The URL can be used to link to this page

Home My WebLink About20241023IPC to Staff 1_Attachments(Redacted).pdf -UIDAHO POWER(,) MEGAN GOICOECHEA ALLEN Corporate Counsel RECEIVED mgoicoecheaallen(cbidahopower.com Wednesday, October 23, 2024 IDAHO PUBLIC UTILITIES COMMISSION October 23, 2024 VIA ELECTRONIC MAIL Commission Secretary Idaho Public Utilities Commission 11331 West Chinden Blvd., Building 8 Suite 201-A Boise, Idaho 83714 Re: Case No. IPC-E-24-36 Mile 28 Hydro Project Application of Idaho Power Company for Approval of a First Amendment to the Energy Sales Agreement for the Sale and Purchase of Electric Energy from the Mile 28 Hydro Project. Dear Commission Secretary: Attached for electronic filing is Idaho Power Company's Response to the First Production Request of the Commission Staff in the above-entitled matter. If you have any questions about the attached documents, please do not hesitate to contact me. Very truly yours, Megan Goicoechea Allen MAG:cd Enclosures CERTIFICATE OF ATTORNEY ASSERTION THAT INFORMATION CONTAINED IN AN IDAHO PUBLIC UTILITIES COMMISSION FILING IS PROTECTED FROM PUBLIC INSPECTION Application of Idaho Power Company for Approval of a First Amendment to the Energy Sales Agreement for the Sale and Purchase of Electric Energy from the Mile 28 Hydro Project Case No. IPC-E-24-36 The undersigned attorney, in accordance with Commission Rules of Procedure 67, believes that the Attachment Nos. 1 and 2 to Idaho Power Company's Response to the First Production Request of the Commission Staff dated October 23, 2024, contains information acquired from a third party that may be contain trade secrets and/or confidential business records that are protected by law from public inspection, examination, or copying pursuant to Idaho Code § 74-101, et seq., and/or § 48-801, et seq. As such, it is protected from public disclosure and exempt from public inspection, examination, or copying. DATED this Wednesday, October 23, 2024. �-%r T I'W" & Megan Goicoechea Allen Counsel for Idaho Power Company MEGAN GOICOECHEA ALLEN (ISB No. 7623) DONOVAN E. WALKER (ISB No. 5921) Idaho Power Company 1221 West Idaho Street (83702) P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-2664 Facsimile: (208) 388-6936 mgoicoecheaallen(a-),idahopower.com dwalker(a-)_idahopower.com Attorneys for Idaho Power Company BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION ) OF IDAHO POWER COMPANY FOR ) CASE NO. IPC-E-24-36 APPROVAL OF A FIRST AMENDMENT TO ) THE ENERGY SALES AGREEMENT FOR ) IDAHO POWER COMPANY'S THE SALE AND PURCHASE OF ELECTRIC ) RESPONSE TO THE FIRST ENERGY FROM THE MILE 28 HYDRO ) PRODUCTION REQUEST OF THE PROJECT. ) COMMISSION STAFF COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and in response to the First Production Request of the Commission Staff ("Commission" or "Staff") dated October 2, 2024, herewith submits the following information: IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 1 STAFF REQUEST FOR PRODUCTION NO. 1: Page 3 of the Application states that Wood Hydro "has proposed an alternative insurance arrangement that Idaho Power has determined creates equivalent protection to the specified insurance requirements currently described in the ESA." Please respond to the following: a. Please explain the details of the alternative insurance arrangement; b. Please explain why Idaho Power believed that the alternative insurance arrangement created equivalent protection; c. Please list all the criteria Idaho Power used in determining that the alternative arrangement is equivalent to the insurance requirements in the ESA; and d. After the execution of the ESA in 1993, the Commission issued Order No. 29482 in 2004, which approved new insurance requirements. Please explain why Parties did not base the alternative insurance arrangement on the updated insurance requirements approved in Order No. 29482 but instead based the alternative insurance arrangement on the original insurance requirements in the ESA. RESPONSE TO STAFF'S REQUEST FOR PRODUCTION NO. 1: As an initial matter and as more fully explained below, the Company clarifies that the alternative arrangement proposed by Wood Hydro, LLC's ("Wood Hydro") relates to the source of coverage rather than the amount and only pertains to a subset of the insurance requirements; notably, it does not impact the ESA's requirement for Comprehensive General Liability insurance with a third-party insurer. The Company also emphasizes that the provision it is seeking to incorporate via the First Amendment to the ESA for Mile 28 Hydro is one that has previously been