20150206notice_of_petition_order_no_33222.pdf

Office of the Secretary
Service Date
February 6,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S PETITION TO MODIFY )CASE NO.IPC-E-15-O1
TERMS AND CONDITIONS OF )
PROSPECTIVE PURPA ENERGY SALES )NOTICE OF PETITION
AGREEMENTS )
)NOTICE OF
)INTERVENTION DEADLINE
)
________________________________
)ORDER NO.33222
On January 30,2015,Idaho Power Company filed a Petition with the Commission to
modify the terms and conditions by which Idaho Power must purchase energy generated by
qualifying facilities (QFs)under the Public Utility Regulatory Policies Act (PURPA).
Specifically.Idaho Power asks that the Commission issue an Order reducing the Commission-
established maximum required term for the Company’s prospective PURPA contracts from 20
years to two years.Idaho Power asserts the change is necessary to ensure system reliability and
to ensure its customers’rates are just,reasonable,and in the public interest.With its Petition,the
Company filed supporting testimony by William H.Hieronymus,Randy Allphin,and Lisa Grow.
BACKGROUND
PURPA was passed as part of the National Energy Act of 1978.The Act’s goals
include the encouragement of electric energy conservation,efficient use of resources by electric
utilities,and equitable retail rates for electric consumers,as well as the improvement of electric
service reliability.16 U.S.C.§2601 (Findings).Under the Act,the Federal Energy Regulatory
Commission (FERC)prescribes rules for PURPA’s implementation.16 U.S.C.§824a-3(a),(b).
State regulatory authorities such as the Idaho Public Utilities Commission implement FERC
rules,but have “discretion in determining the manner in which the rules will be implemented.”
Idaho Power Company v.Idaho Pub.U/il.Comm.,155 Idaho 780,782,316 P.3d 1278,1280
(2013)(citingFE.R.Cv.A1ississipi.456 U.S.742,751 (1982)).
PURPA requires electric utilities,unless otherwise exempted,to purchase electric
energy from qualifying facilities (QFs).16 U.S.C.§824a-3;see also 18 C.F.R.§292.101
(defining qualifying facilities),292.303(a).In Idaho,the purchase rate for a utility’s contract to
NOTICE OF PETITION
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33222 1
purchase QF energy under PURPA must be approved by this Commission.Idaho Power,155
Idaho at 789,316 P.3d at 1287.The purchase rate for PURPA contracts must be ‘just and
reasonable to the electric consumers ...and in the public interest”and “shall not discriminate
against [QFs].”16 U.S.C.§824a-3(b);18 C.F.R.§292.304.Also,the purchase rate shall not
exceed the “incremental cost”to the utility,defined as the cost of energy which,but for the
purchase from [the QFI,such utility would generate or purchase from another source.”16
U.S.C.§824a-3(d);18 C.F.R.§292.101(6)(defining avoided costs).
PURPA and FERC’s implementing regulations are silent as to contract length;
consequently,the issue is in the Commission’s discretion.See 4/ion Energy,Inc.v.Idaho
Power,107 Idaho 781,785-86,693 P.2d 427,431-32 (1984);Idaho Power,155 Idaho at 782,
316 P.3d at 1280.Since PURPA was first implemented in Idaho,this Commission has
periodically modified the length for PURPA contracts.See Order No.29029.Initially,the
Commission established a maximum contract term of 35 years,which it shortened to 20 years in
1987.Order Nos.21018,21630.The term was reduced to five years in 1996,and raised back to
20 years in 2002.Order Nos.26576,29029.In its Petition,Idaho Power asks the Commission
to again modify the maximum term of its QF contracts.
NOTICE OF PETITION
YOU ARE HEREBY NOTIFIED that Idaho Power’s Petition states the Company has
entered into PURPA QF projects since 1982.Petition at 17 (citing Aliphin Direct,Exh.1).
Although its first contracts were for relatively small amounts of PURPA generation,Idaho Power
has seen a “dramatic increase in the number and size of PURPA projects ...coming on-line and
under contract.”Id.at 18.
YOU ARE FURTHER NOTIFIED that Idaho Power asserts it currently has a total of
1.302 megawatts (I’vlW)of PURPA QF projects under contract.Id.at 2 (citing Allphin Direct,
Exh.2).Also,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.(citing Allphin
Direct,Exh.1,2).Idaho Power estimates that the addition of these proposed solar projects
would represent a “long-term financial obligation to customers of approximately $2.1 billion,”in
addition to the existing $2.6 billion obligation over the life of the Company’s projects already
on-line and operational.Id.at 3 (citing Allphin Direct,Exh.4).
