20240228Annual Report 2023.pdf

Matthew Larkin
Revenue Requirement Senior Manager
[e-mail]

VIA ELECTRONIC FILING

February 28, 2024

Monica Barrios-Sanchez, Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg 8,
Suite 201-A (83714)
PO Box 83720
Boise, Idaho 83720-0074

RE: Case No. IPC-E-16-32 – Idaho Power Company’s Application for a
Determination of Hells Canyon Complex Relicensing Costs through 2015
as Prudently Incurred – Annual Report for 2023

Dear Ms. Barrios-Sanchez:

Pursuant to Order No. 34031 and the agreement between Idaho Power Company
(“Idaho Power”), Idaho Public Utilities Commission (“Commission”) Staff, and the Idaho
Irrigation Pumpers Association, Idaho Power submits its sixth annual report as set forth
in the Hells Canyon Complex Relicensing Expenditures Annual Report Outline filed with
the Commission in this case on December 27, 2018.

If you have any questions regarding this report, please contact Regulatory
Consultant Courtney Waites at [phone] or [e-mail].

Sincerely,

Matthew Larkin

MTL:sg
Enclosures
cc: Terri Carlock (w/encls.)
Donn English (w/encls.)

RECEIVED
Wednesday, February 28, 2024 2:42PM
IDAHO PUBLIC
UTILITIES COMMISSION

Hells Canyon Complex Relicensing Expenditures 2023 Annual Report – Page 1

HELLS CANYON COMPLEX RELICENSING EXPENDITURES
2023 ANNUAL REPORT

February 28, 2024

In 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 Idaho Power Company
(“Idaho Power” or “Company”), Commission Staff, and the Idaho Irrigation 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 annual
reports, including the content of the report, and (2) work to identify 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 annual report and specified some
items exclusive to the 2018 Annual Report, including an explanation of Idaho Power’s efforts to
enhance accounting records to better identify 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 Idaho and
Oregon, provides approximately 70 percent of Idaho Power’s hydroelectric generating
nameplate capacity and 30 percent of its total energy generated. In 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, Idaho Power has been operating the project under annual 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”) § 401 certification (“§ 401 certification”), (2) The Endangered Species Act
(“ESA”) consultation, and (3) a revised supplemental National Environmental Policy Act
(“NEPA”) analysis.

Clean Water Act § 401 Certification

§ 401 certification from both Idaho and Oregon is required before FERC can issue its final
license. Idaho Power filed water quality certification applications with the states requesting that
each state certify that any discharges from the project comply with applicable state water quality
Hells Canyon Complex Relicensing Expenditures 2023 Annual Report – Page 2
standards. The Company worked with the states to identify measures that will provide
reasonable assurance that discharges from the HCC will adequately address applicable water
quality standards. In the 2016 § 401 certification application process, Oregon required Idaho
Power to comply with fish passage and reintroduction conditions. Idaho's water quality
certification, however, provided that Idaho Power shall take no action that may result in the
reintroduction or establishment of spawning populations of any fish species into Idaho's waters
without consultation with and express approval of the State of Idaho. In 2016, Idaho Power filed
a petition1 with FERC requesting that FERC resolve the conflict between Oregon’s and Idaho's
conditions and declare that the Federal Power Act pre-empts the Oregon state law. FERC
issued an order2 dismissing Idaho Power’s petition as premature. Idaho Power then sought
rehearing, which FERC denied as well. In early 2018, Idaho Power filed with the D.C. Circuit
Court an appeal3 of FERC's order denying Idaho Power’s petition requesting that FERC resolve
the conflict with Oregon and Idaho with respect to the Company’s § 401 certification while the
governors of Oregon and Idaho continued to negotiate a potential resolution of the disputed
issues.

In April 2019, the states of Idaho and Oregon, along with Idaho Power, reached a
settlement on the § 401 certification outstanding issues that requires Idaho Power to increase
the number of Chinook salmon it releases each year through expanded hatchery production.
Additionally, Idaho Power is required to fund a total of $12 million of research and water quality
improvements in the HCC over a 20-year period following the issuance of the license. These
measures are in exchange for Oregon removing the fish passage requirement from the Oregon
§ 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. In May 2019, Oregon and Idaho
issued final § 401 certifications. These certifications have been submitted to FERC as part of
the relicensing process.

