20030220Application.pdf

BARTON L. KLINE , ISB #1526
MONICA MOEN , ISB #5734
Idaho Power Company
1221 West Idaho Street
P. O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
Attorneys for Idaho Power Company
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL)
OF AN AGREEMENT FOR SALE AND PUR-
CHASE OF FIRM ELECTRIC ENERGY
BETWEEN IDAHO POWER COMPANY
AND TIBER MONTANA LLC
CASE NO. IPC-03-
APPLICATION FOR APPROVAL
OF AGREEMENT FOR SALE
AND PURCHASE OF FIRM
ELECTRIC ENERGY BETWEEN
IDAHO POWER COMPANY AND
TIBER MONTANA LLC
COMES NOW Idaho Power Company ("Idaho Power" or the "Company
and hereby applies for an Idaho Public Utilities Commission ("I PUC" or the
Commission ) Order approving an Agreement between Idaho Power and Tiber
Montana LLC ("Tiber ) under which Tiber would sell and Idaho Power would purchase
during certain months of the year, net firm electric energy and surplus energy generated
by Tiber s electric generation facility.
This Application is based on the following:
APPLICATION FOR APPROVAL OF AGREEMENT FOR SALE AND PURCHASE OF FIRM
ELECTRIC ENERGY BETWEEN IDAHO POWER COMPANY AND TIBER MONTANA LLC - Page 1
Tiber proposes to design , construct, install, own , operate and maintain a
5 MW hydroelectric generating facility located on the outlet works of the existing Tiber
Dam , approximately 15 miles south of the City of Chester, Montana in Liberty County,
Montana (the "Tiber Dam Hydroelectric Plant" or the "Project"). The Project will be a
qualified small power production facility under the applicable provisions of the Public
Utilities Regulatory Policy Act of 1978 ("PURPA"
II.
On February 3, 2003 , Idaho Power and Tiber entered into a Firm Energy
Sales Agreement ("Agreement") pursuant to the rates, terms and conditions approved
by the Commission in Order Nos. 29069 and 29124. In the Agreement, Tiber elected to
contract with Idaho Power for a 20-year term and committed to deliver energy to the
Company only during the months of May, June, July, August, September and October
of each contract year. NorthWest Energy will purchase the plant's output during the
balance of the year. Tiber further elected to contract with the Company using the non-
levelized published avoided cost rate as currently established by the Commission
Posted Rates ). A copy of the Agreement between Idaho Power and Tiber is attached
hereto as Exhibit 1 .
III.
The Tiber Project is located outside Idaho Power s service territory. The
entity transmitting the Project's power to Idaho Power stransmission system
Transmitting Entity ), NorthWestern Energy, has agreed to "firm" all energy deliveries
APPLICATION FOR APPROVAL OF AGREEMENT FOR SALE AND PURCHASE OF FIRM
ELECTRIC ENERGY BETWEEN IDAHO POWER COMPANY AND TIBER MONTANA LLC - Page 2
from Tiber to Idaho Power as specified in Section 9 of the Agreement. This will result in
flat monthly firm energy scheduled into the Idaho Power system.
IV.
The Agreement between Idaho Power and Tiber is the first cogeneration
small power production ("CSPP") Firm Energy Sales Agreement to be executed by the
Company since the mid 1990s. When compared to other CSPP Firm Energy Sales
Agreements approved by the Commission prior to the mid 1990s, certain terms and
conditions of the Agreement between Idaho Power and Tiber have been updated
and/or revised in conformance with (1) current I PUC orders , (2) current technologies
and (3) current utility industry standards. The following is a brief description of these
changes:
Measurement of the 10 MW Ratinq: IPUC Orders No. 29069 and
29124 permit Qualifying Facilities ("QFs ) up to 1 0 MW in size to be eligible for the
Posted Rates. However, these Orders did not specify the manner in which the size of
the QFs was to be measured. Measurement of the size of a QF can be determined on
the basis of such methods as nameplate designation , net generation and gross
generation. To address this uncertainty, Idaho Power and Tiber have agreed to include
the concept of "Optional Energy" in lieu of the reference to the nameplate rating used in
prior CSPP firm energy agreements.
Optional energy" is defined in Section 1.10 of the Agreement as "Energy
which is produced by the Facility, scheduled by the Transmitting Entity and delivered to
the Point of Delivery in an amount that exceeds 10 000 kWh in any single hour." The
Agreement provides that Idaho Power is not obligated to purchase Optional Energy.
APPLICATION FOR APPROVAL OF AGREEMENT FOR SALE AND PURCHASE OF FIRM
ELECTRIC ENERGY BETWEEN IDAHO POWER COMPANY AND TIBER MONTANA LLC - Page 3
Prior to its delivery, the parties have the option to mutually agree on both the purchase
and the sales price for Optional Energy. Including the concept of Optional Energy
allows Tiber to install generating capacity with a nameplate rating of 10 MW or more
while still qualifying to be paid at the Posted Rates the Commission has established for
projects smaller than 10 MW. In the present case, because the nameplate rating of the
Tiber Project is proposed to be 7.5 MW , Optional Energy is not likely to be an issue.
EncouraQinQ Increased "Firmness" of QF Contracts:Traditionally
contracts between Idaho Power and QFs have been denominated as "Firm Energy
Sales Agreements." In fact, the energy purchased under these contracts is not firm
energy as that term is commonly defined by the electric energy industry. Firm energy
purchases Idaho Power makes from non-OF suppliers specify the amounts to be
delivered during heavy-load or light-load hours for the term of the agreement. If the
energy is not delivered in the specified amounts , at the specified times , liquidated
damages provisions in the purchase agreements allow Idaho Power to acquire the
energy from other sources and receive reimbursement from the defaulting supplier for
all of the Company s costs. In a similar manner, the combined cycle combustion
turbine (CCCT), which is the surrogate avoided resource the Commission has used to
set the Posted Rates , is also a dispatchable producer of firm energy. If Idaho Power
constructs a CCCT , the energy from that CCCT resource would be dispatched on a firm
basis to meet customer loads or to allow for surplus sales.