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YOU ARE FURTHER NOTIFIED that Idaho Power contends it is reaching a point at
which the capacity of proposed projects will exceed its operational need.Id.at 20 (citing
Allphin Direct,Exh.3,4,9).Idaho Power states that “the continued creation of 20-year term
[PURPA]contracts places undue risk on customers at a time when Idaho Power has sufficient
resources to meet customer demands.”Id.at 2.According to Idaho Power,if it is obligated to
continue its acquisition of large amounts of unneeded intermittent PURPA generation,it will
result in inflation of its power supply costs and the degrading of its system’s reliability.Id.at
20-27.Idaho Power further asserts that the 20-year lock-in of contractual rates without proper
consideration of the Company’s need for proposed contracts’energy is unreasonable and
contrary to the public interest.Id.at 27-34.In further support,Idaho Power cites this
Commission’s recent decisions expressing concern about the consequences of the continued
addition of extremely large amounts of intermittent QF generation onto Idaho Power’s system.
Id.at 3,21 (see Order Nos.33198-33202,33204-33209).
YOU ARE FURTHER NOTIFIED that Idaho Power’s Petition identifies several
issues concerning PURPA implementation that this Commission could examine and possibly
revise.Id.at 4-5.However,the Company requests only that “the maximum required term for
any Idaho Power PURPA energy sales agreement be reduced from 20 years to two years.”Id.at
.3.
DISCUSSION AND FINDINGS
In several recent decisions,we expressed concern that,“in less than four months’
time,13 QFs have contracted with Idaho Power for nearly 400 MW of solar generation —all
expected to be on-line and producing power by the end of 2016.”Order No.33209 at 7 (see
Errata;see also Order Nos.33 198-33202,33204-33208).We further noted,“The combined 20-
year contractual obligation of these 13 projects is approximately $1.4 billion,”of which 100%is
passed on to ratepayers.Id.Despite adjustments to the IRP methodology to improve the
accuracy of avoided cost rates,QFs continue to request contracts for increasing capacities.Id.at
8;Petition at 2,18.Thus,even before Idaho Power’s current Petition,we were troubled by the
potential negative impact of “the substantial amount of must-take intermittent generation”on
Idaho Power’s ability to reliably serve customers.Order No.33209 at 8 (see also Order Nos.
33 198-33202,33204-33208).
NOTICE OF PETITION
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33222 3
Upon reviewing this Petition,the attached testimonies,and exhibits,our concerns are
unabated.We find that Idaho Power’s Petition presents issues requiring further proceedings
before this Commission.To date,the Commission has received four Petitions to Intervene.One
of the prospective intervenors has filed requests for production.Given the complexity of issues
and the level of interest reflected in the filings thus far,we believe formal proceedings are
necessary.
However,formal proceedings are often protracted.We find there is sufficient
evidence that the predicted influx of high-capacity PURPA contracts could significantly and
detrimentally impact customer rates and system reliability before this matter is fully resolved.
We therefore find that action pending resolution of this matter is warranted.
We have previously ordered five-year terms for PURPA contracts from 1996 to 2002.
Order No.26576.In 2002,we raised the term to 20 years.Order No.29029.Since then,we
have considered but rejected a reduction in contract length.See Order No.32697 at 24.We now
find that circumstances have changed.
Changes in technology,load,resources,and federal tax incentives,among countless
other factors,require the frequent —if not constant —re-examination of how we implement
PURPA.We find that the evidence supports a temporary reduction of the maximum contract
term for Idaho Power’s QF contracts to five years.We believe this interim measure will enable
the Commission to address the PURPA implementation issues raised in this case,without having
to simultaneously manage a continued tide of new PURPA cases.
The five-year term for new PURPA contracts is effective as of February 5,2015,and
shall remain in effect unless and until otherwise ordered by the Commission.The Commission
directs the parties to establish an expedited case schedule.The uncertainty caused by a lengthy
technical hearing process would be unfair to project developers.Therefore,we will expect to
resolve the issues raised in a timely manner.
NOTICE OF INTERVENTIONS AND PARTIES
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter
must file a Petition to Intervene with the Commission pursuant to this Commission’s Rules of
Procedure 72 and 73,IAPA 31.01.01.072 and -.073.All Petitions to Intervene must be filed
no later than February 20,2015.Persons desiring to present their views without parties’rights
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ORDER NO.33222 4
of participation and cross-examination are not required to intervene and may present their
comments without prior notification to the Commission or the parties.
YOU ARE FURTHER NOTIFIED that the Commission has already received
Petitions to Intervene by the following Petitioners:J.R.Simplot Company,Idaho Conservation
League,Intermountain Energy Partners,and Snake River Alliance.
