20180501Decision Memo.pdf

DECISION MEMORANDUM
TO COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:EDITH L. PACILLO
DEPUTY ATTORNEY GENERAL
DATE: MAY 1,2018
SUBJECT:THE PETITION OF IDAHYDRO, SHOROCK HYDRO, INC., J.R.
SIMPLOT COMPANY, AND RENEWABLE ENERGY COALITION FOR
MODIFICATION OF THE 9O/I1O PERFORMANCE BAND AND
CALCULATION OF OPERATION AND MAINTENANCE CHARGES
FOR PURPA QUALIFYING FACTLTTIES, CASE NO. rpC-E-18-07.
On April 16,2018, Idahydro ("ldahydro"), Shorock Hydro, Inc. ("Shorock"), the J.R.
Simplot Company ("Simplot"), and the Renewable Energy Coalition ("REC") (collectively, "the
Parties") jointly petitioned to the Commission to modi$, amend, or stay existing orders or rules,
and to clarify rights and obligations implementing Section 210 of the Public Utilities Regulatory
Policy Act of 1978 ("PURPA"), 16 U.S.C. $824a-3 et seq.
THE PETITIONERS
The Petitioners are Qualifying Facilities ("QFs") under PURPA. The Petitioners either
sell power to Idaho Power Company (the "Company") under Energy Sales Agreements
("ESAs"), or are attempting to develop new QFs that would sell power to the Company.
Application at 1-2. The Commission approved Petitioner Shorock's ESA with the Company in
Order No. 33549, subject to a stipulated motion that the Commission granted in Order No.
33918, that that ESA would be subject to the outcome of this Petition.r
BACKGROUND
In Case No. IPC-E-04-10, certain QFs complained that the Company had proposed
contract provisions that obviated the Company's requirement to buy all of the output from the
QFs at full avoided cost rates when the output is less than90o/o or more than l10o/o of projected
' The ESA between Evergreen Energy Inc., and the Company, currently pending approval or rejection in Case No.
IPC-E-18-04 also contains the 90/l l0 performance band, pending the outcome of this Petition.
IDECISION MEMORANDUM
output (the "90/l l0 performance band"). Order No. 29632 at 2-3. Further, the Company
proposed pricing methods for energy deliveries that fell outside the 90/ll0 performance band.
Id. at 14-15. In Order No. 29632, the Commission found that the 90/1 l0 performance band was
reasonable .2 Id. at 20. The Commission ordered that energy delivered in excess of I l0% of the
contract amount (up to a l0 MW cap)3 should be priced at 85o/o of the Mid-C market or the
contract price, whichever is less, and that the QF will receive no payment for energy delivered
above the 10 MW cap. Id. The Commission ordered that energy delivered at less than 90o/o of the
monthly commitment amount should be priced at 85yo of the market price, or contract rate,
whichever is less. 1d
Since 2004, the 90/110 performance band was an issue in several cases. See generally,
Order Nos.29880,30000 30109, and30206. Ln2007, the Company asked the Commission to
eliminate the 90/ll0 performance band requirement for ESA's involving intermittent wind-
powered QFs where certain conditions were met. In Order No. 30488, the Commission stated
that, "The wind forecasting and mechanical availability guarantee in conjunction with other
provisions of the Settlement in this case, we find, make elimination of the 90%lll0%
performance band reasonable." Id. at 13. In parallel proceedings, the Commission also
established a wind integration adjustment to published avoided cost rates and eliminated the
90/l l0 performance band for wind QFs that agree to provide a mechanical availability guarantee
and share in the cost of wind forecasting services. See Order Nos. 30497 and 30500.
petitioners request that the ."-:::"-r1l':H eo/l l0 performance band for non-
wind QFs because:
l. Changed circumstances have obviated the need for a 90/110 performance band,
including:
a. The variability of hydro QFs in the aggregate is within the range of
variability exhibited by the Company's hydropower facilities.
2 The performance band did not apply to energy deliveries that fall below 90% due to forced outages or force
majeure.
3 The l0 MW cap referred to the maximum monthly generation that qualifies for published rates. Order No. 29632
at 20. The cap was set as the total number of hours in the month multiplied by l0 MW. Id.
2DECISION MEMORANDUM
b. Hydropower and other non-wind and non-solar QFs are sufficiently
predictable in the aggregate that the Company can reasonably incorporate
their variability into its planning and operations.
c. The individual, non-wind and non-solar QF is so small in the Company's
system that any monthly excess energy or shortfall energy amounts would
be de minimis (lost in the "noise") of operating the Company's system.
2. It was not designed to address the unique situation regarding the predictable,
aggregated value of small hydropower, biomass, cogeneration, and baseload QFs.
Therefore, the Petition alleges that the Commission should modify its existing policy and
orders approving the 90/l l0 performance band's applicability to small hydropower,
cogeneration, biomass, and baseload QFs that choose to enter into ESAs or other enforceable
obligations. Petitioners allege that the Commission should instead allow such QFs to sell energy
to Commission-regulated utilities at forecasted, fixed avoided rates calculated at the time the
obligation is incurred, not at the time of delivery.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Petition and set a deadline
for petitions to intervene of 2l days from the service date of the Order. After the intervention
deadline has passed, Staff will confer with parties regarding a schedule for processing the case.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and set a deadline for
petitions to intervene of 2l days from the service
Edith L. Pacillo
Deputy Attorney General
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JDECISION MEMORANDUM