20171115Comments.pdf

DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.0074
[phone]
IDAHO BAR NO. 8370
IN THE MATTER OF THE APPLICATION OF )
rDAHO POWER TO APPROVE OR REJECT rrs)
ENERGY SALES AGREEMENT WITH )sHoRocK HYDRO, INC., FOR THE SALE AND )
PURCHASE OF ELECTRIC ENERGY FROM )
THE ROCK CREEK 1 HYDRO PROJECT )
RECEIVED
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Street Address for Express Mail
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC.E'-17.14
COMMENTS OF
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attorney of record, Daphne Huang, Deputy Attorney General, and submits the following
comments.
BACKGROUND
On September 28, 2017,Idaho Power Company applied to the Commission to approve or
reject its Energy Sales Agreement ("Agreement") with Shorock Hydro, Inc. ("Shorock"). The
Agreement falls under the Public Utility Regulatory Policies Act of 1978 (PURPA), and is a new
contract for the sale of electric energy to Idaho Power from Shorock's Rock Creek 1 Hydro
project ("Facility") near Twin Falls, Idaho. The Agreement replaces an existing PURPA
contract executed in 1981. Applicationat2-3.
ISTAFF COMMENTS NOVEMBER 15,2OI7
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,l55 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 at7, citing Rosebud Enterprises v. Idaho PUC, l2S ldaho 624,
917 P.2d781 (1996); l8 C.F.R. S 292.101(b)(6) (defining "avoided cost").
The Commission has established two methods of calculating avoided cost, depending on
the size of the QF project: (l) the surrogate avoided resource (SAR) methodology, and (2) the
integrated resource plan (IRP) methodology. See Order No. 32697 atl-8. The Commission uses
the SAR methodology - which applies to the Facility in this case - to establish "published"
avoided cost rates. 1d 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 at3-4.
In calculating avoided cost, the Commission has 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 [Integrated Resource Plan] IRP," as
well as "a QF's ability to contribute to a utility's need for capacity." Id. at 16,21.
THE AGRE,EMENT AND STIPULATION
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 a2)-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 l0
aMW. Id. at 4.
The nameplate rating of the Facility is2,166 kW, and Shorock agrees it will not exceed
10 aMW on a monthly basis. 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 terms of the
2STAFF COMMENTS NOVEMBER 15, 2017
Agreement include that "applicable interconnection charges and monthly operational or
maintenance charges under Schedule 72 will be assessed to [Shorock)." Id. Also, PURPA QF
generation o'must be designated as a network resource (DNR) to serve Idaho Power's retail load
on its system." Id. at 5-6.
To maintain DNR status under the Agreement, "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
Transmission Tariff (OATT) and maintain compliance with [Federal Energy Regulatory
Commission] requirements." Id. at 6.
Under its terms, the Agreement 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 objects to the Company's proposed inclusion in the Agreement of: (l)
"90ohllllyo" 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 entered a
stipulation 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%lll0Yo and
O&M provisions in that case. Id. Shorock and Idaho Power further stipulated they will be
bound by the 90%lll0o/o and O&M provisions in the Agreement until the Commission makes
such a future determination that may change those provisions. 1d
STAFF ANALYSIS
Staff has reviewed the proposed rates and confirms they are correct. All other terms and
conditions contained in the proposed Agreement are consistent with prior Commission orders.
RECOMMENDATION
Staff recommends that the Commission approve all of the Agreement's terms and
conditions and declare that all payments made by Idaho Power to Shorock Hydro for purchase of
aJSTAFF COMMENTS NOVEMBER 15,2OI7
energy from the Rock Creek 1 Hydro Project will be allowed as prudently incurred expenses for
ratemaking purposes.
Respectfully submitted this ttr dayofNov ember2otT
Huang
Deputy Attorney General
Technical Staff: Yao Yin
i :umisc :comments/ipce I 7. l4djhyy comments
4STAFF COMMENTS NOVEMBER 15,2017
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15th DAY OF NOVEMBER 2017,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-17-74, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
DONOVAN E WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOrSE ID 83707-0070
E-mail : [e-mail]
dockets@i dahopower. com
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOrSE rD 83707-0070
E-mail : ener gycontracts@idahopower. com
C TOM ARKOOSH
ARKOOSH LAW OFFICES
802 W BANNOCK ST STE 9OO
PO BOX 2900
BOISE ID 8370I
E-mail : tom.arkoosh@.arkoosh.com
ELECTRONIC ONLY
erin. ceciI (E arkoqsh. cqqr
CERTIFICATE OF SERVICE