20100914IPC to Staff 1-5.pdf

R£Ct
esIDA~POR~
DONOVAN E. WALKER
Senior Counsel
dwalkerl.idahopower.com
An IDACORP Company
September 13, 2010
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-10-22
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY
FOR APPROVAL OF A FIRM ENERGY SALES AGREEMENT WITH
YELLOWSTONE POWER, INC., FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY
Dear Ms. Jewell:
Enclosed for filing please find an original and three (3) copies of Idaho Power
Company's Response to the First Production Request of the Commission Staff to Idaho
Power Company in the above matter.
:i(/~
Donovan E. Walker
DEW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
DONOVAN E. WALKER (ISB No. 5921)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker(ëidahopower.com
Inordstrom(ëidahopower.com
DE"" i: ¡~! nj"'\. __ _ \. -i-- ~ '" ;...,....:
infO SEP l 3 PM 4: 53
!D¡\110
UTILlTl!~Ej
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION '..
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )
APPROVAL OF A FIRM ENERGY )
SALES AGREEMENT WITH )
YELLOWSTONE POWER, INC., FOR )
THE SALE AND PURCHASE OF )ELECTRIC ENERGY. )
)
)
CASE NO. IPC-E-10-22
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE
COMMISSION STAFF TO IDAHO
POWER COMPANY
COMES NOW, Idaho Power Company ("Idaho Powet' or the "Company"), and in
response to the First Production Request of the Commission Staff to Idaho Power
Company dated August 23, 2010, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1
REQUEST NO.1: Were any draft power sales agreements prepared and
exchanged between the parties prior to March 15, 2010? If so, please provide a copy of
the draft agreements and cite the dates on which each draft was mailed to either Idaho
Power or to Yellowstone Power, Inc. (Yellowstone).
RESPONSE TO REQUEST NO.1: No. Idaho Power and Yellowstone began
exchanging written draft sales agreements in approximately early June 2010. However,
throughout 2009 and continuing into 2010, Yellowstone was in routine contact with
Idaho Power in regard to a proposed biomass generation facilty. These discussions
included potential siting of the project in Oregon and thorough discussion of Oregon
PURPA rules, regulations, and specific discussions of contract details. Also during
2009 and into the spring of 2010, Yellowstone expressed interest in siting this facilty in
Emmett, Idaho, adjacent to a sawmil the developer was constructing. Proposed project
sizes ranging from 10 megawatts ("MW") to 19 MW were discussed. At the request of
the developer, Idaho Power prepared and supplied AURORA-based energy pricing for a
project larger than 10 MW. During this time period, extensive discussions were
conducted between the parties regarding the complete details of a PURPA purchase
power agreement. There were no outstanding contract issues or disagreements on any
terms or conditions prior to March 15, 2010.
As referenced in the Application for this case, in 2004, Yellowstone's Facilty had
executed a PURPA Firm Energy Sales Agreement ("FESA") with Idaho Power under a
different company for this same site. That agreement went into default and was
eventually terminated when the project was unable to meet the operation date
contained in that FESA. The previous FESA was filed and approved by the
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2
Commission in Case No. IPC-E-04-05. Although there were no written draft power
sales agreements exchanged between Yellowstone and Idaho Power prior to March 15,
2010, there was the previous experience of the parties and familarity with the
Company's PURPA FESA from the previously negotiated, executed, and approved
contract as well as extensive discussions regarding the current contract, and there was
no disagreement between the parties thereto as to any of the FESA terms and
conditions prior to March 15, 2010. In addition, there was an expressed understanding
and agreement to all of the terms and conditions of the PURPA FESA prior to March
2010 that eventually was executed by the parties and is now filed with the Commission
for approval.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Coordinator, Idaho Power Company, in consultation with Donovan E. Walker,
Senior Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3
REQUEST NO.2: Did Yellowstone ever sign either a draft or final power sales
agreement prior to March 16,2010 (either with or without a corresponding signature by
Idaho Power)? If so, please provide a copy of the agreement.
