20230308Redacted Comments.pdf

CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074 SS:N
[phone]
IDAHO BAR NO.9810
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 APPROVAL )CASE NO.IPC-E-22-29
OF A POWER PURCHASE AGREEMENT WITH)
PLEASANT VALLEY SOLAR,LLC.)
)REDACTED COMMENTS OF
)THE COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission,by and through its Attorneyof record,
Chris Burdin,Deputy AttorneyGeneral,submits the followingcomments.
BACKGROUND
On November 14,2022,Idaho Power Company ("Idaho Power"or "Company"),filed an
application ("Application")with the Idaho Public Utilities Commission ("Commission")
requesting an order approving a 20-year Power Purchase Agreement ("PPA")between Idaho
Power and Pleasant Valley Solar,LLC ("Pleasant Valley Solar"or "Seller").The Company
represents that the PPA was entered into with the expectation of assigning the associated energy
and Green Tags/Environmental Attributes to Brisbie LLC ("Brisbie")under the provisions
contained in the Special Contract submitted for Commission review and approval in CaseNo.IPC-
E-21-42.The Company requests an order from the Commission prior to May 11,2023.
REDACTED COMMENTS 1 MARCH 8,2023
OF THE COMMISSION STAFF
Idaho Power and Brisbie have negotiated a Special Contract for the provision of electric
service to Brisbie by Idaho Power.The Special Contract,or the Energy Services Agreement
("ESA"),was filed with the Commission for review and approval in Case No.IPC-E-21-42.
Under the terms of the PPA in this Application,Pleasant Valley Solar will build,own,
operate,and maintain a 200 megawatt ("MW")alternating current ("AC")solar photovoltaic
generation facility ("Facility")and will supply the output to Idaho Power's system.Brisbie is
identified in the PPA as a third-party beneficiary receiving energy and Green Tags associated
with the Facility's Net Output.
STAFF ANALYSIS
Staff's review focused on the Parent Guaranty,rate structures before the Commercial
Operation Date,degradationfactors of the facility output,Expected Energy,Section 23 regarding
effectivityof the contract,Liquidated Damages for OutputShortfall,and the relationship between
this case and Case No.IPC-E-21-42 (Brisbie).Staff recommends that the parties updatethe PPA
to reflect the followingitems:
1.Correcting the mistake of degradationfactors in Section 1.35.
2.Ensuring the term Expected Energy is used correctly in the PPA.
3.Modifying Section 23 to reflect significance of Commission approval.
4.Including transmission-related costs in calculating Liquidated Damages for Output
Shortfall.
Parent Guaranty
The Special Contract required that
.Special Contract at 25.Staff concludes that the Parent Guaranty requirement of the
Special Contract was met.
The PPA was executed on October 27,2022.A Parent Guaranty for the PPA was
delivered on November 7,2022,within ten business days.See Response to Staff's Production
Request No.4.
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OF THE COMMISSIONSTAFF
Rate Structures Before Commercial Operation Date
Staff believes the rate structure for periods prior to the Commercial Operation Date is
reasonable.Before the Commercial Operation Date,the Net Output delivered by the Facility is
called Test Energy,which is defined as
PPA at 17.Brisbie's load will be matched on an
hourly basis against any Test Energy delivered to Idaho Power from the Facility.The rate
structure for the periods prior to the Commercial Operation Date will be similar to the rate
structure for the periods after the Commercial Operate Date,except that Net Output delivered to
Idaho Power after the Commercial Operation Date will be paid at M,while the Test
Energy delivered to Idaho Power before the Commercial Operation Date will be paid at
.See Response to Staff's Production Request No.23 (a).Despite the
difference,.See
Response to Staff's Production Request No.23 (b).Because of the ,Staff
does not have any issues with this rate structure.
Degradation Factor
Staff recommends that the parties file an updated PPA correcting the mistake in Section
1.35 of the PPA.Section 1.35 defines Expected Energy,which means "of Net
Output in the first,full Contract Year,reduced by an annual degradation factor of percent in
the first Contract Year,and percent per Contract Year thereafter..."However,the -percent
annual degradation factor should have been applied to the second Contract Year,instead of the
first Contract Year.See Response to Staff's Production Request No.5(a).
Expected Enerav
Staff recommends that the parties file an updated PPA,ensuring the term Expected Energy
is used correctly.According to its definition stated above,Expected Energy is an annual concept,
not a monthlyconcept.However,the term is mistakenly used as a monthly concept in several
places in the PPA.For example,the term is used in Section 7.12.1 and Section 7.12.2.2 as a
monthly concept.The Company confirmed that the term should be replaced by Estimated Net
Output Amount in these two sections.See Response to Staff's Production Request 5(e).
