20141215_4547.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF

FROM: KRISTINE SASSER
DEPUTY ATTORNEY GENERAL

DATE: DECEMBER 11, 2014

SUBJECT: IDAHO POWER’S APPLICATION FOR APPROVAL OF FIRM
ENERGY SALES AGREEMENT AMENDMENTS, CASE NO. IPC-E-14-
40

Idaho Power filed an Application with the Commission on November 25, 2014,
requesting that the Commission issue an Order approving amendments to three Firm Energy
Sales Agreements (FESAs, Agreements) between Idaho Power and PURPA qualifying facilities
(QFs). Idaho Power states that these amendments are virtually identical, and address the same
issue as those submitted and approved as part of the settlement stipulation in Case No. IPC-E-13-
25, and the approved amendments in Case Nos. IPC-E-14-21 and IPC-E-14-37.
THE APPLICATION
In total for purposes of this case, Idaho Power has executed three individual
amendments to existing Agreements with QFs. The QFs are as follows:
Tiber Montana LLC
contract approved on 4/28/03 by Order No. 29232

Pristine Springs/Idaho Water Resource Board
contract approved on 4/25/05 by Order No. 29766

Pristine Springs/Idaho Water Resource Board
contract approved on 4/25/05 by Order No. 29767

On February 18, 2005, Pristine Springs, Inc. entered into two separate Firm Energy
Sales Agreements with Idaho Power. The Agreements were approved by the Commission on
April 25, 2005. On April 4, 2008, Pristine Springs and Idaho Water Resource Board entered into
an Assignment and Assumption of Agreements, Permits and Licenses providing for, among other
DECISION MEMORANDUM 2
things, assignment of all rights, titles, and interest of Pristine Springs under the Original
Agreement. Upon Commission approval of the amendments in this case, Idaho Power consents
to the substitution of Idaho Water Resource Board for Pristine Springs in each of the
Agreements.
Each of the three Agreements contains 90/110 firmness requirements that apply a
“Market Energy Cost” price to energy deliveries that do not meet the 90/110 requirements. The
FESAs define Market Energy Cost with reference to the Dow Jones Mid-Columbia Index prices
for non-firm energy. Idaho Power states that the Agreements’ provisions for Surplus Energy and
Market Energy Cost generally correlate to Idaho Power’s Schedule 86, Cogeneration and Small
Power Production Non-Firm Energy.
The Dow Jones Mid-Columbia Index was discontinued by the publisher as of October
2013. Case No. IPC-E-13-25 was initiated to address a replacement market index reference for
the non-firm energy price utilized in Idaho Power’s Schedule 86. The parties to IPC-E-13-25
executed a settlement stipulation, approved by the Commission in Order No. 33053, which sets
forth reference to the Intercontinental Exchange (ICE) Mid-Columbia index prices, with a
revised formula for calculating the non-firm price in Schedule 86. In addition, the parties to IPC-
E-13-25 agreed to amend the FESAs between Idaho Power and each intervening party to
reference the ICE index using the same language as, and consistent with, the Schedule 86
language agreed upon in the stipulation. In approving the stipulation, the Commission stated
“We also find it reasonable to allow any additional existing PURPA QFs that currently have a
contract with Idaho Power containing reference to the Dow Jones non-firm Mid-C electricity
price index, should they so choose, to amend their respective agreements consistent with the
terms of this Settlement Stipulation and similar to the contract amendments approved by this
Order.” Order No. 33053 at 4.
Idaho Power and each QF have agreed to amend their FESAs to include the reference
to the ICE index and revised formula that was adopted for Schedule 86 in Case No. IPC-E-13-25.
The Amendments set forth, virtually verbatim, the provisions from Schedule 86 to define
“Market Energy Cost” and/or “Mid-Columbia Market Energy Cost” as appropriate for each
Agreement.
Pursuant to the FESAs which require both parties to agree upon a replacement index
should the Dow Jones index be discontinued, an effective date of October 2013 for use of the
DECISION MEMORANDUM 3
ICE index and calculation referenced in the Amendments is requested. Idaho Power explains
that this would provide for use of the agreed upon ICE index from the time the Dow Jones index
was discontinued.
STAFF RECOMMENDATION
Staff has reviewed Idaho Power’s Application, the Amendments to the Agreements,
and Case Nos. IPC-E-13-25, IPC-E-14-21 and IPC-E-14-37. Prior to the filing of the 13-25 case,
McGraw Hill Financial, the publisher of both the Dow Jones and Platts indices, provided notice
to Idaho Power that it was discontinuing publication of the Dow Jones non-firm index and
transitioning to use of the Platts non-firm index. Idaho Power’s Schedule 86 and a number of
power purchase/energy sales agreements (PPAs) contain language with reference to the Dow
Jones Mid-C in determining an “Avoided Energy Cost.” The pertinent PPAs state that, “If the
Dow Jones Mid-Columbia Index price is discontinued by the reporting agency, both Parties [to
the contract] will mutually agree upon a replacement index, which is similar to the Dow Jones
Mid-Columbia Index.”
The parties to the 13-25 case entered into a settlement stipulation that agreed to an
acceptable substitution for the discontinued Dow Jones index – to be applied to both Idaho
Power’s Schedule 86 and the power purchase/energy sales agreements of QFs who were parties
in the 13-25 case. The settlement stipulation also stated that
The Parties jointly recommend to the Commission that it allow any existing
PURPA qualifying facility (“QF”) that currently has a contract with Idaho
Power containing reference to the Dow Jones non-firm Mid-C electricity price
index to amend their respective FESAs consistent with the terms agreed to in
this Settlement Stipulation and similar to the contract amendments submitted
for approval herewith between Idaho Power and the intervening parties,
should they choose to do so.

The Commission approved the settlement stipulation by Order No. 33053 and specifically stated
“We also find it reasonable to allow any additional existing PURPA QFs that currently have a
contract with Idaho Power containing reference to the Dow Jones non-firm Mid-C electricity
price index, should they so choose, to amend their respective agreements consistent with the
terms of this Settlement Stipulation and similar to the contract amendments approved by this
Order.” Order No. 33053 at 4.
Staff believes that the requested Amendments are consistent with the terms and
conditions approved by the Commission in Order No. 33053 and the subsequent amendments
DECISION MEMORANDUM 4
approved by the Commission in Order Nos. 33110 and 33184. Therefore, Staff recommends that
the Commission approve the proposed Amendments. Based on the Commission’s determination
of reasonableness in IPC-E-13-25 to the definition of “Avoided Energy Cost” and change in
index, and because the Commission already deemed it reasonable for “any additional existing
PURPA QFs” to amend their respective agreements with similar terms, Staff further
recommends that the Commission approve the Amendments without further process.
COMMISSION DECISION
Does the Commission wish to approve the three Amendments to the above-
mentioned agreements without further process?

Kristine A. Sasser
Kristine A. Sasser
Deputy Attorney General

M:IPC-E-14-40_ks