20260519Petition.pdf

RECEIVED
May 19, 2026
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]
Facsimile: [phone]
Email: tom.arkooshkarkoosh.com
nick.ereksonkarkoo sh.com
Admin copy: erin.cecilgarkoosh.com
Attorneys for IdaHydro
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF ) Case No. IPC-E-26-15
IDAHYDRO FOR IDAHO POWER )
COMPANY TO REDUCE ITS ) IDAHYDRO'S PETITION TO
OPERATION AND MAINTENANCE ) UPDATE IDAHO POWER
CHARGES APPLICABLE TO SCHEDULE ) COMPANY'S OPERATION AND
72, GENERATOR INTERCONNECTIONS ) MAINTENANCE CHARGES TO
TO PURPA QUALIFYING FACILITY ) CONFORM WITH PURPA
SELLERS. )
COMES 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 hereby submits this Petition to Update Idaho Power
Company's Operation and Maintenance Charges to Conform with PURPA.
I. SUMMARY OF PETITION
This petition to update Idaho Power Company's ("Idaho Power") Schedule 72 Operation
and Maintenance ("O&M") charges upon interconnection facilities of Public Utilities Regulatory
Policy Act("PURPA") Qualifying Facilities ("QF's")to actual costs comes at the invitation of the
Idaho Public Utilities Commission("PUC" or"Commission") in Order No. 36894:
With regard to the opposition to the Company's proposed Schedule 72 changes,we
find that this docket—which was opened for the purpose of updating the inputs
used to calculate the O&M charges—is not the appropriate forum for a full-scale
challenge to the previously approved methodology. Should IdaHydro or any other
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
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party desire a full re-examination of the system average methodology, they may
petition the Commission to open a docket for that purpose. Potential replacements
to the system average framework for determining Schedule 72 O&M charges, such
as an approach based on direct-assigned actual O&M costs, should be thoroughly
reviewed with possible implications considered prior to implementation.
(Id. at 12).
IdaHydro now asks the Commission to do exactly what Order No. 36894 contemplated:
open a docket for a full re-examination of the system-average methodology Idaho Power uses to
impose Schedule 72 O&M charges on PURPA QFs.The existing methodology is unlawful because
the charges are not tied to actual excess interconnection O&M costs; the charges do not exclude
costs Idaho Power would have incurred anyway; and, the charges do not leave ratepayers
indifferent as PURPA requires. Instead, Idaho Power relies on system-wide averages and
assumptions while admittedly failing to track facility-specific actual O&M costs in any way that
would allow meaningful verification.
PURPA does not allow a utility to convert interconnections into profit centers. Federal law
permits recovery only of those interconnection costs that are incremental costs in excess of what
the utility would have incurred had it generated the power itself or purchased equivalent power
from another source.That limiting principle is the boundary of lawful recovery.But Idaho Power's
present Schedule 72 framework does not begin with actual cost,does not isolate actual excess cost,
and does not prove that the charges assessed against QFs fall within PURPA's narrow allowance.
Instead, the current state of the record demonstrates Idaho Power's Schedule 72's O&M charges
far exceed the actual costs of O&M.
The consequence is predictable. A methodology unmoored from actual cost produces
charges that bear no necessary relationship to the cost of maintaining the interconnection at issue.
Indeed, Idaho Power's current framework can yield charges so inflated that a QF may pay enough
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purported O&M over time to replace the interconnection facilities multiple times during their
useful lives. Rather than simply collecting costs, the current system over-collects hypothetical
costs under the cover of a cost-sharing formula that projects costs based on untested assumptions.
That fundamental defect is not cured by Idaho Power's inability to produce better records,because
the deliberate failure to track actual costs cannot excuse the imposition of charges untethered to
proof.
Utilities bear the burden of proving that charges are fair, just, and reasonable, both
generally and pursuant to PURPA. Idaho Power cannot carry its burden by pointing to the absence
of better records when Idaho Power chose not to keep them.A utility seeking to impose charges
must prove those charges are fair, just, reasonable, and lawful. It cannot meet that burden by
substituting averages for evidence and assumptions for accounting. If actual direct-assigned O&M
costs are more accurate (and Idaho Power's own personnel have acknowledged that actuals are
generally more accurate), then actual costs are where the analysis should start.
This Petition, therefore, asks the Commission to undertake the full review it expressly
invited. IdaHydro requests that the Commission open a docket to re-examine the system-average
methodology, require Idaho Power to justify any Schedule 72 O&M charge by reference to actual
excess interconnection costs, and thoroughly review replacement approaches, including direct-
assigned actual O&M cost methods, before permitting continued implementation of a framework
that is neither proven nor lawful.
II. HISTORICAL BACKGROUND
The Commission recited the parameters of O&M on interconnections in Order No. 15746
(1980):
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
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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. Moreover, these costs include "only 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 qualifying
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.
(Id. at 38-39).