In July 2019, three third-party lawsuits were filed against the Oregon Department of
Environmental Quality in Oregon state court challenging the Oregon § 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. The
court dismissed the third challenge to the Oregon § 401 certification with prejudice. In September
2021 the parties of the lawsuit reached a settlement resolving all remaining litigation over
Oregon’s issuance of a § 401 certification, and preserving the settlement reached between Idaho
Power and the states of Idaho and Oregon over fish passage.

In December 2019, Idaho Power filed an Offer of Settlement with FERC requesting
specific language be included in the new HCC license based upon settlement among the
Company, Idaho 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 Idaho Power Company for Declaratory Order on Preemption and Request for Expedited Action, P-
1971-079 (filed November 23, 2016).
2 Idaho Power Company, 158 FERC ¶61,048 (2017) (January 19 Order).
3 Idaho Power Company v. FERC, Case No. 18-1046 (D.C. Cir). 
Hells Canyon Complex Relicensing Expenditures 2023 Annual Report – Page 3
Endangered Species Act Consultation

In September 2007, in connection with the issuance of its final Environmental Impact
Statement (“EIS”), FERC notified the Department of Commerce National Oceanic and
Atmospheric Administration’s National Marine 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 ESA-listed 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 § 401 certification
process. The NMFS and USFWS therefore recommended that formal consultation under the
ESA be delayed until the § 401 certification process was completed.

Idaho Power prepared draft biological assessments in consultation with the USFWS and
the NMFS and filed those with FERC in October 2022. The draft biological assessments provide
information to the USFWS and the NMFS that is necessary to issue their biological opinion as
required under the ESA.

SUMMARY OF RECENT ACTIVITIES

In July 2020, Idaho Power submitted to FERC its supplement to the final license
application that incorporated the settlement agreement reached between Idaho 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 50-year license and initiate
a supplemental NEPA process at FERC. In 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.

FUTURE RELICENSING ACTIVITIES

In June 2022, FERC issued a notice of intent to prepare a supplemental EIS in
accordance with NEPA. FERC indicated that the supplemental EIS would address the new and
revised measures proposed by the § 401 certification settlement, the conditions contained in the
Oregon and Idaho water quality certificates, and the information provided in the draft biological
assessments. FERC also reinstated informal consultation with the USFWS and the NMFS under
Section 7 of the ESA. In the notice of intent, FERC predicted that the draft supplemental EIS
would be published in June 2023 and the final supplemental EIS in December 2023. However,
in October 2023, FERC issued a notice revising the schedule for completing the supplemental
EIS, targeting a draft supplemental EIS in the spring 2024 and the final supplemental EIS in
November 2024. FERC cannot issue a license for the HCC until ESA consultation on the
licensing project is complete.

Hells Canyon Complex Relicensing Expenditures 2023 Annual Report – Page 4
ACCOUNTING DETAIL

Idaho Power’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, Idaho Power will compile a list of all budget ID and work order
project IDs specific to HCC relicensing expenditures incurred over the reporting period. The
Company will also identify the outstanding issue with which each expenditure is associated: §
401 certification, ESA consultation, NEPA, or all HCC relicensing efforts.

The Company has included all expenditures incurred since December 31, 2015 – the
point in which Idaho 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. In addition, Attachment 2 includes a table that summarizes all HCC relicensing expenditures
incurred during the 1997 through 2023 time period. The following summarizes the projects
associated with HCC relicensing expenditure work orders detailed in Attachment 1 comprising
the majority of the 2023 costs:

 Mercury Studies and Legal Costs. Similar to prior years, the Company spent an
additional $2.2 million on water quality studies in support of CWA § 401
certifications and FERC’s anticipated supplemental environmental analysis. In
addition, Idaho Power incurred $3.7 million of expenses, of which $3.5 million was
AFUDC charges related to previously incurred outside legal fees associated with
legal advice on the CWA § 401 certifications and associated legal challenges for
both states and for ongoing relicensing matters before FERC.

