20210604Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9917
Street Address for Express Mail:
I1331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 837I4
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT BETWEEN
IDAHO POWER COMPANY AND LEMHI
HYDRO COMPANY
CASE NO. IPC-E-2I.l1
COMMENTS OF THE
COMMISSION STAFF
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STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On April 19,2021, Idaho Power Company ("Company") applied to the Commission for
approval or rejection of an energy sales agreement ("ESA") with Lemhi Hydro Company
("Seller") for the energy generated by the Lemhi Hydro Project ("Facility"). The Facility has a
nameplate capacity of 450 kilowatt ("kW") and is near Salmon, Idaho.l
The Seller has been delivering energy generated by the Facility to the Company under a
firm energy sales agreement dated December 20, 1985 that expires on July 31,2021.
I The 1985 Agreement stated that the generator's nameplate rating was 500 kW. However, at the time of
construction in 1986, a generator with 450 kW nameplate capacity was installed. The Seller plans to continue
operating and maintaining the 450-kW generator.
STAFF COMMENTS JI.INE 4,2021
The new ESA has a2)-year term with non-levelized, non-seasonal hydro published
avoided cost rates as set by Order No. 34683.
The Company requests the Commission approve the ESA and declare all payments for
purchases of energy under the ESA be allowed as prudently incurred expenses for ratemaking
purposes.
STAFF REVIEW
Staff recommends approval of the proposed ESA between the Company and the Seller
Staffls justification is based upon its review of the ESA, which was focused on: l) 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 avoided cost rates.
I l0 Rule and 5-for Estimated Net
Staff confirmed the ESA contains the 90/l l0 Rule as required by Commission Order No.
29632. The 90/l l0 Rule requires a seller of a qualifl,ing facility to provide utilities with a
monthly estimate of the amount of energy the qualiffing facility expects to produce. If the seller
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 seller 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 at least five days
advanced notice if the Seller wants to adjust its Estimated Net Energy Amounts for purposes of
complying with 90/110 firmness requirements. Five-day advanced notice has been authorized in
prior Commission orders including Order Nos. 34263 and 34870.
Capacit-y Payment
In Order No. 32697, the Commission stated that, "lf a QF project is being paid for
capacity at the end of the contract term, and the parties [seek] renewal/extension of the contract,
the renewal/extension includes immediate payment of capacity." Although the original contract
did not contain a capacity payment, Staff believes the Facility should be granted capacity
2STAFF COMMENTS JLINE 4,2021
payments for the term of the replacement contract, as was granted by the Commission for the
Black Canyon #3 project in Case No. IPC-E-19-04.
Similar to the Black Canyon #3 project, the December 20,1985, firm Energy Sales
Agreement between the Company and Seller included avoided cost rates without capacity
payments as determined in Order No. 18190, because the Company was energy constrained, not
capacity constrained, then. Since about the year 2000, the Company has added significant
amounts of capacity to meet its capacity needs. These additions include Danskin (2001 and
2008), Bennett Mountain (2005), and Langley Gulch (2012) gas plants. Because the Facility has
operated since the mid- 1 980s - through those capacity deficiency periods - Staff is confident
that the project has contributed to meeting the Company's need for capacity.
In addition, the configuration of the Facility and its generation capacity remains
unchanged in the proposed ESA. Therefore, Staff believes the Facility should be granted
capacity payments for its entire generation capacity amount over the fulI term of the ESA.
Verification of Avoided Cost Rates
Staff reviewed the avoided cost rates proposed in the ESA and verified that the proposed
rates are correct.
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 be allowed as prudently incurred expenses for ratemaking
purposes.
Respectfully submitted this q day ofJune 2021
_--.- Dayn
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Technical Staff: Yao Yin
i:umisc/comments/ipce2l .I l dhyy comments
JSTAFF COMMENTS
f"o Deputy Attomey General
JLINE 4,2021
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 4TH DAY OF JUNE 2021, SERVED
THE FOREGOING COMMENTS OF TTTE COMMISSION STAFF, IN CASE NO.
IPC-E-2I-II, BY E.MAILING A COPY THEREOF, TO THE FOLLOWING:
DONOVAN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOrSE rD 83707-0070
E-MAIL: [e-mail]
dockets@ idahopower.com
TED SORENSON
MIRIAH ELLIOTT
7II E TURTLE POINT DR
IVINS UT 84736
E-MAIL: [e-mail]
miriah@.tsorenson. net
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOrSE rD 83707-0070
E-MAIL: [e-mail]
Jo,4lz--,.v
SECRETA"Y
CERTIFICATE OF SERVICE