20040308Application.pdf

MONICA MOEN , ISB # 5734
BARTON KLINE , ISB # 1526
Idaho Power Company
1221 West Idaho Street
P. O. Box 70
Boise , Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
c; ;::- (' !:-I\/ C
' "'- '
" --, , l..
;: ~D
11m. H~D M , . . U '
' " ""'' \
n .t.
. ., .;
J fiL
::.
~ CUH;SSIDi'i
Attorney for Idaho Power Company
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 ANDTHE J. R. SIMPLOT COMPANY
CASE NO. IPC-04-Q..:j'
APPLICATION
COMES NOW Idaho Power Company ("Idaho Power" or the "Company ) and
pursuant to RP 52, hereby applies for an Idaho Public Utilities Commission ("IPUC" or the
Commission ) Order approving a Firm Energy Sales Agreement between Idaho Power and
the J. R. Simplot Company ("Simplot") under which Simplot would sell and Idaho Power
would purchase electric energy generated by the Simplot cogeneration facility located at
the J. R. Simplot industrial site near Pocatello, Idaho.
This Application is based on the following:
Simplot currently owns, operates and maintains a 15.9 MW cogeneration
facility ("Project") at its industrial site near Pocatello, Idaho. The Project is a qualified small
APPLICATION -
power production facility under the applicable provisions of the Public Utilities Regulatory
Policy Act of 1978 ("PURPA"
II.
This Project is currently interconnected to Idaho Power and is selling energy
to Idaho Power as a Qualifying Facility ("QF") in accordance with a Firm Energy Sales
Agreement dated January 24, 1991 and subsequently amended on November 30 , 1993
and February 23, 2001 and by two letter agreements that extended the term of the
Agreement to February 29 2004 (the "1991 Agreement"). Simplot has requested a new
Firm Energy Sales Agreement for this Project to take effect upon the expiration of the 1991
Agreement. On February 19, 2004, Idaho Power and Simplot entered into a Firm Energy
Sales Agreement ("Agreement") pursuant to the terms and conditions of Commission Order
No. 29391. Under the terms of that Agreement, Simplot elected to contract with Idaho
Power for a 1 O-year term. Simplot further elected to contract with the Company using the
Non-Levelized Published Avoided Cost Rates as currently established by the Commission
for energy deliveries less than 10 MW and a negotiated price for energy deliveries over 10
MW. A copy of the Agreement between Idaho Power and Simplot is attached hereto as
Exhibit 1
III.
In many respects , this Agreement is similar to the agreement between Idaho
Power and Tiber Montana LLC that was approved by the Commission in Order No. 29232
issued on April 25 2003 and the recently submitted agreements between the Company
and United Materials of Great Falls, Inc. (Case No. IPC-04-01) and between the
Company and Renewable Energy of Idaho, Inc. (Case No. IPC-04-05). Following is a
brief description of the unique provisions of the Idaho Power/J. R. Simplot Agreement:
APPLICATION - 2
10 MW or smaller Project size and eliqibility for the published Avoided
Cost Rate : Optional Energy is energy that the Project delivers to Idaho Power that
exceeds 10 000 kWh in a single hour as defined in paragraph 1.16 of this Agreement.
Optional Energy is identified through hourly metering. Because Simplot has made no firm
commitments as to the delivery of this Optional Energy, the energy delivered to Idaho
Power is considered to be non-firm energy. As non-firm energy, Idaho Power and Simplot
have agreed the value of this energy to be the variable current month market based price
as defined in paragraph 1.11 of this Agreement (Case No. IPC-04-05).
Seasonality: Previous I PUC Orders and QF agreements recognized
that the value of purchased power differs in accordance with the season in which it is
actually delivered to Idaho Power. Thus , as an incentive for a QF developer to deliver
energy to the Company during times when it is of greater value to the Company, the
published Avoided Cost rate has been historically "seasonalized." The seasons for the
Simplot Agreement are identified in Section 6.2 of the Agreement and are the same as the
seasons in the Renewable Energy of Idaho agreement.
Environmental Attributes: Idaho Power has filed a petition (IPC-04-
02) with the Commission to clarify ownership of the Environmental Attributes associated
with QF projects from whom Idaho Power purchases energy. As specified in Section 8 of
this Agreement, the final Order of the Commission in response to the Company s petition
will be applicable to this Agreement.
IV.
Section 24 of the Agreement 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 to Simplot for purchases of energy will
APPLICATION - 3
be allowed as prudently incurred expenses for ratemaking purposes.
Within the Agreement, various requirements have been placed upon Simplot
in order for Idaho Power to continue to accept energy deliveries from this Project. Idaho
Power will monitor compliance with these initial requirements in addition to the ongoing
requirements through the full term of this Agreement. Should the Commission approve this
Agreement, Idaho Power intends to consider the Effective Date of the Agreement to be
March 1 2004.
VI.
The Agreement , as signed and submitted by the Parties thereto, contains
Non-Levelized Published Avoided Cost Rates in conformity with applicable IPUC Orders.
All applicable interconnection charges and monthly operation and maintenance charges
under Schedule 72 will be assessed Simplot.
VII.
The 1991 Agreement between Idaho Power and Simplot for this same Project
expired on December 31 , 2003. I n order to enable the Project to continue to deliver energy
to Idaho Power and for Idaho Power to purchase that energy and , in consideration of the
fact that the parties were completing negotiations to permit execution of the subject
Agreement, Idaho Power and Simplot executed two letter agreements extending the 1991
Agreement to February 29, 2004. Copies of both of these letters were forwarded to the
Commission but, in anticipation of this filing, the Company did not make a separate filing of
the extensions. As specified in these extension agreements, the rate paid for energy
during the months of January and February 2004 was the same rate specified in the 1991
Agreement for December 2003 (0.04201 cents per kWh). The rates paid under the 1991
APPLICATION - 4
Agreement for the months of January and February 2004 were less than current published
avoided cost rates for those same months.
VIII.
Service of pleadings , exhibits, orders and other documents relating to this
proceeding should be served on the following:
Monica B. Moen, Attorney II
Barton L. Kline, Senior Attorney
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
and Simplot without change or condition; and
(2)Declaring that all payments for purchases of energy under the Firm
Energy Sales Agreement and the January and February 2004 extensions of the 1991
Agreement between Idaho Power Company and Simplot be allowed as prudently incurred
expenses for ratemaking purposes.
Respectfully submitted this 5th day of March 2004.
(l;.
MONICA B. MOEN
Attorney for Idaho Power Company
APPLICATION - 5
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 5th day of March 2004, I served a true and
correct copy of the within and foregoing APPLICATION upon the following named parties
by the method indicated below, and addressed to the following:
David Hawk
J. R. Simplot Company
O. Box 27
Boise, ID 83707
Hand Delivered
S. Mail
Overnight Mail
FAX
~~
fB.
MONICA B. MOEN
CERTIFICATE OF SERVICE
Article
FilUM ENERGY SALES AGREEMENT
BETWEEN
IDAHO POWER COMPANY
AND
R. SIMPLOT COMPANY
TABLE OF CONTENTS
TITLE
Definitions
No Reliance on Idaho Power
Warranties
Conditions to Continued Acceptance of Energy
Term
Purchase and Sale of Net Energy
Purchase Price and Method of Payment
Environmental Attributes
Facility and Interconnection
Disconnection Equipment
Metering
Records
Protection
Operations
Reliability Management System
Indemnification and Insurance
Force Majeure
Land Rights
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
Appendix D
Simplot Final
2/17/2004
F~ ENERGY SALES AGREEMENT
Simplot - Pocatello
Project Number: 41866112
THIS AGREEMENT, entered into on this /9JJ day of (;brlf. (II" oj .;2Ct?'fbetween
J R Simplot Company, a Nevada Corporation (Seller), and IDAHO POWER COMPANY, an
Idaho corporation (Idaho Power), hereinafter sometimes referred to collectively as "Parties" or
individually as "Party.
