HomeMy WebLinkAbout20240415Comments of the Commission Staff.pdf RECEIVED
Monday,April 15,2024 4:27 PM
IDAHO PUBLIC
UTILITIES COMMISSION
ADAM TRIPLETT
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-0318
IDAHO BAR NO. 10221
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 ) CASE NO. IPC-E-24-09
APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH BP )
HYDRO ASSOCIATES FOR THE SALE AND ) COMMENTS OF THE
PURCHASE OF ELECTRIC ENERGY FROM ) COMMISSION STAFF
THE ROCK CREEK II HYDRO PROJECT )
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Adam Triplett, Deputy Attorney General, submits the following
comments.
BACKGROUND
On February 29, 2024, Idaho Power Company("Company"), applied for approval of an
Energy Sales Agreement ("ESA") with BP Hydro Associates ("Seller") for electric energy
generated by the Rock Creek II Hydro Project("Facility") and a declaration that all payments for
purchases of energy under the proposed ESA be allowed as prudently incurred expenses for
ratemaking purposes. Under the proposed ESA, the Company would buy from the Seller electric
energy generated by the Facility, which is in Twin Falls County, Idaho.
The Company represents that the Facility is a qualifying facility under the Public Utility
Regulatory Policies Act of 1978 ("PURPA"). The Facility is currently selling energy to the
STAFF COMMENTS 1 APRIL 15, 2024
Company under an agreement executed in 1987 ("1987 Agreement"), which expires on April 2,
2024. The Company represents that the proposed ESA provides for the sale of electric energy
for a 20-year term at non-levelized, non-seasonal hydro published avoided cost rates established
in Order No. 35800, with full capacity payments for the entire term.
STAFF ANALYSIS
Staff s review focused on eligibility for/and the amount of capacity payments, avoided
cost rates, Article XXIII (Modification), and the lapsed-contract period.
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 late 1980s,
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.
The First Amendment to the 1987 Agreement listed the nameplate capacity size at 2,100
kilowatts ("kW"),but the actual nameplate capacity size is 1,900 kW, which is reflected in the
proposed ESA. Because the nameplate capacity decreased from 2,100 kW to 1,900 kW, Staff
believes the Facility should be granted immediate capacity payments for its entire generation
capacity amount over the full term of the ESA. Staff also believes that the change in nameplate
capacity does not have negative impacts on customers, because no overpayment will occur.
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
STAFF COMMENTS 2 APRIL 15, 2024
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.
Lapsed-Contract Period
Because the proposed ESA will not be approved before the 1987 Agreement expires,
there will be a lapsed-contract period from April 3, 2024, through the service date of the final
order issued by the Commission. The Parties agreed that the Company will pay for any
generation delivered from the Facility during the lapsed contract period at the Surplus Energy
Price. See Response to Staff Production Request No. 1(b). The Surplus Energy Price is defined
as the lesser of 85 percent of the market price or the contract price. Section 7.2 of ESA. Staff
believes this arrangement is reasonable, because it is consistent with the treatment agreed upon
by both parties in Case No. IPC-E-21-08 and approved in Order No. 35067. Therefore, Staff
recommends that the Company pay the Seller for any generation delivered from the Facility
during the lapsed-contract period at the Surplus Energy Price as defined in Section 7.2 of ESA.
STAFF RECOMMENDATION
Staff recommends the following:
1. The Commission approve the proposed ESA and declare all payments for purchases
of energy under the ESA be allowed as prudently incurred expenses for ratemaking
purposes;
2. If the Facility is modified, Staff recommends the Commission only allow 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; and
3. The Commission direct the Company to pay the Seller for any generation delivered
from the Facility during the lapsed-contract period at the Surplus Energy Price as
defined in Section 7.2 of ESA.
STAFF COMMENTS 3 APRIL 15, 2024
Respectfully submitted this 15th day of April 2024.
aL Z�=
Adam Triplett
Deputy Attorney General
Technical Staff. Yao Yin
I:\Utility\UMISCICOMWMNTS\IPC-E-24-09 Commen[s.docx
STAFF COMMENTS 4 APRIL 15, 2024
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15th DAY OF APRIL 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-24-09, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
DONOVAN E WALKER ENERGY CONTRACTS
MEGAN GOICOECHEA ALLEN IDAHO POWER COMPANY
IDAHO POWER COMPANY PO BOX 70
PO BOX 70 BOISE ID 83707-0070
BOISE ID 83707-0070 E-MAIL: enerpycontractsO—idahopower.com
E-MAIL: dwalker@idahopower.com
mizoicoecheaallenCa)idahopower.com
docketsO,idahopower.com
CORY LAGERSTROM
BP HYDRO ASSOCIATES
ROCK CREEK II HYDRO
4603 HOMESTEAD DR
PRAIRIE VILLAGE KS 66208
E-MAIL: co!yQt,)hydrolandcorp.com
PATRICIA JORDAN
CERTIFICATE OF SERVICE