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Home My WebLink About20040220Notice of Application.pdfOffice of the Secretary Service Date February 20, 2004 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR APPROVAL ) OF AN AGREEMENT FOR SALE AND PURCHASE OF ELECTRIC ENERGY BETWEEN IDAHO POWER COMPANY AND UNITED MATERIALS OF GREAT FALLS, INc. CASE NO. IPC-O4- NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE YOU ARE HEREBY NOTIFIED that on February 4, 2004, Idaho Power Company (Idaho Power; Company) filed an Application with the Idaho Public Utilities Commission (Commission; IPUC) requesting approval of an Energy Sales Agreement (Agreement) between Idaho Power and United Materials of Great Falls, Inc. (United Materials) dated January 6, 2004. United Materials proposes to design, construct, install, own, operate and maintain a 9 MW wind generating facility (the Horseshoe Bend Wind Park or the Project) located at the United Materials industrial facility near Great Falls, Montana. The Project will be a qualified small power production facility (QF) under the Public Utilities Regulatory Policy Act of 1978 (PURPA). As represented by Idaho Power, the Agreement includes purchase prices consistent with the "posted rates" approved by the Commission in Order No. 29391. United Materials has elected to contract with Idaho Power for a 20-year term and has agreed to arrange for delivery of energy to the Idaho Power electrical system across the system of another utility. The submitted Agreement is the first wind energy sales agreement to be executed by Idaho Power. Idaho Power reports that it has developed a cogeneration small power producer (CSPP; QF) agreement concept that is consistent for all QF projects regardless of their energy resource (wind, hydro, geothermal, wood waste, etc.) that incorporates (1) current IPUC Orders (2) current technologies, and (3) current utility industry standards. The submitted Agreement the Company states, contains many of these concepts as well as several unique provisions since NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE 1 the project is not directly connected to the Idaho Power system. The following is a brief description of some of these concepts and unique provisions: A. Opportunity for QFs to Participate in the Firm Energy Sales Agreement: In order to eliminate the need to predetermine the firm or non-firm status of a Qualifying Facility (QF) resource (i., wind, hydro biomass) and, instead, to provide an opportunity for QF resources to receive the Firm Publish~d Avoided Cost Rate based upon the QF' actual performance, Idaho Power has included the concepts of "Shortfall Energy" and "Surplus Energy." Reference Agreement Sections 1.21 and 1.24. Surplus Energy: Under the concept of "Surplus Energy," the QF is required to estimate its monthly kWh generation (Agreement Section 6.2). Each month, the actual net kWh of generation will be compared to the monthly kWh of generation estimated by the QF developer. If a project'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 Agreement Section 7.3. The Surplus Energy Price is a market-based price. Shortfall Energy: Under this concept, a project's actual net monthly kWh of generation is compared to the estimated monthly kWh of generation. In accordance with Agreement Section 1.21 , if the amount of Net Energy is less than ninety percent (90%) of the month's estimated kWh of generation, the difference between the actual net monthly kWh of generation and 90% of the estimated monthly kWh of generation is defined as "Shortfall Energy." If the market energy cost as defined in Agreement Section 1.13 is greater than the Agreement's price for energy in the month that shortfall energy occurs, then a "Shortfall Energy payment" is off-set against the project's energy payment. If the market NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE energy cost is less than the Agreement's price for energy for the month in which Shortfall Energy occurs, no Shortfall Energy payment is calculated. Whether a QFs energy production is Surplus Energy, Shortfall Energy or qualifies for the firm published avoided cost, the Company states, is at the sole discretion of the developer since the developer sets the monthly . estimated generation levels. The only limitation placed upon the developer by the Company is that the Net Energy estimated for each month cannot exceed the nameplate rating of the generation equipment and/or the capacity rating of the interconnection equipment. The Project has chosen to make use of non-fIrm transmission capacity to deliver the Project's energy to Idaho Power. United Materials must therefore consider the risk of energy delivery reductions due to transmission capacity interruptions in setting its estimated Monthly Net Energy amounts. B. Seasonality: As an incentive for United Materials to deliver energy to the Company during times when it is of greater value to Idaho Power, the published avoided cost rate is "seasonalized.The seasons generally