20190904Comments.pdf

MATT HUNTER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10655
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL
OR REJECTION OF AN ENERGY SALES
AGREEMENT WITH PIGEON COVE POWER
COMPANY FOR THE SALE AND PURCHASE
OF ELECTRIC ENERGY FROM THE PIGEON
COVE HYDRO PROJECT.
RECEIVED
t0i9 SEP -h Plt 12: t0
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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
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CASE NO. IPC.E-I9.24
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission comments as follows on Idaho Power
Company' s Application.
BACKGROUND
On July 24,2019,Idaho Power Company ("Idaho Power" or "Company") filed an
Application requesting consideration of an Energy Sales Agreement ("ESA" or "Agreement")
with Pigeon Cove Power Company ("Pigeon Cove") for energy generated by the Pigeon Cove
Hydro project ("Facility"). The Facility is a qualifuing facility ("QF") under the Public Utility
Regulatory Policies Act of 1978.
Under the proposed ESA, Pigeon Cove would sell and Idaho Power would purchase
electric energy generated by the Facility. The Facility is a 1.75 MW nameplate capacity hydro
facility near Filer, Idaho. The Company states that the Agreement contains published non-
seasonal, non-levelized hydro avoided cost rates for a2l-year term. The ESA would replace a
power sales agreement dated May 11, 1983, which expires October 31,2019.
ISTAFF COMMENTS SEPTEMBER 4, 2OI9
STAFF ANALYSIS
Staff recommends approval of the proposed ESA between Idaho Power and Pigeon Cove.
Staffls justification is based upon its review of the ESA, which was focused on: 1) the 90/1 10
rule with a five-day advanced notice for adjusting Estimated Net Energy Amounts; 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/l l0 Rule
Qualifying facilities provide a monthly estimate of the amount of energy they expect to
produce. If the QF delivers more than I l0 percent of the estimated amount, energy delivered in
excess of 110 percent is priced at 85 percent of the market price or the contract price, whichever
is less. If the QF delivers less than 90 percent of the estimated amount, total energy delivered is
priced at 85 percent of the market price or the contract price, whichever is less. Order
No.29632. 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 90/1 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- 1 9-01 ,
IPC-E-19-03, IPC-E-19-04, IPC-E-19-07, and IPC-E-19-12. The Pigeon Cove Hydro project
started generating energy in 1983 and the Company has a long generation history for the QF,
which fuither reduces the need for a revision to delivery estimates beyond a five-day advanced
notice.
Capacity Pa),ment
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 are allowed to include capacity payment for the full term of the replacement contract.
STAFF COMMENTS SEPTEMBER 4, 20192
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. Order No. 32802. 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 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 10 MW. Order
No. 29632 at 14. This project has a 1,750 kW nameplate capacity and therefore produces less
than l0 aMW on a monthly basis under normal or average conditions. Staff verified the project
is eligible for published avoided cost rates.
STAFF RECOMMENDATIONS
Staff recommends the Commission approve the ESA. Staff also recommends the
Commission allow Idaho Power's payments to Pigeon Cove for the purchase of energy generated
by the Pigeon Cove Hydro project under the ESA as prudently incurred expenses for ratemaking
purposes.
hRespectfully submitted this Ll day of September 2019
Hunter
Deputy Attorney General
Technical Staff: Yao Yin
Rachelle Farnsworth
Kathy Stockton
i:umisc/comments/ipce I 9.24mhrfo ykls comments
STAFF COMMENTS SEPTEMBER 4, 2019aJ
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 4th DAY OF SEPTEMBER 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-T9-24, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWNG:
DONOVAN WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-mail : dwalker@idahopower. com
dockets@idahopower. com
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
SECRET
CERTIFICATE OF SERVICE