20200527Final_Order_No_34676.pdf

ORDER NO. 34676 1

Office of the Secretary
Service Date
May 27, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH BIG
WOOD CANAL COMPANY FOR THE SALE
AND PURCHASE OF ELECTRIC ENERGY
FROM THE JIM KNIGHT HYDRO
PROJECT
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CASE NO. IPC-E-19-37

ORDER NO. 34676

On December 9, 2019, Idaho Power Company (“Company”) applied for Commission
approval or rejection of its Energy Sales Agreement (“ESA”) with Big Wood Canal Company
(“Seller”) for the Jim Knight hydro project (“Jim Knight Facility”). The Jim Knight Facility is a
qualifying facility (“QF”) under the Public Utility Regulatory Policies Act of 1978 (“PURPA”).
On January 10, 2020, the Commission issued its Notice of Application and Notice of
Modified Procedure. Order No. 34528. The Commission Staff (“Staff”) filed written comments
on January 31, 2020. Ted Sorenson on behalf of Wood Hydro, LLC (“Wood Hydro”) filed reply
comments on February 5, 2020.1 The Company did not file reply comments.2
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; Idaho 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.

1 Ted Sorenson represents that he is filing reply comments on behalf of Wood Hydro. Sorenson is listed as a governor
of Wood Hydro according to records of the Idaho Secretary of State. He is also listed as an “Authorized Agent” of
Big Wood as set forth in the ESA. See ESA at p. 1, paragraph 1.2 and p. 33, paragraph 25.2.

2 The Company filed comments in Case No. IPC-E-19-38 that address the arguments made by Wood Hydro in its
Reply Comments. Wood Hydro’s arguments pertain to the energy sales agreement being reviewed in Case No. IPC-
E-19-38 and do not affect the terms and conditions of the ESA being considered in this case.
ORDER NO. 34676 2

THE APPLICATION
The Jim Knight Facility is a 475 kilowatt (“kW”) nameplate capacity hydroelectric
facility near Gooding, Idaho. Application at 2. The Jim Knight Facility currently delivers energy
to the Company under a PURPA energy sales agreement executed April 1, 1985. Id. at 2. The
existing energy sales agreement expires on May 31, 2020. Id. The Company and Seller intend the
proposed ESA to replace the expiring energy sales agreement. Id. The Company states the
proposed ESA complies with Commission orders regarding this type of agreement. Id. The
Company asks the Commission to process the Application before the current energy sales
agreement expires. Id. at 6.
In the proposed ESA, Seller has contracted for non-levelized, seasonal hydro published
avoided cost 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.
COMMENTS
1. Staff Comments.
Staff recommends approval of the proposed ESA between the Company and Seller.
Staff’s recommendation is 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 seasonal hydro status; and
(4) adherence to the capacity size threshold to qualify for published rates. Staff Comments at 2.
Staff verified that the 90/110 provision is included in the ESA. Id. Staff also noted
that 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 Seller 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 2-3.
Staff verified the avoided cost rates contained in the ESA are correct and comply with
existing Commission Orders. Id. at 3. Staff also confirmed the Jim Knight Facility’s 475 kW
nameplate capacity so it is eligible for published avoided cost rates.3 Id.

3 In the expiring energy sales agreement, the nameplate capacity of the Facility was 550 kW. That nameplate capacity
is reduced in this case by 75 kW to 475 kW.
ORDER NO. 34676 3

Based on the foregoing, Staff recommended the Commission approve the
ESA. Id. Staff also recommends the Commission declare the Company’s payments to the Seller
for the purchase of energy under the ESA be allowed as prudently incurred expenses for
ratemaking purposes. Id.
2. Wood Hydro’s Reply Comments.
Wood Hydro argued in reply that there should be a netting/offset of the change in
nameplate capacity of the Jim Knight Facility and Sagebrush hydro project (“Sagebrush Facility”)
so that the Sagebrush Facility receives capacity payments for its increased nameplate capacity.
See Case No. IPC-E-19-38. The proposed energy sales agreement for the Sagebrush Facility
provides its nameplate capacity is 575 kW, a 145 kW increase from the nameplate capacity listed
in the expiring contract for this facility. Case No. IPC-E-19-38, Staff Comments at 3.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over 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 authority under Title 61 and PURPA.
The Commission has reviewed the record, including the Application, the ESA, and the
comments of Staff and Wood Hydro. Based on our review, the Commission finds 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 Company’s payments for purchases of energy
and capacity under the ESA are prudently incurred expenses for ratemaking purposes.
Lastly, we acknowledge the reply comments filed by Wood Hydro. However, the
Commission finds that the arguments raised do not affect our decision in this case. The arguments
are appropriately argued and addressed in Case No. IPC-E-19-38.

ORDER NO. 34676 4

O R D E R
IT IS HEREBY ORDERED that the ESA between the Company and Seller is approved,
effective on the service date of this Order.
IT IS FURTHER ORDERED that all payments made by the Company for purchases
of energy and capacity under the ESA are allowed as prudently incurred 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
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
day of May 2020.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Diane M. Hanian
Commission Secretary

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