20071126_2117.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER RED FO RD
CO MMISSI 0 NER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:NOVEMBER 21, 2007
, SUBJECT:CASE NO. PAC-05-09 (PacifiCorp)
THIRD AMENDED POWER PURCHASE AGREEMENT -
SCHWENDIMAN WIND LLC
On March 31 , 2006, the Idaho Public Utilities Commission (Commission) in Case
No. PAC-05-, Order No. 30000, approved a January 27, 2006 Amended Power Purchase
Agreement between Schwendiman Wind LLC and PacifiCorp dba Utah Power & Light
(PacifiCorp; Company). As reflected in the underlying Second Amended Agreement
Schwendiman proposes to design, construct, install, own, operate and maintain a wind generating
facility with a nameplate capacity rating of 20 MW to be located in Bonneville County, Idaho at
a location more particularly described as Sections 3 and 4, Township 2 North, Range 39 East and
Sections 33 and 34 , Township 3 North, Range 39 East, Boise Meridian. Pursuant to the First
Amended Agreement, PacifiCorp was to purchase the net output of 7.15 aMW from the 82.
MW clipper wind generators comprising the QF. The Amended Agreement approved by the
Commission contemplated an estimated annual sale and purchase of 62 723 088 kWh. The
scheduled comn:ercial operation date in the Amended Agreement was changed to July 31 , 2007.
On September 24 , 2007 , PacifiCorp dba Rocky Mountain Power and Schwendiman
Wind LLC filed a Joint Motion with the Commission for approval of a Second Amended Power
Purchase Agreement (Second Amended Agreement) dated September 7, 2007. Prior to the
Commission s consideration of the Second Amended Agreement, the parties notified the
Commission that minor changes to the contract were required. The parties requested that the
Commission refrain from considering the Second Amended Agreement. On November 19
DECISION MEMORANDUM
2007, a Third Amended Agreement dated October 16, 2007 incorporating all changes was
submitted for approval.
Rocky Mountain Power and Schwendiman Wind entered into a 20-year Power
Purchase Agreement on July 19, 2005 (the Original Agreement) and submitted it to the
Commission for approval in this docket on August 15 2005. Pursuant to Order Nos. 29880 and
29921 , the parties submitted an Amended Agreement (September 26, 2006 Agreement) which
was subsequently approved by the Commission on March 31 , 2006 in Order No. 30000.
As set forth in the January 27, 2006 Agreement, Schwendiman Wind proposes to
design, construct, install, own, operate and maintain a wind generating facility with a nameplate
capacity of 20 MW to be located in Bonneville County, Idaho (the facility). Schwendiman Wind
would sell approximately 7.15 aMW of electric energy generated by the facility to the Company.
As previously described in the Application and exhibits filed August 15 , 2005 , the facility has
been self-certified with FERC as a qualified small power production facility (QF) under the
Public Utility Regulatory Policies Act of 1978 (PURP A), and would interconnect with the
Company s system on the Sugar Mill/Goshen-Rigby 69 kV line, 11 miles northeast of Idaho
Falls, Idaho.
Changes to the January 27, 2006 Agreement
The Third Amended Agreement includes the following changes to the January 27
2006 Agreement:
(a) Replace Exhibits A, B , D, and F-2 with new exhibits reflecting
Schwendiman Wind's substitution of Nordic wind turbines for Clipper
wind turbines;
(b) Update the Recitals to reflect the Nordic wind turbine output (average
annual Net Output reduced from 62 723 088 to 53 923 276 kilowatt hours
(kWh));
(c) Move forward in time on the Scheduled Commercial Operation Date
(from July 31 , 2007 to November 1 , 2008) and other intermediate
milestones in Section 2;
(d) Stipulate (in Section 2.3) to Schwendiman Wind's liability for Delay
Liquidated Damages, from August 1 , 2007, until the Commercial
Operation Date;
(e) Update the capacity factor table in Section 4.2.1 to reflect the substitution
of turbines; and
DECISION MEMORANDUM
(f) Add a new Section 22 containing security provisions applicable to
Schwendiman Wind. "Default Security" ($275 000) amount identified as
the estimated value of Delay Liquidated Damages (replacement power)
from August 1 , 2007 to the new Commercial Operation Date, November
2008.
The Third Amended Agreement also adds pricing for the year 2028 in Section 5 and
updates obsolete contract information in Section 21. Otherwise, PacifiCorp contends no
substantive changes to the January 27, 2006 Agreement are contemplated.
PacifiCorp requests that the Commission process the Third Amendment to its Power
Purchase Agreement with Schwendiman pursuant to Modified Procedure, i.e., by written
submission rather than by hearing. Reference Commission Rules of Procedure IDAP A
31.01.01.201-204. PacifiCorp requests a Commission Order approving the Third Amended
Power Purchase Agreement without change or condition; and reaffirming that prices to be paid
for energy and capacity are just and reasonable, in the public interest, and that the cost incurred
by the Company for purchasing capacity and energy from Schwendiman Wind are legitimate
expenses , all of which the Commission will allow the Company to recover from rates in Idaho in
the event other jurisdictions deny recovery of their proportionate share of said expenses.
COMMISSION DECISION
Tendered for Commission approval is a Third Amendment to the Power Purchase
Agreement between PacifiCorp and Schwendiman Wind LLc. The Commission Staff has
reviewed the Third Amendment and recommends approval without further notice or procedure.
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Scott D. Woodbury
bls/M:PAC-O5-09 _sw2
DECISION MEMORANDUM