20110121IPC to Staff 1.pdf

DONOVAN E. WALKER
Senior Counsel
dwalkercaidahopower.com
esiiw~POR~
An IDACORP Company
January 21,2011
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-10-44
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY
FOR APPROVAL OF A FIRM ENERGY SALES AGREEMENT WITH
HIDDEN HOLLOW ENERGY 2, LLC FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY
Dear Ms. Jewell:
Enclosed for filng 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.
Very truly yours,.w~
Donovan E. Walker
DEW:csb
Enclosures
¡
1221 L -. Idaho St. (83702)
P.O. t:x 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((idahopower.com
Inordstrom((idahopower.com
CEi\l
iOtl JAN 21 PH 3= 25
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 HIDDEN HOLLOW )
ENERGY 2, LLC FOR THE SALE AND )
PURCHASE OF ELECTRIC ENERGY. )
)
)
)
CASE NO. IPC-E-10-44
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 "Company"), and in
response to the First Production Request of the Commission Staff to Idaho Power
Company dated January 12, 2011, 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: The attached Form 556 (in pertinent part), Certification of
Qualifying Facilty (QF) Status for a Small Power Production or Cogeneration Facilty,
was filed with FERC on January 5, 2011 in Docket No. QF11-97 to obtain self-
certification as a QF of the Hidden Hollow Energy 2 LLC facilty. Question 8a of the
attached Form 556 requires the applicant to identify any facilties with electrical
generating equipment located within 1 mile of the electrical generating equipment of the
instant facility, and for which any of the entities identified in lines 5a or 5b, or their
affiliates, holds at least a 5 percent equity interest. Hidden Hollow has identified the
existing Ada County Hidden Hollow generating facilty as located within 1 mile and with
common ownership by Fortistar LLC. 1f 3.2 of the Firm Energy Sales Agreement
between Idaho Power and Hidden Hollow Energy 2 LLC requires the facilty to maintain
QF status throughout the term of the Agreement.
a. Does Idaho Power believe that the self-certification application filed with
FERC for the Hidden Hollow Energy 2 facilty complies with FERC's one-mile separation
rule as contained in 18 C.F.R. 292.204(a)(2)?
b If not, is Idaho Power aware as to whether Hidden Hollow Energy 2 has
requested a waiver pursuant to 18 C.F.R. 292.204(a)(3)?
c. If not, does Idaho Power intend to contest Hidden Hollow 2's QF status?
RESPONSE TO REQUEST NO.1:
a. No. Idaho Power does not believe that the one-mile separation rule would
be met for the facilties to be certified as two separate entities by the Federal Energy
Regulatory Commission ("FERC").
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2
b. Idaho Power is currently not aware of whether Hidden Hollow Energy has
or wil request a waiver, or if it wil seek certification of both projects as one PURPA QF.
c. Idaho Power does not intend to contest Hidden Hollow 2's QF status.
Idaho Power was aware, as Staff has noted, that Fortistar LLC has an ownership
interest in both the existing Hidden Hollow landfil gas project and this new facilty,
Hidden Hollow Energy 2. It is also Idaho Powets understanding that these two
generation facilties wil basically be side-by-side units in essentially the same facilty.
Consequently, there is no debate as to the fact that they are within one mile of each
other. Idaho Power has thus far not been involved with the project's self-certification
process and prior to Staff raising this issue was unaware of this potential problem.
Idaho Power has since contacted the project and given them contact information for the
Idaho Public Utilties Commission Staff. The project indicates that it wil work with both
Staff and the Company to resolve this potential issue with its FERC certification. Two
possible options are to include the new project in the same QF certificate as the existing
facilty, or get either a waiver, or express acceptance by FERC of the QF status of each.
Staff is correct in that the contract requires the project to maintain its status as a
certified QF and, ultimately, if the project is unable to attain QF status for this project,
the Firm Energy Sales Agreement ("FESA") can be terminated.
At the time the developer proposed adding the additional 3.2 megawatt ("MW")
facilty at this location, both parties recognized the fact that, in essence, this new project
was a 3.2 MW expansion of the existing 3.2 MW generation facilty that was already
constructed, operating, and under contract to sell energy to Idaho Power. The
combination of the two projects is stil under the published rate eligibilty cap of 10
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3
average megawatts. A key element of the interaction between the existing FESA and
this additional FESA was to preserve the value of the existing FESA for the original 3.2
MW facility for Idaho Powets customers.
The FESA submitted for approval contains provisions that require landfil gas up
to the quantity required to operate the original generation units to be allocated first to
those units under the original contract. Only after this required volume of gas is
supplied to the original units, may fuel then be supplied to the new generation units that
are under the new contract and new rates. This ensures that the value of the original
FESA is not jeopardized by the addition of these additional new generation units.
Other contracting options were considered in the contract discussions, one of
those options being to amend the existing contract to include the new 3.2 MW
expansion. Again, a key element, however, was that it would be necessary to preserve
the value of the original FESA for the first 3.2 MW facilty. After much discussion and
consideration, it became apparent that the amendment of the existing FESA to retain
the value, establish different pricing for different levels of generation, create a blended
price, accommodate different ownership structures, etc., was going to create a very
complex and cumbersome amended FESA. The parties agreed a better course of
action was to create a second contract for the additional generation with the provisions
that limited the fuel supply for this additional generation to only fuel that exceeded the
fuel requirements of the original generation units.
The project informs Idaho Power that it has other facilities at different locations
that are within one mile of each other that have not had any QF certification problems
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
with FERC. Idaho Power does not expect there to be any QF certification problems with
these facilties.
The response to this Request was prepared by Randy C Allphin, Senior Energy
Contract Coordinator, Idaho Power Company, in consultation with Donovan E. Walker,
Senior Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 21st day of January 2011.
&7cÆ~
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 - 5
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 21st day of January 2011 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 TO IDAHO
POWER COMPANY upon the following named parties by the method indicated below,
and addressed to the following:
Commission Staff
Kristine Sasser
Deputy Attorney General
Idaho Public Utilties Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
-- Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email kris.sasser((puc.idaho.gov
yct
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6