20170414Decision Memo.pdf

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DECISION MEMORANDUM
TO:COMMISSIONER IUELLATTDER
COMMISSIONER RAPER
COMNISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:CAN{ILLE CHRISTEN
DEPUTY ATTOR}I"EY GENERAL
DATE: APRIL 13,2017
STIBJECT:IDAHO POWER'S APPLICATION TO APPROVE FIRST AMENDMENT
TO ITS AGREEMENT FOR SALE AIID PURCHASE OF SURPLUS
ENERGY WITH THE AMALGAMATED SUGAR COMPAIIY, LLC,
CASE NO.IPC.E.17.O5
On March 24,2017,Idaho Power Company applied to the Commission for approval
of the First Amendment to its Agreement for the Sale and Furchase of Surplus Energy with the
Amalgamated Sugar Company, LLC. The Amendment replaces a reference to the Dow Jones
Mid-Columbia index with reference to the Intercontinental Exchange [CE) Mid-Columbia
index. The Company asserts that the Amendment is "virtually identical" to and covers the same
issue addressed in the sefflement stipulation approved by the Commission in Case No. IPC-E-I3-
25. Application at l-2. The Commission approved similar changes without further process in
several subsequent applications for amendments to existing agreements in Case Nos. IPC-E-l4-
21, IPC-E- I 4-37, PC-E-14-40, and IPC-E- 15 -10. Id.
BACKGROUND
The Agreement was originally approved in Order No. 30220, Case No. rcC-E-06-29.
Under the Agreement, the Company agrees to purchase up to 3 MW of surplus electric energy
generated by the electric generating equipment located at Amalgamated's refined sugar
production facility in Twin Falls. Order No. 30220 at 1. The surplus energy is non-firm energy
and is available only if Amalgamated does not consume the energy at the plant. Id. ldaho Power
pays Amalgamated for this non-firm surplus energy at rates that are less-than-market-based non-
firm rates-the price is described as 85 percent of the weighted average non-firm Dow Jones
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Mid-Columbia index.l Id. at I-2. The Agreement provides specific formulas for the calculation.
Amalgamated also takes service from Idaho Power at the Twin Falls plant under Idaho Power's
Schedule 19 to supplement the energy it produces itself. Application at 2.
The Dow Jones Mid-Columbia index was discontinued as of October 2013. Id. at2.
That month, Idaho Power filed a tariff advice to update its tariff Schedule 86, which referenced
the Dow Jones index, to replace the reference (Case No. IPC-E-13-25). See id. and Application,
Case No. IPC-E-13-25. The parties to the case executed a stipulation in which they agreed to
change the market index reference in Schedule 86 to the ICE Mid-Columbia index. See Order
No. 33053, Case No. IPC-E-I6-23 atZ.T\e parties also agreed to amend the existing agreements
between Idaho Power and each intervening party "to reference the ICE index using the same
language as, and consistent with, the Schedule 86language." Id. at3.
In its Order in that case, Order No. 33053, the Commission approved the stipulation
and the changes to Schedule 86 and the intervenors' agreements. The Commission
also [found] it reasonable to allow any additional PURPA QFs that currently
have a contact with Idaho Power containing reference to the Dow Jones non-
firm Mid-C electricity price index, should they choose, to amend their
respective agreements consistent with the terms of this Settlement Stipulation
and similar to the contract amendments approved by this Order.
Id. at 4. Since then, the Commission has approved, without further process, revisions to remove
Dow Jones references and replace them with ICE references consistent with the language in
Schedule 86 in several other PURPA agreements and two non-PURPA agreements. See Order
Nos. 33110, 33184 and33l92 (PLJRPA agreements) and Order No.33274 (one PURPA and two
non-PURPA agreements). Some of these amendments included an 85 percent weighting on the
index price to result in a less-than-market price for surplus energy (like the Agreement and
Amendment in the present Application). See, e.g., Order No. 33274 and Application in Case No.
IPC-E-I5-10 (for Hidden Hollow); Order No. 33110 and Application in Case No. IPC-E-14-21
(both approving the ICE index amendment in PURPA agreements, such that the price Idaho
Power pays for surplus energy is the lower of 85 percent of the price based on the ICE index or
the agreement's specified avoided cost price.)
I In the Agreement, Amalgamated asserts that the facility is a qualiffing facility under the Public Utility Regulatory
Policy Act of 1976 (PIJRPA). However, Amalgamated and Idaho Power have agreed to pricing and terms and
conditions other than those required by PURPA and this Commission's PURPA precedent, and the Agreement is not
a PURPA contract. Cou sel for Idaho Power confirmed that this Agreement is not a PURPA contract on March 31,
2017.
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Idaho Power states that after the issuance of Order No. 33053, in October 2014, it
tendered the Amendment to Amalgamated and made reminder phone calls, but that
Amalgamated did not sign and return the Amendment until January 2017. Application at 3.
During the time that the Amendment had been tendered but was not executed, Amalgamated's
Twin Falls facility generated negligible surplus energy and was not paid for any surplus energy,
given that the reference Dow Jones price index no longer existed. 1d.
PROPOSED AMEI\DMENT
The Amendment retains the 85 percent weighting currently in the Agreement but
replaces the reference to the Dow Jones index with reference to the ICE Mid-Columbia index.
Application at 4, Attachment 1. It also makes corresponding changes to the formulas and
calculation details consistent with the changes adopted in Order No. 33053. Application at 4.
According to Idaho Power, the Amendment sets forth, "virtually verbatim, the
provisions from Schedule 86 to define the 'Purchase Price."' Id. Idaho Power asks that the
Commission approve the Application without further process and without change or condition.
Id. at 4-5. If the Commission determines that further process is necessary, Idaho Power asks that
the case be processed under Modified Procedure. Id. As noted above, the Commission has
approved, without further process, similar revisions in other cases to adopt the ICE index
language to calculate the price Idatro Power would pay for surplus energy (including some with
the 85 percent weighting).
STAFF RECOMMENDATION
Staff believes the proposed changes are consistent with Order No. 33053 and
subsequent Orders approving similar changes in other cases and are limited in scope.
Accordingly, Staffrecommends that the Company's request be approved without further process.
COMMISSION DECISION
Does the Commission wish to approve the Application without further process?
Camille Christen
M:IPC-E-I7-05 cc
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JDECISION MEMORANDUM
Deputy Attomey General