20201022Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
[phone]
IDAHO BAR NO. 9917
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Street Address for Express Mail:
11331 W CHINDEN BVLD, BLDG 8, SUITE 2OT-A
BOISE, TD 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTII-ITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION FOR APPROVAL
OR REJECTION OF A POWER PURCHASE
AGREEMENT BETWEEN PACIFICORP AND
FALL RIVER ELECTRIC COOPERATIVE,
INC.
CASE NO. PAC-E.20.10
COMMENTS OF THE
COMMISSION STAFF IN
SUPPORT OF SETTLEMENT
STIPULATION
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On June 9,2020, the Company submitted an Application for an order approving or
rejecting a Power Purchase Agreement ("Agreement") with Fall River Electric Cooperative
("Fa11River") for energy generated by the Felt Hydro Facility ("Facility"), a small hydro facility
in Teton County, Idaho. The Facility is a qualifying facility ("QF") under the Public Utility
Regulatory Policies Act of 1978.
On July 1,2020, Fall River intervened in the case.
On July 2,2020, the Commission issued a Notice of Application and Notice of Modified
Procedure establishing an August 17,2020 comment deadline and an August 24,2020 rcply
comment deadline. See Ordet No. 34717.
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT STIPULATION
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I ocroBER 22,2020
On July 3I,2020, Staff sent its Second Production Request to the Company. Staff
received responses to requests 8-11 on August I0,2020 and requests 12-14 on August 11,2020.
Staff determined it would need additional time to sort out its position on capacity payments
described in the Agreement.
On August |J,2020, Staff filed initial comments and asked the Commission to amend the
comment deadline to allow additional time to analyze the data and finalize its position on
capacity payments through supplemental comments.
At the August 18,2020 Decision Meeting, Staff asked the Commission to vacate the
comment deadlines established in Order No. 34717 and establish new comment deadlines to
allow for public comments on October I,2020 and reply comments on October 15,2020.
On August 25,2020, the Commission issued a Notice of Amended Comment Deadlines
to allow for public comments on October 1,2020 and reply comments on October 15,2020. See
Order No. 34760.
On September 22,2020, an email was distributed to the Commission Secretary, the
Company, and Fall River (Staffl the Company, and Fall River are collectively the "Parties")
providing notice that settlement discussions had begun and the Parties would work toward
resolving issues raised in Staff s August ll,2O2O comments under IDAPA 31.01.0L.272. The
email described the Parties intentions to reach settlement on the issue of rate bifurcation for
capacity and energy payments for generation from the Facility.
At the September 29,2020 Decision Meeting, in anticipation of filing an all parties
settlement stipulation, Staff asked the Commission to vacate the comment deadlines established
in Order No. 34760 and establish a new comment deadline for comments on October 22,2020.
On October 6,2020, the Commission issued Order No. 34806 vacating the
October l,2O2O and October 15,2020 coflrment deadlines established in Order 34760 and
established a new October 22,2020 comment deadline.
On October 13,2020, the Parties filed a Stipulation that resolves all outstanding issues in
this docket. Staff's comments are filed in support of the Stipulation.
STAFF ANALYSIS
Staff has reviewed the Stipulation that resolves all issues identified in the Agreement
between Fall River and the Company. Staff believes the provisions contained within the
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT STIPULATION
ocroBER 22,20202
Stipulation are fair, just, and reasonable, and therefore recommends Commission approval. The
resolutions included in the Stipulation include: (I) limiting capacity payments for generation of
electricity from the Facility to amounts historically generated at Powerhouse #2, while
withholding capacity payments for any excess incremental generation until January 1,2028r, (II)
determining the contract rate used to compare against 85 Vo of the Non-Firm Market Price for
payment of non-conforming energy; (III) applying the proper discount to the firm market price
used by the Company to convert it to a Non-Firm Market Price for determining payment for non-
conforming energy; and (IV) correcting Exhibit K of the Agreement, changing the term "Mid-C-
85" to "PV-85 to reflect the use of the Palo Verde Hub for determining the market price.
I. Limiting Capacity Payments by Setting an Eligibility Limit of 5,100 kilowatt-hours
("kwh")
Staff supports the Parties' Agreement to limit capacity payments for hourly generation of
electricity from the Facility to 5,100 kWhs until January 1,2028-the maximum amount
Powerhouse#2has historically generated in any given hour. The Facility consists of two
powerhouses: Powerhouse #1 has a nameplate capacity rating of 1,950 kilowatts ("kW").
Powerhouse #1 has been out of operation for 14 years and has not contributed to the Company
avoiding capacity costs.2 Powerhouse #2 has a nameplate capacity rating of 5,500 kW.
Generation exceeding the hourly 5,100 kWh capacity payment cap reasonably represent the
incremental future generation from Powerhouse #1. After January I,2028, the Parties have
agreed Fall River will receive capacity payments for all amounts generated from the Facility,
because this is when the Company's system becomes capacity deficient. See Order No. 33917.
