20250916Staff Comments.pdf

RECEIVED
September 16, 2025
JEFFREY R. LOLL IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11675
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-25-22
AUTHORITY TO UPDATE ITS OPERATION )
AND MAINTENANCE CHARGES )
APPLICABLE TO SCHEDULE 72, ) COMMENTS OF THE
GENERATOR INTERCONNECTIONS TO ) COMMISSION STAFF
PURPA QUALIFYING FACILITY SELLERS )
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its attorney of record, Jeffrey R. Loll, Deputy Attorney
General, submits the following comments.
BACKGROUND
On May 8, 2025, Idaho Power Company("Company") applied to the Commission for an
order updating the operation and maintenance ("O&M") charges under Schedule 72 for Public
Utility Regulatory Policies Act of 1978 ("PURPA") qualifying facilities ("QFs"), effective
January 1, 2026 ("Application"). Mr. Riley Maloney provided his direct testimony to support
the Application.
On August 8, 2025, the Company filed an Errata and Corrected Pages to the Application
and Direct Testimony of Riley Maloney to update the proposed O&M charges and correct
STAFF COMMENTS 1 SEPTEMBER 16, 2025

several mistakes contained in the Application and Mr. Riley Maloney's direct testimony. The
proposed updated transmission O&M charge is a monthly 0.26 percent of the original cost of the
transmission interconnection equipment, and the proposed updated distribution O&M charge is a
monthly 0.9 percent of the original cost of the distribution interconnection equipment.
STAFF ANALYSIS
Staff s review focused on whether the update of Schedule 72 has met the requirement of
the settlement stipulation approved by Order No. 36042, the transmission voltages used in
Schedule 72, the methods used to calculate the O&M charges, and the removal of de-
levelization. Staff recommends that the Commission direct the Company to submit a compliance
filing that:
1. Modifies the Schedule 72 language to apply the transmission O&M charge to
transmission lines of 138-kilovolt ("kV") and above;
2. Uses the voltage-based method to calculate both the transmission O&M charge and
the distribution O&M charge;
3. Uses all levels of transmission voltages of 138 kV and above to develop the
transmission O&M charge and use all levels of distribution voltages below 138 kV to
develop the distribution O&M charge;
4. Calculates the transmission O&M charge based on the weighted average of the
transmission O&M rate at each transmission voltage level, weighted by the QF
interconnection capacity percentage at each voltage level as of December 31, 2024;
and
5. Calculates the distribution O&M charge based on the weighted average of the
distribution O&M rate at each distribution voltage level, weighted by the QF
interconnection capacity percentage at each voltage level as of December 31, 2024.
Requirement of Settlement Stipulation
The settlement stipulation approved by Order No. 36042 required Schedule 72 to be
updated to reflect current operating metrics and assumptions. To calculate the proposed rates,
the Company used the original methodology that determined the currently authorized rates but
STAFF COMMENTS 2 SEPTEMBER 16, 2025

also included several modifications to reflect the current assumptions. Staff believes the
requirement of the stipulation has been met.
The proposed rates are calculated by dividing O&M expenses by plant investments. This
method aligns with the original method used to develop the currently authorized O&M charges.
Response to Staff Production Request No. 1. However, the Company has made several major
modifications as follows to reflect the current situation.
First, the Company excludes property taxes in the calculation of the proposed O&M
charges. The state of Idaho no longer assesses property taxes on"contributed property,"which
includes PURPA interconnection facilities. Maloney Direct Testimony at 11. The Idaho State
Tax Commission has determined that "contributed property"will not have taxable value in the
Company's ad valorem assessment, because contributed property is not in rate base. Response to
Staff Production Request No. 3. In addition, a new law that will go into effect on January 1,
2026, will replace the existing property tax regime with a tax based on kilowatt-hours sold.
Response to Staff Production Request No. 3. As a result, the Company excludes property taxes
in the calculation of the O&M charges. Staff believes this treatment is reasonable.
Second, the Company excludes expenses in FERC Account 565 (Transmission of
Electricity by Others) in the calculation of the proposed O&M charges. Since expenses in FERC
Account 565 are typically wheeling expenses for using transmission facilities owned by others,
not costs associated with generator interconnections, the Company does not include the expenses
in the calculation of the proposed O&M charges. Response to Staff Production Request No. 5.
Staff believes this treatment is reasonable.
Third, the Company changes how payroll taxes are recorded in its accounting records. In
the past, an allocation of payroll taxes was recorded separately from labor expenses. The
Company changed the way payroll taxes were accounted for, so payroll taxes are currently
allocated to the O&M accounts that include the associated labor expenses. This change does not
change the results of the calculation. Maloney Direct Testimony at 12. Staff does not have any
issue with this accounting change.
Transmission Voltages
Under the current Schedule 72, transmission O&M charges only apply to 138 kV lines
and 161 kV lines, while distribution O&M charges apply to lines below 138 W. Schedule 72 at
STAFF COMMENTS 3 SEPTEMBER 16, 2025

