20201119Comments.pdf

MATT HUNTER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83120
BOISE, IDAHO 83720-007 4
[phone]
IDAHO BAR NO. 10655
Street Address for Express Mail:
1133I W CHINDEN BLVD, BLDG 8, SUME 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR APPROVAL
OR REJECTION OF AN ENERGY SALES
AGREEMENT WITH SHAWPATIN AGCAP,
LLC, FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY FROM THE MUD CREEK
WHITE HYDRO PRO.IECT
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CASE NO. IPC.E.2O-34
COMMENTS OF THE
COMMISSION STAFF
The staff of the Idaho Public utilities commission comments as follows on Idaho power
Company' s Application.
BACKGROUND
On September 3,2020,Idaho Power Company ("Idaho Power") asked the Commission to
consider an Energy Sales Agreement ("ESA" or "Agreement") with Shawpatin AgCap, LLC for
energy generated by the Mud Creek White Hydro Project ("Facility"). The Facility is a
qualifying facility under the Public Utility Regulatory policies Acr of 197g.
The Facility is a268.6-kilowatt nameplate capacity hydro facility near Buhl, Idaho. The
Agreement contains published non-seasonal, non-levelized,avoided cost rates for a21-year term.
The Facility has been delivering energy to Idaho Power under an energy sales agreement dated
April 15, 1985, which expires December 3l,2OZO.
STAFF COMMENTS NOVEMBER 19,2O2O1
STAFF ANALYSIS
Staff recommends approval of the proposed ESA between Idaho power and Shawpatin
AgCap, LLC. 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 1 10 percent of the estimated amount, energy delivered in
excess of I 10 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 golllo 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 plannin g. see, e.g., caseNos. IpC-E-19-01,
IPC-E-19-03, IPC-E-19-04, IPC-E-Ig-07, and IPC-E- lg-12. The Facility has been generating
energy since the mid-1980s, and the Company has a long generation history for the eF. Staff
believes a five-day advanced notice is sufficient.
It is important to note that while a five-day notice is appropriate here, longer notice could
sometimes benefit the Company in some situations. For example, if a project were to give month-
ahead notice before delivery, 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. The Company expressed through email on August 4,2020,
that it believes the benefits of more accurate monthly estimates in short-term operations provided
by the five-day advanced notice outweigh the need for month-ahead adjustments of monthly
estimates. Staff concurs and believes that a five-day advanced notice is appropriate for any
project, regardless of the amount of project generation history.
STAFF COMMENTS NOVEMBER 19,20202
Capacitv Pavment
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 would include immediate payment of capacity.,, Although the
original contract did not contain a capacity payment, Staff believes the Facility should be granted
immediate capacity payments 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- lg-04.
Similar to the Black Canyon #3 project, the Facility in its original contract included
avoided cost rates without a capacity payment as determined in Order No. lgl90, because Idaho
Power was at that time energy constrained, not capacity constrained. Since about the year ZOOO,
the Company has added significant amounts of capacity such as Danskin (2001 and 200g),
Bennett Mountain (2005), and Langley Gulch (20t2). Because the Company went through those
multiple capacity deficiency periods during the Facility's original contract term, staff is confident
that the Facility has contributed to meeting the company,s need for capacity.
In addition, the Facility has been operating under the current nameplate capacity size
(268'6 kWl) since 1986, and it remains unchanged in the replacement contract. Therefore, Staff
believes the Facility should be granted immediate capacity payment for its entire nameplate
capacity size for the full term of the replacement contract.
Staff reviewed the non-seasonal hydro avoided cost rates contained in the Agreement 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 Shawpatin AgCap, LLC for the purchase of
energy generated by the Mud Creek White Hydro Project under the ESA be allowed as prudently
incurred expenses for ratemaking pu{poses.
I Idaho Power's Quarterly Cogeneration and Small Power Production Report mistakenly shows that the Facility,snameplate is 205 kW, but the actual nameplate capacity has been 223.8kw plus 60 horsepower since 19g6. 60horsepower is approximately equivalentto 44.75 [w, *t i"h brings the roral ro 26g.6 kw.
STAFF COMMENTS 3 NOVEMBER tg,2O2O
flRespectfully submitted this l?day of November 2020
Matt Hunter
Deputy Attorney General
Technical Staff: yao yin
Rachelle Farnsworth
i:umisc/commentVipce20.34mhyyrf comments
4STAFF COMMENTS NOVEMBER 19,2020
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19th DAy oF NOVEMBER 2020,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASENO. IPC-E-20-34, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
DONOVAN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOrSE D 83707-0070
E-MAIL: [e-mail]
dockets @ idahopower.com
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
LESLIE IVERSEN
PO BOX 446
TWIN FALLS ID 83303
E-MAIL: ShawpatinAeCap @ gmail.com
Y
CERTIFICATE OF SERVICE