20200821Comments.pdf

EDWARD JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILMIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-OO] 4
[phone]
IDAHO BAR NO. 10446
IN THE MATTER OF PACIFICORP'S
APPLICATION FOR APPROVAL OR
REJECTION OF ITS POWER PURCHASE
AGREEMENT WITH COMMERCIAL
ENERGY MANAGEMENT, INC.
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Street Address for Express Mail:
11331 W CHINDEN BVLD, BLDG 8, SUITE 2OI-A
BOISE, TD 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. PAC.E.2O.O9
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Edward Jewell, Deputy Attorney General, submits the following comments.
BACKGROUND
On June 8,2020, Rocky Mountain Power a division of PacifiCorp ("Rocky Mountain
Power" or "Company") filed an Application requesting the Commission approve or reject an
amendment to a Power Purchase Agreement ("PPA") between the Company and Commercial
Energy Management,Inc. ("CEM") ("Amended PPA"). CEM owns and operates a 900 kW
hydro-electric qualifying facility ("QF") under the Public Utility Regulatory Policies Act of 1978
(PURPA).
CEM and Rocky Mountain Power entered a PPA on November 21,1991, which expired
May 31, 2020. CEM and the Company are in the process of negotiating a long-term replacement
contract for the sale of energy and capacity and a separate standalone long-term contract that will
address interconnection requirements. The Amended PPA extends the term of the 1991 contract
until March 1,2021, or until a new long-term PPA between the parties is approved, whichever is
STAFF COMMENTS AUGUST 2I,2O2O1
sooner, and updates pricing for energy sales during the extended term. The total nameplate
capacity of the QF remains unchanged at 900 kW.
STAFF ANALYSIS
Staff recommends approval of the Amended PPA between Rocky Mountain Power and
CEM. Staff notes that the Amended PPA was signed by both parties as of March20,2020,yet
the Application was not submitted until June 8, 2020. The Application states, "Due to no fault of
the Seller the Company was late filing this Application and respectfully requests if the
Commission approves the Amendment the updated pricing for energy sales be applicable
retroactively to June 1,2020 as specified in the terms of the extension." Application at 1[ 10.
Staff would like to ensure sufficient time to review the long-term replacement contract
currently being negotiated. Therefore, Staff recommends that the Commission direct the
Company to file the long-term replacement PPA three months before the expiration date of the
Amended PPA, which is the earlier of (i) the effective date of a new power purchase agreement
between PacifiCorp and Seller pertaining to the Facility; or (ii) March I,2O2l. Staff believes the
long-term replacement PPA will need to include gOllLO rule contract provisions. Staff also
recommends that the Company initiate a case to propose an as-available schedule to QFs who
wish to choose as-available avoided cost rates in Idaho.
90/110 Rule and Retroactive Rates
The original 1991 PPA and the Amended PPA do not include 90/110 provisions. The
original PPA did not include it because it was signed before the Commission adopted the rule in
Order No. 29632.r Due to the late filing of the Amended PPA and its limited duration, Staff
believes omission of the 90/110 provisions is acceptable in this instance but should not be seen
as a departure from the Commission's longstanding9olll0 requirements for published contracts.
Staff believes the parties need to include 90/110 provisions in the replacement contract when it is
filed with the Commission.
Had the Company submitted the Amended PPA in a timely manner, Staff would have
communicated its concern with the parties about the lack of 90/110 provisions in the Amended
PPA. The Company states, "Due to a miscommunication within the Company, the regulatory
1 Order No.29632 required QFs to provide monthly estimates to be entitled to a published rate contract.
STAFF COMMENTS 2 AUGUST 2I,2O2O
team was not notified promptly of the amendment resulting in a lag in the Application filing
date. The communication breakdown has been identified and steps taken to ensure proper filing
timelines in the future." Response to Production Request No. 3. Staff understands that
communication breakdowns happen, particularly given the current circumstances and disruption
posed by the coronavirus. In the interests of reasonableness, fairness, and efficiency, Staff
recommends approving the Amended PPA as submitted.
Capacitlr Payment
QFs only receive compensation for capacity when the utility is capacity deficient, unless
they are renewaUextension projects that have been paid for capacity at the end of the original
contracts (see Order No. 32697), or have contributed to meeting the utility's capacity needs
during the original contract terms (see e.g., Case Nos. IPC-E-19-04, IPC-E-19-30, and
rPC-E-19-35).
The avoided cost rates contained in the original 1991 contract were determined in Order
No. 23155, 23358, and23429, which were based on the frst energy deficit year of 1992. A first
capacity deficiency date was not reflected in these orders, and therefore, Staff does not believe
that the project was being paid for capacity at the end of the original contract. However, during
the contract term, the Company added significant resources to meet its capacity deficiencies. For
example, Lake Side 2 was brought online in2014 to meet the Company's capacity deficiency
identified in its Integrated Resource Plan ("IRP"). See Page 9 of Volume I of PacifiCorp's 201 1
IRP in Case No. PAC-E-1 1-10. Therefore, Staff is confident that the project has contributed to
meeting the Company's need for capacity during the term of the original 1991 contract and
should receive full capacity payment for the entire term of the Amended PPA.
Staff believes it is acceptable that the QF receives capacity payments for the period of
time in which the QF did not have an effective contract with the Company (May 3l,2O2O
through Commission approval of the Amended PPA) because the late filing was due to no fault
of the QF.
Non-seasonal Hydro Avoided Cost Rates
Staff reviewed the non-seasonal hydro avoided cost rates contained in the Amended PPA
and believes the rates are correct. The Amended PPA was signed on March 20,2020, and the
parties used the rates authorized at that time.
STAFF COMMENTS AUGUST 2I,2O2O3
Staff also believes it would be prudent for the Company to initiate a case to determine an
as-available rate for QFs in the Company's Idaho service territory.
STAFF RECOMMENDATIONS
Staff recommends the Commission approve the Amended PPA between Rocky Mountain
Power and CEM and declare the prices paid for energy and capacity to be just and reasonable, in
the public interest, and that costs incurred by the Company for purchasing energy and capacity
are legitimate expenses and can be recovered in Rocky Mountain Power rates.
In addition, Staff recommends that the Commission direct the parties to file the long-term
replacement PPA at least three months before the Amended PPA expires and to include contract
provisions related to the 90/110 rule. Lastly, Staff recommends the Commission direct the
Company to initiate a case to propose an as-available avoided cost schedule to QFs who choose
as-available avoided cost rates in Idaho.
Respectfully submitted this 21st day of August 2020.
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Edward Jdt"dl
Deputy ntlHey General
Technical Staff: Yao Yin
Rachelle Farnsworth
i:umisc/commentVpace20.9ejrfyy comments
4STAFF COMMENTS AUGUST 2I,2O2O
CERTIFICATE OF SERVICE
I TMREBY CERTIFY THAT I HAVE THIS 21ST DAY OF AUGUST 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-20-09, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
TED WESTON
JACOB A McDERMOTT
ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I16
E-MAIL: ted.weston @pacificorp.com
Jacob.mcdermott @ pacificorp.com
idahodockets @ pac i ficorp. com
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest @ pacificorp.com
ADAM LOWNEY
McDOWELL RACKNER GIBSON
4I9 SW 11TH AVE SUME 4OO
PORTLAND OR 97205
E-MAIL: [e-mail]
*Jc /D"*
SECRETARY/
CERTIFICATE OF SERVICE