FERC on Tuesday found that Idaho Power had satisfied the commission’s standards for market-based rate authority and terminated a Section 206 proceeding it had ordered last September to find out if the utility was exercising market power in its balancing authority area (ER10-2126).

The proceeding was meant to determine if Idaho Power could continue charging market-based rates in its BAA.

The company’s market-power analysis, initially submitted in June 2019, had passed the pivotal supplier and wholesale market share screens in the Avista, Bonneville Power Administration, Nevada Power, NorthWestern Corp., PacifiCorp-East and PacifiCorp-West BAAs and in CAISO’s Energy Imbalance Market. But it failed the wholesale market share indicative screen in one season in its own BAA.

Based on the results, FERC ordered Idaho Power to show cause within 60 days why the commission should not revoke the company’s market-based rate authority in its BAA.

Responding in November, Idaho Power said its updated market power analysis, which included a delivered price test (DPT), rebutted the presumption of horizontal market power in its BAA.

“As the commission has previously explained, the DPT analysis identifies potential suppliers based on market prices, input costs and transmission availability and calculates each supplier’s economic capacity and available economic capacity for each season/load level,” FERC said. “The results of the DPT are used for pivotal supplier, market share and market concentration analyses.”

The DPT calculates market concentration using the Hirschman-Herfindahl Index (HHI). “An HHI of less than 2,500 in the relevant market for all season/load levels, in combination with a demonstration that the applicants are not pivotal and do not possess more than a 20% market share in any of the season/load levels, would constitute a showing of a lack of horizontal market power, absent compelling contrary evidence from interveners,” FERC explained.

Under the available economic capacity measure, which factors the utility’s own load into the calculation, Idaho Power’s HHI score was less than 2,500 in all 10 season/load levels. But under the economic capacity measure, its HHI exceeded 2,500 in all 10 season/load levels and “thus Idaho Power fails the market concentration test in every season/load level,” FERC said.

However, FERC noted its prior rulings had found that “failure of either the economic capacity or available economic capacity analyses does not result in an automatic failure of the test as a whole. The commission weighs the results of the economic capacity and the available economic capacity analyses and considers the arguments of the parties.”

“As the commission explained in Order No. 697: ‘[I]n markets where utilities retain significant native load obligations, an analysis of available economic capacity may more accurately assess an individual seller’s competitiveness, as well as the overall competitiveness of a market, because available economic capacity recognizes the native load obligations of the sellers,” FERC wrote. “On the other hand, in markets where the sellers have been predominantly relieved of their native load obligations, an analysis of economic capacity may more accurately reflect market conditions and a seller’s relative size in the market.’”

Given Idaho Power’s native load obligations, FERC found the available economic capacity measure — under which its HHI score was consistently less than 2,500 — more accurately reflected conditions in Idaho Power’s BAA.

“Based on the above discussion, there is no further need for the Section 206 proceeding instituted in Docket No. EL19-87-000,” FERC said. “Accordingly, we will terminate this Section 206 proceeding.”