20251014IPC Reply Comments.pdf

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RECEIVED
DONOVAN WALKER OCTOBER 14, 2025
Lead Counsel IDAHO PUBLIC
dwalkerC�idahopower.com UTILITIES COMMISSION
October 14, 2025
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, Idaho 83714
Re: Case No. IPC-E-25-22
Idaho Power Company's Application for Authority to Update its Operation
and Maintenance Charges Applicable to Schedule 72, Generator
Interconnections to PURPA Qualifying Facility Sellers
Dear Commission Secretary:
Attached please find Idaho Power Company's Reply Commetns to be filed in the
above-entitled matter.
If you have any questions about the attached documents, please do not hesitate to
contact me.
Sincerely,
Donovan E. Walker
DEW:cd
Attachments
1221 W. Idaho St(83702)
P.O. Box 70
Boise, ID 83707

DONOVAN E. WALKER (ISB No. 5921)
LISA C. LANCE (ISB No. 6241)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker idahopower.com
IlanceCc)_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-25-22
AUTHORITY TO UPDATE ITS OPERATION )
AND MAINTENANCE CHARGES ) IDAHO POWER COMPANY'S
APPLICABLE TO SCHEDULE 72, ) REPLY COMMENTS
GENERATOR INTERCONNECTIONS TO )
PURPA QUALIFYING FACILITY SELLERS. )
COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and,
pursuant to Idaho Public Utilities Commission's ("Commission") Rules of Procedure 201-
204, hereby respectfully submits the following Reply Comments in response to
Comments filed by Commission Staff ("Staff"), Idaho Hydroelectric Power Producers
Trust d/b/a IdaHydro ("IdaHydro"), and Renewable Energy Coalition ("REC"), on
September 16, 2025.
IDAHO POWER COMPANY'S REPLY COMMENTS - 1

On May 8, 2025, Idaho Power filed an Application requesting Commission
approval to update the monthly operations and maintenance ("O&M") charges contained
in Schedule 72, Generator Interconnections to PURPA Qualifying Facility Sellers
("Schedule 72"). The proposed updates were submitted in compliance with the settlement
stipulation approved by Order No. 36042 issued in the Company's 2023 General Rate
Case (Case No. IPC-E-23-11) (the "2023 GRC") and are intended to reflect current
operating metrics and assumptions.
In these Reply Comments, Idaho Power responds to the recommendations
presented by Staff and addresses arguments made by IdaHydro and REC. The Company
appreciates the thorough review conducted by Staff and generally supports the intent
behind Staff's proposed refinements to the Schedule 72 methodology, though as it
highlights below, the Company's ability to fully implement Staff's recommendations is
limited by the availability of certain accounting data.
I. BACKGROUND
The Commission first adopted Schedule 72, governing the interconnection of
PURPA Qualifying Facility ("QF") generators to Idaho Power's system in Idaho Power's
Idaho service area, in Case No. IPC-E-90-20. When Schedule 72 was established, a
schedule of monthly O&M charges assessed to interconnecting QFs were set out in a 35-
year table. When a PURPA QF interconnects to the Company's facilities, the QF pays the
capital costs of the facilities necessary to connect the project to the Company's system
and, once completed, the Company assumes responsibility for all ongoing O&M
associated with facilities owned by or transferred to the Company. The O&M charges
appearing within Schedule 72 are designed to reimburse the Company for the costs,
IDAHO POWER COMPANY'S REPLY COMMENTS - 2

using system averages, associated with operating and maintaining such interconnection
facilities. These charges serve as an offset to revenue requirement in a general rate case
with the intent of keeping the Company's general body of customers indifferent to the
ongoing O&M costs of the additional infrastructure required by the QF project.
On December 23, 2023, the Commission issued Order No. 36042 in Idaho Power's
2023 GRC, which approved the settlement stipulation entered into by Idaho Power,
Commission Staff, and the other parties to the general rate case including IdaHydro.
Following the conclusion of the 2023 GRC, Idaho Power and IdaHydro held informal
discussions regarding the basis for the methodology used to establish the current O&M
charges in 1990 ("Original Methodology"). Coincident with these discussions, Idaho
Power provided Excel workbooks that performed the calculations to allow IdaHydro to
develop a more complete understanding of the methodology. Those workbooks also
recalculated the equivalent levelized O&M charge rates using historical financial
information from several other select years (2015-2017, 2022, 2023).
In compliance with the 2023 GRC stipulation, Idaho Power filed the application in
this matter on May 8, 2025, seeking to update the existing O&M cost methodology with
current inputs and data, which had not been done since the initial approval and
implementation of Schedule 72 in 1990. On June 9, 2025, the Commission issued Notice
of the Application and set an intervention deadline. Order No. 36631. IdaHydro and REC
petitioned for and were granted intervention. After the directed intervention period the
Commission issued Notice of Modified Procedure Order No. 36714, establishing that the
Application be processed under Modified Procedure, directing persons interested in
submitting written comments to do so by September 16, 2025, directing parties, referring
IDAHO POWER COMPANY'S REPLY COMMENTS - 3

