20230331IPC Reply Comments.pdf

MEGAN GOICOECHEA ALLEN
Corporate Counsel
[e-mail]

March 31, 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 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
Friday, March 31, 2023 2:45:35 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
NORTH SIDE ENERGY COMPANY, INC.
FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY FROM THE BYPASS
HYDRO PROJECT.

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CASE NO. IPC-E-23-02

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, the Notice of Modified Procedure, Order No. 35676, and Order No. 35720, 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
1. Idaho Power appreciates Staff’s thorough review and assessment of the
Company’s proposed replacement Energy Sales Agreement (“ESA” or “Agreement”)
between Idaho Power and North Side Energy Company, Inc. (“North Side” or “Seller”),
for energy generated by the Bypass Hydro Project, which is a qualifying facility (“QF” or
“Facility”) under the Public Utility Regulatory Policies Act of 1978 (“PURPA”).
2. In reviewing the Agreement, Staff focused on the following: Section B-7
Designated Network Resource (“DNR”), Facility nameplate capacity, capacity payments,
avoided cost rates, and Article XXIII Modification. Staff did not identify any issues related
to capacity payments or avoided cost rates. As to the other matters, Staff recommended
the parties update the Agreement as follows:
(1) Updating the incomplete statement contained in Section B-7;

(2) Correcting the Facility nameplate capacity and explaining the difference
between the Facility nameplate capacity (9999 kW) and the net nameplate
capacity (9960 kW) in Appendix B;

(3) Updating Article XXIII Modification to achieve two objectives: (1) the
modified Facility operates under a correct and accurate contract that
describes the characteristics and parameters of the modified Facility; and
(2) the rates paid to the QF and recovered from ratepayers, starting from
the first operation date after the Facility is modified, reflect the proper and
authorized rate of the modified Facility; and

(4) Including recovery of Net Power Supply Expenses ("NPSE") in the Power
Cost Adjustment ("PCA") based on proper and authorized rates starting
from the first operation date of any facility after it has been modified.

3. Idaho Power requested and was granted an extension of time to March 31,
2023, to file these Reply Comments to allow the Company additional time to work with
the QF parties and Staff to reach consensus upon acceptable contract language that
meets Staff recommendations in this case as well as the Commission’s direction on these
IDAHO POWER COMPANY’S REPLY COMMENTS - 3
same issues set forth in Order No. 35705, also issued on March 13, 2023, in the case
pertaining to the Lowline #2 Hydro Project (Case No. IPC-E-22-28).2
II. REPLY COMMENTS
4. Both Staff’s recommendations in the instant case and the Commission’s
Order in Case No. IPC-E-22-28, raised concerns that the existing provision in the
Company’s standard PURPA Agreement related to possible QF modifications may not
adequately cover the range of possible scenarios involving Facility modifications.
Likewise, Staff’s recommendations and the Commission’s directive in Order No. 30575
identified shortcomings with the Company’s proposed revisions to the contract language,
which sought to more clearly incorporate the Commission’s orders regarding the different
types of facility modifications but which the Commission determined did not fully address
its concerns.
5. More specifically, the Commission determined that additional language
needed to be added to the Agreement to ensure that the QF is paid the proper and
authorized rate as of the first operation date after Facility modification and that the
description of the Facility reflected in the final amendment describe the Facility as actually
modified.
6. In an effort to reach alignment on the contract language and amendments
pertaining to Facility modifications and related issues, the Company met with Staff, QF
Seller representatives from Lowline and Bypass Hydro, and counsel for IdaHydro on
March 23, 2023 with subsequent follow-up to discuss the issues and to exchange

