20250122Reply Comments.pdf

OR
IQAHO R®
DONOVAN WALKER
Lead Counsel RECEIVED
dwalker(a�idahopowerxom 2025 January 22
IDAHO PUBLIC
UTILITIES COMMISSION
January 22, 2025
VIA ELECTRONIC FILING
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg 8,
Suite 201-A (83714)
PO Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-24-43
In the Matter of Idaho Power Company's Application of Idaho Power
Company for Approval or Rejection of an Energy Sales Agreement with J.R.
Simplot Company, for the Sale and Purchase of Electric Energy form the
Simplot — Pocatello CSPP Project
Dear Commission Secretary:
Attached please find Idaho Power Company's Reply Comments to be
electronically filed in the above-entitled matter. If you have any questions, please do not
hesitate to contact me.
Very truly yours,
Donovan E. Walker
DEW:cd
Attachment

DONOVAN E. WALKER (ISB No. 5921)
MEGAN GOICOECHEA ALLEN (ISB No. 7623)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker(c-)_idahopower.com
mgoicoecheaallen(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-24-43
APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH J.R. ) IDAHO POWER COMPANY'S
SIMPLOT COMPANY, FOR THE SALE AND ) REPLY COMMENTS
PURCHASE OF ELECTRIC ENERGY )
FROM THE SIMPLOT — POCATELLO CSPP )
PROJECT. )
COMES NOW, Idaho Power Company ("Idaho Power" or "Company") and,
pursuant to Idaho Public Utilities Commission ("Commission") Rule of Procedure 203
and the Notice of Modified Procedure, Order No. 36425, hereby respectfully submits the
following Reply Comments in response to Comments of the Commission Staff ("Staff") in
this case dated January 15, 2025, pertaining to the Company's Application for approval
of the Energy Sales Agreement ("ESA") between Idaho Power and J.R. Simplot ("Simplot"
or "Seller") (jointly, "Parties") for the Simplot — Pocatello cogeneration or small power
production ("CSPP") project ("Project" or" Facility") located near the city of Pocatello,
Idaho, which is a PURPA Qualifying Facility ("QF").
IDAHO POWER COMPANY'S REPLY COMMENTS - 1

I. REPLY COMMENTS
A. Staff Comments
Having reviewed the Company's Application and the ESA, 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 and use of "Mid-Columbia Market Energy Cost." Idaho Power
appreciates Staff's review and consideration of the issues in this case, and the opportunity
to offer these Reply Comments to address Staff's recommendation for a modification of
the definition of "Mid-Columbia Market Energy Cost" as a condition of approval, which
was driven by a concern that the current definition could subject Idaho ratepayers to
impacts of Washington's Climate Commitment Act ("WCCA").
B. Background
While Idaho Power appreciates Staff's desire to insulate Idaho ratepayers from the
costs associated with the WCCA, it believes such concern is misplaced under the
circumstances of this case. That act, which was passed by the Washington Legislature in
2021 and went into effect in January 2023, establishes regulatory requirements to reduce
greenhouse gas emissions from generating plants in Washington and creates a
comprehensive cap-and-invest program that requires certain covered entities to purchase
greenhouse gas allowances through a state sponsored auction to cover carbon emissions
from emitting resources.
As noted by Staff, the Commission has made clear that Idaho customers should
not bear the costs of this unilateral Washington policy; in considering requests from multi-
jurisdictional public utilities serving customers in both Washington and Idaho to account
IDAHO POWER COMPANY'S REPLY COMMENTS - 2