to Staff and Intervenors, interested in filing comments in reply to previously filed
comments to do so by October 7, 2025, and directing the Company to file any reply
comments by October 14, 2025. Order No. 36714.
II. REPLY COMMENTS
A. Technical Merits of the Proposal
Staffs Comments
Commission Staff's analysis focused on whether the Company's proposed update
to the O&M charges contained in Schedule 72 met the requirements of the settlement
stipulation approved by Order No. 36042, included an analysis of the transmission
voltages used in Schedule 72 and methods used to calculate the proposed O&M charges,
and considered the Company's proposal to remove the de-levelization of Schedule 72's
O&M charges. Ultimately, Staff concluded that the Company's proposal satisfies the
stipulation's requirement that Schedule 72 be updated to reflect current operating metrics
and assumptions, as well as offering support for the removal of Schedule 72's de-
levelized O&M charges. Staff further noted that the Company used the original
methodology to calculate its proposed O&M charges, but made modifications necessary
to reflect current assumptions, including the exclusion of property taxes and FERC
Account 565 expenses in the calculation of the proposed charges, as well as a change in
the accounting of payroll tax. Staff found these changes to be reasonable. Staff
Comments, p 3.
Staff then recommended five specific changes be implemented to the Company's
proposed Schedule 72 update ("Staff's Recommendations"): Id., at p 2.
IDAHO POWER COMPANY'S REPLY COMMENTS - 4

1. Modify Schedule 72 language to apply the transmission O&M charge to
transmission lines of 138-kilovolt ("kV") and above;
2. Use a voltage-based method to calculate both transmission and distribution
O&M charges;
3. Include all transmission voltages greater than or equal to 138 kV and all
distribution voltages less than 138 kV in the development of the respective
O&M charges;
4. Calculate the transmission O&M charge based on the weighted average of
the transmission O&M rate at each voltage level, weighted by the QF
interconnection capacity percentage at each level as of December 31, 2024;
and
5. Calculate the distribution O&M charge using the same weighted average
method, based on QF interconnection capacity percentages at each
distribution voltage level.
Staff explained that these improvements were proposed in the spirit of ensuring
that "the O&M charges QFs pay will reflect the O&M costs QFs incur," and that "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." Staff Comments, p 5.
Idaho Power is not opposed in principle to Staff's recommendations; however, the
Company notes that it does not have sufficiently granular accounting data to implement
each of Staff's recommendations as proposed. Staff highlights its concerns with the
Company's method as proposed as: (1) being inconsistent between the transmission
method and the distribution method, (2) using too limited of a data set in developing the
IDAHO POWER COMPANY'S REPLY COMMENTS - 5

respective transmission and distribution charges, and (3) not considering QF
interconnection capacity at each voltage level when determining the proposed O&M
charges.
As an initial matter, the Company highlights that the existing methods, which have
been in place since 1991, utilize differing bases for the transmission and distribution
charges.' That is, the method utilized to develop the current rates in Schedule 72 relied
on a voltage-based method for establishing the transmission charge and used a different
method (the same method as the Company's proposal in this case) for distribution. The
only change to the transmission method the Company proposed in this case was a
different basis for identifying the voltage-specific investments, as the prior report relied on
by the Company is no longer produced. While the Company is not opposed in principle
to what Staff is proposing — to use a voltage-based method for both O&M charges — the
Company clarifies that it does not track voltage-based data for all line investments below
138 kV and therefore is unable to implement Staff's proposal as presented in
Recommendation #2.
However, the Company does have sufficiently granular data to implement Staff's
Recommendations as it pertains to the transmission O&M charge. That is, it can rely on
all transmission line plant investment of 138 kV and above (Staff's Recommendation #1
and the transmission-specific portion of Staff Recommendation #3) and can apply the
For clarify of the record, Idaho Power notes that Schedule 72 does not use the terms "transmission" or
"distribution" to delineate applicability of O&M charges (see Schedule 72, p. 72-13). Rather, the set of
charges contained in Table 1 apply to interconnections at 138 kV and 161 kV, and those contained in Table
2 are applicable to all interconnections less than 138 kV. As noted in Mr. Maloney's direct testimony (p. 6),
Table 2 contains the rates applicable to interconnections considered to be at the distribution-level(below
138 kV). Accordingly, throughout the Company's Application and Staff's comments, "transmission" is used
to refer to interconnections at 138 kV and above and "distribution" is used to refer to interconnections at
less than 138 kV.
IDAHO POWER COMPANY'S REPLY COMMENTS - 6

