20050812Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEG AL
FROM:SCOTT WOODBURY
DATE:AUGUST 9, 2005
SUBJECT:CASE NO. IPC-05-25 (Idaho Power)
FIRM ENERGY SALES AGREEMENT - ARROW ROCK WIND, INC.
On July 28 , 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 Arrow Rock Wind, Inc.
(Arrow Rock) dated July 28, 2005. Under the Agreement, Arrow Rock will sell and Idaho
Power will purchase electric energy generated by the Arrow Rock Wind Generating Project
located near Billings, Montana, in an area more particularly described as located approximately
100 miles northwest of Billings, Montana in Wheatland County on the west side of Highway 191
in the NW 1/4 of Section 36, Township 10 N, Range 15 E. The nameplate rating of the wind
facility is 19.5 MW. Under normal and/or average conditions , the project will not exceed 10
aMW on a monthly basis.
As represented, Arrow Rock will be a qualified small power production facility (QF)
under the applicable provisions of the Public Utility Regulatory Policies Act of 1978 (PURP A).
Idaho Power contends that the Agreement comports with the terms and conditions of
Commission Order No. 29632 (Us. Geothermal et al v. Idaho Power) and avoided cost Order
No. 29646. The Agreement is for a 20-year term and contains the published non-Ievelized
avoided cost rates set forth in Order No. 29646. Arrow Rock has selected December 1 , 2005 as
the scheduled Operation Date for this facility.
Arrow Rock has made arrangements with NorthWestern Energy to deliver the net
energy from its Montana facility to the Idaho Power electrical system. The transmission
DECISION MEMORANDUM
arrangement with NorthWestern Energy means that the Company will receive firm energy from
the facility rather than the intermittent energy generally associated with a wind-generating
project. Energy deliveries from the Arrow Rock project are for nine months out of the year and
exclude deliveries during the spring months of March, April and May when the value of energy
on the Company s system is the lowest.
Idaho Power acknowledges the Company s Petition in Case No. IPC-05-22 and
represents that Arrow Rock was in the final stages of negotiations with Idaho Power immediately
prior to the Petition filing and that prior to that date Arrow Rock had submitted an executed
Agreement to the Company. It is Idaho Power s contention that Arrow Rock is appropriate for
exempting from the temporary suspension requested by the Company in Case No. IPC-05-22.
Section 22 of the Agreement provides that the Agreement will not become effective
until the Commission has approved all the Agreement's terms and conditions and declared that
all payments that Idaho Power makes to Arrow Rock for purchases of energy will be allowed as
prudently incurred expenses for ratemaking purposes.
COMMISSION DECISION
Idaho Power has presented a Firm Energy Sales Agreement with Arrow Rock Wind
Inc. for Commission consideration and approval. Staff has submitted a Production Request to
the Company and is awaiting a response. Staff recommends that the Application be processed
pursuant to Modified Procedure, i.e., by written submission rather than by hearing. Reference
Commission Rules of Procedure, IDAPA 31.01.01.201-204. Does the Commission agree with
Staff s recommended procedure?
Scott D. Woodbury
bls/M:IPCEO525 sw
DECISION MEMORANDUM