20150313Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER RAPER
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DAPHNE HUANG
DEPUTY ATTORNEY GENERAL

DATE: MARCH 13, 2015

SUBJECT: AGREED HEARING SCHEDULE FROM PREHEARING CONFERENCE
FOR CONSOLIDATED PURPA CASES; PETITION AND CROSS-
PETITIONS TO CLARIFY ORDER NO. 33222 BY INTERMOUNTAIN
ENERGY PARTNERS, RENEWABLE ENERGY COALITION, AND
CLEARWATER PAPER AND SIMPLOT; CASE NOS. IPC-E-15-01, AVU-
E-15-01, PAC-E-15-03

On January 30, 2015, Idaho Power filed a Petition to reduce the length of the
contracts under which electric utilities must purchase energy generated by qualifying facilities
(QFs) pursuant to the Public Utility Regulatory Policies Act (PURPA). The Commission issued
a Notice of Petition setting a February 20, 2015 deadline for petitions to intervene. Order No.
33222. The Commission also granted interim relief, temporarily reducing Idaho Power’s
PURPA contract lengths from 20 years to five years pending further order. Id. at 6.
On February 27, 2015, Avista Corporation petitioned for the same temporary and
permanent relief already and to-be granted Idaho Power. Rocky Mountain Power Company filed
a petition seeking similar relief on March 2, 2015. See Order No. 33250 (Consolidation Order).
The Commission issued a Notice of Petitions and Order consolidating the Avista and Rocky
Mountain Petitions with Idaho Power’s case. Id. In that Order, the Commission set a new
deadline of March 27, 2015 for petitions to intervene in the consolidated matters. Id.
BACKGROUND
The Utilities in these consolidated cases seek to modify the length of their contracts
entered under PURPA. That Act requires electric utilities to purchase electric energy from QFs
at rates approved by the applicable state regulatory agency – in Idaho, this Commission. 16
U.S.C. § 824a-3; Idaho Power Company v. Idaho PUC, 155 Idaho 780, 789, 316 P.3d 1278,
1287 (2013). The purchase or “avoided cost” rate shall not exceed the “incremental cost” to the
DECISION MEMORANDUM 2
utility, defined as the cost of energy which, “but for the purchase from [the QF], such utility
would generate or purchase from another source.” 16 U.S.C. § 824a-3(d); 18 C.F.R. §
292.101(6) (defining “avoided cost”).
There are two methods of calculating avoided cost, depending on the size of the QF
project: (1) the surrogate avoided resource (SAR) methodology, and (2) the Integrated Resource
Plan (IRP) methodology. See Order No. 32697 at 7-8. The SAR methodology applies to wind
and solar QFs with a design capacity of up to 100 kilowatts (kW), and up to 10 megawatts (MW)
for QFs of all other resource types. Id. In other words, the “eligibility cap” for published rates
for wind and solar QFs is set at 100 kW and the cap for all other QF projects is set at 10 MW.
The Commission uses the SAR methodology to establish what is commonly referred to as
published rates. Id. The IRP methodology applies to QFs with design capacity above the
eligibility cap for published rates. Id. When a QF project is larger than the eligibility cap, the
avoided cost rates for the project must be individually negotiated by the QF and the utility using
the IRP methodology. Order Nos. 32697 at 2; 32176.
PURPA, and regulations implementing the Act, are silent as to contract length;
consequently, the issue is in the Commission’s discretion. See Afton Energy, Inc. v. Idaho
Power, 107 Idaho 781, 785-86, 693 P.2d 427, 431-32 (1984); Idaho Power, 155 Idaho at 782,
316 P.3d at 1280. On February 5, 2015, the Commission granted Idaho Power interim and
temporary relief by reducing the length for PURPA contracts from 20 years to five years,
pending further order. Order No. 33222 at 4, 6.
THE PREHEARING CONFERENCE
Consistent with Order No. 33222, Staff Counsel convened an informal prehearing
conference on March 10, 2015. The prehearing conference was attended by all the parties
granted intervention to date except for Amalgamated Sugar. At the prehearing conference, the
parties discussed the pending Petition and Cross-Petitions to Clarify Order No. 33222, and
developed a schedule for processing this consolidated proceeding.
A. The Petitions to Clarify
Various parties in the Idaho Power case filed a total of four Petitions or Cross-
Petitions to Clarify Commission Order No. 33222. These Petitions can be divided into two sets.
Each set is discussed in greater detail below.