RESPONSE TO REQUEST NO.2: No. Please see the Company's Response
to Staffs Production Request No. 1 above. Extensive discussions were conducted with
Yellowstone prior to March 16,2010, and both parties were in agreement with all terms
and conditions of the power sales agreement; however, neither party had executed the
agreement prior to March 16, 2010.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Coordinator, Idaho Power Company, in consultation with Donovan E. Walker,
Senior Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
REQUEST NO.3: On what date did Idaho Power first provide to Yellowstone a
final agreement requesting signature by Yellowstone?
RESPONSE TO REQUEST NO.3: Yellowstone was provided with written drafts
for the completion of information and signature in early June 2010. The agreement Was
signed by both parties on July 28, 2010. In 2009 and early 2010, the developer advised
Idaho Power that they had multiple equipment sizes available, some of them being
greater than 10 MW. The parties agreed that prior to Idaho Power providing a purchase
power agreement there was merit in evaluating this project as a larger then 10 MW
project. Beginning in early March 2010 and continuing through May 2010, the
developer provided the data (monthly estimated energy production) required to enable
Idaho Power to develop energy pricing for a larger than 10 average MW facilty.
Promptly after March 16, 2010, the developer contacted Idaho Power, after
becoming aware of the Published Avoided Cost change that month, inquiring as to the
impact this price change would have upon the ongoing purchase power agreement
discussions between Idaho Power and the developer. Idaho Power advised that it was
continuing to work on the requested pricing for a larger than 10 average MW project.
During the months of April and May 2010, the developer provided additional
information with regard to estimated generation data at Idaho Powets request and the
Company executed the AURORA pricing model for this specific project to establish an
energy price for the project and communicated the same to Yellowstone. After
evaluation of the larger equipment specifications and available energy price,
Yellowstone determined that the larger facility was not economically feasible. During
this same time period, Idaho Power was processing various "grandfathering" requests
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
for other projects that arose surrounding the March 2010 change in the published
avoided cost rate. After a request for "grandfathering" from Yellowstone and additional
review, Idaho Power determined that the Yellowstone project may be eligible for a
"grandfathered" rate and therefore in early June 2010, the parties began exchanging
written draft agreements to that effect. The only purpose for exchanging these draft
agreements prior to a final agreement was to complete the "fil in" information and no
terms or conditions were debated or negotiated.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Coordinator, Idaho Power Company, in consultation with Donovan E. Walker,
Senior Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
REQUEST NO.4: At p. 8, 1f 13, the Application states the following:
Since early June 2010, Idaho Power has been working
through internal contract drafting and review processes. Any
perceived delays from early June 2010 to an execution date
of July 28, 2010, were not due to reconsideration of Idaho
Powets agreement to pursue the attached Agreement.
Instead the perceived delays were due to change in
personnel, internal review processes, and the efforts being
expended on other PURPA contracts and issues. (emphasis
added).
Please discuss what activity, if any, occurred involving either part between March 16,
2010 and early June 2010 relating to execution of the power sales agreement. Please
explain why contract drafting and review did not occur prior to early June 2010, and also
why contract drafting and review did not occur prior to March 16, 2010.
RESPONSE TO REQUEST NO.4: Please refer to the Company's previous
Response to Staff's Production Requests Nos. 2 and 3.
In addition, during this time, Idaho Power has experienced overwhelming activity
in the PURPA process. This activity has been in the form of numerous requests for new
PURPA agreements, working through "grandfathering" issues for approximately 6
projects, working with existing contracts with projects that have not yet been
constructed to move them into construction, regulatory matters, etc., all in addition to
the routine operations and processing of PURPA agreements. Also during this period of
time, Idaho Power's lead attorney dealing with the PURPA process retired. As Idaho
Power planned for this transition and new personnel were in place, the transition did
result in some slowdowns in the processing of various PURPA-related requests.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Coordinator, Idaho Power Company, in consultation with Donovan E. Walker,
Senior Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8
REQUEST NO.5: Please provide any written documentation or other evidence
Idaho Power has that it believes demonstrates that Idaho Power and Yellowstone had
agreed prior to March 16, 2010 to all terms and conditions identical to those contained
in the final Agreement.
