20210129Final_Order_No_34910.pdf

ORDER NO. 34910 1

Office of the Secretary
Service Date
January 29, 2021

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF IDAHO POWER’S
APPLICATION FOR APPROVAL OR
REJECTION OF AN ENERGY SALES
AGREEMENT WITH J.M. MILLER
ENTERPRISES, INC, FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY FROM
THE SAHKO HYDRO PROJECT
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CASE NO. IPC-E-20-36

ORDER NO. 34910

On October 29, 2020, Idaho Power Company (“Idaho Power” or “Company”) applied
for approval or rejection of the Company’s Energy Sales Agreement (“ESA”) with J.M. Miller
Enterprises, Inc. for the sale and purchase of electric energy generated by the Sahko Hydro Project.
The Sahko Hydro Project is a qualifying facility (“QF”) under the Public Utility Regulatory
Policies Act of 1978 (“PURPA”).
On December 7, 2020, the Commission issued a Notice of Application and Notice of
Modified Procedure. Order No. 34860.
On December 28, 2020, Commission Staff filed comments.
Now, the Commission approves the ESA.
BACKGROUND
Under PURPA, electric utilities must purchase the power produced by QFs. 16 U.S.C.
§ 824a-3(b); 18 C.F.R. § 292.303(a). The utility must purchase the energy at the avoided cost rate.
18 C.F.R. § 292.304(a). The avoided cost represents “the incremental costs to an electric utility
of electric energy or capacity or both which, but for the purchase from the qualifying facility or
qualifying facilities, such utility would generate itself or purchase from another source.” 18 C.F.R.
§ 292.101(b)(6). State utilities commissions have broad discretion to set avoided cost rates within
their respective jurisdictions. Rosebud Enterprises, Inc. v. Idaho PUC, 128 Idaho 624, 627, 917
P.2d 781, 784 (1996). FERC regulations require state regulatory commissions to establish
published avoided cost rates for all QFs 100 kW and smaller. 18 C.F.R. § 292.304(c)(1). The
Commission, in its discretion, may establish published avoided cost rates for QFs above 100 kW.
18 C.F.R. § 292.304(c)(2). In Idaho, published avoided cost rates are available for hydro QFs up
to 10 aMW. Order No. 32697 at 14.

ORDER NO. 34910 2
In Idaho, published avoided cost rates are determined by the surrogate avoided resource
method (“SAR Method”). The SAR Method uses a natural gas fired combined-cycle combustion
turbine as the proxy resource to calculate the avoided costs. Id. at 17. SAR Method rates are
updated annually to reflect updated natural gas forecasts. Order No. 32802. QFs are eligible for
capacity payments after the utility reaches the first capacity deficit date established at the time the
QF enters its first contract with the utility. Order No. 32697 at 21. The first capacity deficit date
is determined through a proceeding following the utility’s submission, and Commission
acknowledgment, of the utility’s Integrated Resource Plan. Order No. 34649. If a QF renews its
contract with the utility, the first capacity deficit date determined at the time of the first contract
continues to apply, so long as the QF continues to contribute to the utility resource stack. Order
Nos. 33419 at 26; Order No. 32737 at 5.
THE APPLICATION
Idaho Power states that the parties entered into an ESA on November 1, 2010, which
will expire on January 31, 2021. The QF is already interconnected and selling energy to Idaho
Power and the ESA specifies a First Energy Date and Scheduled Operation Date of February 1,
2021. The nameplate capacity of the QF continues to be 500 kW. The replacement ESA contains
capacity payments for the entire 20-year term of the Agreement. The rates are published avoided
cost rates calculated by the SAR Method for a QF in the “Non-Seasonal Hydro” category. The
ESA states that the QF must provide the Company with Net Energy Amount monthly adjustments
by 5:00 p.m. on the 25th day of the month before the month to be revised.
STAFF COMMENTS
Staff recommends the Commission approve the ESA. Staff confirmed the ESA
contains the 90/110 Rule as required by Commission Order No. 29632. Staff states that the
monthly adjustment to the Net Energy Amount complies with prior Commission orders. Staff
verified that the QF is being paid for capacity under its current contract and the amount of capacity
has not changed. Therefore, under Order No. 32697, the QF is eligible for capacity payments for
the full term of the replacement contract, without a sufficiency period. Staff verified the ESA’s
Non-Seasonal Hydro rates are correct and comply with existing orders.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-501, -502
and -503. The Commission is empowered to investigate rates, charges, rules, regulations,

ORDER NO. 34910 3
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 FERC rules. The Commission
may enter any final order consistent with its authority under Title 61 and PURPA.
Pursuant to this authority, we have reviewed the record, including the Application and
comments. We find that the provisions of the ESA comply with our requirements for SAR Method
contracts and the rates were calculated correctly. Therefore, we approve the ESA.
O R D E R
IT IS HEREBY ORDERED that the ESA between Idaho Power and J.M. Miller
Enterprises, Inc. is approved.
IT IS FURTHER ORDERED that Idaho Power’s payments for the purchase of energy
and capacity generated by the QF are prudently incurred expenses.
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 with regard to 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.
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ORDER NO. 34910 4
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 29th
day of January 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\ELECTRIC\IPC-E-20-36\IPCE2036_final order_ej.docx