20220228Annual Report 2021.pdf

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LISA D. NORDSTROM
Lead Counse!
I nordstrom@ida hooower.com
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Enclosurescc: Terri Carlock (w/encls.)
Donn English (w/encls.)
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VIA ELECTRONIC FILING
February 28,2022
Jan Noriyuki, Secretary
ldaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg 8,
Suite 201-A (83714)
PO Box 83720
Boise, ldaho 83720-0074
Case No. IPC-E-16-32 - ldaho Power Company's Application for a
Determination of Hells Canyon Complex Relicensing Costs through 2015
as Prudently lncurred - Annual Report lor 2021
Dear Ms. Noriyuki:
Pursuant to Order No. 34031 and the agreement between Idaho Power Company
("ldaho Powe/'), ldaho Public Utilities Commission ("Commission") Staff, and the ldaho
lrrigation Pumpers Association, ldaho Power submits its fourth annual report as set forth
in the Hells Canyon Complex Relicensing Expenditures Annua! Report Outline filed with
the Commission in this case on December 27,2018.
lf you have any questions regarding this report, please contact Regulatory
Consultant Courtney Waites at [phone] or [e-mail].
Sincerely,
RE
Lisa D. Nordstrom
sEm.
An rrAcolPcofiErrY
HELLS CANYON COMPLEX RELICENSING EXPENDITURES
2021 ANNUAL REPORT
February 28,2022
ln Order No. 34031 issued in Case No. IPC-E-16-32 on April 13, 2018, the Idaho Public
Utilities Commission ("Commission") approved a Stipulation between ldaho Power Company
("ldaho Powe/' or "Company"), Commission Staff, and the ldaho lrrigation Pumpers Association
(collectively referred to as "Signing Parties"), providing for interested parties to (1) collaborate
on a process for filing future Hells Canyon Complex ("HCC") Relicensing Expenditures annua!
reports, including the content of the report, and (2) work to identifiT the detail requested to be
contained within a work order description to allow for the reporting of work orders by projects
specific to HCC relicensing work.
Throughout 2018, the Signing Parties collaborated on both items and reached an
agreement on an outline detailing the content to be incorporated in future annual reports. The
outline identified those items that will be recurring with each annua! report and specified some
items exclusive to the 2018 Annual Report, including an explanation of ldaho Powe/s efforts to
enhance accounting records to better identifo how expenditures are necessary to relicensing
efforts. Because the Company reported on improvements to the accounting records in the 2018
Annual Report, this report includes only those items agreed to by the Signing Parties for recurring
discussion.
BACKGROUND
The HCC, located on the Snake River where it forms the border between ldaho and
Oregon, provides approximately 70 percent of ldaho Power's hydroelectric generating
nameplate capacity and 30 percent of its total energy generated. ln July 2003, the Company
filed an application with the Federal Energy Regulatory Commission ("FERC') for a new license
in anticipation of the July 2005 expiration of the then-existing license. Since the expiration of
that license, ldaho Power has been operating the project underannual licenses issued by FERC.
The Company's efforts towards relicensing the HCC have spanned nearly three decades yet
there are three issues that must be resolved in advance of a license issuance: (1) the Clean
Water Act ('CWA") S 401 certification ('S 401 certification'), (2) The Endangered Species Act
('ESA") consultation, and (3) the potential for a revised supplemental National Environmental
Policy Act (NEPA") analysis.
Clean Water Act S 401 Certification
$ 401 certification ftom both Idaho and Oregon is required before FERC can issue its fina!
license. ldaho Power filed water quality certification applications with the states requesting that
each state certiff that any discharges from the project comply with applicable state water quality
Hells Canyon Complex Relicensing Expenditures 2021 Annual Report - Page 1
standards. The Company worked with the states to identiff measures that will provide
reasonable assurance that discharges from the HCC will adequately address applicable water
quality standards. ln the 2016 S 401 certification application prooess, Oregon required ldaho
Power to comply with fish passage and reintroduction conditions. ldaho's water quality
certification, however, provides that ldaho Power shall take no action that may result in the
reintroduction or establishment of spawning populations of any fish species into ldaho's waters
without consultation with and express approval of the State of ldaho. ln 2016, ldaho Power filed
a petitionl with FERC requesting that FERC resolve the conflict between Oregon's and ldaho's
conditions and declare that the Federal Power Act pre-empts the Oregon state law. FERC
issued an ordef dismissing ldaho Powe/s petition as premature. ldaho Power then sought
rehearing, which FERC denied as well. ln early 2018,ldaho Power filed with the D.C. Circuit
Court an appea!3 of FERC's order denying ldaho Powe/s petition requesting that FERC resolve
the conflict with Oregon and ldaho with respect to the Company's S 401 certification while the
governors of Oregon and ldaho continued to negotiate a potential resolution of the disputed
issues.
