200404091st Response of Id Power to Staff.pdf

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MONICA B. MOEN , ISB # 5734
BARTON L. KLINE , ISB # 1526
Idaho Power Company
1221 West Idaho Street
P. O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
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Attorney for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL)
OF AN AGREEMENT FOR SALE AND
PURCHASE OF ELECTRIC ENERGY
BETWEEN IDAHO POWER COMPANY AND
THE J.R. SIMPLOT COMPANY
CASE NO. IPC-04-
IDAHO POWER COMPANY'
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
COMMISSION STAFF
COMES NOW, Idaho Power Company ("Idaho Power" or "the Company
and in response to the First Production Request of the Commission Staff to Idaho Power
Company dated March 15 , 2004, herewith submits the following information:
REQUEST NO.1: Please provide the avoided cost rates that result from
analysis according to the methodology described in the Settlement Stipulation in Case
No. IPC-95-9. The Settlement Stipulation describes in detail how avoided cost rates
are to be negotiated with Qualifying Facilities larger than 1 MW (now 10 MW as per
Order Nos. 29029 and 29069). In the analysis, consider the full 15.9 MW capacity of
the project. Staff presumes that the AURORA model will be used for this analysis.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF COMMISSION STAFF Page
RESPONSE TO REQUEST NO.1: Idaho Power no longer uses the
forecast model upon which the methodology described in the Settlement Stipulation
referenced in this request was based and the Company does not believe that using the
AURORA model to calculate avoided costs for a 20-year contract is appropriate. In
addition, the AURORA forecast model is currently being extensively updated for use in
the 2004 IRP and is simply not available to perform the requested analysis in the near
future.
It should also be noted that the J.R. Simplot Company does not wish to
make any prior commitments regarding generation of electricity over 10 MW. Instead
Simplot intends to deliver energy in excess of 10 MW on an as available, non-firm
energy basis. Consequently, the Simplot contract specifies that Simplot will receive
variable market energy prices for energy delivered in excess of 10 MW.
The response to this request was prepared by Randy C. Allphin, Contract
Administrator, Power Supply Planning, Idaho Power Company, in consultation with
Monica Moen , Attorney, Idaho Power Company.
REQUEST NO.2: Please explain how the proposed energy prices in the
Agreement comport with the methodology described in the Settlement Stipulation in
Case No. IPC-95-
RESPONSE TO REQUEST NO.2: Please see the response to Request
No.
The response to this request was prepared by Randy C. Allphin , Contract
Administrator, Power Supply Planning, Idaho Power Company, in consultation with
Monica Moen , Attorney, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF COMMISSION STAFF Page 2
REQUEST NO.3: Please provide copies of January and February 2004
extensions of the 1991 Agreement. Please explain why energy purchased from Simplot
during the January and February 2004 extensions should not be treated as purchases
pursuant to a voluntary supply contract, rather than mandatory purchases under
PURPA.
RESPONSE TO REQUEST NO.3: Please refer to Attachments 1 and 2
for copies of the December 22, 2003 and the January 30, 2004 extensions (the
January and February 2004 Extensions ) to the 1991 Agreement. Copies of both of
these documents were forwarded to the Commission for distribution upon execution of
the documents by the parties.
Simplot and Idaho Power have contracted for the sale of energy under
various PURPA agreements since 1986. The latest extension of the 1991 Agreement
expired on December 31 2003. During the summer of 2003, Idaho Power and Simplot
began to discuss the terms of a new agreement for the purchase of energy from the
Simplot QF facility. Due to various changes in required terms resulting from new
Commission orders FERC regulations, WECC requirements and QF contract terms
adopted since execution of the 1991 Agreement, the parties determined that it would
not have been appropriate to simply extend the term of the 1991 Agreement but
instead , it was necessary to negotiate a new agreement that incorporated the
Commission orders and other regulations and requirements.
