20180221final_order_no_33993.pdf

Office of the Secretary
Service Date
February 21,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.PAC-E-17-14
OF ROCKY MOUNTAIN POWER FOR )APPROVAL OF POWER PURCHASE )AGREEMENT BETWEEN PACIFICORP )ORDER NO.33993
AND THE CITY OF PRESTON,IDAHO )
On December 22,2017,Rocky Mountain Power,a division of PacifiCorp,applied to
the Commission for an order approving or rejecting PacifiCorp's proposed Power Purchase
Agreement (PPA)with the City of Preston,Idaho.Rocky Mountain Power explained the proposed
PPA would replace an agreement with an existing "qualifying facility"(QF)under the Public
Utility Regulatory Policies Act (PURPA).Application at 3.The prior agreement expired on
December 31,2017.Id.at 3-4.Since the prior agreement has expired and the proposed PPA is
not yet effective,the Company also sought permission to continue buying the QF's power under
the prior agreement until the Commission approves or rejects the proposed PPA.The Company
stated it and the QF have agreed that the price the Company pays for power after 2017 will be
trued-up to the price it would have paid if the proposed PPA had been in effect.Id at 4.
The Commission issued a Notice of Application and Notice of Modified Procedure
setting comment and reply deadlines.Order No.33960.The Commission also granted the
Company permission to buy power from the QF under the prior agreement until the proposed PPA
is approved or rejected,with prices paid after 2017 being trued-up to the price that would have
been paid under the proposed PPA.Id at 4.Staff timely filed comments;no other comments were
received.The Commission now issues this Order approving the PPA.
BACKGROUND
PURPA was enacted in 1978 "to lessen the country'sdependence on foreign oil and to
encourage the promotion and development of renewable energy technologies as alternatives to
fossil fuels."Order No.32580 at 3,citing FERC v.Mississippi,456 U.S.742,745-46 (1982).
PURPA and its implementing regulations require electric utilities to purchase the power produced
by QFs.16 U.S.C.§824a-3(b);18 C.F.R.§292.303(a).
The rate that a QF receives for the sale of its power to a utility,called the "avoided
cost"rate,is approvedby the Commission,and represents "the 'incremental cost'to the purchasing
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utility which,but for the purchase of power from the QF,such utility would either generate itself
or purchase from another source."Order No.33419 at 3,citing Rosebud Enterprises n Idaho
PUC,128 Idaho 624,627,917 P.2d 781,784 (1996);18 C.F.R.§292.101(b)(6)(defining "avoided
cost").
For QFs generating less than 10 average megawatts (aMW)of energy,the Commission
calculates and publishes rates with a Surrogate Avoidable Resource methodology,using long-term
natural gas price forecasts.Order No.31092 at 3.These published avoided cost rates are
periodically updated as new natural gas price forecasts are issued.Id at 9.
In calculating avoided costs,the Commission has found it "reasonable,appropriate and
in the public interest to compensate QFs separately based on a calculation of not only the energy
they produce,but the capacity that they can provide to the purchasing utility."Order No.32697
at 16.In calculating capacity,the Commission considers "each utility's capacity deficiency based
on load and resource balances found in each utility's [Integrated Resource Plan]IRP,"as well as
"a QF's ability to contribute to a utility's need for capacity."Id at 16,21.
THE APPLICATION
Rocky Mountain Power explained the proposed PPA is a renewal contract with an
existing 400 kilowatt hydroelectric QF under PURPA.1d at 3.The proposed PPA would replace
a prior agreement that was in effect from 1982 until it expired on December 31,2017.Id at 3-4.
The Company asked to continue buyingpower under the prior agreement's terms until
the Commission approves or rejects the proposed PPA.Id at 4.The Company stated it and the
QF "have agreed that the price paid after December 31,2017,would then be trued-up to the price
that would have been paid under the new [PPA],in order to hold [the Company's]customers
harmless from the extension,"Id
Rocky Mountain Power indicated the proposed PPA complies with Commission Order
Nos.36297,32737,and 32802.Id.at 3.Rocky Mountain Power further stated the QF elected to
contract for a 20-year term with prices as set forth in Exhibit F to the proposed PPA,except as
otherwise indicated.Id
Rocky Mountain Power explained the proposed PPA will not take effect until the
Commission approves it and determines:
the prices paid for energy and capacity are justand reasonable,in the public interest,
and that costs incurred by the Company for purchasing energy and capacity are
legitimate expenses,all of which the Commission will allow the Company to
ORDER NO.33993 2
recover in Idaho rates in the event other jurisdictions deny recovery of their
proportionate share of said expenses.
Id
STAFF'S COMMENTS
Staff reviewed the proposed rates and confirmed they are correct and that all other
terms contained in the proposed PPA are consistent with prior Commission orders.Staff
Comments at 2.Staff thus recommended the Commission approve the PPA and declare that all
payments made by Rocky Mountain Power to the City of Preston for purchases of energy will be
allowed as prudently incurred expenses for ratemaking purposes.Id.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdictionover this matter under Idaho Code §§61-502 and 61-
503.The Commission has the express statutory authority 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 may fix the
same by order.Idaho Code §§61-502 and 61-503.In addition,the Commission has authority
under PURPA and the implementing regulations of the Federal Energy Regulatory Commission
(FERC)to set avoided costs,to order electric utilities to enter into fixed-term obligations for the
purchase of energy from qualified facilities and to implement FERC rules.The Commission may
enter any final order consistent with its authority under Title 61 and PURPA.
The Commission has reviewed the record,including the Application,the PPA,and the
comments and recommendations of Commission Staff.We find that the City of Preston's QF is
qualified to receive the published avoided cost rates contained in the PPA.We further find that
the PPA contains acceptable contract provisions consistent with PURPA,FERC regulations,and
this Commission's prior orders.In addition,we find a true-up between 2017 prices and current
prices justand reasonable.We therefore approve the PPA without change or condition.Finally,
we find it fair,justand reasonable to allow payments made under the Agreement as legitimate and
prudentlyincurred expenses for ratemaking purposes.
ORDER
IT IS HEREBY ORDERED that the PPA between PacifiCorp and the City of Preston,
Idaho is approved.
ORDER NO.33993 3
IT IS FURTHER ORDERED that all payments made by the Company for purchases
of energy under the PPA are allowed as legitimate and prudentlyincurred expenses for ratemaking
purposes.
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 with regard to 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.See Idaho Code §61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of February 2018.
PAUL KJELLANDER,PRESIDENT
KR)ŠTINERAP MISSÏONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
I:\Legal\LORDERS\PACE1714cc final order doex
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