In Tiber s case , the arrangement with NorthWest Energy to firm Tiber
generation makes the agreement more like a true firm -energy purchase. However
Idaho Power recognizes that holding most QFs to the same standard of firmness as
APPLICATION FOR APPROVAL OF AGREEMENT FOR SALE AND PURCHASE OF FIRM
ELECTRIC ENERGY BETWEEN IDAHO POWER COMPANY AND TIBER MONTANA LLC - Page 4
Idaho Power would receive from a utility-owned generating plant or from a non-
power supplier is not realistic. However, in an effort to bring OF performance more in
line with actual firm energy production and to provide an opportunity for OFs using
various generating technologies to receive the posted firm rates based upon the OF's
actual performance, Idaho Power and Tiber have included in the Agreement provisions
which will encourage Tiber to provide energy with a greater degree of "firmness" while
at the same time allowing a reasonable amount of flexibility to Tiber in operating its
facility. These provisions are found in Sections 1.15 and 7.2 of the Agreement.
Section 1 .Surplus Enerqv.Under the concept of "Surplus Energy,
Tiber is required to estimate its monthly kWh generation (Section 6.2 of the
Agreement). Each month, the actual net kWh of Tiber s generation will be compared to
the monthly kWh of generation estimated by Tiber and included in Section 6.2 of the
Agreement. If Tiber actual kWh of generation exceeds 110% of a month's estimated
kWh of generation, the energy in excess of 110% is valued at the Surplus Energy Price
as described in Section 7.2 of the Agreement. The Surplus Energy Price is a market-
based price.
Section 7.1 .Adiustment to Net Firm Enerqy Purchase Price Under
this provision, Tiber s actual net monthly kWh of generation is compared to the
estimated monthly kWh of generation as described in the foregoing paragraph. In
accordance with Section 7.1 .2 of the Agreement, if the amount of Net Firm Energy is
ninety percent (90%) or less of the month's estimated kWh of generation, all of that
month's generation will be deemed to be Surplus Energy for which Idaho Power will pay
Tiber the Surplus Energy Price as defined by the Agreement.
APPLICATION FOR APPROVAL OF AGREEMENT FOR SALE AND PURCHASE OF FIRM
ELECTRIC ENERGY BETWEEN IDAHO POWER COMPANY AND TIBER MONTANA LLC - Page 5
Whether energy produced by Tiber is Surplus Energy or not is at the sole
discretion of Tiber since Tiber sets the monthly estimated generation levels indicated in
Section 6.2 of the Agreement. Tiber can reset the monthly estimated generation
amounts every two years to reflect its increased operating experience and to allow
Tiber to respond to changes in water supplies, etc. The only limitation placed on Tiber
by the Company is that the Net Firm Energy estimated for each month cannot exceed
the nameplate rating of the generation equipment.
Seasonality: Previous I PUC orders and OF agreements
recognized that the value of energy generated differs in accordance with the season in
which it is actually delivered to Idaho Power. As an incentive for a OF to deliver energy
to the Company during times when it is of greater value to the Company, the Posted
Rates have historically been "seasonalized." Idaho Power has "seasonalized" the rates
in the Agreement. However, to better align the seasons with the months in which Idaho
Power has identified actual energy needs , the months within each "season" have been
modified from prior OF contracts to account for those periods of higher demand. Thus
the months of August and September have been moved to "Season 3" and the months
of November and December have been moved to "Season 2" as reflected in Section
2 of the Agreement. This adjustment does not change the overall annual average
payment - the average payment continues to be the Posted Rate. The seasonal rates
are identified in Section 7.1 of the Agreement.
Section 19 of the Agreement provides that the Agreement will not become
effective until the Commission has approved all of the Agreement's terms and
APPLICATION FOR APPROVAL OF AGREEMENT FOR SALE AND PURCHASE OF FIRM
ELECTRIC ENERGY BETWEEN IDAHO POWER COMPANY AND TIBER MONTANA LLC - Page 6
conditions and declared that all payments Idaho Power makes for purchases of energy
to Tiber will be allowed as prudently incurred expenses for ratemaking purposes.
VI.
Tiber has elected an Operation Date of May 15, 2004 as specified in
Appendix B of the Agreement. Idaho Power will monitor compliance with this
Agreement and approve an Operation Date provided the conditions of Section 5.3 of
the Agreement have been met by the Tiber Project. Should the Commission approve
this Agreement, Idaho Power intends to consider the Effective Date of the Agreement to
be February 3, 2003.
VII.
The Agreement, as signed and submitted by the Parties thereto , contains
non-Ievelized Posted Rates in conformity with the applicable IPUC Orders. Because
the Project is located outside the Idaho Power service territory, no interconnection
charges or monthly Operation and Maintenance charges under Schedule 72 will be
assessed Tiber.
VIII.
Idaho Power respectfully requests that this Application be processed
under RP 201 , et ai, allowing for consideration of issues to be processed under
Modified Procedure, i.e., by written submission rather than by an evidentiary hearing.
IX.
Service of pleadings , exhibits , orders and other documents relating to this
proceeding should be served on the following:
APPLICATION FOR APPROVAL OF AGREEMENT FOR SALE AND PURCHASE OF FIRM
ELECTRIC ENERGY BETWEEN IDAHO POWER COMPANY AND TIBER MONTANA LLC - Page 7
Barton L. Kline, Senior Attorney
Monica B. Moen , Attorney II
Idaho Power Company
O. Box 70
Boise, Idaho 83707
Randy C. Allphin
Contract Administrator
Idaho Power Company
O. Box 70
Boise, Idaho 83707
NOW , THEREFORE, based on the foregoing, Idaho Power Company
hereby requests that the Commission issue its order:
(1 )Approving the Firm Energy Sales Agreement between Idaho Power
Company and Tiber Montana LLC without change or condition; and
(2)Declaring that all payments for purchases of energy under the Firm
Energy Sales Agreement between Idaho Power Company and Tiber Montana LLC shall
be allowed as prudently incurred expenses for ratemaking purposes.
Respectfully submitted this day of February, 2003.
