20170106Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM: DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
DATE: JANUARY 5, 2017
SUBJECT: IDAHO POWER'S APPLICATION TO APPROVE FIRST AMENDMENT
TO ITS ENERGY SALES AGREEMENT WITH MURPHY FLAT
POWER, LLC, CASE NO. IPC-E-16-36
On December 22, 2016, Idaho Power Company filed an Application asking the
Commission to approve the First Amendment to its Energy Sales Agreement (ESA) with
Murphy Flat Power, LLC (Murphy Flat). The ESA is a contract under the Public Utility
Regulatory Policies Act (PURP A). The Amendment deletes an inapplicable provision, corrects a
typographical error, and updates and corrects information in the ESA's Appendix B. Idaho
Power asks that the Commission approve its Application upon Staffs review and without further
process. Application at 4.
BACKGROUND
Under PURPA, electric utilities must purchase electric energy from "qualifying
facilities" (QFs) at purchase or "avoided cost" rates approved by this Commission. 16 U.S.C. §
824a-3; Idaho Power Co. v. Idaho PUC, 155 Idaho 780, 789, 316 P.3d 1278, 1287 (2013). The
Commission has established two methods for calculating avoided costs, depending on the size of
the QF project: (1) the surrogate avoided resource (SAR) methodology, used to establish
"published" avoided cost rates; and (2) the integrated resource plan (IRP) methodology, to
calculate avoided cost rates for projects exceeding published rate limits. See Order No. 32697 at
7-8. Published rates are available 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 10
average megawatts (aMW). Id.; see also 18 C.F.R. § 292.304(c).
The Commission approved Idaho Power's ESA with Murphy Flat in 2014. Order No.
33198. Under the ESA, Idaho Power purchases and Murphy Flat sells energy generated by
DECISION MEMORANDUM
Murphy Flat's solar facility (Facility) - a PURPA QF -near Murphy, Idaho. Application at 2.
The ESA contains prices based on the IRP avoided cost methodology. Id. at 2-3.
PROPOSED AMENDMENT
In the Amendment, Idaho Power and Murphy Flat agree to delete Article 3.3 of the
ESA, which provides that Murphy Flat will "take such steps as may be required to maintain the
[QF's] status" as a solar published rate facility. Id. at 2; see Attachment 1 to Application in Case
No. IPC-E-14-32 at 10 (ESA Art. 3.3). As noted in the Application here, the Facility "exceeds
the eligibility threshold for published avoided cost rates," thus the language of Article 3.3 does
not apply. Application at 2.
The Company and Murphy Flat also agree to correct Article 7.4 of the ESA to include
the word "Percentage," inadvertently omitted from the second sentence which should read, "All
pricing contained within Appendix E for the current applicable month(s) will be multiplied by
the Pricing Adjustment Percentage .... " Id. at 3 (emphasis added). Finally, the Facility's
physical characteristics have changed since the Commission approved the ESA, which describes
the Facility's configuration, design, and construction in its Appendix B. Id. Accordingly, the
Company and Murphy Flat agree to amend Appendix B to include "a more generalized Facility
description." Id. at 3. The Company states the changes in the Amendment would "have no
material effect to the terms and provisions of the ESA and [ would] not alter the performance
requirements or pricing" in the ESA. Id. at 4.
STAFF RECOMMENDATION
Staff believes the proposed changes are limited in scope and have no substantive
impact on the ESA. Accordingly, Staff recommends that the Company's request be approved
without further process.
COMMISSION DECISION
Does the Commission wish to approve the Application without further process?
e Huang
Deputy Attorney Gene a
M:IPC-E-16-36_djh
DECISION MEMORANDUM 2