20220331Comments.pdf

RILEY NEWTON
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.0074
[phone]
IDAHO BAR NO. II2O2
Street Address for Express Mail:
I I33I W CHINDEN BLVD, BLDG 8, SUITE 2OT-A
BOISE, TD 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF'IDAHO POWER
COMPANY'S APPLICATION REGARDING
THE ENERGY SALES AGREEMENT WITH
SHINGLE CREEK LLC, FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY FROM
THE SHINGLE CREEK HYDRO PROJECT
CASE NO. IPC.E.22-02
COMMENTS OF THE
COMMISSION STAFF
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STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Riley Newton, Deputy Attomey General, submits the following comments.
BACKGROUND
On February 04,2022,Idaho Power Company ("Company") requested Commission
approval or rejection of a replacement Energy Sales Agreement ("ESA") between the Company
and Shingle Creek LLC ("Seller") concerning the purchase of electricity generated from the
Shingle Creek Hydro Project ("Facility") located near the town of Riggins, Idaho. The Facility
is a qualiffing facility ("QF") under the Public Utility Regulatory Policies Act of 1978
("PURPA").
The Company represents that the Facility has been delivering energy to the Company in
accordance with a PURPA ESA that was executed on May 8, 2017. The Company further
1STAFF COMMENTS MARCH 31,2022
represents that the Seller has agreed to a maximum capacity amount of 222 kilowatts which is
equal to the capacity amount of the current ESA which expires on July 31,2022.
The Company represents that, on January 24,2022, it and the Seller executed a new ESA
for a five-year term using the non-levelized, non-seasonal hydro published avoided cost rates
established in Order No. 35052 for replacement contracts and for energy deliveries of less than
ten average megawatts ("MW").
The Company indicates that the replacement ESA contains payment for capacity during
the full term of the ESA. The Company states that the Facility is currently interconnected and
selling energy to the Company and that the ESA specifies a Scheduled First Energy Date and
Scheduled Operation Date for the Facility of August 1,2022.
STAFF ANALYSIS
Staff s review focused on: (1) eligibility for and the amount of capacity payments; (2) the
90lll0 Rule with at least five-day advanced notice for adjusting Estimated Net Energy Amounts;
and (3) avoided cost rates. Staff recommends approval of the ESA as filed.
Capacity Payments
The ESA allows immediate capacity payments for generation up to the maximum
capacity amount of 222 Kilowatts ("kW") atany time and does not provide any payments (both
energy payments and capacity payments) for any generation that exceeds the maximum capacity
amount of 222 kW. Staff believes this treatment is reasonable.
In Order No. 32697, the Commission stated that, "[i]f a QF project is being paid for
capacity at the end of the contract term, and the parties are seeking renewal/extension of the
contract, the renewal/extension includes immediate payment of capacity." Because the current
2077 contract the Facility is operating under contains capacity payments, the Facility should be
granted immediate capacity payments for the full term of the proposed contract.
The proposed ESA lists the nameplate capacity and the maximum capacity amount as
224kW and222 kW, respectively. However, the current 2017 contract listed both the nameplate
capacity and the maximum capacity amount as222 kW. The Company explains in Response to
Staff s Production Request No. 2 that the nameplate capacity of 222 kW is incorrect, and the
correct nameplate capacity should have been 224kW.
2STAFF COMMENTS MARCH 31,2022
In several cases when a replacement contract qualifies for immediate capacity payments,
but the nameplate capacity in the original contract is less than the amount of capacity in a
replacement contract, the Commission ordered the use of a bifurcated rate. See e.g. Order
Nos. 34956,35262, and35223. The bifrrcated rate essentially sets a limit where any generation
below the nameplate capacity will receive both avoided energy and capacity payments, and any
generation above the limit will only receive energy payments, until the first capacity deficiency
date authorized at the time that the replacement contract was executed. This treatment ensures
that the QF does not get paid for avoiding capacity cost for the electricity that can be generated
from the incremental capacity included in the replacement contract until the Company needs it.
Instead of a bifurcated rate, the parties in this case have opted to not allow any payments
above the original222kW Maximum Capacity Amountl. The QF will not receive payments for
capacity that does not contribute to meeting the Company's capacity needs and will only receive
payments for the capacity that the Company relied on when planning for resources in the
Company's Integrated Resource Plan. In a similar case, the Commission recently stated that
limiting the instantaneous generation to the maximum capacity amount would be a reasonable
alternative to implementing a bifurcated rate schedule. See Order No. 35296.
The 90/110 Rule and 5-Day Advanced Notice for Adjusting Estimated Net Energy Amounts
Staff confirmed the ESA contains the 90lll0 Rule as required by Commission Order
No. 29632. The 90/l 10 Rule requires a QF to provide utilities with a monthly estimate of the
amount of energy the QF expects to produce. If the QF delivers more than I l0 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 QF 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 at20.
Staff also confirmed the ESA requires the Seller to give the Company at least five-day
advanced notice if the Seller plans to adjust its Estimated Net Energy Amounts for purposes of
I Normally the nameplate capacity and the Maximum Capacity Amount are the same. However, in this case, the
Maximum Capacity Amount is less than the nameplate capacity amount and is used as the upper limit of capacity
that can or should be generated from the facility.
JSTAFF COMMENTS MARCH 31,2022
complying with the 90/l l0 Rule. Five-day advanced notice has been authorized in prior
Commission orders such as Order Nos. 34263 ,34870 and 34937 .
Avoided Cost Rates
Staffhas verified that the avoided cost rates contained in the ESA are correct.
STAFF RECOMMENDATIONS
Staffrecommends that the Commission approve the ESA as filed and declare that all
payments for purchases of energy under the ESA between the Company and the Seller be
allowed as prudently incuned expenses for ratemaking purposes.
Respecttully submitted this 3Lb- day of Mar ch2022.
Riley
Deputy General
Technical Staff: Yao Yin
i : um isc/commen tsl ip ce22.Zmyy comments
4STAFF COMMENTS MARCH 31,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3I't DAY OF MARCH 2022,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC.E-22-02, BY E.MAILING A COPY TI{EREOF, TO THE FOLLOWING:
DONOVAN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL : [e-mail]
dockets@ idahopower.com
BRYAN DeVENY
MIKE DeVENY
SHINGLE CREEK LLC
PO BOX r 160
RIGGINS ID 83549
E-MAIL: [e-mail]
devenym@frontiernet. net
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
Y
CERTIFICATE OF SERVICE