BART N L. KLI N E
Attorney for Idaho Power Company
APPLICATION FOR APPROVAL OF AGREEMENT FOR SALE AND PURCHASE OF FIRM
ELECTRIC ENERGY BETWEEN IDAHO POWER COMPANY AND TIBER MONTANA LLC - Page 8
CERTIFICATE OF MAILING
I HEREBY CERTIFY that I have this lc)'\-day of February, 2003 , mailed
a true and correct copy of the within and foregoing APPLICATION FOR APPROVAL OF
AGREEMENT FOR SALE AND PURCHASE OF FIRM ELECTRIC ENERGY
BETWEEN IDAHO POWER COMPANY AND TIBER MONTANA LLC to the following
named individuals by mailing a copy thereof, properly addressed with postage prepaid
to:
Ted S. Sorenson , Manager
Tiber Montana LLC
5203 S. 11 th East
Idaho Falls , Idaho 83404
(0 *cl~
BARTON L. KLINE
CERTIFICATE OF MAILING
BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O3-
IDAHO POWER COMPANY
EXHIBIT
- ...
Article
FIRM ENERGY SALES AGREEMENT
BETWEEN
IDAHO POWER COMPANY
AND
TIBER MONT ANA, LLC
TABLE OF CONTENTS
TITLE
Defmitions
No Reliance on Idaho Power
Warranties
Conditions to Acceptance of Energy
Term, Early Termination and Operation Date
Purchase and Sale of Net Firm Energy
Purchase Price and Method of Payment;
Adjustment of Purchase Price
Facility and Interconnection
Transmission Agreement
Protection
Operations
Indemnification and Insurance
Liability; Dedication
Several Obligations
Waiver
Choice of Laws and Venue
Disputes and Default
Governmental Authorization
Commission Order
Successors and Assigns
Modification
Taxes
Notices
Additional Terms and Conditions
Severability
Counterparts
Entire Agreement Signatures
Appendix A
Appendix B
Appendix C
Facility No: 41717139
Project: Tiber Dam
FIRM ENERGY SALES AGREEMENT
THIS AGREEMENT, entered into on this day ofr:..~""""""'between TIBER
MONT ANA LLC (Seller), and IDAHO POWER COMPANY, an Idaho corporation (Idaho Power),
hereinafter sometimes referred to collectively as "Parties" or individually as "Party"
WITNESSETH:
WHEREAS, Seller will design, construct, own, maintain and operate an electric generation
facility; and
WHEREAS, Seller wishes to sell, and Idaho Power has agreed to purchase, fmn electric energy
from Seller s Facility.
THEREFORE, In consideration of the mutual covenants and agreements hereinafter set forth, the
Parties agree as follows:
ARTICLE I: DEFINITIONS
As used in this Agreement and the appendices attached hereto, the following terms
shall have the following meanings:
1.1 Annual Net Firm Energy" - Sum of monthly Net Firm Energy Amounts specified in paragraph
2 for a single Contract Year.
1.2 Commission" - The Idaho Public Utilities Commission.
1.3 Contract Year" - The period commencing each calendar year on the same calendar date as the
Operation Date and ending 364 days thereafter.
1.4 Designated Dispatch Facility" - Idaho Power s Control Area Operations Group, or any
subsequent group designated by Idaho Power.
1.5 Facility" - That electric generation facility described in Appendix B of this Agreement.
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1.6
1.7
1.8
1.9
1.10
Interconnection Facilities - All facilities required to be installed to interconnect and deliver
energy from the Facility to the Transmitting Entity's system including, but not limited to
connection, switching, metering, relaying, communications and safety equipment.
Losses - The loss of energy expressed in kilowatt hours (Kwh) occurring as a result of the
transformation and transmission of energy between the Facility and the Point of Delivery.
Net Firm Energy" - The electric energy produced by the Facility, less Losses, expressed in
kilowatt hours ("Kwh"), not including Optional Energy, which Seller commits to deliver and the
Transmitting Entity schedules to Idaho Power at the Point of Delivery for the full term ofthe
Agreement.
Operation Date" - The day commencing at 0001 hours, Mountain Time, following the day that
all requirements of paragraph 5.3 have been completed.
Optional Energy" - Energy which is produced by the Facility, scheduled by the Transmitting
Entity and delivered to the Point of Delivery in an amount that exceeds 10 000 Kwh in any single
hour.
1.11 Point of Delivery" - The location specified in Appendix B, where the Transmitting Entity
delivers the scheduled energy deliveries to Idaho Power.
1.12 Prudent Electrical Practices" - Those practices, methods and equipment that are commonly and
ordinarily used in electrical engineering and operations to operate electric equipment lawfully
and with safety, dependability, efficiency and economy.
1.13 Replacement Cost"- The replacement value ofthe Facility without deduction for depreciation.
1.14 Season ; - The three periods identified in Article VI.
1.15 Surplus Energy" - Electric energy scheduled by the Transmitting Entity to Idaho Power, not
including Optional Energy, and accepted by Idaho Power during the month which exceeds 110%
of the Monthly Net Firm Energy amount for the corresponding month specified in paragraph 6.2
of this Agreement and all electric energy scheduled by the Transmitting Entity to Idaho Power
prior to the Operation Date.
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1.16
1.17
2.1
2.2
Total Cost of the Facility" - The total Replacement Cost of structures, equipment and
appurtenances.
Transmitting Entity" - The signatory (other than the Seller) to the Transmission Agreement
referred to in paragraph 9.1 and its successors and assigns.
ARTICLE II: NO RELIANCE ON IDAHO POWER
Seller Independent Investigation - Seller warrants and represents to Idaho Power that in entering
into this Agreement and the undertaking by Seller of the obligations set forth herein, Seller has
investigated and determined that it is capable of performing hereunder and has not relied upon
the advice, experience or expertise of Idaho Power in connection with the transactions
contemplated by this Agreement.
Seller Independent Experts - All professionals or experts including, but not limited to, engineers,
attorneys or accountants, that Seller may have consulted or relied on in undertaking the
transactions contemplated by this Agreement have been solely those of Seller.
ARTICLE ill: WARRANTIES
3.1 No Warranty bv Idaho Power - Any review, acceptance or failure to review Seller s design,
specifications, equipment or facilities shall not be an endorsement or a confirmation by Idaho
Power, and Idaho Power makes no warranties, expressed or implied, regarding any aspect of
Seller s design, specifications, equipment or facilities, including, but not limited to, safety,
durability, reliability, strength, capacity, adequacy or economic feasibility.
