20211230Final_Order_No_35281.pdf

ORDER NO. 35281 1

Office of the Secretary
Service Date
December 30, 2021 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

On October 6, 2021, Idaho Power Company (“Company”) applied to the Commission
for approval of an energy sales agreement (“ESA” or “Agreement”) with J.R. Simplot Company
(“Seller”) for the energy generated by the Simplot – Pocatello CSPP project (“Facility”). The
Company stated that, “[p]rior to the Effective Date of [the proposed] ESA th[e] Facility has been
delivering energy to [the Company] in accordance with an ESA dated December 21, 2018.”
Application at 4.
On November 2, 2021, the Commission issued a Notice of Application and Modified
Procedure, setting public comment and Company reply deadlines. Commission Staff (“Staff”) filed
comments and the Seller filed reply comments.
Having reviewed the record, we now approve the ESA.
BACKGROUND
Under PURPA, electric utilities must purchase electric energy from QFs at purchase or
“avoided cost” rates approved by the Commission. 16 U.S.C. § 824a-3; Idaho Power Co. v. Idaho
PUC, 155 Idaho 780, 789, 316 P.3d 1278, 1287 (2013). The Commission has established two
methods for calculating avoided costs, depending on the size of the QF project: (1) the surrogate
avoided resource method, used to establish “published” avoided cost rates; and (2) the integrated
resource plan method, to calculate avoided cost rates for projects exceeding published rate limits.
See Order No. 32697 at 7-22.
The Facility is near Pocatello, Idaho and has a 15.9 megawatt (“MW”) nameplate
capacity. The Seller has been delivering energy from the Facility to the Company under an energy
sales agreement executed December 21, 2018. The 2018 energy sales agreement expires on
February 28, 2022.
IN THE MATTER OF IDAHO POWER
COMPANY’S APPLICATION FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH
IDAHO POWER COMPANY AND J.R.
SIMPLOT COMPANY FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY FROM
THE SIMPLOT – POCATELLO CSPP
PROJECT
)
)
)
)
)
)
)
)
)
CASE NO. IPC-E-21-33

ORDER NO. 35281
ORDER NO. 35281 2

THE APPLICATION
The proposed ESA is for a 3-year term using the non-levelized, Other published
avoided cost rates established in Order No. 35052, for replacement contracts and for energy
deliveries of less than 10 average MW. Id. The Company represented that the new ESA “is nearly
identical to the previously approved ESA between [the Company] and [the Seller], except for some
non-substantive edits and clean-ups.” Id. at 3.
STAFF COMMENTS
Staff recommended the Commission approve the ESA if the parties included a
provision addressing future modifications to the Facility. Staff made its recommendation after
reviewing: (1) 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; (3) verification of
avoided cost rates; and (4) the lack of any provision in the ESA addressing potential modifications
to the Facility.
Staff confirmed the ESA contained the 90/110 Rule as required by Commission Order
No. 29632. Staff also confirmed that “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.” Staff Comments at 2 (citing Order
Nos. 34263, 34870, and 34937).
Staff noted the Facility is currently operating under a Commission approved contract
that contains capacity payments. Id. Staff further noted that “no modifications have been made to
the Facility during the term of the current contract.” Id. As such, Staff believed that “the Facility
should be granted immediate capacity payments for the full term of the ESA.” Id. at 3.
Staff’s review indicated that the avoided cost rates proposed in the new ESA reflect the
rate authorized in Order No. 35052 and in effect when the previously approved ESA was executed.
Staff noted that the ESA did not contain any provision addressing modifications to the
Facility during the contract term. Thus, Staff recommended the parties include the following
provision in their ESA:
Any modifications to the Facility, including but not limited to the generator
or turbine, that (1) increases or decreases the Facility Nameplate Capacity,
or (2) changes the Qualifying Facility Category, or (3) changes the Primary
Energy Source or (4) changes to the generator fuel and subsequently the
Fueled Rate or Non-Fueled Rate, will require a review of the Agreement
terms, conditions and pricing and Idaho Power, at its sole determination,
ORDER NO. 35281 3

may adjust the pricing or terminate the Agreement. If the Agreement is
terminated because of said modifications, the Seller will be responsible for
any Termination Damages.