WITNESSETH:
WHEREAS, Seller has designed, constructed, owns, maintains and operates an electric
generation facility; and
WHEREAS, Seller wishes to sell, and Idaho Power is willing to purchase, firm 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 Energy" - Sum of the monthly Net Energy Amounts specified in paragraph 6.2 for a
single Contract Year.
1.2 Base Energy - Monthly Net Energy less than 110% of the monthly Net Energy Amount as
specified in paragraph 6.2 of this Agreement.
1.3 Commission" - The Idaho Public Utilities Commission.
1.4 Contract Year" - The period commencing March 1 , 2004 and ending the last hour of the last day
of February 2005 and each subsequent year period for the full Term of this Agreement.
- 1-
Simplot Final
2/17/2004
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
Designated Dispatch Facility" - Idaho Power s Control Area Operations Group, or any
subsequent group designated by Idaho Power.
Disconnection Equipment"- All equipment specified in Schedule 72 and the Generation
Interconnection Process and any additional equipment specified in Appendix B or Appendix D.
Facility" - That electric generation facility described in Appendix B of this Agreement.
Generation Interconnection Process - Idaho Power s generation interconnection application
and engineering review process developed to ensure a safe and reliable generation
interconnection in compliance with all applicable regulatory requirements, Prudent Electrical
Practices and national safety standards.
Interconnection Facilities - All equipment specified in Schedule 72 and the Generation
Interconnection Process and any additional equipment specified in Appendix B or Appendix D.
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. The
Loss calculation formula is specified in Appendix B of this Agreement.
Market Energy Cost" - eighty-five percent (85%) of the weighted average of the daily on-peak
and off-peak Dow Jones Mid-Columbia Index (Dow Jones Mid-C Index) prices for non-firm
energy. 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. The selected replacement index will be consistent with other similar agreements
and a commonly used index by the electrical industry.
Material Breach" - A Default (paragraph 23.1) subject to paragraph 23.
Maximum Capacity Amount" - The maximum capacity (MW) of the Facility will be 15.9 MW.
Metering Equipment"- All equipment specified in Schedule 72, the Generation Interconnection
Process, this Agreement and any additional equipment specified in Appendix B or Appendix D
required to measure, record or telemeter power flows between the Seller s electric generation
plant and Idaho Power s system.
- 2-
Simplot Final
2/17/2004
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
1.23
1.24
Net Energy" - The electric energy produced by the Facility, less Station Use and less Losses
expressed in kilowatt hours (KWh), which Seller commits to deliver to Idaho Power at the Point
of Delivery for the full term of the Agreement, not including Optional Energy.
Optional Energy" - The electric energy produced by the Facility, less Station Use, and less
Losses, expressed in Kwh, which Seller deliverers to Idaho Power at the Point of Delivery that
exceeds 10 000 Kwh in any single hour.
Point of Delivery" - The location specified in Appendix B, where Idaho Power s and the
Seller s electrical facilities are interconnected.
Prudent Electrical Practices" - Those practices, methods and equipment that are commonly and
ordinarily used in electrical engineering and operations to operate electric equipment lawfully,
safely, dependably, efficiently and economically.
Schedule 72"- Idaho Power s Tariff No 101, Schedule 72 or its successor schedules as approved
by the Commission.
Season" - The three periods identified in Article VI.
Shortfall Energy" - The difference between 90% of the monthly Net Energy Amount for the
corresponding month specified in paragraph 6.2 of this Agreement and the same month's actual
Net Energy if the actual month's Net Energy is less than 90% of the corresponding month's Net
Energy Amount specified in paragraph 6.
Special Facilities - Additions or alterations of transmission and/or distribution lines and
transformers as described in Appendix B, Appendix D, Schedule 72 or the Generation
Interconnection Process required to safely interconnect the Seller s Facility to the Idaho Power
system.
Station Use" - Electric energy that is used to operate equipment that is auxiliary or otherwise
related to the production of electricity by the facility.
Surplus Energy" - Net Energy delivered by the Seller to Idaho Power and accepted by Idaho
Power during the month which exceeds 110% of the monthly Net Energy Amount for the
corresponding month specified in paragraph 6.2 of this Agreement.
- 3-
Simplot Final
2/1712004
1.25 Total Cost of the Facility" - The total cost of structures, equipment and appurtenances.
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 deterrnlned 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 III: WARRANTIES
No Warranty by 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 defined 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. Idaho Power reserves the right to review the Seller s Qualifying Facility Status
and associated support and compliance documents at anytime during the term of this Agreement.
- 4-
Simplot Final
2/1712004
ARTICLE IV: CONDITIONS TO CONTINUED ACCEPTANCE OF ENERGY
Idaho Power may suspend acceptance of deliveries of energy from the Seller s Facility if the
Seller fails to comply with the following on or before the dates specified below:
1.1
1.2
1.3
This Facility is currently interconnected to Idaho Power and is selling energy to Idaho
Power as a Qualifying Facility in accordance with a Firm Energy Sales agreement dated
January 24, 1991 , first amendment of November 30, 1993 and second amendment dated
February 23 , 2001. No later then September 1, 2004 the Seller shall submit proof to
Idaho Power that all licenses, permits or approvals necessary for Seller to continue
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.
As of the date of this Agreement the Seller has engaged an outside consultant to review
the requirements of this paragraph and to provide the required documents.
Opinion of Counsel - No later then September 1 , 2004, Seller shall 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 of the Opinion
Letter. The Opinion Letter will be in a form acceptable to Idaho Power and will
acknowledge that the attorney rendering the opinion understands that Idaho Power is
reI ying on said opinion. Idaho Power s 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).
Engineer s Certifications - This Facility is currently interconnected to the Idaho Power
system.By September 1, 2004 the Seller will submit an Engineer s Certification of
Operations and Maintenance ("O&M") Policy as described in Commission Order
- 5-
Simplot Final
2/17/2004
No. 21690. This certificate 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. As of the date of this Agreement the Seller has engaged an
outside consultant to review these requirements and provide the required documents.
1.4 Insurance - By March 1 2004, Seller shall submit written proof to Idaho Power of all
insurance required in Article XVI.
1.5 Interconnection - Seller shall complete all interconnection modifications, upgrades or
additions as specified in Appendix D of this Agreement.
1.6 By September 1 2004, Seller shall demonstrate to Idaho Power s reasonable
satisfaction that the Facility is capable of delivering Net Energy in the amounts as
specified in paragraph 6.2 of this Agreement for the full term of this Agreement in a
consistent, reliable and safe manner.
1.7 Written Acceptance - Obtain written confirmation from Idaho Power that all conditions
to acceptance of energy have been fulfilled. Such written confirmation shall not be
unreasonably withheld by Idaho Power.
ARTICLE V: TERM
Term - Subject to completion of Article IV, Conditions to Continued Acceptance of Energy of
this Agreement, this Agreement shall become effective on the date first written, and shall
continue in full force and effect for a period of ten (10) Contract Years from March 1 2004.