Qualifying Facility Status - Seller warrants that the Facility is a "qualifying facility," as that term
is used and derIDed in 18 CFR ~292.207. After initial qualification, Seller will take such steps as
may be required to maintain the Facility's Qualifying Facility Status during the term of this
Agreement and Seller s failure to maintain Qualifying Facility Status will be a material breach of
this Agreement.
3.3 FERC License - Seller warrants that Seller possesses a valid license or exemption from licensing
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from the Federal Energy Regulatory Commission ("FERC") for the Facility. Seller recognizes
that Seller s possession and retention of a valid FERC license or exemption is a material part
the consideration for Idaho Power s execution of this Agreement. Seller will take such steps as
may be required to maintain a valid FERC license or exemption for the Facility during the term of
this Agreement, and Seller s failure to maintain a valid FERC license or exemption will be a
material breach of this Agreement.
ARTICLE IV: CONDITIONS TO ACCEPTANCE OF ENERGY
Prior to the Operation Date and as a condition ofldaho Power acceptance of deliveries of Net
Firm Energy from the Transmitting Entity, Seller shall:
1.1 Submit proof to Idaho Power that all licenses, permits or approvals necessary for
Seller s operations have been obtained from applicable federal, state or local
authorities, including, but not limited to, evidence of compliance with Subpart B, 18
CFR 292.207.
1.2 Opinion of Counsel - Submit to Idaho Power an Opinion Letter signed by an attorney
admitted to practice and in good standing in the State of Idaho providing an
opinion that Seller s licenses, permits and approvals as set forth in paragraph 4.1.1
above are legally and validly issued, are held in the name of the Seller, and based on
a reasonable independent review, counsel is of the opinion that Seller is in substantial
compliance with said permits as of the date ofthe Opinion Letter. The Opinion will be
in a form acceptable to Idaho Power and will acknowledge that the attorney rendering
the opinion understands that Idaho Power is relying on said opinion. Idaho Power
acceptance of the form will not be unreasonably withheld. The Opinion Letter will be
governed by and shall be interpreted in accordance with the legal opinion accord of the
American Bar Association Section of Business Law (1991).
1.3 Engineer s Certifications - Executed Engineer s Certification of Design & Construction
Adequacy, and an Engineer s Certification of Operations and Maintenance ("O&M"
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1.4
1.5
1.7
Policy as described in Commission Order No 21690. These certificates will be in the
form specified in Appendix C but may be modified to the extent necessary to recognize
the different engineering disciplines providing the certificates.
Insurance - Submit written proof to Idaho Power of all insurance required in Article
XII.
Transmission Agreement - Provide Idaho Power with a copy of the Firm Transmission
Agreement executed by the Seller and the Transmitting Entity in a form acceptable to
Idaho Power. Idaho Power s acceptance will not be unreasonably withheld.
Written Acceptance - Obtain written confirmation from Idaho Power that all conditions
to acceptance of energy have been fulfilled. Such written confmnation shall not be
unreasonably withheld by Idaho Power.
Idaho Power Electrical System Study - Seller and Transmitting Entity will request, in
writing, a specific Point of Delivery to Idaho Power for the Seller s energy deliveries
specified in paragraph 6., and to be scheduled to Idaho Power as specified in paragraph
9.1 of this agreement. Upon receipt of this request, at Seller s expense, Idaho Power
will complete an electrical system study to determine Idaho Power s ability to receive
the Seller s energy at the Seller and Transmitting Entity's requested Point of Delivery.
4.1.7.1 If said study results in Idaho Power being unable to receive the Seller
energy at the requested Point of Delivery, the Seller and Transmitting Entity
may request a different Point of Delivery and a similar study, at the Seller
expense, will be conducted.
1.7.2 In the event, the Seller and Transmitting Entity request to deliver the Seller
energy at a Point of Delivery that Idaho Power has identified as being unable
to receive the Seller s energy, at Seller s request and expense, Idaho Power
will conduct a study to determine the necessary upgrades and/or
modifications required to enable receipt of the Seller s energy at the
requested Point of Delivery.
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1.7.3 Seller will be responsible for all expenses associated with all Idaho Power
studies, upgrades and/or modifications required to enable delivery of the
Seller s energy at the requested Point of Delivery. An initial deposit will be
calculated based upon the estimated cost of each individual study, upgrade or
modification and will be required to be paid by the Seller prior to Idaho
Power conducting any work associated with the Seller s request.Upon
completion of the Seller s request, Idaho Power will reconcile the actual
expenses with the previously paid deposit and the appropriate refund or
addition billing will be processed.
ARTICLE V: TERM. EARLY TERMINATION AND OPERATION DATE
Term - Subject to the provisions of paragraph 5.2 below, this Agreement shall become effective
on the date fITst written, and shall continue in full force and effect for a period of twenty (20)
Contract Years.
Early Termination - In addition to any other remedies allowed by law, this Agreement may be
terminated upon the occurrence of any of the following:
1 Either Party may terminate this Agreement on one hundred twenty (120) days
prior written notice if existing Idaho law is modified to allow persons or entities
other than Idaho Power to sell electric capacity or energy at retail in Idaho
Power s exclusive service territory.
2 Idaho Power may terminate this Agreement on thirty (30) days prior written
notice if, in any two (2) consecutive Contract Years, Seller s deliveries of Net
Firm Energy in each Contract Year are less than fifty percent (50%) of the sum
of the twelve (12) Monthly Net Firm Energy amounts specified in paragraph 6.2
of this Agreement.
2.3 Idaho Power may terminate this Agreement on thirty (30) days prior written
notice if the Operation Date as specified in paragraph 5.3 is not attained within
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365 days of the Scheduled Operation Date specified in Appendix B.
