20200306Final_Order_No_34574.pdf

Office of the Secretary
Service Date
March 6,2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-19-36
APPROVAL OR REJECTION OF AN )ENERGY SALES AGREEMENT WITH )SOUTH FORKS JOINT VENTURE,FOR )ORDER NO.34574
THE SALE AND PURCHASE OF ELECTRIC )
ENERGY FROM THE LOW LINE CANAL )HYDRO PROJECT )
On December 9,2019,Idaho Power Company ("Idaho Power"or "Company")applied
for Commission approval of its Energy Sales Agreement ("ESA")with South Forks Joint Venture
("South Forks"or "Seller")for the Low Line Canal hydro project ("Facility").The Facility is a
qualifyingfacility ("QF")under the Public Utility Regulatory Policies Act of 1978 ("PURPA").
On January 13,2020,the Commission issued its Notice of Application and Notice of
Modified Procedure.Order No.34527.The Commission Staff ("Staff")filed written comments
on February 3,2020,and was the only party to do so.The Company did not file reply comments.
Having reviewed the record,the Commission enters this Order approving the
Company's Application.
BACKGROUND
Under PURPA,electric utilities must purchase electric energy from QFs at purchase or
"avoided cost"rates approved by the Commission.16 U.S.C.§824a-3;1daho Power Co.v.Idaho
PUC,155 Idaho 780,789,316 P.3d 1278,1287 (2013).The Commission has established two
methods for calculating avoided costs,depending on 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 7-22.Published rates are available for
wind and solar QFs with a design capacity of up to 100 kilowatts ("kW"),and QFs of other
resource types with a design capacity of up to 10 average megawatts ("aMW").Id.;see also 18
C.F.R.§292.304(c).
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THE APPLICATION
The Facility owned by South Forks is an 8,200 kilowatt ("kW")nameplate capacity
hydroelectric facility near Gooding,Idaho.Application at 1.The Facility currentlydelivers energy
to the Company under a PURPA energy sales agreement executed June 8,1984.Id at 2.This
previous energy sales agreement expires on April 30,2020.Id.The Company and South Forks
intend the proposed ESA to replace the expiring energy sales agreement.The Company states the
proposed ESA complies with Commission orders regarding this type of agreement.Id.at 2.The
Company asks the Commission to process the Application before the current energy sales
agreement expires.Id at 6.
In the proposed ESA,South Forks has contracted for non-levelized,seasonal hydro
published avoidedcost rates as set by the Commission in Order No.34350 for a 20-year term.Id
at 4.Because this is a replacement ESA,it contains capacity payments for the entire term of the
Agreement.Id.at 3.The Company requests its Application be processed by Modified Procedure.
Id.at 6.
STAFF COMMENTS
Staff recommends approval of the proposed ESA between Idaho Power and the Seller.
Staff's recommendationis based upon its review of the ESA,which was focused on:(1)the 90/110
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-levelized,seasonal hydro status;
and (4)adherence to the capacity size threshold to qualify for published rates.StaffComments at
2.
Staff verified that the 90/110 provision is included in the ESA.Id.Staff also noted the
ESA adopted a five-day advance notice for adjusting Estimated Net Energy Amounts for purposes
of complying with 90/110 firmness requirements.Id.Staff also verified that South Forks is being
paid for capacity at the end of the original contract,and thus the proposed avoided cost rates
include capacity payments for the full term of the replacement contract.Id.at 3.
Staff reviewed the avoided cost rates contained in the ESA.Id.Staff noted that except
for a mistake in a price that falls outside the term of the ESA all other rates within the term of the
ESA are correct.Id.Finally,Staff verified the Facility's 8,200 kW nameplate capacity produces
less than 10 aMW every month under normal or average conditions.Id.at 1.Accordingly,Staff
verified the Facility is eligible for published avoided cost rates.Id.
ORDER NO.34574 2
Based on the foregoing,Staff recommended the Commission approve the ESA.Id.
Staff also recommends the Commission declare Idaho Power's payments to the Seller for the
purchase of energy under the ESA be allowed as prudently incurred expenses for ratemaking
purposes.Id.
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 cost rates,to order electric utilities
to enter 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 authorityunder Title 61 and PURPA.
The Commission has reviewed the record,includingthe Application,the ESA,and the
comments of Staff.Based on our review,we find it reasonable to approve the ESA because it
contains Commission-approved terms that the Facility is eligible for based on its characteristics
such as fuel source,project size,generation output profile,and renewal contract status.The
Commission also finds that the prices listed in Appendix F of the ESA for the year of 2041 have
no effect because they fall outside the 20-yearterm of the ESA that is approvedby this Order.The
parties to the ESA should correct Appendix F to reflect only prices for the 20-year term.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 South Forks 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 about any matter
ORDER NO.34574 3
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.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this Ø
day of March 2020.
PAUL KJELL NDER,PRESIDENT
KRI RA ISSIONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
I:\Legal\ELECTRIC\IPC-E-19-36\Orders\lPCEl936_Finaljh docx
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