20230425_IPCE2228_mdyy.pdf

DECISION MEMORANDUM - 1 - APRIL 25, 2023
DECISION MEMORANDUM

TO: COMMISSIONER ANDERSON
COMMISSIONER LODGE
COMMISSIONER HAMMOND
COMMISSION SECRETARY
LEGAL

FROM: MICHAEL DUVAL
YAO YIN

DATE: APRIL 25, 2023

SUBJECT: IN THE MATTER OF IDAHO POWER COMPANY’S APPLICATION
FOR APPROVAL OR REJECTION OF AN ENERGY SALES
AGREEMENT WITH LOWER LOWLINE LLC, FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY FROM LOWLINE #2 HYDRO
PROJECT; CASE NO. IPC-E-22-28.

BACKGROUND
On March 13, 2023, the Commission issued Order No. 35705, requiring the Parties to
amend the proposed energy sales agreement (“ESA”) as a Compliance Filing within 15 days.
On March 17, 2023, Idaho Power filed Motion for Extension of Time to Make
Compliance Filing to extend the deadline for the Company to make its compliance filing to
March 31, 2023.
On March 24, 2023, the Commission issued Order No. 35722, granting the Company’s
Motion and extend the deadline for the compliance filing to March 31, 2023.
On March 31, 2023, the Company filed the Compliance Filing.
On April 7, 2023, the Company filed an Errata to the Compliance Filing and provided a
Replacement First Amendment to the ESA to correct typographical errors in the original
Compliance Filing.

STAFF ANALYSIS
Staff reviewed the Replacement First Amendment and recommends that the Commission
approve it. Staff believes the four requirements for the amended ESA from Order No. 35705
have been met including:

DECISION MEMORANDUM - 2 - APRIL 25, 2023
• Requirement 1: Language that restricts the Seller from modifying the Facility
from the as built description of the Facility included in Exhibit B, without
promptly notifying the Company of that intent.
• Requirement 2: Language that requires the Seller to provide notification of
planned modifications (such as fuel change or capacity size change) to the as-built
description.
• Requirement 3: Language that requires Parties to amend the contract reflecting
the Facility as actually modified.
• Requirement 4: Language that ensures that the ESA’s payment structure allows
payment for only the proper authorized rates of the Facility as actually modified
and as of the date when energy is first delivered as a modified Facility.
Specifically, Requirement 1 is met by paragraph 23.2 of the Replacement First
Amendment contained in the Compliance Filing. Paragraph 23.2 states: “The Seller will not
modify the Facility from the description set forth in Appendix B without prior notification to
Idaho Power,” which applies to both Proposed Facility Modifications (which do not include
additions or expansions) and proposed additions or expansions.
Requirement 2 is met by paragraph 23.2(ii) for Proposed Facility Modifications or the
notification of planned modifications as additions or expansions from the Seller. Paragraph
23.2(ii) states: “Seller has provided Idaho Power with detailed plans regarding the Proposed
Facility Modification(s), including proposed revisions to the as-built description of the Facility
set forth in Appendix B” which is one of the conditions that the Seller needs to meet to begin
construction of any Proposed Facility Modifications.
Requirement 3 is met by paragraph 23.5, which states:
In addition to prior notification of any modifications to the Facility from the
description set forth in Appendix B, no later than thirty (30) days following
the date of substantial completion of such modification, and prior to the first
Operation Date of such modification, Seller must provide Idaho Power with
an “as-built” description of the modified Facility in the form set forth in
Appendix B of this Agreement; provided that the Facility, as reflected in the
“as-built” description to be provided under this paragraph, may not deviate
from the Facility Modification Amendment, except, in each case, to the
extent such further modification(s) are authorized under a subsequent
written amendment to this Agreement that is executed by the Parties and
approved by the Commission. If the “as-built” description deviates from the

DECISION MEMORANDUM - 3 - APRIL 25, 2023
then-approved Appendix B, Idaho Power will review it and follow the
process described in paragraphs 23.3 and 23.4.

Requirement 4 is met by paragraph 23.4.1 for Proposed Facility Modifications or
paragraph 23.6 for proposed additions or expansions. For Proposed Facility Modifications,
paragraph 23.4.1 states:
If Idaho Power determines that it is appropriate to revise the Agreement, the
Parties will enter into a written amendment to the Agreement revising the
relevant terms, conditions, description in Appendix B, and, if necessary,
pricing, referred to herein as the “Facility Modification Amendment”. The
Facility Modification Amendment will be submitted to the Commission for
approval. If the pricing is adjusted, the Parties will agree on and include in
the amendment a pricing true-up mechanism to ensure that the correct rates
apply to the modified Facility from the completion date of the modification.

Although Requirement 4 mandates proper authorized rates to be used from the date when
energy is first delivered as a modified Facility, paragraph 23.4.1 requires correct rates to be used
from the completion date of the modification, which is typically earlier than when energy is first
delivered. For proposed additions or expansions, paragraph 23. 6 states: “Seller may exercise
any rights to enter into a new agreement for the sale of such incremental energy from such
additional facility that is a Qualified Facility under then-applicable laws and regulations.” Staff
believes the “then applicable laws and regulations” referenced in paragraph 23.6 includes proper
rates that will be applied from the date when energy is first delivered.

STAFF RECOMMENDATION
Staff recommends that the Commission approve the ESA with the Replacement First
Amendment and declare that all payments for purchases of energy under the ESA and the
Replacement First Amendment be allowed as prudently incurred expenses for ratemaking
purposes.

COMMISSION DECISION
Does the Commission wish to approve the ESA with the Replacement First Amendment?
Michael Duval
Deputy AttorneyGeneral
Yao Yin
Utilities Analyst
Udmemos/IPC-E-22-28 Decision Memo
DECISION MEMORANDUM -4 -APRIL 25,2023