20091125Exchange Agreement Clatskanie.pdf

BARTON L. KLINE
Lead Counsel
bklinetâidahopower.com
etlDA~PORCI
An IDACORP Company
November 24, 2009
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Exchange Agreement between Clatskanie People's Utilty District and Idaho
Power Company ("Exchange Agreement"
Dear Ms. Jewell:
This letter is written to advise the Commission that Idaho Power Company ("Idaho
Power" or "Company") has entered into the above-referenced Exchange Agreement. A
copy of the Exchange Agreement is enclosed for the convenience of the Commission.
Idaho Power is not seeking ratemaking approval of the Exchange Agreement as the
Company believes this transaction wil be appropriately addressed in the ordinary course of
the Company's power cost adjustment mechanism ("PCA").
Clatskanie People's Utility District ("Clatskanie") is headquartered in Clatskanie,
Oregon, in the northwestern corner of Oregon. Clatskanie, along with five irrigation districts
in southern Idaho, are developing the Arrowrock Hydroelectric Project (the "Project"). The
Project is rated at 18 MW and is located at Arrowrock Dam, an existing USBR dam on the
Boise River. Clatskanie contractually acquired the right to the net electrical output from the
project.
Pursuant to the Exchange Agreement, Idaho Power has agreed to take all of the
output from the Project. A transmission line approximately 5.5 miles long wil connect the
Project's electrical facilities with a substation on Idaho Power's electrical system. Since
Arrowrock Dam is operated with a primary emphasis on flood control and irrigation,
generation from the Project is anticipated to be highest in the irrigation months when Idaho
Power's load service requirements are higher due to summer irrigation pumping and air
conditioning loads. Energy wil be returned by the Company to Clatskanie generally in
months when Clatskanie's loads are higher.
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise. ID 83702
Jean D. Jewell, Secretary
November 24, 2009
Page 2
The parties to the Agreement agreed to use an Energy Bank Account ("EBA") to
account for the value of energy delivered under the Agreement. The Intercontinental
Exchange index for Mid-Columbia Heavy Load Hours and Light Load Hours wil be used to
establish the value of energy delivered to Idaho Power and returned to Clatskanie. The
EBA does not create an obligation for dollar payment between the parties, but enables the
parties to calculate the volume of energy to be exchanged. Idaho Power's obligation to
return energy wil cease when the dollar balance in the EBA becomes zero.
The initial term of the Agreement commences January 1, 2010, and provides Idaho
Power renewal rights. Non-price terms and conditions for deliveries to Idaho Power wil be
governed by Schedule B "Unit Commitment Service," of the Western Systems Power Pool
Agreement ("WSPP"). Energy returned to Clatskanie wil be made pursuant to Schedule B
or Schedule C of the WSPP depending upon the point of delivery.
For PCA purposes, the Company will treat the Exchange Agreement as a purchase
of energy when the Company is receiving power from the Arrowrock project and a surplus
sale of energy when the Company is delivering energy to Clatskanie. The principal benefit
of the Exchange Agreement is the avoidance of transmission expense by both Idaho
Power and Clatskanie.
Idaho Power requests that you bring this letter to the attention of the
Commissioners.
Respectfully submitted,(J~
Barton L. Kline
BLK:csb
Enclosure
cc: James Thompson (w/encl.)
Greg Said (w/encl.)
f'r'\
EXCHANGE AGREEMENT
BETWEEN
CLATSKANI PEOPLE'S UTILITY DISTRICT
AN
IDAHO POWER COMPAN
This Exchange Agreement ("Agreement"), dated September 11, 2009, is by and
between Clatskanie People's Utility Distrct, 469 North Nehalem Street, P.O. Box 216,
Clatskanie, Oregon 97016, an Oregon people's utilty distrct, ("Clatskane"), and Idaho Power
Company, 1221 West Idaho Street, P.O. Box 70, Boise, Idaho 83707, an Idaho Corporation,
("IPC"). Each entity may be refered to hereafter individually as "Party" and collectively as"Pares." .