5.3 Operation Date - The Operation Date may occur only after the Facility has achieved a11 of the
fo11owing:
a) Completed all Conditions to Acceptance of Energy as specified in Article IV.
b) Commission approval of this Agreement has been received.
c) Se11er has demonstrated to Idaho Power s satisfaction that the Facility is complete and
able to provide energy in a consistent, reliable and safe manner.
d) Seller has received written conftrmation from Idaho Power of the Operation Date
this confinnation wi11 not be unreasonably withheld by Idaho Power
ARTICLE VI: PURCHASE AND SALE OF NET FIRM ENERGY
Delivery and Acceptance of Net Firm Energy - Except when either Party'perfonnance is
excused as provided herein, Idaho Power wi11 purchase and Se11er wi11 sell a11 of the Net Firm
Energy and Surplus Energy scheduled to Idaho Power by the Transmitting Entity and delivered
by the Transmitting Entity to the Point of Delivery during the calendar months of May, June
July, August, September and October.
Net Firm Energy Amounts - Seller intends to deliver Net Firm Energy in the fo11owing monthly
amounts:
Season 1
Season 2
Season 3
Month Kwh
March
April
May 910 400
June 752 000
July 910 400
November
December
August 910 400
September 752 000
October 910 400
January
February
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6.2.Adiustment of Net Firm Energy Amount - By written notice given to Idaho Power, no
later than January 31 st of every second (2od) Contract Year, the Seller may revise the
Monthly Net Firm Energy Amounts specified in paragraph 6.2 for the ensuing two
Contract Years. Failure to provide written notice of changed amounts will be deemed to
be an election of no change. If a Net Firm Energy adjustment results in the Annual Net
Firm Energy being 25 % or less of the Annual Net Firm Energy specified for the fIrst two
contract years, all Net Firm Energy delivered to Idaho Power will be deemed to be
Surplus Energy.
ARTICLE VII: PURCHASE PRICE AND METHOD OF PAYMENT;
ADJUSTMENT OF PURCHASE PRICE
7.1 Net Firm Energy Purchase Price - The price to be paid to Seller for Net Firm Energy will be as
follows:
1.1 Non-Levelized Energy Price - in accordance with Commission Order 29124 and after
application of the seasonalization factors:
Season 1 - (73.50 %)Season 2 - (120.00 %)Season 3 - (100.00 %)
Year Mills/Kwh Mills/K wh Mills/K wh
2004 30.50.41.
2005 31.51.46 42.
2006 32.52.43.
2007 33.54.45.
2008 33.55.40 46.
2009 34.56.47.
2010 35.58.48.
2011 36.59.49.
2012 37.46 61.50.
2013 38.40 62.52.
2014 39.64.53.
2015 40.65.54.
2016 41.67.56.
2017 42.40 69.57.
2018 43.46 70.59.
2019 44.72.60.
2020 45.74.62.
2021 46.76.63.
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7.2
2022
2023
2024
2025
47.
49.
50.43
51.
78.
80.
82.
84.40
65.
66.
68.
70.
Adjustment to Net Firm Energy Purchase Price - If, the amount of Net Firm Energy
scheduled to Idaho Power in a calendar month is ninety percent (90%) or less of the Net
Firm Energy Amount for that month specified in paragraph 6.2 of this Agreement, the
entire month's energy delivery will be deemed to be Surplus Energy and the Surplus
Energy Price as defined in paragraph 7.2 will be the applicable energy price.
Surplus Energy Price - For all Surplus Energy, Idaho Power shall pay to the Seller eighty-five
percent (85%) of (1) the monthly weighted average non-fl1111 Dow Jones Mid-Columbia Index
Price or (2) the Non Levelized Energy Price as specified in paragraph 7.1 of this Agreement
whichever is lower. If the Dow Jones Mid-Columbia Index price is not reported for a particular
period, day or days, the average of the immediately preceding and following report periods or
days will be used to set the Surplus Energy Price. If the Dow Jones Mid-Columbia Index price is
discontinued by the reporting agency, both Parties will mutually agree upon a replacement index
which is similar to the Dow Jones Mid-Columbia Index.
7.3 Optional Energy Price - Idaho Power is not obligated to purchase Optional Energy. Idaho Power
may purchase Optional Energy at a price that is mutually agreeable to the Parties. The Optional
Energy Price will be agreed upon prior to the delivery of Optional Energy to the Point of Delivery
by the Seller.
7.4 Payment Due Date - Energy payments to the Seller will be disbursed within 30 days of the date
which Idaho Power receives acceptable documentation of the monthly Net Firm Energy actually
scheduled and delivered to Idaho Power as specified in Appendix A.
Continuing Jurisdiction of the Commission This Agreement is a special contract and as such, the
rates, terms and conditions contained in this Agreement will be construed in accordance with
Idaho Power Company v. Idaho Public Utilities Commission and Afton Energy,Inc. 107 Idaho
781 693 P2d 427 (1984), Idaho Power Company v. Idaho Public Utilities Commission,107
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Idaho 1122, 695 P2d 1 261 (Idaho 1985), Aiton Energy.Inc, v. Idaho Power Com~any.III Idaho
925, 729 P2d 400 (1986), Section 210 of the Public Utilities Regulatory Policies Act of 1978 and
18 CFR ~292.303-308.
ARTICLE VIII: FACILITY AND INTERCONNECTION
Design of Facility - Seller will design, construct, install, own, operate and maintain the Facility
and any Seller-owned Interconnection Facilities so as to allow safe reliable generation and
delivery of electric energy to the Transmitting Entity for the full term of the Agreement.
Interconnection Facilities - Seller will construct, install, own and maintain all Interconnection
Facilities other than those owned, installed or maintained by the Transmitting Entity. Seller will
pay all costs of interconnecting with the Transmitting Entity and transmitting Net Firm Energy to
Idaho Power.
ARTICLE IX: TRANSMISSION AGREEMENT
Transmission Agreement - To deliver the Net Firm Energy generated by the Facility to Idaho
Power, Seller will arrange and pay for the fmn transfer of the Net Firm Energy over the
transmission facilities of NorthWestern Energy (Transmitting Entity) to the Point of Delivery.
The transfer of Net Firm Energy from the Facility to the Idaho Power Point of Delivery shall be
in accordance with the terms and conditions of the Firm Transmission Agreement, which will
include provisions requiring the Transmitting Entity to provide the following:
1.1 Monthly Scheduled Energy Deliveries - The Transmitting Entity will provide Idaho
Power with a schedule of the next month's hourly scheduled energy deliveries, at the
minimum 7 days prior to the beginning of the month. The hourly scheduled energy
delivery will be a constant value for every hour of the month and will remain unchanged
for all hours of the month. The Transmitting entity will never schedule more then 7.
