20191205Comments.pdf

MATT HTINTER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOTSE, rDAHO 83',120-007 4
[phone]
IDAHO BAR NO. I0655
RECEIVED
:'ll90EC -5 Att ll:50
't' i .CIdiitih\Bsrotr
Street Address for Express Mail
472 W. WASHINGTON
BOISE, IDAHO 83702.59I8
Attomey for the Commission Statl'
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. IPC-E-I9-30
COMMENTS OF THE
COMMISSION STAFF
The Staffof the Idaho Public Utilities Commission comments as follows on Idaho Power
Company's Application.
BACKGROUND
On October 4, 2019, Idaho Power Company ("ldaho Power" or "Company") filed an
Application requesting consideration ofan Energy Sales Agreement ("ESA" or "Agreement")
with David Snedigar for energy generated by the Snedigar Hydro project ("Facility"). The
Facility is a qualifying facility ("QF") under the Public Utility Regulatory Policies Act of 1978.
Under the proposed ESA, Mr. Snedigar would sell and Idaho Power would purchase
electric energy generated by the Facility. The Facility is a 495 kW nameplate capacity hydro
facility near Bliss, Idaho. The Company states the Agreement contains published non-seasonal,
non-levelized hydro avoided cost rates for a 2O-year term. The ESA would replace a power sales
agreement dated February 24, 1984, which expires December 31, 2019.
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
APPROVAL OF AN ENERGY SALES
AGREEMENT WITH DAVID SNEDIGAR
FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY FROM THE
SNEDIGARHYDRO PROJECT
ISTAFF COMMENl'S DECEMBER 5,2019
STAFF ANALYSIS
Staffrecommends approval of the proposed ESA between Idaho Power and Mr. Snedigar.
Stall s justification is based upon its review ol the ESA, which was fbcused on: 1) the 90/l l0 rule
with at lcast five-day advanced notice for adjusting Estimated Net Energy Amounts; 2) eligibility
for and the amount ofcapacity payments; 3) verification ofnon-seasonal hydro status; and 4)
adherence to the capacity size threshold to qualily for published rates.
90/l t0 Rulc
Qualifying facilities (QF) provide a monthly estimate of the amount of energy they expect
to produce. If the QF delivers more than I 10 percent ofthe estimated amount, energy delivered
in excess of I l0 percent is priced at the lesser of85 percent of the market price or the contract
price. If the QF delivers less than 90 percent olthe estimated amount, total energy delivered is
priced at the lesser of 85 percent of the market price or the contract price. Order No. 29632.
Staffverified 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 90/110 firmness requirements. The Commission has
approved a five-day revision to monthly generation eslimates in previous cases, recognizing that
Estimated Net Energy Amounls that are closer to the time of delivery can improve the accuracy of
input used by the Company tbr short-term operational planning. See CaseNos. IPC-E-19-01,
IPC-E-19-03, IPC-E-19-04, IPC-E-19-07, and IPC-E-19-12. Thc l-acility has been generating
energy since at least 1984, and the Company has a long generation history for the QF. Staff
believes a five-day advanced notioe is sufficient.
Carracity Payment
In Order No. 32697 , the Commission stated 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 includes immediate payment ol capacity." Although the original
contract did not contain a capacity payment, Staffbelieves the Snedigar Hydro project should be
granted capacity payment for the full term ofthe replacement contract, as was granted by the
Commission to the Black Canyon #3 project in Case No. IPC-E-I9-04.
Similar to the Black Canyon #3 project, the Snedigar Hydro project in its original contract
included avoided cost rates without a capacity payment as detcrmined in Order No. I 8190,
2STAFF COMME,NTS DECEMBER 5, 20I9
effective September I . I 983, because Idaho Power was at that time energy constrained, not
capacity constrained. Since about the year 2000. the Company has added significant amounts of
capacity such as Danskin (2001 and 2008), Bennett Mountain (2005), and Langley Gulch (2012)
gas plants. Because the Company went through those multiple capacity deficiency periods during
Snedigar's 35-year contract term, Stalf is confident that the project has contributed to the
Company's need for capacity. 1'herefore, Staff believes thc Snedigar Hydro proj cct should be
granted capacity payment for the full term ol the replacement contract.