In consideration of the Paries mutual promises, representations and undertkings, they
covenant and agree as follows:
1. Resource: The Arowrock Hydroelectrc Power Project (the "Project") is an 18 MW
hydroelectrc project now under constrction at the existing United States Bureau of
Reclamation ("USBR") operated Arrowrock Dam on the Boise River in Ada County,
Idaho. Pursuant to the Power Purchase and Sales Contract (the "Contract") effective
August 1,2004, as amended, Clatskanie has contractually acquired the right to al of the
net electrcal output to be produced from the Project from five irgation districts from
Idaho and Oregon, namely Boise-Kuna, Nampa & Meridian, New York, Wilder, and Big
Bend (the "Irgation Distrcts"). The anticipated completion date for the Project is
December 2009. The Project is expected to produce an average of approximately 81,000
MW annually.
2. Preconditions For Effectiveness: The effectiveness of this Agreement shall be subject to:
a. Approval of the Agreement, on satisfactory terms and conditions to Idaho Power,
by the Idaho Public Utility Commission, and the Federal Energy Reguatory
Commission. Idaho Power shall make the necessar filings with these
Commssions. Clatskane agrees to cooperate in good faith to obtai necesary
approval to implement the Agreement
b. Acquisition of the r~uired transmssion to move the energy frm the Project to
Idaho Power tranmission system.
c. The Project achieving commercial operation status as determned by the tenns of
the Contract.
3. Term and Termination:
a. The Initial Term of the Agrement shall commence the earlier of Januar 1,2010,
or such other date that power is delivered to Clatskane from the Project, though
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December 31,2015. Provided, however, that commencement of the Intial Term
shall be deferd until all of the preonditions for effectiveness listed in secon 2
hereof have been satisfied.
b. IPC shall have the right to renew the Agreement for two additiona15 year ters.
Should Idaho Power desire to renew the Agreement beyond its Intial Term or a
subsequent renewal term (if any), Idao Power shall provide G:latskane written
notice of its intent to renew at least 180 days,prior to the expiration of the Intial
Term or a subsequent renewal term.
c. This Agreement shall either be suspended or termated if Clatskanie's right to
purchase Project output under the Contract is suspended or terminated for any
reason. Clatskanie shall promptly advise Idao Power of developments or notices
related to potential suspension or termtion of the Contrct.
4. Delivery Points:
a. Deliveries to Idaho Power shal be at Idaho Power's 34.5 kV bench feeder located
adjacent to the Lucky Peak Nurery south of Mores Creek Bridge, Ada County,
Idaho ( "Idaho Power POR").
b. Deliveries to Clatskanie shall be made at either the Idaho Power interconnection
with Bonnevile Power Admstration ("BPA") at LaGrande, or BPA's Slatt
substation, or the Mid-Columbia ("Mid-C") power hub, or other unconstrained
interconnection with BPA to be determned at Idaho Power's discretion.
("Clatskanie POR").
5. Energy Ban Account:
a. Deliveries to each Par puruant to ths Agreement shal be recorded in an
Energy Ban Account ("EBA"). Idao Power shall account for all deliveries
under the Agrement and sha issue monthy statements to Clatskane showing al
transactions and balances in the account. These records shal be subject to audit
by Clatskane upon reasonable advance notice.
b. The EBA balance does not create an obligation for dollar payment betwee the
Pares, but enables the Pares to calculate the volume of energy to be exchanged
pursuant to values determined as follows:
(i) Each MW delivered to Idaho Power durg Heavy Load Hours ("HLH")
or Light Load Hours ("LLH"), as defined by the NERC and/or NAESB
stdads or business practices, shal be multiplied by the correspondig
Intercontienta Exchange ("ICE") Mid-C HLH or LLH daily average
index for such day. The product wil be recorded as a positive value in the
EBA.
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(ii) Each MW delivered to Clatskane durng HLH or LLH shall be
multiplied by the correspondig ICE Mid-C HLH or LLH daily average
index for such day. The product wi be recorded as a negative value in
theEBA.
(üi) Should the ICE index be materially revised or termted" at any tie
durng the term of ths Agreement, such that it no longer reflects the
average HLH or LLH price for the day, the Pares agree to promptly
negotiate in good faith a replacement index to be used in lieu of ICE.
The vaues of the energy to be exchaged via delivery from Clatskane to IPC and
delivery from IPC to Clatskaie are equal and the Paries reasonably expect them to be
equal over any thee (3) year period of exchange. The Paries do not intend that the
balance of the EBA shall go below zero at any time. Once the value of the EBA falls
below zero, then Idaho Power wil have the right to cease deliveries until the dollar
balance value becomes positive.
