20050124Final Order No 29692.pdf

Office of the Secretary
Service Date
January 24 2005
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROV AL
OF AN AGREEMENT FOR SALE AND
PURCHASE OF ELECTRIC ENERGY
BETWEEN IDAHO POWER COMPANY AND
S. GEOTHERMAL, INC.
CASE NO. IPC-O5-
ORDER NO. 29692
On January 5 , 2005, 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 U.S. Geothermal, Inc. dated
December 29, 2004. Under the Agreement, U.S. Geothermal would sell and Idaho Power would
purchase electric energy generated by the Raft River Geothermal Power Plant located near Malta
Idaho. U.S. Geothermal proposes to design, construct, install, own and maintain a geothermal
generating facility producing 10 average megawatts (10 aMW) on a monthly basis. The project will
be a qualifying facility (QF) under the applicable provisions of the Public Utility Regulatory
Policies Act of 1978 (PURP A).
As represented by Idaho Power, the Agreement with U.S. Geothermal comports with the
terms and conditions of Commission Order No. 29632 (Case No. IPC-04-8, U.S. Geothermal vs.
Idaho Power) and avoided cost Order No. 29646. The contract is for a 20-year term and contains
the published non-Ievelized avoided cost rates set forth in Order No. 29646.
The following is a summary of certain provisions within the Agreement that comport
with the Commission s Order No. 29632:
1. Regulatory Out Clause - This clause has been removed from the Agreement.
2. 10 MW Threshold - As specified in Commission Order No. 29632 this
threshold is measured based upon 10 average monthly megawatts.
Initial Capacity Determination - As specified in Commission Order No.
29632, to be eligible for the published avoided cost rates, a facility must
" . . .
demonstrate that under normal or average design conditions the proj ect
will generate at no more than 10 aMW in any given month.
Paragraph 1.7 and paragraph 4.13 of this Agreement define and
specify how this requirement will be met. Idaho Power and U.
Geothermal have agreed that U.S. Geothermal will supply Idaho
ORDER NO. 29692
Power a certificate from a professional engineer certifying that the
facility's design and operating protocols will limit generation at this
facility to no more than 10 aMW in any given month.
Inadvertent Energy - As specified in Commission Order No. 29632, once a
project has qualified for published avoided cost rates "
. . .
we also find it
reasonable to cap the maximum monthly generation that qualifies for
published rates at the total number of hours in a month multiplied by
MW.
Paragraph 1.5 and 7.3 of this Agreement define and specify the
calculation used to measure energy in excess of 1 0 aMW and
provide that Idaho Power will accept but will not pay for any energy
produced in excess of 10 aMW.
3. 90%/110% Performance Band.
Energy Payment - As specified in Commission Order No. 29632 , energy
deliveries outside of this performance band are purchased at a rate equal to
85% of the market price or the contract rate, whichever is less.
Paragraph 1.21 of this Agreement defines energy outside of this
performance band to be "surplus energy" which is (1) all energy
over 110% of the facility s estimated generation amounts (paragraph
6.2) or (2) all of the current month's energy if the facility s monthly
generation is less than 90% of the facility s estimated generation
amounts (paragraph 6.2) or (3) all energy delivered prior to the
operation date of the facility.
Forced Outage - As specified in Commission Order No. 29632, the Forced
Outage minimum outage has been revised to 48 hours and is applicable to
individual generation units at the facility. Paragraph 14.3 and paragraph
6.2.4 of the Agreement specify the process, details and calculations for
factoring forced outages into the computation of purchase obligations.
Revising Generation Estimates - As specified in Commission Order No.
29632, the facility will initially provide Idaho Power monthly generation
estimates for the first year of the Agreement and, beginning in the ninth
month and every three months thereafter, the facility will provide Idaho
Power with an additional three months of forward generation estimates. In
addition, beginning with the end of the third month the facility may revise
previously provided generation estimates beginning with the fourth month
out from that point in time. . .. Paragraph 6.2 of the Agreement specifies
the process and procedures to address revisions to generation estimates.
The Raft River Geothermal facility will interconnect with the Raft River Rural Electric
Cooperative (Coop) electrical system and will wheel its energy to Idaho Power over Coop and/or
ORDER NO. 29692
BP A transmission facilities. Metering and telemeter equipment will be installed at the facility to
accurately measure and communicate the facility s energy deliveries to Idaho Power.
As reflected in Article 24 of the Agreement, the Agreement will not become effective
until the Commission has approved all ~f the Agreement's terms and conditions and declares that
all payments Idaho Power makes to U.S. Geothermal for purchases of energy will be allowed as
prudently incurred expenses for ratemaking purposes. The proposed effective date of the
Agreement is December 29, 2004.
CO MMISSI ON FIND IN
The Commission has reviewed the filings of record in Case No. IPC-05-1. We have
also reviewed our Order No. 29632 in Case No. IPC-04-Us. Geothermal v. Idaho Power.
Submitted in this docket is an Idaho Power Firm Energy Sales Agreement with U.S. Geothermal, a
proposed PURP A QF project near Malta, Idaho. The proposed project and related contract terms
and conditions were the subject of a recent U.S Geothermal complaint action in Case No. IPC-04-
8. That case was fully litigated and resulted in Commission Order No. 29632 resolving disputed
contract provisions.
The Commission finds that the Agreement submitted in this case comports with the
Commission s Order in the U.S. Geothermal complaint case as to the then disputed terms and
conditions, contains otherwise additional standard contract provisions and includes the current non-
levelized published rates approved by the Commission in Order No. 29646.As the contract
provisions of the Agreement are acceptable and the non-Ievelized rates comport with Commission
published avoided cost rates, the Commission finds it reasonable that the submitted Agreement be
approved without further notice or procedure. We further find it reasonable to allow payments
made under the Agreement as prudently incurred expenses for ratemaking purposes.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company, an
electric utility, pursuant to the authority and power granted it under Title 61 of the Idaho Code and
the Public Utility Regulatory Policies Act of 1978 (PURP A).
The Commission has the authority under PURP A and the implementing regulations of
the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric utilities to
enter into fixed term obligations for the purchase of energy from Qualified Facilities, and to
implement FERC rules.
ORDER NO. 29692
ORDER
In consideration of the foregoing, IT IS HEREBY ORDERED and the Commission does
hereby approve the December 29, 2004, Firm Energy Sales Agreement between Idaho Power
Company and U.S. Geothermal, Inc.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code g 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ~Lftf'
day of January 2005.
MARSHA H. SMITH, COMMISSIONER
, COMMISSIONER
ATTEST:
welll v .CommIssIon Secretary
vld/O:IPCEO51 sw
ORDER NO. 29692