Attention is drawn to the two limitations contained in the Federal mandate. First, the QF
may only be charged 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." (Id.). Second, interconnection costs "`do not include any portion
of the interconnection costs for which the qualifying facility has already paid through its retail
rates."' (Id.). Stated in less bureaucratic terms, QFs are responsible for extra O&M costs caused
by their interconnections, less the O&M costs embedded in the rate for electricity purchased from
the QF.
In 1991, A.W. Brown brought this issue to the attention of the Commission, which the
Commission described in Order No. 23631:
Brown contends that IPCo realizes "significant profits" by overcharging QFs on
interconnection construction and contends further that IPCo has reason to inflate
interconnection costs because IPCo's operation and maintenance (O&M) charges
are based on a percentage of interconnection costs. IPCo responds by stating that
QFs have the option of paying actual interconnection costs or estimated
construction costs. O&M charges, the Company states, are based on the average
cost of operation and maintenance of equipment and facilities provided to QFs and
not project-specific equipment costs.
Order No. 23631 concluded that "based on staff analysis," the "average cost of operation
and maintenance of equipment and facilities provided to QFs and not project-specific equipment
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costs" is the proper method. Following is the "staff analysis."
Q. What is your responsibility in this case now before the Commission?
A. My responsibility is to perform the staff analysis of financial data submitted by
Idaho Power Company (IPCo) showing the development of IPCo's rate for
Operation and Maintenance (O&M) costs.
Q. What is the purpose of your testimony?
A. The purpose of my testimony is to comment on IPCo's calculation and
methodology to determine the O&M factor used for recovering costs associated
with distribution and transmission.
Q. What are the O&M factors you are addressing?
A. I am addressing the rates for the non-utility generation, Schedule No. 72,
interconnection tariff mentioned in IPCo's application. Specifically, the rates are
0.7% for distribution and the 0.4% for transmission.
Q. What are your conclusions?
A. The calculations are reasonable and based on correct data. The methodology
used is logical and appropriate.
Q. What is the source of the data used for the calculation?
A. The data is from the books and records of IPCo as of December 31, 1989. The
books and records are kept in accordance with Federal Energy Regulatory
Commission(FERC) Uniform System of Accounts (USOA).
Q. What is the methodology used to determine the above mentioned rates?
A. The methodology is to divide distribution and transmission related O&M
expenses by IPCo's investment in associated assets. The USOA does not separate
Qualified Facilities'(QF) interconnect costs or O&M expenses from general utility
expenses of this type. Therefore some judgments were made by IPCo based on
experience(what plant in service is typically used to interconnect a QF,the relation
of USOA Accounts to QF construction and operation, and cost accounting
conventions (like relating overhead costs to appropriate cost objectives). In my
opinion those judgments were and still are reasonable.
Q. Why use the methodology described above?
A. I considered four common cost allocation methods. 1) Investment, 2) Direct
Labor, 3)Units of Production,and 4)Line Length.The method used by IPCo where
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investment is the basis for allocation,offered the best of all options. It is logical and
verifiable. It is simple to derive and to understand. It results in the most realistic
and fair allocation.
Q. Please explain the other three options and your reasoning for rejecting them.
A. Direct labor is a common basis for allocation of cost pools.An allocation factor
could be developed by dividing direct labor costs on QF facilities by total direct
labor for IPCo. Labor costs for QFs are not shown in a separate USOA account and
IPCo does not capture the specific payroll data to determine QF labor hours or
amounts. A direct labor allocation factor can not be calculated with the available
data.
Another common basis for allocation of cost pools is units of production. Units of
production in this case would be kilowatt hours generated. The factor is determined
by dividing kilowatt hours generated by QFs by total IPCo system generation. The
problem with this method is that it does not recognize that electricity flowing
through the interconnect equipment does not directly affect O&M costs. The
interconnect equipment may require O&M expense even if the QF does not
generate any power.
A third method might be to allocate O&M by dividing the length of line used for a
QF's interconnect by the number of miles of line in the IPCo system. This method
would not reflect realities of terrain, accessibility and dollars of investment.
Q. Do any other utilities you know of use a method similar to IPCo's?
A. Yes. Several other utilities operating in Idaho use a similar method for
calculating O&M rates for use in QF contracts with results similar to those of Idaho
Power.
O&M Rates Based on Investment
----------O&M Rates----------
(%per Month)
Company Distribution Transmission
------------------------- --------------- -----------------
Idaho Power Co. .7 .4
Utah Power& Light .73 .42
Pacific Power&Light .67 .35
Washington Water Power (WWP) does not have an O&M rate for QFs in
effect at this time.WWP permits QFs,on a case by case basis,to build and maintain
their own lines and interconnect subject to WWP specifications.
Q. Does this conclude your testimony?
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A. Yes, it does.
(Hattaway Direct Testimony 1:16-4:16).
As is evident from Mr. Hattaway's analysis, the reason for not using direct costs is that
Idaho Power does not record those direct costs. It was not that A.W. Brown was wrong; the
numbers just were not in the record.