6. Delivery of Energy to Idaho Power:
a. Wee1dy Generation Schedule. To assist the Parties in maming the value of
generation from the Project, Clatskaie wil provide Idaho Power a preliminar
operating schedule prior to the begig of each caenda month. The
preliminar schedule will indicate anticipated timng of water releases from the
Project for the upcoming month. In addition, each week, Clatskane will tranmit
to Idaho Power the weekly water budget ("Weekly Release Volume") that the
Ingation Distrcts and USBR jointly determe for flows to be released from
Arowrock Reseroir into Lucky Peak Reservoir for the upcomig Operatig
Week (Sunday though Satuday). Clatskaie wi endeavor to trnsmit the
Weekly Release Volume on Thurday or Friday of the week preceding the
release. Idao Power shall endeavor to advise Clatskanie on Friday prior to the
begig of each operatig week of Idaho Power's planed generation schedule
for each day of that operating week. Idaho Power wil consider all hydrulic or
other constrts when planng the weekly schedule and wi endeavor to plan
consistent with the followig priciples and as ilustrated in Exhbit A to this
Agreeent. Clatskane will use its best efforts to caue the Project opertors to
accommodate the planed schedule if there is flexibilty in the Project, such as
avaiabilty in plant generation capacity, water and trsmission capacity.
(i) Clatskane wi use its best effort to cause the Project operators to
schedule Project generation in a maner designed to max the
generation durg HLHs durg the week. In order to better match Idaho
Power load profiles, HLH perod is fuer divided into two sub-perods -
- HLH-I and HLH-2.
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(ii) Clatskae will use its best effort to cause the Project operators to
schedule Project generation in HLH-l periods as requested by Idaho
Power durg HLHs ("HLH-1") in any given day.
(ii) After maximizig generation in the HLH -1 periods of each day, any
remaining generation will be scheduled in HLH ~2.
(iv) If there is stil more water scheduled to be released that day, the
generation wil be scheduled in the LLHs.
b. Real-Time or Pre-Schedule Adjustments to Weekly Generation Schedule. Should
Idaho Power request a change to the weekly schedule in pre-schedule or real-time,
Idaho Power wil endeavor to give Clatskåe or its designated agent as much
advance notice as possible. However, Idao Power may submit requests for
changes in the generation schedule up to the firm scheduling deadline provisions
as provided by the Idaho Power Delivery pursuat to its Open Access
Transmission Tarff Clatskane or its designated agent wil allow such schedule
change if there is flexibilty in the Project, such as availabilty in plant generation
capability, water and transmssion capacity.
c. Project Maintenance. On or before the end of November of each year during the
term of ths Agreement, Clatskane wil provide Idaho Power a proposed Anual
Maitenance Schedule for the Project for the upcoming year. Idaho Power and
Clatskane wil mutuy agree on an Anual Maintenance Schedule to be
submitted to the Project for approval, and both Paries shal use best efforts to
propose a maintenace schedule that is designed to maximize the generating
capabilty and/or value of the Project in HLH's. Clatskae shall give Idao
Power as much advance notice as possible of any unplaned maintenace or
repair work requi by the Project that may afect generating capabilty or
availabilty.
d. Meterig. Clatskae shal be responsible for acquiring and paying for any
tranmission, meterig and communcations to enable deliveries to the Idaho
Power POR. Clatske shall pay al costs to intal, and maintan the Meterg
. Equipment as requied and defied by the Interconnection Agrement. If the plan
for the Meterig Equipment under the Interconnection Agreement is determned
not to meet the needs of ths Agreement by Idaho Power's sole discretion,
Clatskane shal pay to install additional meterig equipment requid to measure,
record and report the Net Energy at the Idao Power POR in a maner to provide
Idaho Power adequate energy measurement data to admster ths Agrement.
e. Tele-metering. Clatskae shall cause the Project operators to instal, operate and
matai, at no expense to Idaho Power, meterig, communcations and telemetr
equipment that will be capable of providig Idao Power with contiuous
intantaeous telemetr of Project's Net Energy produced and delivered to the
Idaho Power POR to Idaho Power's designated dispatch facilty, as required by
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the Interconnection Agreement between Idaho Power and the Project. If Idaho
Power requests telemetr equipment, information or servces of any natue
beyond that expressly requied by the Interconnection Agreement, Idao Power
and Clatskane shall mutually cooperate to make effcient use of Clatskane's and
Idaho Power's telemetry equipment to provide the additional inormaton
requested by Idaho Power in the most cost-effective maner. Idaho Power shall
be responsible for any costs associated with the additional telemetr equipment,
inormation, servces or requiements tht are beyond those expressly required by
the Interconnect Agreement.
