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Home My WebLink About20030523Notice of Application.pdfOffice of the Secretary Service Date May 23, 2003 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AN ACCOUNTING ORDER AUTHORIZING INCLUSION OF POWER SUPPLY EXPENSES ASSOCIATED WITH THE PURCHASE, PROFIT) CAPACITY AND ENERGY FROM PPL MONTANA, LLC IN THE POWER COST ADJUSTMENT. CASE NO. IPC-O3- NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE YOU ARE HEREBY NOTIFIED that on May 13, 2003 , Idaho Power Company (Idaho Power; Company) filed an Application with the Commission for an Order approving a Power Purchase Agreement (Agreement) between Idaho Power and PPL Montana, LLC (PPL Montana). The Company requests accounting treatment that will allow Idaho Power to include the expenses associated with the purchase of capacity and energy from PPL Montana, LLC in the Company s Power Cost Adjustment (PCA). Included in the Company s filing in this case is the prefiled direct testimony of Gregory W. Said, Director of Revenue Requirement in the Regulatory Services Department ofIdaho Power. Idaho Power in its Application recounts its failed attempt to secure from its affiliate the seasonal energy deficiencies and peak hour transmission constrained deficiencies identified in its 2000 Integrated Resource Plan (IRP). Reference the proposed IdaWest Garnet 250 MW (Middleton) Natural Gas CCT. In the Gamet Report provided to the Commission on October 30 2002, the Company announced its plan to replace the Garnet Power Purchase Agreement with a combination of firm wholesale purchases and exchanges. In conformance with the replacement strategy identified in the Garnet Report, Idaho Power reports that it has successfully negotiated a firm wholesale Power Purchase Agreement with PPL Montana, LLC. Contracting with PPL Montana is advantageous, the Company contends, because existing constraints on the west side of Idaho Power s system made power purchases on the east side of the Company s system preferable. PPL Montana owns and operates NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE eleven hydroelectric plants located in Montana with a generating capacity of 474 MW. PPL Montana also owns and operates 500 MW of coal-fired generating capacity in Montana. The principal provisions of the Power Purchase Agreement with PPL Montana call for a firm power purchase for the heavy load hours, six days a week, 16 hours a day (6 x 16) in the months of June, July and August. These are the time periods identified in the Company 2002 IRP as the times of peak resource need on Idaho Power s system. The term of the Agreement is June I through August 31 of each year beginning in 2004 and ending in 2009. The quantity of energy purchased is 83 MW per hour, except for the month of August 2004, which shall be 26 MW per hour. The price to be paid for this energy is $44.50 per MWh. After adjusting for losses, and with the exception of the August 2004 time period, Idaho Power will actually receive approximately 80 MW per hour under the PP The Company contends that the energy costs of $44.50 are competitive and favorable when compared to alternative resource options.Other energy costs that may be used for comparison, the Company contends, are current avoided costs for energy purchases from small QFs and for market prices with added transmission costs. As reflected in the Company s prefiled testimony, Idaho Power s current avoided costs for small QFs as determined by the IPUC in Order No. 29124 are based upon a surrogate avoided resource of a 230 MW combined cycle combustion turbine and were set September 26, 2002. The levelized rate for a non-fueled project smaller than 10 MW, coming on line in the year 2004 for a contract length of five years is 43.78 mills/kWh ($43.78 per MWh). The levelized rate for a 20- year contract (a more likely scenario for a QF contract) is $49.83/MWh. The PPA rate of $44.50/MWh for a peak hour summer peak power product compares favorably to non-seasonalized QF contract rates. All of Idaho Power s existing QF contracts use "seasonalized" rates which provide significantly higher purchase prices in the summer months. On May 8, 2003 , forward market bid/offer quotes at Mid-Columbia for Q3 2003, heavy load hours, were $45.50/MWh and $46.50/MWh respectively. Bid/offer quotes for the same quotes at Palo Verde were $62/MWh and $64.25/MWh, respectively. With an energy purchase at either of these hubs, additional costs would be incurred for transmission to the Idaho Power system. It should be noted that transmission from Mid-Columbia, if available, would need to be routed through the northern part of the regional inter-connected transmission grid since the Idaho Power transmission system is constrained from the west. NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE As consideration for PPL Montana s agreement to hold the price in the PP A firm to allow time for Commission review and approval, Idaho Power has paid PPL Montana a deposit in the amount of $250 000 that is refundable if the Application is approved by the Commission no later than July 12 2003. If the Commission does not approve the Agreement by that deadline the Company will forfeit the deposit and either party may terminate the Agreement. In addition to power costs under the Agreement, Idaho Power states it will purchase monthly transmission service across Northwestern Energy s transmission system to Jefferson. At current rates under Northwestern Energy s open access transmission tariff (OATT), the maximum charge for monthly firm transmission service is $3.10 per kW of reserved capacity per. month. Idaho Power proposes that costs associated with acquiring firm monthly transmission service from Northwestern Energy s transmission system be booked in Book Account 565 Transmission of Electricity by Others. These monthly transmission costs will not flow through the Company s Power Cost Adjustment (PCA). Idaho Power proposes that the cost for power acquired through the Montana PPL Agreement be booked in FERC Account 555, Purchased Power, and that the costs upon contract approval flow through the Company s PCA. Until the costs of the contract are included in a general revenue proceeding, any contract costs associated with the Agreement will be considered deviation from the base and, therefore, only 90% of the Idaho jurisdictional costs will be borne by customers. Idaho Power requests that its Application be processed under Modified Procedure , by written submission rather than by hearing. Reference Commission Rules of Procedure IDAPA 31.01.01.201-204. Idaho Power requests that the Commission issue an Order approving the Power Purchase Agreement between Idaho Power and PPL Montana and approving Idaho Power requested accounting treatment for inclusion of the power purchase expenses associated with the PPL Montana Agreement in the Company s Power Cost Adjustment. YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of record in Case No. IPC-03-08. The Commission has preliminarily found that the public interest in this matter may not require a hearing to consider the issues presented, and that issues NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE 3 raised by the Company s filing may be processed under Modified Procedure , by written submission rather than by hearing. 31.01.01.201-204. Reference Commission Rules of Procedure IDAP A YOU ARE FURTHER NOTIFIED that the deadline for riling written comments or protests with respect to Idaho Power s Application and the use of Modified Procedure in Case No. IPC-03-08 is Friday, June 27, 2003. YOU ARE FURTHER NOTIFIED that if no written comments or protests are received within the deadline, the Commission may consider the matter on its merits and may 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 IDAP 31.01.01.204. YOU ARE FURTHER NOTIFIED that written comments concerning Case No. IPC-01-38 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: BARTON L. KLINE SENIOR ATTORNEY IDAHO POWER COMPANY PO BOX 70 BOISE, ID 83707 bkline~IdahoPower.com 472 WWASHINGTON ST BOISE, ID 83702-5983 JOHN P. PRESCOTT VICE PRESIDENT-POWER SUPPLY IDAHO POWER COMPANY PO BOX 70 BOISE, ID 83707 iprescott~IdahoPower. com Street Address for Express Mail 1221 W IDAHO STREET 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 home page located at www.puc.state.id.us. Click the "Comments and Questions icon, and complete the comment form, using the case number as it appears on the front of this NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE 4 document. These comments must also be sent to the Applicant at the e-mail addresses listed above. YOU ARE FURTHER NOTIFIED that if no written comments or protests are received within the time limit set, the Commission will consider this matter on its merits and enter its Order without a formal hearing. If written comments are received within the time limit set, the Commission will consider them and, in its discretion, may set the same for formal hearing YOU ARE FURTHER NOTIFIED that the Application in Case No. IPC-03- may be viewed at www.puc.state.id.by clicking on "File Room" and "Electric Cases " or can be viewed during regular business hours at the Idaho Public Utilities Commission, 472 West Washington Street, Boise, Idaho and at the general business office of Idaho Power Company, 1221 West Idaho Street, Boise, Idaho. DATED at Boise, Idaho this :J.J.,J. day of May 2003. ~.~ Commission Secretary VldIN:IPCEO308 NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE 5