20250324Reply Comments.pdf

-0IQAHO FuwERO
DONOVAN WALKER
Lead Counsel
RECEIVED
dwalkerD.idahopower.com(c
March 24, 2025
IDAHO PUBLIC
UTILITIES COMMISSION
March 24, 2025
VIA ELECTRONIC MAIL
Commission Secretary
Idaho Public Utilities Commission
11331 West Chinden Blvd., Building 8
Suite 201-A
Boise, Idaho 83714
Re: Case No. I PC-E-25-04
Hailey CSPP Project
Idaho Power Company's Application for Approval or Rejection of an Energy
Sales Agreement with the City of Hailey, for the Sale and Purchase of
Electric Energy from the Hailey CSPP Project
Dear Commission Secretary:
Attached for electronic filing is Idaho Power Company's Reply Comments in the
above-entitled matter. If you have any questions about the attached documents, please
do not hesitate to contact me.
Very truly yours,
f &)dpj L
Donovan Walker
DEW:cd
Enclosures
1221 W. Idaho St(83702)
P.O. Box 70
Boise, ID 83707

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-25-04
APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH THE ) IDAHO POWER COMPANY'S
CITY OF HAILEY, FOR THE SALE AND ) REPLY COMMENTS
PURCHASE OF ELECTRIC ENERGY )
FROM THE HAILEY 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. 36481 , hereby respectfully submits the
following Reply Comments in response to Comments of the Commission Staff ("Staff") in
this case dated March 17, 2025, pertaining to the Company's Application for approval of
the Energy Sales Agreement ("ESA") between Idaho Power and the City of Hailey
("Seller") (jointly, "Parties") for the Hailey cogeneration or small power production
("CSPP") project ("Project" or" Facility") located near the city of Hailey, Idaho, which is a
PURPA Qualifying Facility ("QF").
IDAHO POWER COMPANY'S REPLY COMMENTS - 1

I. REPLY COMMENTS
A. Staff Comments
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" and removing the last paragraph of Section B-1 of Appendix B relating to
modification. Recognizing that Staff made a similar recommendation regarding the
definition of "Mid-Columbia Market Energy Cost" as a condition of approval in the last
PURPA ESA case that was before the Commission, IPC-E-24-43 regarding the Simplot-
Pocatello CSPP project, and that the Commission approved an Amendment to that ESA
including the modified definition, Idaho Power again reiterates that it believes such
modification with regard to the Washington Climate Commitment Act ("WCCA") to be
unnecessary, and asks the Commission to direct whether the Company should include
this modified definition in all of its Power Purchase Agreements ("PPA") and PURPA
ESAs going forward.
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
IDAHO POWER COMPANY'S REPLY COMMENTS - 2

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
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 PPA recently approved
by the Commission (Case Nos. IPC-E-22-29 and IPC-E-24-01). The referenced cases
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
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).
IDAHO POWER COMPANY'S REPLY COMMENTS - 3

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
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.
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 -4

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
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 PPAs, nor the PURPA ESAs 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 City of Hailey CSPP 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,
IDAHO POWER COMPANY'S REPLY COMMENTS - 5

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.
While the Company believes the proposed ESA as drafted complies with PURPA
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
Company has contacted the City of Hailey, and they would be amenable to an
amendment making Staff's recommended changes. However, the parties were not able
to draft and execute an amendment in the short turn-around between Staff's Comments
and these Reply Comments.
Idaho Power respectfully requests direction from the Commission to as to whether
the Company should include this modified definition of "Mid-Columbia Market Energy
Cost" with regard to the WCCA in all of its PPAs and PURPA ESAs going forward.
Additionally, Idaho Power requests that should the Commission determine such
modification to be necessary in this case, that it approve the ESA conditioned upon the
parties submitting an amendment making the change to the "Mid-Columbia Market
Energy Cost" and the change to Appendix B in a subsequent compliance filing for
approval of said amendment.
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 City of Hailey
CSPP ESA as originally submitted, without the addition of the modified language from the
IDAHO POWER COMPANY'S REPLY COMMENTS - 6

Pleasant Valley PPAs as recommended by Staff; (2) alternatively, should the Commission
determine that the modified language is required for the City of Hailey's PURPA ESA,
that the Commission approve the ESA conditioned upon the parties submitting an
amendment making the change to the "Mid-Columbia Market Energy Cost" and the
change to Appendix B in a subsequent compliance filing for approval of said amendment,
(3) that the Commission declare whether it expects Idaho Power to include the modified
definition of "Mid-Columbia Market Energy Cost" with regard to the WCCA in all of its
PPAs going forward, and (4) that the Commission declare 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.
Respectfully submitted this 24th day of March 2025.
� �;z 664 -
Donovan Walker
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 7

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 24th day of March 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:
Commission Staff Hand Delivered
Chris Burdin 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 - Chris.Burdin(a)_puc.idaho.gov
Boise, ID 83720-0074
Courtesy Copy Sent via e-mail to:
Brian Yeager, City of Hailey — brian.yeager(D_haileycit hag
CNDV+_
Christy Davenport, Legal Assistant
IDAHO POWER COMPANY'S REPLY COMMENTS - 8