Seller s failure to complete all of the requirements of Article IV, Conditions to Continued
Acceptance of Energy, of this Agreement by November 30, 2004 will be an event of default.
ARTICLE VI: PURCHASE AND SALE OF NET ENERGY
Delivery and Acceptance of Net Energy - Except when either Party s performance is excused as
provided herein, Idaho Power will purchase all of the Net Energy and Optional Energy produced
by the Facility and delivered by the Seller to the Point of Delivery.
- 6-
Simplot Final
2/17/2004
Net Energy Amounts - Seller intends to deliver Net Energy in the following monthly amounts:
Month Kwh
March 380,448
Season 1 April 195 784
May 380,448
July 380,448
August 380,448
Season 2 November 195 784
December 380,448
June 626 199
September 195 784
Season 3 October 380,448
January 380,448
February 826 457
6.2.Seller s Adjustment of Net Energy Amount - By written notice given to Idaho Power in
accordance with paragraph 29., the Seller may revise the monthly Net Energy Amounts
specified in paragraph 6.2 on the following Designated Dates. These notices must be
received a minimum 15 days prior to the Designated Dates and failure to provide timely
written notice of changed amounts will be deemed to be an election of no change.
Designated Dates
July 31 , 2004
January 31 , 2005
Last day of the 3rd, 5 , 7 , and the 9th Contract Year
Idaho Power Adjustment of Net Energy Amount - If Idaho Power is excused from accepting the
Seller s Net Energy as specified in paragraph 14.3.1 or if the Seller declares a Suspension of
Energy Deliveries as specified in paragraph 14.4., the Net Energy Amount as specified in
paragraph 6.2 for the specific month in which the reduction or suspension under paragraph 14.
or 14.4.1 occurs will be reduced in accordance with the following:
- 7-
Simplot Final
2/17/2004
Where:
NEA = Current Months Net Energy Amount (Paragraph 6.
RSH = Actual hours the Facility s energy deliveries were either reduced
or suspended under paragraph 14.1 or 14.4.
Actual total hours in the current month
Resulting formula being:
adjusted Net Energy Amount =
RSH
NEANEA
This adjusted Net Energy Amount will be used in applicable Surplus Energy and Shortfall Energy
calculations for only the specific month in which Idaho Power was excused from accepting the
Seller s Net Energy or the Seller declared a Suspension of Energy.
Unless excused by Force Majeure or by an adjustment as provided in paragraph 6., Seller
failure to deliver Net Energy in any Contract Year in an amount equal to at least ten percent
(10%) of the Annual Net Energy Amount as specified in paragraph 6.2 or as may be adjusted due
to paragraph 6., shall constitute an event of default.
ARTICLE Vll: PURCHASE PRICE AND METHOD OF PAYMENT;
ADJUSTMENT OF PURCHASE PRICE
Base Energy Purchase Price - For all Base Energy, Idaho Power will pay the non-levelized
energy price in accordance with Commission Order 29391 with seasonalization factors applied:
Season 1 - (73.50 %)Season 2 - (120.00 %)Season 3 - (100.00 %)
Year Mills/Kwh Mills/Kwh Mills/Kwh
2004 33.54.45.
2005 34.46 56.46.
2006 35.57.47.
2007 36.58.49.
2008 36.60.50.
2009 37.61.51.48
2010 38.63.52.
2011 39.64.53.
2012 40.66.55.
2013 41.67.56.
- 8-
Simplot Final
2/17/2004
7.4
Surplus Energy Price - For all Surplus Energy, Idaho Power shall pay to the Seller the current
month's Market Energy Cost or the Base Energy Purchase Price specified in paragraph 7.
whichever is lower.
Shortfall Energy Price - For all Shortfall Energy, if the Market Energy Cost for the month in
which the Shortfall Energy occurs is less then the Base Energy Purchase Price for the same
month, the Shortfall Energy Price will be O. If the Market Energy Cost for the month in which
the Shortfall Energy occurs is greater then the Base Energy Purchase Price for the same month
the Shortfall Energy Price will be the current month's Market Energy Cost less the Base Energy
Purchase Price.
Shortfall Energy Payment - The Shortfall Energy Payment amount is the Shortfall Energy
amount multiplied by the Shortfall Energy Price. The Shortfall Energy Payment will be withheld
from the current month's energy payment. If the current month's energy payment is less than the
Shortfall Energy Payment, the Seller will make payment to Idaho Power of the unpaid balance
within 15 days of being notified of the outstanding balance.
Optional Energy Price - For all Optional Energy, Idaho Power shall pay to the Seller the current
month's Market Energy Cost or the Base Energy Purchase Price specified in paragraph 7.
whichever is lower.
Payment Due Date - Energy payments to the Seller will be disbursed within 30 days of the date
which Idaho Power receives and accepts the documentation of the monthly Net Energy and
Optional Energy actually 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 P.2d 427 (1984), Idaho Power Company v. Idaho Public Utilities Commission, 107
Idaho 1122 695 P.2d 1 261 (1985), Afton Energy, Inc, v. Idaho Power Company,111 Idaho 925
- 9-
Simplot Final
2/17/2004
729 P.2d 400 (1986), Section 210 of the Public Utilities Regulatory Policies Act of 1978 and 18
CFR ~292.303-308.
ARTICLE VIII: ENVIRONMENTAL ATTRIBUTES
As of the date of this Agreement, Idaho Power has pending before the Commission a Petition for
a Declaratory Order, IPC Case number IPC-04-02.Idaho Power is seeking a Commission
ruling concerning whether the Environmental Attributes (i.e., renewable energy credits, green
tags, etc.) 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 final Order of the Commission in response to Idaho
Power s Petition will be applicable to this Agreement. The Seller reserves the right to cancel this
Agreement within 30 days after the date the Commission s final Order in IPC Case number IPC-
04-02 becomes final and non-appealable.The Seller s failure to provide cancellation
notification to Idaho Power within the above described time period will be deemed to be
acceptance by the Seller of the allocation of Environmental Attributes as included in the
Commissions final order.
ARTICLE IX: FACILITY AND INTERCONNECTION
Design of Facility - This Facility is interconnected to Idaho Power and is selling energy to Idaho
Power as a Qualifying Facility in accordance with a Firm Energy Sales agreement dated January
, 1991 , first amendment of November 30, 1993 and second amendment dated February 23,
2001. In this previous agreement, Seller was required to design, construct, install, own, operate
and maintain the Facility and any Seller-owned Interconnection Facilities so as to allow safe and
reliable generation and delivery of electric energy to Idaho Power for the full term of the
Agreement. Seller will be required to maintain these same standards in the on-going operations
of this facility for the term of this Agreement.
Interconnection Facilities - This Facility is interconnected to Idaho Power and is selling energy to
Idaho Power as a Qualifying Facility in accordance with a Firm Energy Sales agreement dated
- 10-
Simplot Final
2/1712004
10.
11.1
January 24, 1991 , first amendment of November 30, 1993 and second amendment dated February
2001. Idaho Power has reviewed the existing Interconnection Facilities and has identified
specific items that will require modification, upgrades or additions to the existing equipment.
These items are documented in Appendix D of this agreement. The Seller will be responsible to
complete the modifications, upgrades or additions as specified in Appendix D. All costs of all
items identified within Appendix D and payment to Idaho Power will be in accordance with
Schedule 72.
