20191004final_order_no_34456.pdf

Office of the Secretary
Service Date
October 4,2019
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.IPC-E-19-23
OF IDAHO POWER COMPANY FOR )APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH )ORDER NO.34456
BIRCH CREEK TROUT,INC.,FOR THE )
SALE AND PURCHASE OF ELECTRIC )
ENERGY FROM THE BIRCH CREEK )
HYDRO PROJECT )
On July 18,2019,Idaho Power Company ("Idaho Power"or the "Company")filed an
Application seeking approval or rejection of an Energy Sales Agreement ("ESA")between the
Company and Birch Creek Trout,Inc.,("Seller")for the Birch Creek Hydro Project ("Facility").
The Facility is a qualifyingfacility ("QF")under the Public Utility Regulatory Policies Act of 1978
("PURPA").
On August 16,2019,the Commission issued a Notice of Application and Modified
Procedure,setting comment and reply deadlines.See Order No.34419 at 3.
On September 6,2019,the Commission Staff filed written comments containing its review
and recommendations on Idaho Power's Application.The Company did not file reply comments,
and no other comments were submitted.
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.y Idaho
PUC,155 Idaho 780,789,316 P.3d 1278,1287 (2013).The Commission has established two
methods for calculating avoided costs,dependingon 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).
ORDER NO.34456 1
THE APPLICATION
The Facility is a 65 kW nameplate capacity hydroelectric facility near Hagerman,
Idaho.Application at 4.The Facility currentlydelivers energy to the Company under an existing
Firm Energy Sales Agreement that was executed on July 1,1983,and expires on October 31,2019.
Id.
In the proposed ESA,Birch Creek has contracted for a 20-year term using the non-
levelized,non-seasonal,hydro published avoided cost rates as set by the Commission in Order No.
34350 for replacement contracts and for energy deliveries of less than 10 aMW.Id.Because this
is a replacement ESA,the proposed ESA contains capacity payments for the entire term of the
Agreement.Id.at 2.The ESA also has a 5-Day Ahead provision for the Facility to provide
monthlygeneration forecasts for the 90/110 performance band.Id.at 4-5.
COMMENTS
Staff recommended approval of the ESA.Staff's review of the ESA focused on the
implementation of the 90/110 performance band,the eligibility for and amount of capacity
payments,the Facility'snon-seasonal hydro status,and the Facility's eligibilityfor published rates
as determined by the capacity size threshold.Staff Comments at 2.Staff verified the Facility's
non-seasonal hydro status and its compliance with the capacity size threshold for published
avoided cost rates.Id.at 2-3.Staff also verified the 5-day ahead monthly generation forecast
provision complies with the provision approved by the Commission in several previous cases.Id.
at 2.Staff notes the Facility has been delivering energy to Idaho Power since the 1980s and
therefore has extensive historical production data that the Company can use for both short-term
and long-term planning.Id.Finally,Staff verified that the Seller is being paid for capacity at the
end of its original contract.Therefore,Staff believes that the proposed avoided cost rates are
allowed to include capacity payments for the full term of the replacement contract.Id.at 3.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdictionover 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.The Commission also has authority under PURPA and Federal Energy
Regulatory Commission ("FERC")regulations to set avoided costs rates,to order electric utilities
ORDER NO.34456 2
to enter into fixed-term obligations for the purchase of energy from QFs,and to implement FERC
rules.The Commission may enter any final order consistent with its authority under Title 61 and
PURPA.
The Commission has reviewed the record,includingthe Application,the ESA,and the
comments of Commission Staff.Based on our review,we find it reasonable to approve the ESA
because the ESA contains Commission-approvedterms that the Facility is eligible for based on its
characteristics such as fuel source,project size,generation output profile,and renewal contract
status.We also find that the Company's payments for purchases of energy and capacity under the
ESA are prudentlyincurred expenses for ratemaking purposes.
ORDER
IT IS HEREBY ORDERED that the ESA between Idaho Power and Birch Creek Trout,
Inc.is approved,effective on the service date of this Order.
IT IS FURTHER ORDERED that all payments made by Idaho Power for purchases of
energy and capacity under the ESA are 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 with regard to any
matter decided in 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.
ORDER NO.34456 3
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of October 2019.
PAUL KJE L ER,PRESIDENT
KRI E RAP ,Old ISSIONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
I:\Legal\ELECTRIC\IPC-E-19-23\Orders\IPCE1923Finaljh.doex
ORDER NO.34456 4