20220504Comments.pdf

RILEY NEWTON
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. II2O2
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Street Address for Express Mail:
I 133I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, TD 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITTES COMMISSION
IN THE MATTER OF AVISTA AND THE
TJNIVERSITY OF IDAHO'S JOINT PETITION
FOR APPROVAL OF A POWER PURCHASE
AGREEMENT (SOLAR FACILITY)
CASE NO. AVU.E-22.04
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Riley Newton, Deputy Attomey General, submits the following comments.
BACKGROUND
On February 23,2022, Avista Corporation ("Company") and the Regents of the
University of ldaho ("University") (collectively, the "Parties") petitioned the Commission for an
order approving a power purchase agreement ("Agreement") between the Company and the
University for the University's 13232 Kilowatt ("kW") solar facility ("Facility"). The Parties
requested a Commission order approving the Agreement's effective date of February 16,2022.
The Facility is in Moscow, Idaho and is a qualiffing facility ("QF") under the Public
Utility Regulatory Policies Act of 1978 ("PURPA"). The University intends to use the output
from the Facility to serve the University's load. Under the Agreement, the University will sell to
the Company all output from the Facility in excess of the University's load. The avoided cost
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ISTAFF COMMENTS MAY 4,2022
rates used in the Agreement are calculated at the time of delivery, using the PowerDex hourly
Mid-Columbia ("Mid-C") index price, or other mutually agreed-to index. The term of the
Agreement is for two years from February 16,2022
STAFF REVIEW
Staff has reviewed the Agreement focusing on the PURPA purchasing category, the
proposed avoided cost rates associated with the category, the Nameplate Size and Maximum
Generation Injection at Point of Interconnection, the potential lapsed contract period, the
Renewable Energy Certificatesl 1"RECs";, and Article2l inthe Agreement. Based on the
review, Staff recommends the following changes to the Agreement:
1. Remove the option of other mutually agreed-to index in the Agreement;
2. Set avoided cost rates in this Agreement at85o/o of the PowerDex hourly Mid-C
index price;
3. Veriff the Nameplate Size and the Maximum Generation Injection at Point of
Interconnection and make sure the correct amounts are used in the Agreement;
4. Use 85% of the PowerDex hourly Mid-C index price as avoided cost rates for a
potential lapsed contract period; and
5. Update Article 21 in the Agreement to ensure any amendment or modification
does not become valid without Commission authorization.
Categories of PURPA Purchases: As-available Purchases vs. Legally Enforceable
Obligation ("LEO") Purchases
The power purchases in this Agreement fall under the category of LEO Purchases
calculated at the time of delivery, because the terms of purchase are made through a contract
between the Parties. There are two categories of purchases under PURPA: (1) as-available
purchases; and (2) LEO purchases. The former allows a QF to provide energy whenever it is
available and use avoided costs calculated at the time of delivery, while the latter requires a QF
to provide energy or capacity pursuant to a LEO for the delivery of energy or capacity over a
specified term, using either the avoided costs calculated at the time of delivery, or the avoided
t Also known as Renewable Energy Credits
2STAFF COMMENTS MAY 4,2022
costs calculated at the time the obligation is incurred. See 18 CFR $ 292.304 (d). The Parties in
this case entered a LEO on February 16,2022, with a specified contract term of two years.
Avoided Cost Rates
The Agreement proposes a market-based rate that is not currently covered as a LEO
purchase within the Company's Schedule 62 Cogeneration and Small Power Production
Schedule. However, Staff believes the terms are acceptable if "other mutually agreed-to index"
besides PowerDex is removed from the language in the contract and if an 85% adjustment factor
is applied to the PowerDex hourly Mid-C index price.
Currently, for LEO Purchases, the Company's Schedule 62 Cogeneration and Small
Power Production Schedule provides six rate options: (1) Levelized Fueled Rates; (2) Non-
Levelized Fueled Rates; (3) Levelized Non-Fueled Rates; (4) Non-Levelized Non-Fueled Rates;
(5) Short-Term Rate;2 and (6) Integrated Resource Plan ("IRP")-Based Rate, none of which is
purely market-based. The Agreement proposes to use purely market-based rates as avoided cost
rates: "the PowerDex hourly Mid-C index price, or other mutually agreed-to index." See Article
1.16 and Article 5.2 of the Agreement. Staff believes that market-based rates should be allowed
for LEO purchases, because the Commission has approved several of Idaho Power Company's
("Idaho Power") PURPA contracts that used market-based rates through Uniform Agreements.