ARTICLE X: DISCONNECTION EQUIPMENT
This Facility is interconnected to Idaho Power and is selling energy to Idaho Power as a
Qualifying Facility in accordance with a Firm Energy Sales agreement dated January 24, 1991
first amendment of November 30, 1993 and second amendment dated February 23, 2001. Idaho
Power has reviewed the existing Disconnection Equipment and has identified specific items that
will require modification, upgrades or additions to the existing equipment. These items are
documented in Appendix D of this agreement. The Seller will be responsible to complete the
modifications, upgrades or additions as specified in Appendix D. All costs of all items identified
within Appendix D and payment to Idaho Power will be in accordance with Schedule 72.
ARTICLE XI: METERING AND TELEMETRY
Metering - This Facility is interconnected to Idaho Power and is selling energy to Idaho Power as
a Qualifying Facility in accordance with a Firm Energy Sales agreement dated January 24, 1991
first amendment of November 30, 1993 and second amendment dated February 23, 2001. Idaho
Power has reviewed the Metering and Telemetry and has identified specific items that will require
modification, upgrades or additions to the existing equipment. These items are documented in
Appendix D of this agreement. The Seller will be responsible to complete the modifications,
upgrades or additions as specified in Appendix D. All costs of all items identified within
Appendix D and payment to Idaho Power will be in accordance with Schedule 72. All meters
- 11-
Simplot Final
2/1712004
11.
used to determine the billing hereunder shall be sealed and the seals shall be broken only by
Idaho Power when the meters are to be inspected, tested or adjusted.
11.Meter Inspection - Idaho Power shall inspect and test all meters upon their Installation
and at least once every four (4) years thereafter. If requested by Seller, Idaho Power shall
make a special inspection or test of a meter and Seller shall pay the reasonable costs of
such special inspection. Both Parties shall be notified of the time when any inspection or
test shall take place, and each Party may have representatives present at the test or
inspection. If a meter is found to be inaccurate or defective, it shall be adjusted, repaired
or replaced, at Idaho Power s expense in order to provide accurate metering. If a meter
fails to register, or if the measurement made by a meter during a test varies by more than
two percent (2%) from the measurement made by the standard meter used in the test,
adjustment (either upward or downward) to the payments Seller has received shall be
made to correct those payments affected by the inaccurate meter for the actual period
during which inaccurate measurements were made.If the actual period cannot
determined, corrections to the payments will be based on the shorter of (1) a period equal
to one-half the time from the date of the last previous test of the meter to the date of the
test which established the inaccuracy of the meter; or (2) six (6) months.
Telemetry - metering, communications and telemetry equipment is required which is capable of
providing Idaho Power with continuous instantaneous telemetry of Seller s net generation to
Idaho Power s Designated Dispatch Facility. This Facility is interconnected to Idaho Power and
is selling energy to Idaho Power as a Qualifying Facility in accordance with a Firm Energy Sales
agreement dated January 24, 1991, first amendment of November 30, 1993 and second
amendment dated February 23 , 2001. Idaho Power has reviewed the Telemetry Equipment and
has identified specific items that will require modification, upgrades or additions to the existing
equipment in order for the parties to perform under this agreement. These items are documented
in Appendix D of this agreement. The Seller will be responsible to complete the modifications
upgrades or additions as specified in Appendix D. All costs of all items identified within
- 12-
Simplot Final
2/17/2004
12.
12.
13.
Appendix D and payment to Idaho Power will be in accordance with Schedule 72.
ARTICLE XII - RECORDS
Maintenance of Records - Seller shall maintain at the Facility or such other location mutually
acceptable to the Parties adequate Net Energy and Optional Energy records in a form and content
recommended by Idaho Power.
Inspection - Either Party, after reasonable notice to the other Party, shall have the right, during
normal business hours, to inspect and audit any or all Net Energy and Optional Energy records
pertaining to the Seller s Facility.
ARTICLE XIII - PROTECTION
This Facility is interconnected to Idaho Power and is selling energy to Idaho Power as a
Qualifying Facility in accordance with a Firm Energy Sales agreement dated January 24, 1991
first amendment of November 30, 1993 and second amendment dated February 23 , 2001. Idaho
Power has reviewed the existing Protection equipment and has identified specific items that will
require modification, upgrades or additions to the existing equipment. These items are
documented in Appendix D of this agreement. The Seller will be responsible to complete the
modifications, upgrades or additions as specified in Appendix D. All costs of all items identified
within Appendix D and payment to Idaho Power will be in accordance with Schedule 72. Seller
shall provide and maintain adequate protective equipment sufficient to prevent damage to the
Facility and Seller-furnished Interconnection Facilities. In some cases, some of Seller
protective relays will provide back-up protection for Idaho Power s facilities. In that event, Idaho
Power will test such relays annually and Seller will pay the actual cost of such annual testing.
ARTICLE XIV - OPERATIONS
14.Emergency Conditions - Seller agrees that, in the event 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
- 13-
Simplot Final
2/17/2004
14.
14.
event that the wholesale market prices for energy delivered to Idaho Power are higher than the
energy prices specified in Article vn herein, Seller shall, at Idaho Power s request, within the
limits of reasonable safety requirements as determined by Seller, and when economically viable
as determined by the Seller, will 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, unless it is determined by Idaho Power that market
energy deliveries to Idaho Power are not physically possible, in which case Idaho Power and the
Seller will agree upon the energy price. The Commission will be notified of any energy prices
that exceed the energy prices contained within paragraph 7.1 for the additional energy deliveries.
Additional energy will only be the incremental increase in energy scheduled and delivered to
Idaho Power that exceeds the previously planned energy deliveries to Idaho Power for the
specific period agreed to by both parties prior to the deliveries of the additional energy.
Communications - Idaho Power and the Seller shall maintain appropriate operating
communications through Idaho Power s Designated Dispatch Facility in accordance with
Appendix A of this Agreement.
Energy Acceptance
14.1 Idaho Power shall be excused from accepting and paying for Net Energy and/or Optional
Energy produced by the Facility and delivered to the Point of Delivery if it is prevented
from doing so by an event of force majeure, or if Idaho Power determines that
curtailment, interruption or reduction of Net Energy and/or Optional 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. If, for reasons other than an event of force Majeure, Idaho Power
requires such a curtailment, interruption or reduction of Net Energy deliveries for a
period that exceeds twenty (20) days beginning with the twenty-first day of such
- 14-
Simplot Final
2/17/2004
14.4
interruption, curtailment or reduction, Seller will be deemed to be delivering Net Energy
at a rate equivalent to the pro rata daily average of the amounts specified for the
applicable month in paragraph 6.2. Idaho Power will notify Seller when the interruption
curtailment or reduction is terminated.
14.2 If, in the reasonable opinion of Idaho Power, Seller s operation of the Facility or
Interconnection Facilities is unsafe or may otherwise adversely affect Idaho Power
equipment, personnel or service to its customers, Idaho Power may physically interrupt
the flow of energy from the Facility as specified within Schedule 72 or take such other
reasonable steps as Idaho Power deems appropriate.
14.3 Under no circumstances will the Seller deliver Net Energy and/or Optional Energy from
the Facility in an amount that exceeds the Maximum Capacity Amount. Seller s failure
to limit deliveries to the Maximum Capacity Amount will be a Material Breach of this
Agreement.
