20140623_4396.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: KRISTINE SASSER
DEPUTY ATTORNEY GENERAL

DATE: JUNE 20, 2014

SUBJECT: IDAHO POWER’S APPLICATION FOR APPROVAL OR REJECTION
OF A PPA WITH EIGHTMILE HYDRO, CASE NO. IPC-E-14-12

On May 27, 2014, Idaho Power Company filed an Application requesting that the
Commission accept or reject an Agreement between Idaho Power and Eightmile Hydro
Corporation (Eightmile Hydro), for the sale and purchase of electric energy generated by the
Eightmile Hydro Project. Idaho Power asks that its Application be processed by Modified
Procedure.
THE APPLICATION
On May 5, 2014, Idaho Power and Eightmile Hydro entered into an Agreement
pursuant to the terms and conditions of various Commission Orders applicable to PURPA
agreements for non-seasonal hydro projects. Idaho Power states that Eightmile Hydro proposes
to operate and maintain a 360 kilowatt (kW) non-seasonal hydro energy facility to be located
near Leadore, Idaho. The Company maintains that the project will be a qualified facility (QF)
under the applicable provisions of the Public Utility Regulatory Policies Act (PURPA).
Under the terms of the Agreement, Eightmile Hydro elected to contract with Idaho
Power for a 20-year term using the non-levelized other published avoided cost rates as currently
established by the Commission in Order No. 32817 for energy deliveries of less than 10 average
MW (aMW). As defined in paragraphs 1.20 and 4.1.4 of the Agreement, Eightmile Hydro will
be required to provide data on the facility that Idaho Power will use to confirm that under normal
and/or average conditions, the facility will not exceed 10 aMW on a monthly basis. As described
in paragraph 7.5 of the Agreement, should the facility exceed 10 aMW on a monthly basis, Idaho
Power will accept the inadvertent energy that does not exceed the maximum capacity amount,
but will not purchase or pay for inadvertent energy.
DECISION MEMORANDUM 2
Eightmile Hydro has selected August 30, 2014, as the project’s Scheduled Operation
Date. Various requirements have been placed upon the project in order for Idaho Power to
accept energy deliveries from this facility. Idaho Power will monitor compliance with these
requirements. Idaho Power will continue to monitor the ongoing requirements throughout the
term of the Agreement.
The Agreement provides that all applicable interconnection charges and monthly
operational or maintenance charges under Schedule 72 will be assessed to Eightmile Hydro. A
Schedule 72 Generator Interconnection Agreement (GIA) between Eightmile Hydro and Idaho
Power was executed on December 4, 2013. Idaho Power states that PURPA QF generation must
be designated as a network resource (DNR) to serve Idaho Power’s retail load on its system. In
order for the facility to maintain its DNR status and maintain compliance with Idaho Power’s
non-discriminatory administration of its Open Access Transmission Tariff (OATT) and FERC
requirements there must be a power purchase agreement (PPA) associated with its transmission
service request.
Idaho Power explains that the recent hydro agreements are the first hydro-based
agreements submitted for approval “that contain revised terms and conditions subsequent to the
Commission’s final and reconsideration orders from Case No. GNR-E-11-03. As such, the form
of the [Agreement] has several terms and conditions that vary from previously approved
agreements in order to comply with the Commission’s recent orders.” Application at 4. Idaho
Power and Eightmile Hydro also agreed to changes in some standard provisions that the parties
now propose for Commission approval. Idaho Power identifies that major changes as follows:
 Change to the definition of “Mid-Columbia Market Energy Cost” to
replace reference to the Dow Jones index with reference to the
Intercontinental Exchange (ICE) index and formula consistent with the
proposed settlement in Case No. IPC-E-13-251;

 Addition of definitions and provisions, paragraphs 1.29, 1.38, 1.39, 3.4
and 7.6 to incorporate definitions of “non-seasonal hydro facility” and
“seasonal hydro facility” as well as “seasonal hydro facility test periods”
to incorporate and maintain separate rates for seasonal and non-seasonal
hydro projects and to ensure that seasonal hydro projects perform within
the requirements of generating 55 percent of their annual generation in the
months of June, July and August;

1 This change is relevant to the 90/110 performance requirement. The settlement was approved by the Commission
on June 10, 2014. Order No. 33053.
DECISION MEMORANDUM 3
 Removal of the provisions providing for delay liquidated damages and
maintained provisions to provide for delay security and actual delay
damages as provided for by the Commission’s adoption of the partial
stipulation in Commission Order No. 32697;

 Change to Article VIII, “Environmental Attributes,” to indicate that
Eightmile Hydro owns all Environmental Attributes or Renewable Energy
Credits/Certificates;

 Change to paragraph 6.2 to allow Eightmile Hydro to adjust the “Initial
Year Monthly Net Energy Amounts” on a monthly, rather than quarterly,
basis;

 Revision to paragraph 12.4 relating to Scheduled Maintenance; and

 Several other minor revisions in an attempt to add clarity.

Finally, Article 21 of the Agreement provides that the PPA will not become effective
until the Commission has approved all terms and conditions and declared that all payments Idaho
Power makes to Eightmile Hydro for purchases of energy will be allowed as prudently incurred
expenses for ratemaking purposes.
STAFF RECOMMENDATION
Staff recommends that the case be processed by Modified Procedure with at least a
28-day comment period and opportunity for reply.
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure with a 28-
day comment period and opportunity for reply?

M:IPC-E-14-12_ks