HomeMy WebLinkAbout20110307_3270.pdfDECISION MEMORANDUM 1
DECISION MEMORANDUM
TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
FROM: KRISTINE SASSER
DEPUTY ATTORNEY GENERAL
DATE: FEBRUARY 28, 2011
SUBJECT: ROCKY MOUNTAIN POWER’S APPLICATION FOR APPROVAL OF A
POWER PURCHASE AGREEMENT WITH CARGILL. CASE NO. PAC-
E-11-08.
On February 16, 2011, PacifiCorp dba Rocky Mountain Power filed an Application
requesting approval of a 10-year Firm Energy Sales Agreement (Agreement) between Rocky
Mountain Power and Cargill, Inc. The project (Facility) is located in Jefferson County, Idaho.
The project will be a “qualifying facility” (QF) under the applicable provisions of the federal
PURPA.
THE AGREEMENT
On February 8, 2011, Rocky Mountain Power and Cargill entered into an Agreement.
Cargill intends to own, operate and maintain a biogas-fueled digester generating facility for the
generation of electric power. Under the terms of the Agreement, the Facility agrees to sell
electric energy to Rocky Mountain Power for a 10-year term using the current non-levelized
published avoided cost rates as currently established by the Commission in Order No. 31025 for
energy deliveries of less than 10 aMW. Application at 2. The nameplate rating of the Facility is
1.696 MW. Under normal and/or average conditions, the Facility will not exceed 10 aMW on a
monthly basis. Should the Facility exceed 10 aMW on a monthly basis, Rocky Mountain Power
will accept the energy, but will not purchase or pay for the inadvertent energy. Agreement ¶ 6.6.
The Facility has selected seven (7) days from the service date of the Commission’s
Order approving the Agreement as its Scheduled Commercial Operation Date. Application at 3.
Rocky Mountain Power asserts that various requirements have been placed upon the Facility in
order for Rocky Mountain Power to accept the Facility’s energy deliveries. Rocky Mountain
DECISION MEMORANDUM 2
Power states that it will monitor the Facility’s compliance with initial and ongoing requirements
through the term of the Agreement. The parties have agreed to delay liquidated damages and
security provisions. Agreement ¶¶ 2.4.1, 10.1. Rocky Mountain Power states that the Facility
has also been made aware of and accepted the provisions in the Agreement regarding curtailment
or disconnection of the Facility should certain operating conditions develop on Rocky Mountain
Power’s system. Agreement ¶ 6.3.
By its own terms, the Agreement will not become effective until the Commission has
approved all of the terms and conditions and declares that all payments made by Rocky
Mountain Power to the Facility for purchases of energy “are just and reasonable, in the public
interest, and that the costs incurred by [Rocky Mountain Power] for purchases of capacity and
energy from [Cargill] are legitimate expenses, all of which the Commission will allow [Rocky
Mountain Power] to recover in rates in Idaho in the event other jurisdictions deny recovery of
their proportionate share of said expenses.” Agreement ¶ 2.1.
STAFF RECOMMENDATION
Staff recommends that the Application be processed by Modified Procedure with a
comment deadline of April 7, 2011.
COMMISSION DECISION
Does the Commission agree with the recommendation that the Power Purchase
Agreement be processed under Modified Procedure with a comment deadline of April 7, 2011?
Kristine A. Sasser
Deputy Attorney General
M:PAC-E-11-08_ks