20200821Decision Memo.pdf

DECISION MEMORANDUM
TO COMMISSIONER KJELLAI\DER
COMMISSIONER RAPER
C OMMISSIONER AI\DERSON
COMMISSION SECRBTARY
COMMISSION STAFF
LEGAL
FROM:MATT HUNTER
DEPUTY ATTORNEY GENERAL
DATE: AUGUST 20,2020
SUBJECT:IN THE MATTER OF ROCKY MOUNTAIN POWER'S APPLICATION
FOR APPROVAL OF A POWER PURCHASE AGREEMENT BETWEEN
PACIFICORP AND BIRCH HYDRO COMPANY; CASE NO. PAC-E-20-07
On June 3, 2020, Rocky Mountain Power ("Company"), a division of PacifiCorp,
applied for consideration of a power purchase agreement ("PPA") with Birch Hydro Company for
energy generated by a small hydro facility in Clark County, Idaho ("Facility"). The Facility is a
qualifying facility under the Public Utility Regulatory Policies Act of 1978 ("PURPA"), and has a
nameplate capacity of 2.65 megawatts.
On June 26, 2020, the Commission issued a Notice of Application and Modified
Procedure, setting an August 10,2020 comment deadline and an August 17 ,2020 reply comment
deadline.
C o mmi s s ion Stalf c o mme nts
Commission Staff filed timely written comments, recommending several amendments
to the PPA. Most significantly, Staff noted that the PPA's formula for calculating the 'Non-
Conforming Energy Purchase Price" is inconsistent with prior Commission orders. See
Application, Attachment 1, Exhibit K. Staff explained that in Order No. 29632 the Commission
established that energy delivered outside of the 90/110 performance band (i.e., non-conforming
energy) would be priced at 85%o of the non-firm market price or the contract price, whichever is
less. [n Order No. 33053, the Commission approved an 82.4yo discount to convert firm market
price to non-firm market price. The conversion can be described as follows:
Non-firm market price = firm market price * 0.824
DECISION MEMORANDUM I
Staff explained that firm energy is more valuable than non-finn energy and therefore
must be discounted to comply with the intent of Order No. 29632. Staff asserted that "the 82.4Yo
discount has been used in Idaho Power's and Avista's PURPA contracts when non-firm market
prices are not available." Staff Comments at 4.
Staff noted the Company's PPA uses firm market price to calculate the Non-
Conforming Energy Purchase Price but does not apply the 82.4% discount.l ^See Application,
Attachment 1 at 4, Exhibit K. Staff recommend the Company amend the PPA to include the
discount.
Staff recommended the Commission approve an amended PPA that includes Staff s
recommended updates.
The Company's repllt comments
The Company filed timely reply comments and accepted all of Staffls
recommendations.2 The Company stated that the "Company and the Seller will work expeditiously
to file an updated contract and exhibits incorporating Commission Staff s comments as soon as
possible." Company Reply Comments at 3.
STAFF RECOMMENDATION
Staff recommends the Commission issue an interlocutory order granting the Company
14 days to file an amended PPA. Based on conversations with the Company, Staff believes 14 days
will give the Company sufficient time to file an amended PPA.
Additionally, Staff recognizes the Commission might wish to give the public an
opportunity to comment on the amended PPA. If the Commission chooses to set a public comment
period, Staff recommends a seven-day comment period (beginning when the l4-day filing period
ends), and a seven-day Company reply comment period.
I In response to Production Request 12, the Company explained that the "term 'Index price' in Exhibit K was used in
error," and that it "should be a reference to the 'Firm Market Price Index."
2 Staff believes the Company's reply comments misunderstood Staff s recommendation regarding the calculation of
the "Non-Conforming Energy Purchase Price." Staff and the Company have had several conversations since the
Company filed its reply comments, and Staff believes the Company now fully understands and accepts the
recommendations in Staff s comments.
DECISION MEMORANDUM 2
COMMISSION DECISION
Does the Commission wish to:
1. Grant the Company 14 days from the issuance of the Commission's order to file an
amended PPA?
2. Set a seven-day public comment period immediately after the l4-day filing period,
followed by a seven-day Company reply period?
Matt Hunter
Deputy Attorney General
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