correspond to the months in which Idaho Power has identified actual energy needs and periods of higher demand. Reference Agreement Sections 6.2 and 7. C. Firm Energy Deliveries: The United Materials Project is located outside of Idaho Power service territory. Northwestern Energy, the Transmitting Entity for this project, has agreed, on an hourly basis, to firm all energy deliveries from United Materials to Idaho Power and to other scheduling requirements as specified in Agreement Section 10. NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE 3 D. Environmental Attributes: As reflected in Agreement Article 8, Idaho Power notes its intention to file a Petition for Declaratory Order with the Commission in regards to the "Environmental Attributes.Reference Case No. IPC-04-2. Idaho Power is seeking a Commission ruling concerning whether the Environmental Attributes associated with a QF project are owned by the project or the utility at the time a utility purchases electricity from a QF project. The Commission s fmal Order will be included and become an integral part of the Agreement. United Materials reserves the right to cancel the Agreement within 30 days ofthe Commission s final Order regarding Idaho Power s Petition. Agreement Section 22 provides that the Agreement will not become effective until the Commission has approved all of the Agreement's terms and conditions and declared that all payments Idaho Power makes for purchases of energy to United Materials will be allowed as prudently incurred expenses for ratemaking purposes. Should the Commission approve the Agreement, Idaho Power intends to consider the effective date of the Agreement to be January 6 2004. United Materials has estimated an operation date of December 31 2004. As reflected in the Company s Application, the Agreement contains non-Ievelized published avoided cost rates in conformity with applicable Commission 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. As reflected in Agreement Section 21.3 United Materials may terminate the Agreement on 60 days prior written notice if (1) the Federal Production Tax Credit or other similar economic incentive is not renewed, modified or created in a manner that enables United Materials to participate in these economic incentives in the same manner as if the Project was commercially online as of the date of the Agreement, (2) and United Materials has not begun construction of the Project. Once construction of the Project has begun, United Materials may not terminate the Agreement as specified in Section 21. Pursuant to Agreement Section 21., Idaho Power may terminate the Agreement on 60 days prior written notice if (1) existing Idaho law is modified to allow persons or entities NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE other than Idaho Power to sell electric capacity or energy at retail in Idaho Power s exclusive service territory, and (2) such change in law results in Idaho Power being unable to fully recover in its retail revenue requirement all costs attributed to this Agreement. Idaho Power requests that the Commission issue an Order approving the Firm Energy Sales Agreement between Idaho Power and United Materials of Great Falls, Inc. The Company further requests a Commission finding that all payments for purchases of energy under the Agreement will be allowed as prudently incurred expenses for ratemaking purposes. YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of record in Case No. IPC-04-1. 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 raised by the Company s filing may be processed under Modified Procedure , by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204. YOU ARE FURTHER NOTIFIED that the deadline for filing written comments or protests with respect to Idaho Power s Application and the use of Modified Procedure in Case No. IPC-04-1 is Friday, March 12, 2004. 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 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-04-1 should be mailed to the Commission and the Company at the addresses reflected below. NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE COMMISSION SECRETARY IDAHO PUBLIC UTILITIES COMMISSION PO BOX 83720 BOISE, IDAHO 83720-0074 Street Address for Express Mail: MONICA MOEN, ATTORNEY II BARTON L. KLINE, SENIOR ATTORNEY IDAHO POWER COMPANY PO BOX 70 BOISE ID 83707-0070 bkline~idahopower.com mmoen(~jdahopower.com 472 WWASHINGTON ST BOISE, ID 83702-5983 RANDY C. ALLPHIN, CONTRACT ADMIN. IDAHO POWER COMPANY PO BOX 70 BOISE, ID 83707-0070 rallphin~idahopower. com Street Address for Express Mail 1221 WEST 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 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-04-1 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. NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE DATED at Boise, Idaho this ;L.O#- day of February 2004. ~ID&.Je D. Jewell SSlOn Secretary Vld/N:IPCEO401 NOTICE OF APPLICATION NOTICE OF MODIFIED PROCEDURE NOTICE OF COMMENT/ PROTEST DEADLINE 7