Idaho Power's failure to record direct costs as allowed by FERC accounting principles
remains the case today, the only reason direct costs are not employed. Idaho Power explains its
failure to record direct costs with the canard that this is a PUC requirement. Ironically, this
requirement exists only in response to Idaho Power's request.
In IPC-E-25-22,Aubrae Sloan, finance team leader at Idaho Power, testified in deposition
that the reason Idaho Power does not track direct O&M costs per facility is that Idaho Power set
up the accounting system as it is "per IPUC directive." (Sloan Dep. 23:14-15). Ms. Sloan
acknowledged at page 27 of her deposition that the method had not been verified:
Q. I'm going to withdraw that last question. If it's never been ground-truthed and
it's only based on assumptions, we don't really know whether it's an overcharge or
undercharge; we don't know actuals?
A. We know total system actuals, not by facility. Correct.
Q.And so we don't really know whether the rate payor is indifferent?
A. I think we have a system that is a reasonable methodology to ensure that they
aren't.
Q.You're assuming the rate payor is indifferent,but we don't know; correct?
A. It is not absolute, no.
(Sloan Dep. 27:4-17).
Further, Ms. Sloan acknowledged in her deposition that accounting for actual direct
expenses would be more accurate and would allow gauging whether the ratepayers were
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indifferent:
Q. Okay. In terms of accuracy, would it be more accurate to use actual expenses
rather than assumed expenses?
A. Well, actuals are generally more accurate and they are not always feasible.
Q. But they're preferred if you could get them?
A. It just depends on who you talk to.
Q. Okay. It was suggested to me that one of the reasons that Idaho Power is not
granular using actuals in the operation and maintenance of interconnections is the
expense of the granularity. It would be feasible to include that expense as even a
line item and charge to the facility so that the rate payor remained indifferent.
Wouldn't that be a feasible way of keeping the rate payor indifferent?
A. Not based on our current systems of accountings and processes.
Q. Of course. But if we change to accounting in a granular way to actual expenses,
then the rate payor would be left indifferent?
A. Sure, if we were to do that.
(Sloan Dep. 35:8-36:3).
The history recited above matters for a simple reason: it shows that Idaho Power's current
Schedule 72 methodology was adopted not because it was proven to reflect actual excess
interconnection O&M, but because direct-cost information was not then available in the record
and Idaho Power did not separately track it out of convenience. That historical compromise does
not answer the question now before the Commission. This Petition presents the question directly:
whether a methodology built on entire system averages, assumptions, and unverified allocations
can satisfy PURPA's requirement that a QF pay only those interconnection costs that are
incremental, in excess of what the utility would otherwise incur, and not already recovered
elsewhere. The answer to that question is controlled by the governing federal standard and Idaho
law.
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III. LEGAL STANDARDS
The 1991 Order No. 15746 expressed the operating principles still in effect today. The QF
is responsible for paying interconnect costs in excess of those costs that ratepayers would otherwise
pay but for the purchase of QF energy. Applicable federal regulations specifically provide:
(7) Interconnection costs means the reasonable costs of connection, switching,
metering, transmission, distribution, safety provisions and administrative costs
incurred by the electric utility directly related to the installation and maintenance
of the physical facilities necessary to permit 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 amount of electric
energy itself or purchased an equivalent amount of electric energy or capacity from
other sources. Interconnection costs do not include any costs included in the
calculation of avoided costs.
18 CFR § 292.101 (emphasis added).
IV. RULE 53 STATEMENT
To the extent this Petition is deemed to be directed against a respondent, the respondent is
Idaho Power Company, whose Schedule 72 O&M charges and related practices are the subject of
the relief requested.
V. BURDEN OF PROOF
Under the traditional approach, it is unquestioned that the utility has the initial burden of
establishing a prima facie case for the reasonableness of its operating expenses.Boise Water Corp.
u Idaho Public Utilities Commission, 97 Idaho 832, 836-37, 555 P.2d 163, 167-68 (1976); Wash.
Water Power Co. v Idaho Pub. Utils. Comm'n, 101 Idaho 567, 576, 617 P.2d 1242, 1251 (1980).
VI. FACTS
The factual record relevant to this Petition was substantially developed in Case No.
IPC-E-25-22 through Idaho Power's Application and supporting testimony, the written comments
of Staff and intervenors, supplemental comments, written discovery, and deposition testimony of
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Idaho Power witnesses.
I. IdaHydro incorporates by reference, and also attached to the Declaration of
Nicholas J. Erekson in Support of IdaHydro's Petition to Update Idaho Power Company's
Operation and Maintenance Charges to Conform with PURPA, filed concurrently herewith, the
factual materials developed in IPC-E-25-22, including the Comments of Justin Farr for IdaHydro,
Director of Energy Strategies and expert witness for IdaHydro, the Comments of Ted Sorenson for
IdaHydro, member of IdaHydro, principal of Sorenson Engineering, and veteran hydroelectric
engineer, the Memorandum in Support of Comments for IdaHydro, The Renewable Energy
Coalition's Opening Comments, the deposition testimony of Idaho Power's designated witnesses,
Supplemental Comment ofMaHydro, MaHydro's Motion for Oral Argument and Order No. 36894.
