20250317Staff Comments.pdf

RECEIVED
MARCH 17, 2025
CHRIS BURDIN IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9810
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 THE APPLICATION )
OF IDAHO POWER COMPANY FOR ) CASE NO. IPC-E-25-04
APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH THE )
CITY OF HAILEY, FOR THE SALE AND ) COMMENTS OF THE
PURCHASE OF ELECTRIC ENERGY FROM ) COMMISSION STAFF
THE HAILEY CSPP PROJECT )
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Chris Burdin, Deputy Attorney General,
submits the following comments.
BACKGROUND
On February 11, 2025, Idaho Power Company("Company") filed an application
("Application") with the Commission requesting an order accepting or rejecting the Energy Sales
Agreement ("ESA")between the Company and the City of Hailey under which the Company
would purchase electric energy generated by a non-seasonal hydro facility("Facility") located
near the City of Hailey, Idaho. The Facility is a Public Utility Regulatory Policies Act of 1978
Qualifying Facility ("QF").
STAFF COMMENTS 1 MARCH 17, 2025

The Company represents that the Facility is a 37.3-kilowatt nameplate QF currently
delivering energy to the Company under a March 16, 2020, ESA that was approved by the
Commission in Order No. 34690 and expires on June 24, 2025.
STAFF ANALYSIS
Staff s review focused on the ESA's capacity payments, avoided cost rates, the 90/110
Rule with at least 5-day advanced notice for adjusting Estimated Net Energy Amounts, the
definition of Mid-Columbia Market Energy Cost, Article XXIII (Modification), and Section B-1
of Appendix B.
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") and
removing the last paragraph in Section B-1 of Appendix B.
Lastly, if the Facility is modified, Staff recommends that only the net power supply
expense that reflects the proper authorized rate of the Facility as actually modified 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 Seller.
Capacity Pam
Order No. 32697 stated that if a QF is being paid for capacity at the end of the contract
term, and the parties are seeking renewal/extension of the contract, the renewal/extension would
include immediate payment of capacity. Order No. 32697 at 21. Because the existing contract
that the Facility is operating under contains capacity payments, Staff believes that the Facility
should be granted immediate capacity payments for the full term of the proposed ESA.
Avoided Cost Rates
Staff verified that the avoided cost rates contained in the ESA are correct.
STAFF COMMENTS 2 MARCH 17, 2025

The 90/110 Rule and 5-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. Order No. 29632 at 20.
Staff also confirmed the ESA requires the Seller to give the Company at least five-day
advanced notice if the Seller plans to adjust its Estimated Net Energy Amounts for purposes of
complying with the 90/110 Rule. The 5-day advanced notice term has been authorized in prior
Commission Orders such as Order Nos. 34263, 34870 and 34937.
Definition of Mid-Columbia Market Energy Cost
Staff believes that 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 the
CCA. The Commission has previously expressed that the costs associated with the CCA should
not be borne by Idaho ratepayers. Order Nos. 36015, 36207, and 36367. Recently, the
Commission issued Order No. 36477 approving a modified definition of Mid-Columbia Market
Energy Cost. Staff recommends that the parties modify the definition in the proposed ESA to
avoid potential impacts of the CCA on Idaho ratepayers and to be consistent with the modified
definition approved in Order No. 36477.
In the ESA, 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..." Staff believes that this definition will potentially allow market prices to reflect the
impacts of the CCA.
In an ESA recently approved by the Commission(Case No. IPC-E-24-43) market prices
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,
STAFF COMMENTS 3 MARCH 17, 2025

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). The
Commission found that this language provides protection to Idaho consumers against
unreasonable costs that could arise from the CCA. Order No. 36477 at 5.
Article XXIII (Modification)
Staff reviewed Article XXIII(Modification) in the ESA, which addresses potential
modifications to the Facility, and Staff believes the language complies with Order No. 35705.
However, Staff has two recommendations relative to this section.
First, if the Facility is modified, Staff recommends that only the net power supply
expense that reflects the proper authorized rate of the Facility as actually modified 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 Seller. This places the
ownership for monitoring the contract and any modifications made to the Facility on the
Company to ensure the proper rate is paid to the Seller if and when modifications are made to the
Facility. This treatment is consistent with the Commission direction in Order No. 35705.
Second, the ESA has included an older version of the "Modification" language in the last
paragraph of Section B-I of Appendix B, and Staff recommends that the parties remove the
paragraph to avoid confusion between the parties.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the ESA and declare that all payments
the Company makes to the City of Hailey 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 the CCA, and removing the last paragraph in Section B-I of Appendix B to avoid
confusion between parties.
Also, if the Facility is modified, Staff recommends that only the net power supply
expense that reflects the proper authorized rate of the Facility as actually modified for all energy
STAFF COMMENTS 4 MARCH 17, 2025

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 Seller.
Respectfully submitted this 17th day of March 2025.
0-"A M.
Chris Burdin
Deputy Attorney General
Technical Staff. Yao Yin
1:\Utility\UMISC\COMMENTS\IPC-E-25-04 Comments.doex
STAFF COMMENTS 5 MARCH 17, 2025

CERTIFICATE OF SERVICE
`tJ-
I HEREBY CERTIFY THAT I HAVE THIS 17 DAY OF MARCH 2O25,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-25-04, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
DONOVAN E. WALKER ENERGY CONTRACTS
MEGAN GOICOECHEA ALLEN IDAHO POWER COMPANY
IPC DOCKETS 1221 WEST IDAHO STREET (83702)
1221 WEST IDAHO STREET (83702) PO BOX 70
PO BOX 70 BOISE ID 83707
BOISE ID 83707 E-MAIL: energycontracts,cAidahopower.com
E-MAIL: dwalker a,idahopower.com
mgoicoecheaallenAidahopower.com
docketsCc,idahopower.com
BRIAN YEAGER
CITY OF HAILEY
EMAIL: brian.yea er ,haile�yhall.org
PATRICIA JORDAN, 9ECRETARY
CERTIFICATE OF SERVICE