f. Losses. Generation recorded at the meter wil be adjusted downward by the loss
percetage (curently 3.6%) madated by Idao Power FERC OATT
Transmission Tariffs. The .fina adjusted amount of energy received at Idao
Power POR would be deemed as deliveries to Idao Power and be used to
caculate the value of the energy to be deposited at EBA.
g. No delivery ofRECs. The power delivered to Idaho Power from the Project
pursuant to ths Agreement shall not include any renewable energy credits
("RECs") or other non-power attrbutes that may otherwse be associated with
Project generation. The RECs shall remai the sole, exclusive and unencumbered
property of Clatskane, which :aay hold or tranfer them freely to pares other
than Idaho Power at Clatskae's sole discretion.
7. Delivervof Energy to Clatskane:
a. Durig the month of June, July, August, November, December, and Janua
durg the term of ths Agreement, Idaho Power shall not be obligated to deliver
any retu energy. However, the Pares may upon mutua, wrtten agreement,
arange deliveries of retu energy durg these months. The use of emai or
Instant Messenger shall be sufcient for a wrtten record of these mutual wrtten
agreements.
b. Durg all other months of the year Clatskane wil, subject to section 7.c. below,
have the right to request and Idao Power the responsibilty to deliver energy.
Clatskane will request retu energy for each schedulg day in equa hourly
volumes for each stdad HLH and equal hourly volumes for each standad
LLH. When practical and as a matter of convenience, retu energy wil
generay be scheduled in stadard 25 MW hourly volumes. By mutual
agreement, any amount other th 25 MW ca be retued. A tyical retu
energy schedule by month, subject to sufcient positive EBA, is shown below:
Month Feb Mar Aur Mav Sen OctRetu252525252525 .
Energy
CM)
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c. Idaho Power will use its best efforts to schedule deliveries of the energy to be
retued in day-ahead. However, no energy deliveries wil be requied for those
pre-schedule days for which Idao Power is not, in its sole determination, in an
energy surlus position. If Idaho Power pre-scheduled daily deficits remai for
more than 15 days in any given month selected as retung month, Idaho Power
shal resume retug energy to Clatskae at Mid-C.
d. In the event Idaho Power elects in pre-schedule to retu energy hereunder at the
La Grande POD, but due to forces beyond Clatskanie's control, transmission
constraints prevent Clatskanie's receipt of energy at LaGrande, then return energy
deliveries wi be either: (1) postponed unti the trmission constrint is
relieved; (2) made at a mutually agreed alternate POD; or (3) settled fiancially
based upon a mutually agreed upon price. If the Pares ca not mutually agree to
any of the above alterntives, deliveries wil then be deferred unti Clatskanie is
able to receive energy at LaGrade.
8. Scheduling: All deliveries to Clatskane shall be scheduled on a day-ahead basis and in a
timely manner in accordace with industr stada day-ahead scheduling practices.
Additional deliveries may be made on real-tie, as requested by Clatskanie, but at the
sole discretion of Idao Power. Ifrea-tie cuts occur, the pre-scheduled MW for those
hours wil not be subtracted from the value of the ban (they will be treated as if they
were never scheduled).
9. Incorporation of Term and Conditions:
a. Deliveries to Clatskanie. Unless the Pares have agreed otherwse in this Exchange
Agreement, the tens and conditions of the Western Systems Power Pool Agreement
("WSPP Agreeent') revision Effective Apri 1, 2008, and its Schedules Band C,
sha apply to delivery of energy to Clatskae hereunder. Deliveries made at Mid-C
wil be made pursuant to Schedule C. Deliveries made at the Idaho Power system
border wil be mae pursuant to schedule B "Unit Connitment Servce".
b. Deliveries to Idaho Power. Unless the Paries have agreed otherwe in ths Exchange
Agreement, the terms and conditions of the WSPP Agreement and its Schedule B
"Unit Commtment Servce," shall apply to delivery of energy to Idalo Power
hereunder. Revisions to the WSPP Agreement subsequent to Apri 1, 2008, shall not
be applicable to ths Agrement uness mutuy agreed to in wrting by the Paries.
c. This Agreement Controllig. In the event tht there is a confct between the express
term or stated intent of ths Agreement and any provision of the WSPP Agreement as
incorporated above, then the express terms or stated intent of ths Agreement shall be
controlling.
