20200806Comments.pdf

JOHN R. HAMMOND, JR.
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC U]'ILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
IDAHO BAR NO. 5470
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11331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
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
CASE NO.IPC.E-20.27
COMMENTS OF THE
COMMISSION STAFF
'l'he Staff of the Idaho Public Utilities Commission ("Staff') comments as follows on
Idaho Power Company's Application.
BACKGROUND
On June 25,2020,1daho Power Company ("Company") asked the Commission to approve
or reject the Company's proposed new Energy Sales Agreement ("ESA") with Coleman
Flydroelectric LLC ("Seller") for the energy generated by the Coleman Hydro Project (the
"Facility"). Application at2. The Facility is a qualifuing facility ("QF") under the Public Utility
Regulatory Policies Act of 1978 ("PURPA").
The ESA specifies two types of effective dates. First, the ESA's "Effective Date" is
June I 9, ?020, which is the date by which all parties had signed it. See ESA p. 3, $ l.l I (the
ESA's "Effective Date" is "[t]he date stated in the opening paragraph of this [ESA] representing
STAFF COMMENTS AUGUST 6,2020
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the date upon which this [ESA] was fully executed by both Parties") and ESA at p, 35 (reflecting
the Seller signed the ESA on June 8,2020, and the Company signed the ESA on June 19,2020).
Second, ESA $ 21 .l clarifies the ESA does not become "finally effective" until the
Commission has approved it and declared that the Commission will allow the Company's
payments to the Seller for energy as prudently incurred expenses for ratemaking purposes. ,See
ESA at p. 31, $ 2l .l . Thus, the ESA will not be "finally effective" until a final approving order
issues in this case.
The Company represents that under the ESA the Seller would sell Facility-generated
electricity to the Company at published non-levelized, seasonal hydroelectric avoided cost rates
that became effective on June 1,2A19, as set by OrderNo.34350, for a2}-yearterm. Applicatton
at 3. The Commission updated published non-levelized, seasonal hydroelectric avoided cost rates
in Order No. 34683, which became effective on June 1,2020. See Order No. 34683.
STAFF REVIEW
Staff recommends 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 its analysis of the ESA, which focused on: I ) the 90/l l0 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. Staff summarizes its
analysis below.
90/l l0 Rule and 5-Da.v Advanced Notice for Adjusting Estimated Net Energy Amounts
Staffconfirmed the ESA contains the 90/l l0 Rule as required by Commission Order
29632. The 90/1 I0 Rule requires a QF to provide utilities with a monthly estimate of the amount
of energy the QF expects to produce. If the QF delivers more than I l0 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. 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. See Order No.29632 a|20.
Staffalso 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 for purposes of complying
2STAFF COMMENTS AUGUST 6,2020
with 90/110 firmness requirements. Staff believes this timeframe is reasonable and appropriate
here.
The Commission has approved 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. 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. These cases involved
existing QFs with ample historical generation data. But the principle remains the same where, as
here, 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.
While five-day notice is appropriate here, longer notice could sometimes benefit the
Company. For example, if a project were to give month-ahead notice before adjusting an
estimate, then the Company's month-ahead planning could capture that adjustment. Under a
five-day timeframe, the Company's month-ahead planning for that month would not capture that
adjustment. Here, 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. Staffconcurs, and believes a five-day advanced notice is
appropriate for both new and existing projects, including the new QF project at issue here.
Capacity Payment
Utilities compensate QFs for capacity only when the utility is capacity deficient, unless
the QFs are renewal projects that have been paid for capacity or the QFs have contributed to
meeting the utility's capacity needs at the end of the original contracts. ,See Order Nos. 32697
and34295. Because this QF is a new project, the Company will not start paying the Seller for
capacity until 2026, which is the Company's first capacity deficit year as determined in Order
No. 33898.
Avoided Cost Rates
The Commission has determined that QFs cannot lock-in a certain rate until the QF has:
(l ) a signed contract to sell at that rate, or (2) a meritorious complaint alleging the project is
3STAFF COMMENTS AUGUST 6,2020
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. See A.W. Brown Co., Inc. v, ldaho Pubtic
Utilities Commissiote, 121 Idaho 81 2, 8l 5, 828 P.2d 841 . 844 (1992); see also Rosebud
Enterprises, Inc. v. Idaho Public Utilities Commission, l3l Idaho l, 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. Here, the Seller can lock-in a rate because it has an
ESA with the Company and that ESA entitles the Seller to sell at a specified rate.
Staff takes issue, however, with the rate specified in the ESA. 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. See Order No. 34683 (updating published
avoided rates); ESA p. I opening paragraph, p. 3, $ 1.1 1, and p. 35 (Effective Date is
June 19,2020, which is the date by which all parties had signed the ESA). Thus, 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 perOrderNo.34683. See A.W. BrownCo., lnc.,l2l Idaho at 815,828 P.2d al844;
Rctsebud, l3 I Idaho l, 95 1 P.2d 521 (1997); Idaho Pou,er Company, 155 ldaho 780, 3 l6 P.3d
1278; Commission Order Nos. 32257 and32635. The Commission should thus 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 has attached hereto as Attachments A and B to these
comments. I
STAFF RECOMMENDATIONS
In summary, Staff recommends of the Commission approve the proposed ESA on
condition that the parties update the ESA's published avoided cost rates to those authorized by
Order No. 34683. Staff also recommends that, if the parties update the ESA, the Commission
declare the Company's payments to the Seller under the ESA lor energy be allowed as prudently
incurred expenses for ratemaking purposes.
I Attachment A contains published, non-levelized, seasonal hydro avoided cost rates approved in OrderNo.34683
Attachment B contains published, non-levelized, non-seasonal hydro avoided cost rates approved in Order No.
34683. Seasonal hydro QFs need to produce at least 55% of its annual generation during the months of June, July,
and August to be paid seasonal avoided cost hydro rates. Order No. 32802. Otherwise, they will be paid at non-
seasonal avoided cost hydro rates.
STAFF COMMENTS AUGUST 6,20204
Respectfully submitied this day ofAugust 2020.6lL
Harnmond, Jr.
Attomey General
Technical Staff: Yao Yin
Rachelle Farnsworth
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5STAFF COMMENTS AUGUST 6,2020
Attachment No. A
Case No. IPC-E-20-27
StaffComments
08/06/20
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Attachment No. B
Case No. IPC-E-20-27
StaffComments
08/06/20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 6TH DAY OF AUGUST 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC.E.2O.27, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
DONOVAN E WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: drvalkerl.0idahopower.corn
docketsdl idahopower.co rn
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL : enerqycontracts@.idahopower. oorn
JORDAN WHITTAKER
COLEMAN HYDRO
PO BOX 177
LEADORE ID 83464
E-MAIL: trvodoti rri gation(4) gmai l.corn
S
CERTIFICATE OF SERVICE