20181121Comments.pdf

EDWARD J. JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03 l4
IDAHO BAR NO. 10446
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL
OR REJECTION OF AN ENERGY SALES
AGREEMENT WITH SCOTT AND RICK
KASTER FOR THE PURCHASE OF ELECTRIC
ENERGY FROM THE BOX CANYON HYDRO
PROJECT.
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CASE NO. IPC-8.18-14
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission comments as follows on Idaho Power
Company' s Application.
BACKGROUND
On October 15,2018, Idaho Power Company ("Company") filed an Application seeking
approval or rejection of an Energy Sales Agreement ("ESA") signed by the Company and Scott
and Rick Kaster for the Box Canyon Hydro Project ("Box Canyon" or o'Project"). The Project is
a qualifying facility ("QF") under the Public Utility Regulatory Policies Act of 1978
("PURP4"). Box Canyon is a 300 kilowatt ("kW") nameplate capacity hydroelectric facility
near Buhl, Idaho. The Project currently delivers energy to the Company under an ESA dated
October 7, 1983. The ESA expires on February ll,2019-
STAFF COMMENTS NOVEMBER 21 ,2018I
Under the proposed ESA, the Company would purchase electric energy generated by the
Box Canyon Hydro Project at published non-levelized non-seasonal hydroelectric avoided cost
rates as set by Order No. 34062 for a2}-year term.
The proposed ESA contains capacity payments for the entire term of the Agreement
because it is a replacement ESA.
The Company asks the Commission to accept or reject the ESA and, if the ESA is
accepted, to declare that Idaho Power's payments under the ESA will be allowed as prudently
incurred expenses for ratemaking purposes.
STAFF REVIEW
After a thorough review of the Company's ESA for the Box Canyon Hydro Project, Staff
recommends approval of the ESA. Staff believes the proposed ESA reflects the correct avoided
cost rates and is consistent with Commission orders. Staff s justification is based upon its review
of the ESA focused on: l) compliance requirements for 90/110 firmness rules, 2) eligibility for
and amount of capacity payment, 3) verification of non-seasonal hydro rates, and 4) adherence to
the capacity size threshold to qualifu for published rates.
90/110 Rule
When generation falls outside the 90/110 band, utilities pay QFs 85% of the market price,
or the contract rate, whichever is less. Order No. 29632. The 90/110 rule defines the minimum
degree of predictability required for published rate eligibility. Order Nos. 29632, 30000, and
29880. Staff verifies that this provision is included in the ESA.
Capacity Palzment
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 includes immediate
payment of capacity. Order No. 32697. This project is being paid for capacity at the end of the
original contract, and Staff verifies that the proposed avoided cost rates include capacity payment
for the full term of the replacement contract.
2STAFF COMMENTS NOVEMBER 2I ,2018
Non-seasonal Hydro Status
A "seasonal hydro" project is a hydro generation facility that produces at least 55% of its
annual generation during the months of June, July, and August. Because this project does not
generate 55% of its annual generation during the three months, it is categorized as a "non-
seasonal hydro" project. Staff confirms that the ESA is based on the avoided cost rates of non-
seasonal hydro resources.
Capacity Size Threshold
In order for a hydro project to qualify for published rates, the project capacity cannot
exceed l0 aMW. Project capacity is determined on a monthly basis under normal or average
design conditions. In other words, the maximum monthly generation that qualifies for published
rates is capped at the total number of hours in the month multiplied by l0 MW. Order
No. 29632 at 14. This project has a 300 kW nameplate capacity and therefore produces less than
l0 aMW on a monthly basis under normal or average conditions. Thus, Staff verifies the project
is eligible for the published avoided cost rates.
STAFF RECOMMENDATIONS
Staff recommends the Commission approve the ESA. Staff also recommends the
Commission declare Idaho Power's payments to Scott and Rick Kaster under the ESA be
allowed as prudently incurred expenses for ratemaking purposes.
*Respectfully submitted this 7|day of November 2018
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Deputy Attorney General
Technical Staff: Yao Yin
Rachelle Farnsworth
i :umisc/comments/ipce I 8. I 4ejyyrf comments
JSTAFF COMMENTS NOVEMBER 21, 201 8
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 21't DAY OF NOVEMBER 2018,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-I8-14, 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 : [e-mail]
dockets@ idahopower. com
SCOTT & RICK KASTER
BOX CANYON HYDRO PROJECT
1429 EAST 43OO NORTH
BUHL ID 83316
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE tD 83707-0070
E-mail : energycontracts@ idahopower. com
ARY
CERTIFICATE OF SERVICE