2001419-Milner_dh.doc

MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
LOUANN WESTERFIELD
BILL EASTLAKE
RANDY LOBB
LISA NORDSTROM

FROM:

DATE: APRIL 19, 2001

RE: IDAHO POWER’S INFORMAL REQUEST OF THE COMMISSION TO
SUPPORT ITS TWO FERC HYDRO LICENSING FILINGS

Yesterday Idaho Power informally asked me whether the Commission might be supportive of the Company’s two recent FERC filings to amend the operations of the Twin Falls and Milner dams. In the Twin Falls filing the Company requests authority to discontinue its aesthetic flows at Shoshone Falls. Idaho Power calculates that it spills about 310 cfs at the Falls which represents 3.24 MW of lost generation. Article 410 of the Twin Falls license provides that the
average flow of 300 cfs required during peak viewing time may be temporarily modified if required by operating emergencies beyond control of the licensee or for short periods upon agreement of the licensee, the Bureau of Land Management, the Idaho Department of Parks and Recreation, and the Idaho State Historic Preservation Officer.

Turning to the second FERC filing, Idaho Power requests FERC authority to discontinue flows in the “bypass reach” at its Milner Dam. Article 407 of the Company’s Milner license provides that
the licensee shall discharge from Milner Dam a target flow of 200 cfs as measured at the Milner gauge located in the bypass reach. The licensee shall lease water from the Idaho water bank and/or make releases from upstream storage controlled by the licensee to provide the necessary flow to achieve the 200-cfs target. The main powerhouse shall not operate during any time the target flow is not met. The target flow may be temporarily reduced if required by operating emergencies beyond the control of the licensee or for short periods upon mutual agreement between the licensee and the Idaho Department of Fish & Game.

The Company estimates that discontinuing the bypass flow for one year would achieve cost savings of between $2.4 to $4.2 million. Approximately 75% of that savings would flow to ratepayers.
In both cases, the Company requests a one-year waiver of the respective license articles.
COMMENTS FILED WITH FERC
Twin Falls Comments. In response to Idaho Power’s Twin Falls filing, the Company received supporting comments from: BLM, Twin Falls County, and the State of Idaho. Agencies included in the State of Idaho’s comments include: Parks and Recreation, DEQ, Fish and Game, and DWR. In the State’s comments, it recommended that the Idaho Power’s request be granted. Idaho recognized that “poor water conditions unprecedented with power market conditions may result in the need for operational changes at the Twin Falls project. It is the State of Idaho’s understanding that, at the conclusion of the one-year period, the terms of license article 410 shall be reinstated.” Idaho Comments at 5.
Idaho Rivers United and American Rivers objected to Idaho Power’s filing. The conservation groups objected to the Company’s filing on procedural and substantive grounds. The procedural objection was that FERC should have used a 30-day comment period instead of a 14-day comment period. Comments at 3.
Turning to the substantive comments, the conservation groups acknowledged that Idaho and the rest of the Northwest is facing a serious draught in the coming year. “However, those facts in and of themselves do not inevitably lead to the conclusion that Idaho Power is facing a serious supply shortfall. The western energy crisis is primarily a financial crisis, and Idaho Power presents [no] evidence to support its claim that it is facing a power shortage.” Comments at 3. The Groups maintain that Idaho Power’s current IRP indicates that it will be able to meet its load this year even with low water.
The Groups also assert that if the Company is truly facing shortfalls, “it is incumbent upon Idaho Power to examine whether it can get more out of its projects without eliminating environmental protections or being excused from licensed terms.” Comments at 5. The Groups question whether the Company’s request should be approved given the small amount of power savings at issue. In particular, the Groups suggest that the Company’s alleged shortfall “could easily be made up through efficiency measures.” Id. For example, the Company could reinstitute DSM programs. “Idaho Power has taken no steps to ensure greater efficiency and conservation among its [non-irrigation or large industrial] customers.”
Milner. In the Milner case, Jerome County, the City of Jerome, Twin Falls County and the State of Idaho supported the Company’s request. The Company’s request was opposed by Idaho Rivers United, American Rivers, and by American Whitewater for reasons similar to those mentioned above in the Twin Falls case.
In addition to these three conservation groups, BLM indicated that it “cannot endorse this proposed action without further disclosure of the potential impacts and appropriate mitigation measures.” U.S. Fish & Wildlife Service also opposed Idaho Power’s request for the Milner project. The service characterized the Milner license article as Idaho Power’s acceptance that future operations of the Milner project requires 200 cfs of flow
to preserve and protect aquatic resources downstream at a very minimal level.…This 200 cfs flow is not spill, but is rather, run through a powerhouse at the dam, albeit at a lesser head than if it were diverted into the main power flume. Thus, the 200 cfs not only keeps the Snake River flowing at a very low base level to benefit aquatic life, but it also generates power.
U.S. Fish & Wildlife Comments at 2.
The Service further maintained that article 407 was agreed upon with the full knowledge on the part of the
Service and Idaho Power that only if the water was not available in American Falls Reservoir would this flow requirement be compromised. Thus, unless Idaho Power Company’s storage right in American Falls will not fill in 2001, or you have developed new biological or aquatic habitat information that demonstrates that the 200 cfs flow at Milner Dam is not a benefit to aquatic life, the Service is disinclined to agree to waive this license requirement.
Id.
In this Commission’s recent comments to FERC regarding projected energy shortages in the West, the Commission agreed with FERC’s effort to increase generation in the west through capacity increases and operational efficiency upgrades.
Staff Recommendation
Lou Ann and I support Idaho Power’s request to temporarily change its operating procedures at the Twin Falls Dam. As Article 410 indicates, it primarily provides flows over Shoshone Falls for aesthetic viewing purposes. It also appears that Article 410 allows deviation from normal operating conditions “for short periods upon agreement of the licensee”, the BLM and state agencies. As indicated above, the BLM and state agencies are in agreement. I have also subsequently learned that the Idaho State Historic Preservation Officer has agreed to discontinue the aesthetic flows. Consequently, Staff believes that discontinuing flows is in the public interest and will allow the Company to generate three MW of additional power.
Turning to the Milner filing, Staff notes that the two federal agencies are opposed to this change in condition for environmental reasons. Lou Ann and I believe that the best course of action may be to remain silent on the Milner Application.
In any event, if the Commission does decide to support the Twin Falls and/or Milner Applications, we believe that it is appropriate for the Commission to recommend to FERC that it decide these matters on an expedited basis. Allowing these filings to languish impedes Idaho Power’s ability to plan for its portfolio resources and denies its opponents the opportunity to seek administrative or judicial relief.
Commission Decision
How does the Commission wish to respond to Idaho Power’s informal request?
Is any response necessary given the State’s recommendation to approve the operating amendments?
Does the Commission wish to independently support the Company’s request?

Does the Commission wish to support one project but not the other? Does the Commission wish to do anything else?

vld/M: IPCMilner_dh

Or approximately $400,000 from April through August based on current market prices.
The U.S. Fish & Wildlife Service did not object to the request but suggested that Idaho Power monitor effects on changing water temperatures and dissolved atmospheric gases downstream. The Service recognized that “the current water year for the western United States is one in which shortage will likely occur such that all needs for all water users will probably not be met.” Fish & Wildlife Comments at 1.

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