20211230Petition for Reconsideration.pdf

DONOVAN E. WALKER
Lead Counsel
[e-mail]
December 30, 2021
VIA ELECTRONIC MAIL
Jan Noriyuki, Secretary
Idaho Public Utilities Commission
11331 West Chinden Blvd., Building 8
Suite 201-A
Boise, Idaho 83714
Re: Case No. IPC-E-21-30
MC6 Hydro LLC – MC6 Hydro Project
Idaho Power Company’s Application re the Second Amendment to the
Energy Sales Agreement
Dear Ms. Noriyuki:
Attached for electronic filing please find Idaho Power Company’s Petition for
Reconsideration in the above entitled matter. If you have any questions about the
attached documents, please do not hesitate to contact me.
Very truly yours,
Donovan E. Walker
DEW:cld
Enclosures
RECEIVED
2021 DEC 30 PM 2:36
IDAHO PUBLIC
UTILITIES COMMISSION

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 1
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]

Attorney for Idaho Power Company

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY’S FOR
APPROVAL OR REJECTION OF THE
SECOND AMENDMENT TO THE ENERGY
SALES AGREEMENT WITH MC6 HYDRO
LLC FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY FROM THE MC6
HYDRO PROJECT.

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CASE NO. IPC-E-21-30

IDAHO POWER COMPANY’S
PETITION FOR
RECONSIDERATION

Idaho Power Company (“Idaho Power” or “Company”), petitioner herein, pursuant
to RP 33, 325, and 331, et seq., and Idaho Code § 61-626, hereby respectfully petitions
the Idaho Public Utilities Commission (“Commission” or “IPUC”) for reconsideration of
Final Order No. 35256, dated December 9, 2021, issued in Case No. IPC-E-21-30 (“the
Order”). Idaho Power seeks reconsideration regarding that portion of the Order that
directs modifications to the amended ESA pertaining to the use of two sets of avoided
cost rates, the implementation of the 90/110 rule, and the nameplate capacity. This
Petition is based upon the following:
I. LEGAL STANDARD
A party must seek reconsideration prior to initiating an appeal to the Idaho
Supreme Court. Idaho Code § 61-627. An issue not presented to the Commission on
reconsideration will not be considered on appeal. Key Transp. Inc. v. Trans Magic Airlines

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 2
Corp., 96 Idaho 110, 524 P.2d 1338 (1974). “The purpose of an application for rehearing
is to afford an opportunity to the parties to bring to the attention of the Commission in an
orderly manner any question theretofore determined in the matter and thereby afford the
Commission an opportunity to rectify any mistake made by it before presenting the same
to this Court.” Washington Water Power Co., v. Kootenai Environmental Alliance, 99
Idaho 875, 879, 591 P.2d 122, 126 (1979)(citing Idaho Underground Water Users Ass’n
v. Idaho Power Co., 89 Idaho 147, 404 P.2d 859 (1965); Consumers Co. v. Public Utilities
Comm’n, 40 Idaho 772, 236 P. 732 (1925)).
The Commission may grant reconsideration by reviewing the existing record, by
submission of briefs, memoranda, written comments, interrogatories, and statements or
by evidentiary hearing. RP 331, 332.
II. BACKGROUND
Idaho Power and MC6 Hydro LLC (“MC6 or “Seller”) entered into an ESA on April
23, 2018, for the purchase and sale of energy produced by the Facility. The MC6 Hydro
Project (“Facility”) is a Qualifying Facility pursuant to the Public Utility Regulatory Policies
Act of 1978 (“PURPA”). The ESA was approved by the Commission in Case No. IPC-E-
18-09, Order No. 34106, on July 12, 2018. The Parties entered into an Amendment to
the ESA on June 21, 2019, to amend the Scheduled First Energy Date and Schedule
Operation date in the ESA due to the unexpecting passing away of one of the principal
developers of the project. This First Amendment to the ESA was approved by the IPUC
in Order No. 34425 issued on August 23, 2019. A replacement Appendix D was required
to add an additional year (2040) due to the change in Scheduled Operation Date.
As a result of the COVID-19 pandemic, the Facility was unable to obtain its
generator unit from the manufacturer in Wuhan, China in a timely manner causing a Force

