20220601Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9917
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION FOR APPROVAL
OR REJECTION OF THE POWER
PURCHASE AGREEMENT BETWEEN
PACIFICORP AND GEORGETOWN
IRRIGATION
CASE NO. PAC.E-22.06
COMMENTS OF THE
COMMISSION STAFF
-_ C,Li r.. 1..]i i ti ';' i tJ
-iL'1r-ll
Street Address for Express Mail:
I 1331 W CHINDEN BVLD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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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 April 13,2022, PacifiCorp dba Rocky Mountain Power ("Company") applied to the
Commission for an order approving or rejecting a Power Purchase Agreement ("PPA") between
the Company and Georgetown Irrigation Company ("Seller") for energy generated by a 480-
kilowatt ("kW") hydroelectric facility ("Facility")-a qualifuing facility ("QF") under the
applicable provisions of the Public Utilities Regulatory Policies Act of 1978 ("PURPA").
The Seller has been delivering energy from the Facility to the Company in accordance with
a one-year extension to a contract dated July 2,1984. The one-year extension was approved by
the Commission on August 2, 2021, in Case No. PAC-E-zL-ll, which allowed the Seller to
continue to deliver energy to the Company through March 31,2022. See Order No. 35123.
1STAFF COMMENTS JUNE T,2022
The Seller secured I a new stand-alone transmission interconnection agreement on
September l, 2021, and provided the necessary information and proof of insurance to support the
execution of the renewal PPA by March 24,2022. On March 28,2022, the Company and Seller
entered into a 2}-year renewal PPA that will remain in effect until March 31,2042.
STAFF ANALYSIS
Staffs review focused on: the nameplate capacity rating; capacity payment eligibility;
avoided cost rates; the 90/l l0 Rule; the Lapse (contract) Period; the definition of Contract Year;
Section 6.8; Section ll .1.2 (g); and Section 21 of the PPA. Staff recommends that the Commission
approve the PPA if the Company and Seller enter into, and file, an amended PPA containing the
modifications below:
1. Use one set of avoided cost rates, which include capacity payments starting in2029;
2. Update the provisions associated with the 90/l 10 Rule to reflect the use of one set of
rates;
3. Apply energy payments to the energy generated within the Lapse Period;
4. Update the definition of Contract Year;
5. Improve Section 6.8 to reflect other potential modifications to the Facility, besides
project expansions or additions;
6. Improve Section ll.l.2 (g) to reflect other potential modifications to the Facility,
besides project expansions or additions; and
7. Update Section 21 of the PPA to ensure that any modification does not become valid
without Commission authorization.
Nameplate Capacity Ratine
The original 1984 contract listed the nameplate capacity rating of the Facility at 330 kW.
However, the proposed PPA states that the nameplate capacity rating of the Facility is 480 kW,
which is the nameplate that was actually installed when the Facility was first constructed.
Response to Staff s Production Request No. l.
I The Company further explained to Staff that "secured" means "received" in an email on June 1,2022
2STAFF COMMENTS JUNE 1,2022
Capacitv Payment Eligibilitv
Staff believes that the Facility is not eligible for capacity payments until 2029, the
Company's first deficit year, because the project did not continuously generate energy between
April 1, 2022, and May 12,2022.
A QF only receives compensation for capacity when the utility is capacity deficient, unless
it is a renewal or extension project that was paid for capacity at the end of the original contract
(see Order No. 32697) or has contributed to meeting the utility's capacity needs during the original
contract term (see e.g., Case Nos. IPC-E-19-04,IPC-E-I9-30, and IPC-E-I9-35). In addition,
capacity payments depend on a facility's continuous operation. Order No. 34692 ("payment of
capacity relies on continuous operation under a valid power purchase agreement."); Order No.
34887 ("capacity payments for renewal/extension of energy sales agreements are conditioned upon
consistent and continuous operation of the facility at the time of the renewal/extension."); Order
No. 35303 ("payment of capacity relies on continuous operation under a valid power purchase
agreement.").
This Facility was not paid for capacity at the end of the original extended contract because
it was only paid for energy during the extended period in order to incentivize the Seller to finalize
the transmission interconnection agreement between the parties. Order No. 3 5 I 23 . However, the
project has contributed to meeting the Company's need for capacity during the term of the original
1984 contract, and should have been eligible for capacity payments in the proposed PPA for any
hourly generation up to 330 kWh from the Facility, had it continuously generated energy.
