20200113Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BARNO.9917
IN THE MATTER OF IDAHO POWER'S
PETITION FOR APPROVAL OR DENIAL OF
AN ENERGY SALES AGREEMENT WITH
LITTLE WOOD IRRIGATION DISTRICT
FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY FROM THE LITTLE
WOOD RIVER RESERVOIR HYDRO
PROJECT
CASE NO. IPC-E-I9..35
COMMENTS OF THE
COMMISSION STAFF
RECEIVED
]r:$ JAtl l3 All ll:50
- - . issloN
Street Address for Express Mail:
1133I W CHINDEN BLVD, BLDG 8, SUITE 201-4
BOISE, ID 837I4
Attorney lbr the Commission Staff
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STAFF OF the Idaho Public Utilities Commission, by and through its Attomey of
record, Dayn Hardie, Deputy Attomey General, submits the following comments.
BACKGROUNI)
On November 8, 2019, Idaho Power Company ("ldaho Power" or "Company") filed an
Application requesting consideration ofan Energy Sales Agreement C'ESA" or "Agreement")
with Little Wood Irrigation District ("Little Wood") for energy generated by the Little Wood
River Reservoir Hydro project ("Facility"). The Facility is a 2.85 megawatt C'MW') nameplate
capacity hydro facility near Carey, Idaho. The Facility is a qualitying f'acility ("QF") under the
Public Utility Regulatory Policies Act of 1978. The Facility has a scheduled First Energy Date
under the ESA of March 1, 2020.
STAFF COMMENTS JANUARY I3,2O2O
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
I
The Agreement contains published non-seasonal, non-levelized hydro avoided cost rates
lbr a 20-year term. The ESA would replace an cxisting power sales agreement between the
Company and Little Wood dated August 17, 1984, which expires F'ebruary 29,2020.
The Company requests the Commission declare all payments for purchases under the
ESA be allowed as prudently incurred expenses for ratemaking purposes.
STAFF REVIEW
Staff recommends approval olthe proposcd ESA between Idaho Power and Little Wood
Stafls review is focused on: l) the 90/l l0 rule with at least five-day advanced notice for
adjusting Estimated Net Energy Amounts: 2) the eligibility lbr and the amount of capacity
payments; 3) thc non-seasonal hydro rates; and 4) requirements for Designated Network
Resource ("DNR") status.
90/110 Rule
QFs provide a monthly estimatc ofthe amount of energy they expect to produce. If thc
QF delivers more than I l0 percent of the estimated amount, cnergy delivered in excess of 110
pcrcent is priced at the lcsser of 85 percent ol the market price or the contract price. IftheQF
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 contracl price. Order No. 29632. Statf verified
that this provision is included in the ESA.
The ESA adoptcd a five-day advanced noticc for adjusting Estimated Net Energy
Amounts for purposes of complying with 90/110 firmness requirements. The Commission has
approved a live-day revision to monthly generation estimales in previous cases. recognizing that
Estimated Net Energy Amounts that are closer to the time of delivery can improve the accuracy
ofinput used by the Company for short-term operational planning. Sae Case Nos. IPC-E-I9-01,
IPC-E-19-03, IPC-E-I9-04, IPC-E-19-07. and IPC-E-19-12. Thc Facility has been generating
energy since I 985, and the Company has a long generation history for the QF. Staff believes a
five-day advanced notice is appropriate.
2SI'AFF COMMENTS JANI.JARY 13.2020
Capacitv Paymcnt
There are two issues Staf}'analyzed regarding eligibility ofcapacity payments for the
Facility. The first issue deals with whethcr or not thc QF is eligible for immediate capacity
payments for the Iull term ofthe contract. The second issue deals with a change in the
nameplate capacity ofthe Facility included in the original ESA as comparcd to the lower
nameplate capacity stated in the renewal contract. IJased on its analysis, Staffbelieves the
Facility should be granted immediate capacity payments for all generation during the full term of
the replacement contract.
