20200417Final_Order_No_34629.pdf

ORDER NO. 34629 1
Office of the Secretary
Service Date
April 17, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF IDAHO POWER’S
APPLICATION FOR APPROVAL OR
REJECTION OF AN ENERGY SALES
AGREEMENT WITH LATERAL 10
VENTURES, LLC FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY FROM
THE LATERAL #10 HYDRO PROJECT
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CASE NO. IPC-E-20-03

ORDER NO. 34629

On February 14, 2020, Idaho Power Company applied for an order approving
or rejecting its Energy Sales Agreement (“ESA”) with Lateral 10 Ventures, LLC (“Lateral
10”) for energy generated by the Lateral #10 Hydro project (“Facility”). The Facility is a
qualifying facility (“QF”) under the Public Utility Regulatory Policies Act of 1978. The
Facility’s scheduled First Energy Date under the ESA is May 5, 2020. Idaho Power asks
the Commission to review its Application under Modified Procedure and issue a final order
before May 4, 2020.
On March 11, 2020, the Commission issued a Notice of Application and Notice
of Modified Procedure setting public comment and Idaho Power reply comment deadlines.
Order No. 34582. Staff submitted the only comments and supported Idaho Power’s
Application. Idaho Power did not respond.
Having reviewed the record, we now approve Idaho Power’s Application as
discussed below.
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 method, used to establish
"published" avoided cost rates; and (2) the integrated resource plan method, 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).
ORDER NO. 34629 2
THE APPLICATION
The Facility has been delivering energy to Idaho Power under a firm energy
sales agreement dated June 8, 1984 (“Initial Agreement”), which expires May 4, 2020.
Idaho Power states that the ESA contains non-seasonal, non-levelized hydro published
avoided cost rates for a 20-year term. Idaho Power requests the Commission declare all
payments for purchase of energy under the ESA be allowed as prudently incurred expenses
for ratemaking purposes.
STAFF COMMENTS
Staff recommends the Commission approve the Application. In making its
recommendation, Staff focused on: (1) using the 90/110 rule with a five-day advanced
notice for adjusting Monthly Net Energy Amounts; (2) the eligibility for and amount of
immediate capacity payments; and (3) verification of non-seasonal hydro avoided cost
rates.
Staff verified the ESA includes the 90/110 provision. Staff noted that the ESA
adopts a five-day advance notice for adjusting the Estimated Monthly Net Energy Amounts
for purposes of 90/110 rule compliance. Staff observed that the Commission has approved
the same notice period in other cases, and adjustments made closer to the delivery period
improve accuracy and short-term operational planning for Idaho Power.
Staff noted the Initial Agreement did not require Idaho Power to pay Lateral 10
for capacity. However, Idaho Power became capacity constrained while the Initial
Agreement was in force, and Lateral 10’s Facility helped offset Idaho Power’s capacity
needs.1 Staff thus believes Lateral 10 should be eligible for immediate capacity payments
under the renewed ESA. Staff noted the Facility nameplate capacity is the same under the
Initial Agreement and the ESA and that it would be appropriate for Idaho Power to pay
Lateral 10 for the entire nameplate capacity.
Staff recommended the Commission approve the ESA and declare Idaho
Power’s payments to Lateral 10 for the purchase of energy and capacity under the ESA be
allowed as prudently incurred expenses for ratemaking purposes.

1 Idaho Power has added significant amounts of capacity since the year 2001, including: Danskin (2001 and 2008),
Bennett Mountain (2005), and Langley Gulch (2012).
ORDER NO. 34629 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. In addition, the Commission has
authority under PURPA and Federal Energy Regulatory Commission (“FERC”)
regulations to set avoided costs, 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.
Having reviewed the record, including Idaho Power’s Application, the ESA,
and Staff’s comments, the Commission finds it reasonable to approve the ESA. The ESA
contains Commission-approved terms for which the Facility is eligible based on
characteristics like fuel source, project size, generation output profile, and renewal contract
status. Additionally, the Facility has helped offset Idaho Power’s need for additional
capacity investments. The Commission thus finds it just and reasonable to include capacity
payments for the duration of the agreement. Last, the Commission finds that Idaho Power’s
payments for purchases of energy and capacity under the ESA are prudently incurred
expenses for ratemaking purposes.
O R D E R
IT IS HEREBY ORDERED that Idaho Power’s ESA with Lateral 10 is
approved.
IT IS FURTHER ORDERED that all payments made by Idaho Power 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 regarding
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.
ORDER NO. 34629 4

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 17th
day of April 2020.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Diane M. Hanian
Commission Secretary

I:\Legal\ELECTRIC\IPC-E-20-03\Orders\IPCE2003_final_dh.docx