Between April l, 2022, and May 12,2022, the Facility did not generate any energy due to
lack of Designated Network Resource ("DNR") status. Federal Energy Regulatory Commission
("FERC") requires DNR status of a facility before the Company is able to accept power from the
facility. Response to Staffls Production Request No. 3. After a PPA is executed, a DNR can be
requested, and it can take up to 90 days to obtain the status. Response to Staffs Production
Request No. 4. The Seller did not provide the necessary documents, such as proof of insurance,
required for the execution of the PPA until March 24,2022, despite multiple reminders by the
Company. Response to Staff s Production Request No. 2. The PPA was executed on March 28,
2022. The DNR status request was submitted after the execution of the PPA. On May 12,2022,
the status was obtained, and the Seller could resume generation from that point moving forward.
Response to Staff s Production RequestNo. 3. Due to lack of continuous generation, Staff believes
JSTAFF COMMENTS JUNE 7,2022
that the Facility should be treated as a new project and should not receive capacity payments until
2029.
Avoided Cost Rates
The proposed avoided cost rates are bifurcated rates reflecting the 330 kW stated in the
original 1984 contract. Staff recommends that the avoided cost rates be modified to one set of
rates, which includes capacity payments starting in 2029 due to the interruption to facility
operation as discussed above. However, if the Commission determines that the Facility is eligible
for immediate capacity payments, Staff recommends the bifi.rcated rates as originally proposed.
90111 0 Rule
The 90/110 Rule proposed in the PPA is also based on bifurcated rates. Staff recommends
that the provisions associated with the 90/110 Rule be modified to reflect one set of rates, which
includes capacity payments starting in 2029 due to the interruption to facility operation as
discussed above. If the Commission determines that the Facility is eligible for immediate capacity
payments, Staff recommends the provisions associated with the 90/110 Rule based on the
bifurcated rates as originally proposed.
Lapse Period
According to Section 4.1 of the PPA, the period between the expiration of the original
contract and the Initial Delivery Date is a Lapse Period. Because the energy was not initially
generated until May 12,2022, and the energy could not be relied upon by the Company, Staff
recommends that the energy generated within the Lapse Period receives proposed energy payments
only. Capacity payment should only be made to compensate when the energy generated can be
counted on to avoid capacity cost of resources added in the future.
Definition of Contract Year
Staff recommends that the definition of Contract Year be modified to reflect the Initial
Delivery Date. Contract Year in the PPA is defined as "any consecutive twelve (12) month period
during the Term, commencing at 00:00 hours on April 1,2022, or any of its anniversaries and
ending at24:00 hours on the last day of such twelve (12) month period." The concept is used in
4STAFF COMMENTS JLTNE 1,2022
the annual forecast of Planned Outages in Section 6.5.1, which states: "Seller must provide
PacifiCorp with an annual forecast of Planned Outages for each Contract Year at least one month,
but no more than three months, before the first day of that Contract Year..." Because April l,
2022, was the Scheduled Initial Delivery Date, on which the Seller was not able to make delivery
of energy, Staff recommends changing "April 1,2022" to "Initial Delivery Date" for the definition
of Contract Year.
Section 6.8
Staff recommends that Section 6.8 of the PPA be improved to reflect other potential
modifications to the Facility besides project expansions or additions. Potential modifications for
the parties to consider include but are not limited to changes to the QF categories2 (Small Power
Production Facilities vs. Cogeneration Facilities), changes to the primary energy sources (non-
seasonal hydro, seasonal-hydro, wind, solar, and others), and changes to the generator fuel3 (which
could lead to the options of Fueled Rates vs Non-Fueled Rates). Currently, Section 6.8 is only
focused on project expansions or additions and states that:
PacifiCorp is not required to purchase any Net Output above the Maximum
Delivery Rate. If Seller builds an expansion or additional project such that
the Facility combined with the expansion or additional project would be
deemed a single QF or the same site under FERC regulations, Seller may
not require PacifiCorp to purchase (and PacifiCorp will have no obligation
to purchase pursuant to this Agreement) the output of any such expansion
or additional facility under the terms, conditions, and prices in this
Agreement. Instead, Seller may exercise any rights to enter into a new
agreement for the sale of such incremental energy from such additional
facility that is a QF under then-applicable laws and regulations.