proposed voltage-based weighted average methodology for the transmission O&M
charge (Staff Recommendation #4). As previously noted, the Company is not opposed to
Staff's recommendations to implement these modifications; however, if the Commission
ultimately adopts these specific recommendations, the Company respectfully requests
the Commission order it to submit a compliance filing for the Commission's review within
60 days of a Commission order in this case. This will allow time for the Company to gather
the required data from the interconnection agreements and develop the weighted
transmission O&M charge.
Given the limitations previously explained, for updating the distribution O&M
charge (applicable to interconnections less than 138 kV), Idaho Power recommends the
Commission reject Staff Recommendation #2, the distribution-specific portion of Staff
Recommendation #3, and Staff Recommendation #5, and instead order the Company to
maintain the current Commission-approved methodology. This approach maintains the
existing distinction between how transmission and distribution O&M charges have been
calculated and aligns with readily available data. In the alternative, if the Commission
ultimately desires to implement a voltage-based weighted average approach where data
is available, Idaho Power recommends the Commission direct the Company to work with
Staff to develop a hybrid methodology that applies the voltage-based weighted average
approach for interconnections at 46 kV and above, while continuing to use the existing,
previously approved method for interconnection voltages below 46 kV, in determination
of the distribution O&M charge. If the Commission determines this approach is most
appropriate, Idaho Power recommends the Commission issue an order directing Idaho
Power to collaborate with Staff to develop a hybrid methodology that could be presented
IDAHO POWER COMPANY'S REPLY COMMENTS - 7

in a compliance filing, which would seek Commission approval of the new method for
determining O&M charges applicable to interconnections less than 138 kV.
IdaHydro Comments of Farr and Sorensen
Mr. Justin Farr (Director of Energy Strategies and expert witness for IdaHydro) and
Mr. Ted Sorensen (member of IdaHydro) make several statements regarding the nature
of O&M costs associated with interconnection facilities. Specifically, Mr. Farr asserts that
"[m]any QF interconnection facilities are comprised of a few poles, some wire, a recloser
or automated switch, metering equipment, and a blade disconnect. This equipment
requires very little maintenance and can even operate for years without any maintenance
at all,112 while Mr. Sorenson claims "[t]he interconnects are reliable, stable, and require
little attention, most lasting 20-30 years or more without active work or preservation."3
To clarify, Idaho Power has a continuing obligation to construct, operate, and
maintain its system in accordance with the National Electrical Safety Code ("NESC") and
other applicable standards. This includes routine inspection, testing, vegetation
management, and repair of interconnection facilities, which are part of the Company's
bulk electric system, to ensure safe and reliable service. Even passive infrastructure such
as poles, conductors, and protective devices require ongoing attention to remain
compliant and functional. These activities represent real and recurring costs that are
appropriately recovered through Schedule 72's O&M charges assessed to a QF.
Statements by the intervenors that there is "little" attention or maintenance required
simply do not reflect the operational realities of maintaining the Company's infrastructure,
2 Farr at 3
3 (Sorenson /2).
IDAHO POWER COMPANY'S REPLY COMMENTS - 8

and miss the larger issue related to the impact of the addition of the facilities required by
the QF's interconnection to Idaho Power's overall system — that these additions increase
the overall cost to Idaho Power's retail electric customers. Thus, Schedule 72 assigns
the increment of that same system average O&M cost that customers would otherwise
pay due to the addition of the facilities required by the QF's interconnection to hold
customers indifferent as to whether the utility purchased from the QF or otherwise
generated or purchased the power itself— as required by PURPA and federal law.
B. Procedural Context and Purpose of Filing
IdaHydro mischaracterizes the Company's filing as proposing to implement a new
and unlawful charge to QF's stating it is based upon a flawed premise, contrary to
PURPA, and results in double counting. This is incorrect. Idaho Power is not proposing
a new and unlawful methodology regarding how interconnection costs and the associated
O&M impact are treated and allocated in avoided cost rates and in Schedule 72. The
Application filed in IPC-E-25-22 seeks to implement a routine update to the previously
approved Schedule 72 methodology. No substantive changes are proposed to the
previously approved methodology. The Company seeks only to refresh the O&M charges
using current and available data consistent with Commission-approved practices and to
comply with a provision of the Commission-approved Settlement Stipulation from IPC-E-
23-11 , Order No. 36042, which states:
11. Generation Interconnection Charges. The monthly operations
and maintenance ("O&M") charge in Schedule 72, Generator
Interconnections to PURPA Qualifying Facility Sellers, will be updated in the
future to reflect current operating metrics and assumptions, in conjunction
with the informal proceeding described in paragraph 13(b) below. . .
13. Separate Informal Proceedings. To facilitate further investigation
and participation, the Parties agree that: ...
IDAHO POWER COMPANY'S REPLY COMMENTS - 9