Seller Declared Suspension of Energy Deliveries
14.4.1 If the Seller s Facility experiences a forced outage due to equipment failure which is not
caused by an event of Force Majeure or by neglect, disrepair or a foreseeable failure of
the Seller s Facility, Seller may, after giving notice as provided in paragraph 14.4.2
below, temporarily suspend all deliveries of Net Energy to Idaho Power for a period of
not less than 72 hours to correct the forced outage condition. The Sellers Declared
Suspension of Energy Deliveries will begin at the start of the next full hour following the
Seller s telephone notification as specified in paragraph 14.4.2 and will continue for the
time as specified in the written notification provided by the Seller. In the month(s) in
which the Declared Suspension of Energy occurred, the Net Energy Amount will be
adjusted as specified in paragraph 6.
14.4.2 If the Seller desires to declare a Suspension of Energy Deliveries as provided in
paragraph 14.4., the Seller will notify the Designated Dispatch Facility by telephone.
The beginning hour of the Declared Suspension of Energy Deliveries will be at the
- 15-
Simplot Final
2/17/2004
14.
14.
14.
14.
14.
earliest the next full hour after making telephone contact with Idaho Power. The Seller
will, within 24 hours after the telephone contact, provide Idaho Power a written notice in
accordance with Article XXIX, that will contain the beginning hour and duration of the
Declared Suspension of Energy Deliveries and a description of the conditions that caused
the Seller to Declare a Suspension of Energy Deliveries.
Voltage Levels - Seller, in accordance with Prudent Electrical Practices shall minimize voltage
fluctuations and maintain voltage levels acceptable to Idaho Power. Idaho Power may, in
accordance with Prudent Electrical Practices, upon one hundred eighty (180) days' notice to
Seller, change its nominal operating voltage level by more than ten percent (10%) at the Point of
Delivery, in which case Seller shall modify, at Idaho Power s expense, Seller s equipment as
necessary to accommodate the modified nominal operating voltage level.
Generator Ramping - Idaho Power, in accordance with Prudent Electrical Practices, shall have the
right to limit the rate that generation is changed at startup, during normal operation or following
reconnection to Idaho Power s system. Generation ramping may be required to permit Idaho
Power s voltage regulation equipment time to respond to changes in power flow.
Scheduled Maintenance - On or before January 31 of each calendar year, Seller shall submit a
written proposed maintenance schedule for that calendar year and Idaho Power and Seller shall
mutually agree as to the acceptability of the proposed schedule. The Parties determination as to
the acceptability of the Seller s timetable for scheduled maintenance will take into consideration
Prudent Electrical Practices, Idaho Power system requirements and the Seller s preferred
schedule. Neither Party shall unreasonably withhold acceptance of the proposed maintenance
schedule.
Maintenance Coordination - The Parties shall, to the extent practical, coordinate their respective
line and Facility maintenance schedules such that they occur simultaneously.
Contact Prior to Curtailment - Idaho Power will make a reasonable attempt to contact Seller prior
to exercising its rights to curtail, interrupt or reduce deliveries from Seller for any event that will
be in duration of 24 hours or longer.Seller understands that in the case of emergency
- 16-
Simplot Final
2/17/2004
15.
15.
15.
15.4
circumstances, no notice will be given to Seller prior to interruption, curtailment, or reduction.
ARTICLE XV: RELIABILITY MANAGEMENT SYSTEM
Purpose.In order to maintain the reliable operation of the transmission grid, the WECC
Reliability Criteria Agreement sets forth reliability criteria adopted by the WECC to which this
Seller and Idaho Power Company shall be required to comply. Seller acknowledges receipt of
and understanding of the WECC Reliability Criteria Agreement and how it pertains to the Seller
facility.
Compliance. This Seller shall comply with the requirements of the WECC Reliability Criteria
Agreement, including the applicable WECC reliability criteria set forth in Section IV of Annex A
thereof, and, in the event of failure to comply, Seller agrees to be subject to the sanctions
applicable to such failure. Such sanctions shall be assessed pursuant to the procedures contained
in the WECC Reliability Criteria Agreement. Each and all of the provisions of the WECC
Reliability Criteria Agreement are hereby incorporated by reference into this Article 15 as though
set forth fully herein, and Seller shall for all purposes be considered a Participant, and shall be
entitled to all of the rights and privileges and be subject to all of the obligations of a Participant
under and in connection with the WECC Reliability Criteria Agreement, including, but not
limited to the rights, privileges and obligations set forth in Sections 5, 6 and 10 of the WECC
Reliability Criteria Agreement.
Payment of Sanctions. Seller shall be responsible for reimbursing Idaho Power Company for any
monetary sanctions assessed against Idaho Power Company due to the action or inaction of the
Seller by WECC pursuant to the WECC Reliability Criteria Agreement. Seller also shall be
responsible for payment of any monetary sanction assessed against the Seller by WECC pursuant
to the WECC Reliability Criteria Agreement. Any such payment shall be made pursuant to the
procedures specified in the WECC Reliability Criteria Agreement.
Transfer of Control or Sale of Generation Facilities.In any sale or transfer of control of any
generation facilities subject to this Agreement, Seller shall, as a condition of such sale or transfer
- 17-
Simplot Final
2/17/2004
15.
15.
15.
15.
require the acquiring party or transferee with respect to the transferred facilities either to assume
the obligations of the Seller with respect to this Agreement or to enter into an agreement with
Idaho Power Company imposing on the acquiring party or transferee the same obligations
applicable to the Seller pursuant to this Article 15.
Publication.Seller consents to the release by the WECC of information related to the Seller
compliance with this Agreement only in accordance with the WECC Reliability Criteria
Agreement.
Third Parties.Except for the rights and obligations between the WECC and the Seller specified
in this Article 15, this Agreement creates contractual rights and obligations solely between the
Parties. Nothing in this Agreement shall create, as between the Parties or with respect to the
WECC: (a) any obligation or liability whatsoever (other than as expressly provided in this
Agreement), or (b) any duty or standard of care whatsoever.In addition, nothing in this
Agreement shall create any duty, liability or standard of care whatsoever as to any other party.
Except for the rights, as a third-party beneficiary under this Article 15, of the WECC against the
Seller for the Seller, no third party shall have any rights whatsoever with respect to enforcement
of any provision of this Agreement. Idaho Power Company and the Seller expressly intend that
the WECC is a third-party beneficiary to this Article 15, and the WECC shall have the right to
seek to enforce against the Seller any provision of this Article 15, provided that specific
performance shall be the sole remedy available to the WECC pursuant to Article 15 of this
Agreement, and the Seller shall not be liable to the WECC pursuant to this Agreement for
damages of any kind whatsoever (other than the payment of sanctions to the WECC, if so
construed), whether direct, compensatory, special, indirect, consequential, or punitive.
Reserved Rights. Nothing in the Article 15 of this Agreement or the WECC Reliability Criteria
Agreement shall affect the right of Idaho Power Company, subject to any necessary regulatory
approval, to take such other measures to maintain reliability, including disconnection that Idaho
Power Company may otherwise be entitled to take.
Termination of Article 15.Seller may terminate its obligations pursuant to this Article 15:
- 18-
Simplot Final
2/17/2004
16.
16.
15.If after the effective date of this Article 15, the requirements of the WECC Reliability
Criteria Agreement applicable to the Seller are amended so as to adversely affect the
Seller, provided that the Seller gives fifteen (15) days' notice of such termination to
Idaho Power Company and WECC within forty-five (45) days of the date of issuance
of a Commission order accepting such amendment for filing, provided further that the
forty-five (45) day period within which notice of termination is required may be
extended by the Seller for an additional forty-five (45) days if the Seller gives written
notice to Idaho Power Company of such requested extension within the initial forty-
five (45) day period; or
15.For any reason on one year s written notice to Idaho Power Company and the WECc.
