Idaho Power will take into account the directives from the Idaho Public Utilities Commission (PUC) as it begins work on its next integrated resource plan (IRP) following PUC acceptance of the 2015 IRP, an Idaho Power spokesperson told TransmissionHub Jan. 6.
The PUC accepted the IRP in a Dec. 23, 2015, order, noting that there was some debate about whether the utility chose the best plan to meet utility needs over the next 20 years.
PUC staff and other intervenors asserted that Idaho Power should choose to close two units of the North Valmy coal-fired power plant in 2019, while the utility said such a retirement earlier than the planned closure of the units in 2025 would be costly and increase customer rates by $6m annually in depreciation expenses.
Idaho Power, a subsidiary of IDACORP (NYSE:IDA) and NV Energy, which is owned by Berkshire Hathaway Energy, jointly own the North Valmy plant.
The timing of the planned retirement of Units 1 and 2 at the plant – 2025 in the IRP – is closely linked to the completion of the Boardman to Hemingway transmission line and “balances the risks of environmental legislation, increases in unplanned intermittent and variable generation, and it shown to be cost-competitive,” the Idaho Power spokesperson told TransmissionHub.
The Boardman to Hemingway line is designed as a single circuit, 500-kV facility that would stretch about 305 miles from the Grassland substation near Boardman, Ore., to the Hemingway substation near Melba, Idaho. Cost estimates for the project, which is expected to receive a final environmental impact statement early this year, range from $890m to $940m, according to the project’s website.
Idaho Power is developing the line in conjunction with PacifiCorp and the Bonneville Power Administration, with Idaho Power leading the permitting process toward a planned in-service date in 2020 or later.
Idaho Power receives about 260 MW from the two units at the North Valmy plant, and Unit 1 is not fully depreciated until 2031, while Unit 2 is not fully depreciated until 2034, the PUC noted.
The order makes clear that acceptance of the 2015 IRP does not mean approval of any components, since actions on any of the resource decisions contained in the plan would be subject to prudency reviews in separate proceedings. The IRP, which is filed every two years by regulated utilities in Idaho, “is a plan, not a blueprint, and by issuing this order we merely acknowledge the company’s ongoing planning process, not the conclusions or results reached through that process,” the PUC said in the order.
The 2015 IRP did not anticipate significant new generation resources through the 2020s, with projections for customer growth through 2035 to add about 1.2% to the utility’s average energy demand and 1.5% to its peak demand. To meet load growth, Idaho Power anticipates acquiring 60 MW through new demand response programs, 20 MW from development of an ice-based thermal energy storage plan, and the construction of a 300-MW, natural gas-fired power plant in about 2031.
The plan assumes that much of the increased demand in the near future will be met by completion of the Boardman to Hemingway line, which is expected to be operational by 2020 or shortly thereafter, the PUC said.
Several parties in the IRP proceeding sought to have the North Valmy units retired sooner than the planned 2025 date of Idaho Power, and the utility said that while a 2019 retirement performed well in an economic analysis, early closure carries considerable risk due to a number of factors including the U.S. Environmental Protection Agency’s Clean Power Plan (CPP) and uncertainty surrounding PURPA solar projects, the completion date of the Boardman to Hemingway line, and whether regulators would allow depreciation expense of an early coal plant retirement to be included in customer rates.
Since Idaho Power’s IRP was filed in June 2015, “some of those risk factors have been lessened,” with the utility’s emission-reduction targets under the CPP reduced and a compliance period extended, and a recent PUC order limiting solar and wind PURPA contracts to two years, the PUC said.
Given those developments, the PUC encouraged Idaho Power “to more clearly explain” to stakeholders why the company chose a resource portfolio with a 2025 closure of the North Valmy units instead of 2019.
The PUC also said Idaho Power should further explore whether it could more effectively incorporate energy efficiency by using cost models similar to those used by PacifiCorp, Avista Corp. (NYSE:AVA) subsidiary Avista Utilities, Puget Sound Energy and the Northwest Power and Conservation Council.
While Idaho Power explained its rationale for choosing the portfolio of resources in its IRP through the public process of broad stakeholder engagement and in the document itself, “it understands that additional explanation may be warranted in order to more clearly explain its choice,” the utility spokesperson said. “Idaho Power will continue to work with stakeholders and the commission staff as we begin the ongoing planning process for the 2017 IRP.”
In its order, the PUC also said it would be appropriate for Idaho Power to update stakeholders about the status of the Boardman to Hemingway line, participation in an energy imbalance market, solar photovoltaic cost estimates, the penetration of electric vehicles and their impact on the utility’s load.
“It is not unusual for the Public Utilities Commission to offer the company direction for its next long-range plan,” the utility spokesperson said. “Idaho Power will certainly take the PUC’s suggestions into account as it prepares the 2017 IRP.”