(b) IdaHydro will initiate and meet with Idaho Power to discuss
Qualified Facility O&M charges. Execution of, and agreement to this
Stipulation and Settlement is without prejudice to any Parties' ability to bring
a separate action before the Commission related to O&M charges in
Schedule 72.
In compliance with the stipulation, Idaho Power proposed updated inputs to the
previously-approved and implemented Schedule 72 O&M methodology. The Company's
application did not propose to implement any new charge or new methodology. This
methodology was approved by the Commission in 1990, Case No. IPC-E-90-20, Order
No. 23631, Reconsideration Order No. 24025.
IdaHydro takes no issue with the updated inputs to the approved methodology but
instead challenges the very concept of Schedule 72 O&M charges as being unlawful,
fundamentally flawed, and contrary to PURPA. IdaHydro and REC argue that because
the avoided cost methodology for Idaho Power does not include compensation to the QF
for the avoided interconnection costs of the proxy resource, that it is unlawful to charge
the QF for the O&M costs of the impact of their interconnection to the utility's system in
Schedule 72.4 These arguments were considered and addressed by the Commission in
the 1990 case initially approving Schedule 72 and the Commission specifically addressed
each of these issues, now raised again by IdaHydro and REC. The two issues addressed
by the Commission on reconsideration in the 1990 case were: 1. The inclusion of
interconnect costs in the administratively determined avoided cost rate; and 2. The
4 Idaho Power initially answered IdaHydro's Interrogatory No. 8 incorrectly stating that the avoided cost
methodology does not account for avoided O&M costs. Idaho Power filed a Supplemental Response to
Interrogatory No. 8 correcting this mistake and explaining how the interconnection costs and
interconnection O&M costs for the proxy resource are in fact included in both of the Commission-approved
avoided cost rate methodologies for Idaho Power. Idaho Power's Supplemental Response to IdaHydro's
Interrogatory No. 8 is attached hereto as Attachment 1.
IDAHO POWER COMPANY'S REPLY COMMENTS - 10

calculation and reasonableness of the Schedule 72 operation and maintenance service
charges." Order No. 24025, p. 1, 2, 4. The Commission found that reasonable
interconnect costs were included in the administratively determined avoided cost rate as
required by FERC, and that the underlying methodology used to calculate the O&M
charges was reasonable. Id., at p 4, 8. This remains true today. Idaho Power's
administratively determined avoided cost rates still contain interconnect costs for the
proxy, or avoided, resource and the same previously approved methodology is used to
calculate the O&M charges.
C. Interconnection Costs and Avoided Cost Compensation
IdaHydro and REC both base their entire opposition to the imposition of Schedule
72 O&M costs on the mistaken premise that interconnection costs are not included in the
approved avoided cost rate methodology for Idaho Power. This is simply not true. See, fn
4; Attachment 1. The Commission first addressed the issue of QF interconnection costs
in its seminal Order directing the implementation of PURPA for the state of Idaho in 1980.
Case No. P-300-12, Order No. 15746.5 Between 1981 and the implementation of
Schedule 72 in 1991, all of Idaho Power's QF contracts approved by the Commission
required that the QF reimburse Idaho Power for the costs of interconnecting the QF
project to Idaho Power's system.6 Since the directed implementation of Schedule 72 for
QF interconnections, all of the QFs that contracted with Idaho Power were assessed and
paid the required O&M charge contained therein.
Today, both of Idaho Power's Commission-approved avoided cost rate
5 A copy of the pertinent portion of Order No. 15746 is attached hereto as Attachment 2.
6 Case No. IPC-E-90-20, Idaho Power Reply Comments, p 2.
IDAHO POWER COMPANY'S REPLY COMMENTS - 11

