20201217Final_Order_No_34870.pdf

ORDER NO. 34870 1

Office of the Secretary
Service Date
December 17, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH
COLEMAN HYDROELECTRIC, LLC FOR
THE SALE AND PURCHASE OF ELECTRIC
ENERGY FROM THE COLEMAN HYDRO
PROJECT
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CASE NO. IPC-E-20-27

ORDER NO. 34870

On June 25, 2020, Idaho Power Company (“Idaho Power” or “Company”) applied for
approval or rejection of its proposed Energy Sales Agreement (“ESA”) with Coleman
Hydroelectric, LLC (“Seller”) for energy generated by the Coleman Hydro Project (the “Facility”).
Application at 1. The Facility, near Leadore, Idaho, is a qualifying facility (“QF”) under the Public
Utility Regulatory Policies Act of 1978 (“PURPA”) and has an 800 kW nameplate capacity. Id.
The Company requested that its Application be processed by Modified Procedure. Id. at 5.
On July 16, 2020, the Commission issued a Notice of Application, Notice of Modified
Procedure and Order setting comment and reply deadlines. See Order No. 34726. The
Commission Staff (“Staff”) filed comments on August 6, 2020, and the Company filed reply
comments on August 13, 2020. On August 13, 2020, the Seller filed brief comments and a request
for an extension of time to file additional comments.1 The Commission granted the Seller’s request
in Order No. 34756 and the Seller filed supplemental comments on August 21, 2020.
Having reviewed the record, the Commission issues this Order approving the ESA
conditioned upon compliance with our findings herein.
APPLICATION
The Company represented the ESA, dated June 19, 2020, was signed by the Seller on
June 8, 2020, and by the Company on June 19, 2020. Id. at 2. The ESA’s “Effective Date” is June
19, 2020. See ESA at p. 3, § 1.11 (the ESA’s “Effective Date” is “[t]he date stated in the opening
paragraph of this [ESA] representing the date upon which this [ESA] was fully executed by both

1 The request for an extension of time and brief comments were filed by counsel, C. Tom Arkoosh of Arkoosh Law
Offices on August 13, 2020. On August 21, 2020, Gregory Adams of the law firm Richardson Adams, PLLC filed a
Notice of Appearance and Supplemental Comments for the Seller.
ORDER NO. 34870 2

Parties.”); see also ESA at p. 13, § 5.1 (“[s]ubject to the provisions of paragraph 5.2 below, this
Agreement shall become effective on the Effective Date”).
The ESA is a new QF contract. Id. The ESA provides the Seller would sell the
Facility’s electric energy to the Company at the published non-levelized, seasonal hydroelectric
avoided cost rates as set by Order No. 34350 (dated May 31, 2019), for a 20-year term. Id. at 2
and 4. Because this is a new QF (and ESA), the Company represented the Seller will not receive
capacity payments until 2026. Id. at 2.
The Seller has selected June 1, 2021, as the Facility’s Scheduled First Energy Date2
and Scheduled Operation Date3. Id. at 4; see also Appendix B to the ESA at p. 39, § B-3. The
Company asserted that requirements have been placed on the Seller for the Company to accept
energy deliveries from this Facility. Id. Idaho Power represented the Company will monitor the
compliance requirements to achieve a First Energy Date and Operation Date and the ongoing
requirements through the full term of this ESA. Id.
The Company represented the ESA was executed in compliance with past Commission
orders. Id. at 2. Idaho Power asked the Commission to issue an order approving or rejecting the
ESA and, if approved, declaring all payments for the purchases of energy under the proposed ESA
to be allowed as prudently incurred expenses for ratemaking purposes. Id. at 5.
1. Staff’s Comments
Staff recommended the Commission approve the proposed ESA if the parties update
the ESA's avoided cost rates to those set by Commission Order No. 34683. Staff based its
recommendation on analysis of the ESA, which 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) review of published avoided cost rates.
90/110 Rule and 5-Day Advanced Notice for Adjusting Estimated Net Energy Amounts
Staff confirmed the ESA contains the 90/110 Rule as required by Commission Order
29632. Staff Comments at 2. The 90/110 Rule requires a QF to provide utilities with a monthly
estimate of the amount of energy the QF expects to produce. Id. If the QF delivers more than 110

2 See ESA, Appendix B, p. 39, § B-3.
3 “Scheduled Operation Date” is defined in the ESA as “[t]he date specified in Appendix B when Seller anticipates
achieving the Operation Date. The Scheduled Operation Date provided by the Seller shall be a reasonable estimate
of the date that the Seller anticipates that the Seller's Facility shall achieve.” ESA at 8, § 1.42.