for or recover costs associated with WCCA compliance, the Commission found that it was
not fair, just, or reasonable to include the costs associated with WCCA compliance in
Idaho rates.' The instant case, however, is clearly distinguishable from those cases,
involving a request for Commission review of a standard contract for the purchase and
sale of electric energy generated by a PURPA QF located in Idaho and does not involve
the WCCA, a Washington-specific policy that Idaho Power is not subject to.
It is the Company's understanding that Commission Staff's concern about the
potential impact of the WCCA relative to this contract stems from language included in
the definition of "Market Price Index" contained in two non-PURPA power purchase
agreements ("PPA") recently approved by the Commission (Case Nos. IPC-E-22-29 and
IPC-E-24-01). The cases referenced by Staff involved the Company's request for
approval of the Pleasant Valley PPA and the PVS 2 PPA, which were entered into with
the expectation of assigning the associated energy and Green Tags/Environmental
Attributes to Brisbie LLC ("Brisbie"), which is identified in the PPA as a third-party
beneficiary receiving Net Output and Green Tags from the project, under the provisions
of Brisbie's Special Contract and consistent with the regulatory framework set forth in the
Company's Clean Energy Your Way - Construction option.
At the time the first of those agreements -- the Pleasant Valley PPA -- was being
negotiated, the WCCA was relatively recently passed and had not yet become effective.2
As a result, the details of the cap-and-invest program remained uncertain, leading to
See In the Matter of Avista's Application for an Accounting Order to Modify its Power Cost Adjustment
Mechanism to Account for Costs Associated with Washington's Climate Commitment Act Allowances,
Case No. AVU-E-23-04, Order No. 36015 (Dec. 1, 2023); In the Matter of Rocky Mountain Power's
Application for Approval of 462.4 Million ECAM Deferral, Case No. PAC-24-05, Order No. 36367 (Oct. 18,
2024).
2 Chapter 316, Laws of 2021, known as the Washington Climate Commitment Act, was codified as RCW
70A.65 and became effective on July 25, 2021, to commence on January 1, 2023.
IDAHO POWER COMPANY'S REPLY COMMENTS - 3

concerns and confusion amongst many stakeholders, including concerns the program
would have repercussions for the regional electric power market and the pricing indices
published by the Intercontinental Exchange ("ICE"). In light of the uncertainty surrounding
the WCCA and its potential impact, the counterparties to the PPA desired to include
qualifying language in the definition of "Market Price Index", to provide flexibility in the
event that implementation of the WCCA triggered fundamental changes in the wholesale
electricity market such as the establishment of an alternative or successor index
representative of the Mid-Columbia ("Mid-C") trading hub. The Company was amenable
to the addition of contingency language to address the possibility of changes occurring at
ICE due to the WCCA, and when the PVS 2 PPA was being negotiated subsequently, the
definition of"Market Price Index" was carried over from the Pleasant Valley PPA.
While the market price definition in the Pleasant Vally and PVS 2 PPAs included
negotiated language that was based on the particular circumstances underlying those
contracts and tailored to address the concerns of the specific counterparties, the
Company is not aware of that language being incorporated into the definition of "Mid-
Columbia Market Energy Cost" contained in any of the Company's standard PURPA
contracts, which largely tracks the language of "Avoided Energy Cost" set forth in the
Company's Schedule 86.
Notably, the concern that precipitated the modified market price definition in the
Brisbie Special Contract PPAs, namely the possibility of fundamental changes to
wholesale electricity market pricing indices resulting from WCCA implementation, has not
materialized. To date no direct effect of the WCCA on those PPAs has been identified.
Moreover, the qualifying language included in the "Market Price Index" definition
IDAHO POWER COMPANY'S REPLY COMMENTS -4

accommodating the possibility of an alternative or adjusted index representing a price for
energy that is not delivered to a final point of delivery in a balancing authority area located
entirely in Washington has not been invoked because no such indices exist.
C. Reply Comments
Idaho Power does not believe that all of its PPA's, nor the PURPA ESA's it enters
into, require the use of the modified language regarding the WCCA. The impact to Mid-
C pricing and the resulting reported indexes such as ICE did not materialize as
stakeholders thought possible in the early days of the WCCA when this language was
developed. To date, Idaho Power has not made any such adjustment to Mid-C or Market
Price Index prices in its contracts. There is no definitive basis today for making such
adjustment. Additionally, the WCCA has no other identified direct impact on Idaho Power
and the PPAs or ESAs it enters into to serve load on its system.
For these reasons and considering the different circumstances associated with a
PURPA ESA as compared with the Brisbie Special Contract PPAs, the Company does
not believe that the Simplot ESA as drafted inappropriately allows market prices to reflect
the impacts of the WCCA or that modifying the definition "Mid-Columbia Market Energy
Cost" to utilize language from the market price definition of the Brisbie Special Contract
PPAs avoids potential impacts of WCCA on Idaho ratepayers. In fact, because ICE does
not publish an index representing, or adjusted to assume, a price for energy that is not
delivered to Washington State, the modification recommended by Staff will have no
impact in how the ESA is administered and for this reason the parties are not opposed to
the addition of the language proposed by Staff.
While the Company believes the proposed ESA as drafted complies with PURPA
IDAHO POWER COMPANY'S REPLY COMMENTS - 5