methodologies — the Surrogate Avoided Resource ("SAR") methodology utilized for QF
projects that are below the published rate eligibility thresholds, and the Incremental Cost
Integrated Resource Plan ("ICIRP") methodology utilized for QF projects that are over the
published rate thresholds — contain and account for interconnection, network upgrade,
and O&M costs associated with the proxy or surrogate resource that the utility is assumed
to avoid in the establishment of the avoided cost rates set by those methodologies. As
such, the QF is compensated through the avoided cost rate paid to it for the avoided
interconnection and associated O&M costs of the utility.
SAR Methodology:
For the SAR methodology the surrogate avoided resource is a combined-cycle
natural gas combustion turbine. Interconnection costs, including the gen-tie, are included
in the capital cost component of the avoided cost rate methodology. Non-fuel costs,
including capital cost, fixed O&M, and variable O&M are included in the methodology and
are based on the Northwest Power and Conservation Counsel's Sixth Power Plan and
set by Commission Order No. 30738.
Capital Cost: $1,313/kW
Fixed O&M: $14.57/kW
Variable O&M: $3.86/MWh
O&M Escalation Rate: 2.0%
ICIRP Methodology:
For the ICIRP Methodology the proxy capacity resource is a simple-cycle natural
gas combustion turbine ("SCCT"). The ICIRP methodology, rather than having capital
components set by separate Commission order as is done with the SAR methodology,
uses the proxy costs from Idaho Power's acknowledged Integrated Resource Plan
("IRP"). Idaho Power's most recently acknowledged IRP is the 2023 IRP. Interconnection
IDAHO POWER COMPANY'S REPLY COMMENTS - 12

costs and associated O&M, as well as the network upgrades to interconnect the project
to Idaho Power's system are included in the levelized cost of the SCCT proxy capacity
resource from the 2023 IRP. The values below are from Appendix C of the 2023 IRP.
Network Upgrades: $81/kW
Fixed O&M: $2.10/kW-mo.
O&M Escalation Rate: 2.60%
The O&M charges from Schedule 72 are not the avoided costs of the proxy or
surrogate avoided resource, but are the incremental costs of the QF's addition to the
utility's system that are required to be paid by the QF in order to assure that the utility's
retail customers remain indifferent to, and are not harmed by, the addition of the QF's
required interconnection facilities to the utility's system, as required by PURPA and
federal law.
D. System Average O&M Cost Basis for Schedule 72 O&M Charges
IdaHydro continues its accusations against the Company by falsely claiming that
imposition of Schedule 72 O&M charges results in a double recovery, an overcharge, an
abuse, a smokescreen, etc. These accusations are incorrect and based primarily upon
the false premise that interconnection costs are not included in the avoided cost pricing
methodology. As demonstrated above, interconnection costs and O&M are included in
the avoided cost pricing methodologies and the QF is compensated for those costs
associated with the avoided proxy resource in the rates it is paid for its generation.
IdaHydro's accusations also confuse and misconstrue the use of system average O&M
costs as the basis for Schedule 72 O&M costs with the concept of the 35-year de-
levelization of the average cost. These are two distinct and separate items that IdaHydro
simply confounds together. See, IdaHydro Memorandum, p 5-6.
IDAHO POWER COMPANY'S REPLY COMMENTS - 13

System Average O&M charges are applied to QFs to ensure administrative
efficiency, fairness across projects, and consistency with longstanding Commission
precedent. These charges reflect the Company's actual responsibility for maintaining
interconnection facilities and prevent cost shifting. Most importantly, use of the system
average O&M cost basis is exactly what is included in retail customers' rates, and
because this is precisely the cost that is increased by the expansion of the Company's
system to accommodate the addition of the facilities required by the QF's interconnection,
this is the most appropriate measure to use. Idaho Power makes no additional profit or
earnings on this O&M. There is no rate-based investment involved or included. The QF
is assigned its incremental portion of O&M costs based on the value of its required
interconnection facilities that are added to the Company's system as part of the
interconnection. That incremental portion paid by the QF is then deducted from what is
included in customers' rates for system O&M, both of which utilize a system average O&M
cost basis.'
The use of a system average O&M cost basis is distinct from the issue of de-
levelization. IdaHydro confounds the two issues stating, "Idaho Power dresses up its
proposal in the language of efficiency. The Company claims that abandoning the 35-year
de-levelized schedule in favor of a flat, `average' O&M charge will simplify administration.
That is a smokescreen. Averaging does not simplify; it conceals." IdaHydro
Memorandum, p 5. This, again, is incorrect. Idaho Power proposes to implement the
updated O&M charges utilizing the levelized, average rates to collect O&M costs going
forward and to abandon the de-Ievelized schedule containing different O&M charges on
7 The Schedule 72 methodology does not include certain expenses related to costs that are not associated
with generator interconnection. See, Staff Comments, p 3.
IDAHO POWER COMPANY'S REPLY COMMENTS - 14

