20150427_4658.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER RAPER
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DAPHNE HUANG
DEPUTY ATTORNEY GENERAL

DATE: APRIL 24, 2015

SUBJECT: IDAHO POWER’S APPLICATION TO APPROVE FIRST AMENDMENT
TO ITS POWER PURCHASE AGREEMENT WITH TELOCASET WIND
POWER PARTNERS, CASE NO. IPC-E-15-09

On April 1, 2015, Idaho Power Company filed an Application asking the Commission
to approve the First Amendment to its Power Purchase Agreement (PPA) with Telocaset Wind
Power Partners, LLC. The PPA is not a contract under the Public Utility Regulatory Policies Act
(PURPA), but includes many provisions similar to those in PURPA contracts. See Order No.
30259 at 2.
The parties’ proposed Amendment deletes and replaces the PPA’s Section 12.1 and
Appendix J. The new Section 12.1 changes the nature of financial statements Telocaset must
provide, to adapt to administrative changes implemented by Telocaset’s new parent organization.
Application at 2-3. The amended Appendix J resolves the parties’ conflicting interpretations of
the PPA’s provisions regarding assumption of curtailment risk. Id. at 6.
BACKGROUND
The Commission approved Idaho Power’s PPA with Telocaset in 2007. Order No.
30259. Under the PPA, Idaho Power purchases, and Telocaset sells, energy generated by
Telocaset’s 100.65 megawatt (MW) Elkhorn Wind Park facility, located in eastern Oregon
between Baker City and La Grande, Oregon. Application at 2. The facility is connected directly
to Idaho Power’s La Grande-Brownlee 230 kilovolt transmission line. Id. at 2.
Under PPA Section 9.2 and Appendix J, Idaho Power could – on notice to Telocaset –
elect to pay lower prices (“Post-Operation Date Alternative Pricing”) for energy deliveries, but in
exchange, accept more financial risk for possible curtailment. Id. at 4. In December 2011, Idaho
Power gave notice to Telocaset that it would use the Post-Operation Date Alternative Pricing.
DECISION MEMORANDUM 2
Id. In August 2012, Telocaset sent a first invoice to Idaho Power requesting payment for Lost
Output related to transmission curtailments from March through July 2012; this was followed by
additional monthly invoices for Lost Output. Id. at 4-5. On review of its documented
curtailments and the applicable provisions of the PPA, Idaho Power disagreed with Telocaset’s
Lost Output calculations. Id. at 5.
On December 31, 2012, Idaho Power paid Telocaset the undisputed Lost Output
amount of $485,985.33 for the period from January 2012 through September 2012. Id. at 6. On
May 21, 2013, Idaho Power paid Telocaset an additional undisputed Lost Output amount of
$52,544.05, for the period from October 2012 through December 2012. Id. The remaining
disputed balance is $145,378.97. Id. In essence, the remaining dispute concerned the parties’
disagreement about how to interpret Appendix J to the PPA. Id.
Throughout 2013 and 2014, the parties engaged in meetings and discussions about
their interpretations of Appendix J. Id. at 7. Under Telocaset’s interpretation of Appendix J,
Idaho Power “assumed curtailment risk for the full 100.65 [megawatt (MW)] nameplate rating of
the Facility.” Id. at 6. Under Idaho Power’s interpretation of Appendix J, Idaho Power “only
accepted curtailment risk for the 66 MW of the Facility’s nameplate rating, as the Facility elected
to only secure 66 MW of network transmission capacity for its output” under Section 6.8 of the
PPA. Id. On December 19, 2014, the parties agreed to and signed an Amendment for which
they now seek the Commission’s approval. Id. at 7.
PROPOSED AMENDMENT
As noted in the Application, “as part of the Amendment, each party agreed to settle
and release any and all claims arising under or pursuant to Appendix J . . . including, but not
limited to, the disputed Lost Output payment claim of $145,378.97.” Id. at 8. The parties also
agreed to amend the language in the PPA that led to the parties’ disparate interpretations. To this
end, the parties have “mutually resolved and agreed to [language] . . . memorialized in the
Amended Appendix J.” Id.
In addition, the parties agreed to replace Section 12.1, which requires Telocaset to
provide audited financial statements to Idaho Power, with a new Section 12.1, that requires
Telocaset to provide unaudited financial statements. Id. at 7. This Amendment accommodates
administrative changes implemented by Telocaset’s new parent organization. Id. at 3. Because
Telocaset is already required “to post $10 million of Performance Assurance” under an existing
DECISION MEMORANDUM 3
(and unaltered) provision in the PPA, “Idaho Power believes there is little to no impact by
accepting the proposed change in financial reporting requirements.” Id. at 3.
Idaho Power asks that its Application for approval of the Amendment to its PPA with
Telocaset be processed under Modified Procedure. Id. at 9.
STAFF RECOMMENDATION
Staff has reviewed the Application and attachments and recommends that the
Application be processed under Modified Procedure with a 21-day comment period.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and Notice of Modified
Procedure with a 21-day comment period?

Daphne Huang
Daphne Huang
Deputy Attorney General

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