20160204Comments.pdf

DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.0074
[phone]
IDAHO BAR NO. 8370
Street Address for Express Mail:
4]2W, WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
IN THE MATTER OF IDAHO POWER'S
APPLICATION TO APPROVE OR REJECT
ENERGY SALES AGREEMENT WITH J.R.
SIMPLOT COMPANY FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY.
REC EIVED
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC.E.16.O1
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Daphne Huang, Deputy Attorney General, and in response to the Notice of
Application and Notice Modified Procedure issued in Order No. 33451 on January 14,2016, in
Case No. IPC-E-16-01, submits the following comments.
BACKGROUND
On January 6,20l6,Idaho Power Company filed an Application asking the Commission
to accept or reject its Energy Sales Agreement with J.R. Simplot Company. The Agreement is
for the sale and purchase of electric energy generated by the SimploGPocatello cogeneration
project, a "qualifying facility" (QF) as defined under the Public Utility Regulatory Policies Act
(PURPA), located near Pocatello, Idaho.
On January 4,2016,Idaho Power entered into an Agreement with Simplot, subject to this
Commission's approval, and pursuant to the terms and conditions of various Commission Orders
STAFF COMMENTS FEBRUARY 4,2016
and PURPA. Application at2. Under PURPA, electric utilities must purchase electric energy
from QFs at rates approved by this Commission. 16 U.S.C. $ 824a-3; Idaho Power Co. v. Idaho
P(JC,I55 Idaho 780,789,316 P.3d 1278,1287 (2013). The purchase or "avoided cost" rate
shall not exceed the "'incremental cost' to the purchasing utility of power which, but for the
purchase of power from the QF, such utility would either generate itself or purchase from
another source." Order No. 32697 at7, citing Rosebud Enterprises v. Idaho PUC,128 Idaho
624,917 P.2d78l (1996); l8 C.F.R. 5292.101(bX6) (defining "avoided cost").
The Agreement between Idaho Power and Simplot replaces an existing contract that
expires March 1,2016. Application at 2. Under the terms of the Agreement, Simplot elected to
contract with Idaho Power for a three-year term using non-levelized, "published" avoided cost
rates. Id. at 4. The Commission establishes "published" avoided cost rates using the "SAR
methodology,"l for wind and solar QFs with a design capacity of up to 100 kilowatts (kW), and
for QFs of all other resource types with a design capacity of up to l0 average megawatts (aMW).
Order No. 32697 at7-8. The Simplot-Pocatello cogeneration project is an "other resource type"
QF. Application at2. The Agreement thus uses the "other" published avoided cost rates, as
established by the Commission in Order No. 33305, for energy deliveries of less than l0 aMW.
Id. at 4.
The nameplate rating of the Simplot-Pocatello Project is 15.9 megawatts (MW), however,
Simplot agrees not to exceed 10 aMW on a monthly basis. Id. at 4. If the facility does exceed
the monthly l0 aMW limit, Simplot agrees that "Idaho Power will accept the energy (Inadvertent
Energy) that does not exceed the Maximum Capacity Amount, but will not purchase or pay for
this Inadvertent Energy." Id.
The Commission has found it "reasonable, appropriate, and in the public interest to
compensate QFs" based on the capacity they provide to the purchasing utility, as well as the
energy they produce. Order No. 32697 at 16. In calculating capacity payments, the Commission
considers the utility's "capacity deficiency" based on load and resource balances in the utility's
Integrated Resource Plan (IRP), as well as the "QF's ability to contribute to [the] utility's need
' The SAR methodology uses a "surrogate avoided resource" to calculate standardized avoided cost rates for QFs
with design capacities under prescribed limits. See Order No. 32697 at7-8; see also 18 C.F.R. $ 29T0a@).
STAFF COMMENTS FEBRUARY 4,2016
for capacity ." Id. at l6,2L Because the Agreement in this case is a replacement contract,2 its
rates include capacity payments throughout the contract's term. Application at 3.
The facility is already interconnected and selling energy to Idaho Power, thus the
Agreement specifies a Scheduled First Energy Date and Scheduled Operation date of March 1,
2016,3 but no later than 120 days after Commission approval in a final, non-appealable Order.
Id. at 5.
The terms and provisions of the Agreement include that "applicable interconnection
charges and monthly operation and maintenance charges under Schedule 72 will be assessed to
Simplot." Id. Also, PURPA QF generation "must be designated as a network resource (DNR) to
serve Idaho Power's retail load on its system." Id. at 5-6. To maintain DNR status, "there must
be a power purchase agreement associated with [the project's] transmission service request that
maintains compliance with Idaho Power's non-discriminatory administration of its Open Access
Transmission Tariff (OATT) and maintains compliance with [Federal Energy Regulatory
Commission] FERC requirements." Id. at 6.
STAFF ANALYSIS
Staff has reviewed the proposed rates and confirms they are correct. All other terms and
conditions contained in the proposed Agreement are consistent with prior Commission orders.
RECOMMENDATION
Staff recommends that the Commission approve all of the Agreement's terms and
conditions and declare that all payments made by Idaho Power to J.R. Simplot Company for
purchase of energy from the Simplot-Pocatello cogeneration project will be allowed as prudently
incurred expenses for ratemaking purposes.
2 The Simplot-Pocatello cogeneration project has been in operation since at least 1991, and has thus been
contributing to ldaho Power's system capacity for many years. See Order Nos. 23552,25353,28730,29577,30028,
32790,33240.
3 See Appendix B at 38. The Application contains a typographical error, indicating a First Energy and Scheduled
Operation Date of March l,2015.
STAFF COMMENTS FEBRUARY 4,2016
Respecttully submitted this Ltb day of February 2016.
Technical Staff: Yao Yin
i:umisc:commentVipcel 6. ldjhyy commonts
STAFF COMMENTS FEBRUARY 4,2016
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 4TH DAY oF FEBRUARY 2016,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN
CASE NO. IPC-E-16-OI, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
DONOVAN E WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-mail : [e-mail]
[e-mail]
J R SIMPLOT COMPANY
ATTN: CORP SECRETARY
PO BOX 27
BOISE ID 83707
E-mail: [e-mail]
GREGORY M ADAMS
RICHARDSON ADAMS PLLC
PO BOX 7218
BOISE ID 83707
E-mail: [e-mail]
RANDY C ALLPHIN
IDAHO POWER COMPANY
PO BOX 70
BOrSE rD 83707-0070
E-mail: [e-mail]
DON STURTEVANT
J R SIMPLOT COMPANY
PO BOX 27
BOISE ID 83707
E-mail: [e-mail]
SECRETARY
CERTIFICATE OF SERVICE