13. However, in practice, QFs can be interconnected at other transmission voltages, such as 230
kV. Response to Staff Production Request No. 14. To capture the full diversity of transmission
voltages, Staff recommends that the Commission direct the Company to modify the Schedule 72
language to apply the transmission O&M charge to lines of 138 kV and above.
Methods for Calculating O&M Charges
Although the current Schedule 72 distinguishes transmission and distribution based on
voltage, the methods used to calculate the current charges were not based on O&M costs and
plant investments at specific voltage levels. Instead, for the current transmission O&M charges,
the Company used transmission-categorized costs in various FERC accounts from the
Company's Transmission Sub-Functionalization report for the calculation. Response to Staff
Production Request No. 4(a). For the current distribution O&M charges, the Company used data
of distribution-categorized FERC accounts for the calculation. Response to Staff Production
Request No. 1. Neither transmission O&M charges nor distribution O&M charges were
calculated based on O&M costs and plant investments of interconnection facilities at specific
voltage levels. However, the Company stopped producing the Transmission Sub-
Functionalization report in the early 2000s. Maloney Direct Testimony at 12. Therefore, the
Company proposes using costs associated with the 138 kV and 161 kV lines to replace the
transmission-categorized costs from the Transmission Sub-Functionalization report. However,
the Company still uses the original method to calculate the distribution O&M charge.
Staff has three concerns regarding the Company's proposal. First, the Company's
proposal creates an inconsistency between the transmission method and the distribution method.
Staff recommends that the Company use the voltage-based method to calculate both the
transmission O&M charge and the distribution O&M charge.
Second, as discussed earlier, the Company's proposal only focuses on 138 kV lines and
161 kV lines to develop the transmission O&M charge. Staff recommends that the Company use
all levels of transmission voltages of 138 kV and above and all levels of distribution voltages
below 138 kV to develop the transmission O&M charge and the distribution O&M charge,
respectively.
Third, the Company's proposal does not consider QF interconnection capacity at each
voltage level. Staff believes O&M charges should consider the degree to which QFs
STAFF COMMENTS 4 SEPTEMBER 16, 2025

interconnect at each voltage level so that the O&M charges QFs pay will reflect the O&M costs
QFs incur: if large QF capacity is interconnected at a certain voltage, then the O&M rate at that
voltage level should play a larger role in determining the final O&M charge. Therefore, Staff
recommends that the Company be required to calculate the transmission O&M charge based on
the weighted average of the transmission O&M rate at each transmission voltage level, weighted
by the QF interconnection capacity percentage at each voltage level as of December 31, 2024.
Similarly, Staff recommends that the Company be required to calculate the distribution O&M
charge based on the weighted average of the distribution O&M rate at each distribution voltage
level, weighted by the QF interconnection capacity percentage at each voltage level as of
December 31, 2024. Staff has provided an example of the calculation in Attachment A.
Elimination of De-Levelization
In developing the currently authorized O&M charges, the Company first calculated a
system average monthly O&M charge (i.e. 0.4% for transmission and 0.7% for distribution)
based on the 1989 data. Next, the system average monthly O&M charge was de-levelized so that
rates started low and were escalated over a 35-year period, the maximum PURPA contract length
at that time. For projects that extend beyond 35 years, the Company uses the system average
monthly O&M charge. In this filing, the Company eliminates de-levelization and proposes to
directly apply the system average monthly O&M charges to all QFs moving forward. Staff
believes such rates are more straightforward and can reduce the risk of under-recovery of O&M
costs.
Staff believes that eliminating de-levelized O&M rates can reduce the risk of the
Company under-recovering O&M costs, thus ensuring that O&M costs incurred by QFs are not
shifted to the Company's customers. Under the de-levelized rate structure, if a QF has an
executed contract shorter than the maximum contract length(i.e. currently 20 years), the O&M
costs incurred will not be fully recovered since full recovery only happens when the maximum
contract length is reached. Even if a QF has an executed contract at the maximum contract
length,under-recovery of O&M costs can still occur if the project terminates earlier than
scheduled.
STAFF COMMENTS 5 SEPTEMBER 16, 2025