2. Schedule 72 is not a new tariff. The Commission originally approved Schedule 72
in 1991 after Idaho Power sought a uniform schedule to govern generator interconnections rather
than continuing to negotiate those arrangements one by one.
3. In the Company's 2023 general rate case,the parties agreed that the monthly O&M
charge in Schedule 72 would be updated in a future proceeding, and that IdaHydro could pursue a
separate action before the Commission related to Schedule 72 O&M charges.
4. Following that stipulation, Idaho Power filed its Application in IPC-E-25-22,
seeking approval to update the inputs used in the existing Schedule 72 methodology. Idaho Power
proposed a monthly 0.90% rate applied to the original cost of distribution interconnection
equipment and a monthly 0.26% rate applied to the original cost of transmission interconnection
equipment.
5. Idaho Power also proposed to eliminate the prior de-levelized schedule and instead
impose levelized monthly O&M charges going forward.
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6. Riley Maloney, Regulatory Policy and Strategy Leader in Idaho Power's
Regulatory Affairs Department, provided Idaho Power's direct testimony in support of the
Application. Mr. Maloney testified that his role includes regulatory support and strategic guidance
relating to integrated resource planning, demand-side management,wildfire activities, and related
topics. (Maloney Direct Testimony 3:12-15).
7. Mr. Maloney's testimony showed that Idaho Power's proposal remained tied to the
original methodology rather than to direct-assigned actual O&M by facility. (Maloney Direct
Testimony 6:12-15). The proposal continued to derive O&M charges from overall O&M expenses
and plant investment balances rather than from measured maintenance costs associated with
specific interconnections.
8. Mr. Maloney's testimony also identified modifications Idaho Power made to the
updated calculation, including exclusion of property taxes, exclusion of FERC Account 565
expenses,and accounting changes related to payroll taxes,while still retaining the broader system-
average framework. (Maloney Direct Testimony 11:12-25; 12:1-25).
9. Staff likewise treated Idaho Power's filing as an update to the existing
methodology, not as a transition to actual facility-specific O&M. Staff recommended further
refinement, including greater voltage specificity and weighting by QF interconnection capacity.
(Comments of the Commission Staff).
10. Justin Farr, Director of Energy Strategies and expert for IdaHydro, developed the
factual record concerning the disconnect between Idaho Power's system-average methodology and
the actual character of many QF interconnection facilities. Mr. Farr explained that PURPA permits
recovery only of incremental interconnection costs above what the utility would have incurred to
interconnect an avoided-cost resource. (Comments of Justin Farr for IdaHydro).
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11. Mr. Farr further explained that Idaho Power's proposed Schedule 72 charges are
based on the total cost of QF interconnection facilities and system-wide O&M ratios rather than
on incremental interconnection costs as defined by federal law. (Id.).
12. Mr. Farr also described the physical simplicity of many QF interconnection
facilities, stating that many consist of only a few poles, wire, a recloser or automated switch,
metering equipment, and a blade disconnect, and that such equipment requires very little
maintenance and can operate for years without maintenance at all. (Id.).
13. Mr. Farr quantified the practical effect of Idaho Power' s proposed rates,
explaining that the proposed Schedule 72 charges would require some QFs to pay O&M amounts
sufficient to equal or exceed the original installed cost of the interconnection facilities within a
fraction of their useful lives. (Id.).
14. Ted Sorenson,member of IdaHydro,principal of Sorenson Engineering, and a civil
engineer with decades of hydroelectric design and operating experience, supplied additional
factual evidence from the perspective of a designer, owner, and operator of numerous small hydro
facilities. Mr. Sorenson stated that typical four-pole interconnections commonly cost between
$140,000 and $180,000 to construct, are reliable and stable, and often last 20 to 30 years or more
with little active work or preservation. (Comments of Ted Sorenson for IdaHydro).
15. Mr. Sorenson further stated that other utilities use materially different approaches,
including billing actual O&M as incurred, charging a one-time O&M fee, or allowing the project
owner to operate and maintain the interconnection itself, and that Idaho Power's formula does not
accurately measure or approximate the actual O&M cost of four-pole PURPA interconnections.
(Id.).
16. The Renewable Energy Coalition likewise developed facts showing that Idaho
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Power's avoided-cost methodology does not compensate QFs for interconnection O&M associated
with Idaho Power's avoided generation resource, and that if such avoided-cost pricing does not
compensate the QF for that component, then the QF should not also be separately charged those
same categories of interconnection O&M. (Renewable Energy Coalition's Opening Comments).
17. The supplemental factual record was further developed through the depositions of
Idaho Power's designated Idaho representatives Andres Delgado, Riley Maloney, and Aubrae
Sloan, which IdaHydro relied upon in its Supplemental Comments.
18. Andres Delgado, Assistant Consultant Engineer at Idaho Power, testified that he
has worked for Idaho Power for about 12 years, all in planning, including distribution planning,
system planning, and support for regulatory cases. (Delgado Dep. 6:19-25; 7:1-25; 8:1-7). He
testified that, in his current role, he supports Idaho Power's planning groups and contributes
planning inputs to dockets involving interconnection costs and avoided-cost modeling. (Id.).
