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HomeMy WebLinkAbout20111221_3548.pdfDECISION MEMORANDUM 1 DECISION MEMORANDUM TO: COMMISSIONER KJELLANDER COMMISSIONER REDFORD COMMISSIONER SMITH COMMISSION SECRETARY COMMISSION STAFF FROM: KRISTINE SASSER DEPUTY ATTORNEY GENERAL DATE: DECEMBER 19, 2011 SUBJECT: IDAHO POWER’S APPLICATION FOR A DETERMINATION REGARDING THE FIRM ENERGY SALES AGREEMENT WITH RIVERSIDE INVESTMENTS, CASE NO. IPC-E-11-27 On December 6, 2011, Idaho Power Company filed an Application with the Commission requesting acceptance or rejection of a 20-year Firm Energy Sales Agreement (Agreement) between Idaho Power and Riverside Investments, LLC (Riverside). The Application states that Riverside would sell and Idaho Power would purchase electric energy generated by the Fargo Drop hydroelectric project (Facility) located near Homedale, Idaho. THE AGREEMENT The Application states that Riverside proposes to own, operate and maintain a 1.27 MW (maximum capacity, nameplate) generating facility. Application at 2. The Facility will be a QF under the applicable provisions of the Public Utility Regulatory Policies Act of 1978 (PURPA). The Agreement is for a term of 20 years and contains the published avoided cost rates established by Commission Order No. 32337. Id. The Agreement includes shared ownership of the Renewable Energy Certificates (RECs) generated over the 20-year term of the Agreement. Id. at 3. Riverside selected July 20, 2012, as its Scheduled First Energy Date and August 1, 2012, as its Scheduled Operation Date. Id. Idaho Power asserts that various requirements have been placed upon the Facility in order for Idaho Power to accept the Facility’s energy deliveries. Idaho Power states that it will monitor the Facility’s compliance with initial and ongoing requirements through the term of the Agreement. Riverside and Idaho Power have agreed to liquidated damage and security provisions. Agreement ¶¶ 5.3, 5.8.1. The Application maintains that all applicable interconnection charges and monthly operation or maintenance charges under Schedule 72 will be assessed to Riverside. Idaho Power DECISION MEMORANDUM 2 states that the Facility is currently in the generator interconnection process. “Upon resolution of any and all upgrades required to acquire transmission capacity for this Facility’s generation, and upon execution of the FESA and the GIA, this Facility may then be designated as a network resource.” Id. at 5. Idaho Power states that the Facility has also been made aware of and accepted the provisions in the Agreement and Idaho Power’s approved Schedule 72 regarding non- compensated curtailment or disconnection of its Facility should certain operating conditions develop on Idaho Power’s system. The Application notes that the parties’ intent and understanding is that “non-compensated curtailment would be exercised when the generation being provided by the Facility in certain operating conditions exceeds or approaches the minimum load levels of [Idaho Power’s] system such that it may have a detrimental effect upon [Idaho Power’s] ability to manage its thermal, hydro, and other resources in order to meet its obligation to reliably serve loads on its system.” Application at 6. By its own terms, the Agreement will not become effective until the Commission has approved all of the Agreement’s terms and conditions and declares that all payments made by Idaho Power to Riverside for purchases of energy will be allowed as prudently incurred expenses for ratemaking purposes. Agreement ¶ 21.1. Idaho Power requests that its Application be processed by Modified Procedure pursuant to Commission Rules of Procedure 201-204. IDAPA 31.01.01.201-.204. STAFF RECOMMENDATION Staff recommends that the case be processed by Modified Procedure. COMMISSION DECISION Does the Commission wish to process this case under Modified Procedure? M:IPC-E-11-27_ks