This provision is supported by Commission Orders 32697,34200,34295, and33357.
Order No. 32697 states that "if a QF project is being paid for capacity at the end of the
contract term and the parties are seeking renewaVextension of the contract, the renewal/extension
would include immediate payment of capacity." Because Powerhouse #1 has not been
operational since 2006, it is not being paid for capacity at the end of the current contract.
I Order No. 33917 approved that the Company's first deficit year that starts in July 2028; however, the Surrogate
Avoided Resource ("SAR") model calculates capacity payments from January 1 of the first deficit year.
2 Powerhouse #1 is anticipated to be operational before the current contract expires on March 31,2021.
STAITF COMMENTS IN SUPPORT 3 OCTOBER 22,2020
OF SETTLEMENT STIPULATION
Therefore, the new renewal contract should not include immediate payment of capacity for
Powerhouse #1.
In Order Nos. 34200 and34295, the Commission recognized that the contribution of a
QF to meet the Company's capacity needs during a previous contract period was required for
immediate payment of capacity in a renewal contract. However, the Company has not been able
to rely on any capacity contribution from Powerhouse #1 due to it not operating.
Finally, in Order No. 33357, the Commission expressed that as long as the QF renews its
contract and continuously sells power to the utility, the QF is entitled to capacity payments based
on the capacity deficiency date established at the time of its initial contract. Because
Powerhouse #1 has not operated continuously, it should be treated as a new project without
immediate capacity payments.
To determine the 5,100 kWh capacity payment eligibility limit, Staff examined hourly
generation data from 2015 through2O2O, which is illustrated in Table No. 1, below. This data
represents a period when only Powerhouse #2 was in operation. Because 5,100 kWhs is
approximately the maximum amount that Powerhouse #2 can generate in an hour, capping
capacity payments at this hourly amount, until December 31, 2027, will ensure that Fall River
will receive compensation commensurate with the amount of capacity cost that it has avoided for
the Company's system prior to the renewal date. The Parties agreed this was reasonable.
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT STIPULATION
ocToBER 22,20204
Table No. 1: Frequencv of Hourlv Generation Amounts from UU15 throueh 8/31/20
Hourly
Generation
Amount (kWhs)
Number of
Occurrences
Cumulative
7o
Up to 4500 37536 75.56Vo
4500 - 4550 I163 77.9t%o
4550 - 4600 340 78.597o
4600 - 4650 513 79.74Vo
4650 - 4700 r435 82.637o
4700 - 4750 2441 87.55Vo
4750 - 4800 5345 98.3t%o
4800 - 4850 720 99.76Vo
4850 - 4900 84 99.93Vo
4900 - 4950 22 99.97Vo
4950 - 5000 0 99.97Vo
5000 - 5050 I 99.97Vo
5050 - 5100 t4 lOO.O07o
5100 - 5150 0 100.00%o
5150 - 5200 0 lOO.OOTo
5200 - 5250 0 t00.oovo
5250 - 5300 0 IO0.00Vo
5300 - 5350 0 l00.O0Vo
5350 - 5400 0 LOO.00Vo
5400 - 5450 0 IO0.OOVo
5450 - 5500 0 t00.00vo
Maximum Actual Average Capacity
Nameplate Capacity
Staff provides contract prices for hourly generation up to 5,100 kWh and above 5,100 kwh
in Attachment A.
II. Determining Contract Rate used to compare against 85Vo of the Non-Firm Market
Price for payment of Non-conforming Energy Before January 1r2028
As stipulated, Staff supports the use of a Weighted-Average Conforming Energy
Purchase Price as a contract price to compare against 85Vo of the Non-Firm Market Price for
payment of non-conforming energy for purposes of the 90lll0 rule, before January I,2028. To
comply with 90/1 10, QFs provide a monthly estimate for the amount of energy they expect to
produce. If the QF delivers more than 1 I0Vo of the estimated amount, energy delivered in excess
of lll%o is priced at the lesser of 85Vo of the market price or the contract price. If the QF
delivers less than 907o of the estimated amount, total energy delivered is priced at the lesser of
85Vo of the market price or the contract price. Order No. 29632.
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT STIPULATION
ocToBER 22,20205
A combination of four different contract prices can be applied during a month for each
hour differentiated by prices for on and off-peak and prices with and without capacity payments,
depending on hourly generation amounts. The Weighted-Average Conforming Energy Purchase
Price is an average contract price weighted by the generation amount in each hour. It is
calculated by taking the total revenue that would have been earned by the QF in a given month,
as if all energy was conforming energy, and divided by the total energy generated by the QF for
that month.