Id. at 3. Staff noted that the Company had included the provision in recent PURPA contracts
approved by the Commission.
Staff recommended that the Commission approve the ESA contingent on the parties’
inclusion of the facility modification provision. Staff also recommended that, if the parties updated
the ESA, the Commission declare the Company’s payments to the Seller under the ESA for energy
be allowed as prudently incurred expenses for ratemaking purposes.
SELLER’S REPLY
The Seller disagreed with Staff’s recommendation to include the facility modification
provision. The Seller submitted that there was no legal or practical justification for including the
provision and that requiring the parties to add it would upset the arrangement the parties had
negotiated and agreed to. Seller Reply Comments at 2.
The Seller represented that, contrary to Staff’s representation, Article 23 of the ESA
does contain a provision for addressing modifications to the Facility.1 The Seller submitted that,
due to the detailed description of the Facility provided in Appendix B-1 of the ESA, any Facility
modifications would necessarily be addressed by the process outlined in Article 23 of the ESA.
The Seller also objected to including the facility modification provision on the basis
that it provided the Company with the “unilateral . . . right to terminate the contract and impose
termination damages on [the Seller].” Id. at 3. The Seller reiterated that, because the terms of the
ESA include remedies for the Seller’s breach, adding the provision was unnecessary. Id.
COMMISSION FINDINGS AND DISCUSSION
The Commission has jurisdiction over this matter under Title 61 of the Idaho Code.
The Commission is empowered to investigate rates, charges, rules, regulations, 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, 61-503. The Commission also has authority under PURPA and Federal Energy Regulatory

1 Article 23 of the parties’ ESA states: “[n]o modification to this Agreement shall be valid unless it is in writing and
signed by both Parties and subsequently approved by the Commission.”
ORDER NO. 35281 4

Commission (“FERC”) regulations to set avoided cost rates, to order electric utilities to enter fixed-
term obligations for the purchase of energy from QFs, and to implement FERC rules.
The Commission also has authority under PURPA to review contracts between QFs
and electric utilities. Idaho Code § 61- 502, 61-503; A.W. Brown v. Idaho Power Co., 121 Idaho
812, 816, 828 P.2d 841, 845 (1992); Empire Lumber Co. v. Washington Water Power Co., 114
Idaho 191, 755 P.2d 1229 (1987). Moreover, the Commission has the authority to engage in case-
by-case analysis in setting its standards and requirements for implementation of PURPA. Power
Resources Group v. PUC of Texas, 422 F.3d 231, 237 (5th Cir. 2005) (citing Policy Statement
Regarding the Commission’s Enforcement Role Under Section 210 of [PURPA], 23 FERC ¶
61,304, 1983 WL 39627 (May 31, 1983)); Rosebud Enterprises v. Idaho PUC, 128 Idaho 609, 917
P.2d 766 (1996). The Commission may enter any final order consistent with its authority under
Title 61 and PURPA.
The Commission has reviewed the record, including the Application, Staff’s
comments, and the Seller’s reply. Based on our review, we find it fair, just, and reasonable to
approve the Company’s ESA as submitted.
We find the facility modification provision to be a reasonable provision to generally
consider including in any new ESAs and ESA renewals. However, based on the particular facts
and circumstances in this case, we find Staff’s recommended facility modification provision
unnecessary. We note that Article 23 of the ESA requires each party’s written consent and
subsequent Commission approval of any modification to “the Agreement.” Appendix B-1 to the
Agreement provides a detailed description of the Facility. Any changes to the Facility from its
description in the ESA would constitute a modification of the parties’ ESA. Thus, any such
modification would, pursuant to Article 23 of the parties’ ESA, require both parties’ signed
agreement and subsequent Commission approval.
Based on the above reasoning, we approve the ESA as filed.
O R D E R
IT IS HEREBY ORDERED that the parties’ ESA is approved.
IT IS FURTHER ORDERED that all payments made by the Company for purchases
of energy under the ESA are allowed as prudently incurred expenses for ratemaking purposes.
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 about any matter
ORDER NO. 35281 5

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.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 30th day
of December 2021.

ERIC ANDERSON, PRESIDENT

KRISTINE RAPER, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\ELECTRIC\IPC-E-21-33 Simplot\orders\IPCE2133_final_rn.docx