to “Demand Response”. In the Company’s Reply Comments, it occasionally used “DR”
to refer to “Data Response.”
ORDER NO. 35834 11

Staff Comments on Issue 9
Among the selected DR programs from the 2021 RFP, only include approved programs in
the L&R.
Staff expressed concern that the Company’s “proposed L&R includes all the selected DR
programs from the 2021 DR RFP. Staff recommends that only approved programs be included in
the L&R.” Staff Comments at 7 (emphasis added). Staff recommended that this issue be corrected
in a compliance filing.

Company Reply: The Company disagreed with Staff’s position. The Company stated it should not
be required to remove currently unapproved DR programs because the Company is depending on
those programs to meet its load obligations and the removal of those programs from the analysis
would not result in an earlier deficiency period.

Commission Decision: The Commission approves the DR programs the Company can use to meet
its load requirements. Accordingly, the Commission finds that the Company must only include
approved DR programs in the Company’s L&R. The Commission orders the Company to address
this issue in a compliance filing.

Staff Comments on Issue 10
Include existing DR programs and approved new DR programs consistently in the L&R such
that they are both treated either as a decrement to load or as a resource.
Staff stated that different methods for calculations were applied to different DR programs.
Specifically, “[t]he proposed L&R includes existing DR programs as a decrement to load but
includes selected DR programs from the 2021 DR RFP as a resource.” Id at 8. Staff believed the
DR programs should be treated consistently to ensure mathematically comparable outputs. Staff
argued the best option would be to ensure the planning reserve margin is “applied to the original
load forecast before DR resources are decremented.” Id.

Company Reply: The Company stated:
Within the Company’s filing, both existing and new DR programs are
treated consistently as a decrement to load, in the same manner as the original 2021
IRP and 2021 IRP Update filings. Because the planning reserve margin is already
ORDER NO. 35834 12

reflected in the system sufficiency/deficiency position, the adjustment to include
the capacity associated with the 2021 Demand Response RFP was multiplied by
113%. This is consistent with the treatment of existing demand response, where the
planning reserve margin is only applied to the remaining need after its capacity
contribution is removed.
Company Reply Comments at 8. The Company references discovery provided to Staff to
support its argument.

Commission Decision: The Commission is satisfied with the information provided by the
Company in its reply on this issue.

Staff Comments on Issue 11
Verify the value of the existing EE in the load forecast, ensuring 68 MW is used.
Staff noted that the 2021 IRP Update stated the existing EE mistakenly listed the existing
EE as 73 MW when in fact it is 68 MW. “Staff recommends that the Company verify the value of
the existing EE used in the load forecast and make sure 68 MW is decremented.” Staff Comments
at 8.

Company Reply: The Company acknowledged its previous misstatement but stated the correct
value was embedded in its load forecast “therefore, this value is not singled out in the SAR Method
calculation.” Company Reply Comments at 9. The Company referenced supporting discovery in a
footnote.

Commission Decision: The Commission is satisfied with the information provided by the
Company in its reply on this issue.

O R D E R
IT IS HEREBY ORDERED that the Company’s Application is approved subject to its
compliance with the items discussed above. The Company shall submit a compliance filing
including the matters set forth within 21 days of the issuance of this order.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
ORDER NO. 35834 13

days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 29th day of
June 2023.

ERIC ANDERSON, PRESIDENT

JOHN R. HAMMOND JR., COMMISSIONER

EDWARD LODGE, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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