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OF THE COMMISSION STAFF
Section 23 -Entire Agreement
Section 23 of the PPA contains the statement "[n]o modification hereof shall be effective
unless it is in writing and executed by both Parties."PPA at 63.Staff believes that this statement
neglects the significance of Commission approval and recommends that the statement be updated
to reflect the need for the Commission approval before any modification becomes valid.For
example,the statement can be updated as follows:No modification hereof shall be effective
unless it is in writing and executed by both Parties andsubsequentlyapprovedby the Commission.
Liquidated Damages For Output Shortfall
Staff recommends inclusion of transmission costs in the calculation of liquidated damages
for OutputShortfall.
PPA at 47.
PPA at 47.
PPA at 8.This
calculation does not consider transmission costs associated with moving energy from market to
Idaho Power to cover the Output Shortfall.
Idaho Power stated that actual damages may or may not be the calculated liquidated
damages and that there may or may not be transmission costs incurred.See Response to Staff's
Production Request No.25.Staff believes transmission costs should be included in the
calculation of liquidated damages for the followingreasons.First,when market price is used in
calculating liquidated damages,transmission costs associated with moving energy from market
to Idaho Power should be considered.Otherwise,when the Seller does not meet the Output
Guarantee,ratepayers (instead of the Seller)will have to pay for the transmission to move
replacement energy to Idaho Power.
in the calculation of the damages for situations in which the Seller has
committed an Event of Default where Seller fails to deliver.Because the impact of an Event of
Default and the impact of an Output Shortfall are essentially the same in nature,Staff believes
that they should be treated in a consistent manner.
REDACTED COMMENTS 4 MARCH 8,2023
OF THE COMMISSION STAFF
Relationship Between this Case and Case No.IPC-E-21-42 (Brisbie)
This case is focused on the price that Idaho Power pays Pleasant Valley,which will be
passed through to Brisbie,while Case No.IPC-E-21-42 is focused on the rate structure between
Brisbie and Idaho Power using Schedule 33.Currently,the Brisbie ESA has not been approved
by the Commission.However,the Company cannot accept deliveries of Net Output and Green
Tags from the Seller until both cases are approved.See Section 3.1 of the PPA and Response to
Staff's Production Request No.10.Therefore,Staff is not concerned about the sequence of
Commission decisions between both cases.
The Facility is expected to begin delivering energy in the first quarter of 2025.See
Response to Staff's Production Request No.11.Brisbie is expected to begin operations in
Tim Tatum Direct Testimony,Case No.IPC-E-21-42 at 4.Staff anticipates Commission
decisions before .
In addition,the 12X24 forecast currentlyrequired in the PPA will not be required as a
result of the Commission decision in the Brisbie case.According to Section 7.7.3 of the PPA,
Seller shall provide an initial 12X24 Net Output forecast and update this forecast at least every
two years on a mutually agreed upon schedule that is intended to coincide with the Integrated
Resource Plan.The 12X24 forecast is used in calculation of Renewable Capacity Credit ("RCC")
for the Facility.If the Commission orders the Company to use
,the 12X24 forecast will not be required and the Company
anticipates deprioritizing the forecast.See Response to Staff s Production Request No.8.Staff
believes this plan is reasonable.
STAFF RECOMMENDATIONS
Staff recommends approval of the PPA conditioned on the parties updating the PPA to
reflect the followingitems:
1.Correcting the mistake of degradationfactors in Section 1.35.
2.Ensuring the term Expected Energy is used correctly in the PPA.
3.Modifying Section 23 to reflect significance of Commission approval.
4.Including transmission-related costs in calculating Liquidated Damages for Output
Shortfall.
REDACTED COMMENTS 5 MARCH 8,2023
OF THE COMMISSION STAFF
Respectfully submitted this day of March 2023.
Chris Burdin
Deputy AttorneyGeneral
Technical Staff:Yao Yin
Michael Eldred
i:umisc/comments/ipce22.29 comments
REDACTED COMMENTS 6 MARCH 8,2023
OF THE COMMISSION STAFF
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 8TH DAY OF MARCH 2023,
SERVED THE FOREGOING REDACTED COMMENTS OF THE COMMISSION
STAFF,IN CASE NO.IPC-E-22-29,BY E-MAILING A COPY THEREOF,TO THE
FOLLOWING:
DONOVAN E WALKER TIM TATUM
IDAHO POWER COMPANY CONNIE ASCHENBRENNER
PO BOX 70 IDAHO POWER COMPANY
BOISE ID 83707-0070 PO BOX 70
E-MAIL:[e-mail] BOISE ID 83707-0070
[e-mail] E-MAIL:[e-mail]
[e-mail] [e-mail]
SECRETARY/
CERTIFICATE OF SERVICE