20240315Comments of the Commission Staff.pdf

CHRIS BURDIN 1=t E C E I V E D
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION Q2� e' 0 5 �� �' i
PO BOX 83720r'udL1G
BOISE, IDAHO 83720-0074 `Il.' ! `` CohlMISSION
[phone]
IDAHO BAR NO. 9810
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT PETITION )
OF AVISTA CORPORATION AND REGENTS ) CASE NO. AVU-E-24-02
OF THE UNIVERSITY OF IDAHO FOR )
APPROVAL OF POWER PURCHASE )
AGREEMENT ) COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Chris Burdin, Deputy Attorney General, submits the following
comments.
BACKGROUND
On January 31, 2024, Avista Corporation ("Avista") and the Regent of the University of
Idaho ("University" or "Seller") (collectively, the "Parties") petitioned the Idaho Public Utilities
Commission ("Commission") for an order approving the renewal Power Purchase Agreement
("PPA") between Avista and the University for its 132.32-kW solar facility ("Facility") located in
Moscow, Idaho. The Facility is a qualifying facility ("QF") pursuant to the Public Utility
Regulatory Policies Act of 1978 ("PURPA").
The original agreement between the Parties, as amended by the First Amended and
Restated Power Purchase Agreement, was approved by the Commission in Order No. 35440, and
STAFF COMMENTS 1 MARCH 15, 2024

expired on February 16, 2024. The Parties request that the Commission issue an order approving
the renewal PPA with an Effective Date of February 17, 2024. The term of the renewal PPA is
two years from the Effective Date.
STAFF ANALYSIS
Commission Staff ("Staff') reviewed the PPA focusing on the proposed avoided cost rates,
the lapsed -contract period, and Section 9.6 of the PPA. Based on its review, Staff recommends
approval of the PPA conditioned upon the modification of Section 9.6 to meet the requirement in
Order No. 35705. Staff also recommends:
1. the Seller be paid at the proposed avoided cost rates with an effective date of February
17, 2024; and
2. if the Seller modifies the Facility, the Company only include Net Power Cost ("NPC")
in the Power Cost Adjustment ("PCA") that reflects rates for any energy delivered
appropriate for the Facility as modified, regardless of the compensation paid to the
Seller.
Avoided Cost Rates
The renewal PPA, like the original agreement, uses avoided cost rates based on "time of
delivery." These are avoided cost rates available to a QF when a legally enforceable obligation
("LEO") has been established,' which the Commission has determined as non -firm market prices
discounted 15% for the cost of transmission. When using non -firm market prices as the avoided
cost rates, the Commission has determined that the non -firm market prices should be discounted
15% to account for costs of transmission, transmission losses, and transmission transaction costs
associated with the energy being "must -take" and potentially needing to be sold into the market.
Order No. 29093 at 4 and 5. For these reasons, Staff believes the proposed avoided cost rates are
reasonable.
1 Power purchases that fall under the category of LEO Purchases can be calculated at the time of delivery, because
the terms of purchase are made through a contract between the Parties. There are two categories of purchases under
PURPA: (1) as -available purchases; and (2) LEO purchases. The former allows a QF to provide energy whenever it
is available and use avoided costs calculated at the time of delivery, while the latter requires a QF to provide energy
or capacity pursuant to a LEO for the delivery of energy or capacity over a specified term, using either the avoided
costs calculated at the time of delivery, or the avoided costs calculated at the time the obligation is incurred. See 18
CFR $ 292.304 (d).
STAFF COMMENTS 2 MARCH 15, 2024

Lapsed -Contract Period
The original agreement expired on February 16, 2024. Until the Commission approves the
proposed PPA and establishes an effective date, the Facility is and will be operating during a
lapsed -contract period. Section 4 of the PPA states that the Effective Date is February 17, 2024,
or such other date set by the Commission order. Staff recommends that the Commission
retroactively set the effective date for February 17, 2024, and pay the Seller the proposed avoided
cost rates starting at that time.
Staff justifies its recommendation for two reasons. First, the Commission has historically
set the effective date for other PURPA contracts either the day following the end of the previous
contract term (e.g. Order Nos. 34792, 35123, and 35383) or after the Commission's approval (e.g.
Order Nos. 35303 and 35486). Regardless of when the effective date was set by the Commission
in those examples, the retroactive rates for the lapsed contract period were the avoided cost rates
established in the approved contract. Second, a QF's eligibility for capacity payments may be
affected if the facility lacks continuous operation during the lapsed period. Order No. 34792 at 3.
Because the proposed PPA uses non -firm market prices that do not include capacity payments,
Staff is not concerned about lack of continuous operation, if any, in this case. Therefore, Staff
believes the treatment is reasonable.
In addition, Staff echoes the Commission's past concerns regarding late -filed renewal
contracts that result in a lapsed contract period and a lack of contractual commitment. This lack
of commitment can create uncertainty for the Company's resource planning. The Commission
expects renewal QF contracts to be filed well before an existing contract expires to avoid these
situations. Order Nos. 35067 at 4 and 35060 at 4.
Section 9.6
Commission Order No. 35705 in Case No. IPC-E-22-28 requires inclusion of language that
restricts a seller from modifying the facility from the as -built description of the facility without
promptly notifying the Company of that intent. However, Section 9.6 of the PPA only states that
"Seller shall notify Avista in writing of any material modifications to the Facility," which does not
ensure that a notification will be made before modifications to the Facility. Staff recommends that
the Parties modify Section 9.6 to meet the requirement in Order No. 35705. For example,
STAFF COMMENTS 3 MARCH 15, 2024

Amendment No. 5 to the contract between Stimson Lumber and the Company approved in Case
No. AVU-E-23-14 states that the "Project Developer shall notify Avista in writing prior to making
any material modifications to the Facility..."
In addition, if the Seller modifies the Facility, Staff recommends that the Company only
include NPC in the PCA that reflects rates for any energy delivered appropriate for the Facility as
modified, regardless of the compensation paid to the Seller. Order No. 35705 at 4.
STAFF RECOMMENDATION
Staff recommends approval of the PPA conditioned upon the modification of Section 9.6
to meet the requirement in Order No. 35705. Staff also recommends:
1. the Facility be paid at the proposed avoided cost rates with an effective date of
February 17, 2024; and
2. if the Seller modifies the Facility, the Company only include Net Power Cost in the
Power Cost Adjustment that reflects rates for any energy delivered appropriate for
the Facility as modified, regardless of the compensation paid to the Seller.
Respectfully submitted this 15th day of March 2024.
0, - Zi,,.A
Chris Burdin
Deputy Attorney General
Technical Staff: Yao Yin
I:\URlity\UMISC\COMA EiNTS\AVU-E-24-02_Comments.docx
STAFF COMMENTS 4 MARCH 15, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15TH DAY OF MARCH 2O24,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU-E-24-02, BY E-MAILING A COPY THEREOF TO THE
FOLLOWING:
CHRIS DRAKE
AVISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220-3727
E-MAIL: chris.drakeaa,avistacom.com
EDITH PACILLO
OFFICE OF GENERAL COUNSEL
322 E FRONT ST 340G
BOISE ID 83702
E-MAIL: eloacillo(@uidaho.edu
MICHAEL G. ANDREA
SENIOR COUNSEL
AVISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220-3727
E-mail: michael.andrea(@avistacora.com
GREGORY M ADAMS
RICHARDSON ADAMS PLLC
515 N 27TH ST
BOISE ID 83702
E-MAIL: ereeQrichardsonadams.com
Kaiu. —f�i li✓K.P/�
SECRETARY
CERTIFICATE OF SERVICE