Non-Seasonal Hvdro Status
A "seasonal hydro" project is a hydro generation facility that produces at least 5502 of its
annual generalion during the months ofJune, July, and August. OrderNo.32802. Staffverificd
that this project does not generate 55% of its annual generation during the three monlhs according
to the Monthly Estimated Net Encrgy Amounts provided, and thus it is categorized as a "non-
seasonal hydro" project. Staffconfirmed that the ESA is based on the avoided cost rates ibr non-
seasonal hydro resources.
Capacity Size Threshold
In order for a hydro project to qualifr for published rates. the projcct capacity cannot
exceed 10 aMW. Project capacity is dctermined 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 495 kW nameplate capacity and thereforc produces less than 10 aMW on
a monthly basis under normal or average conditions. StalT verified the project is eligible tbr
published avoided cost rates.
Scheduled First Energy and Qperation Date
In Appendix B ofthe contract submitted in the Company's Application, it states that "[t]he
First Energy Date and the Operation Date lor this Agreement will be at hour beginning 00:01 on
January 1, 2020, provided that the Commission approves the replacement Agreement and the
Seller completes all of the Article IV and Article V requirements prior to December 27,2020."
December 27 ,2020 is a typographical error. Idaho Power corrected the mistake and changed the
date to December 27,2019 in a replacement Appendix B provided to Staff on November 21, 2019
.,)STAFF COMMENTS DECEMBER 5.20I9
("Replacement Appendix B"). Staff represents that Replacement Appendix B is reasonable and
acceptable, but believes the Company should oflicially lile Replacement Appendix B with the
Commission.
If the Commission approves the ESA, Staff recommends the Commission also order Idaho
Power to officially file Replacement Appendix B with the Commission-if Idaho Power has not
already done so.
Dcsisnated Netw'ork Resource (DNR)
The original contract contained an incomplete sentence that described the continued DNR
status. Idaho Power added a portion to the sentcnce to make it complete in Replacemcnt
Appendix B. The new sentence states "[t]he DNR status will continue il'this Agreement is
l) executed and approved by the Commission;2) a GIA has been executed by both parties; and
3) the Seller is in compliance *'ith all requirements ofthat GIA." Staffbelieves it is reasonable
and acceptable, and recommends the Commission order Idaho Power to file Replacement
Appendix B if the Commission approves thc ESA.
STAFF RECOMMENDATIONS
StafTrecommends the Commission approve the ESA. Stalf also recommends that the
Commission order Idaho Pou,€r to file Replacement Appendix B. Finally, Staff recommends the
Commission declare Idaho Power's payments to Mr. Snedigar for the purchase ofenergy
generated by the Snedigar Hydro project under the ESA be allowed as prudently incurred
expenses for ratemaking purposes.
Rcspectfu lly submitted this day of December 201 9.
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Matt Hunter
Deputy Attomey General
Teohnical Staff: Yao Yin
Johan Kalala-Kasanda
Rachelle F-arnsworth
i unisc,/commcnts/rpcel 9.30mlrjb.!rf comments
4STAFF COMMENTS DECITMBER 5,2019
CERTIFTCATE OF StrRVICE
I HEREBY CERTIFY THAT I HAVE THIS 5TII DAY OF DECEMBER2Olg,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-I9-30, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
ENERGY CONTRACTS
IDAHO POWERCOMPANY
PO BOX 70
BOISE ID 83707-0070
E-mail: [e-mail]
SECRET RY
CL,RTIFICN'I E OF SFRVICL
DONOVAN WALKER
REGULATORY DOCKETS
IDAHO POWERCOMPANY
PO BOX 70
BOISE rD 83707-0070
E-mai[: [e-mail]
dockets@ idahonower.com