ln April 2019, the states of ldaho and Oregon, along with ldaho Power, reached a
settlement that requires ldaho Power to increase the number of Chinook salmon it releases each
year through expanded hatchery production. Additionally, ldaho Power is required to fund a
totalof $12 million of research and waterquality improvements in the HCC over aZ0-year period
following the issuance of the license. These measures are in exchange for Oregon removing
the fish passage requirement from the Oregon S 401 certification for at least the first 20 years
after final license issuance. The estimated combined cost of the mandated water quality
improvements and expanded hatchery production is $20 million over the first 20 years of the
new license term. ln May 2019, Oregon and ldaho issued final $ 401 certifications. These
certifications have been submitted to FERC as part of the relicensing prooess.
ln July 2019, three third-party lawsuits were filed against the Oregon Department of
Environmental Quali$ in Oregon state court challenging the Oregon S 401 certification based
on fish passage, water temperature, and mercury issues associated with the Snake River and
HCC. Two of the lawsuits were consolidated, and the Company intervened in that lawsuit. As
discussed later, in 2021 the parties of the lawsuit reached a settlement. The court dismissed
the third challenge to the Oregon S 401 certification with prejudice.
ln December 2019, ldaho Power filed an Offer of Settlement with FERC requesting
specific language be included in the new HCC license based upon settlement among the
Company, ldaho and Oregon. FERC has received several comments opposing the Offer of
Settlement and its decision relating to the Offer of Settlement is pending as of the date of this
report.
1 Petition of ldaho Power Company for Declaratory Order on Preemption and Request for Expedited Action, P-
197 1 -079 (fi led November 23, 201 6).
2 ldaho Power Company, 158 FERC l[61,048 (2017) (January 19 Order).
3 ldaho PowerCompanyv. FERC, Case No. 18-1046 (D.C. Cir).
Hells Canyon Complex Relicensing Expenditures 2021 Annual Report - Page 2
Endanoered Species Act Consultation
In September 2007, in connection with the issuance of its final Environmental lmpact
Statement ('ElS"), FERC notified the Department of Commerce National Oceanic and
AtmosphericAdministration's NationalMarine Fisheries Service ("NMFS") and the United States
Fish and Wildlife Service ("USFWS") of its determination that the licensing of the HCC was likely
to adversely affect ESAlisted species, including the bull trout and fall Chinook salmon and
steelhead, under the NMFS's and USFWS's jurisdiction and requested that the NMFS and
USFWS initiate formal consultation under Section 7 of the ESA on the licensing of the HCC.
Each of the NMFS and USFWS responded to FERC that the conditions relating to the licensing
of the HCC were not fully described or developed in the final EIS as the measures to address
the water quality effects of the project were yet to be fully defined by the S 401 certification
process. The NMFS and USFWS therefore recommended that formal consultation under the
ESA be delayed untilthe S 401 certification process is completed.
SUMMARY OF RECENT ACTIVITIES
ln July 2020, ldaho Power submitted to FERC its supplement to the final license
application that incorporated the settlement agreement reached between ldaho and Oregon on
the $ 401 certifications, updated the 2003 license application, and provided feedback on
proposed modification of the 2007 final EIS for the HCC. The July 2020 filing also contained an
updated cost analysis of the HCC and a request for FERC to issue a SO-year license and initiate
a supplemental NEPA process at FERC. ln addition, the Company prepared draft biological
assessments in consultation with the USFWS and the NMFS and filed those with FERC in
October 2020. The draft biological assessments provide the necessary information to the
USFWS and the NMFS to issue their biological opinion as required under the ESA.
