20201022Comments.pdf

Gregory M. Adams (ISB No. 7454)
Peter J. Richardson (ISB No. 3195)
Richardson Adams, PLLC
515 N. 27ft Street
Boise,Idaho 83702
Telephone: [phone]
Fax: [phone]
greg@richardsonadams. com
peter@richardsonadams. com
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Attorneys for Fall River Rural Electric Cooperative, Inc.
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
FOR APPROVAL OF THE POWER
PURCHASE AGREEMENT BETWEEN
PACIFICORP AND FALL RTVER RURAL
ELECTRIC COOPERATTVE, INC.
CASE NO. PAC-E-z0-IO
COMMENTS OF FALL RTVER
RURAL ELECTRIC COOPERATIVE,
INC. IN SI.'PPORT OF SETTLEMENT
STIPULATION
Pursuant to Order No. 34806 issued by the Idaho Public Utilities Commission
("Commission") on October 6,2020, Fall River Rural Electric Cooperative, Inc. ("Fall River")
hereby lodges its Comments in Support of the Settlement Stipulation that was lodged for
Commission approval on October 13,2020.
BACKGROUi\D
This proceeding regards the approval of a replacement power purchase agreement for the
Felt Hydropower Project ("Felt "Project") currently owned and operated by Fall River. The Felt
Project currently sells its full electrical output to PacifiCorp as a qualiffing facility (*QF") under
a 35-year power purchase agreement ("PPA") dated December 4, 1984. The Felt Project consists
of two powerhouses located at a diversion dam on the Teton River - Powerhouse #1 which has a
capacity of 1,950 kW, and Powerhouse#2,whichhas a capacity of 5,500 kW. The 1984 PPA
COMMENTS OF FALL RTVER RURAL ELECTRIC COOPERATME, INC. IN SUPPORT
OF SETTLEMENT STIPULATION
PAC-E-2O-10
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expires on April 1,2021, and therefore Fall River contacted PacifiCorp to obtain a replacement
PPA over ayear ago. PacifiCorp and Fall River engaged in extensive negotiations, with give and
take on both sides, to reach the agreed-to terms and conditions in the PPA ultimately submitted
for approval in this proceeding. Consistent with the Commission's policy for renewing PPAs for
existing QFs, the PPA submitted for approval contained rates that included for avoided capacity
costs for its entire term, even though PacifiCorp's avoided cost rates in effect at the time of
execution of the PPA contained a substantial capacity surplus period until 2028 for new QF
projects.
In Commission Staff s comments filed on August 17,2020, Staff recommended several
changes to the PPA submitted for approval. Most significantly, Staff asserted that because one
of the two powerhouse, Powerhouse #1, has been out of service since 2006, the PPA should be
revised to provide that Fall River will not receive capacity payments until the end of the capacity
surplus period, in2028, for capacity from Powerhouse #1. Additionally, Staff proposed a
reduction to the non-firm energy rate used for energy delivered outside ofthe 90-l l0
performance band, and Staff proposed that a mechanism would need to be adopted to enable the
90-110 performance band to function properly in conjunction with the two different rate streams
under the PPA. Upon receipt of StafPs comments, the Parties conferred and reached agreement
on how the resolve the issues raised in Staff s comments on a mutually acceptable basis and
entered in the Sefflernent Stipulation.
The Settlement Stipulation has been negotiated and agreed to by all of the Parties to this
docket which includes the Commission StaS Fall River, and PacifiCorp (collectively referred to
herein as the "Parties"). The Settlement Stipulation was lodged with the Commission on
COMMENTS OF FALL RTVER RURAL ELECTRIC COOPERATIVE, INC. IN SUPPORT
OF SETTLEMENT STIPULATION
PAC-E-2o-10
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October 13, 2020, in a pleading in which the Parties represent that it is "fair, just, and
reasonable" and in which the Parties recommend Commission's approval of all of the terms and
conditions contained in the Settlement Stipulation. Fall River lodges these Comments in Support
in order to provide the Commission additional context and understanding as to the
reasonableness of the compromises and agreements embedded in the Settlement Stipulation.
COMMENTS IN ST'PPORT OF THE SETTLEMENT STIPULATION
The Commission should approve the Settlement Stipulation in its entirety because it will
result in a fair and reasonable outcome of the issues in this proceeding.
1. Capacity Payments
The most significant potentially disputed issue that was amicably resolved in sefflement
discussions and that is embedded in the Settlement Stipulation deals with the treatment of future
capacity payments for this relatively small hydroelectric QF. The Settlement Stipulation
provides atparagraph 9 that the PacifiCorp will:
[L]imit capacity payments for generation of electricity from the Facility to amounts that it
has historically generated at Powerhouse#2, while withholding capacity payments for
any incremental generation until January 1,2028. [PacifiCorp's next capacity deficit
year.l
More specifically, as explained in paragraph I l, the Parties agree to amend the PPA to provide
that the capacity payments will only be made for the frst 5,100 kW delivered from the Facility in
any hour until the end of the capacity surplus period, which is explained as follows:
The Parties agree that from April 1,202I, the date sales are to commence under the
Amended Agreement, through December 3I,2027 the Company will pay Fall River for
the avoided cost ofcapacity and the avoided cost ofenergy for energy generated by the
Facility in each hour up to the capacity payment limit of 5, 100 kilowatt-hours ("kWh")
and the Company will pay Fall River the avoided cost of energy only for energy
delivered hourly in excess of 5,100 kWhs.