ORDER NO. 34870 3

percent of the estimated amount, then the utility must buy the excess energy for the lesser of 85
percent of the market price or the contract price. Id. If the QF delivers less than 90 percent of the
estimated amount, then the utility must buy total energy delivered for the lesser of 85 percent of
the market price or the contract price. Id.; see also Order No. 29632 at 20. Staff also confirmed
the ESA requires the Seller to give the Company five-day advanced notice if the Seller wants to
adjust its Estimated Net Energy Amounts to comply with 90/110 Rule. Id. at 2-3. Staff believed
this timeframe is reasonable and appropriate. Id. at 3.
Staff noted that the Commission has approved a five-day notice in other cases because
the Company can more accurately plan its short-term operations if the QF submits its Estimated
Net Energy Amounts closer to when the QF delivers energy to the Company. Id. at 3; see also,
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. Id.
Staff stated these cases involved existing QFs with ample historical generation data. Id. But the
principle remains the same here where the ESA involves a new QF project: for short-term planning
on any project-whether old or new-the Company's short-term planning benefits because forecasts
are more accurate when made closer to actual delivery. Id. Staff believed that while a five-day
notice is appropriate here, a longer notice could sometimes benefit the Company. Id. For example,
if a project gave month-ahead notice before adjusting an estimate, then the Company’s month-
ahead planning could capture that adjustment. Id. Under a five-day timeframe, the Company’s
month-ahead planning for that month would not capture that adjustment. Id. Staff represented
that the Company expressed, through an August 4, 2020 e-mail, that the benefits of more accurate
monthly estimates in short-term operations provided by the five-day notice outweigh the need for
month-ahead adjustments of monthly estimates, even for new projects that lack historical
generation data. Id. Staff concur and believes a five-day advanced notice is appropriate for both
new and existing projects, including the new QF project at issue here. Id.
Capacity Payment
Staff noted that because this QF is a new project, the Company will not pay the Seller
for capacity until 2026, which is the Company's first capacity deficit year as determined in Order
No. 33898. Id.
Avoided Cost Rates
Staff argued that the Commission has determined that QFs cannot lock-in a certain rate
until the QF has: 1) a signed contract to sell at that rate, or 2) filed a meritorious complaint that the
ORDER NO. 34870 4

project is mature and the QF has attempted and failed to negotiate a contract with the utility; that
is, there would be a contract but for the utility’s conduct. Id. at 3-4 citing A.W. Brown Co., Inc. v.
Idaho Public Utilities Commission, 121 Idaho 812, 816-818, 828 P.2d 841, 845-847 (1992); see
also Rosebud Enterprises, Inc. v. Idaho Public Utilities Commission, 131 Idaho 1, 951 P.2d 521
(1997); Idaho Power Company v. Idaho Public Utilities Commission, 155 Idaho 780, 316 P.3d
1278 (2013); Commission Order Nos. 32257 and 32635. Staff stated that in this case the Seller
can lock-in a rate because it has a legally enforceable obligation with the Company that entitles
the Seller to sell at a specified rate. Id. at 4.
Staff disputed the rate specified in the ESA. Id. Staff noted that the ESA’s Effective
Date of June 19, 2020, occurred after the Commission updated its published non-levelized,
seasonal hydroelectric avoided cost rates on June 1, 2020. Id.; see also Order No. 34683 (updating
published avoided rates). Thus, Staff asserted the Company's proposed published avoided cost
rates for the ESA-the old rates set by Order No. 34350-are unavailable because the ESA was fully
executed and effective after new rates took effect on June 1, 2020, per Order No. 34683. Id. Staff
contended that the Commission should condition its approval of the ESA on the Company and
Seller updating the ESA’s published avoided cost rates to those set in Order No. 34683, which
Staff attached as Attachments A and B to its comments. Id.
2. Idaho Power Reply Comments
In response to Staff’s comments, Idaho Power contacted the Seller to ask if it wanted
to amend the ESA. Idaho Power Reply Comments at 2. The Company represented that the Seller
wished for the matter to be submitted to the Commission for decision. Id.
Idaho Power asserted that the Seller began the Schedule 73 contracting process on May
8, 2019, and was sent an executable version of the submitted ESA on May 27, 2020. Id. The
Company provided a timeline of the Seller’s movement through the tariffed contracting process in
its Reply Comments. Id. at 2-3.
The Company stated that a QF’s entitlement to a previously effective avoided cost rate
under a contract, or through a non-contractual but legally enforceable PURPA obligation, is a
determination left to the Commission’s discretion. Id. at 3. Idaho Power noted that Staff correctly
cited precedent requiring a signed contract or a meritorious complaint that the project is mature
and the QF has attempted and failed to negotiate a contract with the utility, before locking in a
previously effective avoided cost rate under a legally enforceable obligation. Id.
ORDER NO. 34870 5

