20190314Comments.pdf

EDWARD JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03t4
IDAHO BAR NO. 10446
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Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
THE APPLICATION OF IDAHO POWER FOR
CONSIDERATION OF AN ENERGY SALES
AGREEMENT WITH KOYLE HYDRO
CASE NO. IPC-E-19-03
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Edward Jewell, Deputy Attorney General, submits the following comments.
BACKGROUND
On February 6,20l9,Idaho Power Company ("Idaho Power" or "Company") filed an
Application seeking approval or rejection of an Energy Sales Agreement ("ESA" or
"Agreement") with Koyle Hydro Inc. ("Koyle") for energy generated by the Koyle Small Hydro
Project ("Facility"). The Facility is a qualifying facility under the Public Utility Regulatory
Policies Act of 1978 ("PURPA"). The Facility is a 1.4 MW nameplate capacity hydro facility
near Gooding, Idaho.
The ESA contains a five-day ahead Net Energy Amount monthly adjustment consistent
with the Company's Application in IPC-E-19-01.
The Facility has been delivering energy to Idaho Power under a Power Purchase
Agreement dated February 15, 1983. The proposed Agreement contains capacity payments for
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ISTAFF COMMENTS MARCH I4,2OI9
the Facility for the entire term of the ESA, with no sufficiency period. Koyle has elected an ESA
with a 2}-year term with published non-levelized non-seasonal hydro avoided-cost rates. The
Facility has a scheduled First Energy Date under the ESA of April 1,2019.
STAFF ANALYSIS
Staff recommends approval of the proposed ESA between Idaho Power and Koyle
Hydro, Inc. Staff s justification is based upon its review of the ESA, which focused on: (1)
90/110 firmness rules; (2) eligibility for and the amount of capacity payments; (3) verification of
non-seasonal hydro status; and (4) adherence to the capacity size threshold to qualify for
published rates.
90/110 Rule
Qualifying facilities (QF) provide a monthly estimate of the amount of energy they
expect to produce. If the QF delivers more than 110 percent of the estimated amount, energy
delivered in excess of 1 10 percent is priced at the lesser of 85 percent of the market price or the
contract price. If the QF delivers less than 90 percent of the estimated amount, total energy
delivered is priced at the lesser of 85 percent of the market price or the contract price. Order No.
29632. Staff verified that this provision is included in the ESA.
Koyle requested that notification of adjustments to monthly estimated amounts used for
the 90/110 rule be reduced from one-month advanced notice to five-day advanced notice prior
to the upcoming delivery month. A change in the amount of advance notice was first proposed
and subsequently approved in a renewal ESA between the J.R. Simplot Co. and Idaho Power
for generation from Simplot's Pocatello cogeneration plant in Case No. IPC-E-19-01. Order
No. 34263. Consistent with the Commission Order in that case, Staff recommends approval of
the reduced notification requirement for reasons in this case described below.
Staff continues to believe that five business days'notice is reasonable and could
potentially provide more accurate information for the Company to use in its short-term planning
as it enters into the delivery month. This would be true for any contract regardless if it is a new
or renewal contract because as a general rule, forecasts are typically more accurate closer to the
time of execution. However, the Koyle facility, like the Simplot facility, has been delivering
energy to the Company since the 1980's and therefore has extensive historical production data
2STAFF COMMENTS MARCH I4,2OI9
that the Company can use for both short-term and long-term planning. Staff believes that the
advantages of the availability of historical data for longer-term planning outweighs the
disadvantages associated with the five-day advanced notice.
Staff still has concems when the Company lacks extensive historical production data.
Staff would like to see more information comparing the advantages and disadvantages of five-
day advanced notice versus one-month advanced notice for both short-term and longer-term
planning for QFs without extensive historical data. Staff recommends that these types of QF
contracts be examined on a case-by-case basis.
Capacity Payment
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 includes immediate payment of capacity." Staff verified that this project is
being paid for capacity at the end of the original contract, and thus the proposed avoided cost
rates should include capacity payment for the full term of the replacement contract.
Non-Seasonal Hydro Status
A "seasonal hydro" project is a hydro generation facility that produces at least 55% ofits
annual generation during the months of June, July, and August. Staff verified that this project
does not generate 55% of its annual generation during the three months according to its Monthly
Estimated Net Energy Amounts provided, and thus it is categorized as a "non-seasonal hydro"
project. Staff confirmed that the ESA is based on the avoided cost rates of non-seasonal hydro
resources.
CaPacit), Size Threshold
In order for a hydro project to qualify for published rates, the project capacity cannot
exceed 10 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 1,405 kW nameplate capacity and therefore produces less
JSTAFF COMMENTS MARCH T4,2OI9
than 10 aMW on a monthly basis under normal or average conditions. Staff verified that the
project is eligible for published avoided cost rates.
STAFF RECOMMENDATION
Staff recommends the Commission approve the ESA. Staff also recommends the
Commission declare Idaho Power's payments to Koyle Hydro for the purchase of energy
generated by the Koyle Small Hydro project under the ESA be allowed as prudently incurred
expenses for ratemaking purposes.
Respectfully submitted this lt{{'t^- day of Mar ch2019.
s'. C(
Ed*".d iffiil-
Deputy AttiHey General
Technical Staff: Yao Yin
Travis Culbertson
Rachelle Farnsworth
i:umisc/comments/ipce I 9.3ejyyrftnc comments
4STAFF COMMENTS MARCH I4,2OI9
CBRTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14TH DAY OF MARCH 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN
CASE NO. IPC-E-19-03, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
DONOVAN WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOrSE ID 83707-0070
E-mail : dwalker@,idahopower. com
dockets@idahopower. com
ALAN L KOYLE
KOYLE HYDRO INC
1505 SOUTH 18OO EAST
GOODING ID 83330
E-mail: [e-mail]
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOrSE rD 83707-0070
E-mail: [e-mail]
CERTIFICATE OF SERVICE