20250916Comments - J. Farr.pdf

RECEIVED
September 16, 2025
C. Tom Arkoosh, ISB No. 2253 IDAHO PUBLIC
Nicholas J. Erekson, ISB No. 9325 UTILITIES COMMISSION
ARKOOSH LAW OFFICES
913 W.River Street, Suite 450
P.O. Box 2900
Boise, ID 83701
Telephone: [phone]
Facsim ie: ( 208) 343-5456
Em dl: tom.arkooshgarkoosh.com
nick.ereksong arkoosh.com
Adm n copy: erin.ceciln,arkoosh.com
Attorneys for IdaHydro
BEFO IRE TH EIDAH OPUBLIC UTILITIES COMMISSIO N
IN THE MATTER OF THE APPLICATION ) Case No. IPC-E-25-22
OF IDAHO POWER COMPANY FOR )
AUTHORITY TO UPDATE ITS ) COMMENTS O FJUSTIN FARR FO R
OPERATION AND MAINTENANCE ) IDAH)DRO
CHARGES APPLICABLE TO SCHEDULE )
72, GENERATOR INTERCONNECTIONS )
TO PURPA QUALIFYING FACILITY )
SELLERS. )
C OM ES NOW the Idaho Hydroelectric Power Producers Trust, an Idaho Trust, d/b/a
IdaHydro ("IdaHydro"), by and through its counsel of record, C. Tom Arkoosh and Nicholas J.
Erekson of Arkoosh Law Offices, and pursuant to the Notice of Modified Procedure, Order No.
36714, entered on August 11, 2025, hereby subm is the following com mats of Justin Farr,
Director of Energy Strategies and expert for IdaHydro:
On behalf of IdaHydro, I respectfully subm i these com in nts regarding Idaho Power
Com pany's ("Idaho Power" or "the Com fany") proposed revisions to Schedule 72, Generator
Interconnections to PURPA Qualifying Facility Sellers, which governs the interconnection of
Qualifying Facilities ("QFs") under the Public Utility Regulatory Policies Act of 1978
("PURPA").
In its Application, Idaho Power seeks to update the Schedule 72 Operation and
M aintenance ("O&M)'charges applied to QF generator interconnection facilities. However, as
discussed below, the Com Zany's assessm ait of O&M charges for QF interconnection facilities
appears inconsistent with federal PURPA standards that define interconnection costs as those costs
COMMENTS 0 FJUSTIN FARR FO RIDAH)DRO—Page 1

"in excess of the interconnection costs the utility would have incurred to interconnect an avoided
cost generator.
APPLICABLE STANDARD
PURPA regulations prom dgated by the Federal Energy Regulatory Com mssion
("FERC") establish that utilities in a' require QFs to pay only the interconnection costs that are
increm altal to the cost of interconnection that the utility otherwise would have incurred had it
generated the energy itself or purchased energy from an alternative generation source. Specifically,
18 C.F.R. § 292.101(b)(7) of FERC rules im Oem siting PURPA define interconnection costs as:
Interconnection costs in cans the reasonable costs of connection, switching,
in dering, transm ssion, distribution, safety provisions and adm nistrative costs
incurred by the electric utility directly related to the installation and in antenance
of the physical facilities necessary to perm I interconnected operations with a
qualifying facility, to the extent such costs are in excess of the corresponding
costs which the electric utility would have incurred if it had not engaged in
interconnected operations, but instead generated an equivalent am aunt of
electric energy itself or purchased an equivalent am aunt of electric energy or
capacity from other sources. Interconnection costs do not include any costs
included in the calculation of avoided costs.
18 C.F.R. § 292.101(b)(7) [Emliiasis added].
I am not an attorney and am not offering a legal opinion, but my interpretation of this
statutory language is that it establishes a clear lim ration: a utility can only charge the QF for direct
and reasonable interconnection costs that are above and beyond, or in other words increm anal to,
what it would have cost the utility to interconnect another generator to provide an equivalent
am cunt of energy or capacity.It follows logically that if the QF is only supposed to pay increm altal
interconnection costs,relative to what the utility would have incurred to interconnect an alternative
resource, then the QF should likewise only be responsible for paying increm aital O&M
However,as I will explain below,Idaho Power has proposed Schedule 72 O&Mrates based
on the total cost of the QF interconnection facilities, rather than on the increm anal
interconnection costs as defined by PURPA. Accordingly, the Com fany's proposed charges
should be rejected.
IDAHOPOWH2'S PRO POSED METH OIDLOGY
In this proceeding, Idaho Power proposes Schedule 72 interconnection O&Mcharges as a
levelized rate to be applied to the original cost of distribution or transm ssion interconnection
equipm ait. Specifically, Idaho Power proposes a 0.26% per in(nth rate applied to the original
COMMINTS 0 FJUSTIN FARR FO RIDAH)DRO—Page 2

