20230105Comments.pdf

MICHAEL DUVAL
DEPUTYATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BARNO.11714
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE, ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )COMPANY'S APPLICATION FOR )CASE NO.IPC-E-22-28
APPROVAL OR REJECTION OF AN )ENERGY SALES AGREEMENT WITH )LOWER LOWLINE LLC,FOR THE SALE )COMMENTS OF THE
AND PURCHASE OF ELECTIC ENERGY )COMMISSION STAFF
FROM THE LOWLINE #2 HYDRO PROJECT )
STAFF OF the Idaho Public Utilities Commission,by and through its Attorney of
record,Michael Duval,Deputy AttorneyGeneral, submits the followingcomments.
BACKGROUND
On November 9,2022,Idaho Power Company ("Company")applied for approval or
rejection of an energy sales agreement ("ESA")with Lower Lowline LLC ("Seller")for the
energy generated by the Lowline #2 Hydro Project ("Facility").The Facility is a qualifying
facility ("QF")under the Public Utility Regulatory Policies Act of 1978 ("PURPA").
The Facility is near Twin Falls,Idaho and has a 2,790 kilowatt ("kW")nameplate
capacity. The Seller has been delivering energy from the Facility to the Company under a
contract entered into on September 12,1986. The 1986 contract expires on April 30,2023.The
STAFF COMMENTS I JANUARY 4,2023
RECEIVED
Thursday, January 5, 2023 2:16:15 PM
IDAHO PUBLIC
UTILITIES COMMISSION
new ESA has a 20-year term with non-levelized,seasonal hydro published avoided cost rates,
which contains capacity payments for the entire term.
STAFF ANALYSIS
Staff s review focused on:(1)eligibilityfor and the amount of capacity payments;(2)the
90/110 Rule with at least five-day advanced notice for adjusting Estimated Net Energy Amounts;
(3)avoided cost rates;and (4)the Article XXIII "Modification."Staff recommends the
Commission approve the ESA conditioned on the parties updating Article XXIII "Modification."
Capacity Payments
The ESA allows immediate capacity payments and Staff believes this treatment is
reasonable.In Order No.32697,the Commission stated that "if a QF project is being paid for
capacity at the end of the contract term and the parties are seeking renewallextension of the
contract,the renewallextension would include immediate payment of capacity."The current
avoided cost rates in the 1986 contract were established in Order No.20350'in Case
No.U-1006-248 and those rates do not contain capacity payments.2
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 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.
See Order Nos.34875,34961,and 35067.
The 1986 contract and the ESA listed the nameplate capacity of the Facility as 2,790 kW,
and the Maximum Capacity Amount for the ESA is also 2,790 kW.Staff believes the Facility
should be granted immediate capacity payments for its entire generation capacity amount over
the full term of the ESA.
1 The Decision Memo dated October 24,1986,stated the rates used in the 1986 contract were established in Order
No.20350 in Case No.U-1006-248.
2 Order No.20350 stated "[t]he current avoided cost payments for Idaho Power,as well as the payments set in the -
200 case,are 100%energy based.In other words,payments are made solely for energy deliveries,and there is no
separately calculated capacity payment."See Order No.20350 at 19.
STAFF COMMENTS 2 JANUARY 4,2023
The 90/110 Rule and 5-Day Advanced Notice for AdjustingEstimated Net Energy
Amounts
Staff confirmed the ESA contains the 90/110 Rule as required by Commission Order
No.29632.The 90/110 Rule requires a QF to provide utilities with a monthlyestimate 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
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 at 20.
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 90/110 Rule.Five-day advanced notice has been authorized by the
Commission.See Order Nos.34263,34870,and 34937.
Avoided Cost Rates
Staff verified that the avoided cost rates contained in the ESA are correct.
Article XXHI "Modification"
Article XXIII "Modification"addresses a potential situation in which the Seller seeks to
modify the Facility that may require a change in rates.However,the Article does not include
any provisions that addresses if the actual modification deviates from the proposed and approved
modification.Order No.35506 required parties 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 at 4.Staff recommends that the parties update
Article XXIII to address this potential circumstance.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the ESA 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,conditioned on the parties updating Article
XXIII "Modification."
STAFF COMMENTS 3 JANUARY 4,2023
Respectfully submitted this day of January 2023.
Michael Duval
Deputy AttorneyGeneral
Technical Staff:Yao Yin
i umisc/comments/ipcc22.28mdyy comments
STAFF COMMENTS 4 JANUARY 4,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 4th DAY OF JANUARY 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN
CASE NO.IPC-E-22-28,BY E-MAILING A COPY THEREOF,TO THE FOLLOWING:
DONOVAN E WALKER ENERGY CONTRACTS
MEGAN GOICOECHEA ALLEN IDAHO POWER COMPANY
IDAHO POWER COMPANY PO BOX 70
PO BOX 70 BOISE ID 83707-0070
BOISE ID 83707-0070 E-MAIL:eneravcontractsSidahopower.com
E-MAIL:dwalkerOidahopower.com
[e-mail]
dockets idahopower.com
LOUIS ZAMORA
TWIN FALLS CANAL CO
PO BOX 326
TWIN FALLS ID 83303
E-MAIL:[e-mail]
SE 'RE )
CERTIFICATEOF SERVICE