See Order Nos. 29607 and 30631.
However, Staff has two recommended changes related to the establishment of rates in the
Agreement. First, Staff recommends that the option of "other mutually agreed-to index" be
removed from the language of the Agreement and if the Parties decide to use another market
price index in the future, they should file an amendment to the Agreement so the index can be
reviewed and approved by the Commission. Second, Staff believes that the avoided cost rates
used in this Agreement for non-firm energy generation should be 85Yo of the non-firm market
2 Schedule 62 states:
The Short-Term Rate shall be applicable to any Quali$ing Facility when the Customer
chooses to supply output including energy and capacity at market-based rates under
contract. The Short-Term Rate shall be the lower of the applicable Non-Levelized Non-
Fueled Rate or the Market Rate. The rate is subject to a Seasonal Factor, a Daily Shape
Adjustment, and Integration Charges. The resultant rate shall be applied to all kilowatt-
hours of generation up to the Eligibilrty Cap for Qualifying Facilities below the Eligibility
Cap, and to all hourly Facility ouryut up to contracted nameplate capacity for Qualifuing
Facility exceeding the Eligibility Cap.
This rate option involves using the market-based rates in the calculation, but it is not a purely market-based rate.
JSTAFF COMMENTS MAY 4,2022
rates, and thus recommends that an85%o adjustment factor be applied to the PowerDex hourly
Mid-C index price. See Order No. 29093.
In determining the avoided cost rates for non-firm energy based on a market index, 85o%
of the non-firm market index has been used to account for costs of transmission, losses, and
transaction costs in case utilities are forced to sell QF generation that they don't need. See Order
No. 29093. For example, when a QF delivers energy outside the 90/110 band, prices for the
energy outside the band are determined at the lesser of 85% of the non-firm market price, or the
contract rate. See Order No. 29632. Another example is Idaho Power's Schedule 86, where 85%
of the non-firm3 market price is used to determine avoided cost rates for non-firm energy.
Lastly, the Company's Schedule 62 defines Market Rate as 85% of the non-firma market price to
compare against contract rates for determining the Short-Term Rate. See Application and Order
No. 33048 in Case No. AVU-E-14-03.
Because the Commission has approved the PowerDex hourly Mid-C index in lieu of the
non-firm market index, Staff believes it is reasonable to continue to use it as a non-firm market
index consistent with Order No. 33048; however, for reasons stated above, an 85oh adjustment
factor should be applied to comply with prior orders.
Nameplate Size and Maximum Generation Injection at Point of Interconnection
Exhibit A of the Agreement states that both the Nameplate Size and the Maximum
Generation Injection at Point of Interconnection is 132.2 kW alternating current ("AC").
However, Federal Energy Regulatory Commission Form 556 for the Facility states that the
Maximum Gross Production Capacity is 147.2 kW direct current ("DC") or 133.2 kW AC after
ACIDC conversion, and the Maximum Net Power Production Capacity at the Point of
Interconnection is 132.0 kW AC after deduction of line losses. Staff recommends that the
Parties veriff the Nameplate Size and the Maximum Generation Injection at Point of
Interconnection and make sure the correct amounts are used in the Agreement. Staff also
believes the Maximum Generation Injection at Point of Interconnection should consider the line
losses between the Facility and the Point of Interconnection, unless the losses are so negligible
3 Since the discontinuation of the non-firm market index,82.4Yo of lntercontinental Exchange ("ICE') daily firm
Mid-C market prices has been used by Idaho Power in lieu of the non-firm market index. See Order No. 33053.a Since the discontinuation of the non-firm market index, PowerDex hourly Mid-C index has been used by the
Company in lieu of the non-firm market index. See Order No. 33048.