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10. Miscellaneous:
a. Representations. Each Par, with respect to itself, by its signatue to this
Agreement, hereby represents to the other Par, as of the date of execution, as
follows:
(i) It is duly organed, validly existing and in good stadig under the laws '
of the jursdiction of its formtion;
(ii) The execution, delivery and performance of this Agreement are within its
statutory and corporate powers;
(ii) It has full legal right, power and authority to execute, deliver and perorm
its obligations under this Agreement; it has taken al appropriate and
necessar action to authorize the execution, delivery and performance of
this Agreement, including without limitation, the approval by its Board of
Commssioners or Board of Directors, as the case may be; and ths
Agreement has been duly and validly executed and delivered by it; and
ths Agreement does not violate any of the terms or conditions in its
governg documents or any contract to which it is a par or any law,
rue, regulation, order, wrt, judgment, decree or other legal or regulatory
deternation applicable to it;
(iv) Ths Agreement constitutes a legal, vald and binding obligation of such
Par enforceable against it in accordance with its term;
(v) Except for necessar approval of this Agreement as referred to herein no
authorization, approval, exemption or consent by any governental or
public body or authority is requied in connection with th authoriation,
execution, delivery and carg out of the terms of ths Agrement, which
has not been obtaned;
(vi) There are no banptcy, insolvency, reorganation, receivership or other
arangement or proceedigs pendig or being contemplated by it, or to its
knowledge thateed agaist it;
(vi) There are no actions, suits, proceedigs or investigations pendig or, to the
Par's knowledge, theatened againt such Par or any of its Affates, at
law or in equty which, if adversely detered. would individuay or in
the aggregate have a material adverse effect on the business, propertes or
assets or the condition, ficial or otherwse, of such Par, or result in
any impaient of such Par's abilty to perform its obligations under ths
Agreement;
b. Assignent. Neither Part shall assign ths Agreement or its rights hereunder
without the prior writtn consent of the other Par, which consent may not be
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uneasonably witheld. Provided, however, that either Part may, without the
consent of the other, pledge or encumber this Agrement or the accounts,
revenues or proceeds hereof in connection with any fmancing or other financial
arangements;
c.Notification. All notices to be given puruant to this Agreement shall be given to
the Par at their respective contact and address as follows: ..'\
Clatskane People's Utiity Distrct
Power Manager
P.O. Box 216
Clatskane, Oregon 97016
powerlclatskanepud.com
Facsiie: [phone]
Idaho Power Company
Manager, Power Supply Operation
P.O. Box 70
Boise, Idaho 83707
trark(fidahopower.com
Facsimle: [phone]
Notices may be properly given by US Mail, private courer, electronic mail or facsimle.
Either Par may change the identity of the contact person or the address for notice for
such Par by providig notice thereof to the other Par pursuant to ths Section of the
Agreement.
d. ! Bindig Effect. This Ágreement shall be bindig upon the Parties and their
successors and peritted assigns;
e. Headigs. Section and subsection headigs are included solely for the
convenience of the Partes and do not constitute a par of ths Agreement. No
meanng shall be imputed to such headgs nor shall they be relied upon tointerpret ths Agreement; .
£ Execution. Ths Agreement may be executed on separte counterpar, each of
which when so executed and delivered, shal be an origial, but all such
counterpars shal together constitute but one and the same instrent.
The Pares have executed ths Agreement as of the date first wrtten above.
CLATSKA PEOPLES UTILITY DISTRCT~IDAHO POWER COMPAN
By:~\ß~'
Danel B. Mior,
Sr. Vice-President, Delivery
(For Greg Booth, General Manager)
Joseph A. Taffe, Actig General Manager
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EXHBIT A
The Pares will attempt to maximize generation from the Project in the hours designated HLH-l
in ths Exhbit A:
For Jan, Feb, Max, Oct, Nov and Dec For Apr, May, Jun, Jul, Aug and Sep
HEPPT HEPPT
HLH-I
HLH-2
HLH-Pea Hour
HLH-Shoulder
Hour
Light Load Hour
Hour Endig
Pacific Prevailing
Time
LLH
HE
PPT
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