HomeMy WebLinkAbout20200604Final_Order_No_34690.pdfORDER NO. 34690 1
Office of the Secretary
Service Date
June 4, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
On March 17, 2020, Idaho Power Company (“Idaho Power” or “Company”) applied
for consideration of an Energy Sales Agreement (“ESA” or “Agreement”) with the City of Hailey
for energy generated by the Hailey CSPP Hydro Project (“Facility”). The Facility is a 37.3-kilowatt
nameplate capacity hydro facility in Hailey, Idaho. The Facility is a qualifying facility under the
Public Utility Regulatory Policies Act of 1978 (“PURPA”). The Facility has a scheduled First
Energy Date under the ESA of June 25, 2020.
On April 23, 2020, the Commission issued a Notice of Application and Modified
Procedure, setting a May 14, 2020 comment deadline and a May 21, 2020 reply comment deadline.
Order No. 34644. Commission Staff filed the only comments, and Idaho Power did not file reply
comments.
Having reviewed the record, we now approve Idaho Power’s Application as discussed
below.
THE APPLICATION
The Facility has been delivering energy to Idaho Power under an energy sales
agreement dated June 14, 1985, which expires June 24, 2020. The Company stated that the
Agreement contains published non-seasonal, non-levelized avoided cost rates for a 5-year term.
The Company requested the Commission declare all payments for purchase of energy under the
ESA be allowed as prudently incurred expenses for ratemaking purposes.
STAFF COMMENTS
Staff recommended the Commission approve the ESA and declare all payments for
purchases of energy under the ESA be allowed as prudently incurred expenses. Staff’s review of
the ESA focused on the implementation of the 90/110 performance band, the eligibility for and
amount of capacity payments, and the Facility’s non-seasonal hydro avoided cost rates.
IN THE MATTER OF IDAHO POWER
COMPANY’S APPLICATION FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH THE
CITY OF HAILEY, FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY FROM
THE HAILEY CSPP HYDRO PROJECT
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CASE NO. IPC-E-20-16
ORDER NO. 34690
ORDER NO. 34690 2
Staff verified that the non-seasonal hydro avoided cost rates in the ESA are correct and
comply with existing orders. Staff verified the 5-Day Ahead monthly generation forecast provision
complies with the provision approved by the Commission in Case No. IPC-E-19-01. See Order
No. 34263. at 5. Staff noted the Facility has been delivering energy to the Company since the
1980s, and therefore has extensive historical production data that the Company can use for both
short-term and long-term planning.
Staff noted the Facility is not receiving capacity payments under its existing contract,
but asserted the Facility should receive immediate payment for capacity based on the recent
approval of the energy sales agreement for the Black Canyon #3 hydro project in Case No. IPC-
E-19-04. See Order No. 34295 at 5. Staff believes the rationale used in Commission Order No.
34295 for the Black Canyon #3 hydro project also applies to the Facility. During the 35-year term
of the Facility’s existing contract with Idaho Power, the Company has procured capacity and
included the Facility's capacity in the utility's load and resource balance. Therefore, Staff
recommended the Facility be granted capacity payments for the full term of the ESA.
Staff noted that the nameplate capacity in the ESA is 37.3 kW, whereas the Facility has
a nameplate capacity of 62 kW in its original contract. Staff discovered that the original 62-kW
generator was replaced with a 37.3-kW generator in 2016. While Staff “verified whether the
change might have adversely affected the terms of the original contract” and found it did not, Staff
noted the ESA has a provision which would apply if the Facility’s nameplate capacity was again
changed:
Any modifications to the Facility, including but not limited to the generator or
turbine, that (1) increases or decreases the Facility Nameplate Capacity, or (2)
changes the Qualifying Facility Category, or (3) changes the Primary Energy
Source or (4) changes to the generator fuel and subsequently the Fueled Rate or
Non-Fueled Rate, will require a review of the Agreement terms, conditions and
pricing and Idaho Power, at its sole determination, may adjust the pricing or
terminate the Agreement. If the Agreement is terminated because of said
modifications, the Seller will be responsible for any Termination Damages.
Staff Comments at 3; see Application, Attachment 1, Appendix B. Staff supports this
provision in all future energy sales agreements, noting that it will “prevent inaccurate rates and
violations of Commission orders or Federal Energy Regulatory Commission (FERC) rules due to
changes to the facility.” Staff Comments at 4. Staff stated it plans to work with the other two
electric utilities in Idaho to have similar language in their future PURPA contracts.
ORDER NO. 34690 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 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. Based on our review, we find 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.
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 ESA. Last, the Commission finds 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 the City of Hailey 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 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.
ORDER NO. 34690 4
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 4th
day of June 2020.
PAUL KJELLANDER, PRESIDENT
KRISTINE RAPER, COMMISSIONER
ERIC ANDERSON, COMMISSIONER
ATTEST:
Diane M. Hanian
Commission Secretary
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