20230815Supplemental Comments of the Commission Staff.pdf

MICHAEL DUVAL ~'
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION "''
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.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-23-19APPROVALORREJECTIONOFAN)ENERGY SALES AGREEMENT WITH )AMERICAN FALLS RESERVOIR DISTRICT )SUPPLEMENTAL COMMENTSNO.2 )OF THE COMMISSION STAFF
COMMISSION STAFF ("STAFF")OF the Idaho Public Utilities Commission
("Commission"),by and through its Attorneyof record,Michael Duval,Deputy Attorney
General,submits the followingcomments.
BACKGROUND
On May 11,2023,Idaho Power Company ("Company")applied to the Idaho Public
Utilities Commission ("Commission")for approval or rejection of an energy sales agreement
("ESA")with American Falls Reservoir District No.2.("Seller")(collectivelythe "Parties")for
the energy generated by the Dietrich Drop Hydro Project ("Facility").The Facility is a
qualifying facility under the Public Utility Regulatory Policies Act of 1978.
The Company represented that the Facility is located in Lincoln County of Idaho and has
a 4,770 kilowatt ("kW")Nameplate Capacity.Application at 2.The Facility has been delivering
energy to the Company under a firm energy sales agreement entered into on July 13,1987
SUPPLEMENTAL STAFF COMMENTS 1 AUGUST 15,2023
("1987 Agreement").Id.The Nameplate Capacity listed in the 1987 Agreement was 4,500 kW.
1987 Agreement at 39.The First Amendment to the 1987 Agreement,'executed on August 5,
1988,listed the Nameplate Capacity as 4,770 kW.Response to Staff Production Request No.1.
The 4,770 kW Nameplate Capacity represents the actual Nameplate Capacity installed.(See
photo of manufacturer's nameplate from the generation unit included in the Second Amendment
to the ESA filed on July 28,2023.)Neither the 1987 Agreement nor the First Amendment to the
1987 Agreement contained information of Maximum Capacity Amount.
On July 12,2023,Staff filed Comments,recommending approval of the ESA conditioned
on including a provision addressing potential modifications to the ESA.In addition,Staff does
not oppose the Parties amending the ESA to reflect a new timeframe associated with the 55%
requirement for seasonal hydro avoided cost rates.
On July 19,2023,the Company filed Reply Comments,which contained the First
Amendment to the ESA.This amendment,based on Staff's recommendations,included a
provision to address potential modifications to the ESA and modified provisions to reflect the
new timeframe associated with the 55%requirement for seasonal hydro avoided cost rates.
On July28,2023,the Company filed a Motion and SupplementalComments,which
contained the Second Amendment to the ESA.This amendment clarified that the Facility is
capable of generating up to 5,050 kW,and therefore the Maximum Capacity Amount is proposed
to be 5,050 kW.
STAFF REVIEW
Staff has reviewed the ESA,the First Amendment to the ESA,and the Second
Amendment to the ESA.Due to the issue of the Maximum Capacity Amount,Staff recommends
the Parties further modify the contract according to the options below:
Option 1:Set the Maximum Capacity Amount at 5,050 kW.If this option is chosen,
Staff recommends that the description of the Maximum Capacity Amount of 4,770 kW
contained in Appendices E and F of the ESA be updated to 5,050 kW.
Option 2:Set the Maximum Capacity Amount at 4,770 kW.If this option is chosen,
Staff recommends that the Parties update the Second Amendment to the ESA to reflect
the Maximum Capacity Amount of 4,770 kW.
I Note that the First Amendment to the 1987 Agreement is different than the First Amendment to the ESA.
SUPPLEMENTAL STAFF COMMENTS 2 AUGUST 15,2023
First Amendment to the ESA
The First Amendment to the ESA included a provision to address potential modifications
to the ESA and modified provisions to reflect the new timeframe associated with the 55%
requirement seasonal hydro avoided cost rates.Staff believes these modifications are consistent
with Staff's recommendations stated in its Comments filed on July 12,2023.
Second Amendment to the ESA
Due to the issue of Maximum Capacity Amount in the Second Amendment to the ESA,
Staff recommends the Parties modify the contract to address the issue.
