20200331Comments.pdf

STAFF COMMENTS 1 MARCH 31, 2020
DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9917

Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714

Attorney for the Commission Staff

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

COMMENTS OF THE
COMMISSION STAFF

STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of record,
Dayn Hardie, Deputy Attorney General, submits the following comments.

BACKGROUND
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.
The Facility is a 2.062 MW nameplate capacity hydro facility near Twin Falls, Idaho.
Under the proposed ESA, Lateral 10 would sell Facility-generated electricity to Idaho Power.
Idaho Power states the ESA contains published non-seasonal, non-levelized hydro avoided cost
rates for a 20-year term. The ESA would replace an existing power sales agreement dated June 8,
1984, which expires May 4, 2020.
RECEIVED
2020 March 31,AM10:42
IDAHO PUBLIC
UTILITIES COMMISSION
STAFF COMMENTS 2 MARCH 31, 2020
Idaho Power asks the Commission to declare all payments for purchases under the ESA
be allowed as prudently incurred expenses for ratemaking purposes.

STAFF ANALYSIS
Staff recommends approval of the proposed ESA between Idaho Power and Lateral 10.
Staff’s justification is based upon its review of the ESA, which was focused on: 1) the 90/110 rule
with at least five-day advanced notice for adjusting Estimated Net Energy Amounts; 2) eligibility
for and the amount of capacity payments; and 3) verification of non-seasonal hydro avoided cost
rates.

90/110 Rule
Qualifying facilities provide a monthly estimate of the amount of energy they expect to
produce. If the QF delivers more than 110 percent of the estimated amount, energy delivered in
excess of 110 percent is priced at the lesser of 85 percent of the market price or the contract price.
If the QF 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 contract price. Order No. 29632. Staff verified
that this provision is included in the ESA.
The ESA adopted a five-day advanced notice for adjusting Estimated Net Energy Amounts
for purposes of complying with 90/110 firmness requirements. The Commission has approved a
five-day revision to monthly generation estimates in previous cases, recognizing that Estimated Net
Energy Amounts that are closer to the time of delivery can improve the accuracy of input used by
the Company for short-term operational planning. See, e.g., Case Nos. IPC-E-19-01, IPC-E-19-03,
IPC-E-19-04, IPC-E-19-07, and IPC-E-19-12. The Facility has been generating energy since the
mid-1980s, and the Company has a long generation history for the QF. Staff believes a five-day
advanced notice is sufficient.

Capacity Payment
In Order No. 32697, the Commission stated that, “If a QF project is being paid for
capacity at the end of the contract term, and the parties are seeking renewal/extension of the
contract, the renewal/extension includes immediate payment of capacity.” Although the original
contract did not contain a capacity payment, Staff believes the Lateral #10 Hydro project should
STAFF COMMENTS 3 MARCH 31, 2020
be granted capacity payment for the full term of the replacement contract, as was granted by the
Commission to the Black Canyon #3 project in Case No. IPC-E-19-04.
Similar to the Black Canyon #3 project, the Lateral #10 Hydro project in its original
contract included avoided cost rates without a capacity payment as determined in Order No.
18190, effective September 1, 1983, because Idaho Power was at that time energy constrained,
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 multiple capacity deficiency periods
during the Lateral #10 Hydro project’s 35-year contract term, Staff is confident that the project
has contributed to meeting the Company’s need for capacity.
In addition, the nameplate capacity size (2,062 kW) remains unchanged in the replacement
contract. Therefore, Staff believes the Lateral #10 Hydro project should be granted capacity
payment for its entire nameplate capacity size for the full term of the replacement contract.

Verification of Non-Seasonal Hydro Avoided Cost Rates
Staff reviewed the non-seasonal hydro avoided cost rates contained in the contract and
verified that the proposed rates are correct and comply with existing orders.

STAFF RECOMMENDATIONS
Staff recommends the Commission approve the ESA. Staff also recommends the
Commission declare Idaho Power’s payments to Lateral 10 for the purchase of energy generated
by the Lateral #10 Hydro project under the ESA be allowed as prudently incurred expenses for
ratemaking purposes.

Respectfully submitted this 31st day of March 2020.

________________________________
Dayn Hardie
Deputy Attorney General

Technical Staff: Yao Yin

i:umisc/comments/ipce20.3dhyyrf comments
CERTIFICATE OF SERVICE
CERTIFICATE OF SERVICE

I HEREBY CERTIFY THAT I HAVE THIS 31st DAY OF MARCH 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-20-03, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:

DONOVAN E WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
[e-mail]

ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]

/s/ Reyna Quintero __
SECRETARY