20230111Reply Comments.pdf

MEGAL GOICOECHEA ALLEN
Corporate Counsel
[e-mail]
January 11, 2023
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-22-28
Lower Lowline, LLC – Lowline #2 Hydro Project
Idaho Power Company’s Application re Energy Sales Agreement
Dear Ms. Noriyuki:
Attached for electronic filing is Idaho Power Company’s Reply Comments in the
above-entitled matter. If you have any questions about the attached documents, please
do not hesitate to contact me.
Very truly yours,
Megan Goicoechea Allen
MGA:cld
Enclosures
RECEIVED
Wednesday, January 11, 2023 3:07:22 PM
IDAHO PUBLIC
UTILITIES COMMISSION
IDAHO POWER COMPANY’S REPLY COMMENTS - 1
DONOVAN E. WALKER (ISB No. 5921)
MEGAN GOICOECHEA ALLEN (ISB No. 7623)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]

Attorneys for Idaho Power Company

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH
LOWER LOWLINE LLC, FOR THE SALE
AND PURCHASE OF ELECTRIC ENERGY
FROM THE LOWLINE #2 HYDRO
PROJECT.

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CASE NO. IPC-E-22-28

IDAHO POWER COMPANY’S
REPLY COMMENTS

COMES NOW, Idaho Power Company (“Idaho Power” or “Company”) and,
pursuant to Idaho Public Utilities Commission’s (“Commission”) Rule of Procedure1
203 and the Notice of Modified Procedure, Order No. 35620, hereby respectfully submits
the following Reply Comments in response to Comments of the Commission Staff (“Staff”)
in this case.

1 Hereinafter cited as RP.
IDAHO POWER COMPANY’S REPLY COMMENTS - 2
I. INTRODUCTION
The Company appreciates Staff’s thorough analysis of the replacement Energy
Sales Agreement (“ESA”) between the Company and Lower Lowline LLC (“Lowline #2”)
for energy generated by the Lowline #2 Hydro Project, a qualifying facility (“QF”) under
the Public Utility Regulatory Policies Act of 1978 (“PURPA”) and offers these comments
to discuss Staff’s recommendation for a modification of the ESA as a condition of
approval. While the Company believes the proposed ESA complies with PURPA and the
Commission’s orders directing the implementation of PURPA in Idaho, it understands
Staff’s desire for clarity and consistency and is willing to add more explicit language as
proposed herein in an effort to ensure the contract description matches actual facility
parameters.
In reviewing the ESA, Staff focused on the following: (1) eligibility for and the
amount of capacity payments; (2) the 90/110 rule with at least five-day advance notice
for adjusting Estimated Net Energy Amounts; (3) avoided cost rates; and (4) Article XXIII
“Modifications” of the ESA. As to the first three matters, Staff concluded that the
replacement ESA included the necessary Idaho-specific provisions in compliance with
prior Commission orders and that the avoided cost rates were accurate.
With respect to the final review item, Staff acknowledges that Article XXIII
“addresses a potential situation in which the Seller seeks to modify the Facility that may
require a change in rates.” Staff Comments, p. 3. It recommended, however, that Article
XXIII be amended to address the potential circumstances in which “the actual modification
deviates from the proposed and approved modification,” citing to Order No. 35506 from
IDAHO POWER COMPANY’S REPLY COMMENTS - 3
Case No PAC-E-22-08.2
II. BACKGROUND
Staff’s recommendation that the parties update the ESA’s modification provision
stemmed from the Commission’s recent decision in a case filed by PacifiCorp d/b/a/
Rocky Mountain Power (“PacifiCorp”) for approval or rejection of a power purchase
agreement (“PacifiCorp PPA”) with a PURPA QF (Case No. PAC-E-22-08, Order No.
35506). In that case, Staff’s review of the PacifiCorp PPA noted, among other concerns,
the lack of detailed provisions to adequately address potential modifications to the facility
and overlooked the requirement for Commission approval before any modification
becomes valid.3 While Idaho Power understands Staff’s concerns with, and
recommendations for, the PacifiCorp PPA, it believes the Lowline #2 ESA is
distinguishable and does not lack the provisions regarding modification that were at issue
in that case.
Though Staff Comments in the instant case did not include a discussion of the
underlying rationale, Staff’s Comments in Case No. PAC-E-22-08 provide additional
details of the potential circumstances at issue including description of the two types of
facility modifications: (1) occurs when the completed project deviates from what was
approved in the contract; and (2) occurs after the project is built where modifications are
made to the originally built project.4 The first type of modification was addressed by the
Commission in Case No. IPC-E-21-26, Order No. 35239, with the Commission’s
determination that, to help avoid errors of facility size with respect to new PURPA

