20211112Final_Order_No_35223.pdf

ORDER NO. 35223 1

Office of the Secretary
Service Date
November 12, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

On June 11, 2021, Rocky Mountain Power, a division of PacifiCorp (“Company”),
applied for an order approving or rejecting the Power Purchase Agreement (“PPA”) with Mink
Creek Hydro LLC for energy generated by a 2.95-megawatt hydroelectric power plant (“Facility”).
Application at 1. The Facility is near the city of Preston, in Franklin County, Idaho. Id. The Facility
is a qualifying facility (“QF”) under the Public Utility Regulatory Policies Act of 1978
(“PURPA”). Id. at 2. The PPA’s effective date is April 1, 2022. Id. at 3; see also PPA at 10, § 2
attached to the Application.
On July 16, 2021, the Commission issued a Notice of Application and set deadlines for
comments and reply comments. Only Commission Staff (“Staff”) filed comments. Having
reviewed the record, we now approve the Company’s Application as discussed below.
BACKGROUND
Under PURPA, electric utilities must purchase electric energy from QFs at purchase or
“avoided cost” rates approved by the Commission. 16 U.S.C. § 824a-3; Idaho Power Co. v. Idaho
PUC, 155 Idaho 780, 789, 316 P.3d 1278, 1287 (2013). The Commission has established two
methods for calculating avoided costs, depending on the size of the QF project: (1) the surrogate
avoided resource method, used to establish “published” avoided cost rates; and (2) the integrated
resource plan method, to calculate avoided cost rates for projects exceeding published rate limits.
See Order No. 32697 at 7-22. Published rates are available for wind and solar QFs with a design
capacity of up to 100 kilowatts. Id.; see also 18 C.F.R. § 292.304(c).

IN THE MATTER OF ROCKY MOUNTAIN
POWER’S APPLICATION FOR APPROVAL
OR REJECTION OF THE POWER
PURCHASE AGREEMENT BETWEEN
PACIFICORP AND MINK CREEK HYDRO
LLC
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CASE NO. PAC-E-21-14

ORDER NO. 35223
ORDER NO. 35223 2

THE APPLICATION
The Seller has been delivering energy from the Facility to the Company under a power
purchase agreement dated May 21, 1985, which expires March 31, 2022. Application at 3. The
Company represented that during the negotiation of the PPA it found that the nameplate rating for
the Facility in the original power purchase agreement was 2.70 Megawatts (“MW”). Id. at 4.
However, the Company stated the Facility’s actual nameplate rating is 2.95 MW. Id. As a result,
the Company represented that the PPA contains two sets of rates, one with capacity and energy for
the first 2.70 MW and the second with energy only for production above that level until the
Company’s next capacity deficiency period. Id. The PPA contains published non-seasonal, non-
levelized avoided cost rates for a 20-year term. See PPA Exhibit K attached to the Application.
The Company asks the Commission to declare that the avoided cost prices set forth in the PPA are
just and reasonable, in the public interest, and that the Company’s incurrence of such costs are
legitimate expenses for cost recovery. Application at 5.
STAFF COMMENTS
Staff’s review of the PPA focused on nameplate capacity rating, capacity payment
eligibility, avoided cost rates, the 90/110 rule, and long-range forecasting. Staff Comments at 2.
Staff noted differing capacity ratings and peak contributions of the Facility and that actual capacity
payment amounts will depend on its actual generation. Id. at 2. Staff confirmed that the Facility
should receive capacity payments for the first 2.70 Megawatt hours (“MWh”) generated each hour
from the Facility. Id. During the Facility’s original power purchase agreement term the Company
added significant resources to meet its capacity deficiencies, which also qualifies it for immediate
capacity payments as in Case Nos. IPC-E-19-04, IPC-E-19-30, and IPC-E-19-35. Id. Staff also
recommended that generation amounts over 2.70 MWhs would not receive capacity payment until
2029, its first deficit year. Id. 2-3.
Staff confirmed the PPA contains the 90/110 Rule as required by Commission Order
No. 29632 and believes that the advanced notice provisions and market prices used for determining
prices outside of the 90/110 band are reasonable. Id. at 3. Staff reviewed advanced notice
requirements and the determination of market prices in the PPA and believes they are reasonable.
Id. at 3-4. Staff did not oppose the Seller providing annual updates to the generation profile
described in Section 6.7.1 of the PPA. Id. Staff also noted that the Company and Seller are securing
ORDER NO. 35223 3

a new stand-alone generation interconnection agreement. Id. at 4. This generation interconnection
agreement is required by the PPA before the PPA becomes effective. Id.
Staff recommended that the Commission approve the PPA and exhibits as filed with
two sets of rates. Id. at 2-4. One set of rates with avoided cost of capacity and avoided cost of
energy for up to 2.70 MWh each hour, and the second only with avoided cost of energy for
production above that level until the Company’s first capacity deficiency date. Id. at 2. Staff also
recommended that the Company file the executed stand-alone generation interconnection
agreement in this case. Id. at 4. Last, Staff recommended the Commission find that the avoided
cost prices in the PPA are prudently incurred expenses for ratemaking purposes. Id.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-502 and 61-
503. The Commission is empowered 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 to fix the same by order. Id. In addition,
the Commission has authority under PURPA and Federal Energy Regulatory Commission
(“FERC”) regulations to set avoided costs, to order electric utilities to enter fixed term obligations
for the purchase of energy from QFs, and to implement FERC rules. The Commission may enter
any final order consistent with its authority under Title 61 and PURPA.
Having reviewed the record, including the Company’s Application, the PPA, and
Staff’s Comments, the Commission finds it reasonable to approve the PPA and exhibits as filed.
The Facility is eligible based on characteristics such as the nameplate capacity rating, capacity
payment eligibility, avoided cost rates, the 90/110 rule, and long-range forecasting. The
Commission also approves two sets of rates. One set of rates with avoided cost of capacity and
avoided cost of energy for up to 2.70 MWh each hour, and the second only with avoided cost of
energy for production above that level until the Company’s first capacity deficiency date.
The Company shall also file the executed stand-alone generation interconnection
agreement required by the terms of the PPA with the Commission. Lastly, the Commission finds
the avoided cost prices in the PPA are just and reasonable, in the public interest, and that the
Company’s incurrence of such costs for purchases of energy and capacity are prudently incurred
expenses for ratemaking purposes.
ORDER NO. 35223 4

O R D E R
IT IS HEREBY ORDERED that the Company’s PPA and exhibits as filed with the
Seller are approved.
IT IS FURTHER ORDERED that the Company shall file the executed stand-alone
generation interconnection agreement with the Commission.
IT IS FURTHER ORDERED that all payments made by the Company for purchases
of energy and capacity under the PPA are allowed as prudently incurred 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 regarding 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 12th day
of November 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\ELECTRIC\PAC-E-21-14 Mink Creek\orders\PACE2114_final_order_es.docx