20240304Final_Order_No_36103.pdf

ORDER NO. 36103 1
Office of the Secretary
Service Date
March 4, 2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF IDAHO POWER
COMPANY’S APPLICATION FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH BIG
WOOD CANAL COMPANY FOR THE
SALE AND PURCHASE OF ELECTRIC
ENERGY FROM THE MAGIC
RESERVOIR HYDRO PROJECT
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CASE NO. IPC-E-23-34

ORDER NO. 36103

On December 5, 2023, Idaho Power Company (“Company”) applied to the Idaho Public
Utilities Commission (“Commission”) for approval or rejection of an energy sales agreement
(“ESA”) with Big Wood Canal Company (“Seller”) (Company and Seller referred to collectively
as the “Parties”) for the energy generated by the Magic Reservoir Hydro Project (“Facility”). The
Facility has a 9.0-megawatt (“MW”) nameplate capacity and is a qualifying facility (“QF”) under
the Public Utility Regulatory Policies Act of 1978 (“PURPA”). The Company requested that this
matter be processed by Modified Procedure with a final order being published before the expiration
of the current contract on June 1, 2024.
On January 3, 2023, the Commission issued a Notice of Application and established public
comment and party reply deadlines. Order No. 36052. Commission Staff (“Staff”) filed the only
comments in this case.
With this Order, we approve the proposed ESA, as filed.
THE APPLICATION
The Seller has been delivering energy from the Facility to the Company under a firm ESA
entered into on July 10, 1987 (“1987 ESA”). The nameplate capacity remains unchanged since the
Second Amendment to the 1987 ESA.1 Under the proposed ESA, the Seller would receive capacity
payments for the entire 20-year term.
The proposed ESA can be found in Attachment 1 to the Application. The Company stated
that the proposed ESA adopts “a five-day advanced notice for adjusting Estimated Net Energy
Amounts for purposes of complying with 90/110 firmness requirements.” Application at 7.

1 The 1987 ESA originally had a listed a nameplate capacity of 9.9 MW and was updated by the Second Amendment
to reflect the current nameplate capacity of 9.0 MW.
ORDER NO. 36103 2
The Company further stated that, in compliance with Order Nos. 35705 and 35767, the
proposed ESA has updated language under Article XXIII relating to modifications of the ESA or
the Facility.
The Company requested the Commission approve the ESA and declare all payments for
the purchase of energy under the ESA be allowed as prudently incurred expenses for ratemaking
purposes.
STAFF COMMENTS
Staff reviewed the Company’s Application and focused on eligibility for capacity
payments, the proposed avoided cost rates, and language regarding Article XXIII. Staff
recommended that the Commission approve the proposed ESA and declare all payments as
prudently incurred for ratemaking purposes.
Staff noted that the Company has added significant capacity since 2000. Relatedly, Staff
stated that the Facility has been operating since the mid-1980s and contributed to the Company’s
ability to meet its capacity needs since then. Staff noted that the Facility’s nameplate capacity of
9.0 megawatts has remained unchanged since the Second Amendment of the 1987 ESA and Staff
believed the Facility should be eligible for capacity payments over the full term of the ESA.
Staff also reviewed the ESA’s language in Article XXIII regarding modification and
recommended that if the Facility is modified, “that only the net power supply expense that reflects
the proper authorized rate for all energy delivered as of the first operation date of the modified
Facility be included in the Company’s Power Cost Adjustment, regardless of the compensation
paid to the modified Facility.” Staff Comments at 2. See Order 35705.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-502 and 61-
503. The Commission is empowered to investigate rates, charges, rules, regulations, practices, and
contracts of public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provision of law, and to fix the same by order. Idaho Code
§§ 61-502 and 61-503. The Commission also has authority under PURPA and Federal Energy
Regulatory Commission (“FERC”) regulations to set avoided cost rates, to order electric utilities
to enter fixed-term obligations for the purchase of energy from QFs, and to implement FERC rules.
The Commission may enter any final order consistent with its authority under Title 61 and PURPA.
ORDER NO. 36103 3
Having reviewed the record, including the Company’s Application, the ESA, and Staff’s
comments, the Commission finds it reasonable to approve the ESA. The ESA contains
Commission-approved terms for which the Facility is eligible based on characteristics like fuel
source, project size, generation output profile, and renewal contract status. Additionally, the
Facility has helped offset the Company’s need for additional capacity investments. The
Commission thus finds it just and reasonable to include capacity payments for the nameplate
capacity listed in the ESA for the duration of the agreement. The Commission also finds that the
Company’s payments for purchases of energy and capacity under the ESA are prudently incurred
expenses for ratemaking purposes. Finally, we support the modifications to Article XXIII which
follow past Commission orders and direct that if the Facility is modified, the Power Cost
Adjustment should reflect only the net power expense as authorized starting with the modified
Facility’s first operation date.
ORDER
IT IS HEREBY ORDERED that the Company’s proposed ESA is approved and all
payments for energy and capacity under the proposed ESA shall be prudent for ratemaking
purposes.
IT IS FURTHER ORDERED that, if the Facility is modified, only the net power supply
expense that reflects the proper authorized rate for all energy delivered as of the first operation
date of the modified Facility shall be included in the Company’s Power Cost Adjustment.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order about any matter
decided in this Order. Within seven (7) days after any person has petitioned for reconsideration,
any other person may cross-petition for reconsideration. Idaho Code § 61-626.
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ORDER NO. 36103 4
DONE by order of the Idaho Public Utilities Commission at Boise, Idaho this 4th day of
March 2024.

__________________________________________
ERIC ANDERSON, PRESIDENT

__________________________________________
JOHN R. HAMMOND JR., COMMISSIONER

__________________________________________
EDWARD LODGE, COMMISSIONER
ATTEST:

__________________________________
Monica Barrios-Sanchez
Commission Secretary

I:\Legal\ELECTRIC\IPC-E-23-34_ESA Big Wood\orders\IPCE2334_Final_md.docx