COMMENTS OF FALL RIVER RURAL ELECTRIC COOPERATIVE, INC. IN SUPPORT
OF SETTLEMENT STIPULATION
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This mechanism was acceptable to all Parties under the circumstances here. The Parties
were able to determine that the maximum net output reasonably likely to be produced by
Powerhous e # 2 is roug$y 5,100 kW over the cotuse of an hour. Furthermore, due to the
configuration of the Facility and available water, the Facility has historically been operated, and
is planned to be operated in the future, such that Powerhouse #1 is normally only operated during
times where Powerhous e #2 is already operating at its maximum level. PacifiCorp's billing
systems can implement this payment mechanism without any party incurring the cost and delay
that might be entailed with other solutions that might otherwise result from Staff s proposed
treatment of capacity from Powerhouse #1, such as installation of new meters or communication
devices that would separately meter the output of the two powerhouses.
This provision of the Settlement Stipulation resolves, what was for Fall River at least, the
single most significant issue that was addressed during settlement negotiations among the
Parties. As noted above, PacifiCorp and Fall River initially proposed full capacity payments for
Powerhouse#2 xwell as Powerhouse #l in their initial filing before the Commission.
However, Staffargued in its filed comments that Powerhouse #1 should not be entitled to any
capacity payments during PacifiCorp's capacity surplus period (until2028) because Powerhouse
#l has been out of service since approximately 2006, and it is currently being repaired. Fall
River believes its initial position as to receipt of capacity payments for the electrical output from
Powerhouse #1 for the entire term of the renewal PPA was, and remains defensible under extant
Commission precedent. Fall River intends to have Powerhouse #1 back online before the
termination of its existing PPA, and the available data produced in discovery demonstrated that
COMMENTS OF FALL RIVER RURAL ELECTRIC COOPERATIVE, INC. IN SUPPORT
OF SETTLEMENT STIPULATION
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the Facility as a whole has generated more generation annually in the years since Powerhouse #1
has been out ofservice.
However, Fall River acknowledges the extended period Powerhouse #1 has been out of
service and has agreed to compromise its position on this issue in the interests of this
Commission's approval of the overall Settlement Stipulation - particularly due to the fact that
the Parties were able to reach an agreement on how to cost-effectively implement Stafls
proposal in a manner that Fall River considers fair and reasonable under the facts presented.
However, should the Commission reject the Stipulation, Fall River has preserved, pursuant to
paragraph 21 of the Sefflement Stipulation, the right to present its position for approval of the
originally filed PPA, which contains full capacity payments forboth Powerhouse#2 and
Powerhouse #l for the entire term of the power purchase agreement.
2. Miscellaneous Issues
The Settlement Stipulation also resolves the other issues raised by Staffin its comments
in accordance with Staff s recommendation. These included replacement of the market energy
price used for non-conforming energy (falling outside of the 90-l l0 performance band) with a
reduced value to the market price to approximate a "non-firm" market price, as well technical
changes to the PPA to accommodate that change and to properly implement the 90-110
performance band with two different fixed-price streams in the PPA. Notably, these changes,
along with those noted above regarding the capacity payments, generally work to reducethe
amount Fall River will be paid for its electrical output. However, that fact notwithstanding, Fall
River is amenable to these provisions in the furtherance of the of Settlement Stipulation and to
further comity among the Parties.
COMMENTS OF FALL RTVER RURAL ELECTRIC COOPERATME, INC. IN SUPPORT
OF SETTLEMENT STIPULATION
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CONCLUSION
WIIEREFORE, Fall River respectfully requests that this Commission find that the
Settlement Stipulation is in the public interest and is fair, just, and reasonable. Fall River
recommends it be adopted in full.
DATED: October 22, 2020.
RICHARDSON ADAMS, PLLC
By /s/ Gresory M. Adams
Gregory M. Adams (ISB No. 7454)
515 N.27ft Street
Boise,Idaho 83702
Telephone: [phone]
Fax [phone]
greg@richardsonadams. com
COMMENTS OF FALL RTVER RURAL ELECTRIC COOPERATIVE, INC. IN SUPPORT
OF SETTLEMENT STIPULATION
PAC-E-2O-10
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 22od day of October2020,I delivered true and correct
copies of the foregoing COMMENTS OF FALL RTVER RURAL ELECTRIC
COOPERATIVE, INC. IN SUPPORT OF SETTLEMENT STIPULATION to the following
parties via electronic mail:
JanNoriyuki
Commission Secretary
Idaho Public Utilities Commission
P.O. Box 83720
Boise, lD 83720-0074
j an.noriyuki@puc. idaho. gov
Jacob A. McDermott
Senior Counsel
Rocky Mountain Power
1407 WestNorth Temple, Suite 320
salt Lake city, uT 84116
Jacob. mcde rmott@p acifi corp. com
Edward Jewell
Deputy Attomey General
Idaho Public Utilities Commission
P.O. Box 83720
Boise,lD 83720-0074
edward j ewell@puc. idaho. gov
Adam Lowney (ISB#1 0456)
McDowell Rackner Gibson PC
419 SW 1lft Avenue, Suite 400
Portland, OR 97205
[e-mail]
Ted Weston
Idaho Regulatory Affairs Manager
Rocky Mountain Power
1407 WestNorth Temple, Suite 330
salt Lake ciry, uT 84116
ted. weston@pacificorp. com
IdahoDockets@pacifi corp. com
Dated: October 22,2020
ls/ Gresorv M. Adams
Gregory M. Adams (ISB No. 7454)
COMMENTS OF FALL RMER RURAL ELECTRIC COOPERATME, INC. IN SUPPORT
OF SETTLEMENT STIPULATION
PAC-E-2O-10
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