20210504Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
[phone]
TDAHO BAR NO, 9917
Street Address for Express Mail:
I I33I W CHINDEN BVLD, BLDG 8, SUITE 2OI-A
BOISE, ID 837I4
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ir.t+.;'L.:t
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION FOR APPROVAL
OR REJECTION OF THE POWER
PURCHASE AGREEMENT WITH CHESTER
DIVERSION PROJECT
CASE NO. PAC.E.2I.O6
COMMENTS OF THE
COMMISSION STAFF
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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 March 10,2021, Rocky Mountain Power, a division of PacifiCorp ("Company")
requested the Commission approve or reject a Power Purchase Agreement ("PPA") with Fall River
Rural Electric Cooperative ("Seller") for the purchase and sale of energy from the Chester
Diversion Hydro Project ("Facility").
The Facility is a run of river hydroelectric qualifring facility ("QF") under the Public Utility
Regulatory Policies Act of 1978. The QF utilizes the Fremont - Madison lrrigation District's
existing Chester Diversion dam on the Henry's Fork of the Snake River in Fremont County, Idaho.
The QF has three 1,200 kilowatt ("kW") generators. One operates as back-up when another
generator is out of service. The available water gives the QF a maximum generating capacity of 2
MW. The Company states the rates, terms, and conditions are those previously approved by the
Commission and effective June I ,2020 for purchases from non-seasonal hydro QF projects.
ISTAFF COMMENTS MAY 4,2021
Energy will be delivered from the QF to the Company's system at the Goshen substation by a
transmission agreement with the Bonneville Power Administration.
STAFF ANALYSIS
Staff s review focused on the 90/l l0 firmness requirements, the long-range forecasts, the
maximum delivery rate, the avoided cost rates, and the project ownership.
90/1 10 Firmness Requirements
Staff confirmed the PPA contains the 90/l l0 firmness requirements as required by Order
No. 29632. It requires a Seller QF to provide utilities with a monthly estimate of the amount of
energy the Seller QF expects the QF to produce. If the Seller delivers more than I l0 percent of the
estimated amount, then the utility must buy the excess energy for the lesser of 85 percent of the
market price or the contract price. If the Seller delivers less than 90 percent of the estimated
amount, then the utility must buy total energy delivered for the lesser of 85 percent of the market
price or the contract price. See Order No. 29632 at20.
l. Monthly Estimates
The Application states that the Facility's estimated annual net output over the term is 6,580
megawatt-hours. However, Section4.9, Exhibit A, and Page 3 of the PPA indicate that the
estimated annual net output is 5,481,400 kilowatt-hours ("kWh"). The Company explained in
Response to Staff s Production Request No. 3 that the estimate for the month of June incorrectly
includes a period instead of a comma. While the PPA states the forecasted energy for June is
"1,100.000", it should read "1,100,000". This correction increases the estimated annual net output
from 5,481,400 kwh to 6,580,300 kwh. Staff recommends the parties amend the PPA to correct
the amounts.
Staff also notes that the output in January (10,000 kwh) is significantly lower than that in
February (170,000kwh) or in December (175,200 kwh). The Company stated in Response to
Staff s Production Request No. 2 that the monthly generation amounts were provided by the Seller,
and the Company does not have an explanation for the monthly differentials, but typically changes
in monthly production are the result of expected water flow variability at the Facility.
2STAFF COMMENTS MAY 4,2021
2. Advanced Notice
The PPA uses a l0-day advanced notice to revise future monthly estimates. Staff believes
any timeframe between one month in advance and 5 days in advance is reasonable. The
Commission allowed a month-ahead timeframe in Order No. 33103, which states:
The intent of a QF providing generation estimates has always been
to assist the utility in forecasting and operational planning so that
the utility can provide the most reliable service possible to its
customers. We find that a provision allowing for monthly
generation estimate updates is consistent with that purpose.
Later, the Commission also allowed a 5-day timeframe in several cases, recognizing that
monthly estimates provided closer to the time of delivery can improve the accuracy of input used
for short-term operational planning. See Order Nos. 34263 and 34870 for example.
3. Market Prices
The Company uses Palo Verde Hub to establish market prices for the purpose of the 90/1 l0
firmness requirements. Staff believes the Company's determination of market prices is fair and
reasonable.
4. Firm Delivery
The QF is located outside the Company's service territory and will wheel its power through
Bonneville Power Administration's ("BPA") transmission system. The Seller pays BPA for
ancillary services to ensure that the energy delivered to the Point of Delivery in the Company's
system is firm. The Seller provides the Company with a schedule of the next day's hourly
scheduled Net Output at least 24 hours prior to the beginning of the day being scheduled, and the
ancillary service is designed to correct a mismatch between energy scheduled by Seller and the
actual real-time production of the QF. The Company agrees to accept and pay for the
Supplemented Output from BPA, but the QF must offset the amount by delivering less than the
amount generated before the month ends to ensure that the accumulated difference between the
energy delivered at the Point of Delivery and the QF's Net Output is zero.r Effectively, only
I When the accumulated difference is greater than zero, the Company will accept the surplus delivery, but will not pay
for it. When the accumulated difference is smaller than zero, the Company will reset the imbalance to zero at the end of
the Settlement Period with no future chance of recovering the energy generated but not delivered. This understanding
was confirmed by the Company through email on April2l,202l .