Additionally, Idaho Power represented that the Company did not refuse to contract nor
delay the contracting process. Id. at 3-4. The Company asserted that the only element absent when
rates changed on June 1 was that the ESA remained unsigned until June 8 by the Seller, and June
19, 2020, by the Company. Id. at 4. Under these facts, the Company did not believe it could refuse
to sign the ESA. Id.
3. Seller’s Comments and Supplemental Comments
On August 13, 2020, the Seller filed comments arguing there was a legally enforceable
obligation (“LEO”) before May 31, 2020, because the Facility had completed the Schedule 73
contracting process, except for signing the ESA before that date. Coleman Hydroelectric, LLC
Comments at 1. The Seller alternatively argued for grandfathering; that is even if a LEO did not
exist, the Commission still could approve the ESA with the old rates because the Commission has
grandfathered expired rates into previous contracts. Id. at 2.
On August 21, 2020, the Seller filed Supplemental Comments and the Declaration of
Jordan Whittaker, who attested that he was a developer of the Facility. Declaration of Jordan
Whittaker at 1. The Seller again asked the Commission to approve the ESA with the published
avoided cost rates from Order No. 34350 that were effective until June 1, 2020. Supplemental
Comments of Coleman Hydroelectric, LLC at 1. The Seller also agreed with the contracting
timeline in Idaho Power’s Reply Comments. Id. at 2. Further, the Seller asserted that before June
1, 2020, it had taken several steps to develop the Facility by buying and installing equipment at
significant cost. Decl. Whittaker at 2.
The Seller asserted that Federal Energy Regulatory Commission (“FERC”) regulations
entitle a QF to form a LEO with the rates and terms in effect when the QF commits to selling
power to the utility. Id. The Seller asserts these commitments result in contracts or in non-
contractual, but binding, LEOs. Id. IPC-E-10-22.
The Seller also noted that in the past the Commission approved an executed energy
sales agreement between Idaho Power and Yellowstone Power, Inc. (“Yellowstone”) containing
rates that expired before the agreement was signed despite “the apparent lack of any written
documentation . . . evidencing that the terms of a power purchase agreement were materially
complete [before the rate change].” Id. at 5; see also Order No. 32104, Case No. IPC-E-10-22.
ORDER NO. 34870 6

The Seller further asserted that the Commission has looked to a project’s maturity and
the QF’s developer’s level of commitment to completing the project in determining whether to
approve the use of pre-existing rates. Id. citing Order No. 29954.
The Seller also argued that FERC’s recent Order No. 872, proposing new rules (which
are not in effect yet) reaffirms FERC’s prior LEO precedent and confirms that a QF may be entitled
to previously effective avoided costs without an executed written contract. Id. at 5. The Seller
also claimed FERC in Order No. 872 listed requirements it had found to be inconsistent with the
LEO rule. Id. The Seller claimed these unlawful LEO requirements include a requirement for a
utility’s execution of a power purchase agreement or requiring that QFs file a formal complaint
with the state commission. Id. The Seller highlighted that FERC specifically cited Grouse Creek
Wind Park, LLC, 142 FERC ¶ 61,187 at ¶ 40 (2013), for the proposition that requiring the QF to
file a complaint to establish a LEO is unlawful. Id.
The Seller asserted that based on the foregoing, the Seller created a LEO before June
1, 2020, and the Commission should approve the ESA as submitted. Id. at 7. The Seller also
asserted this Commission has acknowledged that pre-existing rates should apply where the facility
has matured to the level that demonstrates the QF’s commitment to the project, and the Seller
satisfies such test. Id.
The Seller also asserted that the parties’ inability to sign the written agreement before
the rates changed on June 1, 2020, was simply due to logistics like the parties’ physical separation,
the resulting need to mail the document back and forth, and remote working conditions caused by
a global pandemic. Id. at 9.
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 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 rules. The Commission may enter any final order
consistent with its authority under Title 61 and PURPA.

ORDER NO. 34870 7

Published avoided cost rates are updated by this Commission every year. The new
rates go into effect on June 1 every year. See Order Nos. 32817, 33041, 33305, 33538, 33773,
34062, 34350, and 34683. Contracts executed after June 1 are subject to the new rates. Indeed,
the parties explicitly agreed to an “Effective Date” within the terms of their negotiated ESA.
Notwithstanding the arguments made in this case, we accept the parties’ representations in their
contract – that they intended the “Effective Date” to be when the ESA was fully executed by both
parties on June 19, 2020. Furthermore, a LEO argument is inappropriate based on the facts of this
case. The parties entered negotiations that, ultimately, resulted in an agreement. Neither party
asserts that the other caused undue delay. FERC’s LEO standards, prior to the issuance of Order
No. 872 and after it, are intended to prevent intransigence and undue delay by a utility in
negotiating with a QF. None of those circumstances apply here.
Based on our review of the record, the Commission finds it is fair, just, and reasonable
to approve the ESA with published avoided cost rates set in Order No. 34683. The rates set by
Order No. 34683 became effective on June 1, 2020. The mutually negotiated ESA has an effective
date of June 19, 2020. If the Company and Seller had intended a different effective date, they
could have negotiated one. Because the ESA’s effective date is after the June 1, 2020 rate change,
the Seller is not entitled to the previously effective rates. See A.W. Brown Co., v. Idaho Public
Utilities Commission, 121 Idaho 812, 816-818, 828 P.2d 841, 845-847 (1992).
The Commission also finds that the Company’s payments for purchases of energy
under the ESA are prudently incurred expenses for ratemaking purposes.
O R D E R
IT IS HEREBY ORDERED that the ESA is approved conditioned upon on the
Company and Seller updating the ESA’s published avoided cost rates consistent with Order No.
34683.
IT IS FURTHER ORDERED that all payments made by the Company for purchases
of energy 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. 34870 8

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

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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