Generally, there are two types of modifications to a facility. The first type happens when
a project is first built, and the completely built project deviates from what was approved earlier.
The second type happens during the contract term after the project is built where modifications are
made to the originally built project. In order to address the first type of modifications, the
Commission issued Order No. 35239 requiring new QFs to submit an "as-built" description of
their facilities by the first operation date. If the "as-built" description does not match the
description in the original, approved contract, the contract should be amended to reflect the "as-
2 A QF can switch from a small power production facility to a cogeneration facility. See example of Case No.
IPC-E- l9-39.
' A QF can also switch from non-fueled rates to fueled rates. See example of Case No. IPC-E-19-39.
5STAFF COMMENTS JUNE 1,2022
built" description. For the second type of modifications, Staff believes there are two solutions that
can be explored. The first solution is to include an "as-built" description and a provision that any
major modifications causing the project to deviate from the "as-built" description will trigger an
amendment to the contract and require an approval from the Commission. The second solution
does not require an "as-built" description, but instead lists in the contract all the items that can
trigger an amendment to the contract and subsequently require an approval from the Commission,
including but not limited to changes to nameplate capacity ratings.
For example, if the QF in this case chooses to switch from a non-seasonal hydro project to
a seasonal hydro project, Staff believes that rates and terms in the contract will need to be updated,
an amendment will need to be filed to reflect the changes, and the Commission needs to approve
these changes. Therefore, Staff recommends that Section 6.8 of the PPA be improved to reflect
other potential modifications to the Facility besides project expansions or additions.
Section 11.1.2 (g)
Staff recommends that Section 11.1.2.(g be improved to reflect other modifications
besides project expansions and additions, as discussed above. The section currently states that:
Any modification of the Facility that (i) results in the Facility increasing its
Nameplate Capacity Rating beyond that stated in Exhibit B, or (ii) is
reasonably likely to result in the expected annual Net Output, as calculated
in Exhibit A, to increase.
Staff believes this section should be improved to reflect the changes to Section 6.8
discussed above.
Section 2l
Section 2l of the PPA contains the statement: "No modification of this Agreement is
effective unless it is in writing and executed by both Parties." Staff believes that this statement
neglects the significance of Commission approval and recommends that the statement be updated
to reflect the need for the Commission approval before any modification becomes valid. For
example, the statement can be updated as follows: No modification of this Agreement is effective
unless it is in writing and executed by both Parties and subsequently approved by the Commission.
6STAFF COMMENTS JUNE 1,2022
STAFF RECOMMEIIDATION
Staff recommends Commission approval of the PPA if it is amended to include the
following changes:
1. Use one set of avoided cost rates, which include capacity payments starting in2029;
2. Update the provisions associated with the 90/110 Rule to reflect the use of one set of
rates;
3. Apply energy payments to the energy generated within the Lapse Period;
4. Update the definition of Contract Year;
5. Improve Section 6.8 to reflect other potential modifications to the Facility, besides
project expansions or additions;
6. Improve Section ll.l.2 (g) to reflect other potential modifications to the Facility,
besides project expansions or additions; and
7. Update Section 21 of the PPA to ensure that any modification does not become valid
without Commission authorization.
If the Commission approves these changes, Staff recommends that the parties file an
updated PPA as a compliance filing to reflect Staff s recommended changes.
!9Respectfully submitted this day ofJune 2022.
Dayn
Deputy Attomey General
Technical Staff: Yao Yin
i :umisc/comments/ pacfl2.6dtryy comments
7STAFF COMMENTS JUNE I,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS IST DAY OF JUNE 2022, SERVED
THE FOREGOING COMMENTS Of,' TIIE COMMTSSION STAFF, IN CASE NO.
PAC-E-22-06, BY E.MAILING A COPY THEREOF, TO THE FOLLOWING:
TED WESTON
ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I16
E-MAIL: ted.weston@facifi corp.com
idahodockets@pac ifi com. com
DATA REQUEST RESPONSE CENTER
E.MAIL OITLY:
datarequest@Jracifi corp.com
EMILY WEGENER
ROCKY MOUNTAIN POWER
1407 WN TEMPLE STE 320
SALT LAKE CITY UT 84I16
E-MAIL : emily.wegener@.pacificorp.com
Jo,4Z,,-,
SECRETAR
/
CERTIFICATE OF SERVICE