19. In his deposition, Andres Delgado testified that Idaho Power cannot identify any
specific place in the SAR or ICIRP models where interconnection O&M is separately isolated or
quantified, and that Idaho Power cannot identify a specific amount of interconnection O&M
included in avoided-cost pricing. (Delgado Dep. 13:21-14:12; 14:21-15:11; 17:12-25).
20. Mr. Delgado further testified that Idaho Power did not conduct an independent
study or quantitative analysis to determine how much interconnection O&M is embedded in
avoided-cost rates, and that without a breakdown of that amount, Idaho Power cannot compare
what is allegedly included in avoided-cost pricing with what is later charged under Schedule 72.
(Id.). When asked again, he confirmed:
Q: •••we don't know whether the amount under Schedule 72 is greater than the amount that
was included under the avoided cost modeling or whether it's less than; correct?
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A. Correct.
(Delgado Dep. 19:11-15).
21. Similarly, Riley Maloney, in his deposition, admitted that Idaho Power does not
differentiate interconnection O&M from broader system O&M, but instead treats those costs as
part of the same larger pool: "So we do not differentiate interconnection O&M to system O&M;
it's all one in the same." (Maloney Dep. 19:11-12). He further admitted that Idaho Power has not
validated its proportional model against actual interconnection maintenance experience and does
not know whether the Schedule 72 methodology over-collects, under-collects, or accurately
reflects actual interconnection O&M. (Maloney Dep. 35:3-24).
22. Aubrae Sloan, Finance Team Leader at Idaho Power, testified that she manages
Idaho Power's financial accounting and financial reporting teams. (Sloan Dep. 6:11-12). She
further testified that her team manages the accounting process from generator interconnection
through the actual power purchase agreement, including calculation of payments to energy
suppliers and the Schedule 72 O&M charges. (Sloan Dep. 7:1-18).
23. In her deposition, Aubrae Sloan confirmed that Idaho Power does not track
interconnection O&M on a facility-specific basis, does not maintain work-order or accounting
mechanisms that isolate interconnection-specific O&M from its current system,and instead knows
only aggregated system actuals rather than actuals by facility. (Sloan Dep. 23:1-22).
24. Ms. Sloan further testified that actual expenses are generally more accurate than
assumed expenses,that Idaho Power's current accounting system could be changed if the Company
chose to implement a new system to track actual interconnection O&M by facility, and that the
current methodology has not been ground-truthed at the facility level. (Sloan Dep. 35:8-36:3).
25. The deposition record also established that Idaho Power does not know whether the
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current Schedule 72 methodology leaves ratepayers truly indifferent in any absolute sense
(Maloney Dep. 35:3-24; Sloan Dep. 27:4-17),because the Company does not know actual facility-
level interconnection O&M and does not compare that actual experience to what is charged.
26. The record further showed that the current Schedule 72 methodology can produce
charges that substantially exceed any rational relationship to actual interconnection maintenance
cost,including recovery levels sufficient to replace interconnection facilities multiple times during
their useful lives. (See e.g., Comments of Justin Farr for IdaHydro,pp. 3-4; Sloan Dep. 34:11-23).
27. This Petition is based on that developed record and seeks the full re-examination
the Commission invited: whether Idaho Power's current Schedule 72 O&M charges are tied to
actual excess interconnection cost,whether they exclude costs Idaho Power would otherwise incur,
and whether the existing methodology can continue to stand under PURPA.
VII. ARGUMENT
A. The question is not how long Schedule 72 has existed, but whether Idaho Power
can prove the charges it imposes today comply with PURPA7s excess-cost
limitation and are fair,just, and reasonable.
In Order No. 36894, the Commission held that the prior Schedule 72 update docket "was
not the appropriate forum for a full-scale challenge to the previously approved methodology," and
further stated that if IdaHydro or another party desired"a full re-examination of the system average
methodology, they may petition the Commission to open a docket for that purpose." Order No.
36894 at 12. The Commission also specifically identified "direct-assigned actual O&M costs" as
a potential replacement approach that should be reviewed before implementation.Id. This Petition
is not an attempt to relitigate the previous docket. Rather, it is to open the separate docket that the
Commission itself invited.
It is most likely that Idaho Power will try to recast this Petition as an attack on settled
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history rather than a challenge to present lawfulness. But Order No. 36894 forecloses that
argument. The Commission did not say the methodology was immune from review. It said the
review had to occur in a different proceeding. This is that proceeding. The question now is not
whether the current Schedule 72 methodology has been around a long time. The question is
whether Idaho Power can prove, on this record, that the charges it imposes today conform to
PURPA's limitation to excess interconnection costs and are fair,just, and reasonable.
B. PURPA permits recovery only of excess interconnection costs, not average system
costs untethered to actual interconnection expense.
