20190823final_order_no_34425.pdf

Office of the Secretary
Service Date
August 23,2019
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.IPC-E-19-21
OF IDAHO POWER COMPANY FOR )
APPROVAL OF THE FIRST AMENDMENT )
TO THE ENERGY SALES AGREEMENT )ORDER NO.34425
FOR THE MC6 HYDRO LLC PROJECT )
On July 3,2019,Idaho Power Company filed an Application seeking approval of the
First Amendment to its Energy Sales Agreement (ESA)with MC6 Hydro LLC (MC6).The ESA
falls under the Public Utility Regulatory Policies Act of 1978 (PURPA),and is a contract for the
sale and purchase of electric energy generated by the MC6 Hydro Project,a PURPA qualifying
facility (QF).The Amendment changes the Scheduled Operation Date from July 30,2019,to
August 31,2020.Idaho Power asked that the Commission process its Application by Modified
Procedure.
On July 19,2019,the Commission issued a Notice of Application and Modified
Procedure,setting a 21-day comment period and a seven-day reply period.Staff filed the only
comments.Idaho Power did not file reply comments.
Having reviewed the record,we now approve the Amendment as discussed below.
BACKGROUND
Under PURPA,electric utilities must purchase electric energy from QFs at purchase or
"avoided cost"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 Commission has established two
methods for calculating avoided costs,depending on the size of the QF project:(1)the surrogate
avoided resource (SAR)methodology,used to establish "published"avoided cost rates;and (2)
the integrated resource plan (IRP)methodology,to calculate avoided cost rates for projects
exceeding published rate limits.See Order No.32697 at 7-8.Published rates are available for wind
and solar QFs with a design capacity of up to 100 kilowatts (kW),and for QFs of all other resource
types with a design capacity of up to 10 average megawatts (aMW).Id;see also 18 C.F.R.§
292.304(c).
The Commission approved Idaho Power's ESA with MC6 in 2018.Order No.34106.
The ESA contains a Scheduled Operation Date of July 30,2019.After the ESA was executed and
approved,a principal developer of the QF died unexpectedly,delaying its construction.
ORDER NO.34425 1
On June 21,2019,Idaho Power and MC6 entered into an Amendment to their ESA,
subject to this Commission's approval.The Amendment deletes Appendix B-3 of the ESA--titled
"Scheduled First Energy and Operation Date"-and replaces it with a new Appendix B-3 that
changes the Scheduled Operation Date from July 30,2019,to August 31,2020.See Attachment 1
of Application in Case No.IPC-E-18-09.Idaho Power stated this change is necessary because "a
principle developer of the MC6 Facility became unexpectedly ill and subsequently passed away,
delaying construction of the facility."Application at 2.The Amendment provides that "[t]he July
30,2019,Scheduled Operation Date will remain in effect only as the start date for calculating any
Delay Damages."Id.If the Amendment is approved,MC6's Delay Damages will be calculated
from the original Scheduled Operation Date in the ESA.
STAFF COMMENTS
Staff filed the only comments,and supported approving the Amendment.Staff argued
that the primary issue arising from moving the Scheduled Operation Date is whether the avoided
cost rates in the original contract will still be fair,just,and reasonable.To analyze this issue,Staff
examined:1)whether Commission orders provide guidance about the shelf life of PURPA rates
for contracting purposes;2)how the 28 months from the contracting date to the new Scheduled
Operation Date compare with other PURPA contracts;and 3)how the current contract's use of
avoidedcost rates instead of the most recent authorized avoided cost rates would impact customers
over the life of the contract.
Staff concluded that the avoided cost rates in the original contract are fair,just,and
reasonable.It recommended approval of the Amendment to change the Scheduled Operation Date
from July 30,2019,to August 31,2020.However,Staff suggested that the Commission should,in
a future case,establish a time limit for contracted avoided cost rates.
COMMISSION FINDINGS AND DISCUSSION
The Commission has jurisdiction over this matter under Idaho Code §§61-502 and 61-
503.The Commission is empowered to investigate rates,charges,rules,regulations,practices,
and contracts of public utilities and to determine whether they are just,reasonable,preferential,
discriminatory,or in violation of any provision of law,and to fix the same by order.Idaho Code §§
61-502 and 61-503.In addition,the Commission has authorityunder 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
ORDER NO.34425 2
rules.The Commission may enter any final order consistent with its authorityunder Title 61 and
PURPA.
The Commission has reviewed the record,including the Application,proposed
Amendment,and the comments of Staff.Based on our review,we find it reasonable to approve
Idaho Power's Amendment.The main issue arising from this Amendment is whether the avoided
cost rates in the original contract will still be fair,just,and reasonable.We find them to be so.The
28-month timeframe between the parties'contracting date and the Scheduled Operation Date
resulting from the Amendment is comparable to existing projects on Idaho Power's system and
does not conflict with our prior decisions.Moreover,delay damages will be applied based on the
original Scheduled Operation Date.
There is a point at which avoided cost rates could become stale after substantial delay.
While the facts of this case do not warrant such a finding,we encourage utilities within our
jurisdiction to remain vigilantregarding application of the appropriate avoided cost rate in each
PURPA contract.
ORDER
IT IS HEREBY ORDERED that the Amendment to Idaho Power's ESA with MC6-
changing the Scheduled Operation Date from July 30,2019,to August 31,2020-is approved.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsiderationwithin 21-days of the service date of this Order with regard to any matter decided
in this Order.Within seven days after any person has petitioned for reconsideration,any other
person may cross-petition for reconsideration.See Idaho Code §61-626.
ORDER NO.34425 3
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 7
day of August 2019.
PAUL KJELLANbEl RESIDENT
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
I:\Legal\ELECTRIC\lPC-E-19-21\orders\IPCE1921 Final mh.doex
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