20140606Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: KRISTINE SASSER
DEPUTY ATTORNEY GENERAL

DATE: JUNE 6, 2014

SUBJECT: IDAHO POWER’S APPLICATION FOR APPROVAL OR REJECTION
OF A PPA WITH WILLIAM ARKOOSH, CASE NO. IPC-E-14-06

On April 30, 2014, Idaho Power Company filed an Application requesting that the
Commission accept or reject an Agreement between Idaho Power and William Arkoosh for the
sale and purchase of electric energy produced by the Little Wood River Ranch II Project
(Project). On May 27, 2014, Idaho Power filed an Amendment to its Application that included a
summary of terms and conditions contained in the proposed Agreement that are different from
prior agreements approved by this Commission.
THE APPLICATION
On April 23, 2014, Idaho Power and William Arkoosh entered into an Agreement
pursuant to the terms and conditions of various Commission Orders applicable to PURPA
agreements for non-seasonal hydro projects. Idaho Power states that Mr. Arkoosh proposes to
operate and maintain a 1.28 megawatt (MW) non-seasonal hydro energy facility to be located
near Shoshone, Idaho. The Company maintains that the Project will be a qualified facility (QF)
under the applicable provisions of the Public Utility Regulatory Policies Act (PURPA).
Under the terms of the Agreement, Mr. Arkoosh elected to contract with Idaho Power
for a 20-year term using the non-levelized published avoided cost rates as currently established
by the Commission in Order No. 32817 for energy deliveries of less than 10 average MW
(aMW). As defined in paragraphs 1.20 and 4.1.4 of the Agreement, Mr. Arkoosh will be
required to provide data on the facility that Idaho Power will use to confirm that under normal
and/or average conditions, the facility will not exceed 10 aMW on a monthly basis. As described
in paragraph 7.5 of the Agreement, should the facility exceed 10 aMW on a monthly basis, Idaho
DECISION MEMORANDUM 2
Power will accept the inadvertent energy that does not exceed the maximum capacity amount,
but will not purchase or pay for inadvertent energy.
Mr. Arkoosh has selected June 1, 2015, as the Project’s Scheduled Operation Date.
Various requirements have been placed upon Mr. Arkoosh in order for Idaho Power to accept
energy deliveries from this facility. Idaho Power will monitor compliance with these
requirements. Idaho Power will continue to monitor the ongoing requirements throughout the
term of the Agreement.
The Agreement provides that all applicable interconnection charges and monthly
operational or maintenance charges under Schedule 72 will be assessed to Mr. Arkoosh. A
Schedule 72 Generator Interconnection Agreement (GIA) between Mr. Arkoosh and Idaho
Power was executed on July 29, 2013. Idaho Power states that PURPA QF generation must be
designated as a network resource (DNR) to serve Idaho Power’s retail load on its system. In
order for the facility to maintain its DNR status and maintain compliance with Idaho Power’s
non-discriminatory administration of its Open Access Transmission Tariff (OATT) and FERC
requirements there must be a power purchase agreement (PPA) associated with its transmission
service request.
Article 21 of the Agreement provides that the PPA will not become effective until the
Commission has approved all terms and conditions and declared that all payments Idaho Power
makes to Mr. Arkoosh for purchases of energy will be allowed as prudently incurred expenses
for ratemaking purposes.
Idaho Power filed an Amendment to its initial Application on May 27, 2014. The
Amendment provides a summary of terms and conditions contained in the proposed Agreement
that are different from prior agreements approved by this Commission. In its Amendment, Idaho
Power explains that this Agreement is the first hydro-based agreement submitted for approval
“that contains revised terms and conditions subsequent to the Commission’s final and
reconsideration orders from Case No. GNR-E-11-03. As such, the form of the [Agreement] has
several terms and conditions that vary from previously approved agreements in order to comply
with the Commission’s recent orders.” Amendment at 5.
Idaho Power and Mr. Arkoosh also agreed to changes in some standard provisions
that the parties now propose for Commission approval. Idaho Power identifies that major
changes as follows:
 Change to the definition of “Mid-Columbia Market Energy Cost” to
replace reference to the Dow Jones index with reference to the
DECISION MEMORANDUM 3
Intercontinental Exchange (ICE) index and formula consistent with the
proposed settlement in Case No. IPC-E-13-251;

 Addition of definitions and provisions, paragraphs 1.29, 1.38, 1.39, 3.4
and 7.6 to incorporate definitions of “non-seasonal hydro facility” and
“seasonal hydro facility” as well as “seasonal hydro facility test periods”
to incorporate and maintain separate rates for seasonal and non-seasonal
hydro projects and to ensure that seasonal hydro projects perform within
the requirements of generating 55 percent of their annual generation in the
months of June, July and August;

 Removal of the provisions providing for delay liquidated damages and
maintained provisions to provide for delay security and actual delay
damages as provided for by the Commission’s adoption of the partial
stipulation in Commission Order No. 32697;

 Change to Article VIII, “Environmental Attributes,” to indicate that Mr.
Arkoosh owns all Environmental Attributes or Renewable Energy
Credits/Certificates;

 Change to paragraph 6.2 to allow Mr. Arkoosh to adjust the “Initial Year
Monthly Net Energy Amounts” on a monthly, rather than quarterly, basis;

 Revision to paragraph 12.4 relating to Scheduled Maintenance; and

 Several other minor revisions in an attempt to add clarity.

Idaho Power requests that its Application be processed by Modified Procedure.
STAFF RECOMMENDATION
Staff recommends that the case be processed by Modified Procedure with at least a
28-day comment period and opportunity for reply.
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure with a 28-
day comment period and opportunity for reply?

M:IPC-E-14-06_ks

1 This change is relevant to the 90/110 performance requirement.