2 In the Matter of Idaho Power Company’s Application for Approval or Rejection of an Energy Sales
Agreement with Lower Lowling, LLC for the Sale and Purchase of Electric Energy from the Lowline #2
Hydro Project, Case No. IPC-E-22-28, Order No. 35705 (Mar. 13, 2022).
IDAHO POWER COMPANY’S REPLY COMMENTS - 4
information and ideas with a goal of implementing the Commission’s intent in both cases
and in ESAs moving forward. As a result of these efforts, Staff and the Company, as well
as the Seller, have agreed on modifications to Article XXIII of the ESA. Additionally, Idaho
Power and the Seller have amended additional provisions as recommended by Staff’s
comments.
7. Filed herewith and included herein as Attachment 1 is the fully executed
First Amendment to the Agreement Between Northside Energy Company, Inc. and Idaho
Power Company (“First Amendment”), for the Bypass facility, which was entered into by
the parties to incorporate the recommendations from Staff’s March 13, 2023 Comments.
More specifically, to address the issues identified by Staff and the Commission with
regard to Article XXIII Modification, the First Amendment amends the language of Article
XXIII regarding Facility modification to ensure: (1) that the QF is paid the proper and
authorized rate as of the first operation date after Facility modification; and (2) that the
description of the Facility reflected in the final amendment describes the Facility as
actually modified to include provisions that address: (i) Language that restricts the Seller
from modifying the Facility from the as-built description of the Facility included in Exhibit
B, without promptly notifying the Company of that intent; and (ii) Language that requires
the Seller to provide notification of planned modifications (such as fuel change or capacity
size change) to the as-built description.
8. Additionally, the First Amendment adds language to ensure that both
Parties agree to: (1) amend the contract reflecting the facility as actually modified, and (2)
adjust payments to the QF such that the final amounts reflect the proper authorized rates
of the facility as actually modified and as of the date when energy is first delivered as a
IDAHO POWER COMPANY’S REPLY COMMENTS - 5
modified facility. In particular, this adjustment provision is meant to address the
Commission’s directive that Idaho Power “only include net power supply expense in the
Company’s Power Cost Adjustment that reflects the proper authorized rate for all energy
delivered as of the first operation date as a modified Facility.”
9. The First Amendment submitted herewith also addresses the other issues
identified by Staff as follows. The Parties agreed to amend Section B-1 of the ESA
correcting the nameplate capacity to 9999 kW, which matches the manufacturer’s
nameplate stamping, while explaining that the Maximum Capacity Amount is a net of 9960
kW because of station use. The First Amendment also addresses the incomplete
statement in Section B-7 regarding the Designated Network Resource requirements
related to an existing project entering into a replacement ESA.
III. CONCLUSION
10. 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. Idaho Power believes the attached and executed First Amendment
makes the necessary changes to the Agreement required to implement Staff’s
recommendations and Idaho Power respectfully requests that the Commission approve
the Agreement between Idaho Power and Northside Energy, the First Amendment
thereto, and declare that all payments for purchases of energy thereunder be allowed as
prudently incurred expenses for ratemaking purposes.
Respectfully submitted this 31st day of March 2023.

MEGAN GOICOECHEA ALLEN
Attorney for Idaho Power Company
IDAHO POWER COMPANY’S REPLY COMMENTS - 6
CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 31st day of March 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:

Commission Staff
Riley Newton
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

