20201216Comments.pdf

JOHN R.HAMMOND,JR.
DEPUTY ATTORNEY GENERAL :()0IDAHOPUBLICUTILITIESCOMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.5470
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-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 )CASE NO.IPC-E-20-37
APPROVAL OR REJECTION OF AN )ENERGY SALES AGREEMENT WITH THE )CITY OF POCATELLO )COMMENTS OF THE
)COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission ("Staff')comments as follows on
Idaho Power Company's Application.
BACKGROUND
On November 12,2020,Idaho Power Company ("Company")asked the Commission to
approve or reject the Company's proposed Energy Sales Agreement ("ESA")with the City of
Pocatello,Idaho ("Seller")for the energy generated by the Pocatello Waste Project (the
"Facility").The Facility is a qualifying facility ("QF")under the Public Utility Regulatory
Policies Act of 1978 ("PURPA").
The Company and Seller entered the ESA,which was signed by the Seller on November
5,2020 and by the Company on November 9,2020.The ESA is a replacement agreement for a
previous energy sales agreement with the Company that was executed on April 24,1985 and
expires on December 31,2020.
STAFF COMMENTS l DECEMBER 16,2020
Under the ESA,the Seller would sell the energy generated by the Facility to the Company
at published non-levelized,"Other"avoided cost rates as set by Order No.34683 for a 20-year
term.The Company states the replacement ESA contains capacity payments for its entire term,
with no sufficiency period.
The Company requests the Commission 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 prudentlyincurred expenses for ratemaking purposes.
Since the Application was filed,updated and corrected Monthly Estimated Net Energy
Amounts on page 16 of the ESA have been provided by the Seller to the Company,and a clerical
error was discovered on page 50 of the ESA.On December 8,2020,the Company filed
replacement pages of page 16 and page 50 of the ESA.
STAFF REVIEW
Staff recommends approval of the proposed ESA between the Company and Seller.
Staff's recommendation 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)eligibilityfor and the amount of capacity payments;and 3)verification of avoided cost rates.
90/110 Rule and 5-Day Advanced Notice for AdjustingEstimated Net Energy Amounts
Staff confirmed the ESA contains the 90/110 Rule as required by Order No.29632.The
90/110 Rule requires a QF to provide utilities with a monthlyestimate of the amount of energy
the QF expects to produce.If the QF delivers more than 110 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 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 for purposes of complying
with the 90/110 Rule.Staff believes this timeframe is reasonable and appropriate.
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.
STAFF COMMENTS 2 DECEMBER 16,2020
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.
While five-day notice is appropriate,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 monthlyestimates,even for new projects that lack historical
generation data.Staff concurs,and believes a five-day advanced notice is appropriate for all
projects.
On the original page 16 of the ESA,the monthlygeneration estimate is 200 kWh each
month.Staff believed this to be an error,which the Company corrected through a replacement
page that shows the new monthlygenerationestimate is 162,000 kWh each month,which results
in an annual amount of 1,944,000 kWh.This annual amount more realistically aligns with the
potential capacity and the amount of generationthat can be produced by the facility.The
Company uses these monthlyamounts as the standard to determine compliance with the 90/110
Rule.However,the Seller can modify the monthlyamounts five days in advance of the delivery
month to adjust the standard on an ongoing basis.
Capacity Payment
In Order No.32697,the Commission stated that,"[i]f 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/extensionincludes immediate payment of capacity."Althoughthe original
ESA did not contain a capacity payment,Staff believes the Facility should be granted capacity
payment 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-19-04.
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.18190,effective
September 1,1983,because the Company was at that time energy constrained,not capacity
constrained.Since about the year 2000,the Company has added significant amounts of capacity
such as Danskin (2001 and 2008),Bennett Mountain (2005),and Langley Gulch (2012)gas
STAFF COMMENTS 3 DECEMBER 16,2020
plants.The Facility's capacity has not changed since 1993 or 1994.Because the Company went
through those multiple capacity deficiency periods since 1993 or 1994,Staff is confident that the
Facility has contributed to meeting the Company's need for capacity.
In addition,the amount of capacity remains unchanged in the proposed ESA.Therefore,
Staff believes the Facility should be granted capacity payments for its entire capacity amount over
the full term of the proposed ESA.
Verification of Avoided Cost Rates for the "Other"Category
Because the Facility is operated by methane gas from the Pocatello Wastewater Treatment
Plant,the parties use avoided cost rates for the "Other"category.Staff reviewed the avoided cost
rates in the proposed ESA and verified that the proposed rates are correct except for a mistake for
year 2041.1 Althoughthis is beyond the contract term,in case of a future contract extension with
circumstances that justify an extension of the current rate schedule,the Company submitted a
replacement page that corrected the mistaken rate.
STAFF RECOMMENDATIONS
Staff recommends the Commission approve the ESA.Staff also recommends the
Commission declare the Company's payments to the Seller for the purchase of energy generated
by the Facility under the ESA with the replacement pages be allowed as prudently incurred
expenses for ratemaking purposes.
Respectfully submitted this day of December 2020.
John R.Hamnfond,Jr.
Deputy AttorneyGeneral
Technical Staff:Yao Yin
Bentley Erdwurm
i:umisc:comments/ipce20 37jhyybe comments
'The term of the proposed ESA is from 2021 through 2040.
STAFF COMMENTS 4 DECEMBER 16,2020
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 167"DAY OF DECEMBER 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN CASE
NO.IPC-E-20-37,BY E-MAILING A COPY THEREOF,TO THE FOLLOWING:
DONOVAN E WALKER ENERGY CONTRACTS
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
E-MAIL:E-MAIL:[e-mail]
LEVI ADAMS
CITY OF POCATELLO WPC
10733 N RIO VISTA
POCATELLO ID 83202
E-MAIL:[e-mail]
Jo /Mw
SECRE TAR
CERTIFICATE OF SERVICE