20230119Application.pdf

MEGAL GOICOECHEA ALLEN
Corporate Counsel
[e-mail]
January 18, 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-23-02
Bypass Hydro Project
Idaho Power Company’s Application re Energy Sales Agreement with
North Side Energy Company, Inc.
Dear Ms. Noriyuki:
Attached for electronic filing is Idaho Power Company’s Application 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
Thursday, January 19, 2023 10:58:59 AM
IDAHO PUBLIC
UTILITIES COMMISSION
NEW CASE
APPLICATION - 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
NORTH SIDE ENERGY COMPANY, INC.
FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY FROM THE BYPASS
HYDRO PROJECT.

)
)
)
)
)
)
)
)
)

CASE NO. IPC-E-23-02

APPLICATION

Idaho Power Company (“Idaho Power” or “Company”), in accordance with Idaho
Public Utilities Commissions (“Commission”) Rule of Procedure1 52 and the applicable
provisions of the Public Utility Regulatory Policies Act of 1978 (“PURPA”), hereby
respectfully applies to the Idaho Public Utilities Commission (“Commission”) for an order
accepting or rejecting the Energy Sales Agreement (“ESA” or “Agreement”) between
Idaho Power and North Side Energy Company, Inc. (“North Side” or “Seller”) under which

1 Hereinafter cited as RP.
APPLICATION - 2
North Side would sell and Idaho Power would purchase electric generation from the
Bypass Hydro Project (“Facility”) located near the city of Hazelton, Idaho, which is a
PURPA Qualifying Facility (“QF”).
In support of this Application, Idaho Power represents as follows:
I. BACKGROUND
1. Idaho Power and Seller (jointly, “Parties”) entered into an Agreement on
November 12, 1986 (“1986 Agreement”) for the purchase and sale of energy produced
by the Facility, a 9,960 kilowatt (“kW”) nameplate capacity hydroelectric facility located on
the Snake River, near Hazelton, Idaho. The 1986 Agreement expires on May 31, 2023.
2. The ESA submitted herewith dated January 3, 2023, is a new contract with
the same QF for a new term with updated terms and conditions. The Parties intend the
proposed ESA to replace the 1986 Agreement in light of its upcoming expiration. Under
the proposed ESA, the Seller would sell and the Company would purchase electric energy
generated by the Facility at non-levelized, published avoided cost rates for seasonal
hydroelectric resources as set in Case No. GNR-E-22-01, Order Nos. 35422 and 35475,
for a 20-year term, with full capacity payments for the entire term. See Order No. 32697
at 21-22; Order No. 32737 at 5; and Order No. 32871.
3. As more fully set forth herein, the proposed ESA complies with the
Commission’s orders directing the implementation of PURPA for the State of Idaho,
including but not limited to Commission Order Nos. 32697, 32737, and 32802 from Case
No. GNR-E-11-03.
II. RELEVANT LAW

