20181025final_order_no_34177.pdf

Ofñee of the Secretary
Service Date
October 25,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT PETITION )CASE NO.AVU-E-18-05
OF AVISTA AND THE CITY OF COVE,)OREGON,TO APPROVE POWER )PURCHASE AGREEMENT )ORDER NO.34177
On June 19,2018,Avista Corporation dba Avista Utilities ("Avista"or "Company")
and the City of Cove,Oregon,jointly petitioned the Commission for an Order approving a Power
Purchase Agreement ("PPA"or "Agreement").The PPA is for an 800 kW hydroelectric generating
facility ("Facility")in or around Cove,Oregon.The Facility is a qualifying facility ("QF")under
the Public Utility Regulatory Policies Act of 1978 ("PURPA").Application at 2.The term of the
Agreement runs through June 12,2038.Id.at 3.
The Commission issued a Notice of Petition and Notice of Modified Procedure setting
comment and reply deadlines.'Order No.34115.Commission Staff timely filed comments and
no other comments were received.Followingthe reply comment deadline,the Company amended
its Application.The Commission issued a Notice of Extended Comment Period to give the public
the opportunity to comment on the amended Application.Order No.34140.Staff filed
supplemental comments and no other comments were received.
BACKGROUND
PURPA was enacted in 1978 "to lessen the country'sdependence on foreign oil and to
encourage the promotion and development of renewable energy technologies as alternatives to
fossil fuels."Order No.32580 at 3,citing FERC v.Mississippi,456 U.S.742,745-46 (1982).
PURPA and its implementing regulations require electric utilities to purchase the power produced
by QFs.16 U.S.C.§824a-3(b);18 C.F.R.§292.303(a).
The rate that a QF receives for the sale of its power to a utility,called the "avoided
cost"rate,is approvedby the Commission,and represents "the 'incremental cost'to the purchasing
utility which,but for the purchase of power from the QF,such utility would either generate itself
I Avista and the City of Cove styled their filing as a "Petition."Under Commission Rule 52,the proper term for the
submission in this case is an Application.We will therefore refer to the filing as an Application in this Order.
ORDER NO.34177 1
or purchase from another source."Order No.33419 at 3,citing Rosebud Enterprises v Idaho
PUC,128 Idaho 624,627,917 P.2d 781,784 (1996);18 C.F.R.§292.101(b)(6)(defining "avoided
For non-wind and non-solar QFs generating less than 10 average megawatts (aMW)of
energy,the Commission calculates and publishes rates using a Surrogate Avoidable Resource
("SAR")methodology.Order No.32697 at 14 (maintaining a 10 aMW project eligibilitycap for
non-wind and non-solar projects).The Commission uses a combined-cycle combustion turbine as
the SAR for establishing published avoided cost rates.Id at 17.The Commission updates the
published avoided cost rates annuallybased on natural gas forecasts provided by the U.S.Energy
Information Administration's Annual Energy Outlook.Id.at 16.
THE APPLICATION
The Application was subject to numerous amendments.On July 13,2018,the
Company filed Amendment No.1.The Amendment revised the PPA to clarify that the rate paid
for Surplus Energy and Shortfall Energy,which is the energy delivered outside of the 90/110
performance band,will be the lessor of 85%of the current month's Market Energy Price or the
avoided cost rates.The Amendment also revised the Agreement to provide that Monthly Net
Output Estimates are to be updated on a month-ahead basis,consistent with Commission Order
No.33103.
On July 23,2018,the Company filed Supplement to Amendment No.1.The
Supplement contained the avoided cost rates the Company proposed to use in the Agreement,
which were the levelized non-seasonal hydroelectric avoided cost rates for QFs smaller than ten
average MW in place when the parties began negotiating the Agreement.
On August 6,2018,the Company filed Amendment No.2.The Amendment rectified
a discrepancy between the effective dates in Amendment No.1 and the original Application and
set a proposed effective date of July 31,2018,or such other date as set by the Commission.The
Agreement anticipates a November 1,2018 initial delivery date.Application at 3.
On August 24,2018,two days after the comment reply period expired,the Company
filed Amendment No.3.The Amendment updated the avoided cost rates to reflect the rates in
effect when both parties signed the Agreement.The Company also updated the security deposit
required for levelized rates.
ORDER NO.34177 2
On September 13,2018,the Company submitted Amendment No.4.The Amendment
corrected a rounding error in the security deposit schedule.
STAFF'S COMMENTS
Staff filed the only comments in this matter.In its first comments,Staff recommended
the Commission approve the Agreement with updated avoided cost rates.In its Supplemental
Comments,Staff recommended the Commission unconditionally approve the Agreement as
amended.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdictionover this matter under Idaho Code §§61-502 and 61-
503.The Commission has the express statutory authority to investigate rates,charges,rules,
regulations,practices,and contracts of public utilities and to determine whether they are just,
reasonable,preferential,discriminatory,or in violation of any provision of law,and may fix the
same by order.Idaho Code §§61-502 and 61-503.In addition,the Commission has authority
under PURPA and the implementing regulations of the Federal Energy Regulatory Commission
("FERC")to set avoided cost rates,to order electric utilities to enter into fixed-term obligations
for the purchase of energy from qualified facilities and to implement FERC rules.The
Commission may enter any final order consistent with its authorityunder Title 61 and PURPA.
The Commission has reviewed the record,including the Application,the PPA,the
amendments,and the comments and recommendations of Commission Staff.We find that the City
of Cove hydroelectric facility is qualified to receive the levelized non-seasonal hydroelectric
avoided cost rates for QFs smaller than ten average MW in effect on the date the agreement was
signed by both parties.Such rates were included in Amendment No.3.We further find that the
PPA contains acceptable contract provisions consistent with PURPA,FERC regulations,and this
Commission's prior orders.We therefore approve the Agreement as amended without further
change or condition.Finally,we find it reasonable to allow payments made under the Agreement
as amended as prudentlyincurred expenses for ratemaking purposes.
ORDER
IT IS HEREBY ORDERED that the PPA as amended between Avista and City of Cove,
Oregon,is approved,effective July31,2018.
IT IS FURTHER ORDERED that all payments made by Avista for purchases of energy
under the PPA as amended are allowed as prudentlyincurred expenses for ratemaking purposes.
ORDER NO.34177 3
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order with regard to any
matter decided in this Order.Within seven (7)days after any person has petitioned for
reconsideration,any other person rnay cross-petition for reconsideration.See Idaho Code §61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this **
day of October 2018.
PAUL K LL ,PRESIDENT
KRISTINE RAPER,COMMISSIONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
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