The Commission settled the governing rule decades ago: a QF may be charged only the net
increased interconnection costs above what the utility would otherwise have incurred absent the
QF purchase. In Order No. 15746, the Commission recognized that a qualifying facility is
responsible only for the "net increased interconnection costs" imposed on the utility as compared
to those costs the utility would have incurred had it generated the energy itself or purchased an
equivalent amount from another source. The Commission further recognized that recoverable
interconnection costs include "only those additional interconnection expenses incurred by the
utility as a result of the purchase" and do "not include any portion of the interconnection costs for
which the qualifying facility has already paid through its retail rates."Id.
That standard contradicts Idaho Power's current methodology. Schedule 72 does not start
with actual interconnection O&M. It does not isolate excess cost. It does not identify what Idaho
Power would have otherwise incurred. And it does not demonstrate that the charges assessed
against QFs exclude costs already borne elsewhere in the system.
Instead, Idaho Power uses a system-average framework that smears general transmission
and distribution expense across QFs without proving that the resulting number reflects the actual
incremental burden caused by any given interconnection.A proxy is not proof.An average is not
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
MAINTENANCE CHARGES TO CONFORM WITH PURPA—Page 16

evidence.Administrative ease is not a substitute for compliance with federal law.
PURPA's command is both comparative and limiting. It does not ask whether Idaho Power
has devised a formula that produces a charge. Instead, it asks whether the charge reflects costs in
excess of what the utility would have otherwise incurred but for the QF interconnection. That
requires a demonstrable connection between the amount collected and the actual excess cost
imposed. A methodology, like Idaho Power's, that never identifies facility-level O&M, never
separates direct interconnection expense from broader system expense,and never tests whether the
result leaves ratepayers indifferent is not merely imperfect. Rather, such a system is structurally
incapable of satisfying PURPA's standard.
That defect is not cured by age. The fact that a system-average method was tolerated when
direct-cost data were not available does not transmute approximation into law. The controlling
legal principle has not changed. Idaho Power still may recover only interconnection costs that are
incremental, excess, and not otherwise embedded in rates. If its chosen accounting system cannot
prove that its Schedule 72 charges fall within that narrow category,then the charges have not been
justified. Importantly,when a utility cannot prove that its charge is confined to lawful excess cost,
the Commission should not permit the utility to collect it.
C. Idaho Power bears the burden of proof, and it cannot carry that burden with
assumptions in place of evidence.
A utility that seeks to impose charges must prove those charges are fair,just, reasonable,
and lawful. That burden rests with Idaho Power. It is not enough for Idaho Power to say it has a
methodology. It must show that the methodology produces a lawful charge. Here, it cannot. Idaho
Power does not track actual facility-level O&M for QF interconnections. It knows only system
totals, not the actual costs associated with a given interconnection. Without that information, it
cannot prove that any particular Schedule 72 charge reflects actual excess interconnection cost
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
MAINTENANCE CHARGES TO CONFORM WITH PURPA—Page 17

rather than a generalized allocation of broader system expense.
Idaho Power's own testimony confirms the defect. Ms. Sloan admitted that Idaho Power
knows "total system actuals,not by facility," (Sloan Dep. 27:9) and when pressed whether, absent
facility-level data, Idaho Power can truly know whether the ratepayer is indifferent, she conceded:
"It is not absolute, no." (Sloan Dep. 27:17). She further acknowledged that "actuals are generally
more accurate,"(Sloan Dep. 35:11)and agreed that if Idaho Power changed to granular accounting
for actual expenses, the ratepayer could be left indifferent (Sloan Dep. 36:3).1 Those admissions
strip away the pretense that the present Schedule 72 framework is proven. It is not proven; it is
assumed.And assumption is not evidence.
That is fatal to Idaho Power's position. PURPA does not permit the utility to charge first
and justify later. Nor does it permit Idaho Power to excuse its inability to prove the lawfulness of
its charges by pointing to its own accounting choices. If Idaho Power has elected to maintain its
books in a way that obscures actual interconnection O&M,that is not a defense.That is the problem
this Petition asks the Commission to correct.A utility cannot satisfy its burden of proof by hiding
the numbers and then insisting the formula must therefore suffice.
D. It is not enough for Idaho Power to show what it books or charges itself for system
O&M; it must prove that the Schedule 72 charges are reasonable, excess, and
lawfully attributable to QF interconnections.
Under the traditional approach, the utility bears the initial burden of making a prima facie
showing that its operating expenses are reasonable. Boise Water Corp. a Idaho Pub. Utils.
Comm'n, 97 Idaho 832, 555 P.2d 163 (1976). As the Idaho Supreme Court later explained, mere
proof that an expense was actually incurred does not, by itself, establish reasonableness. Wash.
' These cost numbers are not unknowable.Ted Sorensen's undisputed testimony is that: (1)utilities other than Idaho
Power charge"O&M as it is incurred,"(Comments of Ted Sorenson for IdaHydro,¶6);(2)"...other utilities can and
do record and bill for Schedule-72-type expenses," (Id. ¶ 14); and (3) "...PacifiCorp charges actual operation and
maintenance costs for PURPA plants if and when charges are incurred."(Id. ¶ 11).