cost of transm ssion equipm ait and a 0.90% rate per in anth rate applied to the original cost of
distribution equipm ant.1
Conceptually, Idaho Power proposes to derive these O&Mcharges by calculating the ratio
of aggregated annual distribution, or transm ssion, O&M expenses for overhead lines burdened
with layers of Adm histrative & General expenses to the corresponding distribution, or
transm ssion, plant in service. That ratio is then in dtiplied by the initial capital investment of the
interconnection facilities to determ he the in anthly charge.
This calculation, which is based on the system average O&M costs relative to the
corresponding FERC capital accounts,is intended to reim parse the Com pany for the entire am aunt
of interconnection costs associated with operating and in dntaining the QF's interconnection
facilities, not the O&Minterconnection costs "in excess" of the costs to interconnect an avoided
cost resource, as required by PURPA.
Notably, as indicated above,the definition of interconnection costs excludes any costs that
were included in the calculation of avoided costs. Thus, if Idaho Power had included the
interconnection costs and associated O&Mfor an avoided-cost resource in its avoided cost pricing
in dhodology, one could argue that the full am cunt of interconnection costs and O&M would
qualify as"in excess."However,that does not appear to be the case here.In response to IdaHydro's
First Set of Interrogatories and Requests for Production to Idaho Power Company, the Com fany
confirm ai that "Idaho Power does not account for avoided O&M costs in its avoided cost
in dhodology for PURPA pricing..."I
Not only has Idaho Power proposed an O&Mrate intended to collect the entire am cunt of
O&Mcosts,but it has also set the rate based on system averages which do not reflect the direct
costs associated with the sim lie design of interconnection facilities. Many QF interconnection
facilities are comprised of a few poles, sour ewire, a recloser or autom ded switch, in dering
equipm ant, and a blade disconnect. This equipm ait requires very little in dntenance and can even
operate for years without any in dntenance at all.
Based on currently proposed Schedule 72 rates, owners of QFs that interconnect at the
transm ssion level would be charged 3.12% annually and owners of QFs that interconnect at the
1 See Errata and Corrected Pages to Application and Direct Testimony of Riley Mdoney,p. 10.
2 Response to Interrogatory No. 8,Idaho Power Company's Response to IdahHdros First Set of Interrogatories and
Requests for Production to Idaho Power Company.
COMMINTS 0 FJUSTIN FARR FO RIDAH YDRO—Page 3

