20190906Comments.pdf

Street Address for Express Mail
472W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
JOHN R. HAMMOND, JR.
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILTTIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
IDAHO BAR NO. 5470
IN THE MATTER OT'THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH
BIRCH CREEK TROUT,INC., FOR THE
SALE AND PURCHASE OF ELECTRIC
ENERGY FROM THE BIRCH CREEK
HYDRO PROJECT
REC EIVED
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CASE NO. IPC-E-19.23
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission, submits the following comments
regarding the above referenced case.
BACKGROUND
On July 18,2019,Idaho Power Company ("Company") filed an Application seeking
approval or rejection of an Energy Sales Agreement ("ESA") signed by the Company and Birch
Creek Trout, Inc., ("Seller") for the Birch Creek Hydro Project ("Facility"). The Facility is a
qualiffing facility ("QF") under the Public Utility Regulatory Policies Act of 1978 ("PURPA").
The Facility is a 65 kilowatt ("kW") nameplate capacity hydroelectric facility near Hagerman,
Idaho. Application at 4. The Facility currently delivers energy to the Company under an existing
Firm Energy Sales Agreement that was executed on July 1 , 1983. Id. The ESA expires on
October 31,2019. Id.
1STAFF COMMENTS SEPTEMBER 6,20I9
Under the proposed ESA, the Seller would sell and the Company would purchase electric
energy generated by the Facility at published non-seasonal, non-levelized hydroelectric avoided
cost rates as set by Order No. 34350 for a20-year term. Id. at 4. The proposed ESA contains
capacity payments for the entire term of the Agreement because it is a replacement ESA. Id. at2.
STAFF ANALYSIS
Staff recommends approval of the proposed ESA between Idaho Power and the Seller.
Staff s justification is based upon its review of the ESA, which was focused on: (1) 90/110 rule
with a five-day advanced notice for adjusting Estimated Net Energy Amounts;l (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 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 I 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. See Order No. 29632 at20.
Staff verified that this provision is included in the ESA.
The ESA adopted a five-day advanced notice for adjusting Estimated Net Energy
Amounts for purposes of complying with 90/l l0 firmness requirements. The Commission has
approved a five-day revision to monthly generation estimates in previous cases, recognizing that
Estimated Net Energy Amounts that are closer to the time of delivery can improve the accuracy of
input used by the Company for short-term operational planning. See Case Nos. IPC-E-19-01,
IPC-E-19-03, IPC-E-19-04, IPC-E-19-07, and IPC-E-19-12. The Facility has a long generation
history starting in 1983 for the QF, which further reduces the need for a revision to delivery
estimates beyond a five-day advanced notice.
I Estimated Net Energy Amount is defined in the proposed ESA at Section l.l3 and 6.2
2STAFF COMMENTS SEPTEMBER 6,20I9
Capacit), Payment
In Order No. 32697, the Commission ruled that "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." Order No. 32697 at 21. Staff
verified that Seller is being paid for capacity at the end of the original contract, and thus the
proposed avoided cost rates are allowed to include capacity payment for the full term of the
replacement contract.
Non-Seasonal H)rdro Status
A "seasonal hydro" project is a hydro generation facility that produces a 55Yo of its annual
generation during the months of June, July, and August. Order No. 32802 at 5. Staff verified that
the Facility does not generate 55% of its annual generation during this period 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.
Capacity Size Threshold
In order for a hydro project to qualifu 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 10 MW. Order No. 29632
at 14. The Facility has a 65 kW nameplate capacity and therefore produces less than 10 aMW on
a monthly basis under normal or average conditions. Staff verified the Facility is eligible for
published avoided cost rates.
STAFF RECOMMENDATIONS
Staff recommends the Commission approve the ESA. Staff also recommends the
Commission declare Idaho Power's payments to the Seller for the purchase of energy generated
by the Facility under the ESA be allowed as prudently incurred expenses for ratemaking purposes.
JSTAFF COMMENTS SEPTEMBER 6,2019
Respectfully submitted this
l'{Uto day of September 2019
J Hammond, Jr.
Attorney General
Technical Staff: Yao Yin
Rachelle Famsworth
i :umisc:comments/ipce I 9.23jhyryrf comments
4STAFF COMMENTS SEPTEMBER 6,20I9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 6TH DAY oF SEPTEMBER
2019, SERVED THE FOREGOING COMMENTS OF THE COMMISSION
STAFF, IN CASE NO. IPC-E-19-23, BY MAILING A COpy THEREOF,
POSTAGE PREPAID, TO THE FOLLOWING:
DONOVAN WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-mail : dwalker@idahopower. com
[e-mail]
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-mail : ener gycontracts @idahopower. com
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CERTIFICATE OF SERVICE