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

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

First Amendment to the ESA Page 1 of 6 Between Idaho Power and Northside Energy Company, Inc.
FIRST AMENDMENT TO THE POWER PURCHASE AGREEMENT
BETWEEN
IDAHO POWER COMPANY
AND
NORTHSIDE ENERGY COMPANY, INC.
This First Amendment to the Power Purchase Agreement (“First Amendment”) is effective as of March ___, 2023 (“Effective Date”) and is entered into by and between Idaho Power Company, an Idaho corporation (“Idaho Power”) and Northside Energy Company, Inc. (“Seller”), (individually a “Party” and collectively the “Parties”).
WHEREAS, Idaho Power entered into an Energy Sales Agreement (“ESA”) with the
Seller on January 3, 2023, for the purchase and sale of energy under the Idaho Public Utilities Commission’s (“Commission”) implementation of the Public Utility Regulatory Policies Act of 1978 (“PURPA”). This 2023 ESA is a replacement contract. The parties have an existing PURPA contract that was entered into on November 12, 1986 and runs its full term on May 31, 2023. Idaho
Power filed the 2023 replacement ESA with the Commission for approval or rejection on January
19, 2023. Case No. IPC-E-23-02.
WHEREAS, the Commission Staff filed comments regarding the ESA on March 13, 2023, recommending several updates to the ESA which include the following: (1) update the incomplete statement in Section B-7; (2) correct the facility nameplate capacity and explain the difference
between the facility nameplate and net nameplate in Appendix B; (3) update Article XXIII
Modification to achieve two objectives (a) the modified Facility operates under a correct and accurate contract that describes the characteristics and parameters of the modified Facility; and (b) the rate paid to the QF and recovered from ratepayers, starting form the first operation date after the Facility is modified, reflect the proper and authorized rate of the modified Facility; and (4)
include recovery of Net Power Supply Expenses in the Power cost Adjustment based on proper
and authorized rates starting from the first operation date of any facility after it has been modified.
WHEREAS, the Parties desire to enter into this First Amendment to the PPA to address the updates recommended by Commission Staff and submit the same for the Commission’s approval of the ESA with this First Amendment.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Parties hereto agree as follows:
1. Incorporation of Recitals. The above-stated recitals are incorporated into and made a part of the PPA, as amended, by this reference to the same extent as if these recitals were set forth in full
at this point.