distribution level would be charged 10.8% annually. Just to put that into context, a QF facility at
the distribution level will pay m are in O&Mfees during the first 10 years of the projects than the
original cost to install the equipm aft. After 35 years,the QF will have paid O&Mequal to 3.78
tim cs the installed costs.
APPRO HUATE CO ST RECO VERY
Consistent with 18 C.F.R. § 292.10 1(b)(7), the appropriate recovery of O&M associated
with interconnection costs for QFs should be lim ted to only the costs that are in excess of the cost
of interconnecting the avoided cost resource. This would require a determ nation of "the
corresponding costs which the electric utility would have incurred if it had not engaged in
interconnected operations, but instead generated an equivalent am aunt of electric energy itself or
purchased an equivalent am aunt of electric energy or capacity from other sources."3
Doing so could prove challenging, considering the Corn pany's apparent lack of detailed
cost data. Idaho Power has indicated that they do "not system aically track actual costs incurred
for operation and m antenance expenses on Qualifying Facilities("QF")interconnections."'In the
absence of historical data, the Com masion could treat the proposed Schedule 72 rates, based on
system average O&Mcosts, as a proxy baseline for the interconnection-related O&Mcosts the
utility would have incurred for an avoided-cost resource. Under this approach, only costs above
the Schedule 72 rate would be considered increm aital. Absent evidence showing that QF
interconnection-related O&M costs exceed those baseline costs, the appropriate Schedule 72
charge should be zero. However, to the extent that there are interconnection O&M costs
determ Tied to be "in excess of what Idaho Power would have incurred for an avoided cost
generator, those increm aital costs should be directly billed to the QF responsible, as opposed to
being allocated to all QFs based on system average costs.
In utility ratem doing, direct assignm alt of costs is always preferred to using allocation
m dhods when feasible and when the costs are caused by a single custom cr or generator. Moreover,
system-average O&Mcosts are not an appropriate proxy for the actual O&Mcosts associated with
QF interconnection facilities. For exam lie, a m jor driver of Idaho Power's increased distribution
O&M nests bas been "ildfire-related apenses, iicluding vegetation m nagement aid
s 18 C.F.R. §292.101(b)(7)
a Response to Request for Production No. 5,Idaho Power Company's Response to IdaHydro's First Set of
Interrogatories and Requests for Production to Idaho Power Company.
COMMINTS 0 FJUSTIN FARR FO RIDAH YDRO—Page 4

am crtization of the Com pany's wildfire deferral.' These costs bear little relation to the utility's
actual ecpenses necessary b m attain he itility-owned portion cf a QF custom ar's
interconnection facilities.
The direct assignm aft of excess O&Mcosts would require the Com pany to begin tracking
actual O&M perform ad on QF interconnection facilities, which it has not previously done. Idaho
Power's failure to track this inform lion in the past is not a good reason for not tracking this
inform lion going forward. Considering the advancem Mt in software since the early 90's, when
Schedule 72 was first approved,Idaho Power should be entirely capable of tracking its work orders
to differentiate O&Mexpense perform ed on QF interconnection facilities.
CO NCLUSIO N
I respectfully urge the Com masion to reject Idaho Power's proposal to im pose levelized,
system-average O&Mcharges on QFs under Schedule 72. Instead,the Com mssion should clarify
that:
• O&Mcharges associated with interconnection costs m ist be lim i:ed to the increm altal
costs "in excess of O&M it would have incurred to interconnect the avoided cost
resource,consistent with the definition of interconnection costs as defined by 18 C.F.R.
§ 292.10 1(b)(7); and
• Any increm aital interconnection-related O&Mcosts should be directly assigned to the
responsible QF project, rather than recovered through system wide allocation ratios.
Such a fram exork would ensure that Schedule 72 rem dns consistent with PURPA's
requirem efts,prevents over-collection from QFs, and preserves the integrity of Idaho's regulatory
environm eit for independent renewable generation.
09/15/2025
DATED:
J ustin Farr
'Direct Testimony of Riley Mdoney,p. 11.
COMMINTS 0 FJUSTIN FARR FO RIDAH YDRO—Page 5

CERTIFICATE O FMAILING
I HEREBY CERTIFY that on the 161h day of September 2025, I served a true and correct
copy of the foregoing docum ait(s)upon the following person(s), in the m ainer indicated:
IDAH OPUBLIC UTILITIES U.S. Mail, Postage Prepaid
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P.O. Box 83720
Boise, ID 83720-0074
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C-
C. Tom Arkoosh
COMMINTS 0 FJUSTIN FARR FO RIDAH YDRO—Page 7

2025-09-15 Corn m (mts of Farr for IH to sign
Final Audit Report 2 025-09-15
Created: 2 025-09-15
By: Nicholas Erekson([e-mail])
Status: S igned
Transaction ID: C BJCHBCAABAAeWbvXZB4BiO1-JG04cZpaetNASALn7M
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