HomeMy WebLinkAbout20241023IPC 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