20220729Comments.pdf

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-,.i: .,1.[. ii 1,ii ii]: ?0CLAIRE SHARP
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
IDAHO BAR NO. 8026
Street Address for Express Mail:
I 133I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION FOR APPROVAL
OR REJECTION OF THE POWER
PURCHASE AGREEMENT WITH AMY
FAMILY HOLDINGS, LLC.
CASE NO. PAC.E.22-08
COMMENTS OF THE
COMMISSION STAFF
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STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Claire Shurp, Deputy Attorney General, submits the following comments.
BACKGROUND
On May 18,2022, PacifiCorp d/b/a Rocky Mountain Power ("Company") applied to the
Commission for an order approving or rejecting a Power Purchase Agreement ("PPA") between
the Company and Amy Family Holdings, LLC. ("Seller") (collectively, the "Parties") for energy
generated by the Bell Mountain Hydro Project ("Facility"fa qualifuing facility ("QF")-and a
declaration that the avoided cost prices arejust and reasonable.
The Seller's original Public Utility Regulatory Policies Act of 1978 ("PURPA") contract
("1985 Contract") was dated January 3, 1985. The PURPA contract was entered into prior to the
Company separating its energy supply and transmission functions. The Company required the
Seller to complete certain standalone interconnection requirements prior to entering into a new
long-term PPA, which the Seller could not complete before the expiration of the 1985 Contract.
ISTAFF COMMENTS JULY 29,2022
To allow time for the Seller to complete the interconnection, the Parties amended the contract
and entered into a one-year extension of the 1985 Contact ("Amendmenf'). The Commission
conditionally approved the Amendment requiring modifications before it could be approved on
December 20,2021. See OrderNo. 35262.
The Parties filed the modifications to the Amendment on June 14,2022, as a compliance
filing. The Commission approved the modified Amendment ("Modified Amendment") on
JluJy 21,2022, in OrderNo. 35469.
STAFF ANALYSIS
StafPs review focused on: the Avoided Cost Rates, Contract Year, Scheduled Initial
Delivery Date, SectionlL.2.4., Section 21, andprovisions that address potential modifications to
the Facility. Staffrecommends that the Commission approve the PPA if the Company and Seller
enter into and file an amended pp{ ssftaining the following modifications:
1. Replace "January 1,2022- with "January 1,2023" in Exhibit K.
2. Replace 'oJanuary 1,2022" with "January 1,2023" in the definition of Contract
Year on Page2 of the PPA.
3. Replace "January 1,2022" with "January 1,2023" in the definition of Scheduled
Initial Delivery Date on Page 8 of the PPA.
4. Replace "July 1, 2022 with "July I,2023" in Section 11.2.4 (Remedy for
Seller's Failure to Achieve Timely Initial Delivery Date) on Page 30 of the PPA.
5. Update Section 21 of the PPA to eruilre that any modification does not become
valid without Commission authorization; and
6. Include detailed provisions to adequately address potential modifications to the
Facility.
Avoided Cost Rates
When the Commission conditionally approved the one-year extension, it also directed the
conhacting parties to use bifurcated avoided cost rates in any long-term renewal contract for the
Facility. ,See Order No. 35262. Although the proposed avoided cost rates contained in Exhibit K
are correct, Staff believes that the start time for bifurcated rates is mistakenly stated. Therefore,
2STAFF COMMENTS JULY 29,2022
Staffrecommends that the start time be corrected to "January 1,2023". Exhibit K of the PPA
uses a startdate ofJanuary L,2022, and states:
[F]rom January l, 2022, through December 31, 2028, the Conforming
Energy annual rate from Table 1, Column l.a. below, for the year for all
Net Output in each hour up to 600 kWh, and the Conforming Energy annual
rate from Table l, Column 1.b. for all Net Output in each hour in excess of
600 kwh.
Staffrecommends that ooJanuary 1,2022 be replaced with "January L,2023" because the
Facility is using the avoided cost rates and operating under the Modified Amendment for the
period from January L,zozz,through December 31,2022.1
Contract Year
Contract Year is defined as "any consecutive twelve (12) month period during the Term,
commencing at 00:00 hours on January 1,2022, or any of its anniversaries and ending at24:00
hours on the last day of such twelve (12) month period." Because the Facility is operating under
the Modified Amendment with a contact term from January I,2022, through December 31,
2022, Staff recommends that "January I , 2022 in the definition be replaced with "January I ,
2023 on Page 2 of the PPA, based on the start of the confract term for the PPA under review in
this case.