4. Pursuant to PURPA and regulations of the Federal Energy Regulatory
Commission (“FERC”) implementing it, electric utilities are required to purchase power
APPLICATION - 3
produced by designated Qualifying Facilities. Under this must purchase provision, the
rate a utility must buy the power produced by the QF is generally referred to as the
avoided cost rate, which is intended to reflect the incremental cost to the purchasing utility
of power, which it would either generate itself or purchase from another source but for the
purchase of power from the QF. See 18 CFR §292.101(b)(6).
5. While FERC is tasked with developing broad federal regulations to guide
PURPA’s implementation, individual state commissions are tasked with implementing
PURPA at the state level. “PURPA requires that utilities buy the power output from QF’s
under a federal rate mechanism (i.e., avoided costs) that is determined and implemented
by state utility commissions.” Order No. 32697 at 7.
6. Pursuant to its authority under PURPA, this Commission has established
and adopted numerous contract terms and conditions for energy sales agreements
entered into between regulated utilities and QFs under PURPA and developed
parameters for published and negotiated avoided cost rate calculations.
7. The Commission’s seminal decisions on PURPA implementation, starting
with Order No. 32697, established, in pertinent part, a 10 average megawatts (“aMW”)
project eligibility cap for access to published avoided cost rates for resources other than
wind and solar and confirmed use of the surrogate avoided resource (“SAR”)
methodology to calculate published rates (updated annually). Within the SAR
methodology, hydroelectric QF projects that produce 55% of their annual generation
during June, July, and August (the utility’s peak power consumption months) are
classified as “seasonal hydro” projects and entitled to higher rates based on the ability to
deliver generation when the utility is most in need. See Order No. 32802.
8. The Commission also held that both energy and capacity should be
APPLICATION - 4
considered in determining avoided costs, though payments for capacity should only begin
at such time that the utility becomes capacity deficient. See Order No. 32697. If an
existing QF seeks a new contract with the utility to replace an expiring contract, the
capacity deficit date is still determined as of the date the original contract was executed,
and the QF will be entitled to immediate payment for capacity under the replacement
contract if it was being paid for capacity at the end of the prior agreement. See also Order
No. 32871.
9. Relative to QF replacement contracts, the Commission subsequently
recognized that conditions existing at the time a legally enforceable obligation was
established in the prior contract could prevent a QF from ever receiving capacity
payments, which would be inconsistent with the Commission’s prior orders addressing
QF eligibility for capacity payments. See, e.g., Order No. 34200 at 4-5. As a result, the
Commission has focused on whether the utility has been relying on the QF’s power
production to meet its capacity needs in determining whether a QF qualifies for immediate
capacity payments in a replacement contract.
III. THE PROPOSED ENERGY SALES AGREEMENT
10. The Facility is currently delivering energy to Idaho Power in accordance with
the 1986 Agreement that expires on May 31, 2023.
11. On January 3, 2023, Idaho Power and the Seller entered into an ESA,
executed in compliance with Commission Order No. 32697 and its progeny, which is
intended to replace the 1986 Agreement and pursuant to which the Seller would continue
to sell, and the Company would continue to purchase electric energy generated by the
Facility. A copy of the ESA is attached to this Application as Attachment 1.
APPLICATION - 5
12. Under the terms of the proposed ESA, the Seller elected to contract with
Idaho Power for a 20-year term using the non-levelized, published avoided cost rates for
“seasonal hydro” resources as currently established by the Commission in GNR-E-22-01
for replacement contracts and for energy deliveries of less than 10 aMW. See Order No.
35475 dated July 28, 2022. Additionally, because it is a replacement ESA, the proposed
ESA contains capacity payments for the entire term of the Agreement consistent with prior
Commission Orders.2 See Order No. 32697 at 21-22; Order No. 32737 at 5; Order No.
32871; and Order No. 34200 at 4-5.
13. The proposed ESA contains contract provisions consistent with PURPA,
FERC regulations, and the Commission’s prior orders. With regard to the latter, the
following discussion demonstrates the proposed ESA’s compliance with certain Idaho-
specific provisions that have been the focus of Commission Staff in reviewing similar
approval requests: (1) adherence to the capacity size threshold for published rates; (2)
verification of seasonal/non-seasonal hydro status; (3) eligibility for the amount of
capacity payments; and (4) 90/110 rule with a five-day advance notice for adjusting
Estimated Net Energy Amounts.
14. The Company notes that in the matter of the amendment to the Lowline #2
ESA currently pending before the Commission (Case No. IPC-E-22-28), Staff’s
Comments also included a recommendation related to Article XXIII “Modifications” of the
ESA. Specifically, Staff recommended the parties update Article XXIII to address the