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First Amendment to the ESA Page 2 of 6 Between Idaho Power and Northside Energy Company, Inc.
2. Amendment.
A. Section B-7 - Section B-7 of Appendix B of the ESA is hereby amended to state:
(new language is underlined, and deleted language uses strikethrough).
This Facility is an Idaho Power DNR pursuant to an existing Firm Energy Sales Agreement. If this Agreement is 1) executed and approved by the Commission and 2) a GIA has been executed by both parties and 3) the Seller is in compliance with all requirements of that GIA. Idaho Power cannot accept or pay for generation from
this Facility if the Facility has not achieved the status of being an Idaho Power
DNR. Federal Energy Regulatory Commission (“FERC”) rules require Idaho Power to prepare and submit the application to achieve DNR status for this Facility. Because much of the information Idaho Power needs to prepare the DNR application is specific to the Seller’s Facility, Idaho Power’s ability to file the DNR
application in a timely manner is contingent upon timely receipt of the required
information from the Seller. Prior to Idaho Power beginning the process to enable Idaho Power to submit a request for DNR status for this Facility, the Seller shall have 1) filed a Generation Interconnection application, 2) submitted all information required by Idaho Power to complete the application, and 3) either executed this
Agreement or, at a minimum, provided Idaho Power with confirmation of the
Seller’s intent to complete this Agreement in a timely manner. Seller’s failure to provide complete and accurate information in a timely manner can significantly impact Idaho Power’s ability and cost to attain the DNR designation for the Seller’s Facility and the Seller shall bear the costs of any of these delays that are a result of
any action or inaction by the Seller. This Facility is an Idaho Power DNR pursuant
to an existing Firm Energy Sales Agreement. If this Agreement is 1) executed and approved by the Commission and 2) a GIA has been executed by both parties and 3) the Seller is in compliance with all requirements of that GIA, then the DNR status should continue.
B. Facility Nameplate - Section B-1 of Appendix B of the ESA is hereby amended to
state: (new language is underlined, and deleted language uses strikethrough).
A 35-year Firm Energy Sales Agreement for the Bypass Hydro Facility was executed on November 12, 1986. The Facility started delivering energy to Idaho Power in April of 1988. The 1986 agreement expires on May 31, 2023.
The Facility has 3 generators with nameplate ratings of 3333 kW each at 4160 volts,
three phase, 60 hertz driven by Kaplan S-Type turbines. The Nameplate Capacity is 9999 kW, however tThe net generator nameplate capacity amount that can be delivered to Idaho Power less station service is 3320 kW per generator unit or 9960 kW total for the Facility, which is the Maximum Capacity Amount. See, Section
B-4 below. These 3 generators are the original generators that were installed prior
to April 1988.
Facility Nameplate Capacity: 9960 9999 kW
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First Amendment to the ESA Page 3 of 6 Between Idaho Power and Northside Energy Company, Inc.
Qualifying Facility Category (Small Power Production or Cogeneration): Small Power Production
Primary Energy Source (Hydro, Wind, Solar, Biomass, Waste, Geothermal): Hydro
Fueled or Non-Fueled Rate (Generator primarily fueled with fossil or non-fossil fuel): Non-Fueled.
C. Article XXIII: Facility Modification - Article XXIII of the ESA is hereby deleted in its entirety and replaced with the following provisions:
ARTICLE XXIII: FACILITY MODIFICATION
23.1 No later than the First Energy Date, the Seller will provide Idaho Power with an “as-built” description of the Facility in the form set forth in Appendix B.
23.2 The Seller will not modify the Facility from the description set forth in
Appendix B without prior notification to Idaho Power. A proposed
modification to the Facility that would change the Facility as described in Appendix B is referred to herein as a “Proposed Facility Modification.” Proposed Facility Modification does not include additions or expansions to the Facility that result in an increase to the Maximum Capacity Amount,
which are addressed in section 23.6. The Seller may not begin
construction of any Proposed Facility Modification(s) unless and until the following requirements have been met:
(i) Seller has promptly notified Idaho Power of the Proposed Facility Modification(s) prior to initiating the modification design,
specification, purchasing and construction process;
(ii) Seller has provided Idaho Power with detailed plans regarding the Proposed Facility Modification(s), including proposed revisions to the as-built description of the Facility set forth in Exhibit B; and
(iii) The Proposed Facility Modification has been reviewed by Idaho
Power and a determination made to either pursue amendment as a
Proposed Facility Modification pursuant to sections 23.3 and 23.4 or as an expansion or additional project pursuant to Section 23.6.
23.3 Idaho Power will review any Proposed Facility Modification(s) and “as-built” descriptions to determine whether amendment of the Agreement is
appropriate as set forth in Section 23.4. In reviewing any Proposed Facility
Modification(s) or actual modifications reflected in the as-built description, Idaho Power shall consider the following information: (i) The nature, scope, and extent of the proposed or actual modification(s); (ii) The impact, if any, on the applicable avoided cost rates or other relevant terms and conditions;
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First Amendment to the ESA Page 4 of 6 Between Idaho Power and Northside Energy Company, Inc.
and (iii) Such other information as may reasonably be necessary including the effect on any other provisions hereof which may be impacted by the
proposed or actual modification. Proposed modifications could result in
several possible actions including but not limited to: no change to Appendix B, and thus no further action; an amendment to conform Appendix B to the modified Facility; an amendment to adjust the pricing and other relevant terms and conditions; or a termination and new Agreement.