Scheduled Initial Deliverv Date
Staffbelieves that the Scheduled Initial Delivery Date should coincide with the start date
of the contract term, the Scheduled Lritial Delivery Date should also be corrected reflecting
January 1,2023, instead of January 1,2022, on Page 8 of the PPA.
t The Modified Amendment states "[u]nless terminated earlier pursuant to the terms of this Agreernent, this
Agreement shall expire upon the earlier of (i) the effective date of a new power purchase agreement between
PacifiCorp and Seller pertaining to the Facility; or (ii) December 31, 2022." The Effective Date of the PPA is no
earlierthan Januarv 1.2023. because Section 2.1 of the PPA defines Effective Date as follows: "This Agreement
will become effective after the occurrence of all of the following events (such date of occurrence, the "Effective
Date"): (l) execution by both Parties; (2) approval by the Commission; (3) Seller has executed and is performing in
accordance with a new Generation Interconnection Agreement with the Interconnection Provider; or 4) January l,
2023; provided, however, this Agreement shall not become effective until the Commission has determined, pursuant
to a final and non-appealable order, that the prices to be paid for energy and capacity arejust and reasonable, in the
public interest, and that the costs incurred by PacifiCorp for purchases of capacity and energy from Seller are
legitimate expenses, all of which the Commission will allow PacifiCorp to recover in rates in Idaho in the event
otherjurisdictions deny recovery oftheir proportionate share ofsaid expenses."
3STAFF COMMENTS ruLY 29,2022
Section I1.2.4 (Remedv for Seller's Failure to Achieve Timely Initial Delivery Date)
Section 11.2.4 states that Seller shall have until July I,2022, or ninety (90) days after the
Effective Date, whichever is later, to cure any failure to achieve Initial Delivery before
PacifiCorp will have the right to terminate this Agreement. Because the Facility is operating
under Modified Amendment from January 1,2022, through December 31,2022,9taff
recommends that "July l, 2022" be replaced with "July 1 , 2023' .
Section 2l
Section 2l of the PPA contains the statement "[n]o modification of this Agreement is
effective unless it is in writing and executed by both Parties." Staffbelieves 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 Panies and subsequently approved by the
Commission.
Potential Modifications to Facilitv
Staffbelieves that the PPA needs additional detailed provisions to adequately address
potential modifications besides capacity size increases to the Facility and to describe
responsibilities of each party before and after such modifications take place.
Although Section 2l states that "[n]o modification of this Agreement is effective unless it
is in writing and executed by both Parties," Staff believes "modification of this Agreement" is
not equivalent to a change in the Facility. For example, a QF could modiff its facility,
increasing its capacity and its output without modiffing its contract. This would result in
overpayments to the QF by allowing it to receive compensation for potential increases in output
due to facility upgrades prior to the Company's need for additional capacity.
Potential modifications to the Facility for the Parties to consider include but are not
limited to nameplate capacity changes, generation output changes2, QF categories3 (Small Power
2 Generation ouput changes are not necessarily correlated with nameplate capacity changes; generation output can
change with the nameplate capacity staying the same.
' A QF can switch from a small power production facility to a cogeneration facility. See example of Case No. IPC-
E-19-39.
4STAFF COMMENTS JULY 29,2022
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 fuela
(which could lead to the options of Fueled Rates vs Non-Fueled Rates).
Generally, there are two tlpes of modifications to a facility. The first type happens when
a project is first built, and the completed project deviates from what was approved in the
contract. The second type happens dwing the conffact 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 confract, the contract should be amended to
reflect the "as-built" description.
For the second type of modifications, Staffbelieves there are two options to address the
modifications before they take place. The first option requires an "as-built" description in the
contract and a provision that any major modifications causing the project to deviate from the "as-
built" description will trigger an amendment to the contract requiring Commission approval.
The second option does not require an "as-built" description, but instead lists in the contract all
the items that can trigger an amendment to the contact and subsequently require approval from
the Commission, such as the items listed in the previous paragraph.