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 3
Majeure event, which necessitated a change in the Scheduled Operation Date to April 5,
2021. The project received and installed a generator with a Nameplate Capacity of 2.3
megawatts (“MW”) that is 0.2 MW larger than the 2.1 MW generator listed in the ESA.
MC6 subsequently requested a change to the time period for making adjustments
to the Net Energy Amounts in the ESA such that the Seller can make adjustments by the
25th day of the month preceding the month for which a change is requested. The
Commission has previously approved several similar amendments to changes in the time
period for adjusting the Net Energy Amounts. On August 26, 2021, Idaho Power filed an
application with the Commission for approval or rejection of the Second Amendment to
the ESA. The Second Amendment executed by Idaho Power and MC6 provided for
changes to the ESA to allow changes to the Net Energy Amount by the 25th day of the
month, and changes to the ESA to update the stated nameplate capacity of the generator
from 2.1 MW to 2.3 MW.
On October 27, 2021, Commission Staff ("Staff') filed its Comments. Staff
recommended approval of the provisions reflected in the Second Amendment, but also
recommended that the Commission require additional changes to the ESA. Staff
recommended inclusion of additional specific language in the ESA addressing
modification of the Facility including a termination provision. Staff also recommended
adopting two sets of avoided cost rates, based upon the updated nameplate capacity:
one rate for all generation under 2.1 MW (the original contractual rate) and an updated
avoided cost rate from the time of execution of the Second Amendment for any generation
over 2.1 MW. Staff also recommended corresponding modification to the implementation
of the 90/110 rule based on two sets of avoided cost rates.
On November 4, 2021, Idaho Power filed Reply Comments objecting to the
inclusion of the additional provisions regarding project modifications and objecting to the

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 4
recommended adoption of two sets of avoided cost rates and implementation of the
90/110 rule based on two sets of avoided cost rates, both due to the nameplate capacity
of the installed generator being 200 kW more than what the project had initially identified
in the ESA.
On December 9, 2021, the Commission issued Final Order No. 35256, approving
the Second Amendment to allow a five-day advanced notification to adjusted monthly
Estimated Net Energy Amounts and to update the nameplate capacity to reflect the
installed capacity of the generator. However, the Commission also directed,
IT IS HEREBY ORDERED that the Parties’ amended ESA
is approved with the following modifications:

1. The amended ESA will use two sets of avoided
cost rate between the Company and Seller: any
hourly generation equal to or less than 2.1
MWhs will use the avoided cost rates contained
in the ESA and approved in Order No. 34106:
any hourly generation above 2.1 MWhs will use
the avoided cost rates from the SAR Method
approved in Order No. 35052.

2. The 90/110 Rule will be implanted based on two
sets of avoided cost rates.

The Company is directed to submit an updated or amended
Replacement ESA consistent with this Order.

Order No. 35256, p 6.
III. PETITION FOR RECONSIDERATION
Idaho Power respectfully asks the Commission to grant reconsideration in this
matter and set a procedural schedule whereby the Commission may take and consider
additional factual information provided by MC6, the QF party, and take additional written
submissions from the Parties (Staff, Idaho Power, and MC6) regarding the following items
and issues related to those portions of Final Order No. 35256 pertaining to two avoided

