20021220Status report.pdf

BARTON L. KLINE ISB #1526
Idaho Power Company
O. Box 70
1221 West Idaho Street (83702)
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
Attorney for Idaho Power Company
LISA D. NORDSTROM ISB #5733
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington Street (83702-5983)
O. Box 83720
Boise , Idaho 83720-0074
Telephone: [phone]
FAX Telephone: [phone]
Attorney for the Commission Staff
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S INTERIM AND
PROSPECTIVE HEDGING , RESOURCE
PLANNING , TRANSACTION PRICING
AND IDACORP ENERGY SOLUTIONS
(IES) AGREEMENT.
Historv of the Proceeding
) CASE NO. IPC-01-
(PHASE II)
) STATUS REPORT
This report is submitted to advise the Commission of the current status of
the Parties' efforts to resolve the remaining issues in this case specifically relating to
transactions between Idaho Power and IDACORP Energy LP ("IE") under the
Agreement For Electricity Supply and Management Services between Idaho Power and
IDACORP Energy Solutions LP ("Supply and Management Agreement"
STATUS REPORT , Page
In Order No. 28831 issued on August 24 2001 , the Commission identified
a number of concerns associated with the Supply and Management Agreement
including the issues of additional compensation to Idaho Power for transmission system
and other system resource usage by IE , and whether the transfer prices for both day-
ahead and real-time transactions between Idaho Power and IE approved in Commission
Order No. 28552 should be modified on a prospective basis.
On June 21 2002, IDACORP announced that it was exiting the energy
trading business. Subsequently the Company advised the Commission that as a
consequence of I E's exiting the energy trading business , Idaho Power intended to wind
up all of its transactions with IE as of August 1 2002, and after that date IE would no
longer be providing most of the services it had previously provided under the Supply
and Management Agreement. As a result, the scope of the resolution of the issues in
this case will be limited to historic transactions, and it will not be necessary to address
the ongoing relationship between Idaho Power and IE.
In Order No. 29102 issued on August 28 , 2002, the Commission resolved
the risk management and hedging issues portion of this case by adopting a stipulation
presented by the parties. In Order No. 29102 the Commission also directed the parties
to continue with their ongoing efforts to resolve the remaining issues relating to: (1) the
pricing of transactions between Idaho Power and IDACORP Energy LLP (IE) under the
Supply and Management Agreement, and (2) additional compensation that may be
owing to Idaho Power by IE as a result of IE's use of Idaho Power s transmission
system and other ancillary services provided by Idaho Power. Order No. 29102
directed the parties to present either the resolution to these issues or a status report on
STATUS REPORT, Page 2
the progress the parties were making toward resolving those issues, no later than
December 20, 2002.
Resolution of FERC Issues
During the process of winding up IE's energy trading business , it became
apparent to Idaho Power that a number of wholesale transactions between Idaho Power
and I E had been executed in a manner that was not consistent with the requirements of
the Federal Energy Regulatory Commission (FERC). In addition , it was determined that
a number of wholesale power transactions between the Company and IE had not
received the required prior approval from the FERC. While in most instances IE has
already paid for the wholesale services provided , the purchase prices under these
transactions must be reviewed and approved by the FERC. To come into full
compliance with the FERC requirements, Idaho Power and IDACORP Energy have
been engaged in a substantial effort to review, allocate and price all transactions
between the parties in a manner that is consistent with FERC requirements. Idaho
Power has retained the services of Charles River Associates to assist in this separation
and pricing process.
Plan For Resolution of -16 Case Issues
To determine the proper pricing and allocation of costs relating to
transactions between IDACORP Energy and Idaho Power, it will be necessary for the
FERC to finally approve purchase prices for certain ancillary services sold to IE and to
finally approve prices for real-time energy purchases between Idaho Power and
IDACORP Energy. Idaho Power has presented these issues and a massive amount of
data to the FERC and is currently awaiting a determination by the FERC as to what
STATUS REPORT, Page 3
additional information and filings they require. Idaho Power and IPUC Staff-have
discussed this situation informally and have jointly concluded that it would be advisable
to allow the FERC to complete its review process before initiating additional settlement
discussions among the participants in this case. Idaho Power and Staff believe that this
procedure will avoid unneeded duplication of effort and allow for the most efficient
allocation of resources by the parties.
Staff and Idaho Power anticipate that when the FERC has made its final
determinations on the allocation and quantification of costs associated with the Idaho
Power-IE transactions , Idaho Power and IE will enter into a settlement agreement which
would establish an amount of additional monies owing to Idaho Power. Idaho Power
would then present that settlement agreement and supporting documentation to the
parties in this proceeding in a workshop or series of workshops in which the amount and
derivation of the additional revenue could be discussed. Following the workshops , it
would be Idaho Power s and Staff's expectation that the parties would attempt to
negotiate and enter into a written stipulation which would resolve and settle all of the
remaining issues in this case. This stipulation would integrate the FERC-approved
transfer prices and allocations in developing the final negotiated settlement.
To ensure that this case maintains a reasonable schedule for final
resolution , Idaho Power and Staff have agreed that on or before March 15 2003, Idaho
Power will file with the Commission either (1) the proposed resolution described above
or (2) another status report addressing the remaining unresolved issues and a plan for
resolving the issues.
STATUS REPORT, Page 4
Idaho Power regrets that this case has become much more complicated
than had been initially anticipated. However, the Company is also confident that the
substantial effort undertaken by Idaho Power , IE and Charles River Associates will
provide the participants in this case with a high level of confidence that the issues have
been fully explored and that any additional compensation owing to Idaho Power is
computed based on the best available data.
Respectfully submitted this 20th day of December, 2002.
Wcl~
BARTON L. KLINE
Attorney for Idaho Power Company
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LISA D. NORDST OM
Deputy Attorney General
Idaho Public Utilities Commission
STATUS REPORT , Page 5