2 It is the Company’s understanding based on prior Commission orders that QF projects that have been
included in Idaho Power’s load and resource balance during their initial contract term meet the
requirements to include value for their replacement contracts as more fully discussed in Order No. 34200
at 4-5. To that end the Bypass Hydro Facility is, like other PURPA contracts, included in the Company’s
generation forecast for existing resources that is considered in the load and resource balance analysis as
part of the Integrated Resource Plan (“IRP”) process.
APPLICATION - 6
potential circumstance involving deviation from a proposed and approved facility
modification. In its Reply Comments, the Company explained that while it believed that
the ESA as written adequately addressed the potential circumstance identified by Staff, it
was willing to amend Article XXIII to more clearly and explicitly incorporate the
Commission’s orders addressing the different types of facility modifications. Given that
the ESA with North Side contains the same provision, the Company submits this
application subject to the Commission’s decision in that matter, and will execute the same
changes to Article XXIII should the Commission approve and direct the same.
Capacity Size Threshold
15. The Seller warrants that the Facility is a PURPA Qualifying Facility and has
provided documentation that the project nameplate capacity is 9,960 kW, which matches
the nameplate in the current 1986 Agreement.
16. As defined in paragraphs 1.24 and 4.1.4 of the ESA, the Seller will be
required to provide data on the Facility that Idaho Power will use to confirm that under
normal and/or average conditions, the Facility will not exceed 10 aMW on a monthly basis.
Furthermore, as described in paragraph 7.7 of the ESA, should the Facility exceed 10
aMW on a monthly basis or 2790 kW on an hourly basis, Idaho Power will accept the
energy, defined as Inadvertent Energy, but will not purchase or pay for it.
17. Because the Facility produces less than 10 aMW on a monthly basis under
normal or average conditions, it is eligible for published avoided cost rates.
Seasonal Hydro Status
18. As defined in paragraph 1.40 and 3.4 of the ESA, the Seller has warranted
that the Facility qualifies as a seasonal hydro facility, as described in Order No. 32802,
because it produces at least 55% of its annual generation during the months of June,
APPLICATION - 7
July, and August. The Facility’s ongoing eligibility to be classified as a seasonal hydro
facility will be reviewed pursuant to paragraph 7.8 of the ESA .
19. Because it meets the criteria for a seasonal hydro facility, the ESA is
appropriately based on the avoided cost rates for seasonal hydro resources.
Eligibility for Capacity Payments
20. In Case No. GNR-E-11-03, the Commission held if a QF project is being
paid for capacity at the end of a contract term and enters into a replacement contract, it
will be entitled to immediate payment of capacity. See Order No. 32697 at 21-22; Order
No. 32737 at 5; and Order No. 32871. Subsequently, the Commission recognized that
there may be circumstances under which a QF should still qualify for immediate capacity
payments with a replacement ESA despite not receiving a separate capacity payment
under the existing/expiring contract. Under broad PUPRA and Commission guidelines,
the primary question for determining capacity payment eligibility is whether or not the
operation of the QF permits the Company to avoid or deter adding future additional
capacity. See, e.g., Order No. 34200 at 4-5 and Order No. 34295 at 4-5.
21. The 1986 Agreement does not separate energy and capacity components
but, considering that Idaho Power has included the QF’s production in its IRP load and
resource balance in the same manner as other QFs, it is Idaho Power’s understanding
that a consistent application of the rationale in Order Nos. 32697, 34200, and 34295 calls
for including capacity payments for the entire term of the replacement contract. More
specifically, because the utility has been relying on the QFs power production for IRP
planning purposes and no significant changes are contemplated in the replacement
contract, the replacement ESA contains payment for capacity for the entire term of the
replacement contract in line with prior Commission orders.
APPLICATION - 8
90/110 Rule and 5-Day Ahead Provision
22. In Idaho, the Commission has determined that the contractual obligation of
a QF under PURPA translates into a commitment to deliver its monthly estimated
production. Order 29632 at 20. To maintain eligibility for the firm avoided cost rates, as
opposed to Schedule 86 non-firm avoided cost rates, Qualifying Facilities are to provide
a monthly estimate of the amount of energy they expect to produce, and the delivery of
committed energy must fall within a 90/110 band for the QF to be entitled to the firm
published avoided cost rate.
23. Consistent with these provisions, the proposed ESA requires that the Seller
provide estimates of net energy and adopted a five-day advanced notice for adjusting
Estimated Net Energy Amounts for purposes of complying with 90/110 firmness
requirements as set forth in paragraphs 6.2 and 7.1. The notification of Net Energy
