20140819Comments.pdf

KRISTINE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
BAR NO. 6618
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorneys for the Commission Staff
IN THE MATTER OF THE APPLICATION
OF PACIFICORP DBA ROCKY MOUNTAIN
POWER F'OR APPROVAL OF A POWER
PURCHASE AGREEMENT WITII LOWER
VALLEY ENERGY,INC.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. PAC.E-14-06
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Kristine A. Sasser, Deputy Attorney General, and submits the following
comments in response to the Notice of Modified Procedure issued on July 30,2014, Order No.
3308s.
BACKGROUND
On July 3,2014, PacifiCorp dba Rocky Mountain Power filed an Application with the
Commission requesting that the Commission approve a Power Purchase Agreement between
Rocky Mountain Power and Lower Valley Energy, Inc., for the sale and purchase of electric
energy produced by the Lower Valley hydroelectric project located in Afton, Wyoming.
Lower Valley owns, operates, and maintains three run of river hydroelectric generating
facilities in Lincoln County, Wyoming - two are located on Swift Creek and one is located on
the culinary water system located in/near the town of Afton. The Swift Creek facilities were
STAFF COMMENTS AUGUST I9,2OI4
completed in2009 and have maximum capacities of 940 kW (the "Upper Facility") and 535 kW
(the "Lower Facility"). The third facility - the "Culinary Facility" - has a nameplate capacity of
225 kW.
On May 22,2009, PacifiCorp and Lower Valley entered into a Power Purchase
Agreement (PPA) regarding the Upper Facility for a three-year term, expiring on May 1,2012.
The Commission approved the PPA in July 2009. Order No. 30864. In February 2010, the
Company and Lower Valley executed a Revised and Restated Power Purchase Agreement to
include generation from the Lower Facility. The Commission approved the revised agreement
on February 25,2010, by Minute Order. In May 2011, PacifiCorp and Lower Valley sought
another revision of the PPA. The parties requested that the Commission add output from the
newly constructed Culinary Facility and extend the term of the entire contract through September
1,2014. The Commission approved the addition of the Culinary Facility and extension of the
contract term on August I 0, 20 1 I . Order No. 323 23 .
PacifiCorp and Lower Valley executed an agreement on June 17,2014, pursuant to the
terms and conditions of the various Commission Orders applicable to this PURPA agreement for
a hydroelectric resource. Under the terms of the PPA, Lower Valley elected to contract with
Rocky Mountain for a two-year term using non-levelized published avoided cost rates
established at the time of the PPA under Order No. 32817 for energy deliveries of less than 10
average megawatts (aMW).
The nameplate rating of the facilities as a whole is l 7 MW. Lower Valley has attested
and documented through its generation profile that its facilities will not exceed 10 aMW on a
monthly basis. Furthermore, this PURPA agreement includes the 90-l l0 performance band as
required by Commission Order No. 29632.
PURPA QF generation must be designated as a network resource on Rocky Mountain's
system, which requires the Company's merchant function to submit a Transmission Service
Request on behalf of the facilities to PacifiCorp transmission. Submission of this request
occurred on May 29,2014. Upon resolution of any and all required upgrades, if necessary, to
acquire network transmission capacity for the facilities' delivery of energy and upon execution
of the PPA, the facilities may then be designated as a network resource.
Lower Valley has also been made aware of and accepted the provisions of the PPA
regarding curtailment or disconnection of its facilities should certain operating conditions
STAFF COMMENTS AUGUST I9,2OI4
develop on the Company's system. Section 6 of the PPA defines the condition for curtailment
and obligations of Lower Valley in the event of curtailment.
By its own terms, the Agreement will not become effective until the Commission has
approved all of the terms and conditions and declares that all payments made by Rocky
Mountain Power to the project for purchases of energy "arejust and reasonable, in the public
interest, and that the costs incurred by [Rocky Mountain Power] for purchases of capacity and
energy from [Lower Valley] are legitimate expenses, all of which the Commission will allow
[Rocky Mountain Power] to recover in rates in Idaho in the event other jurisdictions deny
recovery of their proportionate share of said expenses." Agreement n2.1.
STAFF ANALYSIS
As stated earlier, this Agreement is intended to replace an existing agreement that will
expire on September l, 2014. Nearly all of the terms of the new Agreement are identical to those
in the expiring agreement. One difference between the old and new agreements, however, is that
the rates in the new Agreement have been updated. The Agreement contains the non-levelized
published avoided cost rates in accordance with Commission Order No. 3281 7. Staff believes
the rates for the two-year term are based upon the avoided costs calculated at the time the
agreement was reached by the parties. Staff confirmed that the monthly on-peak/off-peak
multipliers contained in the Agreement are also correct.
The Agreement does not specify ownership affangements for any Renewable Energy
Credits (RECs) associated with the project, but PacifiCorp through email correspondence
confirmed with Staff that the RECs for this project will be owned by the QF. This ownership
arrangement is consistent with recent Commission orders. (See Order Nos. 32697,32802).
STAFF RECOMMENDATION
Staff recommends that the Commission approve all of the Agreement's terms and
conditions and declare that all payments made by PacifiCorp to Lower Valley for purchase of
energy will be allowed as prudently incurred expenses for ratemaking purposes.
STAFF COMMENTS AUGUST I9,2OI4
Respecttully submitted this te day of August 2014.
Technical Staff: Rick Sterling
Yao Yin
i:umisc:comments/pace l4.6krpsyy comments
4STAFF COMMENTS AUGUST I9,2OI4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19th DAY OF AUGUST 2014,
SERVED THE FOREGOING COMMENTS OF THE COMISSION STAFF" IN CASE
NO. PAC-E-14-06, BY E-MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
TED WESTON DANIEL E SOLANDER
ID REGULATORY AFFAIRS MANAGER SENIOR COUNSEL
ROCKY MOUNTAIN POWER
2OI S MAIN ST STE 23OO
SALT LAKE CITY UT 84I 11
E-MAIL: [e-mail]
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datareq uest@pacifi com.com
ROCKY MOUNTAIN POWER
201 S MAIN ST STE 23OO
SALT LAKE CITY UT 84I11
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE