20211006Reply Comments.pdf

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DONOVAN E. WALKER
Lead Counsel
[e-mail]
October 6,2021
VlA ELECTRONIC MAIL
Jan Noriyuki, Secretary
ldaho Public Utilities Commission
11331 West Chinden Blvd., Building 8
Suite 201-A
Boise, ldaho 83714
Case No. IPC-E-21-26
Trout-Co Hydro Project
ldaho Power Company's Application re the Energy Sales Agreement
Dear Ms. Noriyuki:
Attached for electronic filing please find the Reply Comments of ldaho Power
Company in the above entitled matter. lf you have any questions about the attached
documents, please do not hesitate to contact me.
Very truly yours,
Re
2delQ
Donovan E. Walker
DEW:cld
Enclosures
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for ldaho Power Company
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
MICHAEL BRANCHFLOWER FOR THE
SALE AND PURCHASE OF ELECTRIC
ENERGY FROM THE TROUT.CO HYDRO
PROJECT.
CASE NO. IPC-E-21-26
REPLY COMMENTS OF
IDAHO POWER COMPANY
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ldaho Power Company ("ldaho Powef or "Compdny'), in response to the
comments filed by Commission Staff ('Staff), hereby respectfully submits the following
Reply Comments.
I. INTRODUCTION AND BACKGROUND
On August 16,2021, ldaho Power filed an application with the Commission for
approvalor rejection of a replacement Energy Sales Agreement ("ESA") applicable to the
Trout-Co Hydro PURPA Qualiffing Facility ("Trout-Co"). The ESA that was executed by
the Company and Michael Branchflower ("Parties") is for a 280 kW hydro PURPA
Qualifying Facility ("QF"). Trout-Co has been operating on the ldaho Power system under
REPLY COMMENTS OF IDAHO POWER COMPANY. 1
a previous QF Firm Energy Sales Agreement ("FESA") that will expire on November 30,
2021 . When the initial FESA was signed on January 7, 1985, the FESA indicated a 240
kW total nameplate capacity. \ffhen the construction was completed and the project
achieved an operation date nearly two years later in December 1986, the installed project
total nameplate capacity was (and still is) 280 kW. However, the nameplate description
in the FESA was never changed from240 kW to 280 kW.
On September 29, 2021, Commission Staff ("Staff') provided the following
recommendations for the Trout-Co facility:
1. The ESA should use two sets of avoided cost rates between
the Company and the Seller from 2021 through 2025: any
hourly generation equal to or less than 240 kilowatt hours
("kWhs") will receive immediate capacity payment, and any
hourly generation above 240 kWtrs will not receive capacity
payment until the Company becomes capacity deficient in
2026.
2. The 90/110 Rule should be implemented as described
above based on two sets of avoided cost rates from 2021
through 2025 untilthe Company becomes capacity
deficient.
Staff Comments, Sept 29, 2021, p 5.
Staff referred to the Sagebrush Hydro project ("Sagebrush") in Case No. IPC-E-
19-38 as a similar situation as Trout-Co. However, the two projects are not similarly
situated. \ffhen the Sagebrush FESA expired May 31 ,2020, the project rebuilt the facili$
and installed new generators, increasing the origina! nameplate capacity from 430 kW to
575 kW. No such generator replacement or rebuild has occurred with Trout-Co. Rather,
the actual installed nameplate capacity has always been 280 kW since the project was
built in 1986. Therefore, Idaho Power recommends that Trout-Co receive capacity
payments up to 280 kW beginning with year one of the replacement ESA, and no changes
should be made to how the 90/110 Rules is implemented.
REPLY COMMENTS OF IDAHO POWER COMPANY - 2
II. REPLY COMi,lENTS
ldaho Power appreciates Staffs detailed analysis and review of the ESA, but ldaho
Power disagrees that the ESA requires modification based on the 280 kW nameplate
capacity.
Elioibilitv Limit for Capacity Pavments and lmplementation of 90/110 Rule
On December 18, 2012, the Commission issued Order No. 32697, which
established parameters for published and negotiated avoided cost rate calculations. The
Commission further established and defined numerous contract terms and conditions for
standard power purchase agreements entered into between regulated utilities and QFs.
On January 2,2013, the Commission issued Errata to Order No. 32697, which corrected
published avoided cost rates to include energy payments not discounted by transmission
and line loss. Then the Commission issued Reconsideration Order Nos. 32737 and
32802 on February 5,20'13, and May 5, 2013, respectively, which further clarified certain
terms and conditions of power purchase agreements. Most recently, in Order No. 33898,
the Commission directed ldaho Power to utilize July 2026 as its first capacity deficit in the
Company's SAR methodology. However, because this ESA is a replacement contract,
and the Trout-Co nameplate capacity installed in 1986 was and still is 280 kW which
matches the replacement ESA nameplate capacity of 280 kW, the ESA contains capacity
payments for the entire contract term up to 280 kW.
The Commission has approved more than 25 (twenty-five) previous replacement
ESAs with prices containing capacity value. These previous ESAs have included value
for capacity, as determined by the SAR methodology, up to the nameplate capacity for
the entire period of the replacement ESAs, so long as the nameplate capacity in the ESA
is the same or lower than the actual nameplate capacity of the QF when it first delivered
energy at the start of the expiring FESA.