 HCC Sediment Programs. Expenses continue to be incurred for developing a
sediment monitoring plan and the fall Chinook gravel monitoring plan, in 2023
another $878,000 were incurred. Under these plans, collection and analysis of
data will occur to quantify 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
channel with a multibeam sonar, Light Detection and Ranging (“LiDAR”) surveys
of sandbars, underwater photography of fall Chinook spawning gravels,
measuring sediment inputs from tributaries, water velocity mapping, and taking
gravel and sand samples. Data analysis includes mapping changes in sediment
volumes and particle sizes and relating these changes to the local hydraulics,
estimating the sediment 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 EIS.

Hells Canyon Complex Relicensing Expenditures 2023 Annual Report – Page 5
 Snake River Stewardship Program Development. Idaho Power’s expenditures
associated with the watershed enhancement program, which are primarily
AFUDC charges as program development is nearly complete, were approximately
$889,000 in 2023.

 Bull Trout Program. The Company spent approximately $1.2 million 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, Indian Creek and
the Wildhorse 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, that will be used by FERC to initiate
formal consultation with the USFWS. Idaho Power anticipates these expenses will
continue until FERC issues a new license as they are a component of the
supplemental environmental analysis required under NEPA and for ongoing ESA
consultation.

 Fall Chinook Program. Idaho Power’s relicensing expenses associated with its fall
Chinook salmon program, totaling approximately $770,000 in 2023, are largely
related to two projects: (1) the entrapment monitoring of juvenile fall Chinook
salmon in off-channel water during spring-time operations of the Hells Canyon
dam, and (2) the fall monitoring and evaluation of spawning redds, which are the
areas female salmon lay their eggs. The number of redds and the ratio of hatchery
versus wild salmon are important gauges of the population’s health. These actions
are done primarily to inform the ESA consultation requirements that will result in
biological opinions being issued by the NMFS, the federal agency that regulates
threatened and endangered salmon. Receiving a biological opinion is a
requirement to getting a new license for the HCC.

 Oregon 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. In 2021, Oregon legislatively revised the hydroelectric program fee
structure, resulting in an increase in the annual fee for the HCC from $0.28/THP
to $0.48/THP, for a total of approximately $693,000 of expenses in 2023.

 Roll-Up Work Orders. Finally, $25.3 million of the 2023 expenditures was primarily
associated with the Allowance for Funds Used During Construction on the HCC
relicensing roll-up work orders.

Hells Canyon Complex Relicensing Expenditures 2023 Annual Report – Page 6
CONCLUSION

Idaho Power continues to work with Idaho 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 final 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, but believes
issuance will be in 2025 or thereafter.

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 28th day of February 2024, I served a true and
correct copy of IDAHO POWER COMPANY’S HELLS CANYON COMPLEX
RELICENSING EXPENDITURES 2023 ANNUAL REPORT upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Dayn Hardie
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg 8,
Suite 201-A (83714)
Boise, ID 83720-0074
Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email [e-mail]
Industrial Customers of Idaho Power
Peter J. Richardson
Richardson Adams, PLLC
P.O. Box 7218
515 N. 27th Street
Boise, ID 83702
Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email [e-mail]
Dr. Don Reading
6070 Hill Road
Boise, ID 83703
Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email [e-mail]
Idaho Irrigation Pumpers Association, Inc.
Eric L. Olsen
Echo Hawk & Olsen, PLLC
505 Pershing Ave., Suite 100
PO Box 6119
Pocatello, ID 83205
Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email [e-mail]
Anthony Yankel
12700 Lake Ave., Unit 2505
Lakewood, OH 44107
Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email ton ankel.net
________________________________
Stacy Gust, Regulatory Administrative
Assistant
BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-16-32

IDAHO POWER COMPANY

ATTACHMENT 1
TO HELLS CANYON COMPLEX
RELICENSING EXPENDITURES
2023 ANNUAL REPORT
(See attached spreadsheet)
BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-16-32

IDAHO POWER COMPANY

ATTACHMENT 2
TO HELLS CANYON COMPLEX
RELICENSING EXPENDITURES
2023 ANNUAL REPORT
(See attached spreadsheet)