2 In the Matter of Rocky Mountain Power’s Application for Approval or Rejection of the Power Purchase
Agreement with Amy Family Holdings, LLC, Case No. PAC-22-08, Order No. 35506 (Aug. 19, 2022).
3 Id., Comments of the Commission Staff, p. 4-6 (Jul. 29, 2022).
4 Id.
IDAHO POWER COMPANY’S REPLY COMMENTS - 4
contracts, a provision should be included that “requir[es] the QF to submit an ‘as-built’
description of the facility by the first operation date. If the ‘as-built’ description does not
match the description in the original approved contract, the contract should be amended
to reflect the ‘as-built’ description.”5 The second type of modification, changes to an
existing project, provided the basis for Staff’s recommendation in PAC-E-22-08 to include
a provision that any major modifications causing the project to deviate from the as-built
description6 will trigger an amendment requiring Commission approval.
Regardless of the type of modification, Staff’s efforts to ensure that potential
changes to a qualifying facility are adequately accounted for in the contract help achieve
the ultimate goal of preventing overpayments of avoided cost of capacity. Idaho Power
agrees with this objective and does not object to adding more explicit language to the
ESA as proposed herein to ensure it clearly and comprehensibly reflects the
Commission’s intent.
III. COMPARITIVE ANALYSIS
PacifiCorp PPA – Case No. PAC-E-22-08
The underlying context for the PacifiCorp example relied on by Staff is important
as the amendments directed by the Commission in that case were intended to remedy
the perceived deficiencies based on the specific language of that contract. That situation
is readily distinguishable from the language in the Lowline #2 ESA at issue in this case
insofar as Article XXIII directly addresses modification and already contains the provisions
found to be lacking in the PacifiCorp PPA. Perhaps most significantly, the PacifiCorp PPA

5 In the Matter of the Application of Idaho Power Company for Approval or Rejection of an Energy Sales
Agreements with Michael Branchflower, for the Sale and Purchase of Electric Energy from the Trout-Co
Hydro Project, Case No. IPC-E-21-26, Order No. 35239, p. 5 (Nov. 30, 2021).
6 Staff noted the description of the facility as built was included in Exhibit B to the PPA.
IDAHO POWER COMPANY’S REPLY COMMENTS - 5
did not include a separate modification provision but addressed modifications indirectly
through the default provisions. The only other reference to modification in the initial
PacifiCorp PPA related to the need for a signed writing in order to modify the agreement;
Section 21 “Entire Agreement” provided: “No modification of this Agreement is effective
unless it is in writing and executed by both Parties.”
In their comments on PaciCorp’s application Staff noted that the PPA, as initially
drafted, neglected the significance of Commission approval of modifications and,
additionally, would allow a QF to modify its facility, including increasing its capacity and
output, without modifying the contract. Staff was concerned that the failure to clearly
address these matters in the PPA could result in the QF being compensated for potential
increases in output due to facility upgrades regardless of the need for additional capacity.
The Commission agreed with Staff’s concerns and recommendation to include
additional detail to address the potential for facility modifications. In pertinent part, it
directed that the PPA be amended to include the following:
1. Language that restricts the Seller from modification of the Facility from the as-
built description of the Facility included in Exhibit B, without promptly notifying
the Company of that intent.

2. Language that requires the Seller to provide notification of planned
modifications (such as fuel change or capacity size change) to the as-built
description.