Mw to Idaho Power for the Facility. The Transmitting Entity shall be excused from
scheduling Net Firm Energy to Idaho Power if the Transmitting Entity determines that
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9.3
9.4
curtailment, interruption or reduction of Net Firm Energy deliveries is necessary because
of line construction or maintenance requirements, emergencies, electrical system
operating conditions on its system, or as otherwise required by Prudent Electrical
Practices.
Energy Reserve Requirements - The Transmitting Entity will provide all required
generation reserves as are currently required by the Western Electricity Coordinating
Council (WECC) and/or as required by any other governing agency or industry standard.
Acceptance of Transmission Agreement - This Agreement is expressly conditioned and
contingent upon Idaho Power s acceptance of the Transmission Agreement. Such acceptance
will not be unreasonably withheld. Idaho Power is an intended third part beneficiary of the
Transmission Agreement and a default by Seller under the Transmission Agreement will be a
default under this Agreement.
Losses - Idaho Power will only purchase the energy that is scheduled by the Transmitting Entity
to Idaho Power as shown on Idaho Power s daily system logs. All Losses will be attributed to
Seller.
Documentation - Seller will provide Idaho Power with monthly documentation in a form
acceptable to Idaho Power showing the amount of energy scheduled to Idaho Power at the Point
of Delivery. All energy scheduled to Idaho Power at the Point of Delivery, which has been
generated by this Facility is deemed delivered.
ARTICLE X - PROTECTION
10.Seller will construct, operate and maintain the Facility and Seller-furnished Interconnection
Facilities in accordance with Prudent Electrical Practices, the National Electric Safety Code and
any other applicable local, state, and federal codes.
ARTICLE XI - OPERATIONS
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11.1
11 .
11.3
Emergency Conditions - Seller agrees that, in the ~vent of and during a period of a shortage of
power on Idaho Power s system as declared by Idaho Power in its reasonable discretion or in the
event that the wholesale market prices for energy delivered to Idaho Power are higher than the
energy prices specified in paragraph 7.1 herein, Seller shall, at Idaho Power s request, within the
limits of the Finn Transmission Agreement and reasonable safety requirements as determined by
Seller, use its best efforts to provide the requested energy, and shall, if necessary, delay any
scheduled shutdown of the Facility, provided such delay of scheduled shutdown will not damage
Seller s facilities. All additional energy delivered by the Seller to Idaho Power at the request of
Idaho Power during the identified Emergency Condition will be priced in accordance with
paragraph 7.1. Additional energy will only be the incremental increase in energy scheduled to
Idaho Power that exceeds the previously plannec;l schedule of energy to Idaho Power.
Communications - Idaho Power and the Transmitting Entity on behalf of Seller shall maintain
appropriate operating communications through Idaho Power s Designated Dispatch Facility, and
Seller shall require the Transmitting Entity to report to Idaho Power at the times and in the
manner established in the Transmission Agreement described in paragraph 9.
Energy Acceptance - Idaho Power shall be excused from accepting and paying for Net Finn
Energy delivered by Seller, produced by the Facility, to the Point of Delivery if Idaho Power
determines that curtailment, interruption or reduction of Net Finn Energy deliveries is necessary
because of line construction or maintenance requirements, emergencies, electrical system
operating conditions on its system, or as otherwise required by Prudent Electrical Practices.
11 .4 Scheduled Maintenance - No routine maintenance of the Facility will be scheduled during the
month's of June, July or August without prior written approval from Idaho Power.
ARTICLE XII: INDEMNIFICATION AND INSURANCE
12.Indemnification - Each Party shall agree to hold harmless and to indemnify the other Party, its
officers, agents, and employees against all loss, damage, expense and liability to third persons for
injury to or death of person or injury to property, proximately caused by the indemnifYing Party'
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12.2
construction, ownership, operation or maintenance of, or by failure of, any of such Party's works
or facilities used in connection with this Agreement. The indemnifying Party shall, on the other
Party's request, defend any suit asserting a claim covered by this indemnity. The indemnifying
Party shall pay all costs that may be incurred by the other Party in enforcing this indemnity.
Insurance - During the tenD of this Agreement, Seller shall secure and continuously carry the
following insurance coverage:
12.2.1 Comprehensive General Liability Insurance for both bodily injury and property damage
with limits equal to fifteen percent (15%) of the Total Cost of the Facility, QL- $1 000,000,
whichever is greater, each occurrence, combined single limit. The deductible for such insurance
shall not exceed one-half of one percent (0.5%) of the Total Cost of the Facility.
12.2 The above insurance coverage shall be placed with an insurance company with an AM.
Best rating of A- or better and shall include:
(a)An endorsement naming Idaho Power as an additional insured and loss payee as
applicable;
(b)provision stating that such policy shall not be canceled or their limits of
liability reduced without sixty (60) days' prior written notice to Idaho Power.
12.3 Seller to Provide Certificate of Insurance - As required in paragraph 4.1.4 herein and annually
thereafter, Seller shall furnish Idaho Power a certificate of insurance, together with the
endorsements required therein, evidencing the coverage as set forth above.
12.4 Seller to Provide Copies of Policy of Insurance - Within one hundred twenty (120) days after the
Operation Date, and within ninety (90) days of the effective date of any modifications to the
policy, Seller will furnish to Idaho Power a certified copy of the original of the insurance policy
and any endorsements for the insurance coverage described above. In the case of policy
renewals, Seller may provide a certificate from the insurance carrier that there have been no
changes to the policy in lieu of providing the required certified copy of the policy.
12.Seller to Notify Idaho Power of Loss of Coverage - If the insurance coverage required by
paragraph 12.2 shall lapse for any reason, Seller will immediately notify Idaho Power in writing.
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13.
14.
The notice will advise Idaho Power of the specific reason for the lapse and the steps Seller is
taking to reinstate the coverage. Failure to provide this notice will constitute a material breach of
this Agreement.