4STAFF COMMENTS MAY 4,2022
that the Nameplate Size and the Maximum Generation Injection at Point of Interconnection can
be reasonably considered the same.
Order No. 29093 limited Idaho Power's Schedule 86 tariff eligibility for non-firm energy
contracts with a capacity nameplate rating of less than l0 megawatts ("MW") to align with the
Commission's orders in Case No. GNR-E-02-01 that increased the capacity size for eligibility of
published rates to 10 MW. Although the Company does not have a similar tariff for non-firm
energy, Staff believes that this Facility's Nameplate Size does not challenge the Commission's
size expectation for non-firm QFs.
Lapsed Contract Period
Page 5 of the Agreement states that the effective date is February 16,2022, or other date
set by Commission order. If the final approved effective date results in a lapsed contract period in
which retroactive rates are required, Staff recommends that the Parties use 85% of the PowerDex
hourly Mid-C index price for the energy delivered during the lapsed contract period. As of March
23,2022, the project has generated energy to serve the University's load but has not delivered or
sold any energy to the Company. See Response to Staffls Production Request No. 4.
RECs
The Agreement allows the Parties to share the RECs equally. Because this contract uses
neither published avoided cost rates nor IRP-based avoided cost rates, Staff believes the
arrangement is in the discretion of the Parties. The Commission has stated that a QF that uses
published avoided cost rates will retain all the RECs, and a QF that uses the IRP-based avoided
cost rates will share the RECs with the utility equally. See Order No. 32697. The Commission
has not determined REC ownership for QFs that use market-based rates.
Article 21: AMENDMENT
Article 2l of the Agreement, AMENDMENT, states "[n]o change, amendment or
modification of any provision of this Agreement shall be valid unless set forth in a written
amendment to this Agreement signed by both Parties." Staff believes that this statement neglects
the significance of Commission approval and recommends that the statement be updated to
reflect the need for the Commission approval before it becomes valid. For example, the
5STAFF COMMENTS MAY 4,2022
statement can be updated to be "[n]o change, amendment or modification of any provision of this
Agreement shall be valid unless set forth in a written amendment to this Agreement signed by
both Parties and subsequently approved by the Commission."
STAFF RECOMMENDATION
Staff recommends Commission approval of the Agreement if it is amended to on include
the following changes:
1. Remove the option of "other mutually agreed-to index" in the Agreement;
2. Set avoided cost rates in the Agreement at85Yo of the PowerDex hourly Mid-C
index price;
3. Verifu the Nameplate Size and the Maximum Generation Injection at Point of
Interconnection and make sure the correct amounts are used;
4. Use 85% of the PowerDex hourly Mid-C index price as avoided cost rates for a
potential lapsed contract period; and
5. Update Article 2l in the Agreement to ensure any amendment or modification
does not become valid without Commission authorization.
If the Commission approves these changes, Staff recommends that the Parties file an
updated Agreement as a compliance filing to reflect Staff s recommended changes.
Respecttully submitted this 'l1O day of May 2022.
Riley Newton
Deputy Attomey General
Technical Staff: Yao Yin
Travis Culbertson
i:umisc/commentsl avue22.4m7rytnc comments
6STAFF COMMENTS MAY 4,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 46 DAY OF MAY 2022, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. AVU-E-22-04, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
KEVIN HOLLAND MANAGER
WHOLESALE MARKETING &
CONTRACTS
AVISTA CORPORATION
PO BOX3727
SPOKANE WA99220-3727
E-MAIL: [e-mail]
[e-mail]
GREGORY M ADAMS
RICHARDSON ADAMS PLLC
5I5 N 27TH ST
BOISE ID 83702
E-MAIL: [e-mail]
MICHAEL G ANDREA
SENIOR COUNSEL
AVISTA CORPORATION
PO BOX3727
SPOKANE WA99220-3727
E-mail: [e-mail]
EDITH PACILLO SENIOR
ASSOCATE GENERAL COUNSEL
OFFICE OF GENERAL COUNSEL
3228 FRONT ST 324D
BOISE TD 83702
E-MAIL: [e-mail]
[e-mail]
SECRET
CERTIFICATE OF SERVICE