19890403Letter re Swift Creek Project.pdf

SNAKE RIVER ..I..' ~S(,LJ..
IDAHO POVVER COMPANY
HYDROPOWER
.-:~ECEi\F) W LOX 70 . lOISE, IDAHO 83707':lLED ri
¡J9 APR 3 PFI 2' YO
March 31, 1989
HO FUbLiC
Mr Farley Eskel son, PE
President
Swift Creek Power Co, Inc
100 Lindberg P1 aza 2
5160 Wi ley Post Way
Salt Lake City, UT 84116
Re: Swi ft Creek Sma 11 Hydro Proj ect
UTI LIT I ESC 0 tA M i s :; ION
Dear Mr Eskelson:
This letter will recap some of the issues discussed at our meeting in
Boi se, and the status of those outstandi ng issues.
1. Status of 1 i censes, permi ts, and water ri ghts. You have pro-
vided me with copies of the extensions of time you have received from the FERC,
the Forest Service, and the state of Wyoming. At this time, it does not appear
that we need any additional information regarding the status of those permits.
If we do, I will contact you immediately.
2.. Wheeling Agreements. At the meeting we discussed the fact that
we had still not receivêd the information we had requested many months ago
regarding the contracts for wheeling the power from your project to Idaho
Power. The reason that we must insist that the wheeling arrangements be in
place prior to our executing a contract with Swift Creek is based on our prior
experience with Bonneville Power Administration (BPA). It is our understanding
that BPA insists that Idaho Power execute your wheeling agreement and that
Idaho Power be responsible to BPA for paying for wheeling charges. Idaho Power
is not willing to do either of those things. Wheeling arrangements are between
yourself, BPA, and the other intermediary utilities and we will not be
contractua lly bound to guarantee those arrangements. For thi s reason we do not
think it is appropriate for you to simply po~tpone your discussions with BPA
until after you had secured a contract with Idaho Power. While that may be
more convenient for you, past experience indicates it is not the best way to
proceed.
3. Expiration of the FERC license. Much of our discussion at the
Boi se meeti ng focused on the overpayment li abi 1 i ty securi ty problems caused by
the fact that your FERC 1 icense wi 11 expi re in approximately three years. We
discussed a number of possible ways that satisfactory security arrangements
coul d be made to cover the overpayment 1 i abi 1 i ty unti 1 such time as the new
license is issued (if it is). You state that your insurance advisor had
i ndi cated that thi s ri sk coul d be covered by insurance. However, based on our
recent telephone conversations, it is now apparent that the insurance your
advisor had in mind does not cover the risk of a loss of your FERC license. At
our Boise meeting, Idaho Power suggested a number of alternatives to address
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this risk including a proposal that additional liquid security be posted until
the new 1 icense is issued. Another possible solution would be for Swift Creek
to accept nonfirm rates until the new license is issued. As we indicated, in
the Boise meeting, Idaho Power is willing to consider any reasonable
alternative you might suggest. However, our discussions need to be bilateraL.
We have suggested a number of alternative solutions but we have not received
any workable proposals from you.
Aga in, 1 et me emphas i ze that we are wi 11 i ng to meet wi th you anddi scuss these matters at any time. It is our des i re that thi s matter be
amicably resolved by an agreement that is mutually acceptable. We will
continue to search 'for a reasonable way to resolve this matter and we hope that
you wi 11 do the same.
sæl:John Ferree
Administrator of
Customer Generation
JF/ekg
cc: L A Crowley
R W Stahman
S Woodbury
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