20171213final_order_no_33949.pdf

Office of the Secretary
Service Date
December 13,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER TO APPROVE OR )CASE NO.IPC-E-17-14
REJECT ITS ENERGY SALES )AGREEMENT WITH SHOROCK HYDRO,)ORDER NO.33949
INC.,FOR THE SALE AND PURCHASE OF )
ELECTRIC ENERGY FROM THE ROCK )CREEK 1 HYDRO PROJECT )
On September 28,2017,Idaho Power Company applied to the Commission to approve or
reject its Energy Sales Agreement with Shorock Hydro,Inc.(Shorock)under the Public Utility
Regulatory Policies Act of 1978 (PURPA).The Agreement replaces a contract executed in
1981,and is for the sale of electric energy to Idaho Power from Shorock's Rock Creek 1 Hydro
pro.ject ("Facility")near Twin Falls,Idaho.Application at 2-3.Idaho Power requested a final
Commission decision before January 15,2018,when the existing contract expires.Id.at 6.
The Commission issued a Notice of Application and Notice of Modified Procedure on
October 12,2017.Order No.33912.Renewable Energy Coalition petitioned to intervene,to
which the Company opposed.Shorock and the Company filed a stipulated motion,requesting a
new comment schedule,and agreeing Shorock would initiate a separate case to address disputed
issues in the Agreement.The Commission granted the motion and issued an amended schedule.
Order No.33918.Renewable Energy Coalition then withdrew its petition to intervene.Staff
filed the only comments in the case,and Idaho Power did not reply.The Commission now
approves the Application.
BACKGROUND
Under PURPA,electric utilities must purchase electric energy from "qualifying facilities"
(QFs)at 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 purchase or "avoided cost"rate
shall not exceed the "'incremental cost'to the purchasing utility of power which,but for the
purchase of power from the QF,such utility would either generate itself or purchase from
another source."Order No.32697 at 7,citing Rosebud Enterprises v.Idaho PUC,128 Idaho
624,917 P.2d 781 (1996);18 C.F.R.§292.101(b)(6)(defining "avoided cost").
ORDER NO.33949 1
The Commission established two methods of calculating avoided cost,dependingon the
size of the QF project:(1)the surrogate avoided resource (SAR)methodology,and (2)the
integrated resource plan (IRP)methodology.See Order No.32697 at 7-8.The Commission uses
the SAR methodology -which applies to the Facility in this case -to establish "published"
avoided cost rates.Id 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 In this case,the Facility is a QF under the
"all other resource type"(specifically "non-seasonal hydro")category.Application at 3-4.
In calculating avoided cost,the Commission found it "reasonable,appropriate and in the
public interest to compensate QFs separately based on a calculation of not only the 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 "each 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."Id at 16,21.
THE AGREEMENT
Idaho Power and Shorock entered the Agreement on September 25,2017.Application at
3-4.Under the Agreement,Shorock elected to contract with Idaho Power for a 20-year term
using the non-levelized,non-seasonal,hydro published avoided cost rates,as established by the
Commission (Order No.33773)for replacement contracts and energy deliveries of less than 10
aMW.Id at 4.
The Facility's nameplate rating is 2,166 kW,and Shorock agreed not to exceed 10 aMW
per month.Id at 5.The Facility "is already interconnected and selling energy to Idaho Power"
under the existing contract.Id The Agreement specifies a Scheduled First Energy Date and
Scheduled Operation Date of January 16,2018.Id The Agreement's terms include that
"applicable interconnection charges and monthly operational or maintenance charges under
Schedule 72 will be assessed to [Shorock]."Id Also,PURPA QF generation "must be
designated as a network resource (DNR)to serve Idaho Power's retail load on its system."Id at
5-6.
Under the Agreement,to maintain DNR status,"there must be a power purchase
agreement associated with [the Facility's]transmission service request in order to maintain
compliance with Idaho Power's non-discriminatory administration of its Open Access
ORDER NO.33949 2
Transmission Tariff (OATT)and maintain compliance with [Federal Energy Regulatory
Commission]requirements."Id at 6.The Agreement provides that it will not become effective
"until the Commission has approved all of [its]terms and conditions and declared that all
payments Idaho Power makes to [Shorock]for purchases of energy will be allowed as prudently
incurred expenses for ratemaking purposes."Id
Shorock objected to the Company's proposed inclusion in the Agreement of:(1)
"90%/110%"provisions (relating to surplus energy);and (2)provisions relating to Operation and
Maintenance (O&M)charges in the Generator Interconnection Agreement.Id at 2.However,
Shorock and Idaho Power submitted that the Agreement is fully executed,and they agreed that
Shorock will file a separate case in which it will argue its objections to the Commission.
Stipulation at 3.Shorock and Idaho Power stipulated that this Agreement will be subject to and
conditioned on the Commission's eventual determination of the 90%/110%and O&M provisions
in that case.Id Shorock and Idaho Power further stipulated they will be bound by the
90%/l10%and O&M provisions in the Agreement until the Commission makes such a future
determination that may change those provisions.Id
STAFF COMMENTS
Staff reviewed the proposed rates and confirmed they are correct,and that the proposed
Agreement is otherwise consistent with prior Commission orders.Staff thus recommended that
the Commission approve the Agreement,and declare that Idaho Power's payments to Shorock
for energy from the Rock Creek 1 Hydro Project will be allowed as prudentlyincurred expenses
for ratemaking purposes.
FINDINGS AND CONCLUSIONS
The Idaho Public Utilities Commission has jurisdiction over Idaho Power,an electric
utility,and the issues raised in this matter under the authority and power granted it under Title 61
of the Idaho Code and PURPA.The Commission has authority under PURPA and Federal
Energy Regulatory Commission (FERC)regulations to set avoided costs,to order electric
utilities to enter into fixed-term obligations for the purchase of energy from QFs,and to
implement FERC rules.
The Commission has reviewed the record,including the Application,Agreement,and
Commission Staff s comments and recommendations.We find the Shorock hydro project is
qualified to receive the non-levelized,non-seasonal,hydro published avoided cost rates
ORDER NO.33949 3
contained 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 find it reasonable to allow payments made under the Agreement as prudently
incurred expenses for ratemaking purposes.
ORDER
IT IS HEREBY ORDERED that the Agreement between Idaho Power and Shorock for a
20-year term is approved without change or condition.We further declare that Idaho Power's
payments to Shorock for energy from the Rock Creek 1 Hydro Project will be allowed as
prudently incurred expenses for ratemaking purposes.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-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 §61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of December 2017.
PAlkE'kJELLAÑIE ,PRESIDENT
KR INE RAP MMISSIONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
1:\Legal\LORDERS\IPCE1714 djh3 doc
ORDER NO.33949 4