20050415Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:KIRA DALE PFISTERER
DATE:APRIL 13 2005
RE:CASE NO. IPC-05-
FIRM ENERGY SALES AGREEMENT-PRISTINE SPRINGS #3
On March 4, 2005, Idaho Power Company filed an Application requesting approval
of a Firnl Energy Sales Agreement (Agreement) between Idaho Power and Pristine Springs, Inc.
dated February 18, 2005. On March 22, 2005 , the Commission issued a Notice of Application
and solicited COlnments regarding the proposed Agreement.See Order No. 29739.
comments were received other than those submitted by Commission Staff.
THE AGREEMENT
Under the Agreement, Pristine Springs will sell and Idaho Power will purchase
electric energy generated by the Pristine Springs hydroelectric generation facility. Facility #3 is
located on Warm Creek, north of Twin Falls, Idaho in an area more particularly described as the
NW
y,.
of Section 19, Township 9 South, Range 17 East, Boise Meridian, Jerome County, Idaho.
The Pristine Springs facility #3 will be a qualified small power production facility (QF) under
the applicable provisions of the Public Utility Regulatory Policies Act of 1978 (PURP A).
The Agreement was developed pursuant to Commission Order Nos. 29632 (V.
Geothermal et at. v. Idaho Power) and 29646 (setting avoided costs effective December 1 , 2004)
and will replace the previously approved Schedule 86, Uniform Agreement for the sale of non-
firm energy. See Order No. 29234. In the proposed Agreement, the parties agree to a ten-year
contract term and to use the non-Ievelized published avoided cost rates as currently established
by the Commission for energy deliveries of no more than 10 average MW. The Pristine Springs
facility #3 consists of a single hydroelectric generation unit. The nameplate rating and maximum
generation capability of the Pristine Springs facility #3 is 200 kW.
DECISION MEMORANDUM
Because the Pristine Springs facility #3 is currently interconnected and selling energy
to Idaho Power under an existing Schedule 86, non-firm agreement, interconnection to the
Company s distribution system is completed. The previously established interconnection costs
set out in the Schedule 86 will be used to value the interconnection costs under the proposed
Agreement. The applicable monthly Schedule 72 charges will apply.
Within the proposed Agreement, various requirements have been placed upon Pristine
Springs in order for Idaho Power to accept energy deliveries from the Pristine Springs facility #3.
Idaho Power proposes to monitor compliance with these initial requirements and, once the
requirements have been met, the existing Schedule 86 agreement will be terminated. As
reflected in Article 24 of the Agreement, the Agreement will not become effective until the
Commission has approved all the Agreement's terms and conditions and declares that all
payments that Idaho Power makes to Pristine Springs for purchases of energy will be allowed as
prudently incurred expenses for ratemaking purposes.
STAFF COMMENTS
Staff reviewed the Agreement and found that it comports with the terms and
conditions of Commission Order Nos. 29632 (Us. Geothermal) and 29646 (2004 avoided costs).
Staff confirmed that the contract is for a ten-year term and contains the published non-levelized
avoided cost rates set forth in Order No. 29646. Staff also noted that this Agreement is intended
to replace an existing Schedule 86 Uniform Agreement. Because the previous Schedule 86
Agreement contains no generation commitment and no termination date, it should remain in
effect until the new Agreement becomes effective. Therefore, Staff recommends approval of the
Pristine Springs #3 Agreement as presented by Idaho Power.
COMMISSION DECISION
Does the Commission wish to accept Staff s recommendation and approve the Pristine
Springs #3 Agreement as presented by Idaho Power?
tJ,
Kim Dal fisterer
DECISION MEMORANDUM