approved by the Commission in other ESAs. Based on the discretion afforded by this provision in subsequent ESAs, the IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 2 Company was able to consider and accept the same alternative insurance arrangement being proposed for Mile 28 Hydro for another similarly situated ESA and is merely seeking to align the contractual terms for the Mile 28 Hydro facility so that it may be afforded the same treatment. a. It is the Company's understanding that options for insuring hydropower projects have become more limited in recent years and that various major insurance carriers have withdrawn from the hydropower sector altogether. In addition, many of the insurers that are still willing to insure hydropower projects are seeking significant premium rate increases while also restricting the coverage they provide, often incorporating exclusions, restrictions, or limited cover for key project elements. In addition to discussions with Wood Hydro, Idaho Power has been contacted by other projects that are experiencing similar industry challenges with satisfying property insurance requirements. As a result of these challenges, Wood Hydro proposed use of a captive insurance company as an option for covering certain areas of risks otherwise exposed; it should be noted that the captive insurance policy covers multiple hydroelectric projects, including the North Gooding Main Hydro facility, which also has a levelized avoided cost rate PURPA contract (see Case No. IPC-E-15-24). However, while Idaho Power had the discretion under the terms of the North Gooding Main Hydro ESA to consider alternative insurance arrangements that create equivalent protection for Idaho Power's ratepayers (see Appendix H, Insurance Requirements, Paragraph 5 titled "Insurance Alternatives"), the ESA for the Mile 28 Hydro Project did not provide the Company the option of accepting alternative insurance arrangements, which the IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 3 First Amendment filed in this case was intended to address. As noted, Wood Hydro has proposed to use captive insurance, as opposed to traditional insurance purchased from a third-party insurer with an A.M. Best rating of A- or better, as an alternative insurance arrangement pursuant to paragraph 14.6 of the proposed First Amendment to the ESA to satisfy certain of the insurance requirements specified in Article XIV of the ESA. For additional details on the captive insurance arrangement and the coverage thereunder see the following attachments: • Correspondence from the Tennessee Department of Commerce and Insurance, Captive Insurance Section, dated January 12, 2024, accepting the plan of operation and participation agreement for the purpose of the formation of Sorenson Insurance LLC Series Cell; and • Sorenson Insurance LLC Series Cell Property Retention Policy, Policy Number SIC23-PR-01 . b. The coverage amounts under the captive insurance arrangement are consistent with the requirements of the ESA, and the use of a duly formed captive insurance company was deemed by the Company's Insurance Program Manager as being acceptable under the circumstances and able to adequately safeguard the Company. c. In determining that the alternative insurance arrangement created equivalent protection, the Company considered a number of factors including but not limited to the following: • The insurance requirements set forth in the ESA as well as the insurance requirements for other levelized rate PURPA contracts that have been authorized more recently by the Commission, which included modified insurance requirements as well as affording Idaho Power the discretion to consider alternative insurance arrangements that place Idaho Power in an equal or better position in the event of the occurrence of an insurable event. IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF -4 See, e.g., Order No. 29482, Order No. 29863, Order No. 33404. • Market changes in the insurance industry generally and the hydropower sector, in particular, that have impacted the availability and price of insurance coverage in traditional markets. • The Company's communications with other projects purporting to have experienced similar industry challenges with satisfying property insurance requirements. • Industry trends in response to the challenging insurance market conditions including increased use of alternatives to traditional insurance, such as captives. • The need to maintain satisfactory risk mitigation measures for PURPA contracts with levelized avoided cost rates. • The information