20181030Comments.pdf

EDWARD J. JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10446
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL
OR REJECTION OF AN ENERGY SALES
AGREEMENT WITH MCCOLLUM
ENTERPRISES, LIMITED PARTNERSHIP, FOR
THE SALE AND PURCHASE OF ELECTRIC
ENERGY FROM THE CANYON SPRINGS
HYDRO PROJECT.
RIC E IV ED
t*l$ *[T 30 Pt{ 2, l0
CASE NO. IPC.E.18-12
COMMENTS OF THE
COMMISSION STAFF
oI
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THB IDAHO PUBLIC UTILITIBS COMMISSION
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The Staff of the Idaho Public Utilities Commission comments as follows on Idaho Power
Company' s Application.
BACKGROUND
On September 1l ,2018,Idaho Power Company ("Company") filed an Application
seeking approval of an Energy Sales Agreement ("ESA" orooAgreement") between the Company
and McCollum Enterprises, L.P. ("McCollum"). The facility operated by McCollum is a
qualifuing facility ("QF" or "Facility") under the Public Utility Regulatory Policies Act of 1978
("PURPA"). Application at 2. The QF is near Twin Falls, Idaho.
Under the proposed ESA, McCollum would sell to Idaho Power electric energy generated
by the Canyon Springs Hydro Project. The Canyon Springs Hydro Project is a 112 kilowatt
nameplate capacity QF under PURPA.
1STAFF COMMENTS ocToBER 30,2018
The Facility sells electricity to the Company in accordance with a Schedule 86 Uniform
Agreement dated September 22, 2004.
McCollum has elected an ESA with a 2}-year term with published non-levelized non-
seasonal hydro avoided-cost rates.
The Agreement states that the First Energy Date, the Scheduled Operation Date, and the
termination date of the Schedule 86 Uniform Agreement will be the first day of the month
following the Commission's approval of its Agreement.
The Company asks the Commission to accept or reject the ESA and, if accepted, to
declare that Idaho Power's payments under the ESA will be allowed as prudently incurred
expenses for ratemaking purposes.
STAFF RE,VIEW
Staff has reviewed the proposed rates and believes Idaho Power should not include
capacity payments in the avoided cost rates at the start of the contract term. Staff believes the
QF is not eligible for capacity payments until after the first capacity deficit date of JuJy 2026
occurs as determined in Case No. IPC-E-17-12. See Order No. 33898.
The facility is currently paid under Schedule 86 on a non-firm, as-available basis, which
does not include capacity payments. In Order No. 32697, the Commission stated:
if a QF project is being paid for capacity at the end of the contract term and the
parties are seeking renewal/extension of the contract, the renewal/extension would
include immediate payment of capacity. An existing QF's capacity would have
already been included in the utility's load and resource balance and could not be
considered surplus power.
The Commission fuither clarified this through Order No. 32871:
unless capacity payments were being made to a QF at the expiration of a PURPA
Agreement, capacity payments would not be immediately payable upon renewal
or extension of an Agreement. In other words, we find that the renewal or
extension of an Agreement with a QF will only include immediate payment for
capacity if the QF seeking renewal or extension was being paid for capacity at the
end of the prior Agreement.
Staff believes that the above Commission Orders are in the context of firm QF contract
renewals. In order for a QF to receive capacity payments at the end of its previous contract, it
cannot be compensated as a non-firm resource under Schedule 86, as is the case for this project.
To receive payment for contributions for avoided capacity cost, a QF is currently required to
STAFF COMMENTS 2 OCTOBER 30, 2OI8
agree to contractual conditions of firmness by supplying electricity within a90Yo to I l0% band
of its projected monthly output. See Commission Order No. 29632. Since the Canyon Springs
Hydro Project has not been operating under these conditions and was only supplying energy on
an as-available basis, the Company should not have been able to count on the Project to supply
capacity during peak needs. This would require the Company to plan for and obtain other
resources. However, since the QF is now willing to make a commitment through a new
agreement to supply firm power, Staff believes that the QF is entitled to capacity payments only
after the currently authorized first capacity deficit date occurs. Due to the change in commitment
to firmness with the proposed contract, Staff believes this is analogous to an entirely new
agreement. Staff believes that it is the Commission's intent to determine capacity payment
eligibility based on the date a QF first enters a contract to sell firm energy, and selling energy
under Schedule 86 is not a contract to sell firm energy.
All other terms and conditions contained in the proposed ESA are consistent with prior
Commission orders.
STAFF RECOMMENDATIONS
Staff recommends that the Commission approve the ESA after Idaho Power and the QF
modifies the avoided cost rates and adopt the rates that include capacity payment from the first
deficit date of July 2026, instead of rates that include capacity payment for the full-term.
Respectfully submitted this Taay of october 2018
Deputy
J.
A General
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Technical Staff: Yao Yin
Rachelle Farnsworth
i :umisc/comments/ipce I 8. I 2ejyyrf comments
aJSTAFF COMMENTS ocroBER 30,2018
CERTIFICATE OF SERVTCE
I HEREBY CERTIFY THAT I HAVE THIS 30th DAY OF OCTOBER 2018,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-18.12, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
DONOVAN E WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-mail : dwalker@idahopower. com
dockets@idahopower. com
W DAVID McCOLLUM
McCOLLUM ENTERPRISES LP
CANYON SPRINGS HYDRO
PO BOX 5492
TWIN FALLS ID 83303
E-mail: [e-mail]
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-mail : ener gycontracts@,idahopower. com
JOSEPH D McCOLLUM JR
11IO WARM SPRINGS AVE
BOrSE ID 83712-7949
ARY
CE,RTIFICATE OF SERVICE