When the Facility generates outside of the 901lrc band, the Weighted-Average
Conforming Energy Purchase Price is compared to 85Vo of the Non-Firm Market Price. If the
Weighted-Average Conforming Energy Purchase Price is less than 85Vo of the Non-Firm Market
Price, regardless if the amount of energy is above or below the 90/110 band, the on and off-peak,
and with and without capacity payment contract pricing structure can be applied for each hour in
the month as if all energy is conforming. If 85Vo of the Non-Firm Market Price is less than the
Weighted-Average Conforming Energy Purchase Price, then 85%o of the Non-Firm Market Price
can be used to calculate payments for generation amounts for all hours in the month. Other than
using the Weighted-Average Conforming Energy Purchase Price to compare to 857o of the Non-
Firm Market Price, the original Agreement adequately deals with these situations.
However, for the special case when actual generation in a given month is above ll07o of
the estimated amount, and when the Weighted-Average Conforming Energy Purchase Price is
higher than 85Vo of the Non-Firm Market Price, the Stipulation requires the Amended Agreement
to reflect use of the average of the Weighted-Average Conforming Energy Purchase Price and
85Vo of the Non-Firm Market Price weighted by the amount of generation below and above
ll07o of the estimated amount, respectively, to calculate payments. Effectively, the generation
amount below ll07o of the estimated amount is paid at the Weighted-Average Conforming
Energy Purchase Price, and the generation amount above the llo%o of the estimated amount is
paid at the lower of 85Vo of the Non-Firm Market Price and the contract price, complying with
Order No.29632. (Calculations of all the scenarios are illustrated in Attachment B.)
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT STIPULATION
6 ocToBER 22,2020
Ill.Applying the 82.4Vo discount to the firm market price used by Company to convert it to
a Non-Firm Market Price for determining payment for non-conforming energy
Staff is in support of applying the 82.4Vo discount to the firm market price to convert it to
a non-firm market price for the purpose of the 90/1 10 rule as stipulated. The market price
referred to in Order No.29632 is a non-firm market price. Originally, in Order No.29632,
market price was defined as "the monthly weighted average of the daily on-peak and off-peak
Dow Jones Mid-Columbia Index (Dow Jones Mid-C Index) prices for non-firm energy."
However, the Dow Jones Mid-C Index was discontinued in2013, and Case No. IPC-E-13-25
was initiated to find a replacement market index for non-firm energy. Because firm energy is
more valuable than non-firm energy, the Commission authorized that 82.47o of the monthly
arithmetic average of each day's Intercontinental Exchange ("ICE") daily firm Mid-C Peak Avg
and Mid-C Off-Peak Avg index prices to be used as a replacement market index for non-firm
energy. Order No. 33053. Since then, the 82.47o discount has been used in Idaho Power's and
Avista's PURPA contracts when non-firm market prices are not available.
IV. Correcting Exhibit K of the Agreement, changing the term "Mid-C-8s" to "PV-85 to
reflect the use of the Palo Verde Hub for determining the market price.
Staff is in support of changing the term "Mid-C-85" to "PV-85" to reflect the use of the
Palo Verde Hub as stipulated.
CONCLUSION AND RECOMMENDATIONS
Staff believes that the Stipulation, agreed to by all Parties, represents afair,just, and
reasonable solution to the issues identified in this proceeding and that it is in the public interest.
Staff recommends that the Commission approve the Stipulation.
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT STIPULATION
ocroBER 22,20201
Respectfully submitte a tndaay of Octob er 2020.
Dayn Hardie
Deputy Attorney General
Technical Staff: Yao Yin
Mike Louis
i:umisc/commentVpace20. lOdhyyrf comments setdement
STAIIF COMMENTS IN SUPPORT
OF SETTLEMENT STIPULATION
8 ocToBER 22,2020
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Attachment A
CaseNo. PAC-E-20-10
StaffComments
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Attachment B
Case No. PAC-E-20-10
Staff Comments
10122120 Page 1 of I
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 22"d DAY OF OCTOBER 2020,
SERVED THE FOREGOING COMMENTS OF THB COMMISSION STAFF IN
SUPPORT OF SETTLEMENT STIPULATION, IN CASE NO. PAC-E-20-10, BY
E-MAILING A COPY THEREOF, TO THE FOLLOWING:
TED WESTON
ROCKY MOUNTAIN POWER
I4O7 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84116
E-MAIL: ted.weston @pacificorp.com
idahodockets @pasifi corp.com
JACOB A McDERMOTT
ROCKY MOUNTAIN POWER
1407 WN TEMPLE STE 320
SALT LAKE CITY UT 84116
E-MAIL: [e-mail]
ADAM LOWNEY
McDOWELL RACKNER GIBSON
419 SW 11TH AVE SUITE 4OO
PORTLAND OR 97205
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest @ pac i fi corp.com
E-MAIL: adam@ -law.com
GREGORY M ADAMS
PETER J RICHARDSON
RICHARDSON ADAMS PLLC
5I5 N 27TH STREET
BOISE D 83702
E-MAIL: [e-mail]
peter @ richardsonadams.com
ARY
CERTIFICATE OF SERVICE