20260305Final_Order_No_36956.pdf

Office of the Secretary
Service Date
March 5,2026
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER ) CASE NO. IPC-E-25-31
COMPANY'S APPLICATION FOR )
APPROVAL OR REJECTION OF AN ) ORDER NO. 36956
ENERGY SALES AGREEMENT WITH )
FOSSIL GULCH WIND PARK, LLC FOR )
THE SALE AND PURCHASE OF )
ELECTRIC ENERGY FROM THE FOSSIL )
GULCH WIND PARK )
On September 30, 2025, Idaho Power Company ("Company") applied to the Idaho Public
Utilities Commission ("Commission") requesting approval of an energy sales agreement with
Fossil Gulch Wind Park, LLC ("Seller") for energy generated by the Fossil Gulch Wind Park
("Facility") in Twin Falls County, Idaho ("Proposed ESA") ("Application").
On October 22, 2025, the Commission issued a Notice of Application and Notice of
Modified Procedure establishing written comment deadlines. Order No. 36814. Commission Staff
("Staff') filed comments to which the Company replied. The Commission received Do public
comments.
Having reviewed the record in this case, we now issue this Final Order approving the
Proposed ESA.
BACKGROUND
In 2004, the Commission approved the original energy sales agreement ("2004
Agreement"), allowing the Company to purchase Facility generation from the Seller. Order No.
29630. The 2004 Agreement had a term of 20 years. Id. at 1.
THE APPLICATION
The 2004 Agreement expired on September 30, 2025. Application at 2. According to the
Company, despite its best efforts to execute a replacement agreement with sufficient time for
regulatory review and approval prior to the expiration of the 2004 Agreement,largely due to delays
caused by a change in the Seller's ownership, the Proposed ESA was not signed until September
26, 2025. Application at 2-4. Because the 2004 Agreement expired before approval of the
Proposed ESA,the Company entered an interim agreement("Interim Agreement")with the Seller.
Id. at 4-5. Under the Interim Agreement the Company bought generation from the Facility at the
ORDER NO. 36956 1

Surplus Energy Price contained in the Proposed ESA until the Commission ruled on the
Application concerning the new agreement. Id. at 5.
The Company stated that the Proposed ESA complies with the Public Utility Regulatory
Policies Act of 1978 ("PURPA"), Federal Energy Regulatory Commission regulations, and prior
Commission orders regarding PURPA implementation. Id. at 4. The Proposed ESA has a term of
two years and includes negotiated avoided cost rates based on the Commission-approved
incremental cost integrated resource plan("ICIRP")pricing methodology for a wind project above
the published rate eligibility cap of 100 kilowatts ("kW"). Id. at 4, 6. The Proposed ESA also
includes Commission-ordered wind integration charges. Id. at 4.
The Company requested that the Commission approve or reject the Proposed ESA and
Interim Agreement.Id. at 13. If approved,the Company also sought a Commission declaration that
all payments made to the Seller for purchases of energy would be allowed as prudently incurred
expenses, allowing the Company to recover such costs through ratemaking.Id.
STAFF COMMENTS
Staff reviewed the Application and its attachments, including the Proposed ESA and the
Interim Agreement. Staff Comments at 2. Staff's analysis was primarily focused on contractual
terms concerning the avoided cost rates; the Maximum Capacity Amount; shortfall damages; the
Surplus Energy Price; potential modifications to the Facility; and Wind Energy Production
Forecasting. Id. Staff recommended that the Commission approve the Interim Agreement and the
Proposed ESA, while deeming all Company payments made to the Seller under such agreements
as prudently incurred expenses for ratemaking purposes—subject to a compliance filing
implementing modifications to the Proposed ESA, as described below.
First, Staff believed the Company and Seller should recalculate the avoided cost of energy
and the avoided cost of capacity. Id. The calculations would use the AURORA model from the
Company's 2025 Integrated Resource Plan("IRP"),rather than that of the 2023 IRP.Id. Staff also
contended the calculations should be based on the Facility's updated generation profile, as
determined by the new ownership group.Id. at 2, 5. Staff also stated that resource changes of high
certainty as of the date on which the parties executed the Proposed ESA, September 26, 2025,
should be reflected in the avoided cost of energy calculation.Id. at 2.
Staff next stated that the contract modifications contained in the recommended compliance
filing should make adjustments to the Maximum Capacity Amount. Id. According to Staff, the
ORDER NO. 36956 2

