20060628_1608.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
CO MMISSI 0 NER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:CECELIA A. GASSNER
DATE:JUNE 19, 2006
SUBJECT:IN THE MATTER OF THE APPLICATION OF IDAHO POWER
COMP ANY FOR APPROVAL OF A FIRM ENERGY SALES
AGREEMENT WITH CKTV1 ENERGY, LLC, CASE NO. IPC-06-
On April 28, 2006, Idaho Power Company ("Idaho Power" or "Company ) filed an
Application requesting approval of a Firm Energy Sales Agreement dated April 28, 2006 with
CKTVI Energy, LLC ("CKTVI "). Under the Agreement, CKTVI would sell and Idaho Power
would purchase electric energy generated by CKTVI's Treasure Valley 1 anaerobic digester gas-
to-energy facility located near Caldwell, Idaho. The Company asks the Commission approve the
Agreement and declare that all payments for purchases of energy under the Agreement be
allowed as prudently incurred expenses for ratemaking purposes. On May 26 , 2006, the
Commission issued a Notice of Application and Modified Procedure requesting any comments to
the matter. See Order No. 30054. In addition to comments filed by Staff, the Commission
received four comments from members of the general public.
THE AGREEMENT
According to the Application, CKTVI proposed to design, construct, install, own
operate and maintain a 3.2 MW anaerobic digester gas-to-energy generating facility to be located
near Caldwell, Idaho (the "Facility ). The Facility will be a qualified small power production
facility under the applicable provisions of the Public Utility Regulatory Policies Act of 1978
PURP
Under the terms of the Agreement, CKTVI has elected to enter into the Agreement
with Idaho Power for a 20-year term. CKTVI further elected to contract with the Company
DECISION MEMORANDUM
using the non-Ievelized published avoided cost rates as currently established by the Commission
for energy deliveries of less than 10 aMW. All applicable interconnection charges and monthly
operation and maintenance charges under Schedule 72 will be assessed to CKTV
CKTVI has elected November 2006 as the scheduled first energy date and March
2007 as the scheduled operation date for the Facility. Certain requirements have been placed
on CKTVI for Idaho Power to accept energy deliveries from the Facility. Idaho Power will
monitor compliance with these initial requirements, as well as ongoing requirements throughout
the term of the Agreement.
ST AFF COMMENTS
Based on its review, Staff believes that the Agreement between CKTVI and Idaho
Power comports with the terms and conditions of Commission Order No. 29632 (Us.
Geothermal et al v. Idaho Power) and avoided cost Order No. 29646. Section 24 of the
Agreement provides that the Agreement will not become effective until the Commission has
approved all the Agreement's terms and conditions and declared that all payments that Idaho
Power makes to CKTVI for purchases of energy will be allowed as prudently incurred expenses
for ratemaking purposes. The proposed effective date of the Agreement is April 28 , 2006. Staff
recommends approval of the Agreement.
PUBLIC COMMENTS
The Commission received four comments from the general public. Each of these
comments voiced support of the Application and using the biomass waste to generate electrical
power.
CO MMISSI 0 N D ECISI 0 N
Does the Commission desire to approve the Application for the Firm Energy Sales
Agreement between Idaho Power and CKTVI?
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M:IPC-O6-cg2
DECISION MEMORANDUM