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
MAINTENANCE CHARGES TO CONFORM WITH PURPA—Page 18

Water Power Co. a Idaho Pub. Utils. Comm'n, 101 Idaho 567, 576, 617 P.2d 1242, 1251 (1980)
("In the case of payments to an affiliate,moreover,unlike in the case of payments to a non-affiliate,
a mere showing of actual incurrence of the expense does not establish a prima facie case of
reasonableness."). Thus, it is not enough for Idaho Power to show that it generally bills a portion
of what it charges itself for O&M, it must show the charges to the QF are reasonable.
Idaho Power cannot satisfy its burden merely by pointing to the fact that it books O&M
expenses on its own transmission and distribution system and then repackages a slice of those
booked system expenses into a Schedule 72 charge. The question is not whether Idaho Power
incurs O&M somewhere on its system. Of course it does. The questions are whether the particular
charges imposed on a PURPA QF are reasonable, whether they reflect only the excess
interconnection O&M attributable to that QF, and whether they exclude costs Idaho Power would
have incurred anyway. On those questions, a system ledger is not enough.
That is because Schedule 72 is not a retail rate spread across Idaho Power's customer base.
It is a targeted charge imposed on a discrete class of PURPA interconnections. Once Idaho Power
singles out QFs for a separate O&M charge, it must do more than show that it incurs broad O&M
expense as part of operating its overall system. It must show a lawful connection between the
charge and the cost. It must show that the charge reflects interconnection-related O&M rather than
ordinary system O&M. It must show that the charge is incremental rather than embedded.And it
must show that the charge exceeds what Idaho Power would have otherwise incurred absent the
QF purchase.Without those additional showings, Idaho Power is not proving reasonableness. It is
merely relabeling its own internal accounting.
This distinction matters here because Idaho Power's methodology does not begin with
actual interconnection work performed on QF facilities. It begins with what Idaho Power books to
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
MAINTENANCE CHARGES TO CONFORM WITH PURPA—Page 19

itself for the operation of its broader transmission and distribution system. It then layers in
administrative and general expense, derives a system-average ratio, and applies that ratio to the
original investment in QF interconnection facilities. That process may produce a number, but a
number is not a prima facie case. The resulting charge remains unproven unless Idaho Power can
demonstrate that the amount collected bears a reasonable relationship to actual interconnection
O&M and to PURPA's excess-cost limitation.
Nor can Idaho Power avoid that burden by arguing that its internal books are kept in
accordance with accepted utility accounting conventions for non-PURPA applications.Accounting
convention does not answer the ratemaking question. Books are records. They are not proof of
legal entitlement. The fact that Idaho Power records broad O&M expenses in its own accounts
does not establish that those same expenses may be shifted to PURPA QFs through a separate tariff
charge. Still less does it establish that such charges are limited to excess interconnection costs.
A utility may keep its books one way for its own purposes and still fail to prove that a charge
extracted from a third party is just and reasonable.
This is where Idaho Power's "proof' fails. It does not track actual facility-level O&M for
QF interconnections.'It does not identify which booked system expenses were actually caused by
a given QF interconnection. It does not separate the expense of maintaining simple QF
interconnection facilities from the expense of maintaining the utility's broader network.It does not
show what portion of the charge reflects costs the utility would have incurred in any event.And it
does not show what portion of the assessed amount is genuinely "in excess" under PURPA.
In short, Idaho Power has evidence that it spends money on its system. But, it does not have proof
that the Schedule 72 charge imposed on QFs is the lawful measure of those expenditures.
z The record clearly shows that FERC allows plant level accounting,though Idaho Power chooses not to keep records
at the facility level of detail.(Sloan Dep.25:1-25;26:1-25;27:1-10).
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
MAINTENANCE CHARGES TO CONFORM WITH PURPA—Page 20

The law requires more. Once Idaho Power seeks to impose a specialized O&M charge on
PURPA QFs, it must justify that charge with something more than its own general bookkeeping.
It must supply a factual basis demonstrating reasonableness, causation, and compliance with
PURPA's excess-cost limit. Because Idaho Power cannot do so by merely repackaging what it
charges and books to itself for the O&M of its own system,the present Schedule 72 methodology
cannot stand.
E. The outcomes produced by Schedule 72 confirm that the present methodology is
unreasonable and untethered to cost causation.
The most revealing indictment of the current methodology is the result it produces.A lawful
O&M charge should bear some rational relationship to the actual cost of maintaining the
interconnection facility at issue. Schedule 72 does not. As IdaHydro has shown, the existing
framework can impose charges so inflated that a QF may pay enough in purported O&M over time
to replace the interconnection facilities multiple times during their useful lives. On its face, this
appears less like maintenance recovery and more like overcollection.
