20191216Decision Memo.pdf

DECISION MEMORANDUM
TO:COMNfl SSIONER KIELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMN{ISSION SECRETARY
COMIVtrSSION STAFF
LEGAL
FROM:
DATE: DECEMBER16,2019
STJBJECT:IN TITE MATTER OF IDAHO POWER COMPANY'S APPLICATION FOR
APPROVAL OF AN ENERGY SALES AGREEMENT WITH PICO
ENERGY, LLC FOR TIIE SALE AND PURCHASE OF ELECTRIC
ENERGY FROM THE PICO ENERGV DAIRY DIGESTER
COGEI{ERATION FACILITY; CASE NO. IPC-E-I9-39
On December 16, 2019, Idaho Power Company ("ldaho Power" or "Company") filed
an Application requesting consideration of a replacement Energy Sales Agreement ("ESA" or
"Agreement") with Pico Energy, LLC ("Pico Energy'') for energy generated by the Pico Energy
dairy digester cogeneration project ("Facility"). The Facility is a 2.276 megrwatl nameplate
capacity cogeneration facilily near Jerome, Idaho. The Facility represents it is a qualifying facility
("QF') under the Public Utilily Regulatory Policies Act of 1978 ('PURPA").
TIIE APPLICATION
The Facility has been delivering energy lo ldaho Power as a PURPA small power
production facility under a ten-ye.u energy sales agrcement dated May 4, 2OlO. See Order No.
32024. The Company states Pico Energy is reconfiguring the Facility from small power production
facility to a cogeneration facility. Application at 2. As the cogeneration facility will use fossil fuel
as it-s fuel source, it will no longer be eligible for the small power production avoided cost rates
established by the Commission. Id; see Order No. 34350. Under the ESA, the Facility will use
published avoided cost fueled rates, which are substantially less than the avoided cost rates in Pico
Energy's existing energy sales agreement. d. The ESA will be for a ten-year term, and will replace
the existing energy sales agreement with ldaho Power. /d. at 5.
DECISION MEMORANDUM
MAITHUNTER
DEPUTY ATTORNEY GENERAL
The Company believes the Scheduled First Energy Date, Scheduled Operation Date,
First Energy Date, and Operation Date for Facility will occur simultaneously; the panies will
mutually agree in writing on a date after Commission approval ofthe ESA and append the agreed
date to the ESA. /d. at 6. The Company requests the Commission declare all payments for purchase
ofenergy under the ESA be allowed as prudently incurred expenses for ratemaking purposes. /d
ar 7.
STATF RECOMMENDATION
Commission Staff had a phone confcrence with Idaho Power and Pico Energy on
December 12,2019. Because of Pico Energy's timeline for reconfiguring the Facility from a small
power production facility to a coteneration facility, Staff determined that an expedited
Commission rcview process is both desirable for the parries and fea"sible for Staff.
Staff recommends the Commission issue a Noticc of Application and Notice of
Modified Procedure and set a December 31, 2019 comment deadline, and a January 7, 202O reply
commenl deadline.
COMi\ISSION DECISION
Does the Commission wish to issue a Notice of Application and Notice of Modified
Procedure and set a December 31, 2019 comment deadline, and a January 7,2020 reply comment
deadlioe?
)
Matt Hunter
Deputy Attomey General
I r,l.!rl ,l:CfRl(\llt] I 19llulr'l l rr,d.rr.tu 6iU.E
1DECISION MEMORANDUM
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