Because the PPA includes a description of the Facility in Exhibit B, Staffrecommends
that the Parties use the first option and include provisions that:
1. Restrict the Seller from modifying the Facility from the as-built description of the
Facility included in Exhibit B, without promptly notiffing the Company of that
intent.
2. With notification, Seller will provide planned modifications (such as fuel change
or capacity size change) to the as-built description.
3. Once the Company verifies commitment of the Seller's intent and concurs that the
Seller is capable of providing planned modifications, the rates approved by the
Commission earlier may not be applied to the modifications. lnstead, the project
may be priced at the appropriate avoided cost rates in effect at the time a new
LEO is established. As such, the Company will be required to file an amendment
o A QF can also switch from non-fueled rates to fueled rates. See example of Case No. IPC-E-19-39.
5STAFF COMMENTS ruLY 29,2022
to the contract for approval by the Commission with then-current pricing for the
modifications.
4. If planned modifications to the proJect, as reflected in the proposed, new as-built
description of the Facility, results in an additional project such that the project
combined with the additional project would still be deemed a single QF or on the
same site under FERC regulations, Seller may not require the Company to
purchase and the Company will have no obligation to purchase pursuant to this
Agreement, the output of any such additional facility under the terms, conditions,
and prices in the Agreement. Instead, Seller may exercise any rights to enter into
a new agreement for the sale of such incremental energy from the additional
facility that is a QF under then-applicable laws and regulations.
5. If the actual modification deviates from the proposed modification, the Parties
need to amend the contract again to reflect the actual modification and seek
approval from the Commission; and
6. The Seller will be in default if it does not adhere to any of the above.
Although the PPA contains relevant provisions for modifications to the Facility, such as
Section 6.85 and Section 11.1.2 (9)6, Staffbelieves that the PPA needs additional detailed
provisions to adequately address potential modifications besides capacity size increases to the
Facility and to describe responsibilities of each party before and after such modifications take
place.
5 Section 6.8 describes what happens when project expansions occur and states that "PacifiCorp is not required to
purchase any Net Output above the Maximum Delivery Rate or the Expected Net Output. 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."6 Section I I .1.2 (g) states that any modification of the Facility that results in the Facility increasing its Nameplate
Capacity Rating beyond that stated in Exhibit B or is reasonably likely to result in the Expected Net Output to
increase will higger defaults by Seller.
6STAFF COMMENTS JULY 29,2022
STAFF RECOMMENDATION
Staffrecommends Commission approval of the PPA if it is amended to include the
following changes:
1. Replace "January 1,2022" with "January 1,2023" in Exhibit K.
2. Replace "January l, 2022" with "January l, 2023" in the definition of Contact
Year on Page} of the PPA.
3. Replace "January 1,2022'with "January 1,2023" in the definition of Scheduled
Initial Delivery Date on Page 8 of the PPA.
4. Replace "July l, 2022" with "July 1,2023" in Section 11.2.4 (Remedy for
Seller's Failure to Achieve Timely Initial Delivery Date) on Page 30 ofthe PPA.
5. Update Section 2l of the PPA to ensure that any modification does not become
valid without Commission authorization; and
6. Include detailed provisions to adequately address potential modifications to the
Facility.
If the Commission approves these qfianges, Staffrecomme,nds that the parties file an
updated PPA as a compliance filing to reflect Staff s recommended changes.
Respecttully submitted this 2W day of J:uly 2022.
Claire Sharp
Deputy Attorney General
Technical Staff Yao Yin
i:umisc/commentVpace22.Scsyy comments
7STAFF COMMEN'TS Jt LY 29,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 29'h DAY OF ruLY 2022,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC.E.22.O8, BY E.MAILING A COPY THEREOF, TO THE
FOLLOWING:
TED WESTON
ROCKY MOI.'NTAIN POWER
I4O7 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I 16
E-MAIL : [e-mail]
idahodockets@0oc i f icorp. com
DATA REQUEST RESPONSE CENTER
F-MAIL ONLY:
datareouest@paci ficom.com
EMILY WEGENER
ROCKY MOI,JNTAIN POWER
I4O7 WN TEMPLE STE 320
SALT LAKE CITY UT 84I 16
E-MAIL: emil),[e-mail]
CERTIFICATE OF SERVICE