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 5
cost rates, the implementation of the 90/110 rule, and the nameplate capacity of the
Facility.
A. Nameplate Capacity - Final Order No. 35256 approved the
provisions in the Second Amendment changing the Nameplate Capacity of the Facility
from 2.1 MW (in the original ESA) to 2.3 MW. Subsequent to the issuance of Final Order
No. 35256, Idaho Power contacted MC6 and the QF informed Idaho Power that it did not
wish to implement the bifurcated rate structure in another Amendment or Replacement
Contract. MC6 stated that they have run testing on the hydro turbine with their available
water and do not believe the Facility is capable of generation over 2.1 MW. MC6 was not
certain whether the Facility could be re-certified to a Nameplate Capacity of 2.1 MW, but
wished to potentially pursue this option as opposed to bifurcating the avoided cost rates
as directed by Final Order No. 35256.
Alternatively, MC6 would like the Commission to consider limiting the provision of
generation from the Facility in the ESA to 2.1 MW. Idaho Power proposes that this could
potentially be accomplished within the ESA - as an alternative to implementing a
bifurcated rate structure - by utilizing an existing term and related mechanism within the
ESA - the Maximum Capacity Amount. For example: the stated Nameplate Capacity of
the Facility could be stated as 2.3 MW, but the Maximum Capacity Amount could be
stated as 2.1 MW. By operation of the existing provisions in the ESA (and perhaps a
small addition of a couple of extra sentences) the Facility would be limited to generating
only up to the Maximum Capacity Amount, 2.1 MW, regardless of its stated Nameplate
Capacity, and would not be compensated for any deliveries that exceed that Amount.
Idaho Power respectfully requests additional opportunity on reconsideration for the
Parties to consider these options and additional opportunity to provide such information
to the Commission.

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 6
B. Materiality Threshold - Idaho Power submitted in its Reply Comments to
this matter that the potential difference and rate impact represented by a 200 kW variation
in the nameplate capacity was de minimus in relation to the administrative burden of
amending, tracking, maintaining, paying, and implementing a bifurcated rate and 90/110
provision. Idaho Power also suggested that it was common for a certain amount of
manufacturing variance to occur from the specifications sent to the manufacturer as to
what is actually delivered, installed, and operates. Based upon the number of times the
issue of a small variance in the Nameplate Capacity has come up, either in Replacement
ESAs or in New ESAs, and the significant amount of time, effort, and controversy that has
been generated by such, Idaho Power proposes that the Commission consider a
Materiality Threshold, for example: any variation of less than 1 MW (or some other
threshold) in actual Nameplate Capacity from that stated in the ESA is considered
immaterial and does not require rate adjustment to the ESA.
C. Change of Avoided Cost Rates in an Approved ESA - Idaho Power
argued in Reply Comments that the factual situation with MC6 was distinct and
substantively different from previous times when the Commission has ordered a
bifurcated rate in a PURPA ESA. Past bifurcated rates were implemented in
Replacement ESAs, such as in what Idaho Power believes to be the first such instance
of this practice with Sagebrush Hydro, Case No. IPC-E-19-38. In Sagebrush Idaho Power
agreed with Staff, and the Commission, that when a project has upgraded, replaced, or
changed the generation units or the Facility from the original configuration in the expiring
contract that their eligibility for full-term capacity payment in the Replacement ESA should
be limited to the original amount of Nameplate Capacity in the expiring/original ESA to be
consistent with the Commission’s past directives regarding eligibility for full-term capacity
payments. Order No. 32697.

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 7
However, MC6 is a new QF with a new ESA and not a replacement ESA. MC6
came online and provided generation to Idaho Power pursuant to its Commission-
approved ESA for several months prior to submission of the Second Amendment. The
configuration of the generator was never changed. It was and remains the original
generation unit that was installed at the Facility. The Second Amendment proposed to
correct the designation of the Nameplate Capacity from the originally stated 2.1 MW,
which was established prior to manufacture of the turbine and construction of the Facility
. Splitting the project’s avoided cost rate in this instance - or adding a new, updated
avoided cost rate for the incremental difference of 200 kW at the point in time when the
Second Amendment was signed - does not comport to the same logical reasoning and
rationale as implementing a bifurcated rate for full-term capacity payment eligibility in a
Replacement ESA. For MC6, or a new QF ESA, this amounts a different determination
that involves overall avoided cost rate eligibility and implicates the changing of a locked-
in contractual avoided cost rate during the term of the ESA, among other issues.
D. Supporting Rationale for IPUC Decision in Final Order No. 35256 - The
Commission’s determinations in Final Order No. 35256 as to implementing two sets of
avoided cost rates, basing a different avoided cost rate for a 200 kW incremental portion
of Nameplate Capacity on the rates in place at the time of signing the Second
Amendment, and modifying the 90/110 calculations, were all ordered and directed with
no reference to any underlying rationale or explanation. In the Commission Discussion
and Findings section of Final Order No. 35256, the Commission stated,
The Commission finds it reasonable and in the public interest
to require the Company and Seller to apply two sets of
avoided cost rates previously approved in Order Nos. 34106
and 35052 in their amended ESA. Specifically, the
Commission finds that the first set of avoided cost rates
should apply to any hourly generation equal to or less than 2.1
MWhs. See Order No. 34106. The Commission further finds