ARTICLE XVI: INDEMNIFICA nON AND INSURANCE
Indemnification - Each Party shall agree to hold harmless and to indemnify the other Party, its
officers, agents, affiliates, subsidiaries, parent company 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 s 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, including
reasonable attorney fees that may be incurred by the other Party in enforcing this indemnity.
Insurance - During the term of this Agreement, Seller shall secure and continuously carry the
following insurance coverage:
16.1 Comprehensive General Liability Insurance for both bodily injury and property damage
with limits of $2 000,000 each occurrence, combined single limit.Seller will be
responsible for any deductible applicable to losses covered by this insurance.
16.2 The above insurance coverage shall be placed with an insurance company with an A.M.
Best Company rating of A- or better and shall include:
- 19-
Simplot Final
2117/2004
16.
16.4
17.
(a)An endorsement naming Idaho Power as an additional insured and loss payee as
applicable; and
(b)A provision stating that such policy shall not be canceled or the limits of liability
reduced without thirty (30) days' prior written notice to Idaho Power.
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.
Seller to Notify Idaho Power of Loss of Coverage - If the insurance coverage required by
paragraph 16.2 shall lapse for any reason, Seller will immediately notify Idaho Power in writing.
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 and to expeditiously reinstate or
replace the coverage will constitute a Material Breach of this Agreement.
ARTICLE XVll. FORCE MAJEURE
As used in this Agreement
, "
force Majeure" or "an event of force Majeure" means any cause
beyond the control of the Seller or of Idaho Power which, despite the exercise of due diligence
such Party is unable to prevent or overcome. Force Majeure includes, but is not limited to, acts of
God, fire, flood, storms, wars, hostilities, civil strife, strikes and other labor disturbances
earthquakes, fires, lightning, epidemics, sabotage, or changes in law or regulation, which, by the
exercise of reasonable foresight such party could not reasonably have been expected to avoid and
by the exercise of due diligence, it shall be unable to overcome. If either Party is rendered wholly
or in part unable to perform its obligations under this Agreement because of an event of force
Majeure, both Parties shall be excused from whatever performance is affected by the event of
force Majeure, provided that:
(1)The non-performing Party shall, as soon as is reasonably possible after the
occurrence of the force Majeure, give the other Party written notice describing
the particulars of the occurrence.
- 20-
Simplot Final
2/1712004
18.
18.
18.
(2)The suspension of performance shall be of no greater scope and of no longer
duration than is required by the event of force majeure.
(3)No obligations of either Party which arose before the occurrence causing the
suspension of performance and which could and should have been fully
performed before such occurrence shall be excused as a result of such
occurrence.
ARTICLE XVill: LAND RIGHTS
Seller to Provide Access - Seller hereby grants to Idaho Power for the term of this Agreement all
necessary rights-of-way and easements to install, operate, maintain, replace, and remove Idaho
Power s Metering Equipment, Disconnection Equipment and other Special Facilities necessary or
useful to this Agreement, including adequate and continuing access rights on property of Seller.
Seller warrants that it has procured sufficient easements and rights-of-way from third parties so as
to provide Idaho Power with the access described above. All documents granting such easements
or rights-of-way shall be subject to Idaho Power s approval and in recordable form.
Use of Public Rights-of-Way - The Parties agree that it is necessary to avoid the adverse
environmental and operating impacts that would occur as a result of duplicate electric lines being
constructed in close proximity. Therefore, subject to Idaho Power s compliance with paragraph
18.4, Seller agrees that should Seller seek and receive from any local, state or federal
governmental body the right to erect, construct and maintain Seller-furnished Interconnection
Facilities upon, along and over any and all public roads, streets and highways, then the use by
Seller of such public right-of-way shall be subordinate to any future use by Idaho Power of such
public right-of-way for construction and/or maintenance of electric distribution and transmission
facilities and Idaho Power may claim use of such public right-of-way for such purposes at any
time. Except as required by paragraph 18.4, Idaho Power shall not be required to compensate
Seller for exercising its rights under this paragraph 18.
Joint Use of Facilities - Subject to Idaho Power s compliance with paragraph 18.4, Idaho Power
- 21-
Simplot Final
2/1712004
18.4
19.
may use and attach its distribution and/or transmission facilities to Seller s Interconnection
Facilities, may reconstruct Seller s Interconnection Facilities to accommodate Idaho Power
usage or Idaho Power may construct its own distribution or transmission facilities along, over and
above any public right-of-way acquired from Seller pursuant to paragraph 18., attaching Seller
Interconnection Facilities to such newly constructed facilities. Except as required by paragraph
18.4, Idaho Power shall not be required to compensate Seller for exercising its rights under this
paragraph 18.
Conditions of Use - It is the intention of the Parties that the Seller be left in substantially the same
condition, both financially and electrically, as Seller existed prior to Idaho Power s exercising its
rights under this Article XVill. Therefore, the Parties agree that the exercise by Idaho Power of
any of the rights enumerated in paragraphs 18.2 and 18.3 shall: (1) comply with all applicable
laws, codes and Prudent Electrical Practices, (2) equitably share the costs of installing, owning
and operating jointly used facilities and rights-of-way. If the Parties are unable to agree on the
method of apportioning these costs, the dispute will be submitted to the Commission for
resolution and the decision of the Commission will be binding on the Parties, and (3) shall
provide Seller with an interconnection to Idaho Power s system of equal capacity and durability
as existed prior to Idaho Power exercising its rights under this Article XVill.
ARTICLE XIX: 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 under 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 or affect the status of
Idaho Power as an independent public utility corporation or Seller as an independent individual or
entity.
- 22-
Simplot Final
2/17/2004
20.
21.1
22.
22.2
23.
23.
ARTICLE XVIII: 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 XXI: WAIVER
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 XXll: CHOICE OF LAWS AND VENUE
This Agreement shall be construed and interpreted in accordance with the laws of the State of
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 of Idaho in and for the County of Ada.
ARTICLE XXIII: 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.
Notice of Default -
23.2.Defaults.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
- 23-
Simplot Final
2/17/2004
23.
23.
default occurred. If the defaulting Party shall fail to cure such default within the sixty
(60) days after service of such notice, or if the defaulting Party reasonably
demonstrates to the other Party that the default can be cured within a commercially
reasonable time but not within such sixty (60) day period and then fails to diligently
pursue such cure, then, the nondefaulting Party may, at its option, terminate this
agreement and/or pursue its legal or equitable remedies.
Material Breaches - The notice and cure provisions in paragraph 23.1 do not apply
to defaults identified in this Agreement as Material Breaches. Material Breaches must
be cured as expeditiously as possible following occurrence of the breach.
Security for Performance - For the full term of this Agreement, Seller will provide Idaho Power
with the following:
23.
23.3.
23.3.
Insurance - Evidence of compliance with the provisions of paragraph 16.2. If Seller
fails to comply, such failure will be a Material Breach and may only be cured by
Seller supplying evidence that the required insurance coverage has been replaced or
reinstated;
Engineer s Certifications - Every three (3) years after March 1 , 2004, Seller will
supply Idaho Power with a Certification of Ongoing Operations and Maintenance (0
and M) 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
Licenses and Permits - During the full term of this Agreement, Seller shall maintain
compliance with all permits and licenses described in paragraph 4.1 of this
Agreement. In addition, Seller will supply Idaho Power with copies of any new or
additional permits 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 permits and licenses described in paragraph 4.1 or to provide
- 24-
Simplot Final
2/17/2004
24.
