20220525Comments.pdf

CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
(208) 334-03r4
IDAHO BAR NO. 9810
Street Address for Express Mail:
1I331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
,-i
,.t-...J
''; ,-:.r i;'i i?: I I
. ; .:-l.. ..t1 !All-"'-\u'tVtr
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH
FAULKNER BROTHERS HYDRO, FOR THE
SALE AND PURCHASE OF ELECTRIC
ENERGY FROM THE FAULKNER RANCH
HYDRO PROJECT
CASE NO. IPC.E.L2.IO
COMMENTS OF THE
COMMISSION STAFF
)
)
)
)
)
)
)
)
STAFF OF the Idaho Public Utilities Commission ("Staff'), by and through its Attorney
of record, Chris Burdin, Deputy Attorney General, submits the following comments.
BACKGROUND
On April l,2022,Idaho Power Company ("Company" or "ldaho Power") applied for
approval or rejection of an Energy Sales Agreement ("ESA") between the Company and
Faulkner Brothers Hydro ("Seller") under which the Company would purchase electric
generation from the Faulkner Ranch Hydro Project ("Facility") located near Bliss, Idaho. The
Company represented that the Seller currently has a Public Utility Regulatory Policies Act of
1978 ("PURPA") contract with the Company for the Facility that was executed on December I l,
1986 ("1986 Agreement"). The 1986 Agreement expires on July 31,2022.
1STAFF COMMENTS MAY 25,2022
STAFF REVIEW
Staff s review focused on: (l) eligibility for and the amount of capacity payments; (2) the
90/110 Rule with at least five-day advanced notice for adjusting Estimated Net Energy Amounts;
and (3) avoided cost rates. Staff recommends the Commission approve the ESA as filed.
Capacity Payments
The ESA allows immediate capacity payments, and 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." The current avoided
cost rates in the 1986 Agreement were determined in Order No. 18190, and those rates do not
contain capacity payments because the Company was energy constrained, not capacity
constrained, at that time. However, since 2000 the Company has added significant amounts of
capacity to meet capacity needs including the Danskin (2001 and 2008), Bennett Mountain
(2005), and Langley Gulch (2012) gas plants. Staff believes that because the Facility has
operated since the mid-1980s, and throughout the Company's capacity deficiency periods, the
Facility has contributed to meeting the Company's need for capacity and should be granted
immediate capacity payments.
The 1986 Agreement and the ESA listed the nameplate capacity of the Facility as 870
kW, and the Seller also provided documentation to the Company that the project nameplate is
870 kW. In addition, the Maximum Capacity Amount for the ESA is 870 kW. Staff believes the
Facility should be granted immediate capacity payments for its entire generation capacity amount
over the full term of the ESA.
The 90/110 Rule and 5-Day Advanced Notice for Adjusting Estimated Net Energy Amounts
Staff confirmed the ESA contains the 90/110 Rule as required by Commission Order
No. 29632. The 90lll0 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 110 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
2STAFF COMMENTS MAY 25,2022
amount, then the utility must buy the total energy delivered for the lesser of 85 percent of the
market price or the contract price. 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
complying with the 90/l l0 Rule. Five-day advanced notice has been authorized by the
Commissiot. Se e Order Nos. 34263, 3 487 0, and 34937 .
Avoided Cost Rates
Staff verified that the avoided cost rates contained in the ESA are correct.
STAFF RECOMMENDATIONS
Staff recommends that the Commission approve the ESA as filed and declare that all
payments for purchases of energy under the ESA between Idaho Power and the Seller be allowed
as prudently incurred expenses for ratemaking purposes.
Respecttully submitted this Z$ day of May 2022
Chris Burdin
Deputy Attorney General
Technical Staff: Yao Yin
i: umisc/comments/ipce22. I 0cbyyjh comments
JSTAFF COMMENTS MAY 25,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 25th DAY OF MAY 2022,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFF,
IN CASE NO. IPC-E-ZZ-IO, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
DONOVAN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-MAIL: [e-mail]
dockets@ idahopower. com
JOHN FAULKNER
MITCH ARKOOSH
FAULKNER BROTHERS HYDRO
1997 SOUTH 1875 EAST
GOODING ID 83330
E-MAIL: m I [e-mail]
ENERGY CONTRACTS
IDAHO POWER COMPANY
PO BOX 70
BOrSE ID 83707-0070
E-MAIL : [e-mail]
Y
CERTIFICATE OF SERVICE