20241114Staff Comments .pdf

RECEIVED
Thursday, November 14, 2024 10:04:45 AM
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 ) CASE NO. IPC-E-24-36
APPROVAL OF A FIRST AMENDMENT TO )
THE ENERGY SALES AGREEMENT FOR )
THE SALE AND PURCHASE OF ELECTRIC ) COMMENTS OF THE
ENERGY FOR THE MILE 28 HYDRO ) COMMISSION STAFF
PROJECT )
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Michael Duval, Deputy Attorney
General, submits the following comments.
BACKGROUND
On September 18, 2024, Idaho Power Company("Company") applied to the Commission
requesting an order approving the First Amendment to the Energy Sales Agreement ("ESA")
between the Company and Wood Hydro, LLC ("Seller") for electric energy generated by the
Seller's Mile 28 Hydro Project("Facility").
The Company and Contractor's Power Group, Inc. ("CPG") entered into the original ESA
in 1993. The ESA had a 35-year term with levelized, non-seasonal hydro published avoided cost
rates and was approved on January 12, 1994, in Case No. IPC-E-93-25, Order No. 25354.
STAFF COMMENTS 1 NOVEMBER 14, 2024

The Company, Seller, and CPG entered a Consent, Assignment, and Assumption
Agreement on August 22, 2018, that transferred its interests, rights, and obligations relative to
the Facility to the Seller.
The Company stated that the proposed First Amendment to the ESA updates the
provisions regarding insurance alternatives, giving the Company the ability to obtain different
insurance coverage if it provides equivalent or superior protection to the Company's customers.
The Company stated this request is consistent with its practices and has been previously
approved by the Commission. See Order No. 33404.
The Company stated that, in compliance with Order Nos. 35705 and 35767, the proposed
ESA has updated Article XXV relating to Modifications of the ESA.
STAFF ANALYSIS
Staffs review is focused on the two proposed items in the First Amendment to the ESA:
Insurance Alternatives and Article XXV Modifications. Staff recommends approval of the First
Amendment. In addition, 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.
Insurance Alternatives
The current ESA contains Article XIV (Indemnification and Insurance), which includes
specific insurance requirements as risk mitigation measures for contracts using levelized avoided
cost rates. However, the current ESA does not provide the Company with discretion to accept
alternative insurance arrangements that place the Company in an equal or better position of
protecting ratepayers than the existing insurance requirements described in the ESA. The First
Amendment proposes to provide the Company with such discretion. Staff believes the proposal
is reasonable for the following reasons.
First, hydro projects have experienced challenges from the insurance industry, and thus a
use of a captive insurance company as an alternative creates an opportunity to ensure equivalent
or better insurance coverage. For example, many insurance carriers either have withdrawn from
the hydropower sector or have increased premium rates with limited coverage provided.
STAFF COMMENTS 2 NOVEMBER 14, 2024

Response to Staff Production Request No. 1 (a). But the current ESA requires all insurance
coverage be provided by insurance companies with an AM Best rating of A- or better without
considering alternative options.
Second, the Company's evaluation of alternative insurance arrangements will include a
review by the Company's Insurance Program Manager to ensure any insurance company under
consideration is duly formed and able to adequately safeguard the Company. The insurance
company currently under evaluation has already been deemed to meet those requirements.
Response to Staff Production Request No. I (b).
Third, such discretion has been granted by the Commission previously to ESAs using
levelized avoided cost rates, such as the North Gooding Main Hydro Project's ESA. Order No.
33404 at 3.
Article XXV (Modification)
Staff reviewed the proposed Article XXV (Modification) in the First Amendment 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 First Amendment to the ESA; and
2. 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 NOVEMBER 14, 2024

Respectfully submitted this 14th day of November 2024.
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Michael Duval
Deputy Attorney General
Technical Staff. Yao Yin
I:\Utility\UMISC\COMMENTS\IPC-E-24-36 Comments.docx
STAFF COMMENTS 4 NOVEMBER 14, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS jq+d�DAY OF NOVEMBER 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN CASE
NO. IPC-E-24-36, 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: energycontractsgidahopower.com
E-MAIL: dwalker cr,idahopower.com
mgoicoecheaallengidahopower.com
docketsgidahopower.com
TEDSORENSON
E-MAIL: tedgtsorenson.net
PATRICIA JORDAN SECRETARY
CERTIFICATE OF SERVICE