With respect to the Clean WaterAct $ 401 certification, in September 2021, a settlement
agreement between the third parties and the Oregon Department of Environmental Quality was
reached, resolving all remaining litigation over Oregon's issuance of a S 401 certification, and
preserving the settlement reached between ldaho Power and the states of ldaho and Oregon
over fish passage.
ln December 2020, FERC Staff issued six additional informational requests ("AlR") from
ldaho Power to help with the analysis and baseline for the project moving forward. The
Company filed the responses and subsequently, in September202l FERC issued an additional
ten AlRs to clariff the cost of the proposed mitigation measures. The Company filed responses
to allthe AlRs.
FUTURE RELICENSING ACTIVITIES
Now that the states have issued their final $ 401 certifications, FERC will likely need to
provide a supplemental NEPA analysis given the HCC final EIS was issued in 2007. ldaho
Power anticipates FERC will issue a public notice of the process and timeline for the HCC in
2022which will indicate whether or not a revised supplemental NEPA analysis will be provided.
Following a NEPA decision, FERC will conduct the formal ESA consultation with the NMFS and
the USFWS, which had been delayed unti! the S 401 certification process was completed. FERC
cannot issue a license for the HCC until ESA consultation on the licensing project is complete.
Hells Canyon Complex Relicensing Expenditures 2021 Annual Report - Page 3
ACCOUNTING DETAIL
ldaho Powe/s request in Case No. IPC-E-16-32 included a prudence review of HCC
relicensing expenditures incurred for nearly 20 years, from 1997 through December 31, 2015.
During their extensive review and audit of the expenditures, Commission Staff requested the
Company ensure that future reviews of accounting detail better align the project descriptions
with specific HCC relicensing activities. As part of collaborative efforts to develop a process for
filing annual reports, the Signing Parties to the Stipulation in Case No. IPC-E-16-32 identified
the detail to be contained within a work order description in the Company's accounting system
to allow for the reporting of work orders by project specific to HCC relicensing work. They agreed
that as part of the annual report, ldaho Power will compile a list of all budget lD and work order
project lDs specific to HCC relicensing expenditures incurred over the reporting period. The
Company will also identiff the outstanding issue with which each expenditure is associated: $
401 certification, ESA consultation, NEPA, or al! HCC relicensing efforts.
The Company has included all expenditures incurred since December 31, 2015 - the
point in which ldaho Power's expenditures covered in the prudence request in Case No. IPC-E-
16-32 concluded, in the summary of the HCC relicensing expenditures included as Attachment
1. ln addition, Attachment 2 includes a table that summarizes allHCC relicensing expenditures
incurred during the 1997 through 2021 time period. The following summarizes the projects
associated with HCC relicensing expenditure work orders detailed in Attachment 1 comprising
the majority of the 2021 costs:
a Mercurv Studies and Leqal Costs. Similar to prior years, the Company spent an
additional $2.0 million on water quality studies in support of CWA S 401
certifications and FERC's anticipated supplemental environmental analysis. ln
addition, ldaho Power incurred $3.2 million of expenses, of which $3.0 million was
AFUDC charges related to previously incurred outside legalfees associated with
legaladvice on the CWA S 401 certifications and associated legal challenges for
both states and for ongoing relicensing matters before FERC.
Snake River Stewardship Proqram Database and Reoortino Tool. This reporting
tool is required to support implementation of the Snake River Stewardship
Program. Work to develop the required technology that will be functionalwhen a
license is issued and deployed to monitorand maintain allaspects of the mitigation
program continues with expenditures of approximately $765,000 in 2021.
a
o HCC Sediment Proqrams. Expenses continue to be incurred for developing a
sediment monitoring plan and the fall Chinook gravel monitoring plan, in 2021
another $900,000 were incurred. Under these plans, collection and analysis of
data will occur to quantiff the amount of sediment entering, moving through and
leaving the 60 miles of the river system from the Hells Canyon Dam to the
confluence with the Salmon River. Data collection includes surveying the river
channelwith a multibeam sonar, Light Detection and Ranging (LiDAR) surveys of
sandbars, underwater photography of fal! Chinook spawning gravels, measuring
sediment inputs from tributaries, water velocity mapping, and taking grave! and
sand samples. Data analysis includes mapping changes in sedimentvolumes and
particle sizes and relating these changes to the Iocal hydraulics, estimating the
Hells Canyon Complex Relicensing Expenditures 2O2l Annual Report - Page 4
sedlment load from tributary streams, and calculating the modern and historic
sediment loads to the system. The work also supports the aquatic, water quality
and cultural resource studies and is required under the final ElS.