RESPONSE TO REQUEST NO.5: Throughout 2009, Idaho Power and
Yellowstone were in discussions on potential project siting, size, and contract terms and
conditions. An Oregon draft contract was prepared in May 2009 and discussed with the
project. As Yellowstone had extensive knowledge of Idaho Power PURPA agreements
(Oregon contract discussions, ongoing detailed discussions of available Idaho
agreement, and past knowledge of other PURPA agreements) an actual agreement was
not exchanged, with the understanding that Yellowstone was fully prepared to execute
an agreement. Please see the attached Affidavit of Richard Vinson on behalf of
Yellowstone.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Coordinator, Idaho Power Company, in consultation with Donovan E. Walker,
Senior Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 13th day of September 2010.
~('~::
DONOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 13th day of September 2010 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER
COMPANY upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Neil Price, Deput Attorney General
Idaho Public Utilties Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Yellowstone Power, Inc.
Dick Vinson
Yellowstone Power, Inc.
P.O. Box 1539
Thompson Falls, Montana 59873
Dean J. Miler
McDEVITT & MILLER LLP
420 West Bannock Street
P.O. Box 2564
Boise, Idaho 83701
-2 Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-2 Email NeiI.Price(ëpuc.idaho.gov
Hand Delivered
-2 U.S. Mail
_ Overnight Mail
FAX
-2 Email dick(ëblackfoot.net
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
-2 Email joe(ëmcdevitt-miler.com
4~~
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 10
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE 'NO. IPC-E-10-22
IDAHO POWER COMPANY
RESPONSE TO STAFF'S
PRODUCTION REQUEST NO.5
Dean J. Miler (ISB No. 1968)
eha F. McDevitt (lSB No. 835)
McDEVITT & MILLER LLP
420 West Banock Street
P.O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
joe(ámedevitt-miler.com
Attorney for Yellowstone Power Inc.
BEFORE TH IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF TH APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF A FIRM ENERGY SALES
AGREEMENT WIH YELLOWSTONE
POWER, INC., FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY.
CASE NO. IPC-E-IO-19
AFFIDAVIT OF RICHA VISON
STATE OF IDAHO )
: S8County of Ada )
RICHAR VINSON, bemg fist duly sworn upon an oath, deposes and says:
1. I am over the age of 21 yea and make ths Afdavit of my own knowledge.
2. I am one of the pnncipal members of Yellowstone Power Inc.
3. Dung the coure of my business carer, spanng more than 58 year, I have
gaied substatial expenence in electrc power genertion and the sale of electrc
power to public utilties. I am therefore famliar with terms customarly included
in a power sales ageement.
AFIDAVIT OF RICHAR VISON-l
4. More spificaly, I was previously the pricipa member of a company known as
Renewable Energy of Idao, Inc (RI). In 2004, REI negotiated a :f energy
sales agrement with Idao Power Company for the sae of electrc power
intended to be produced by a biomas generation project. As explained in the
Application in ths cas, that contrct went into default and Yellowstone Power
ha agreed to pay, on behalf of REI, damges incUled by Idao Power, in the
event ths Application is approved. As a consequence of negotiations that lead up
to execution of the REI :f energy sales agreement, I was familar with the term
and conditions contaned in Idao Power's stdard form of:f energy sales
ageements.
Prior to Marh 16, 2010, Mr. Rady Allphi explained to me chages tht
ha occured withn Idaho Power's stdard form:f energy sales agreement,
priarly related to daages and securty for delay in performance. I understood
those additiona ters and ageed to them. Prior to March 16, 2010, I believe all
the terms of the :f energy sales agreement filed in this case were agreed upon.
If a wrtten :frm energy sales agreement had been presented to me prior to March
16, 2010, Yellowstone Power would have signed the agreement.
5. Pror to March 16,2010, Yellowstone Power was not represented by regulatory
counsel and I was unaware of any risk that published avoided costs might
suddenly chage. Had I been awar of such risk, I would have requested tht
Idaho Power prepare for signate a written :frm energy sales agreement,
contaning the terms included in the firm energy sales agreement that has been
submitted in ths case.
AFFIDAVIT OF RICHAR VISON-2
DAl1I ibs îday ofSe, 2i~k
Richa Vinsn
Yellowsne Power Inc.
lY0'()C\
STATE OF lDAtf ). ) 55CountyO~ )
D SWORN before me ths ~ day of Sepber, 2010~~.~..t~Nilme$ii ...J." dNota PublkfO~6L ..Residing at '\ \ò~ &'Ll\~
My commsion e~if = '=(7.=0 icl