3. Language that the Parties will need to amend the contract again to reflect the
actual modification and seek approval from the Commission if the actual
modification deviates from the proposed modification.

See Order No. 35506, p. 4. Additionally, the Commission instructed PacifiCorp to replace
“[n]o modification of this Agreement is effective unless it is in writing and executed by both
Parties” in Section 21 of the PPA with “No modification of this Agreement is effective
IDAHO POWER COMPANY’S REPLY COMMENTS - 6
unless it is in writing and executed by both Parties and subsequently approved by the
Commission.”
To comply with the Commission’s order PacifiCorp filed an Amended PPA to
address facility modifications, Company notification of modification obligations, and
expressly state that modifications to the PPA required Commission approval, which the
Commission approved in Order No. 35554 on October 7, 2022.
Idaho Power and Lowline #2 ESA – Case No. IPC-E-22-28
The Company understands and appreciates Staff’s concern regarding the potential
for overpayments of avoided cost of capacity due to overgeneration, which Staff and the
Commission believed was not adequately addressed in the initial PacifiCorp PPA in Case
No. PAC-E-22-08 and resulted in the Commission directing amendments to meet certain
requirements. In contrast, unlike the initial PacifiCorp PPA, the Lowline #2 ESA includes
a particularized, detailed modification provision. Article XXIII “Modification” states:
The Seller will promptly notify Idaho Power if they are intending to modify
the Facility prior to initiating the modification design, specification
purchasing and construction process. 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 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.
No modification to this Agreement shall be valid unless it is in writing and
signed by both Parties and subsequently approved by the Commission.

Notably, this provision directly contemplates potential modifications of the Facility
and addresses the areas of concern identified by Staff and the Commission
including the requirement of notification to the Company of intent to modify, the
IDAHO POWER COMPANY’S REPLY COMMENTS - 7
possibility that facility modification could result in pricing adjustment or termination
of the ESA, and the requirement for Commission approval of modifications.
Thus, while the Company agrees with Staff that modifications to an approved
facility, particularly those that change the output of the facility, could be problematic, it
believes that these concerns are sufficiently addressed under the current contract
language. Though the Company believes that the ESA as written adequately accounts
for the potential circumstance identified by Staff in its recommendation (in which the
actual modification deviates from the proposed and approved modification), it is willing to
amend Article XXIII of the ESA to more clearly and explicitly address the Commission’s
orders addressing the different types of facility modifications including reformatting that
provision for clarity. The Company’s proposed modification to Article XXIII is attached to
these Reply Comments as Exhibit A, in red-line format.
IV. CONCLUSION
Idaho Power appreciates Staff’s review and consideration of the issues in this case
and the opportunity to offer these Reply Comments to address Staff’s recommendations.
While the Company believes that the potential circumstances identified by Staff are
already sufficiently addressed under the current contract language, it is willing to add
more explicit language to ensure clarity and consistency as set forth herein. Subject to
that revision if the Commission deems it appropriate, Idaho Power respectfully requests
that the Commission issue an order consistent with Staff’s recommendations to accept
the ESA between Idaho Power and Lowline #2 and declare that all payments for
purchases of energy under the ESA between Idaho Power and Lowline #2 be allowed as
prudently incurred expenses for ratemaking purposes.
IDAHO POWER COMPANY’S REPLY COMMENTS - 8
Respectfully submitted this 11th day of January 2023.

MEGAN GOICOECHEA ALLEN
Attorney for Idaho Power Company

IDAHO POWER COMPANY’S REPLY COMMENTS - 9
CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 11th day of January 2023, I served a true and
correct copy of the within and foregoing Idaho Power Company’s Reply Comments upon
the following named parties by the method indicated below, and addressed to the
following:

Michael Duval
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg No. 8,
Suite 201-A (83714)
PO Box 83720
Boise, ID 83720-0074

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Louis Zamora
Twin Falls Canal Company
P.O. Box 326
Twin Falls, Idaho 83303

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________________________________
Christy Davenport, Legal Assistant

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-22-28

IDAHO POWER COMPANY

ATTACHMENT 1