20150306Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER RAPER
COMMISSION SECRETARY
COMMISSION STAFF
DAPHNE HUANG

FROM: DON HOWELL
DEPUTY ATTORNEY GENERAL

DATE: MARCH 3, 2015

SUBJECT: AVISTA’S PETITION TO REDUCE THE LENGTH OF ITS PURPA
CONTRACT ON AN INTERIM AND PERMANENT BASIS CONSISTENT
WITH THE COMMISSION’S RECENT ORDER IN AN IDAHO POWER
CASE (IPC-E-15-01), CASE NO. AVU-E-15-01

On February 27, 2015, Avista Corporation filed a Petition requesting that the
Commission issue an Order modifying the terms and conditions of Avista’s standard power
purchase agreements (PPAs) with qualifying facilities (QFs) under the Public Utility Regulatory
Policies Act of 1978 (PURPA). Avista’s Petition seeks an Order granting interim relief
consistent with the relief the Commission granted to Idaho Power Company in Order No. 33222
(Case No. IPC-E-15-01). More specifically, Avista requests that the length of its standard PPA
be reduced from 20 years to 5 years. Avista filed the supporting testimony of Clint Kalich with
its Petition.
BACKGROUND
The Idaho Power Case
On January 30, 2015, Idaho Power filed a petition requesting that its IRP-based
power purchase agreements (PPAs) with QFs be reduced in length from 20 years to 2 years.
Application at 1-2. In its petition Idaho Power generally alleged that it has experienced a
dramatic increase in the number and size of PURPA projects requesting PPAs with the utility. In
particular, Idaho Power witness Randy Allphin stated that Idaho Power has “an additional 885
MW of PURPA solar capacity in the queue actively seeking PURPA energy sales agreements to
be on-line in 2016.” Id. at 2, 18 citing Allphin Direct at 3-4; Exh. 3. Idaho Power asserted that
DECISION MEMORANDUM 2
the mandatory acquisition of this amount of power over a 20-year period exceeds the operational
needs of the Company, places undue risk on customers when the Company has sufficient
resources to meet demand, and is unreasonable and contrary to the public interest. Application at
2, 20, 27-34.
On February 6, 2015, the Commission issued Order No. 33222 partially granting
Idaho Power’s request to reduce the length of its PURPA contracts. The Commission found that
a “temporary reduction of the maximum contract term for Idaho Power’s QF contracts [shall be]
five years while the Commission reviews the issue of contract length in greater detail.” Order
No. 33222 at 4.1
On February 19, 2015, Avista filed a Petition to Intervene in the Idaho Power case.
In its petition, Avista asserted that all utilities subject to PURPA in Idaho “should be afforded the
same interim protections that [are] provided in Order No. 33222 issued in [Case No. IPC-E-15-
01].” Petition at 2. Avista’s Petition to Intervene in the Idaho Power case was granted in Order
No. 33239 issued March 3, 2015.
AVISTA’S PETITION IN THIS CASE
As mentioned above, Avista seeks the same interim relief that the Commission
granted Idaho Power in Order No. 33222. Avista expressed its concern that “PURPA developers
that previously planned to sell the output from their [projects] to Idaho Power may seek to sell
such output to Avista. Thus, as a direct result of the Commission’s action affording one utility
interim relief, Avista could be required to enter into a significant number of PURPA contracts.”
Avista Petition at 3. To prevent a rush of PURPA projects being delivered to Avista’s door, it
“requests immediate Commission action ordering that the maximum required contractual term
for Avista’s new PURPA contracts shall, pending further order of the Commission, be five
years.” Id. at 4. In addition to the interim relief, Avista requests that it be afforded the same
permanent relief that the Commission may provide to other utilities regarding the length of
PURPA contracts. Id.
1 Several parties have filed petitions to clarify the scope of the five-year interim relief, i.e., applicable to just IRP-
based rate contracts or just wind and solar PPAs. In a discovery response dated February 24, 2015, Idaho Power
stated that its requested interim relief “is limited to [PPAs] that exceed the published rate eligibility cap.” Resp. No.
1 to Simplot.
DECISION MEMORANDUM 3
STAFF RECOMMENDATION
Given Avista’s request for the same interim treatment afforded Idaho Power
regarding the length of PURPA contracts, the Commission Staff recommends that the
Commission consolidate the Avista case with Idaho Power Case No. IPC-E-15-01. Staff
believes it is appropriate to take up the issue of contract length in the Idaho Power case.
Consolidating the Avista Petition (as well as the PacifiCorp Petition) with the Idaho Power case
will allow the Commission to efficiently and expeditiously examine the issue of PURPA contract
lengths. Commission Staff also recommends that the parties to the Idaho Power case be deemed
parties to the Avista and PacifiCorp cases.
COMMISSION DECISION
1. Does the Commission grant Avista the same interim relief it granted Idaho Power
in Order No. 33222, namely reducing the standard contract length for Avista’s new PURPA
contracts to five years pending completion of the 15-01 case?
2. Does the Commission wish to consolidate the Avista Petition with Idaho Power
Case No. IPC-E-15-01?
3. Does the Commission wish to designate the parties in the Idaho Power case as
parties to this Avista case?
4. Anything else?

/s/ Don Howell
Don Howell
Deputy Attorney General

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