24.
25.
26.
the documentation required by this paragraph, such failure will be an event of default
and may only be cured by Seller submitting to Idaho Power evidence of compliance
from the permitting agency.
ARTICLE XXIIII: GOVERNMENTAL AUTHORIZATION
This Agreement is subject to the jurisdiction of those governmental agencies having control over
either Party of this Agreement.
Idaho Power may terminate this Agreement on sixty (60) days prior written notice if (1) 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, and (2) such change in law results
in Idaho Power being unable to fully recover all costs associated with this Agreement.
ARTICLE XXV: COMMISSION ORDER
This Agreement shall become finally 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 XXVI: SUCCESSORS AND ASSIGNS
This Agreement and all of the terms 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,
obligations and interests under this Agreement. This article shall not prevent a financing entity
with recorded or secured rights from exercising all rights and remedies available to it under law
- 25-
Simplot Final
211712004
27.
28.
29.
or contract. Idaho Power shall have the right to be notified by the financing entity that it is
exercising such rights or remedies.
ARTICLE XXVII: MODIFICATION
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 XXVIII: TAXES
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 XXIX: NOTICES
All written notices under this agreement shall be directed as follows and shall be considered
delivered when deposited in the U. S. Mail, first-class postage prepaid, as follows:
To Seller:J R Simplot Company
Attn: Corporate Secretary
POBox 27
Boise, ID 83707
Copy to:
J R Simplot Company
Attn: David Hawk
POBox 27
Boise, ID 83707
To Idaho Power:Vice President, Power Supply
Idaho Power CompanyPOBox 70
Boise, Idaho 83707
- 26-
Simplot Final
2117/2004
30.
31.1
32.
33.
ARTICLE XXX: ADDITIONAL TERMS AND CONDITIONS
This Agreement includes the following appendices, which are attached hereto and included by
reference:
Appendix A
Appendix B
Appendix C
Appendix D
Generation Scheduling and Reporting
Facility and Point of Delivery
Engineer s Certifications
Modifications, Upgrades and Additions
ARTICLE XXXI: 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 if the invalid or unenforceable term or provision were omitted.
ARTICLE XXXII: 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 XXXIII: 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.
- 27-
Simplot Final
2/17/2004
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 J R Simplot Company
?1:?:g~.~~?:~~~~ t u r in g
~~~.
~Y~,~Y=,~.Y,
~",
Dated
\=="~
'a \ CD 0 ~Dated
~ ~~eIdaho Power
- 28-
Simplot Final
2/17/2004
APPENDIX A
MONTHLY POWER PRODUCTION AND SWITCHING REPORT
At the end of each month the following required documentation will be submitted to:
Idaho Power Company
Attn: Cogeneration and Small Power Production
POBox 70
Boise, Idaho 83707
The Meter readings required on this report will be the reading on the Idaho Power Meter
Equipment measuring the Facilities energy production delivered to Idaho Power at the Point of Delivery
required to administer this Agreement.
- 29-
Simplot Final
2/17/2004
Idaho Power Company
Cogeneration and Small Power Production
MONTHLY POWER PRODUCTION AND SWITCHING REPORT
Project Name
Month Year
Project Number:
Address
City
Meter Number:
End of Month Kwh Meter Reading:
Beginning of Month Kwh Meter:
Difference:
Times Meter Constant:
Kwh for the Month:
Metered Demand:
Breaker Opening Record
Date Time Meter
Breaker Opening Reason Codes
Lack of Adequate Prime Mover
Forced Outage of Facility
Disturbance of IPCo System
Scheduled Maintenance
Testing of Protection Systems
Cause Unknown
Other (Explain)
State Zip
Facility
Output
Local
Service
Phone Number:
Auxiliary
Service
Net Generation
Breaker Closing Record
Date Time Meter
I hereby certify that the above meter readings are
true and correct as of Midnight on the last day of the
above month and that the switching record is accurate
and complete as required by the Energy Sales
Agreement to which I am a Party.
Signature
- 30-
Reason
Date
Simplot Final
2/1712004
ROUTINE REPORTING
Idaho Power Contact Information
Daily Energy Production Reporting
Call daily by 10 Am 800-356-4328 or 800-635-1093 and leave the following
information:
Project Identification - Project Name and Project Number
Current Meter Reading
Estimated Generation for the current day
Estimated Generation for the next day
Planned and Unplanned Project outages
Call 800-345-1319 and leave the following information:
Project Identification - Project Name and Project Number
. Approximate time outage occurred
Estimated day and time of project coming back online
Seller s Contact Information
24 Hour Project Operational Contact
Name:
Telephone Number:
Project On-site Contact information
Telephone Number:
- 31-
Simplot Final
2/17/2004
APPENDIX B
FACILITY AND POINT OF DELIVERY
PROJECT NO. 41866112
SIMPLOT POCA TELLO
DESCRIPTION OF FACILITY
The Seller s Facility is described as one General Electric synchronous generator with a three-phase
nameplate rating of 18.75 MV A at 13.2 kV three phase, 60 hertz, driven by a steam turbine.
LOCA nON OF FACILITY
The Facility is located in the South Half of Section 7, Township 6 South, Range 34 East, Boise
Meridian, Power County, Idaho.
POINT OF DELIVERY
The Point of Delivery of energy from the Seller to Idaho Power is the 12.47 kV bushings of the
Idaho Power owned phosphate substation metalclad vacuum breaker connected to the Simplot
three-phase transformer bank. This isolation transformer bank, which consists of three single phase
5000 kV A/6250 kV A transformers, is connected 12.47 kV Delta to 13.09/7.56 kV grounded wye
three phase, and the underground primary conductors connecting the transformer to the metalclad
is owned by Simplot.
METERING
The Metering Equipment is located at Don Substation on the Don 015 metalclad bus and consists
of potential and current transformers, and a Scientific Columbus JEM 2 electronic bi-directional
demand meter. The meter registers kilowatt-hours and kilowatts of demand.
SPECIAL FACILITIES
The completion of the fifth distribution feeder bay including metalclad and metering at Don
Substation, installation of new substation 12.47 kV underground getaway cables, construction of a
section of overhead three phase 12.47 kV distribution feeder, and the installation of a section of
- 32-
Simplot Final
2/1712004
underground three phase 12.47 kV distribution feeder, has been provided by Idaho Power as
Special Facilities.
DISCONNECTION EQUIPMENT
Disconnection Equipment is required to insure that the Seller s Facility will be disconnected from
Idaho Power s system in the event of a disturbance on either Idaho Power s system or the Seller
Facility. This equipment is for the protection of Idaho Power s equipment only. Idaho Power has
installed the protective equipment in a new substation to be called Phosphate. This equipment
consists of a metal clad vacuum breaker, potential transformers, and relaying and associated
wiring. Idaho Power will rely on generator emergency batteries and certain generator fault relays
for fault detection. Idaho Power did connect and test the equipment prior to the operation of the
facility. The total cost of the Disconnection Equipment, connection and testing has been
reimbursed to Idaho Power by the Seller.
B- 7 COSTS
The total cost of Special Facilities and metering was $214 989. The total cost of the Disconnecting
Equipment was $84 052. The total cost paid by the Seller was $299 041. In addition to the
installation and construction charges above, during the term of the Agreement Seller will pay Idaho
Power an operation and maintenance charge of the sum of the following:
Original Equipment - This Facility has been interconnected and delivering energy to
Idaho Power Company under an existing agreement.The monthly Schedule 72
operations and maintenance expense in regards to the equipment originally installed at a
total cost of $299,041 will continue on the same operations and maintenance schedule as
specified in Schedule 72 based upon the original installation date of this equipment.