ARTICLE XIII: LIABILITY: DEDICATION
Nothing in this Agreement shall be construed to create any duty to, any standard of care with
reference to, or any liability to any person not a Party to this Agreement. No undertaking by one
Party to the other undex: any provision of this Agreement shall constitute the dedication of that
Party's system or any portion thereof to the other Party or to the public, nor affect the status of
Idaho Power as an independent public utility corporation, or Seller as an independent individual
or entity.
ARTICLE XIV: SEVERAL OBLIGATIONS
Except where specifically stated in this Agreement to be otherwise, the duties, obligations and
liabilities of the Parties are intended to be several and not joint or collective. Nothing contained
in this Agreement shall ever be construed to create an association, trust, partnership, or joint
venture or impose a trust or partnership duty, obligation or liability on or with regard to either
Party. Each Party shall be individually and severally liable for its own obligations under this
Agreement.
ARTICLE XV: WAIVER
15.Any waiver at any time by either Party of its rights with respect to a default under this
Agreement, or with respect to any other matters arising in connection with this Agreement, shall
not be deemed a waiver with respect to any subsequent default or other matter.
ARTICLE XVI: CHOICE OF LAWS AND VENUE
16.1 This Agreement shall be construed and interpreted in accordance with the laws of the State of
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16.
17.1
Idaho, without reference to its choice of law provisions.
Venue for any litigation arising out of or related to this Agreement will lie in the District Court of
the Fourth Judicial District ofldaho in and for the County of Ada.
ARTICLE XVII: DISPUTES AND DEFAULT
Disputes - All disputes related to or arising under this Agreement, including, but not limited to
the interpretation of the terms and conditions of this Agreement, will be submitted to the
Commission for resolution.
17.Notice of Default - If either Party fails to perform any of the terms or conditions of this
Agreement, (an "event of default") the nondefaulting Party shall cause notice in writing to be
given to the defaulting Party, specifying the manner in which such default occurred. If the
defaulting Party shall fail to cure such default within the sixty (60) days after service of such
notice then, the nondefaulting Party may, at its option, terminate this Agreement, and/or pursue
its legal or equitable remedies.
17.3 Security for Performance - Prior to the Operation Date and thereafter for the full term of this
Agreement, Seller will provide Idaho Power with the following:
17.Insurance - Evidence of compliance with the provisions of paragraph 12.2. If Seller
fails to comply, such failure will be an event of default under Article XVII. Such
default will be a material breach and may only be cured by Seller supplying evidence
that the required insurance coverage has been replaced or reinstated;
17.3.Engineer s Certifications - Every three (3) years after the Operation Date, Seller will
supply Idaho Power with a Certification of Ongoing Operations and Maintenance
from a Registered Professional Engineer licensed in the State of Idaho, which
Certification of Ongoing 0 & M shall be in the form specified in Appendix C. Seller
failure to supply the required certificate will be an event of default. Such a default
may only be cured by Seller providing the required certificate; and
17.3.3 Licenses and Permits - During the full term of this Agreement, Seller shall maintain
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18.
19.1
compliance with all pennits and licenses described in paragraph 4.1 of this
Agreement. In addition, Seller will supply Idaho Power with copies of any new or
additional penn its or licenses. At least every fifth Contract Year, Seller will update the
documentation described in Paragraph 4.1. If at any time Seller fails to maintain
compliance with the pennits and licenses described in paragraph 4.1 or to provide
the documentation required by this paragraph, such failure will be a default and a
material breach and may only be cured by Seller submitting to Idaho Power evidence
of compliance from the pennitting agency.
ARTICLE XVIII: GOVERNMENTAL AUTHORIZATION
This Agreement is subject to the jurisdiction of those governmental agencies having control over
either Party of this Agreement.
ARTICLE XIX: COMMISSION ORDER
This Agreement shall become fmally effective upon the Commission s approval of all terms and
provisions hereof without change or condition and declaration that all payments to be made to
Seller hereunder shall be allowed as prudently incurred expenses for ratemaking purposes.
ARTICLE XX: SUCCESSORS AND ASSIGNS
20.1 This Agreement and all of the tenDS and provisions hereof shall be binding upon and inure to the
benefit of the respective successors and assigns of the Parties hereto, except that no assignment
hereof by either Party shall become effective without the written consent of both Parties being
fIrst obtained. Such consent shall not be unreasonably withheld. Notwithstanding the foregoing,
any party which Idaho Power may consolidate, or into which it may merge, or to which it may
conveyor transfer substantially all of its electric utility assets, shall automatically, without further
act, and without need of consent or approval by the Seller, succeed to all of Idaho Power s rights
and interests under this agreement. This article shall not prevent a fmancing entity with recorded
- 16-
or secured rights from exercising all rights and remedies available to it under law or contract.
Idaho Power shall have the right to be notified by the fmancing entity that it is exercising such
rights or remedies.
ARTICLE XXI: MODIFICATION
21.1 No modification to this Agreement shall be valid unless it is in writing and signed by both Parties
and subsequently approved by the Commission.
ARTICLE XXII: TAXES
22.Each Party shall pay before delinquency all taxes and other governmental charges, which if
failed to be paid when due could result in a lien upon the Facility or the Interconnection
Facilities.
ARTICLE XXIII: NOTICES
23.All written notices under this Agreement shall be directed as follows, and shall be considered
delivered when deposited in the U SMail, flfst-class postage prepaid, as follows:
To SeHer:Ted S. Sorenson
Manager, Tiber Montana LLC
5203 S 11 th E
Idaho Falls, ID 83404
To Idaho Power:Vice President, Power Supply
Idaho Power Company
POBox 70
Boise, Idaho 83707
ARTICLE XXIV: ADDITIONAL TERMS AND CONDITIONS
24.1 This Agreement includes the following appendices, which are attached hereto and included by
reference:
Appendix A Generation Scheduling and Reporting
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25.
26.
27.
Appendix B
Appendix C
Facility and Point of Delivery
Engineer s Certifications
ARTICLE XXV: SEVERABILITY
The invalidity or unenforceability of any term or provision of this Agreement shall not affect the
validity or enforceability of any other terms or provisions and this Agreement shall be construed
in all other respects as ifthe invalid or unenforceable term or provision were omitted.
