20170714final_order_no_33814.pdf

Office ofthe Secretary
Service Date
July 14,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWERTO APPROVEOR )CASE NO.lPC-E-17-08
REJECTITS ENERGYSALES AGREEMENT )WITH SHINGLECREEKLLC FORTHE )
SALE AND PURCHASEOF ELECTRIC )ENERGYFROM THE SHINGLECREEK )ORDERNO.33814
JWDRO PROJECT )
On May 2017,ldaho Power Company fled an Application asking the
Commission to approve or reject its Energy Sales Agreement with Shingle Creek LLC.The
Agreement falls under the Public Utility Regulatory Policies Act of 1978 (PURPA),and is a
contract for the sale of electric energy purchased by ldaho Power,and generated by Shingle
Creek's hydro project (slacility'')near ltiggins,ldaho.The Commission issued a Notice of
Application and Notice of Moditied Procedure.Order No.33774.Commission Staff tiled the
only comments in the case,and the Company did not reply.The Commission now approves the
Application.
BACKGROUND
Under PURPA,electric utilities must purchase electric energy from tkualifying
facilities''(QFs)at rates approved by this Commission.16 U.S.C.j 824a-3,'Idaho Power Co.v.
Idaho PUC,155 ldaho 780,789,316 P.3d 1278,1287 (2013).The purchase or 'avoided cost''
rate shall not exceed the Gtincremental cost'to the purchasing utility of power which,but for the
purchase of power f'rom the QF,such utility would either generate itself or ptlrchase from
another source.''Order No.32697 at 7,citing RosebudEnterprises v.Idaho PUC,128 Idaho 624,
917 P.2d 781 (1996);18 C.F.R.j 292.101(b)(6)(defining (tavoided cosf).
The Commission has established two methods of calculating avoided cost,depending
on the size of the QF project:(1)the surrogate avoided resotlrce (SAR)methodology,and (2)
the integrated resource plan (1RP)methodology.See Order No.32697 at 7-8.The Commission
uses the SAR methodology-whichapplies to the Facility in this case-to establish Ctpublished''
avoided cost rates.1 Published rates are available for wind mld solar QFs with a design
capacity of up to 100 kilowatts (kW),and for QFs of a11 other resource types with a design
capacity of up to 10 average megawatts (aMW).1d.Here,the Facility is a QF under the Eall
other resource type''(specificallyCnon-seasonal hydro'')category.Application at 2.
ORDER NO.33814
In calculating avoided cost,the Commission has found it treasonable,appropriateand
in the public interest to compensate QFs separately based on a calculation of not onlythe energy
they produce,but the capacity that they can provide to the purchasing utility.''Order No.32697
at 16.In calculating capacity,the Commission considers Iteach utility's capacity deficiency
based on load and resource balances found in each utility's IRP,''as well as (a QF's ability to
contribute to a utility's need for capacity.''fJ.at 16,21.
THE AGREEMENT
Idaho Power and Shingle Creek first entered a PURPA agreement in 1982.
Application at 2.That contract is set to expire July 31,2017.1d.The Agreement is a new
contract entered into by ldaho Power and Shingle Creek on May 8,2017.Id Under the
Agreement's terms,Shingle Creek elected to contract with Idaho Power for a five-year tenn
using the non-levelized,non-seasonal,hydro published avoided cost rates,as established by the
Commission (Order No.33538)for replacement contracts and energy deliveries of less than 10
aMW.Id.at 3-4.
The nnmeplate rating of the Facility is 222 kilowatts (kW),and Shingle Creek agreed
it will not exceed 10 aMW on a monthlybasis.1d.at 4.The Facility Gtis already intercolmected
and selling energy to ldaho Power.''1d.Nonetheless,the Agreement specifies its Scheduled
First Energy Date and Scheduled Operation Date as August 1,2017.I The terms and
provisions of the Agreement include that Itapplicable intercomwction charges and monthly
operational or maintenance charges under Schedule 72 will be assessed to (Shingle Creekj.''1d.
at 5.Also,PURPA QF generation must be designated as a network resotlrce (($DNR'')to serve
Idaho Power's retail load on its system.''Id
Under the Agreement,to maintain DNR stams,dEthere must be a power purchase
agreement associated with gthe Facility'sj transmission service request in order to maintain
compliance with ldaho Power's non-discriminatory adminisation of its Open Access
Transmission Tmiff and maintains compliance with (Federal Energy Regulatory Commission)
FERC requirements.''Id The Agreement states it will not become effective ltmtil the
Commission has approved all of gitsl terms and conditions and declared that all payments Idaho
Power makes to Shingle Creek for pmchases of energy will be allowed as prudently incurred
expenses for ratemaking purposes.''Id at 5.
ORDERNO,33814 2
STAFF COMMENTS
Upon its review,Staff confirmed that the proposed rates are correct,and that al1 other
terms and conditions in the proposed Agreement are consistent with prior Commission Orders.
Staffrecommended that the Commission approve the Agreement and find that a11 payments from
Idaho Power to Shingle Creek for the ptzrchase of energy from the Facility be allowed as
prudentlyincurred expenses for ratemaking purposes.
FINDINGSAND CONCLUSIONS
The Idaho Public UtilitiesCommission has jurisdiction over ldaho Power,an electric
utility,and the issues raised in this matter tmder the authorityand power granted it tmder Title 61
of the Idaho Code and PURPA.The Commission has authority tmder PURPA and Federal
Energy Regulatory Commission (FERC)regulations to set avoided costs,to order electric
utilities to enter into tixed-tenn obligations for the ptzrchase of energy from QFs,and to
implement FERC rules.
The Commission has reviewed the record,including the Application and Agreement,
and the comments and recommendations of Commission Staff.We find that the Shingle Creek
hydro project is qualified to receive the non-levelized,non-seasonal,hydro published avoided
cost rates in the Agreement.We further find that the proposed Agreement contains acceptable
contract provisions consistent with PURPA,FERC regulations,and this Commission's prior
Orders.We tind it reasonable to allow payments made under the Agreement as pnzdently
incurred expenses for ratemaking purposes.
O R D E R
IT IS HEREBY ORDERED that the May 8,2017 Energy Sales Agreement between
ldaho Power Company and Shingle Creek for a tive-year term is approved without change or
condition.We further declare that a11 pamentsmade by Idaho Power to Shingle Creek for
ptzrchases of energy will be allowed as prudentlyincurred expenses for ratemaking purposes.
THIS IS A FWAL ORDER.Any person interested in this Order may petition for
reconsideration withintwenty-one(21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code j 61-626.
ORDERNO.33814 3
DONE by Order of the ldaho Public UtilitiesCommission at Boise,ldaho this *Y
day of July2017.
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Commission Secretary
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ORDER NO.33814 4