modproc.pet.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY FOR A
DECLARATORY ORDER CONCERNING
ENTITLEMENT TO PUBLISHED RATES FOR
NON-FUELED SMALL POWER PRODUCTION
FACILITIES
)
)
)
)
)
)
)
)
)
)
)
)
CASE NO. IPC-E-01-37

NOTICE OF PETITION

NOTICE OF
MODIFIED PROCEDURE

NOTICE OF
COMMENT/PROTEST
DEADLINE

YOU ARE HEREBY NOTIFIED that on October 29, 2001, Idaho Power Company (Idaho Power; Company) filed an Application with the Idaho Public Utilities Commission (Commission) requesting a Declaratory Order clarifying the intent of Order No. 25884 issued by the Commission in Case No. IPC-E-01-28 dated January 31, 1995. Reference IDAPA 31.01.01.101. In Order No. 25884 the Commission approved two avoided cost rate methodologies for qualifying cogeneration and small power production facilities (QFs) smaller than 1 MW. Reference Public Utility Regulatory Policies Act of 1978 (PURPA); 18 C.F.R. § 292. One methodology was adopted for “…non-fueled projects, e.g., wind, solar, hydro…”, Order No. 25884, p. 14, and a separate methodology was approved for pricing power generated by “fueled projects.” Order No. 25884 did not provide examples of fueled projects but did state that it was the Commission’s intent to encourage the development of non-fossil fuel generation. Both methodologies assume the costs Idaho Power would avoid and the costs associated with a combined cycle combustion turbine (CCCT). The methodologies, although structured differently, are presumed to be equivalent, each representing the purchasing utility’s avoided costs, i.e., the “incremental costs to an electric utility of electric energy or capacity or both which, but for the purchase from the qualifying facility or qualifying facilities, such utility would generate itself or purchase from another source.” 18 C.F.R. § 292.101(b)(6) definition—Avoided Costs.

Fueled Project Methodology
As reflected in the Company’s Petition, the published avoided cost rates for fueled projects track very closely to the typical cost structure for a CCCT. Rates for fueled projects contain a non-adjustable component equivalent to the fixed cost of the CCCT and an adjustable component which is intended to track the price of the natural gas fuel for a CCCT. The adjustable portion is changed annually based on the price of natural gas at the Sumas, Washington hub. Like the actual costs of a CCCT, the non-adjustable component is relatively small when compared to the cost of the adjustable component, i.e., the natural gas fuel.
Non-Fueled Project Methodology
In contrast, the published rates for non-fueled projects, the Company states, look more like the typical cost structure for a hydro plant than for a CCCT. The total costs, fixed and variable, are combined into a large non-adjustable payment with a small increment for variable O&M that is escalated at a fixed rate and the total amount is fixed over a 20-year life. The rates for non-fueled projects are currently higher than the rates for fueled projects.
Idaho Power states that it continues to receive requests from QFs seeking to develop projects smaller than 1 MW. Most developers seek to have their projects categorized as non-fueled so that they can receive higher, fixed prices. Many of these proposed projects, the Company states, utilize a “fuel” to produce the motive force for their generating facilities. For example, anaerobic digesters utilize animal waste to produce methane gas, which is then combusted to provide motive force for the production of electricity. Wood processing facilities desire to utilize wood waste to burn to produce steam for the motive force for their generation equipment. Clearly these generating facilities, the Company contends, utilize materials that have variable O&M expense associated with acquisition, storage and handling of the “fuel” for the facilities. On the other hand, this fuel is a “non-fossil fuel” consisting of a waste product that is a by-product of other industrial processes or agricultural products. It generally is not purchased from third parties and may or may not have market value for other uses. Thus, the Company admits, it is not subject to price fluctuations in the same manner that the price of fossil fuels varies over time.
Idaho Power states that it is cognizant of the possible system benefits associated with distributed generating resources using renewable sources of fuel. However, the Company states it is also desirous of complying with the Commission’s intent that there be a distinction between fueled and non-fueled projects.
Idaho Power requests that the Commission issue a Declaratory Order clarifying Order No. 25884 with respect to QF eligibility for entitlement to published rates for non-fueled small power projects. Order No. 28854, the Company states, clearly identifies renewable resources such as wind, solar, and hydro as being eligible for non-fueled rates. Additional clarification is required as to whether non-fossiled fuel fired generating facilities utilizing waste products as fuel will also qualify for non-fueled rates.
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of record in Case No. IPC-E-01-37. The Commission has preliminarily determined that the public interest regarding the Company’s Petition for Declaratory Order regarding the eligibility of animal waste and wood waste fueled projects for non-fueled rates may not require a hearing to consider the issues presented and that issues raised by the Petition may be processed under Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204.
YOU ARE FURTHER NOTIFIED that the Commission may not hold a hearing in this proceeding unless it receives written protests or comments opposing the use of Modified Procedure and stating why Modified Procedure should not be used. Reference IDAPA 31.01.01.203.
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments or protests with respect to the Petition for Declaratory Order and the Commission’s use of Modified Procedure in Case No. IPC-E-01-37 is Thursday, November 29, 2001. Persons desiring a hearing must specifically request a hearing in their written protests or comments.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are received within the deadline, the Commission will consider the issue on its merits and enter its Order without a formal hearing. If comments or protests are filed within the deadline, the Commission will consider them and in its discretion may set the matter for hearing or may decide the matter and issue its Order based on the written positions before it. Reference IDAPA 31.01.01.204.
YOU ARE FURTHER NOTIFIED that the written comments concerning Case No. IPC-E-01-37 should be mailed to the Commission and the Company at the addresses reflected below.
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074

Street Address for Express Mail:

472 W. WASHINGTON ST.
BOISE, ID 83702-5983 BARTON L. KLINE
SENIOR ATTORNEY
IDAHO POWER COMPANY
PO BOX 70
BOISE, ID 83707-0070
Email: [e-mail]

Street Address for Express Mail:

1221 W. IDAHO ST.
BOISE, ID 83702
All comments should contain the case caption and case number shown on the first page of this document. Persons desiring to submit comments via e-mail may do so by accessing the Commission’s homepage located at www.puc.state.id.us under the “Comments and Questions” icon. Once at the “Comments and Questions” icon, fill in the case number as it appears on the front of this document, and enter your comments. These comments should also be sent to the Applicant at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that the Petition for Declaratory Order in Case No. IPC-E-01-37 can be reviewed at the Commission’s office and at the principal office of Idaho Power Company during regular business.
DATED at Boise, Idaho this day of November 2001.

Jean D. Jewell
Commission Secretary

bls/N:IPCE0137_sw
NOTICE OF PETITION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF
COMMENT/PROTEST DEADLINE 1

Office of the Secretary
Service Date
November 8, 2001