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 8
that the other set of avoided cost rates - those that were
effective August 11, 2021, when both parties signed the
current Amendment - should apply to any hourly generation
above 2.1 MWhs. See Order No. 35052.

Final Order No. 35256, p 5.
Findings of fact in Commission orders must be supported by substantial,
competent evidence to be affirmed on appeal. Industrial Customers of Idaho Power v.
Idaho PUC, 134 Idaho 285, 288, 1 P.3d 786, 789 (2000); Hulet v. Idaho PUC, 138 Idaho
476, 478, 65 P.3d 498, 500 (2003). On questions of law, review is limited to the
determination of whether the Commission has regularly pursued its authority. A.W.
Brown, 121 Idaho at 815, 828 P.2d at 844; Hulet, 138 Idaho at 478, 65 P.3d at 500.
However, the Commission’s order must contain the reasoning behind its conclusions to
sufficiently allow the reviewing court to determine that the Commission did not act
arbitrarily. Rosebud Enterprises v. Idaho PUC, 128 Idaho 609, 618, 917 P.2d 766, 775
(1996). Here, Final Order No. 35256 does not address the Parties’ respective positions
on the issues and contains no stated reasoning behind the Commission’s determination
to implement a bifurcated rate structure other than a statement that it is “reasonable” and
“in the public interest.”
IV. NATURE AND EXTENT OF EVIDENCE AND ARGUMENT
TO BE OFFERED ON RECONSIDERATION

RP 331 requires that Idaho Power state the nature and extent of evidence or
argument it will present or offer if reconsideration is granted. Idaho Power respectfully
asks that the Commission grant reconsideration in this matter and set a procedural
schedule whereby the Commission may take and consider additional factual information
provided by MC6, the QF party, and take additional written submissions from the Parties
(Staff, Idaho Power, and MC6) regarding the items and issues identified herein related to
those portions of Final Order No. 35256 pertaining to two avoided cost rates, the

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 9
implementation of the 90/110 rule, and the nameplate capacity of the Facility. Should the
Commission grant reconsideration, Idaho Power stands ready to augment the evidentiary
record by additional comments, legal briefing, testimony, exhibits, and hearing, any or all
of which as determined to be appropriate and at the discretion of the Commission.
V. CONCLUSION
Idaho Power respectfully requests that the Commission issue an order granting
reconsideration of Final Order No. 35256 as set forth herein.
Respectfully submitted this 30th day of December 2021.

DONOVAN E. WALKER
Attorney for Idaho Power Company

IDAHO POWER COMPANY’S PETITION FOR RECONSIDERATION - 10
CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on the 30th day of December 2021 I served a true and
correct copy of the within and foregoing Idaho Power Company’s Petition for
Reconsideration upon the following named parties by the method indicated below, and
addressed to the following:

Riley Newton
Deputy Attorney General
Idaho Public Utilities Commission
P.O. Box 83720
Boise, ID 83720-0074

Emailed to:
[e-mail]
Ted Sorenson
MC6 Hydro LLC
711 E Turtle Point Dr.
Ivins, UT 84738

Emailed to:
[e-mail]
C. Tom Arkoosh
ARKOOSH LAW OFFICES
913 w. River Street, Suite 450
P.O. Box 2900
Boise, ID 83701

Emailed to:
[e-mail]
[e-mail]
________________________________
Christy Davenport, Legal Assistant