a yearly basis over 35 years as currently exists. The rates that are currently in effect were
subjected to a "de-levelization" process, where the rate is lower in the initial years and
escalated for 35 years using an inflation factor. The Company proposes to remove the
de-levelization concept from the rate and instead charge the same calculated average
rate each year. The overall charge is equivalent to the system average cost only spread
(de-levelized) over the initial 35 years, and the current Schedule 72 charge reverts to the
levelized, system average cost after year 35. There is no smokescreen or concealment.
The Commission itself initially directed this de-levelization in the 1990 case. Order No.
24025, p 6.
The use of system average O&M cost basis for Schedule 72 O&M charges, as has
been previously approved and implemented since 1991 , is lawful and valid under PURPA
and is the most appropriate measure as it directly relates to and offsets the same system
average cost paid by retail customers that the mechanism is meant to protect from harm
by the addition of the QF.
E. Response to Requests for Hearing
IdaHydro's initial request for a technical hearing was heard in oral argument before
the Commission at a regularly scheduled Commission Decision Meeting, where the
Commission determined pursuant to RP 201-204, IDAPA 31.01.01.201-204, that the
public interest may not require a formal hearing in this matter, and that it will proceed
under Modified Procedure, noting that Modified Procedure and written comments have
proven to be an effective means for obtaining public input and participation. Order No.
36714.
IDAHO POWER COMPANY'S REPLY COMMENTS - 15

IdaHydro again asks for a "full evidentiary hearing" in is Memorandum in Support
of Comments and in a separate pleading filed after the reply comment deadline. IdaHydro
continually cites a perceived need to develop facts and the factual record, without
articulating why the facts and factual record cannot be adequately developed through
Modified Procedure and the written record, as it routinely is done in many and numerous
high stakes and high dollar cases before the Commission. In fact, the primary argument
advanced by IdaHydro and REC is a legal and policy-based argument that the
interconnection O&M charges in Schedule 72 are contrary to PURPA and federal law.
IdaHydro's false allegations of utility malfeasance, conspiracy, or profiteering does not
change the independently verifiable facts that the Commission has previously addressed
their very arguments and found that reasonable interconnect costs were included in the
administratively determined avoided cost rate as required by FERC, and that the
underlying methodology used to calculate Schedule 72's O&M charges was reasonable.
Order No. 24025 at p 4, 8. This remains true today. Idaho Power's administratively
determined avoided cost rates still contain interconnect costs for the proxy, or avoided,
resource —which comes from independently Commission reviewed and approved Orders
and acknowledged IRPs — as well as the same previously approved methodology used
to calculate the O&M charges.
III. CONCLUSION
Idaho Power appreciates Staff's review and as discussed above is supportive of
implementing Staff's recommendations related to the O&M Charges applicable to
interconnections at 138 kV and greater. While the Company believes it is reasonable to
maintain the current methodology for interconnections below 138 kV, in the alternative if
IDAHO POWER COMPANY'S REPLY COMMENTS - 16

the Commission determines it most appropriate to accommodate a hybrid approach
leveraging available data, the Company recommends the Commission direct it to
collaborate with Staff to develop a hybrid methodology and to submit a compliance filing
within 60 days of a final order in this case, which would seek Commission approval of a
new method for determining Schedule 72's O&M charges applicable to interconnections
less than 138 kV.
Further, Idaho Power respectfully submits that IdaHydro and REC's criticism of the
Company is misplaced and misconstrued given the clear history of the Commission's
implementation of interconnection costs in avoided costs rates since the very first
implementation of PURPA in the state of Idaho in 1980 with Order No. 15746, as well as
the consistent, fair, just and reasonable implementation of Schedule 72's O&M charges
for the protection of retail customers since the implementation of Schedule 72 in 1991.
The Commission's prior decisions have appropriately implemented PURPA's
requirements that retail customers of the utility be economically indifferent as to whether
or not Idaho Power purchases power from Us or generates or purchases the power
itself, and to assure there is not an impermissible subsidy from ratepayers to the QF.
Therefore, Idaho Power respectfully requests that the Commission issue its order:
(1) finding that Modified Procedure is appropriate; (2) approving the proposed changes
to Schedule 72, as initially filed by the Company, effective January 1, 2026, or if it accepts
Staff's recommendations, in the alternative directing the Company to collaborate with
Staff to develop modified charges and to submit a compliance filing resulting from that
effort within 60 days of a Commission order, and (3) finding that the Company has
IDAHO POWER COMPANY'S REPLY COMMENTS - 17

satisfied its compliance obligation from the 2023 GRC Order No. 36042 to update the
O&M charge in Schedule 72, to reflect current operating metrics and assumptions.
Respectfully submitted this 14th day of October 2025.
DONOVAN WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 18