REPLY COMMENTS OF IDAHO POWER COMPANY - 3
ln the Sagebrush case, the initial (expired) FESA was for a nameplate capacity of
430 kW. The project rebuilt the generator and the replacement ESA was for a nameplate
capacity of 575 kW. The Commission approved the replacement ESA but directed that
Sagebrush only receive initial capacity payments up to 430 kW, the amount that was
operating under the initial ESA. For the additional, and new, 145 kW resulting from the
rebuild of the generator the Commission directed that Sagebrush not receive a capacity
payment in the replacement ESA until ldaho Power becomes capacity deficient. Order
No. 34677 at 5-6. The Commission found
Under the expiring contract, the Seller is being paid for
capacity for 430 kW. As such, 430 kW from the Sagebrush
Facility is already included in fidaho Power's] Ioad and
resource balance and would not be surplus power. See Order
No. 32697 at21-22. The Commission finds it reasonable for
the Seller to be paid for capacity up to 430 kW for the full term
of this renewal ESA. See Order No 32697 at 21-22. The
Commission also finds that the 145 kW increase in capacity
for the Sagebrush Facility comes at a time when fidaho
Power] is not capacity deficient. This "new' capacity is
analogous to a new QF whose output and pricing must be
evaluated when an executed energy sales agreement with an
electric utility is filed with the Commission for review.
Therefore, the Commission finds that the Seller shall not
receive capacity payment for the 145 kW increase to the
nameplate capacity of the Sagebrush Facility until fidaho
Powerl becomes capacity deficient.
Order No. 34677 at 5-6 (footnote omitted).
However, the facts for Sagebrush, where the project had actually rebuilt the
generator and increased its physical capability, leading to the increase in the nameplate
capacity in the replacement ESA, are different for Trout-Co. For Trout-Co, the same
generator that was originally installed in 1986, with a nameplate capacity of 280 kW is the
same, unchanged generator in the replacement ESA with a nameplate capacity of 280
kW. The issue here is that the initial FESA incorrectly described the nameplate for the
REPLY COMMENTS OF IDAHO POWER COMPANY - 4
facility as240 kW, which was different from the 280 kW nameplate originally installed and
still existing. The description in the initial FESA was never changed to match what was
actually installed and providing generation for the duration of the contract since 1986.
Considering the fact that the same 280 kW generator has been installed and
generating since 1986, and remains unchanged for the replacement ESA - as well as the
relatively smal! and temporary difference of carving off 40 kW for a partially reduced
payment with no capacity component - compared to the administrative burden of
bifurcating the rate and maintaining two separate 90/110 firmness calculations, ldaho
Power recommends that the replacement ESA should contain capacity payments
beginning with year one for the entire contract term, for up to 280 kW. Similarly, Idaho
Power recommends no changes be made to the implementation of the 90/110 Rule based
on the 280 kW nameplate capacity, for the same reasons stated above. The nameplate
capacity has remained the same since the project was constructed. The fact that the
replacement ESA has a different value from the expiring FESA does not reflect a change
in the physical characteristics or capabilities of the generator, but rather is akin to a
typographical error in the agreement.
Staff s Recommendation for' As-B u il( Desciption Reo u ire ment
Staff also recommended the Commission order the Company to include a
provision in all new PURPA contracts requiring the QF to submit an "as-built" description
of the facility by the first operation date. Staff suggests that if the "as-built" description
does not match the description in the originalapproved contract, then the contract should
be amended to reflect the "as-built" description. The Company does not object to this
recommendation.
REPLY COMMENTS OF IDAHO POWER COMPANY - 5
[!. coNcLustoN
ldaho Power believes the rates in the Trout-Co replacement ESA should contain
capacity payments beginning with year one for the entire contract term, for up to 280 kW.
The original generators installed in 1986 had a nameplate rating of 280 kW and have
been delivering energy with this nameplate since the first energy date of the expiring
FESA. This is also consistent with past replacement energy sales agreements for
PURPA QFs. ldaho Power respectfully requests that the Commission issue an order
approving the ESA without modification and declaring all payments to the Seller under
the ESA be allowed as prudently incurred expenses for ratemaking purposes.
Respectfully submitted this 6h day of October 2021.
A,*2da!4-
DONOVAN E. WALKER
Attorney for ldaho Power Company
REPLY COMMENTS OF IDAHO POWER COMPANY.6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 6th day of October 2021, I served a true and
correct copy of the within and foregoing REPLY COMMENTS OF IDAHO POWER
COMPANY upon the following named parties by the method indicated below, and
addressed to the following:
Michael Branchflower
Trout-Co Hydro Project
1991 S. Doe Creek Way
Boise, ID 83709
John Hammond Jr.
Deputy Attorney General
!daho Public Utilities Commission
P.O. Box 83720
Boise, lO 83720-0074
via emailto:
M G Branchfl ower@hotmail. com
via emailto:
[e-mail]
Christy Davenport, Legal Assistant
REPLY COMMENTS OF IDAHO POWER COMPANY. T