DECISION MEMORANDUM 3
1. Petition and Cross-Petition to Clarify by Intermountain Energy Partners
and Renewable Energy Coalition
Idaho Power stated on pages 1-2 of its Petition that its request to reduce PURPA
contract length is “limited to transactions with proposed QF projects that exceed the published
rate eligibility cap.” However, in its “Prayer for Relief” on page 36, the Company characterized
its requested relief as an Order “directing that the maximum required term for any Idaho Power
PURPA [contract] be reduced from 20 years to two years.” (Emphasis added.) Order No. 33222
granting interim relief did not specify the explicit type of PURPA contracts to which the five-
year interim relief applied.
On February 18, 2015, intervenor Intermountain Energy Partners (IEP) petitioned for
clarification under Rule 325. That rule allows any person to file a petition “to clarify any order,
whether interlocutory or final.” IDAPA 31.01.01.325. In its Petition, IEP addresses the
ambiguity of granting interim relief to only IRP-based projects, or any Idaho Power PURPA
contract. IEP suggested that the Commission clarify its Order by adding the following
language::
IT IS HEREBY ORDERED that . . . the maximum contractual term for Idaho
Power’s new PURPA contracts shall be five years, provided however this
Order shall not apply to proposed QF projects that do not exceed the
published rate eligibility cap.
IEP Petition at 1.
The Cross-Petition for Clarification by Renewable Energy Coalition (REC) concurs
with the clarifying language proposed in IEP’s Petition.1 REC’s Cross-Petition also observed
that in a discovery response dated February 24, 2015, Idaho Power conceded that its requested
interim relief “is limited to transactions with proposed QF projects that exceed the published rate
eligibility cap.” Resp. No. 1 to Simplot, citing Idaho Power Petition at 1-2 (attached). At the
prehearing conference, all parties agreed that the Commission should clarify its Order to clarify
that the five-year interim relief should not apply to QF contracts that are eligible for published
avoided cost rates.
1 The Commission has also received a Petition to Intervene and Joinder in Petitions to Clarify by AGPower DCD,
LLC and AGPower Jerome, LLC, which agrees with IEP’s and REC’s Petitions.
DECISION MEMORANDUM 4
2. Cross-Petition for Clarification by Clearwater Paper and Simplot
Clearwater Paper and Simplot also filed a Cross-Petition for Clarification on February
25, 2015, proposing that the five-year term for interim relief granted in Order No. 33222 should
apply to only “new intermittent solar and wind projects.” Clearwater Cross-Petition at 3-4. In
their Cross-Petition, Clearwater and Simplot argue that this limitation should apply because
Idaho Power’s initial Petition highlights the dramatic increase in “predominantly wind, and now,
solar, QF projects coming on-line and under contract.” Id. at 2-3. They maintain that “there is
no record suggesting a need to reduce the maximum contract length for any type of resource
other than wind and solar.” Id. at 5.
Their Cross-Petition and proposed language were discussed at the March 10
prehearing conference. The parties were unable to reach consensus. However, the parties agreed
upon a schedule to address this second Petition. Parties interested in responding to the Cross-
Petition should do so by March 19, 2015, and Clearwater and Simplot may reply by March 26,
2015.
PROPOSED SCHEDULING AND TECHNICAL HEARING
At the prehearing conference, the parties also agreed to the following schedule for
case management and a technical hearing:
April 23, 2015 Staff / Intervenors file direct testimony
May 14, 2015 Staff / Intervenors file rebuttal testimony
June 11, 2015 Petitioners file rebuttal testimony
June 29, 30, July 1, 2015 Technical hearing
*June 2015 Public hearings
COMMISSION DECISION
1. Does the Commission wish to grant Intermountain Energy Partners’ Petition and
Renewable Energy Coalition’s Cross-Petition for Clarification of Order No. 33222, by limiting
the five-year interim relief to IRP-based contracts, as agreed by all parties at the prehearing
conference?
2. Does the Commission wish to adopt the response and reply schedule agreed to by
the parties regarding Clearwater and Simplot’s Cross-Petition for Clarification, or take other
action?
DECISION MEMORANDUM 5
3. Does the Commission adopt the proposed schedule and dates for the technical
hearing agreed to by the parties?
4. What does the Commission want to do about public hearings?
5. Anything else?
Daphne Huang
Deputy Attorney General
M:IPC-E-15-01_AVU-E-15-01_PAC-E-15-03_djh
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for ldaho Power Company
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO MODIFY
TERMS AND CONDITIONS OF
PROSPECTIVE PURPA ENERGY SALES
AGREEMENTS
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-15-01
IDAHO POWER COMPANY'S
RESPONSES TO THE FIRST
PRODUCTION REQUESTS OF THE
J. R. SIMPLOT COMPANY
COMES NOW, ldaho Power Company ("ldaho Powe/' or "Company'), and in
response to the Firct Production Requests of the J. R. Simplot Company dated
February 3,2015, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSES TO THE FIRST
PRODUCTION REQUESTS OF THE J.R. SIMPLOT COMPANY - 1
REQUEST FOR PRODUCTION NO. 1: Reference the direct testimony of Lisa
Grow at page 15:23 to 16:3. ls ldaho Powe/s proposal to Iimit contract terms to two
years limited to QFs ineligible for standard avoided cost rates or to limit the term for all
QFs as Ms. Grow suggests?
RESPONSE TO REQUEST FOR PRODUCTION NO. 1: ldaho Powe/s Petition
states that the Company's request "is limited to transactions with proposed QF projects
that exceed the published rate eligibility cap." Petition, pp. 1-2. The statements in Ms.
Grow's testimony were not meant to differ from this limitation.
The response to this Request is sponsored by Lisa Grow, Senior Vice President
of Power Supply, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSES TO THE FIRST
PRODUCTION REQUESTS OF THE J.R. SIMPLOT COMPANY - 2