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 14t" day of October 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:
IPUC COMMISSION STAFF Hand Delivered
Jeffrey R. Loll U.S. Mail
Deputy Attorneys General Overnight Mail
Idaho Public Utilities Commission FAX
P.O. Box 83720 X Email -jeff.loll(a�puc.idaho.gov
Boise, ID 83720-0074
IDAHYDRO Hand Delivered
C. Tom Arkoosh U.S. Mail
Nicholas J. Erekson Overnight Mail
Arkoosh Law Offices FAX
913 W. River St., Ste. 450 X Email - tom.arkoosh(o)-arkoosh.com
P.O. Box 2900 nick.erekson(a_arkoosh.com
Boise, ID 83701 erin.cecil(a)-arkoosh.com
RENEWABLE ENERGY COALITION Hand Delivered
Irion Sanger U.S. Mail
Sanger Greene, P.C. Overnight Mail
4031 Se Hawthorne Blvd. FAX
Portland, Or 97214 X Email - irion(aD-sanger-law.com
Christy Davenport, Legal Assistant
IDAHO POWER COMPANY'S REPLY COMMENTS - 19

BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-25-22
IDAHO POWER COMPANY
ATTACHMENT NO. 1

INTERROGATORY NO. 8: Please explain whether Idaho Power accounts for
avoided O&M costs in its avoided cost methodology for PURPA pricing. If so, identify
where such accounting occurs. If not, explain why not.
RESPONSE TO INTERROGATORY NO. 8:
Idaho Power does not account for avoided O&M costs in its avoided cost
methodology for PURPA pricing because PURPA developments, which require additional
infrastructure to be built out or maintained, do not decrease the Company's O&M. To the
contrary, additional infrastructure being added to the Company's system inherently
increases its overall O&M costs.
The response to this Request is sponsored by Riley Maloney, Regulatory Policy
and Strategy Leader, Idaho Power Company.
SUPPLEMENTAL RESPONSE TO INTERROGATORY NO. 8:
Idaho Power's initial Response to Interrogatory No. 8 focused upon the fact that
Schedule 72 O&M costs are not avoided costs but are additional costs. In reviewing party
comments submitted in the case, the Company understands it did not fully answer the
question posed. Idaho Power now therefore submits the following Supplemental
Response to Interrogatory No. 8.
Both of Idaho Power's Commission-approved avoided cost rate methodologies —
the Surrogate Avoided Resource ("SAR") methodology utilized for Qualifying Facilities
("QF") that are below the published rate eligibility thresholds, and the Incremental Cost
Integrated Resource Plan ("ICIRP") methodology utilized for QF projects that are over the
published rate thresholds — contain and account for interconnection, network upgrade,
and O&M costs associated with the proxy or surrogate resource the utility is assumed to
IDAHO POWER COMPANY'S SUPPLEMENTAL RESPONSE TO IDAHYDRO'S FIRST SET OF
INTERROGATORIES AND REQUESTS FOR PRODUCTION TO IDAHO POWER COMPANY- 2

avoid in the establishment of the avoided cost rates set by those methodologies. As such,
the QF is compensated through the avoided cost rate paid to it for the avoided
interconnection and associated O&M costs of the utility.
SAR Methodology:
For the SAR methodology the surrogate avoided resource is a combined-cycle
natural gas combustion turbine. Interconnection costs, including the gen-tie, are included
in the capital cost component of the avoided cost rate methodology. Non-fuel costs,
including capital cost, fixed O&M, and variable O&M are included in the methodology and
are based on the Northwest Power and Conservation Counsel's Sixth Power Plan and
set by IPUC Order No. 30738.
Capital Cost: $1,313/kW
Fixed O&M: $14.57/kW
Variable O&M: $3.86/MWh
O&M Escalation Rate: 2.0%
ICIRP Methodology:
For the ICIRP Methodology the proxy capacity resource is a simple-cycle natural
gas combustion turbine ("SCCT"). The ICIRP methodology, rather than having capital
components set by separate Commission order as done with the SAR methodology, uses
the proxy costs from Idaho Power's acknowledged Integrated Resource Plan ("IRP).
Idaho Power's most recently acknowledged IRP is the 2023 IRP. Interconnection costs
and associated O&M, as well as the network upgrades to interconnect the project to the
Idaho Power system are included in the Ievelized cost of the SCCT proxy capacity
resource from the 2023 IRP. The values below are from Appendix C of the 2023 IRP.
Network Upgrades: $81/kW
Fixed O&M: $2.10/kW-mo.
O&M Escalation Rate: 2.60%
IDAHO POWER COMPANY'S SUPPLEMENTAL RESPONSE TO IDAHYDRO'S FIRST SET OF
INTERROGATORIES AND REQUESTS FOR PRODUCTION TO IDAHO POWER COMPANY- 3