In Order No. 32697 , the Commission stated that, "If a QF project is being paid for
capacity at the end ofthe contracl term, and the partics are seeking renewal/exlension ofthe
contract, the renewal/extension includes immediate payment of capacity." Although thc original
contract did not contain a capacity payment, Staff believes the Facility should be granted
capacity payment lbr the full term of the replacement contract, as was granted by the
Commission to the Black Canyon #3 project in Order No. 34295.
Similar to the Black Clanyon #3 project, the Facility in its original contract included
avoided cost rates without a capacity payment as dctcrmined in Order No. 1 8 1 90, effective
September I , 1983, because the Company was. at that time, energy constrained and 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 deliciency periods during
this Facility's initial 35-year contract term, Staffis confident that the project has contributed to
the Company's need Ibr capacity and should be eligible lbr immediate payment for avoided
capacity with the renewal of the contract.
Additionally, Staffnotes that the total nameplate capacity in the renewal ESA has
changed from the original ESA. The nameplate capacity stated in the renewal ESA is 2.850 kW,
which is less than the nameplale capacity of 3.000 kW stated in the original contract. Because
the updated amount is less than the amount the Company has included for purposes ofresource
planning, the Company should have avoided the cost of new capacity additions by at lcast the
smaller amount. Thus, Stal'f believes the Facility should be granted capacity payments for all
generation produced by the Facility. Had the nameplate capacity increased instead ofdecreased,
lS'I'AFF COMMDNTS JANUARY 13.2020
Staff believes that the amount ofthe increase would not have been eligible for capacity payments
until the Company becomes capacity dcficient.
Non-Seasonal Hvdro Rates
Parties in this case chose to use non-seasonal rates for this project. A "seasonal hydro"
project is a hydro generation facility that produces at least 557o of its annual generation during
the months of June, July, and August. Order No. 32802. Although the monthly generation
estimates show this project has potential to produce over 559o of its annual generation during the
sumrner months, the parties still agree to use non-seasonal rates, because the historical
generation record shows "the QF would not comply with the requirements of an ESA containing
seasonal hydro published avoided cost prices on an ongoing basis without making changes to the
operation ofthe Facility." The Company's Response to the First Production Request of
Commission Staff. Staff verihed that the proposed non-seasonal rates are correct and comply
with Order No. 34350.
nated Netwo ource DNRS
The original contract contained an incomplete sentence that described the continued DNR
status. The Company added a portion to the sentence to make it complete in replacement page
39 of Appendix B. The new sentence states "[t]he DNR status will continue if this Agreement is
l) executed and approved by the Commission; 2) a General Interconnection Agreement C'GIA")
has been executed by both parties; and 3) the Seller is in compliance with all requirements of that
GIA." Staff believes it is reasonable and acceptable.
4 JANUARY 13,2O2O
STAFF RECOMMENDATION
Staff recommends the Commission approve the ESA and declare Idaho Power's
payments to Little Wood for the purchase of energy generated by the Linle Wood River
Reservoir Hydro project under the ESA be allowed as prudently incurred expenses for
ratemaking purposes.
STAFF COMMENTS
$$^Respectfully submitted this dav olJanuarv 2020.
Deputy Attomey General
Technical Staff: Yao Yin
i:unl isc/commcnts/ipce I 9.3 5 dhyy comments
)STAFF COMMENTS JANUARY 13.2O2O
CERTIFICATE OF SERVICE
I IIEREBY CERTIFY THAT I HAVE ]'HIS I3.I'H DAY OF JANUARY
2020, SERVED THE FOREGOING COMMENTS OF THE COMMISSION
STAFF, rN CASE NO. IPC-E-19-35, BY MAILING A COpy THEREOF,
POSTAGE PREPAID, TO THE FOLLOWING:
DONOVAN WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83',707-0070
[-mail: dnalk daho
dockcts(@idtrhopower.com
SECRETAR
CERTIFiCATE OIT SERVICE
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-mail: [e-mail]