20150921_4775.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER RAPER
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DAPHNE HUANG
DEPUTY ATTORNEY GENERAL

DATE: SEPTEMBER 14, 2015

SUBJECT: IDAHO POWER’S APPLICATION TO APPROVE OR REJECT
ENERGY SALES AGREEMENT WITH NORTH GOODING MAIN
HYDRO LLC, CASE NO. IPC-E-15-24

On September 8, 2015, Idaho Power Company filed an Application asking the
Commission to accept or reject its Energy Sales Agreement (ESA) with North Gooding Main
Hydro LLC. The ESA is for the sale and purchase of electric energy generated by the North
Gooding Main Hydro Project, a “qualifying facility” as defined under the Public Utility
Regulatory Policies Act (PURPA), located near Gooding, Idaho. Idaho Power asks that its
Application be processed by Modified Procedure.
LEGAL BACKGROUND
Under PURPA, electric utilities such as Idaho Power must purchase electric energy
from qualifying facilities (QFs) at rates approved by this Commission. 16 U.S.C. § 824a-3;
Idaho Power Company v. Idaho PUC, 155 Idaho 780, 789, 316 P.3d 1278, 1287 (2013), citing
FERC v. Mississippi, 456 U.S. 742, 751 (1982). The purchase or “avoided cost” rate must be
“just and reasonable to the electric consumers . . . and in the public interest” and “shall not
discriminate against [QFs].” 16 U.S.C. § 824a-3(b); 18 C.F.R. § 292.304. The Commission has
established two methods of calculating avoided cost, depending on the size of the QF project.
The Commission uses the Surrogate Avoided Resource (SAR) methodology to calculate and
publish rates for QFs with a design capacity up to a prescribed eligibility cap. See Order No.
32697 at 7-8. For QFs using non-wind, non-solar resource-types – such as hydro – the published
rate eligibility cap is 10 average megawatts (aMW). Id.
THE AGREEMENT
On July 29, 2015, Idaho Power entered into its ESA with North Gooding – subject to
this Commission’s approval – pursuant to the terms and conditions of various Commission
DECISION MEMORANDUM 2
Orders and PURPA. Application at 3. North Gooding’s facility is a seasonal hydro project. Id.
Under the terms of the ESA, North Gooding elected to contract with Idaho Power for a 20-year
term using the levelized published avoided cost rates as currently established by Commission
Order No. 33305 for energy deliveries less than 10 aMW. Id.
The nameplate rating of North Gooding’s facility is 1.3 megawatts (MW). Id. at 4.
North Gooding will be required to provide data on the facility that Idaho Power will use to
confirm that under normal or average conditions, the facility will not exceed 10 aMW on a
monthly basis. Id. North Gooding has selected April 1, 2017, as the Scheduled Operation Date.
Id. Under the ESA, various requirements have been placed on North Gooding in order for Idaho
Power to accept energy deliveries from the facility. Id. Idaho Power will monitor all ongoing
requirements through the full term of the ESA. Id.
The ESA provides that all interconnection charges and monthly operational or
maintenance charges under Schedule 72 will be assessed to North Gooding. Id. Before the
facility will deliver any energy to Idaho Power, all requirements of the Schedule 72 Generator
Interconnection Agreement (GIA) must be complete, and the facility must be designated as a
network resource (DNR) to serve Idaho Power’s retail load on its system. Id. at 4-5. In its
Application, Idaho Power states that a GIA is expected to be signed by May 1, 2016. Id. at 5.
By its own terms, the ESA will not become effective until the Commission has
approved all of its terms and conditions and declared that all payments made by Idaho Power to
North Gooding for purchases of energy will be allowed as prudently incurred expenses for
ratemaking purposes. Id.
STAFF RECOMMENDATION
Staff recommends that the case be processed by Modified Procedure with a 21-day
comment deadline.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and Notice of Procedure
setting a 21-day comment deadline?

Daphne Huang
Daphne Huang
Deputy Attorney General

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