20240318Comments of the Commission Staff.pdf

STAFF COMMENTS 1 MARCH 18, 2024
RECEIVED
Monday, March 18, 2024, 1:14PM
IDAHO PUBLIC UTILITIES
COMMISSION

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11714

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 IDAHO POWER
COMPANY’S APPLICATION FOR
APPROVAL OF A THIRD AMENDMENT TO
AN EXISTING ENERGY SALES
AGREEMENT AND REPLACEMENT
ENERGY SALES AGREEMENT
REGARDING THE BARBER DAM HYDRO
PROJECT
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CASE NO. IPC-E-24-06

COMMENTS OF THE
COMMISSION STAFF

COMMISSION STAFF (“STAFF”) OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Michael Duval, Deputy Attorney General, submits the following
comments.

BACKGROUND
On January 26, 2024, Idaho Power Company (“Company”) applied for approval of a
Third Amendment to an existing Firm Energy Sales Agreement (“1987 Agreement”) with
Fulcrum, LLC for energy generated by the Barber Dam Hydroelectric Project (“Facility”) as well
as the approval of a replacement Energy Sale Agreement (“ESA”) with the Barber Pool Hydro,
LLC (“Seller”).
On July 13, 1987, Idaho Power and Interwest Hydro, Inc. entered into the 1987
Agreement, which listed the nameplate capacity of the Facility as 2,400 kilowatts (“kW”).
STAFF COMMENTS 2 MARCH 18, 2024
On May 13, 1988, Interwest Hydro, Inc. assigned its interest to Bonneville Pacific
Corporation, which in turn assigned its interest to Fulcrum, Inc.
On September 20, 1988, the Company and Fulcrum, Inc. entered into the First
Amendment to the 1987 Agreement, which listed the nameplate capacity of the Facility as 4,200
kW.
On November 24, 1999, the Company and Fulcrum, Inc. entered into the Second
Amendment to the 1987 Agreement to modify the requirements for escrow accounts as security
provisions for overpayment liability.
On April 2, 2015, Fulcrum, Inc. was converted to Fulcrum, LLC.
On December 23, 2023, Idaho Power, Fulcrum, LLC, and the Seller entered a Consent,
Assignment, and Assumption Agreement, where Fulcrum, LLC has assigned and the Seller has
assumed the Agreement, as amended, and the rights and obligations of the Seller thereunder,
with Idaho Power’s consent.
On January 4, 2024, the Company and the Seller entered into the Third Amendment to
the 1987 Agreement to list Barber Pool Hydro as the new Seller based on the Consent,
Assignment, and Assumption Agreement and correct the nameplate capacity size to reflect the
actual nameplate capacity size of 3,700 kW.
On January 17, 2024, the Company and the Seller entered into the ESA, pursuant to
which the Seller would continue to sell, and the Company would continue to purchase energy
generated by the Facility.

STAFF ANALYSIS
Staff reviewed the Third Amendment to the 1987 Agreement and the proposed ESA, and
Staff recommends the following:
1. Approval of the Third Amendment to the 1987 Agreement.
2. Approval of the proposed ESA and declaration that all payments for purchases of energy
under the ESA be allowed as prudently incurred expenses for ratemaking purposes.
3. If the Facility is modified, Staff recommends that only the net power supply expense that
reflects the proper authorized rate for all energy delivered as of the first operation date of
the modified Facility be included in the Company’s Power Cost Adjustment, regardless
of the compensation paid to the modified Facility.
STAFF COMMENTS 3 MARCH 18, 2024
I. Third Amendment to the 1987 Agreement
The Third Amendment replaced Fulcrum, LLC or its predecessors in interest under the
1987 Agreement with Barber Pool Hydro, LLC. Staff believes this is reasonable and is
consistent with the Consent, Assignment, and Assumption Agreement signed by the Company,
Fulcrum, LLC, and Barber Pool Hydro, LLC, on December 23, 2023.
The Third Amendment corrected the nameplate capacity size to reflect the actual
nameplate capacity size of 3,700 kW, which is shown on the generating units. Because the
nameplate capacity decreased from 4,200 kW in the First Amendment to 3,700 kW in the Third
Amendment, Staff believes that it does not create a need to adjust the avoided cost rates
contained in the 1987 Agreement. Staff also believes that the change in nameplate capacity does
not have negative impacts on customers, because no overpayment will occur.

II. ESA
Staff’s review of the ESA is focused on eligibility for and the amount of capacity
payments, avoided cost rates, and Article XXIII (Modification). Staff recommends that the
Commission approve the proposed ESA and declare that all payments for purchases of energy
under the ESA be allowed as prudently incurred expenses for ratemaking purposes.

Capacity Payments
The ESA allows immediate capacity payments, and Staff believes this treatment is
reasonable. Since 2000 the Company has added significant amounts of capacity to meet capacity
needs including the Danskin (2001 and 2008), Bennett Mountain (2005), and Langley Gulch
(2012) gas plants. Staff believes that because the Facility has operated since 1989, and
throughout the Company’s capacity deficiency periods, the Facility has contributed to meeting
the Company’s need for capacity and should be granted immediate capacity payments.
Because the nameplate capacity in the ESA remains unchanged at 3,700 kW from the
Third Amendment to the 1987 Agreement, which is the generator’s actual nameplate capacity,
Staff believes the Facility should be granted immediate capacity payments for its entire
generation capacity amount over the full term of the ESA.

STAFF COMMENTS 4 MARCH 18, 2024
Avoided Cost Rates
Staff has verified that the avoided cost rates contained in the ESA are correct.

Article XXIII (Modification)
Staff reviewed Article XXIII (Modification) in the ESA that addresses potential
modifications to the Facility and believes the language complies with Order No. 35705.
If the Facility is modified, Staff recommends that only the net power supply expense that
reflects the proper authorized rate for all energy delivered as of the first operation date of the
modified Facility be included in the Company’s Power Cost Adjustment, regardless of the
compensation paid to the modified Facility. This treatment is consistent with the Commission
direction in Order No. 35705.

STAFF RECOMMENDATION
Staff recommends the following:
1. Approval of the Third Amendment to the 1987 Agreement.
2. Approval of the proposed ESA and declaration that all payments for purchases of energy
under the ESA be allowed as prudently incurred expenses for ratemaking purposes.
3. If the Facility is modified, Staff recommends that only the net power supply expense that
reflects the proper authorized rate for all energy delivered as of the first operation date of
the modified Facility be included in the Company’s Power Cost Adjustment, regardless
of the compensation paid to the modified Facility.

Respectfully submitted this 18th day of March 2024.

________________________________
Michael Duval
Deputy Attorney General

Technical Staff: Yao Yin
I:\Utility\UMISC\COMMENTS\IPC-E-24-06 Comments.docx
CERTIFICATE OF SERVICE
CERTIFICATE OF SERVICE

I HEREBY CERTIFY THAT I HAVE THIS 18TH DAY OF MARCH 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN
CASE NO. IPC-E-24-06, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:

DONOVAN E WALKER
MEGAN GOICOECHEA ALLEN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
[e-mail]
[e-mail]
[e-mail]

ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
[e-mail]

TED SORENSON
BARBER POOL HYDRO LLC
711 E TURTLE POINT DR
IVINS UT 84738
[e-mail]
[e-mail]

_________________________________
SECRETARY