o Snake River Stewardship Prooram Development. ldaho Powe/s expenditures
associated with the watershed enhancement program, which are primarily
AFUDC charges as program development is nearly complete, were approximately
$850,000 again in 2021.
a Bull Trout Proqram. The Company spent approximately $910,000 for continued
evaluation of the status of bull trout populations in the HCC and to understand the
potential effects of the HCC on those populations. This work involves population
assessments in the tributaries to the HCC, including Pine Creek, lndian Creek and
the \Mldhorse River and in the mainstem Snake River below the HCC. The bull
trout program supports the preparation of a biological assessment, including those
assessments filed with FERC in October 2020,thatwill be used by FERC to initiate
formal consultation with the USFWS. ldaho Power anticipates these expenses
will continue until FERC issues a new license as they are a component of the
supplementalenvironmentalanalysis required under NEPA and for ongoing ESA
consultation.
Oreqon Water Resources Department Fees. The state of Oregon assesses
annual fees on hydroelectric projects to cover the administrative costs of the
Oregon state departments that administer and oversee hydroelectric projects in
the state. These fees are based on the theoretical horsepower ("THP") produced
by the facility. ln2021, Oregon legislatively revised the hydroelectric program fee
structure, resulting in an increase in the annual fee for the HCC from $0.28ITHP
to $0.48/THP, for a total of approximately $505,000 of expenses in 2021.
Roll-Up Work Orders. Finally, $26.7 million of the 2021 expenditures was primarily
associated with the Allowance for Funds Used During Construction on the HCC
relicensing roll-up work orders.
CONCLUSION
ldaho Power continues to work with ldaho and Oregon on measures to provide
reasonable assurance that any discharges from the HCC will comply with applicable state water
quality standards and associated measures identified in the final $ 401 certifications, and
continues to cooperate with the USFWS, NMFS, and FERC in an effort to address ESA
concerns. Once the fina! EIS and ESA consultation is complete, FERC can issue a license. The
Company is unable to predict the timing of issuance by FERC of any license order, which could
occur as early as2023, but believes issuance is more likely in 2024 or thereafter.
o
a
Hells Canyon Complex Relicensing Expenditures 2021 Annual Report - Page 5
RELICENSING EXPENDITURES 2021 ANNUAL REPORT upon the following named
parties by the method indichted below, and addressed to the following:
Commission Staff
Dayn Hardie
De[ruty Attorney General
Ildaho Public Utilities Commission
11331 W. Chinden Blvd,, Bdg 8,
Suite 201-A (83714) I
Boise, lD 83720-0074
! HEREBY CERTI
correct copy of I
lndustrial Customers of ldaho Power
Peter J. Richardson
Richardson Adams, PLLC
P.O. Box 7218
515 N.27th Street
Boise, lD 83702
Dr. Don Reading
6070 Hill Road
Boise, lD 83703
Anthony Yankel
12700 Lake Ave., Unit 2505
Lakewood, OH 44107
CERTIFICATE OF SERVICE
that on the 28th day of February 2022, ! served a true and
POWER COMPANY'S HELLS CANYON COMPLEX
_Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
ldaho lrrigation Pumpers Association, lnc. _Hand Delivered
Eric L. OIsen _U.S. Mail
Echo Hawk & Olsen, PLLC Overnight Mail
505 Pershing Ave., Suite 100 _FAX
PO Box 6119 X Email [e-mail]
Pocatello, lD 83205
_Hand Delivered
_U.S. Mai!
Overnight Mail
_FAXX Email [e-mail]
_Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
_Hand Delivered
_U.S. Mail
Overnight Mail
_FAXX Email [e-mail]
(}-.^J=
Stacy Gust, Regulatory Administrative
Assistant
Hells Canyon Complex Relicensing Expenditures 2021 Annual Report - Page 6
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-16-32
IDAHO POWER COMPANY
ATTACHMENT 1
TO HELLS CANYON COMPLEX RELICENSING
EXPENDITURES 2021 ANNUAL REPORT
(See attached spreadsheet)
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-16-32
IDAHO POWER COMPANY
ATTAGHMENT 2
TO HELLS CANYON COMPLEX RELICENSING
EXPENDITURES 2021 ANNUAL REPORT
(See attached spreadsheet)