ARTICLE XXVI: COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
ARTICLE XXVII: ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement of the Parties concerning the subject matter
hereof and supersedes all prior or contemporaneous oral or written agreements between the
Parties concerning the subject matter hereof.
IN WITNESS WHEREOF, The Parties hereto have caused this Agreement to be
executed in their respective names on the dates set forth below:
Idaho Power Company Tiber Montana. LLC
~I. L
Dated
~\:, 1-, 20(J3 Dated
.J~ ~ ~e.... y
Seller
1. DO
Idaho Power
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APPENDIX A
GENERA nON SCHEDULING AND REPORTING
Seller will provide Idaho Power with monthly documentation acceptable to Idaho Power showing
the amount of Net Finn Energy actually scheduled and delivered to Idaho Power by the Transmitting
Entity at the Point of Delivery. In accordance with paragraph 9.3 such documentation, subject to
subsequent review by Idaho Power will be the basis of payment for energy purchased by Idaho Power
from the Seller.
At the end of each month the required documentation will be mailed to:
Idaho Power Company
Attn: Cogeneration and Small Power Production
POBox 70
Boise, Idaho 83707
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APPENDIX B
FACILITY AND POINT OF DELIVERY
PROJECT NO. 41717139
TIBER DAM
DESCRIPTION OF FACILITY
The Seller s Facility is described as:
Tiber Dam Hydroelectric Plant: Power Plant is located on the outlet works of the existing Tiber
Dam. A single Vertical Francis Turbine, a single 7.5 Mw Type "SA VB" Vertical Brushless
Synchronous Generator.
LOCATION OF FACILITY
The Facility is located at:
Tiber Dam, 15 miles south of the City of Chester, Montana. Liberty County, Montana, located
in the NW 14, MW 14, Section 33 , Township 30 N, Range 5 E,
SCHEDULED OPERATION DATE
Seller has selected May 15. 2004 as the Scheduled Operation Date.
POINT OF DELIVERY
Point of Delivery" means, unless otherwise agreed by both Parties, the point of interconnection
between Idaho Power and the Transmitting Entity: Known as the Jefferson Line
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APPENDIX C
ENGINEER'S CERTIFICATION
OPERATIONS & MAINTENANCE POLICY
The undersigned behalf himself and
hereinafter collectively referred to as "Engineer
hereby states and certifies to the Seller as follows;
That Engineer is a Licensed Professional Engineer in good standing in the State of Idaho.
That Engineer has reviewed the Firm Energy Sales Agreement, hereinafter "Agreement"
between Idaho Power as Buyer, and as Seller, dated
That the cogeneration or small power production project which is the subject of the
Agreement and this Statement is identified as lPCo Facility No and is further
designated as Federal Energy Regulatory Commission Hydro Project No and is hereinafter
referred to as the "Project"
That the Project, which is commonly known as the Project,
is located in Section , Township , Range County,
That Engineer recognizes that the Agreement provides for the Project to furnish electrical
energy to Idaho Power for a year period.
That Engineer has substantial experience in the design, construction and operation of
electric power plants of the same type as this Project.
That Engineer has no economic relationship to the Design Engineer of this Project.
That Engineer has reviewed and/or supervised the review of the Policy for Operation and
Maintenance ("O&M") for this Project and it is his professional opinion that, provided said Project has
been designed and built to appropriate standards, adherence to said O&M Policy will result in the
- 21-
oj,
Project's producing at or near the design electrical output, efficiency, and plant factor for a
year period.
That Engineer recognizes that Idaho Power, in accordance with Article 2 of the
Agreement, is relying on Engineer s representations and opinions contained in this Statement.
10.That Engineer certifies that the above statements are complete, true and accurate to the
best of his knowledge and therefore sets his hand and seal below.
(P .E. Stamp)
Date
STATE OF IDAHO
)ss
County of
On this day of 19 before me, the undersigned, a Notary Public
personally appeared personally known, who being duly sworn, did say
that he/she is the individual who executed the within instrument, and acknowledged to me that he/she
executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day and year in
this certificate fIrst above written.
(NOTARIAL SEAL)Notary Public for Idaho
Residing at:
Commission Expires
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.,
APPENDIX C
ENGINEER'S CERTIFICATION
ONGOING OPERATIONS AND MAINTENANCE
The undersigned , on behalf of himself and
hereinafter collectively referred to as "Engineer , hereby
states and certifies to the Seller as follows:
That Engineer is a Licensed Professional Engineer in good standing in the State of
Idaho.
That Engineer has reviewed the Firm Energy Sales Agreement, hereinafter
Agreement", between Idaho Power as Buyer, and as Seller, dated
That the cogeneration or small power production project which is the subject of the
Agreement and this Statement is identified as IPCo Facility No and hereinafter referred to as the
Project" .
That the Project, which is commonly known as the Project, is
located at
That Engineer recognizes that the Agreement provides for the Project to furnish
electrical energy to Idaho Power for a year period.
That Engineer has substantial experience in the design, construction and operation of
electric power plants of the same type as this Project.
That Engineer has no economic relationship to the Design Engineer of this Project.
That Engineer has made a physical inspection of said Project, its operations and
maintenance records since the last previous certified inspection. It is Engineer s professional opinion
based on the Project's appearance, that its ongoing O&M has been substantially in accordance with said
O&M Policy; that it is in reasonably good operating condition; and that if adherence to said O&M Policy
continues, the Project will continue producing at or near its design electrical output, efficiency, and plant
- 23-
.... .
factor for the remaining years of the Agreement.
That Engineer recognizes that Idaho Power, in accordance with paragraph 17.3.2 of
the Agreement, is relying on Engineer s representations and opinions contained in this Statement.
10.That Engineer certifies that the above statements are complete, true and accurate to
the best of his knowledge and therefore sets his hand and seal below.
(P .E. Stamp)
Date
STATE OF IDAHO
)ss
County of
On this day of 19 before me, the undersigned, a Notary Public,
personally appeared personally known, who being duly sworn, did say
that he/she is the individual who executed the within instrument, and acknowledged to me that he/she
executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affIXed my official seal, the day and year in
this certificate fITst above written.
(NOTARIAL SEAL)Notary Public for Idaho
Residing at:
Commission Expires
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