1 IPue Order No, 29124, issued in September 2002, revised many of the general parameters required to be contained within OF
agreements, Furthermore, the term of the OF contracts was extended to 20 years and the size of facility eligible for avoided cost
rates was increased from 1 MW to 10 MW. Moreover, that Order updated the published avoided cost model. The published
avoided costs were also revised pursuant to Order No. 29391 issued in December 2003.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF COMMISSION STAFF Page 3
Negotiations between the parties could not be completed until approval of
the revised avoided cost rates as published in December 2003 with Order No. 29391.
Also , final negotiations and filing of the Agreement with the Commission could not be
accomplished by the December 31 2003 termination of the previous agreement.
However , in accordance with PURPA requirements and Orders of this Commission
Idaho Power was required to purchase the energy produced by the Simplot QF facility.
The January and February 2004 Extensions to the 1991 Agreement
specified that the terms and conditions of the 1991 Agreement for the month of
December 2003 were applicable to the extension months. This resulted in the
December 2003 energy price being paid to Simplot for the months of January and
February 2004. That energy price was lower than the price that would have been paid
had the new agreement been in effect in January and February 2004.
The response to this request was prepared by Randy C. Allphin, Contract
Administrator, Power Supply Planning, Idaho Power Company, in consultation with
Monica Moen , Attorney, Idaho Power Company.
DATED at Boise , Idaho, this 9th day of April 2004.
MONICA B. MOEN
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF COMMISSION STAFF Page 4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 9th day of April 2004, I served a true and
correct copy of the within and foregoing IDAHO POWER COMPANY'S RESPONSE TO
THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF upon the
following named parties by the method indicated below, and addressed to the following:
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise , Idaho 83720-0074
Hand Delivered
S. Mail
Overnight Mail
FAX [phone]
David Hawk
R. Simplot Company
O. Box 27
Boise , Idaho 83707
Hand Delivered
x U.S. Mail
Overnight Mail
FAX [phone]
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MONICA B. MOEN
CERTIFICATE OF SERVICE
IDAHO POWER COMPANY
CASE NO. IPC-O4-
FIRST PRODUCTION REQUEST
COMMISSION STAFF
TT A CHMENT 1 TO
RESPONSE TO
REQUEST NO.
HECDVED
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An IDACORP Company
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Contract Administrator
December 23, 2003
Idaho Public Utilities Commission
Attn: Jean Jewell
PO Box 83720
Boise, ID 83720-0074
Dear Ms. Jewell:
Enclosed are 8 copies of the attached letter for distribution and filing in regards to the Simplot -
Pocatello Cogeneration Facility (Project #41866112) current Energy Sales Agreement with Idaho Power
Company.
The expiration date of the current agreement and the associated amendments is December 31 ~ 2003.Idaho Power and the J R Simplot Company are currently engaged in negotiations of a new QF, Firm purchase
power agreement for this facility, but it is unlikely that negotiations will be completed by the expiration date.
This letter agreement extends the expiration date of the existing agreement for 1 month in order for
the parties to complete the current negotiations of a new QF,. Firm purchase power agreement.
Please return to me a file stamped copy, acknowledging receipt of this letter and the attachment.
Sincerely,
Enclosures
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cc:Bart Kline (IPCo)
Monica Moen (IPCo)
Scott Woodbury (IPDC)
Telephone: [phone] Fax: [phone] Rallphin(g)ldahopower . com
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An IDACORP Company
Randy C. Allphin
Contract Administrator
December 22, 2003
J R Sirnplot Company
Attn: David Hawk
POBox 27
Boise, ill 83707
RE:Simp lot- Pocatello Cogeneration facility, Project Number: 41866112
Dear David:
The Simplot - Pocatello cogeneration facility is currently interconnected to Idaho Power Company
and is selling energy to Idaho Power Company as a Qualifying Facility (QF) in accordance with a Firm
Energy Sales agreement dated January 24, 1991, first amendment of November 30, 1993 and second
amendment dated February 23 2001 ("Current Agreement"
The expiration date of the current agreement and the associated amendments is December 31
2003. Idaho Power and the J R Simplot Company are currently engaged in negotiations of a new QF
Firm purchase power agreement for this facility, but it is unlikely that negotiations will be completed by
the expiration date.