Maximum Capacity Amount should either be changed to 10 megawatts ("MW") to match the
original capacity size, or the agreement should adopt:
...a bifurcated rate that includes a rate of avoided cost of energy, avoided cost of
capacity, and wind integration charges for hourly generation up to 10 megawatt
hours ("MWhs") and a second rate of avoided cost of energy and wind integration
charges without avoided cost of capacity for any hourly generation above 10
MWhs,until the first capacity deficit date.
Id. A single rate of avoided cost of energy, avoided cost of capacity, and wind integration charges
would be applied after the first capacity deficiency date. Id. Staff believed the capacity deficiency
date used should initially be the authorized capacity deficit date as of September 26, 2025, which
would subsequently be updated to reflect all resource changes of high certainty on the Company's
system as of September 26, 2025. Id. at 2-3. Staff represented that this approach to determining
the Maximum Capacity Amount is consistent with prior Commission orders. Id. at 7-8.
Additionally, Staff thought the compliance filing should correct the calculation description
in Article 6.4.4 so that shortfall damages are based on 85% of the Calculated Net Energy Amount;
update the definition of Surplus Energy to correspond with the parties' intention; remove the
modification language included in Appendix B; and correct the error in Appendix E.Id. at 3, 10-
11.
COMPANY REPLY COMMENTS
While the Company generally agreed with Staff's position that it would be preferable to
use the most recently filed IRP to calculate the avoided cost of energy and the avoided cost of
capacity, it noted that, with the exception of gas price and load forecasts, the Company has
historically based ICIRP pricing on the most recently acknowledged IRP. Company Reply
Comments at 2. The Company stated that it was not opposed to using Staff's recommendation,but
it requested the Commission issue a clarification for current and future ICIRP pricing.Id. at 4.
The Company was also not opposed to Staff's other recommendations concerning the
avoided cost of energy and capacity.Id. However, the Company warned that continually updating
resource changes with a high degree of certainty and pricing based on the facility's updated
generation profile could cause delays and pricing disputes.Id. The Company requested that, if the
Commission implements these recommendations,it do so in an unambiguous manner that provides
clarity to the Company and developers.Id.
ORDER NO. 36956 3

The Company had no objection to Staff s remaining recommendations to: either reduce the
Maximum Capacity Amount to 10 MW or use a bifurcated rate structure for generation above 10
MW; correct the calculation description in Article 6.4.4 so that shortfall damages are based on
85%of the Calculated Net Energy Amount;update the definition of Surplus Energy to correspond
with the parties' intention; remove the modification language included in Appendix B; and correct
the error in Appendix E. Id. at 5. However, the Company noted that Seller agreement is necessary
before any contractual changes.Id. at 6.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-502 and 61-
503. 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. The Commission also has authority under PURPA and Federal Energy
Regulatory Commission ("FERC") regulations to set avoided cost rates, to order electric utilities
to enter fixed-term obligations for the purchase of energy from QFs,and to implement FERC rules.
The Commission may enter any final order consistent with its authority under Title 61 and PURPA.
Having reviewed the record,including the Company's Application,the Proposed ESA, and
the parties' written submissions,the Commission finds it reasonable to approve the Proposed ESA
and Interim Agreement, subject to the Company's and Seller's agreeance to the modifications
described below, and to deem all payments the Company has made or will make to the Seller under
the agreements as prudently incurred expenses for ratemaking purposes.
The Company and Seller shall recalculate the avoided cost of energy and the avoided cost
of capacity. The calculations will use the AURORA model from the Company's 2025 IRP.1 The
calculations shall also be based on the Facility's updated generation profile. Additionally,resource
changes of high certainty as of the date on which the parties executed the Proposed ESA,
September 26, 2025, should be reflected in the avoided cost of energy calculation.
In reestablishing the Maximum Capacity Amount,the Company and Seller have the option
to (1) set the amount at the original 10 MW or(2) adopt the bifurcated rate design described in the
above section of this Order concerning Staff s comments.
'As requested,the Commission clarifies that,moving forward,the Company should use its most recently filed IRP to
determine the avoided cost of energy and the avoided cost of capacity for ICIRP pricing.
ORDER NO. 36956 4

Finally, the Company and Seller shall correct the calculation description in Article 6.4.4,
making shortfall damages based on 85% of the Calculated Net Energy Amount; update the
definition of Surplus Energy by removing Item 1 of the definition; remove the modification
language included in Appendix B; and correct the error in Appendix E by replacing"item d"with
"item 4."
Should the Company and Seller agree to the modified terms, the Company shall submit a
compliance filing containing an updated ESA reflecting these modifications.
ORDER
IT IS HEREBY ORDERED that the Proposed ESA and the Interim Agreement are
approved—subject to the Company submitting a compliance filing containing an updated ESA that
incorporates the modifications described above—and that all payments for energy and capacity
under the agreements are deemed 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 of 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 51h day of
March 2026.
EDWARD LODGE, PR DENT
R. HAMMOND IR., COMMISSIONER
DAYN H IE, COMMISSIONER
ATTEST:
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M ica a ' s- chez
Commission Secretary
I:\Lega1\ELECTRIC\IPC-E-25-31_Fossi1Gu1chESA\orders\IPCE2531_FO_jl_.doex
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