Idaho Power's own witnesses have admitted the system has never been ground-truthed by
facility. That means Idaho Power does not know whether the methodology overcharges,
undercharges, or incidentally lands somewhere near the truth in any given case. A tariff that
operates in ignorance of its own accuracy cannot be defended as "reasonable"merely because it is
administratively convenient. Reasonableness requires a factual basis. Here, the factual basis is
missing, and the outcomes that can be observed are inconsistent with lawful cost recovery.
F. The Commission should require a methodology tied to actual excess
interconnection O&M, with any legitimate overhead transparently assigned and
justified.
The requested remedy follows directly from the defect. The Commission should open the
docket and conduct the full re-examination of the system-average methodology that Order No.
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
MAINTENANCE CHARGES TO CONFORM WITH PURPA—Page 21

36894 expressly contemplated. It should hold that Idaho Power may not continue to impose
Schedule 72 O&M charges unless those charges are justified by a methodology that identifies
actual interconnection O&M and isolates the portion that is in excess of what the utility would
otherwise incur absent the QF interconnection.
At a minimum, Idaho Power should be required to develop and maintain accounting
sufficient to track direct-assigned actual O&M by facility, while separately identifying any
legitimate shared overhead administrative costs associated with interconnection maintenance and
justifying the method by which such overhead is allocated. That approach is consistent with the
record evidence that actuals are more accurate and that a granular system could better test ratepayer
indifference.
The Commission should not permit continued collection under a methodology that Idaho
Power cannot prove is lawful. The Company's own admissions establish that it does not know
actual facility-level O&M,does not know whether actual ratepayer indifference has been achieved
in any given case, and does not know whether the Schedule 72 charge reflects true excess cost
rather than a generalized system allocation. That is not enough.A utility that wishes to collect an
O&M charge from PURPA QFs must prove the charge is tied to actual, excess, and reasonable
interconnection expense. Because Idaho Power cannot do that on this record, the Commission
should require a new methodology that can.
VIII. CONCLUSION
For the foregoing reasons, IdaHydro respectfully requests that the Commission do what it
invited in Order No. 36894 and open a docket for a full re-examination of Idaho Power's
Schedule 72 O&M methodology. The present framework rests on system averages, assumptions,
and accounting convenience, not proof of actual excess interconnection cost. PURPA permits
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
MAINTENANCE CHARGES TO CONFORM WITH PURPA—Page 22

recovery only of those interconnection costs that are incremental, in excess of what the utility
would otherwise incur, and not already embedded elsewhere in rates. Idaho Power has not shown
that its current Schedule 72 charges satisfy that standard. On this record, it cannot.
Accordingly, IdaHydro respectfully requests that the Commission:
1. Open a new docket for the full re-examination of Idaho Power's Schedule 72 O&M
methodology, as contemplated in Order No. 36894;
2. Determine that Idaho Power may not continue to justify Schedule 72 O&M charges
solely through a system-average methodology;
3. Require Idaho Power to develop and maintain accounting sufficient to identify
direct-assigned actual O&M costs by facility, together with any legitimate shared
administrative or overhead costs associated with interconnection maintenance, and
to justify any allocation of such shared costs;
4. Require that any future Schedule 72 O&M charges be tied to actual excess
interconnection costs, consistent with 18 C.F.R. § 292.101 and the principles
recognized by this Commission in Order No. 15746; and
5. Grant such other and further relief as the Commission deems just and proper.
DATED this 191h day of May 2026.
ARKOOSH LAW OFFICES
Nicholas J. Erekson
Attorney for MaHydro
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
MAINTENANCE CHARGES TO CONFORM WITH PURPA—Page 23

CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 19th day of May 2026, I served a true and correct copy
of the foregoing document(s) upon the following person(s), in the manner indicated:
IDAHO PUBLIC UTILITIES U.S. Mail, Postage Prepaid
COMMISSION: Overnight Courier
Commission Secretary Hand Delivered
Idaho Public Utilities Commission Via Facsimile
11331 W. Chinden Blvd., Building 8, X_ E-mail:
Suite 201-A (83714) secretgakpuc.idaho.gov
P.O. Box 83720
Boise, ID 83720-0074
IDAHO PUBLIC UTILITIES U.S. Mail, Postage Prepaid
COMMISSION STAFF: Overnight Courier
Jeff Loll Hand Delivered
Deputy Attorney General Via Facsimile
Idaho Public Utilities Commission X_ E-mail:
11331 W. Chinden Blvd., Building 8, jeff.loll(a�puc.idaho.gov
Suite 201-A (83714)
P.O. Box 83720
Boise, ID 83720-0074
IDAHO POWER:
Donovan E. Walker U.S. Mail, Postage Prepaid
IPC Dockets Overnight Courier
Idaho Power Company Hand Delivered
1221 W. Idaho Street(83702) Via Facsimile
P.O. Box 70 X E-mail:
Boise, ID 83707 dwalker(cidahopower.com
dockets&idahopower.com
Nicholas J. Erekson
IDAHYDRO'S PETITION TO UPDATE IDAHO POWER COMPANY'S OPERATION AND
MAINTENANCE CHARGES TO CONFORM WITH PURPA—Page 24