Idaho Power and the J R Simplot Company hereby agree to extend the expiration of the current
agreement to January 31 , 2004. All energy delivered to Idaho Power during January 2004, will be
purchased and sold in accordance with the pricing, tenDS and conditions of the current agreement for the
month of December 2003.
Sincerely,
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fjr Randy C. Allphm
Contract Administrator
UNDERSTOOD, AGREED AND ACCEPTED:
JR. SIMPLOT COMPANY
By:
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IDAHO POWER COMPANY
CASE NO. IPC- E-O4- 7
FIRST PRODUCTION REQUEST
COMMISSION STAFF
TT A CHMENT 2 TO
RESPONSE TO
REQUEST NO.
DAHOPOWER
An IDACORP Company
Randy C. Allphin
Contract Administrator
J R Simplot Company
Attn: David Hawk
POBox 27
Boise, ID 83707
January 30 , 2004
RE:Simp lot - Pocatello Cogeneration facility, Project Number: 41866112
Dear David:
The Simplot - Pocatello cogeneration facility is currently interconnected to Idaho Power Companyand is selling energy to Idaho Power Company as a Qualifying Facility (QF) in accordance with a Firm
Energy Sales agreement dated January 24, 1991 , first amendment of November 30, 1993 and secondamendment dated February 23, 2001 ("Current Agreement") and a one-month letter extension dated
December 22 2003.
The expiration date of the current one-month letter extension is January 31 , 2004. Idaho Power
and the J R Simplot Company have made significant progress in negotiating a new 10-year FirmPurchase Power Agreement for this facility, but some unexpected delays in gathering of information hasslowed the process and it is unlikely the negotiations will be complete by January 31 2004.
Idaho Power and the J R Simplot Company hereby agree to extend the expiration of the current
agreement to February 29, 2004. All energy delivered to Idaho Power during February 2004, will bepurchased and sold in accordance with the pricing, terms and conditions of the current agreement for themonth of December 2003.
UNDERSTOOD, AGREED AND ACCEPTED:
Sincerely,
I~J eCLee'p/Randy C. Allphin
Contract Administrator
J R. SIMPLOT COMPANY
By:
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RECEiVED
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An IDACORP Company
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UTlL!TIES COrlr1lSS!ONRandy C. Allphin
Contract Administrator
February 2 2004
Idaho Public Utilities Commission
Attn: Jean Jewell
PO Box 83720
Boise, ill 83720-0074
Dear Ms. Jewell:
Enclosed are 8 copies of the attached letter for distribution and filing in regards to the Simplot
Pocatello Cogeneration Facility (Project #41866112) current Energy Sales Agreement with Idaho Power
Company.
The expiration date of the current agreement and the associated amendments was December 31 , 2003.
On December 23, 2003 Idaho Power and the J R Simplot Company executed a letter extending the current
agreement through January 31 , 2004; as negotiations for a new QF agreement were ongoing.
During this extended time (January 2004), both parties have been working diligently to complete the new
QF Firm purchase power agreement for this facility. Unfortunately, unplanned in-depth research of some of the
requirements within the new QF Agreement was unable to be completed in January 2004. Both parties are
nearing completion of this research and a final draft of the new QF agreement is being prepared for both parties
review.
This letter agreement extends the expiration date of the existing agreement to February 29, 2004 in
order for the parties to complete the current negotiations of a new QF, Firm purchase power agreement.
Please return to me a file stamped copy, acknowledging receipt of this letter and the attachment.
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Sincerely,
Enclosures
cc:Bart Kline (IPCo)
Monica Moen (!PCo)
Scott Woodbury (!pDq
Telephone: [phone] Fax: [phone] RaUphin(1j)Idahopower.com