23.4 Based on its review, Idaho Power, at its sole determination in accord with
the provisions of the Public Utility Regulatory Policies Act of 1978 and any amendments thereto (“PURPA”) and subject to Commission approval, may choose to enter into an amendment of the Agreement to adjust the pricing or other relevant terms and conditions as necessary, including Appendix B;
23.4.1 If Idaho Power determines that it is appropriate to revise the
Agreement, the Parties will enter into a written amendment to the Agreement revising the relevant terms, conditions, description in Appendix B, and, if necessary, pricing, referred to herein as the “Facility Modification Amendment”. The Facility Modification
Amendment will be submitted to the Commission for approval. If
the pricing is adjusted, the Parties will agree on and include in the amendment a pricing true-up mechanism to ensure that the correct rates apply to the modified Facility from the completion date of the modification.
23.4.2 If the Commission determines that the Proposed Facility
Modification would require termination of the Agreement, the Seller may abandon the Proposed Facility Modification or accept the termination. If the Seller accepts the termination, Seller will be responsible for Termination Damages, if any, and the Parties may
negotiate a new agreement based on the Facility as modified.
23.5 In addition to prior notification of any modifications to the Facility from the description set forth in Appendix B, no later than thirty (30) days following the date of substantial completion of such modification, and prior to the first operation date of such modification, Seller must provide Idaho Power with
an “as-built” description of the modified Facility in the form set forth in
Appendix B of this Agreement; provided that the Facility, as reflected in the “as-built” description to be provided under this section, may not deviate from the Facility Modification Amendment, except, in each case, to the extent such further modification(s) are authorized under a subsequent
written amendment to this Agreement that is executed by the Parties and
approved by the Commission. If the “as-built” description deviates from the then-approved Appendix B, Idaho Power will review it and follow the process described in sections 23.3 and 23.4.
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First Amendment to the ESA Page 5 of 6 Between Idaho Power and Northside Energy Company, Inc.
23.6 Idaho Power is not required to purchase any Net Energy above the Maximum Capacity Amount. If Seller builds an expansion or additional
project such that the expansion, or additional project would be deemed a
single QF or the same site under FERC regulations, Seller may not require Idaho Power (and Idaho Power will have no obligation to purchase pursuant to this Agreement) the output of any such expansion, or additional facility under the terms, conditions and prices in this Agreement. Instead, Seller
may exercise any rights to enter into a new agreement for the sale of such
incremental energy from such additional facility that is a QF under then-applicable laws and regulations.
23.7 Idaho Power is not obligated to and shall not make any incremental payment to Seller as a result of any modification, addition, or expansion of the
Facility if such modification was not authorized and approved by the
Commission pursuant to the provisions of this Section 23. Should the Seller modify, construct additions, and/or expand the Facility without notification to Idaho Power nor the authorization and approval of the Commission pursuant to the provisions of this Section 23, any incremental payments to
Seller resulting from and subsequent to the modification, addition, and/or
expansion of the Facility that deviate from the description in Appendix B shall be unauthorized and immediately due and owing back to Idaho Power. Failure to repay, or reasonably offset future payments made to Seller designed to repay and recoup any unauthorized payment amounts will be
deemed a material breach of this Agreement.
3. Commission Approval. The obligations of the Parties under this First Amendment are subject to the Commission’s approval of this First Amendment and such approval being upheld on appeal, if any, by a court of competent jurisdiction.
4. Effect of Amendment. Except as expressly amended by this First Amendment, the terms and
conditions of the PPA remain unchanged.
5. Capitalized Terms. All capitalized terms used in this First Amendment and not defined herein shall have the same meaning as in the PPA.
6. Scope of Amendment. This First Amendment shall be binding upon and inure to the benefit of the Parties hereto, and their respective heirs, executors, administrators, successors, and assigns,
who are obligated to take any action which may be necessary or proper to carry out the purpose
and intent hereof.
7. Authority. Each Party represents and warrants that as of the Effective Date: (i) it is validly existing and in good standing in the state in which it is organized, (ii) it is the proper party to amend the PPA, and (iii) it has the requisite authority to execute this First Amendment.
8. Counterparts. This First Amendment may be executed in any number of counterparts, each
of which shall be deemed an original and all of which taken together shall constitute a single instrument.
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First Amendment to the ESA Page 6 of 6 Between Idaho Power and Northside Energy Company, Inc.
IN WITNESS WHEREOF, the Parties hereto have caused this Second Amendment to be
duly executed as of the date above written.
IDAHO POWER COMPANY

By: _________________________________
Name: _______________________________
Title: ________________________________
NORTHSIDE ENERGY COMPANY, INC.
By: _________________________________
Name: _______________________________
Title: ________________________________

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Alan Hansten
General Manager
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VP, Power Supply
Ryan N. Adelman