JSTAFF COMMENTS MAY 4,2021
Energy Scheduled QF Net Output Ancillary Service Energy Delivered
Hour X 5 J 2 5
Hour Y 7 9 -2 7
Sum t2 12
energy generated by the QF receives payment. Table No. 1 illustrates how the offset works
Table No. 1: Zero Accumulated Difference
Although Staff believes the mechanism with BPA provides a way for the Seller to meet its
90/l l0 firmness requirements, it does not serve as a replacement. Maintaining90ll l0 requirements
provides the incentive and accountability necessary for the Seller to meet its 90/110 monthly
estimates, while the BPA mechanism only hrms production aday at a time.
Long-Range Forecasts
Seller agrees to provide an annual update to the 12X24 generation profile in Section 6.7.1
Although the Commission does not require 12 X 24 generation profiles for contracts that use
published rates, Staffdoes not oppose to this provision agreed upon by the parties.
Maximum Delivery Rate
The "Maximum Delivery Rate" as listed in Exhibit A should state "2.0 MW" rather than
"2.0 MWh", which is the nameplate capacity of the unit. See Response to Staff s Production
Request No. 1. Staff recommends that the parties amend the PPA to correct this.
Avoided Cost Rates
Staff reviewed the non-seasonal hydro avoided cost rates contained in the PPA and believes
the rates are incorrect. The Application states that the PPA was negotiated during 2020 and was
subject to Commission Order No. 33917 that established the Company's first capacity deficiency of
July 2028. The PPA was signed February 26,2021, and the Commission approved a new first
capacity deficiency of July 2029 in Order No. 34918 on February 9,2021. Therefore, Staff believes
that the parties should use new avoided cost rates that reflect the new first deficit date.
4STAFF COMMENTS MAY 4,2021
The difference between the old and new avoided cost rates occurs in year 2028. The annual
rate for that year will change from $67.85/MWh to $37.65/MWh,2 because the rate will not contain
avoided cost of capacity due to the shift of the first deficit date by one year.
Project Ownership
The Application states that this project is a run-of-river hydroelectric project that utilizes the
Fremont - Madison lrrigation District's existing Chester Diversion dam on the Henry's Fork of the
Snake river in Fremont County, Idaho. Exhibit B states that this project is in Fremont County,
Idaho, and utilizes Fremont-Madison Irrigation District's pre-existing Cross Cut Diversion Dam on
the Henry's Fork of the Snake River. Exhibit E also lists real estate documents, which includes
"Amended Lease Agreement between Fall River Rural Electric Cooperative and Fremont Madison
Inigation District dated October 28, 2013." However, an updated FERC Form No. 556 Form
("Form 556") for the project clarifies the ownership of the Facility by removing Fremont-Madison
Irrigation District, which was listed as a direct owner on the previously filed Form 556. The
updated Form 556 states that while Fremont-Madison Irrigation District has a right to become a
direct owner with equity interest in the Facility upon occurrence of contingent events, Fremont-
Madison Irrigation District is not currently a direct owner with an equity interest in the Facility.
Therefore, Staff recommends that the parties should amend the PPA to reflect the correct
ownership.
STAFF RECOMMENDATION
Staff recommends the parties file an amended PPA that includes the following updates:
1. The amounts of generation estimates in Section4.9, Exhibit A, and Page 3 of the
PPA;
2. The units for the Maximum Delivery Rate;
3. The avoided cost rates should be updated to reflect the new first deficit date of July
2029; and
4. The project ownership.
Staff recommends approval of an amended PPA with these updates and also recommends
that, if the updates described above are made by the Company, the Commission declare that the
2 The annual rate will be adjusted by monthly on-peak and off-peak multipliers
5STAFF COMMENTS MAY 4,2021
avoided cost prices set forth in the Agreement are just and reasonable, in the public interest, and
that the Company's incurrenoe of such costs are legitimate expenses.
qrL
Respectfu lly submittod this day of May 2421.
Dayn
Deputy Attorney General
Technical Staff: Yao Yin
irumisc/,oomments/psce2 l.6dhyy @&ments
6STAFF COMMENTS MAY 4,2421
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 4th DAY OF MAY 2021,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-21-06, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
TED WESTON
ROCKY MOUNTAIN POWER
I4O7 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I 16
E-MAIL : ted.weston@pacifi corp.com
idahodockets @pacifi corp. com
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest@fracifi com.com
EMILY WEGENEI(
ROCKY MOUNTAIN POWER
1407 WN TEMPLE STE 320
SALT LAKE CITY UT 84I 16
E-MAIL: [e-mail]
GREGORY M ADAMS
RICHARDSON ADAMS PLLC
515 N 27TH STREET
BOISE ID 83702
E-MAIL : [e-mail]
CERTIFICATE OF SERVICE