Amount monthly adjustments described in paragraph 6.2.3 must be provided no later than
5 p.m. Mountain Standard Time on the 25th day of the month that is prior to the month to
be revised. If the 25th day of the month falls on a weekend or holiday, then written notice
must be received on the last business day prior to the 25th.
24. The Commission has previously approved the same five-day advanced
notice revisions to monthly generation estimates in numerous instances, recognizing that
Estimated Net Energy Amounts that are closer to the time of delivery can improve the
accuracy of input used by the Company for short-term operational planning. See, e.g.,
Case Nos. IPC-E-19-01, lPC-E-19-03, IPC-E-19-04, IPC-E-19-07, IPC-E-19-12, lPC-E-
21-05, IPC-E-21-23, IPC-E-21-27, IPC-E-21-28, IPC-E-21-29, IPC-E-21-31, IPC-E-22-
03, and IPC-E-22-04. Moreover, the Facility has a long generation history under the 1986
APPLICATION - 9
Agreement, which further reduces the need for a revision to delivery estimates beyond a
five-day advanced notice.
Other Pertinent Provisions
25. The Facility is already interconnected and selling energy to Idaho Power
and the ESA specifies a Scheduled First Energy Date and Scheduled Operation Date for
this Facility of June 1, 2023. See Appendix B. Articles IV and V of this ESA recognize
that information provided under the previous agreement may still be applicable to this
replacement ESA. As specified in the ESA, Idaho Power shall review the previously
provided information and will accept the information as previously submitted, request
updates to that information, and/or require new information to satisfy compliance with the
various requirements for the Seller to be granted a First Energy Date and Operation Date
for this replacement ESA. In addition, Idaho Power will monitor the ongoing requirements
through the full term of this ESA.
26. The ESA provides that all applicable interconnection charges and monthly
operational or maintenance charges under Schedule 72 will be assessed to Seller. Idaho
Power and Seller entered into a Schedule 72 Generator Interconnection Agreement, or
“GIA,” on or about December 23, 2022. PURPA QF generation must be designated as a
network resource (“DNR”) to serve Idaho Power’s retail load on its system. In order for
the Facility to maintain its DNR status, there must be a power purchase agreement
associated with its transmission service request in order to maintain compliance with
Idaho Power’s non-discriminatory administration of its Open Access Transmission Tariff
(“OATT”) and maintain compliance with FERC requirements.
27. Article XXI of the ESA provides that it will only become finally effective upon
the Commission’s approval of all of the ESA’s terms and conditions and declaration that
APPLICATION - 10
all payments Idaho Power makes to the Seller for purchases of energy will be allowed as
prudently incurred expenses for ratemaking purposes.
IV. MODIFIED PROCEDURE
28. Idaho Power believes that a technical hearing is not necessary to consider
the issues presented herein and respectfully requests that this Application be processed
under Modified Procedure, i.e., by written submissions rather than by hearing. RP 201,
et seq. If, however, the Commission determines that a technical hearing is required, the
Company stands ready to prepare and present its testimony in such hearing.
29. Because the existing contract will run its full term and expire on May 31,
2023, the Parties request that the Commission set a procedural schedule that would result
in a final Commission determination prior to the expiration of the existing contract.
V. COMMUNICATIONS AND SERVICE OF PLEADINGS
30. Communications and service of pleadings, exhibits, orders, and other
documents relating to this proceeding should be sent to the following:
Donovan E. Walker Energy Contracts
Megan Goicoechea Allen Idaho Power Company
IPC Dockets 1221 West Idaho Street (83702)
1221 West Idaho Street (83702) P.O. Box 70
P.O. Box 70 Boise, Idaho 83707
Boise, Idaho 83707 [e-mail]
[e-mail]
[e-mail]
[e-mail]

VI. REQUEST FOR RELIEF
31. Idaho Power respectfully requests that the Commission issue an order: (1)
authorizing that this matter may be processed by Modified Procedure; (2) accepting or
rejecting the ESA between Idaho Power and the Seller; and, if accepted, (3) declaring
APPLICATION - 11
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.
Subject to the Commission’s decision in Case No. IPC-E-22-28 on the issue of the
potential revision of Article XXIII “Modifications”, Idaho Power will incorporate those
changes here if so directed and agreed to by Seller.
Respectfully submitted this 18th day of January 2023.

MEGAN GOICOECHEA ALLEN
Attorney for Idaho Power Company
APPLICATION - 12

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 18th day of January 2023, I served a true and
correct copy of the within and foregoing APPLICATION upon the following named parties
by the method indicated below, and addressed to the following:

Alan W. Hansten, General Manager
North Side Energy Company
921 N. Lincoln Ave.
Jerome, ID 83338

Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email – [e-mail]

________________________________
Christy Davenport, Legal Assistant

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-23-02

IDAHO POWER COMPANY

ATTACHMENT 1