20220309Comments.pdf

RILEY NEWTON
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.0074
[phone]
IDAHO BAR NO. II2O2
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION FOR APPROVAL
OR REJECTION OF THE AMENDED
POWER PTJRCHASE AGREEMENT
BETWEEN PACIFICORP AND LARRY AND
CHRISTIE OJA.
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Street Address for Express Mail:
I I33I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. PAC.E-22.0I
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Riley Newton, Deputy Attorney General, submits the following comments.
On January 19,2022, Rocky Mountain Power, a division of PacifiCorp ("Compffiy"),
requested the Commission approve or reject a Second Amendment to the Power Purchase
Agreement between the Company and Larry and Christie Oja ("Sellers") for energy generated by
a 260-kilowatt ("kW") hydroelectric facility ("Facility"Fa qualiffing facility ("QF") under the
applicable provisions of the Public Utility Regulatory Policies Act of 1978 ("PURPA").
The Facility is in Oneida County, Idaho, and has been delivering energy to the Company
in accordance with a Power Purchase Agreement ("PPA") dated March 4,1986, which expires
January 31,2022.
The Company states that it and the Sellers are in the "process of securing a new stand-
alone interconnection agreement that, after all distribution system upgrades are constructed and
in-service, will replace the interconnection provisions in the current PURPA contract." The
ISTAFF COMMENTS MARCH 9,2022
Company further states that the Second Amendment will operate as a one-year extension of the
current PURPA contract already in place between the Sellers and the Company and will be
effective for the earlier of the effective date of a renewal contract or January 31,2023.
STAFF ANALYSIS
Staffrecommends approval of the proposed Second Amendment of the PPA between the
Company and Sellers. Staff also recommends that the Commission approve the retroactive
application of the avoided cost rates in the Second Amendment for the duration of the lapsed
contract period, even though the Second Amendment does not cover that period. StafPs review
focused on the 90/110 rule, capacity payment eligibility, the lapsed contract period, and the
avoided cost rates.
90/110 Rule
Staff believes it is acceptable to not include the 90/l l0 rule in the Second Amendment
for the limited period during which it will be effective. However, when the long-term renewal
contract is submitted for Commission approval, the parties need to include the 90/110 rule. In
addition, the renewal contract should be promptly filed so as to allow sufficient time for Staff to
review and for the Commission to deliberate on it. Doing this will enable the new contract to be
authorized before the extended contract expires.
The original 1986 contract did not include the 90/l l0 rule because it was signed before
the Commission adopted the rule in Order No. 29632.1 However, the contract extension
provided for in the Second Amendment is limited to a maximum of one year serving as a short-
term bridge to allow the Seller and the Company to secure the transmission interconnection
agreement required for a new long-term renewal contract. The circumstances of this case are
similar to those in Case No. PAC-E-20-09 and Case No. PAC-E-2L-IL, where the Commission
allowed the parties to amend their contract without including the 90/110 requirements so that the
QF could secure an interconnection agreement and continue operation under a new renewal
contract.
I Order No. 29632 required QFs to provide monthly estimates to be entitled to a published rate contract.
2STAFF COMMENTS MARCH 9,2022
Capacitv Payment Eligibility and Lapsed Contract Period
The Sellers were receiving capacity payments at the end of the original 1986 contract and
are eligible to continue receiving capacity payments for the extended contract term. The
Commission has determined that QFs receiving capacity payments at the end of their previous
contract term or QFs that have contributed to meeting the utility's capacity needs during the
original contract term, should be eligible for immediate capacity payments under a renewal
contract. See Order No. 32697 (QFs receiving capacity payments at the end of their previous
contract term eligible for immediate capacity payments); Order Nos. 34295 ,34512, and 34539
(QFs that have contributed to meeting the utility's capacity needs during the original contract
term eligible for capacity payments).
In this case, however, the original 1986 contract expired on January 31,2022. According
to Article 5 of the Second Amendment, it will not become effective until the Commission
approves it. Therefore, there is a lapsed contract period between February 1,2022, and the
Second Amendment's final effective date. Although the Commission has warned in previous
orders of withholding capacity payments to sellers who allow contracts to lapse before a renewal
contract becomes effective, Staff does not believe the circumstances in this case warrant
withholding; thus, Staff believes that it is acceptable to apply the proposed avoided cost rates
with capacity payments retroactively for the lapsed contract period.
