20040316Notice of Application.pdf

Office of the Secretary
Service Date
March 16 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
RENEWABLE ENERGY OF IDAHO, INC.
CASE NO. IPC-O4-
NOTICE OF APPLICATION
NOTICE OF MODIFIED
PROCEDURE
NOTICE OF COMMENT/
PROTEST DEADLINE
YOU ARE HEREBY NOTIFIED that on February 19 , 2004, Idaho Power Company
(Idaho Power; Company) filed an Application with the Idaho Public Utilities Commission
(Commission) requesting approval of a Firm Energy Sales Agreement (Agreement) between
Idaho Power and Renewable Energy of Idaho, Inc. (Renewable Energy) dated February 12
2004.
Renewable Energy proposes to design, construct, install, own, operate and maintain a
17.5 megawatt (MW) biomass (primarily wood waste) generating facility to be located at the old
Boise Cascade Plant site near Emmett, Idaho (the Project). The Project will be a qualified small
power production facility (QF) under the Public Utilities Regulatory Policies Act of 1978
(PURPA).
Under the terms of the Agreement, Renewable Energy has elected to contract with
Idaho Power for a 20-year term. The Agreement contains non-Ievelized published avoided cost
rates as currently established by the Commission for energy less than 10 MW and a negotiated
price for energy over 10 MW.
As in recent prior submitted agreements, Idaho Power utilizes a cogeneration small
power producer (CSPP; QF) agreement that is consistent for all CSPP projects regardless oftheir
resource (wind, hydro, geothermal, wood waste, etc.) and 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 unique negotiated
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provisions due to the fact that the Project wishes to routinely deliver more than 10 MW to Idaho
Power. The following is a brief description of some of these concepts and unique provisions:
A: Ten MW or Smaller Project Size and Eligibility for the Published Avoided
Cost Rate: Noting that the Commission has established a 10 MW size limit for PURP A projects
eligible for QF published avoided cost rates, Idaho Power points out that the Commission did not
specify how the 10 MW limit was to be measured. Historically, the Company recognizes, the
nameplate rating of the facility has been considered to be the measurement for this limit. Idaho
Power suggests in this filing that it is reasonable that this limitation be based on that energy
delivery to the utility and not nameplate rating.
Many QF facilities, due to less than 100% capacity factors and unknown incremental
fuel supplies, the Company contends, are not able to commit to a long-term firm commitment of
the incremental energy production above 10 MW. To address this issue, Idaho Power has
developed the concept of "Optional Energy." The concept of Optional Energy, the Company
contends, maintains the integrity of the 10 MW limitation and the QF published avoided cost
rates but also allows the project developer the ability to assess its specific facility's performance
capital cost and other risk/benefit factors in designing the size ofthe QF's individual facilities.
Optional Energy is all energy that the Project delivers to Idaho Power that exceeds
000-kilowatt hours in a single hour, typically non-firm energy, as defined in ,-r 1.18 of the
Agreement. Optional Energy is identified through hourly metering. The price of this energy is a
price negotiated between Idaho Power and the specific project. As non-firm energy, Idaho
Power considers the value of this energy to be a variable current month market based price.
Renewable Energy requested that fixed prices be established for its Optional Energy
rather than receiving the monthly variable market prices. Idaho Power and Renewable Energy,
therefore, negotiated fixed prices for the Optional Energy (Section 7.5 of the Agreement) in
consideration of the Project providing year-ahead firm commitments of the monthly Optional
Energy amounts (Section 6.4 of the Agreement).
Also applying to this Optional Energy, are Company-developed Shortfall and Surplus
Energy concepts (Sections 7.7 and 7.8 of the Agreement), as previously included in the
Company s Tiber Montana LLC contract approved by the Commission in Order No. 29232 and
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the recently submitted Agreement with United Materials of Great Falls, Inc. (Case
No. IPC-04-1).
B. Seasonality: As an incentive for Renewable Energy to deliver energy to the
Company during times when it is of greater value to Idaho Power, the Company has refined the
seasonalization of rates to coincide to the months in which Idaho Power has identified actual
energy needs and periods of higher demand. Reference Agreement Sections 6., 7.1 and 7.
C. Environmental Attributes: As reflected in Agreement Section 8, Idaho Power
notes that it has filed a Petition with the Commission in Case No. IPC-04-2 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 final Order will be included and become an integral part of the
Agreement. Renewable Energy reserves the right to cancel the Agreement within 30 days of the
Commission s final Order regarding Idaho Power s Petition.
Agreement Section 24 provides that the Agreement will not become effective until
the Commission has approved without change all the Agreement terms and conditions and
declared that all payments that Idaho Power makes for purchases of energy to Renewable Energy
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 February 12, 2004. As reflected in the Company s Application, the Agreement
contains non-Ievelized published avoided cost rates in conformity with applicable Commission
Orders.
Idaho Power requests that the Commission issue an Order approving the Firm Energy
Sales Agreement between Idaho Power Company and Renewable Energy of Idaho, Inc. without
change or condition. 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-04-5. 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
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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 Commission s use of Modified
Procedure in Case No. IPC-04-5 is Wednesday, April 7, 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 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-04-5 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:
MONICA B. MOEN, ATTORNEY II
BARTON L KLINE, SR. ATTORNEY
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
e-mail: bkline~idahopower.com
e-mail mmoen~idahopower.com
472 W WASHINGTON ST
BOISE, ID 83702-5983 RANDY C ALLPHIN
CONTRACT ADMINISTRATOR
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
e-mail: rallphin~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.. Click the "Comments and Questions
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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-04-5 may
be viewed 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 / (pt! day of March 2004.
Je D. Jewell
Commission Secretary
Vld/N :IPCEO40S _
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