provided by Wood Hydro regarding the proposed captive insurance arrangement and coverage thereunder vis-a-vis the insurance requirements in the Mile 28 Hydro ESA. • The other requirements of the ESA including the requirement for Comprehensive General Liability insurance. • Determination by the Company's Insurance Program Manager that captive insurance was acceptable under the circumstances proposed and that Wood Hydro had provided sufficient evidence of property insurance. d. As stated, after the execution of the Mile 28 Hydro ESA, the Commission approved modifications to insurance requirements for PURPA power purchase agreements containing levelized avoided cost rates to comport with what was then-available in the insurance industry. Notably, those modified provisions were incorporated into the ESA for the North Gooding Main Hydro project, which is also covered by the captive insurance arrangement. The Company clarifies that it is the mechanism for providing coverage via a captive insurance company rather than a traditional third- party insurer with an A.M Best rating of A- or better, not necessarily the coverage itself, that forms the basis of the alternative arrangement being proposed for the Mile 28 Hydro project. As more fully set forth above, the Company determined that the captive insurance arrangement was an acceptable mechanism for providing coverage under the circumstances so long as the captive insurance policy afforded IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 5 the Company with equal or better coverage than the applicable contract requirements, which it did based both on the Commission's updated insurance requirements approved in Order No. 29482 (as set forth in the North Gooding Main Hydro ESA) and the Commission's original more onerous requirements stemming from Order No. 25240 (as reflected in the Mile 28 Hydro ESA). The response to this Request is sponsored by William Hatch, Senior Energy Contracts Coordinator, Idaho Power Company. Respectfully submitted this 23rd day of October, 2024. MEGAN GOICOECHEA ALLEN Attorney for Idaho Power Company IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 6 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 23rd day of October, 2024, 1 served a true and correct copy of the within and foregoing IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF upon the following named parties by the method indicated below, and addressed to the following: Michael Duval Hand Delivered Deputy Attorney General U.S. Mail Idaho Public Utilities Commission Overnight Mail 11331 W. Chinden Blvd., Bldg No. 8 FAX Suite 201-A (83714) FTP Site PO Box 83720 X Email - michael.duval(d)_puc.idaho.gov Boise, ID 83720-0074 Courtesy Copy: Ted Sorenson - ted(a.tsorenson.net caal�— Christy Davenport Legal Administrative Assistant IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF - 7 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO. IPC-E-24-36 IDAHO POWER COMPANY ATTACHMENT 1 Correspondence from the Tennessee Department of Commerce and Insurance, Captive Insurance Section, dated January 12, 2024, accepting the plan of operation and participation agreement for the purpose of the formation of Sorenson Insurance LLC Series Cell �5 STATE OFTENNESSEE DEPARTMENT OF COMMERCE AND INSURANCE 500 JAMES ROBERTSON PARKWAY NASHVILLE,TENNESSEE 37243-5065 615-741-6007 BILL LEE CARTER LAWRENCE GOVERNOR COMMISSIONER January 12, 2024 Maple Shade Assurance, LLC c/o Hartley Hartman Risk Partners, Inc. 1064 Gardner Road, Suite 1113 Charleston, SC 29407 Re: Sorenson Insurance LLC Series Cell of Maple Shade Assurance, LLC — Plan of Operation and Participation Agreement Approval Dear Mr. Hartman: The Tennessee Department of Commerce and Insurance, Captive Insurance Section, is in receipt of the proposed plan of operation for Sorenson Insurance LLC Series Cell of Maple Shade Assurance, LLC. The Department performed a review of this plan of operation and participation agreement pursuant to Tenn. Code Ann. § 56-13-204(1)(A) and § 56-13- 204(14) and did not note any instances of noncompliance with the statute. This letter acknowledges the Department accepts the plan of operation and participation agreement for the purpose of the formation of Sorenson Insurance LLC Series Cell of Maple Shade Assurance, LLC, effective December 5, 2023. Sincerely, C�r La ence(Jan 12,202412:12 AST) Carter Lawrence Commissioner CONFIDENTIAL BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO. IPC-E-24-18 IDAHO POWER COMPANY ATTACHMENT 2 Sorenson Insurance LLC Series Cell Property Retention Policy, Policy Number SIC23-PR-01