YOU ARE FURTHER NOTIFIED that the following person is designated as Idaho
Power’s representative in this matter:
Donovan E.Walker
Idaho Power Company
1221 West Idaho Street
P.O.Box 70
Boise,ID 83707
E-Mail:dwalker(idahopower.corn
YOU ARE FURTHER NOTIFIED that,once the deadline for intervention has
passed,the Commission Secretary shall prepare a Notice of Parties.As soon as possible
thereafter,Staff counsel will convene an informal scheduling conference.
NOTICE OF PROCEDURE
YOU ARE FURTHER NOTIFIED that the Petition,exhibits,and testimonies have
been filed with the Commission and are available for public inspection during regular business
hours at the Commission offices.The Application,exhibits,and testimonies are also available
on the Commission’s web site at y uçjdghogw.Click on the “File Room”tab at the top of
the page,scroll down to “Open Electric Cases,”then click on the case number as shown on the
front of this document.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and the Public Utility
Regulatory Policies Act of 1978 (PURPA).The Commission has authority under PURPA and
the implementing regulations of the Federal Energy Regulatory Commission (FERC)to set
avoided costs,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 authority under Title 61 and PURPA.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 3 1.01.01.000,etseq.
NOTICE OF PETITION
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33222
YOU ARE FURTHER NOTIFIED that all hearings and oral arguments in this matter
will be held in facilities meeting the accessibility requirements of the Americans with
Disabilities Act (ADA).Persons needing the help of a sign language interpreter or other
assistance in order to participate in or to understand testimony and argument at a public hearing
may ask the Commission to provide a sign language interpreter or other assistance at the hearing.
The request for assistance must be received at least five (5)working days before the hearing by
contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSiON
PU BOX 83720
BOISE,IDAHO 83720-0074
[phone] (Telephone)
[phone] (FAX)
E—4ai1:s1aF\(nu,dihuo
ORDER
IT IS HEREBY ORDERED that effective February 5,2015,and pending further
order of the Commission,the maximum contractual term for Idaho Power’s new PURPA
contracts shall be five years.
IT IS FURTHER ORDERED that persons desiring to intervene in this matter shall
file a Petition to Intervene by February 20,2015.Once the deadline for Petitions to Intervene
has passed,the Commission Secretary shall prepare and issue a Notice of Parties.
IT IS FURTHER ORDERED that,as soon as possible after the Notice of Parties has
issued,Staff counsel shall convene an informal scheduling conference for the parties to discuss
how to expedite proceedings in this case.
IT IS FURTHER ORDERED that the Petitions to Intervene filed by J.R.Simplot
Company,Idaho Conservation League,Intermountairi Energy Partners,and Snake River
Alliance are granted.
IT IS FURTHER ORDERED that all parties in this proceeding serve all papers
hereafter filed in this matter on all parties of record.These intervenors are represented by the
following for purposes of service:
NOTICE OF PETITION
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33222 6
J.R.SMPLOT COMPANY:
Peter .1.Richardson
Gregory \I.Adams
Richardson Adams.PLLC
P0 Box 7218
Boise,ID 83702
E-mail:iJzuic1I4cLLc1
urg richardsonadams.con
Dr.Don Reading
6070 Hill Road
Boise.ID 83703
E-mail:
Lt)A[I()(‘()NSERVKI’ION IEAGtJE:
Benjamin J.Otto
Idaho Conservatioi League
710 N.6”Street
Boise,ID 83702
E-mail:tidihoconservationIgug
INTERMOUNTAIN ENERGY PARTNERS,LtC:
Dean J.Miller
McDevitt &Miller LLP
420 W.Bannock Street
P0 Box 2564 -83701
Boise.ID 83702
LeifElgethun,PE.LEED AP
lntermountain Energy Partners,LLC
P0 Box 7354
Boise.ID 83707
E—mail:leifa sitehasedenergv.com
E-mail:jq1mcjt1m1HeLcQrn
SNAKE RIVER ALLiANCE:
Kelsey .Jae Nunez
Snake River Alliance
223 N.6 Street,Suite 317
P0 Box 1731
l3oise.1[)83701
E-mail:knunci anakeriveraI anec.oru
NOTiCE OF PETITION
NOTICE OF INTERVENTION DEADLINE
ORI)ER NO.33222 7
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of February 2015.
PA KJELLA RESIDENT
ATTEST:
mmission Secretary
O:IPC-E-1 5-0 ldjh
A ,1
U fiL Li (-4”
MARSHA H.SMITH,COMMISSIONER
NOTICE OF PETITION
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33222
MA.A.REDFORD,
8