20250115Staff Comments.pdf

RECEIVED
Wednesday, January 15, 2025 9:06:42 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-24-43
APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH )
IDAHO POWER COMPANY AND J.R. ) COMMENTS OF THE
SIMPLOT COMPANY FOR THE SALE AND ) COMMISSION STAFF
PURCHASE OF ELECTRIC ENERGY FROM )
THE SIMPLOT—POCATELLO CSPP )
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 November 12, 2024, Idaho Power Company("Company") applied to the Commission
for approval of an energy sales agreement ("ESA")with J.R. Simplot Company("Seller") for the
energy generated by the Simplot—Pocatello CSPP project("Facility"). The Facility is near
Pocatello, Idaho and has a 15.9-megawatt("MW") nameplate capacity. The ESA proposed a
five-year term using the non-levelized,published avoided cost rates for"Other"resources. The
scheduled First Energy and Operation date is March 1, 2025. Because the existing contract will
STAFF COMMENTS 1 JANUARY 15, 2025

expire on February 28, 2025, the parties request that the Commission make a final decision prior
to the expiration date.
STAFF ANALYSIS
Staff s review focused on the nameplate capacity, capacity payments, avoided cost rates,
the 90/110 Rule with at least five-day advanced notice for adjusting Estimated Net Energy
Amounts, the definition of Mid-Columbia Market Energy Cost, and Article XXIII
(Modification).
Based on its analysis, Staff recommends that the Commission approve the ESA and
declare that all payments the Company makes to the Seller for purchases of electric energy
generated by the Facility will be allowed as prudently incurred expenses for ratemaking
purposes, conditioned on the parties modifying the definition of Mid-Columbia Market Energy
Cost to avoid potential impacts of Washington's Climate Commitment Act("CCA").
Lastly, 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("PCA"),
regardless of the compensation paid to the modified Facility.
Nameplate Capacity
The nameplate capacity of the Facility is 15.9 MW, which could disqualify the Seller
from receiving published avoided cost rates,because Order No. 32697 established a 10 average
MW("aMW")per month project eligibility cap for qualifying facilities (other than wind and
solar facilities)that seek published avoided cost rates. See Order No. 32697 at 13. However, the
Facility will operate below 10 aMW monthly under normal conditions and the Seller will not be
paid for energy in excess of 10 aMW. See Paragraphs 1.24, 4.1.4, and 7.7 of the ESA. Because
the Facility's operation is capped at 10 aMW monthly, Staff believes the Seller is eligible for
published avoided cost rates.
Capacity Payments
In Order No. 32697, the Commission stated that if a qualifying facility("QF") is being
paid for capacity at the end of the contract term, and the parties are seeking renewal/extension of
STAFF COMMENTS 2 JANUARY 15, 2025

the contract, the renewal/extension would include immediate payment of capacity. Order No.
32697 at 21. Because the existing contract contains capacity payments, Staff believes that the
Facility is eligible for immediate capacity payments for the duration of the proposed ESA.
Avoided Cost Rates
Staff verified that the avoided cost rates contained in the ESA are correct.
The 90/110 Rule and Five-Day Advanced Notice for Adjusting Estimated Net Energy Amounts
Staff confirmed the ESA contains the 90/110 Rule as required by Commission Order
No. 29632. The 90/110 Rule requires a QF to provide utilities with a monthly estimate of the
amount of energy the QF expects to produce. If the QF delivers more than 110 percent of the
estimated amount, then the utility must buy the excess energy for the lesser of 85 percent of the
market price or the contract price. If the QF delivers less than 90 percent of the estimated
amount, then the utility must buy total energy delivered for the lesser of 85 percent of the market
price or the contract price. See Order No. 29632 at 20.
Staff also confirmed the ESA requires the Seller to give the Company at least a five-day
advance notice if the Seller plans to adjust its Estimated Net Energy Amounts for purposes of
complying with the 90/110 Rule. The five-day advance notice has been authorized in several
prior Commission Orders.
Definition of Mid-Columbia Market Energy Cost
The market price used for the 90/110 Rule, which is termed"Mid-Columbia Market
Energy Cost" in the ESA, could subject Idaho ratepayers to impacts of CCA. The Commission
has previously expressed that the costs associated with the CCA should not be borne by Idaho
ratepayers. See Order Nos. 36015, 36207, and 36367. Therefore, Staff recommends that the
parties modify the definition of Mid-Columbia Market Energy Cost to avoid potential impacts of
CCA on Idaho ratepayers.
Mid-Columbia Market Energy Cost is defined as "Eighty-two and four tenths percent
(82.4%) of the monthly arithmetic average of each day's Intercontinental Exchange ("ICE")
daily firm Mid-C Peak Avg and Mid-C Off-Peak Avg index prices. Each day's index prices will
reflect the relative proportions of peak hours and off-peak hours in the month as follows..." This
STAFF COMMENTS 3 JANUARY 15, 2025

definition and pricing from the Mid-Columbia market will inappropriately allow market prices to
reflect the impacts of the CCA.
In several power purchase agreements recently approved by the Commission, such as the
contracts in Case Nos. IPC-E-22-29 and IPC-E-24-01, market prices were defined differently and
are defined as:
82.4% of the monthly arithmetic average of each day's ICE daily firm Mid-C Peak
Avg and Mid-C Off-Peak Avg index prices with such prices being the index
representing or adjusted to assume, a price for energy that is not delivered to a final
point of delivery in a balancing authority area located entirely in Washington, or a
designated scheduling point associated with a Washington retail provider within a
balancing authority area operated by a federal power marketing administration, in
the month as follows... (Emphasis added)
This definition and pricing will allow Idaho ratepayers to avoid potential impacts of
CCA. Therefore, Staff recommends that the parties modify the definition of Mid-Columbia
Market Energy Cost in the ESA to avoid potential impacts of CCA on Idaho ratepayers.
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 PCA, regardless of the compensation paid to the
modified Facility. This treatment is consistent with the Commission's direction in Order No.
35705.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the ESA and declare that all payments
the Company makes to the Seller for purchases of electric energy generated by the Facility will
be allowed as prudently incurred expenses for ratemaking purposes, conditioned on the parties
STAFF COMMENTS 4 JANUARY 15, 2025

modifying the definition and use of"Mid-Columbia Market Energy Cost"pricing to avoid the
potential impacts of CCA.
Also, 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 PCA, regardless of the compensation
paid to the modified Facility.
Respectfully submitted this 15th day of January 2025.
s
ayn Har ie or Michael Duval
Deputy Attorney General
Technical Staff. Yao Yin
Seungjae Lee
1:\Utility\UMISC\COMMENTS\IPC-E-24-43 Comments.docx
STAFF COMMENTS 5 JANUARY 15, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS DAY OF JANUARY 2025,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE
NO. IPC-E-24-43, 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: energycontracts&idahopower.com
E-MAIL: dwalkergidahopower.com
mgoicoecheaallengidahopower.com
docketskidahopower.com
i \
PATRICIA JORDA
CERTIFICATE OF SERVICE