20180511Decision Memo.pdf

DECISION MEMORAI{DUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:EDITH L. PACILLO
DEPUTY ATTORNEY GENERAL
DATE: May 10,2018
SUBJECT:THE APPLICATION OF IDAHO POWER COMPANY FOR APPROVAL
OR REJECTION OF AN ENERGY SALES AGREEMENT WITH MC6
HYDRO LLC, FOR THE SALE AND PURCHASE OF ELECTRIC
ENERGY FROM THE MC6 HYDRO PROJECT, CASE NO. IPC-E.I8-09.
On May 2, 2018, Idaho Power Company applied to the Commission for an order
approving or rejecting its Energy Sales Agreement (ESA) with MC6 Hydro LLC (MC6), under
which MC6 would sell and Idaho Power would purchase electric energy generated by the MC6
Hydro project (Facility). Application at l. The MC6 Hydro project is a2.l megawatt (MW)
"qualifying facility" (QF) under the Public Utility Regulatory Policies Act (PURP A). Id. at 4.
This request is for the approval or rejection of a new ESA applicable to a new project, is
fully executed by both parties, and contains the Commission's standard terms and conditions
relating to surplus energy ("90o lll)yo") and operations and maintenance ("O&M") fees.
However, MC6, similar to Shorock Hydro, Inc. and Evergreen Energy, Inc. has raised objections
to the inclusion in this ESA of provisions relating to 90Yolll}Yo and provisions of the ESA,
Generator lnterconnection Agreement ("GlA"), and Schedule 72 relating to the payment of O&M
charges. Idaho Power and MC6 agree to move forward with the ESA as submitted and to be
bound by the currently approved and existing 90%lll0o/o and O&M provisions of the signed
E,SA, unless and until the Commission issues a final order in any subsequent proceeding
modifying or changing the same, as referenced in the Stipulated Motion from Case No. IPC-E-
17 -14.
DECISION MEMORANDUM I
Because the Facility is a new qualifying facility, the capacity payments will begin in year 2026.
Id. at 2. The proposed ESA is a new contract with a 2}-year term using the rates calculated by
Commission Staff for a QF in the non-levelized, non-seasonal hydro category pursuant to the
surrogate avoided resource methodology, as directed by the Commission in its Order No. 33898.
Id. at 4.
Idaho Power requests that the Commission issue an order accepting or rejecting the ESA
and, if accepted, declaring that all payments for purchases of energy under the ESA be allowed
as prudently incurred expenses for ratemaking purposes. Id. at 5.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Application and Notice of
Modified Procedure, with comments due within 2l days from the service date of the Order and
reply comments, if any, due within 14 days of the deadline.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and Notice of Modified
Procedure, with comments due within 2l days from the service date of the Order and reply
comments, if any, due within l4 days of the deadline?
L. Paci
Deputy Attorney General
IPCEl809-dec memo
2DECISION MEMORANDUM