and the Commission's orders directing the implementation of PURPA in Idaho and does
not inappropriately subject Idaho ratepayers to costs associated with the WCCA, the
parties are amenable to Staff's recommended modification as it will not affect the rights
of the parties under the ESA. Additionally, the current ESA expires on February 28, 2025,
and neither Idaho Power nor Simplot want to experience any complications from potential
delay past that expiration. Accordingly, and in order to avoid delay and ensure that a final
Commission determination can be issued prior to the expiration of the existing contract
on February 28, 2025, Idaho Power and Simplot have entered into an amendment to
incorporate Staff's recommended change. More specifically, filed herewith and included
herein as Attachment 1 is the fully executed Frist Amendment to the Energy Sales
Agreement between Idaho Power and Simplot ("First Amendment"), which modifies the
definition of "Mid-Columbia Market Energy Cost" as recommended in Staff Comments.
II. CONCLUSION
Idaho Power appreciates Staff's review and consideration of the issues in this case
and the opportunity to offer these Reply Comments to address Staff's recommendation.
Idaho Power respectfully requests: (1) that the Commission approve the Simplot ESA as
originally submitted, without the addition of the modified language prom the Pleasant
Valley PPAs as recommended by Staff; (2) alternatively, should the Commission
determine that the modified language is required for Simplot's PURPA ESA, the Parties
have executed and submitted for approval the First Amendment, incorporating this
modified language into the ESA, and respectfully request approval of the Simplot ESA
and First Amendment on or before February 28, 2025, and (3) that the Commission
declare all payments the Company makes to the Seller for purchases of electric energy
IDAHO POWER COMPANY'S REPLY COMMENTS - 6

generated by the Facility will be allowed as prudently incurred expenses for ratemaking
purposes.
Respectfully submitted this 22nd day of January 2025.
Donovan Walker
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 7

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 22nd day of January 2025, 1 served a true and
correct copy of the within and foregoing IDAHO POWER COMPANY'S REPLY
COMMENTS upon the following named parties by the method indicated below, and
addressed to the following:
Michael Duval Hand Delivered
Idaho Public Utilities Commission U.S. Mail
11331 W. Chinden Blvd., Bldg No. 8 Overnight Mail
Suite 201-A (83714) FAX
PO Box 83720 FTP Site
Boise, ID 83720-0074 X Email - [e-mail]
Courtesy Copy Sent via e-mail to:
Pete Richardson - peterC@.richardsonadams.com
David Albright - david.albright(a�simplot.com
covv,�_ -
Christy Davenport, Legal Assistant
IDAHO POWER COMPANY'S REPLY COMMENTS - 8

BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-24-43
IDAHO POWER COMPANY
ATTACHMENT 1

FIRST AMENDMENT
TO THE
ENERGY SALES AGREEMENT
BETWEEN
IDAHO POWER COMPANY
AND
J.R. SIMPLOT COMPANY
This First Awdment of the Firm Energy Sales Agreement ("First Amendment") is
effective as of this 21 9day of January 2025 ("Effective Date"),and is entered into by and between
Idaho Power Company, an Idaho corporation ("Idaho Power"), and J.R. Simplot Company, a
Nevada Corporation ("Seller") (individually a"Party" and collectively the "Parties").
WHEREAS, Idaho Power and Seller entered into an Energy Sales Agreement on
November 04, 2024 ("Agreement"), for the purchase and sale of energy produced by the Simplot
- Pocatello Project ("Project"), which is a Qualifying Facility under the Public Utility Regulatory
Policies Act of 1978 ("PURPA") located in Pocatello, Idaho. The Project is currently delivering
energy to Idaho Power in accordance with an existing contract that expires on February 28, 2025.
WHEREAS, the Agreement is intended to replace the existing contract upon its expiration
and was filed with the Idaho Public Utilities Commission("the Commission") in Case No. IPC-E-
24-43 on November 12,2024. On January 15,2025, Commission Staff filed comments in that case
recommending the Commission approve the Agreement and declare that all payments the
Company makes to the Seller for purchases of electric energy generated by the Project will be
allowed as prudently incurred expenses for ratemaking purposes, conditioned on the parties
modifying the definition and use of "Mid-Columbia Market Energy Cost" pricing to avoid
potential impacts of Washington's Climate Commitment Act.
WHEREAS, the Parties desire to enter into this First Amendment to the Agreement to
address Commission Staff s recommendation by modifying the definition of Mid-Columbia
Market Energy Cost to incorporate language from the market price definitions contained in two
power purchase agreements recently approved by the Commission in Case Nos. IPC-E-22-29 and
IPC-E-24-01 and submit the same for the Commission's approval of the Agreement with this First
Amendment.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound, the Parties hereto agree as follows:
1. Incorporation of Recitals. The above-stated recitals are incorporated into and made a part of
this Agreement, as amended, by this reference to the same extent as if these recitals were set forth
in full at this point.
Project Number 20250301 Simplot- Pocatello Project
First Amendment Page 1 of 3

