28865.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL
OF THE FIRST AMENDMENT TO THE
AGREEMENT FOR SALE AND PURCHASE OF
SURPLUS ENERGY BETWEEN IDAHO
POWER COMPANY AND AMALGAMATED
SUGAR COMPANY LLC
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CASE NO. IPC-E-01-26

ORDER NO. 28865

On October 31, 1998, Idaho Power Company (Idaho Power; Company) and The Amalgamated Sugar Company LLC (TASCO) entered into an Agreement for the Sale and Purchase of Surplus Energy (the “Surplus Energy Agreement”) under which Idaho Power currently purchases surplus electric energy up to 2 MW from TASCO at market-based prices. Reference Case No. IPC-E-98-15, Order No. 27885.
On July 25, 2001, Idaho Power filed an Application with the Idaho Public Utilities Commission (Commission) requesting approval of a First Amendment (Amendment) to the Idaho Power/TASCO Surplus Energy Agreement. As represented in the Application, TASCO has decided to install additional generating capacity at its Nampa plant. In addition to the approximately 2 MW of generating capacity that currently exists, TASCO intends to add an additional 8 MW of capacity which will bring the total generating capacity at the Nampa plant to 10 MW. Under the Amendment dated July 23, 2001, Idaho Power agrees to purchase the additional surplus energy generated by TASCO at prices that are less than market-based non-firm energy prices. The Amendment provides a September 1, 2003 termination date for the Surplus Energy Agreement.
Pursuant to the Amendment, the electric energy to be sold under the Surplus Energy Agreement is non-firm energy and will be only available when TASCO does not consume the electric energy in the Nampa plant. The purchase price for the energy provided by TASCO is separated into two blocks. The first block is energy attributable to the first two (2) MW of energy and is priced at the same level as previously approved by the Commission in Order No. 27885. The second block is energy attributable to the next eight (8) MW of capacity installed by TASCO and is priced at a percentage discount from the monthly average non-firm Dow Jones Mid-Columbia index price. During the period from August 1, 2001 through September 30, 2001, the price for the second block energy will be equal to 90% of the monthly weighted average non-firm Dow Jones Mid-Columbia index prices during the period. From January 1, 2002 through September 1, 2003, second block energy will be priced at 85% of the monthly weighted average non-firm Dow Jones Mid-Columbia index price.
Under the terms of the Amendment, until Idaho Power has completed necessary engineering studies, purchases from the Nampa plant will be physically and contractually limited to 8.5 MW. If additional interconnection facilities are required to allow parallel operation between TASCO and Idaho Power at the 10 MW level, TASCO will be obligated to reimburse Idaho Power for those costs prior to the additional generation being accepted by Idaho Power.
Pursuant to the Amendment, the revisions of the Surplus Energy Agreement will not become finally effective until the Commission has approved the Amendment and declares that all payments for surplus energy under the Surplus Energy Agreement as amended shall be allowed as prudently incurred expenses for ratemaking purposes.
On August 24, 2001, the Commission issued Notices of Application and Modified Procedure in Case No. IPC-E-01-26. The deadline for filing comments was September 12, 2001. The Commission Staff was the only party to file comments. Staff recommends that the proposed Amendment to the TASCO Agreement be approved and the Company be permitted to recover reasonably incurred related costs through the PCA.
Staff in its analysis compared the TASCO Agreement second block energy price to several other buy-back programs, short-term energy purchase agreements and the Company’s agreement to lease mobile diesel generators. Staff concludes that the TASCO Agreement second block energy is similar in price to other short-term alternatives, less expensive than some and more expensive than others. Because the price to be paid under the amended Agreement is a percentage of market price rather than a fixed price, the amount paid by Idaho Power will increase or decrease as market prices change. When Idaho Power needs the energy, the price will always be more attractive than buying from the market. When it does not need the power, Idaho Power should, Staff contends, be able to resell the energy at the higher full market price and credit the revenue to its power sales account. Staff believes that the prices agreed to in this Amendment are attractive to Idaho Power and its ratepayers.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case No. IPCE01-26, including the comments and recommendations of the Commission Staff. Based on our review, we continue to find it reasonable to process this case pursuant to Modified Procedure, i.e., by written submission rather than by hearing. Reference IDAPA 31.01.01.204.
The Commission finds the terms of the First Amendment to be a reasonable means of securing additional electric energy and minimizing the Company's power supply costs. We further find it reasonable to authorize recovery of related and reasonably incurred expenses through the Company's Power Cost Adjustment mechanism.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company, an electric utility, pursuant to the authority and power granted it under Title 61 of the Idaho Code and the Commission's Rules of Procedure, IDAPA 31.01.01.000 et seq., and the Public Utilities Regulatory Policies Act of 1978 (PURPA).
The Commission has the authority under PURPA and the implementing regulations of the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric utilities to enter into fixed term obligations for the purchase of energy from qualifying facilities and to implement FERC rules.
O R D E R
In consideration of the foregoing, IT IS HEREBY ORDERED and the Commission does hereby approve the terms of the July 23, 2001 First Amendment to the underlying Agreement for Sale and Purchase of Surplus Energy between Idaho Power Company and Amalgamated Sugar Company LLC (TASCO).
THIS IS A FINAL ORDER. Any person interested in this Order may petition for reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this _______ day of September 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

vld/O:IPC-E-01-26_sw

ORDER NO. 28865 1

Office of the Secretary
Service Date
September 28, 2001