20230905Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER LODGE
COMMISSIONER HAMMOND
COMMISSION SECRETARY
LEGAL
FROM:MICHAEL LOUIS
DAYN HARDIE
DATE:SEPTEMBER 5,2023
RE:IN THE MATTER O OF IDAHO POWER COMPANY'S APPLICATION
FOR APPROVAL OF A SPECIAL CONTRACT AND TARIFF
SCHEDUEL 33 TO PROVIDE ELECTRIC SERVICE TO BRISBIE,LLC'S
DATA CENTER FACILITY -CASE NO.IPC-E-21-42
BACKGROUND
On December 22,2021,Idaho Power Company ("the Company")applied to the Idaho
Public Utilities Commission ("Commission")seeking approval of a special contract for electric
service between the Company and Brisbie,LLC ("the Company and Brisbie"or "the Parties")
for Brisbie's new enterprise data center ("ESA"),for rates proposed in Tariff Schedule 33,and
approval of the regulatory framework for the on-going implementation and administration of the
ESA without change or condition.
On May 11,2023,the Commission issued Final Order No.35777 approving the
Company's ESA for electric service between the Parties with modifications requiring the
Company to submit an amended ESA ("Amended ESA")and an amended Schedule 33.The
modifications include the pricing structure contained in the Micron ESA as approvedthrough
Order Nos.35482,35607,35735,and 35898 regarding the treatment of Excess Generation
Credits ("EGC")and Renewable Capacity Credits ("RCC").
On August 9,2023,the Company submitted Idaho Power Company's Compliance Filing
("Filing")to address the Commission ordered modifications by submitting the First Amendment
to the ESA ("First Amendment")includinga revised version of ESA Exhibit 3.1:Pricing
("Revised Exhibit 3.1")and a revised Schedule 33 containing the modifications directed by the
Commission.In addition to the Commission ordered modifications,the Company:(1)corrected
DECISION MEMORANDUM -1 -September 5,2023
a discrepancy in the method describing how the Energy EfficiencyRider should be assessed in
accordance with Schedule 91 and reflected in Revised Exhibit 3.1,(2)included an
Administration Charge negotiated between the Parties of the contract as reflected in Revised
Exhibit 3.1 and revised Schedule 33 ,and (3)stated in the Filing that the Company will file
future renewable PPAs or similar resource construction agreements with the Commission for its
review and approval.Filing at 7.
STAFF ANALYSIS
Staff reviewed the First Amendment and revised Schedule 33 included in the Company's
Filing and determined that the modifications comply with Commission Order No.35777.The
Company also made two changes to the First Amendment and Schedule 33 that went beyond the
scope of the modifications included in Order No.35777;however,Staff believes they are
reasonable.Finally,the Company stated,"[i]n conformitywith the Commission's directive,the
Company will file future renewableresource PPAs or similar resource construction agreements
with the Commission for its review and approval."Filing at 7.
Modifications to Pricing for Excess Generation Credits ("EGC")
The Commission ordered that the Excess Energy Generation rate be valued at "the lower
of the Excess Energy Price (with the 85 percent adjustment)or the actual high or low load hour
Mid-C market price (without any adjustment)for each hour of excess energy delivered."Order
No.3577 at 17.I This rate is referred as the Excess Generation Price in the ESA and is the rate
used when multipliedby the amount of EGCs in a month to determine the EGC payment.The
method in this case is the same method approvedin Case No.IPC-E-22-06.Staff verified that
the updated definition of the Excess Generation Price included in Revised Exhibit 3.1 complies
with the Commission's Order and that the updated definition is appropriately referenced in
revised Schedule 33.
Modifications to Renewable Capacity Credits("RCC")Pricing and Method of Payment
i See also Order Nos.35482 and 35607.The 85%adjustment compensates for the cost to wheel excess energy when
sold as surplus sales.
DECISION MEMORANDUM -2 -September 5,2023
The Commission ordered the method used to determine the pricing and payment of RCCs
in this case should utilize the same methods determined in Case No.IPC-E-22-06 through Order
No.35735.Id.at 18.Staff's review determined that with appropriate differences in the data
used between this case and Case No.IPC-E-22-06,the method used to determine the pricing and
method of RCC payment is essentially the same with one minor but legitimate exception.
Therefore,Staff believes that the method used to determine the RCC pricing and method of
payment complies with the Commission Order No.35777.
The main difference between the RCC methods in this case versus those used in Case No.
IPC-E-22-06 is the years used to determine the capacity critical hours that each of the two
resources are expected to contribute capacity to the Company's system.The resource in this case
does not come online until 2025,so only the capacity critical hours for 2025 were used.The
resource in Case No.IPC-E-22-06 comes online in 2023 and the payments are based on a
combination of 2023 capacity critical hours with some weight given to critical hours in 2025.
Additional Modifications Beyond the Items Required by the Commission Order
First,the Company updated the language in Revised Exhibit 3.1 that defines the Monthly
Contract Payment to include how the Energy Efficiency Rider will be assessed.Staff determined
that the language was incorrect in the original ESA and the updated language in the Revised
Exhibit 3.1 is now consistent with Schedule 91.
Second,the Company included an Administration Charge negotiatedbetween the Parties
to compensate the Company for non-recovery of 95%/5%customer sharing of EGCs and RCCs
included in net power supply expense,which is then trued-up in the Power Cost Adjustment
("PCA").However the Company proposed that the Administration Charge not be subject to
95%/5%sharing.The Commission found it fair,just,and reasonable that the credits for excess
energy generation and capacity included in net power supply expense be subject to 95%sharing
in the PCA."Order No.35777 at 19 and Order No.35607 at 13.
Staff recommends that the Commission allow this charge because it was negotiated and
agreed upon between the Parties for the purpose protecting the Company from non-recovery of
95%/5%sharing.Additionally,Staff believes:(1)the charge will not impact other customers,
and (2)it is consistent with the Commission's intent in Case No.IPC-E-22-06 where the
Commission stated,for similarly-situated circumstances,"Micron and the Company are free to
DECISION MEMORANDUM -3 -September 5,2023
negotiate for whatever rates they wish,and the Commission will generally approve such rates
provided they are fair,just,and reasonable to all customers."Order No.35607 at 13.
STAFF RECOMMENDATION
Staff recommends that the First Amendment and revised Schedule 33 be authorized by
the Commission.
COMMISSION DECISION
Does the Commission wish to approve the First Amendment and revised Schedule 33 as
filed with an effective date of May 11,2023?
Michael L ui
Staff Engineering Program Manager
Udmemos/IPC-E-23-42 Decision Memo
DECISION MEMORANDUM -4 -September 5,2023