Thus the Schedule 72 Contract Year to be referenced to the Schedule 72 Operations and
Maintenance table will be as follows for the term of this agreement in regards to the
original equipment cost of $299,041.
- 33-
Simplot Final
2/17/2004
Calendar Date Schedule 72 Contract Year
Feb 1 2003 - January 31 , 2004
Feb 1 2004 - January 31 , 2005
Feb 1 2005 - January 31 , 2006
Feb 1 2006 - January 31 , 2007
Feb 1 2007 -January 31, 2008
Feb 1 2008 - January 31, 2009
Feb 1 2010 - January 31 , 2011
Feb 1 2011 - January 31 , 2012
Feb 1 2012 - January 31 , 2013
Feb 1 2013 - January 31 , 2014
Additional Equipment - any new equipment installations beyond the scope of routine
maintenance of the Original Equipment will considered to be Additional Equipment and
the Schedule 72 Contract year will be determined based upon the completed installation
date of the Additional Equipment.The complete installed cost of the Additional
Equipment will be the bases that the appropriate Schedule 72 Operations and
Maintenance percentage shall be applied.
SALVAGE
No later than sixty (60) days after the termination or expiration of this Agreement, Idaho Power
will prepare and forward to Seller an estimate of the remaining value of those Idaho Power
furnished Interconnection Facilities described in this Appendix, less the cost of removal and
transfer to Idaho Power s nearest warehouse. If the Interconnection Facilities will be removed
Idaho Power may then be invoiced by Seller for the net salvage value estimated by Idaho Power
for the interconnection facilities and shall pay such amount to Seller within thirty (30) days after
receipt of said invoice.
- 34-
Simplot Final
2/17/2004
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 Energy Sales Agreement, hereinafter "Agreement,
between Idaho Power Buyer and Simplot Company 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 is hereinafter
referred to as the "Project."
That the Project which commonly known the
Project, is located in Section , Township
Range , Boise Meridian County, Idaho.
That Engineer recognizes that the Agreement provides for the Project to furnish electrical
energy to Idaho Power for a Ten (10) 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
- 35-
Simplot Final
2117/2004
been designed and built to appropriate standards, adherence to said O&M Policy will result in the
Project's producing at or near the design electrical output , efficiency and plant factor for a ten (10) year
period.
That Engineer recognizes that Idaho Power, in accordance with paragraph 5.3 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
- 36-
Simplot Final
2/17/2004
APPENDIX C
ENGINEER'S CERTIFICA nON
ONGOING OPERA nONS 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 Energy Sales Agreement, hereinafter "Agreement
between Idaho Power Buyer and Simplot Company 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 commonly known
the
Project, is located at
That Engineer recognizes that the Agreement provides for the Project to furnish
electrical energy to Idaho Power for a ten (10) 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
- 37-
Simplot Final
2117/2004
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
factor for the remaining years of the Agreement.
That Engineer recognizes that Idaho Power, in accordance with paragraph 5.3 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
- 38-
Simplot Final
2/17/2004
APPENDIX D
MODIFICATIONS , UPGRADES AND ADDITIONS
PROJECT NO. 41866112
SIMPLOT POCA TELLO
This Facility is interconnected to Idaho Power and is selling energy to Idaho Power as a Qualifying
Facility in accordance with a Firm Energy Sales agreement dated January 24, 1991, first amendment of
November 30, 1993 and second amendment dated February 23 2001. The Interconnection Facilities
Disconnection Equipment, Metering Equipment, Telemetry Equipment and Protection Equipment were
designed, installed, operated and maintained in accordance with this previous agreement.
Idaho Power has reviewed the existing Interconnection Facilities, Disconnection Equipment, Metering
Equipment, Telemetry Equipment and Protection Equipment and listed below are specific modifications,
upgrades and lor additions required for these facility to continue to deliver energy to Idaho Power at the
Point of Delivery under this new Energy Sales Agreement. The Seller will be responsible to complete the
modifications, upgrades or additions as specified in this Appendix D. All costs of all items identified
within this Appendix D and payment to Idaho Power will be in accordance with Schedule 72.
INTERCONNECTION FACILITIES
Idaho Power has reviewed the existing Interconnection Facilities at the Sellers facility and finds
that no upgrades, modifications or additions are required that the Seller would at this time be
responsible for. If in the future, Prudent Electrical Practices, regulations, electrical codes or
safety codes require upgrades, modifications or additions to the existing equipment, Idaho Power
will notify the Seller of these requirements and the Seller will be responsible for all costs of all
items identified and payment to Idaho Power will be in accordance with Schedule 72.
- 39-
Simplot Final
2/17/2004
DISCONNECTION EQUIPMENT
Idaho Power has reviewed the existing Disconnection Equipment at the Sellers facility and finds
that no upgrades, modifications or additions are required that the Seller would at this time be
responsible for. If in the future, Prudent Electrical Practices, regulations, electrical codes or
safety codes require upgrades, modifications or additions to the existing equipment, Idaho Power
will notify the Seller of these requirements and the Seller will be responsible for all costs of all
items identified and payment to Idaho Power will be in accordance with Schedule 72.
METERING EQUIPMENT
Idaho Power has reviewed the existing Metering Equipment at the Sellers facility and finds that
no upgrades, modifications or additions are required that the Seller would at this time be
responsible for. If in the future, Prudent Electrical Practices, regulations, electrical codes or
safety codes require upgrades, modifications or additions to the existing equipment, Idaho Power
will notify the Seller of these requirements and the Seller will be responsible for all costs of all
items identified and payment to Idaho Power will be in accordance with Schedule 72.
TELEMETRY EQUIPMENT
Idaho Power has reviewed the existing Telemetry Equipment at the Sellers facility and finds that
no upgrades, modifications or additions are required that the Seller would at this time be
responsible for. If in the future, Prudent Electrical Practices, regulations, electrical codes or
safety codes require upgrades, modifications or additions to the existing equipment, Idaho Power
will notify the Seller of these requirements and the Seller will be responsible for all costs of all
items identified and payment to Idaho Power will be in accordance with Schedule 72.
PROTECTION EQUIPMENT
Idaho Power has reviewed the existing Protection Equipment at the Sellers facility and finds that
no upgrades, modifications or additions are required that the Seller would at this time be
- 40-
Simplot Final
2117/2004
responsible for. If in the future, Prudent Electrical Practices, regulations, electrical codes or
safety codes require upgrades, modifications or additions to the existing equipment, Idaho Power
will notify the Seller of these requirements and the Seller will be responsible for all costs of all
items identified and payment to Idaho Power will be in accordance with Schedule 72.
Facility Owned Protective Relays - The facility owns and operates several protective
relays that provide protection to the Idaho Power System. As specified in paragraph 13.
of this Agreement, when the Seller s protective relays provide protection for the Idaho
Power system, Idaho Power annually tests these relays at the Seller s expense.
Historically, this testing has been accomplished by Idaho Power witnessing the Seller
annual tests of these relays. The Seller being responsible for costs of the tests and the
cost of Idaho Power providing a witness to these tests. This arrangement has
accommodated both parties in the past and will be continued until such time as either
Idaho Power or the Seller request in writing a change in this testing procedure.
- 41-
Simplot Final
2/1712004