Staff acknowledges the Commission's concems about lapsed contract periods. For
example, the Commission has stated that the lack of contractual commitment could create
uncertainty for the Company's resource planning and leave the Company with little recourse
should a seller experience a sudden change in operation or decide not to sell to the Company
going forward. See, e.g., Order Nos. 35067 and 35060; see also Order No. 34792 (where the
Commission stated "[i]f the PPA were to have lapsed without a replacement PPA in place, the
QF's eligibility for capacity payments may be affected.")
Staff examined the circumstances and timeline of the transmission interconnection
process that contributed to the lapsed contract period in this case. According to the Company,
the Sellers could have prevented months of delay by more promptly responding to its request
regarding renewal of the PPA, applying for the new transmission interconnection, and hiring a
consultant to assist with providing the site control and technical data. See Response to Staff
Production Request No. 4.
JSTAFF COMMENTS MARCH 9,2022
While there were opportunities for the Sellers to have completed the interconnection
process prior to expiration of the 1986 contract, Staff believes it is acceptable for the project to
receive capacity payments during the lapsed contract period for three reasons. First, the Sellers
have not shown any lack of commitment to securing an interconnection agreement and
continuing to provide generation to the Company since they became actively engaged, in
September 2021, in resolving the interconnection issues. Second, several previous QFs with a
lapsed contract period were not denied capacity payments by the Commission. See Order Nos.
34692,34792, and 35303. Third, although the Commission authorized contracts without
capacity payments during lapsed contract periods in Case Nos. PAC-E-21-LL,IPC-E-21-07, and
IPC-E-21-08, the parties in those cases agreed to the terms when submitting their filed PPAs,2
which do not apply in this case.
Last, continuous operation is a requirement for QFs to receive capacity payments. See,
e.g., Order Nos. 33357 and 34887. The Company expects the Facility to continue to generate
energy, even though the Seller is no longer operating under the current contract. The Company
will pay the avoided cost rates proposed in the Second Amendment for the lapsed contract period
if the Commission approves retroactive rates starting February 1,2022. See Response to
Production Request No. 3.
Avoided Cost Rates
Staff reviewed the non-seasonal hydro avoided cost rates contained in the Second
Amendment with the execution date of December 15, 2021, by comparing the rates contained in
the Second Amendment and the rates authorized at that time. Staff verified that the proposed
rates are correct.
Although the Second Amendment states that it was dated December 15,202l,the
Company's signature page was not dated. The signature pages show that the Sellers executed the
Second Amendment on December 6,2021, and the Company's execution date was unknown.
Subsequently, the Company provided evidence of email correspondence between the parties that
the Company executed the Second Amendment on December 15, 2021. See Confidential
Response to Staff s Production Request No. l.
2 In Case Nos. IPC-E-21-07 and IPC-E-21-08, the parties agreed to use Surplus Enerry Price without capacity
payments for the lapsed contract periods during the discovery process. Staff s comments agreed to this treatment.
4STAFF COMMENTS MARCH 9,2022
STAT'X' RECOMMENDATIONS
Staff recommends approval of the proposed Second Amendment of the PPA between the
Company and Sellers. Staffalso recommends that the Commission approve the avoided cost
rates contained in the Second Amendment retroactively for the lapsed contract period. Lastly,
Staff recommends that the Commission declare that the avoided cost prices set forth in the
Second Amendment are just and reasonable, in the public interest, and that the Company's
incurrence of such costs are legitimate expenses.
Respecttully submitted this 1lL\ day of Mar ch2022.
Riley Newton
Deputy Attorney General
Technical Staff: Yao Yin
i:umisc/commentVpace22.0 lmyy comments
5STAFF COMMENTS MARCH 9,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 9TH DAY OF MARCH 2022,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFF, IN
CASE NO. PAC.E,-22-OI, 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 : [e-mail]
idahodockets@pacifi corp. com
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datareq uest@pacifi com. com
EMILY WEGENER
ROCKY MOUNTAIN POWER
I4O7 WN TEMPLE STE 320
SALT LAKE CITY UT 84I 16
E-MAIL: [e-mail]
CERTTFICATE OF SERVICE