20250423Final_Order_No_36564.pdf

Office of the Secretary
Service Date
April 23,2025
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION ) CASE NO. IPC-E-25-04
OF IDAHO POWER COMPANY FOR )
APPROVAL OR REJECTION OF AN ) ORDER NO. 36564
ENERGY SALES AGREEMENT WITH THE )
CITY OF HAILEY, FOR THE SALE AND )
PURCHASE OF ELECTRIC ENERGY FROM )
THE HAILEY CSPP PROJECT )
On February 11, 2025, Idaho Power Company ("Company") filed an application
("Application") with the Idaho Public Utilities Commission ("Commission") requesting an order
accepting or rejecting the Energy Sales Agreement ("ESA") between the Company and the City
of Hailey ("Hailey") under which the Company would purchase electric energy generated by the
Hailey cogeneration or small power production("CSPP")project("Facility") located near the city
of Hailey, Idaho. The Facility is a Public Utility Regulatory Policies Act of 1978 ("PURPA")
Qualifying Facility ("QF").
The Company represented that the Facility is a 37.3-kilowatt ("kW") nameplate QF
currently delivering energy to the Company under a March 16,2020, ESA("2020 ESA")that was
approved by the Commission in Order No. 34690 and expires on June 24, 2025. Application at 2.
The Company stated that the ESA submitted with its Application is a new contract with the same
Facility for a new term with updated terms and conditions to replace the 2020 ESA upon its
expiration.Id.
The Company represented that under the proposed ESA, the Company would purchase
electric energy generated by the Facility at non-levelized rates calculated for a QF in the "Non-
Seasonal Hydro" category pursuant to the surrogate avoided resource ("SAR") avoided cost
methodology for a 5-year term, with full capacity payments for the entire term. Id.
STAFF COMMENTS
Staffs 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 13-1
of Appendix B. Staff Comments at 2.
ORDER NO. 36564 1

Based on its analysis, Staff recommended 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.
Id. However, Staff recommended that Commission approval be 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.Id.
Staff also recommended 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.Id.
COMPANY REPLY COMMENTS
The Company requested that the Commission: (1) approve the City of Hailey CSPP ESA
as originally submitted, without the addition of the modified language from the Pleasant Valley
PPAs as recommended by Staff, (2) alternatively, 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)
declare whether it expects the Company to include the modified definition of "Mid-Columbia
Market Energy Cost" with regard to the CCA in all of the Company's PPAs going forward, and
(4) 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.
Company Reply Comments at 6-7.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-501, 61-502,
and 61-503. The Commission is vested with the power to "supervise and regulate every public
utility in the state and to do all things necessary to carry out the spirit and intent of the [Public
Utilities Law]."Idaho Code§ 61-501.The Commission is empowered to investigate rates,charges,
rules,regulations,practices,and contracts of public utilities and to determine whether they are just,
reasonable,preferential, discriminatory,or in violation of any provision of law,and to fix the same
by order.Idaho Code §§ 61-502 and 61-503.
ORDER NO. 36564 2

Having reviewed the Application and all submitted materials,the Commission Ends it fair,
just, and reasonable to approve the ESA and to declare that all payments the Company makes to
Hailey for purchases of electric energy generated by the Facility will be allowed as prudently
incurred expenses for ratemaking purposes. While the Commission does not End it necessary to
order the Company to include the modified definition of"Mid-Columbia Market Energy Cost"
with respect to the CCA in all of the Company's PPAs or ESAs going forward, the Company is
directed to ensure that, consistent with the Commission's previous orders and to the extent
reasonably practicable, no CCA cost are borne by the Company's Idaho rate payers.
ORDER
IT IS HEREBY ORDERED that the ESA is approved. All payments the Company makes
to Hailey for purchases of electric energy generated by the Facility will be allowed as prudently
incurred expenses for ratemaking purposes.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date upon this Order regarding any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. Idaho Code §§ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 23`d day of
April 2025.
G
EDWARD LODG RESIDENT
R. HAMMOND JR., COMMISSIONER
DAYN H DIE, COMMISSIONER
ATTEST:
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Commission Secretary
I Tegal\ELECTRIC\IPC-E-25-04_ESA Hai1ey\orders\IPCE2504_FO_chdocx
ORDER NO. 36564 3