20181025final_order_no_34176.pdf

Office of the Secretary
Service Date
October 25,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.IPC-E-18-11
OF IDAHO POWER COMPANY FOR )APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH )ORDER NO.34176
CLEAR SPRINGS FOODS,INC.,FOR THE )SALE AND PURCHASE OF ELECTRIC )
ENERGY FROM THE CLEAR SPRINGS )
TROUT HYDRO PROJECT )
On August 16,2018,Idaho Power Company applied to the Commission for an Order
approving or rejecting its Energy Sales Agreement (ESA)with Clear Springs Foods,Inc.(Clear
Springs Hydro).Application at 1.Under the ESA Clear Springs Hydro would sell and Idaho
Power would purchase electric energy generated by the Clear Springs Trout Hydro project
(Facility),which is a 564 kilowatt qualifying facility (QF)under the Public Utility Regulatory
Policies Act (PURPA).Id.at 4.
The Commission issued a Notice of Application and Notice of Modified Procedure on
September 17,2018.See Order No.34145.Staff filed comments on October 4,2018.Idaho
Power did not file a reply.The Commission now approves the Application.
BACKGROUND
Under PURPA,electric utilities must purchase electric energy from 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").
The Commission established two methods of calculating avoided cost,depending on
the size of the QF project:(1)the surrogate avoided resource (SAR)methodology,and (2)the
integratedresource plan (IRP)methodology.See Order No.32697 at 7-8.The Commission uses
the SAR methodology -which applies to the QF in this case under the "non-seasonal hydro"
category -to establish "published"avoided cost rates.Id.and Application at 2.
ORDER NO.34176 1
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'sneed for capacity."Id at 16,21.
THE NEW ESA
Under the proposed ESA,Clear Springs Hydro would sell to Idaho Power electric
energy generated by the Clear Springs Trout Hydro Project.Application at 1.The parties have an
existing ESA for the facility that expires on October 31,2018.Clear Springs Hydro elected for
the ESA to have a 20 year term using the non-levelized rates for non-seasonal hydro projects
smaller than 10 average megawatts.Id.at 3.
The proposed ESA uses the rates established by the Commission in Order No.34062
dated May 16,2018.Id.at 3-4.As a result of the ESA being a replacement contract,the rates
contain capacity payments for the entire contractual term,with no sufficiencyperiod.Id.at 3 and
Order No.32871.
The Application asks the Commission to accept or reject the replacement ESA and,if
the ESA is accepted,to find that Idaho Power's payments under it will be allowed as prudently
incurred expenses for ratemaking purposes.Application at 5.
STAFF COMMENTS
Staff reviewed the proposed rates and confirmed they are correct,and that the new ESA
is otherwise consistent with prior Commission orders.Staff thus recommended that the
Commission approve the new ESA,and find that Idaho Power's payments to Clear Springs Foods,
Inc.,for energy from the Clear Springs Trout Hydro QF 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.
ORDER NO.34176 2
The Commission has reviewed the record,includingthe Application,the new ESA,and
Commission Staff's comments and recommendations.We find the Clear Springs Trout Hydro
project is qualified to receive the non-levelized,non-seasonal-hydropublished avoided cost rates
in the ESA.We further find that the ESA 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 new ESA as prudentlyincurred expenses for ratemaking purposes.
ORDER
IT IS HEREBY ORDERED that the new ESA between Idaho Power and Clear Springs
Foods,Inc.for a 20-year term is approved without change or condition.Further,Idaho Power's
payments to Clear Springs Foods,Inc.,for energy from the Clear Springs Trout Hydro project will
be allowed as prudentlyincurred 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 October 2018.
PAUL K LA ,PRESIDENT
KR MMISSIONER
ERIC ANDERSON,COMMISSIONER
ATTES
Diane M.Hanian
Commission Secretary
llegal\ELECTRIC\IPC-E-18-11\orders\IPCEl811 final sc.docx
ORDER NO.34176 3