2. Amendment.
A. ARTICLE L•DEFINITIONS of the Agreement is hereby revised by modifying paragraph
1.30, "Mid-Columbia Market Energy Cost," as follows (new language is underlined, and
deleted language uses strikethrough)
1.30 "Mid-Columbia Market Energy Cost"-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 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
eet
relative
mar eting administration,—:-£ac�i a" ex� tt Ees-�re€l��
pr-epet4iens of peak heur-s and off peak houfs in the month as follows:
The Mid-Columbia Market Energy Cost actual calculation being:
n
.824 * ( Y_ {(ICE Mid-C Peak Avg, * HL hours for day) +
X=1
(ICE Mid-C Off-Peak Avg,, * LL hours for day)} / (n*24))
where n=number of days in the month
If the ICE Mid-C Index prices are not reported for a particular day or days, prices
derived from the respective averages of HL and LL prices for the immediately
preceding and following reporting periods or days shall be substituted into the
formula stated in this definition and shall therefore be multiplied by the appropriate
respective numbers of HL and LL Hours for such particular day or days with the
result that each hour in such month shall have a related price in such formula. If
the day for which prices are not reported has in it only LL Hours (for example a
Sunday), the respective averages shall use only prices reported for LL hours in the
immediately preceding and following reporting periods or days.If the day for which
prices are not reported is a Saturday or Monday or is adjacent on the calendar to a
holiday, the prices used for HL Hours shall be those for HL hours in the nearest
(forward or backward) reporting periods or days for which HL prices are reported.
If the ICE Mid-C Index reporting is discontinued by the reporting agency, both
Parties will mutually agree upon a replacement index, which is similar to the ICE
Mid-C Index. The selected replacement index will be consistent with other similar
agreements and a commonly used index by the electrical industry.
Project Number 20250301 Simplot- Pocatello Project
First Amendment Page 2 of 3

3. Commission Approval. The obligations of the Parties under this First Amendment are subject
to the Commission's approval of this First Amendment and such approval being upheld on appeal,
if any, by a court of competent jurisdiction.
4. Effect of Amendment. Except as expressly amended by this First Amendment,the Agreement
shall remain in full force and effect.
5. Capitalized Terms. All capitalized terms used in this First Amendment and not defined herein
shall have the same meaning as used in the Agreement.
6. Scope of Amendment. This First Amendment shall be binding upon and inure to the benefit
of the Parties hereto, and their respective heirs, executors, administrators, successors, and assigns,
who are obligated to take any action which may be necessary or proper to carry out the purpose
and intent thereof.
7. Authority.Each Party represents and warrants that(i)it is validly existing and in good standing
in the state in which it is organized, (ii) it is the proper party to amend the Agreement, and (iii) it
has the requisite authority to execute this First Amendment.
8. Counterparts. This First Amendment may be executed in any number of counterparts, each of
which shall be deemed an original and all of which taken together shall constitute a single
instrument.
IN WITNESS WHEREOF, the Parties hereto have caused this First Amendment to be
duly executed as of the date above written.
IDAHO POWER COMPANY J.R. SIMPLOT COMPANY
By: � l � By: �-
Name: Ryan Adelman Name: Christopher Morgan
Title: Vice President, Power Supply Title: Vice President,Mining and Manufacturing
Project Number 20250301 Simplot- Pocatello Project
First Amendment Page 3 of 3