The O&M charges from Schedule 72 are not the avoided costs of the proxy or
surrogate avoided resource, but are the incremental costs of the QFs addition to the
utility's system that are required to be paid by the QF in order to assure that the utility's
retail customers remain indifferent to, and are not harmed by the addition of the QFs
required interconnection facilities to the utility's system.
IDAHO POWER COMPANY'S SUPPLEMENTAL RESPONSE TO IDAHYDRO'S FIRST SET OF
INTERROGATORIES AND REQUESTS FOR PRODUCTION TO IDAHO POWER COMPANY-4

BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-25-22
IDAHO POWER COMPANY
ATTACHMENT NO. 2

of the utility's Commission-approved curtailment plan so as to
give special consideration to cogenerators, reservation of a
block of power to serve the cogenerator's own needs, or subtraction
of outages caused by utility curtailments from the cogenerato24s
total amount of firm power commitment in a given time frame.
The solution is not, as suggested by Potlatch, to create a power
entitlement in the customer equal to the amount of power it is
generating. This would be double counting. If one opts for the
benefits of a simultaneous purchase and sale, the two processes
are independent of one another. One cannot receive capacity
payments based on a legally enforceable obligation to deliver
power and, at the same time, retain the right to keep that power
to oneself at times of curtailment. Problems of this sort are
precisely the reason why large facilities require individually
negotiated contracts.
vIII. INTERCONNECTION AND WHEELING.
The issues of interconnection and wheeling did not
receive extensive discussion during the Commission's February and
June hearings. Nonetheless, they represent areas of significant
concern. The costing principles are straightforward enough.
Section 292.306 of the federal rules makes it the duty of the
qualifying facility to reimburse the utility for interconnection
costs on a nondiscriminatory basis with respect to other customers
having similar load characteristics. This means that the cogenerator
or small power producer is responsible for the "net increased
interconnection costs" imposed on the utility "compared to those
costs it would have incurred had it generated the energy itself
or purchased an equivalent amount" from another source. 45
Federal Register at 12217.25 Moreover, these costs include "only
24. Comments to the FERC rules note that the cogenerator
may deserve additional payments if it contracts "to forego its
own use of energy during system emergencies and
system" 45 Rederal Register at 12227rovide power to
a utility s sys
25. These costs may be assessed on a class average basis
for facilties with a design capacity of 100 KW or less. 45
Federal Register at 12230.
38

those additional interconnection expenses incurred by the utility
as a result of the purchase. " They do "not include any portion
of the interconnection costs for which the qualifyi:._, facility
has already paid through its retail rates. " Ibid. Finally,
utilities are encouraged to arrange for payment of these costs on
a reasonable amortization schedule rather than in a large lump
SUM. 45 Federal Register at 12230.
Of far greater concern is the question of whether the
qualifying facility has a right to have its power wheeled to a
utility located outside the service area where it is intercon-
nected. The FERC comments offer little guidance on this point.
They note that
There are several circumstances in which a
qualifying facility might desire that the
electric utility with which it is intercon-
nected not be the purchaser of the qualifying
facility's energy and capacity, but would
prefer instead that an electric utility with
which the purchasing utility is interconnected
make such a purchase.
45 Federal Register at 12219. The example given is an all-require-
ments utility that possesses no generating capacity of its own
and whose avoided costs, therefore, are those of its wholesale
bulk power contracts. This is an easy example, but not really to
the point. The point is that any sophisticated qualifying facility
will always desire to sell its output outside the service area of
its own utility if it can get a higher price elsewhere. In
particular, assuming that the transmission capability exists,
cogenerators and small power producers in the Northwest would
always find it to their advantage to sell to California utilities
in order to receive the higher avoided costs of those utilities.
We do not see an easy resolution of this problem. For one thing,
we do not believe that PURPA had as a goal the eradication of
state boundaries and the creation of a "value of service" pricing
mechanism whereby the utility with the highest avoided costs bids
up the price and becomes the recipient of all power available
from all cogenerators and small power producers in a given region.
For another, we believe that in times of massive curtailment due
to regional drought, Idaho ratepayers would find it unacceptable
39