The Second Amendment clarified that although the Nameplate Capacity described by the
manufacturer and the First Amendment to the 1987 Agreement was 4,770 kW,the Facility is
capable of generatingup to 5,050 kW.Motion and SupplementalComments at 3.Therefore,the
Second Amendment modified the Maximum Capacity Amount from 4,770 kW to 5,050 kW.
Second Amendment to the ESA at 2.
A facility's Nameplate Capacity indicates the maximum output a generator can produce,
which usuallymatches the facility's Maximum Capacity Amount.However,in this case,the
Facility's Nameplate Capacity does not reflect the actual Maximum Capacity Amount.Because
the Commission has never approved a generation amount greater than 4,770 kW,Staff believes
setting the Maximum Capacity Amount at 5,050 kW requires additional modifications of
relevant provisions.
Staff believes there are two options to address the issue.The first option is based on the
change in the Maximum Capacity Amount proposed in the Second Amendment to the ESA.
When this has occurred with other projects under similar circumstances,the Commission
required a bifurcated rate with a rate that included both avoided cost of energy and capacity for
all generation up to the facility's Nameplate Capacity and a second rate that only included the
avoided cost of energy until the authorized First Capacity Deficit Year.See Order Nos.34956,
35262,and 35223.After that date,the facility would begin receiving a rate that included both
avoided cost of energy and capacity.
However,with the current authorized First Deficit Year being 2023,the Facility is
avoiding capacity cost for hourly generation above 4,770 kWh beginning immediately;therefore,
the rates contained in Appendices E and F of the ESA,which includes both avoided cost of
SUPPLEMENTAL STAFF COMMENTS 3 AUGUST 15,2023
energy and capacity,can be used to fairly compensate the Seller.If this option is chosen,Staff
recommends that the description of the Maximum Capacity Amount of 4,770 kW contained in
Appendices E and F of the ESA be updated to 5,050 kW.
The second option is to set the Maximum Capacity Amount at 4,770 kW,which matches
the Nameplate Capacity approvedby the Commission.However,by choosing this option,there
are still provisions within the contract that would not allow the facility to generate over the
Maximum Capacity Amount,despite the capability of exceeding the maximum amount.
Commission Order No.35296 states that limitingthe instantaneous generation to Maximum
Capacity Amount would be a reasonable alternative to implementing a bifurcated rate schedule.
If the Parties choose this option,Staff recommends that the Parties update the Second
Amendment to the ESA to reflect the Maximum Capacity Amount of 4,770 kW.
STAFF RECOMMENDATIONS
Due to the issue of Maximum Capacity Amount,Staff recommends the Parties further
modify the contract according to one of the options below:
Option 1:Set the Maximum Capacity Amount at 5,050 kW.If this option is chosen,
Staff recommends that the description of the Maximum Capacity Amount of 4,770 kW
contained in Appendices E and F of the ESA be updated to 5,050 kW.
Option 2:Set the Maximum Capacity Amount at 4,770 kW.If this option is chosen,
Staff recommends that the Parties update the Second Amendment to the ESA to reflect
the Maximum Capacity Amount of 4,770 kW.
Respectfully submitted this 15"'day of August 2023.
Michael Duval
Deputy AttorneyGeneral
Technical Staff:Yao Yin
Shubrah Paul
i:umisc/comments/ipce23.19mdyyspsupplementalcomments
SUPPLEMENTAL STAFF COMMENTS 4 AUGUST 15,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15TH DAY OF AUGUST 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TO
IDAHO POWER COMPANY,IN CASE NO.IPC-E-23-19,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:[e-mail]
E-MAIL:[e-mail]
[e-mail]
[e-mail]
MIRIAH R ELLIOTT IDAHYDRO
DIETRICH DROP HYDRO PROJECT C TOM ARKOOSH
711 E TURTLE POINT DR ARKOOSH LAW OFFICES
IVINS UT 84738 PO BOX 2900
E-MAIL:miriah tsorenson.net BOISE ID 83701
E-MAIL:[e-mail]
erin.cecil arkoosh.com
SECRETARY
CERTIFICATE OF SERVICE