STAFF RECOMMENDATION
Staff recommends that the Commission direct the Company to submit a compliance filing that:
1. Modifies the Schedule 72 language to apply the transmission O&M charge to
transmission lines of 138 kV and above;
2. Uses the voltage-based method to calculate both the transmission O&M charge and
the distribution O&M charge;
3. Uses all levels of transmission voltages of 138 kV and above to develop the
transmission O&M charge and use all levels of distribution voltages below 138 kV to
develop the distribution O&M charge;
4. Calculates the transmission O&M charge based on the weighted average of the
transmission O&M rate at each transmission voltage level, weighted by the QF
interconnection capacity percentage at each voltage level as of December 31, 2024;
and
5. Calculates the distribution O&M charge based on the weighted average of the
distribution O&M rate at each distribution voltage level, weighted by the QF
interconnection capacity percentage at each voltage level as of December 31, 2024.
Respectfully submitted this 16th day of September 2025.
effrey R.JKoll
Deputy Attorney General
Technical Staff: Yao Yin
1:\Utility\UMISC\COMMENTS\IPC-E-25-22 Comments.docx
STAFF COMMENTS 6 SEPTEMBER 16, 2025

Attachment A
The following hypothetical example is used to illustrate Staff s proposed method for
calculating the transmission O&M charge. This same method would also be applied to the
distribution O&M charge.
• The example assumes there are only three levels of transmission voltages.
• The transmission O&M rate at each voltage level would be calculated outside of this
example and used as an input to the method illustrated below. The rates provided in this
example are not based on actual data.
• QF Interconnection Capacity Percentages are calculated based on the QF interconnection
capacity at each transmission voltage level divided by the total QF interconnection
capacity at all transmission voltage levels. The sum of all QF Interconnection Capacity
Percentages is 100%. Each QF Interconnection Capacity Percentage at each voltage level
in this example would be calculated outside of this example and used as an input to the
method illustrated below. The percentages provided in this example are not based on
actual data.
• In this example, the transmission O&M charge is 0.278%.
138 kV 161 kV 235 kV
Transmission O&M Rate 0.26% 0.25% 0.30%
QF Interconnection
Capacity Percentages 30% 20% 50%
Transmission O&M Rate
X
QF Interconnection 0.26%x 30% 0.25%x 20% 0.30%x 50%
Capacity Percentages
0.26%x 30% + 0.25%x 20% + 0.30%x 50%
Weighted Average
Transmission O&M =0.278%
Charge
ATTACHMENT A
CASE NO. IPC-E-25-22
STAFF COMMENTS 7 SEPTEMBER 16, 2025

CERTIFICATE OF SERVICE
H THIS DAY OF SEPTEMBER 2025 I HEREBY CERTIFY THAT I HAVE V � ,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-25-22, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
Idaho Power Company: Idaho Power Company:
DONOVAN E. WALKER TIM TATUM
IPC DOCKETS RILEY MALONEY
IDAHO POWER COMPANY IDAHO POWER COMPANY
1221 WEST IDAHO STREET (83702) 1221 WEST IDAHO STREET (83702)
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
E-MAIL: E-MAIL:
dwalker(c�idahopower.com ttatumLidahopower.com
dockets crJdahopower.com nnaloney Lcuidahopower.com
IdaHydro:
C. Tom Arkoosh
Nicholas J. Erekson
Arkoosh Law Offices
913 W. River St., Ste. 450
P.O. Box 2900
Boise, ID 83701
E-MAIL:
tom.arkoosh(ct arkoosh.com
nick.erekson, arkoosh.com
erin.cecihLqc,arkoosh.com
Renewable Energy Coalition:
IRION SANGER
SANGER GREENE, P.C.
4031 SE HAWTHORNE BLVD.
PORTLAND, OR 97214
E-MAIL:
irionLsanger-law.com
PATRICIA JORDA ECRETARY
CERTIFICATE OF SERVICE