20200401Comments.pdf

STAFF COMMENTS 1 APRIL 1, 2020
MATT HUNTER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10655

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
COMPANY’S APPLICATION FOR
APPROVAL OF AN ENERGY SALES
AGREEMENT WITH MARCO POWER
COMPANY, FOR SALE AND PURCHASE OF
ELECTRIC ENERGY FROM THE MARCO
RANCHES HYDRO PROJECT

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CASE NO. IPC-E-20-06

COMMENTS OF THE
COMMISSION STAFF

The Staff of the Idaho Public Utilities Commission comments as follows on Idaho Power
Company’s Application.

BACKGROUND
On February 14, 2020, Idaho Power Company (“Idaho Power” or “Company”) applied for
an order approving or rejecting an Energy Sales Agreement (“ESA”) with Marco Power Company
(“Marco” or “Seller”) for energy generated by the Marco Ranches hydro project (“Facility”). The
Facility is a qualifying facility (“QF”) under the Public Utility Regulatory Policies Act of 1978.
The Facility has a scheduled First Energy Date under the ESA of August 1, 2020.
Marco Power Company’s Facility is a 1,200-kilowatt nameplate capacity hydro facility
near Jerome, Idaho. Under the proposed ESA, Marco Power Company would sell Facility-
generated electricity to Idaho Power at published non-levelized, non-seasonal hydroelectric
avoided cost rates over a 20-year term. The proposed ESA would replace an energy sales
agreement from 1985 that expires on July 31, 2020.
RECEIVED
2020 April 1,AM11:32
IDAHO PUBLIC
UTILITIES COMMISSION

STAFF COMMENTS 2 APRIL 1, 2020
Idaho Power also asked the Commission to declare Idaho Power’s purchases under the
ESA will be allowed as prudently incurred expenses for ratemaking purposes.

STAFF ANALYSIS
Staff recommends approval of the proposed ESA between Idaho Power and Marco.
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 (QF) 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.
Paragraph 7 of the Application mistakenly states that “this Facility has been delivering
energy to Idaho Power in accordance with an energy sales agreement dated March 26, 2015, that
expires on May 1, 2020.” Idaho Power corrected the mistaken dates through email and changed
the statement to “this Facility has been delivering energy to Idaho Power in accordance with a
firm energy sales agreement dated February 28, 1985 that expires on August 1, 2020.” The
mistake occurred in the Application and did not have any impacts on the ESA.

STAFF COMMENTS 3 APRIL 1, 2020
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 Marco Ranches hydro project
should 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 Marco Ranches 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 those multiple capacity deficiency periods during the Marco
Ranches 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 (1,200 kW) remains unchanged in the replacement
contract. Therefore, Staff believes the Marco Ranches 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 Marco Power Company for the purchase of
energy generated by the Marco Ranches hydro project under the ESA be allowed as prudently
incurred expenses for ratemaking purposes.

STAFF COMMENTS 4 APRIL 1, 2020
Respectfully submitted this 1st day of April 2020.

________________________________
Matt Hunter
Deputy Attorney General

Technical Staff: Yao Yin

i:umisc/comments/ipce20.6mhyyrf comments
CERTIFICATE OF SERVICE
CERTIFICATE OF SERVICE

I HEREBY CERTIFY THAT I HAVE THIS 1st DAY OF APRIL 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-20-06, 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