20051128Comments.pdf

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SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 1895
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROV AL )
OF A FIRM ENERGY SALES AGREEMENT
FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY BETWEEN IDAHO
POWER COMPANY AND MILNER DAM
WIND PARK LLc.
CASE NO. IPC-O5-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of
Application, Notice of Modified Procedure and Notice on CommentlProtest Deadline issued on
November 7 2005, submits the following comments.
BACKGROUND
On October 20, 2005, Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of a
20-year Firm Energy Sales Agreement (Agreement) between Idaho Power and Milner Dam
Wind Park LLC (Milner) dated October 14, 2005. Under the Agreement, Milner will sell and
Idaho Power will purchase electric energy generated by Milner, a project located approximately
000 yards west of the Milner Dam in Cassia County, Idaho, in an area more particularly
described as Sections 25, 26 and 35, Township 10 S, Range 20 E, Boise Meridian, Cassia
STAFF COMMENTS NOVEMBER 28, 2005
County, Idaho. The project will consist of twelve 1.5 MW GE wind turbines. The nameplate
rating of the project is 18.0 MW. Under normal and/or average conditions, the project's
generation will not exceed 10 aMW on a monthly basis. If energy in excess of this amount
(Inadvertent Energy) is accidentally generated, Idaho Power will accept Inadvertent Energy that
does not exceed the 19.2 MW Maximum Capacity Amount, but will not purchase or pay for it.
Agreement ~ 7.2; Appendix B-
The Milner project will be a qualified small power production facility (QF) under the
applicable provisions of the Public Utility Regulatory Policies Act of 1978 (PURP A). As
represented by Idaho Power, the Agreement comports with the terms and conditions of
Commission Order No. 29632 (Us. Geothermal et al v. Idaho Power), avoided cost Order No.
29646 and Commission Order Nos. 29839, 29851 and 29872 in Case No. IPC-05-22. The
Agreement is for a 20-year term and contains the non-Ievelized published avoided cost rates set
forth in Order No. 29646.
Milner has selected November 2006 as the scheduled first energy date and May 2007 as
the scheduled operation date. As reflected in Section 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 Milner for purchases of
energy will be allowed as prudently incurred expenses for ratemaking purposes.
STAFF ANALYSIS
The Milner Project is one of four nearly identical projects with contracts now pending
before the Commission. Attachment A shows the location of these four projects. The
Agreement is similar to several other recent agreements for wind projects entered into by Idaho
Power and approved by the Commission (Thousand Springs Wind Park - Order No. 29770;
Pilgrim Stage Wind Park - Order No. 29771; Oregon Trail Wind Park - Order No. 29772; Tuana
Gulch Wind Park - Order No. 29773; Burley Butte Wind Park - Order No. 29813; and the
Golden Valley Wind Park - Order No. 29814). Attachment A also shows the locations of these
projects with existing approved power sales agreements.
The locations of each of the four projects with pending contracts are widely spread as
shown on Attachment A, such that none could reasonably be considered associated with the
others. Furthermore, Staff does not believe any of the four could be considered additions to any
STAFF COMMENTS NOVEMBER 28, 2005
existing facilities or part of a larger "wind farm." Consequently, Staff does not believe that the
issue of disaggregation of a larger proj ect into smaller 10 MW pieces is relevant in this case.
The issue of disaggregation of larger proj ects is one of the issues being considered in ongoing
workshops ordered by the Commission in Case No. IPC-02-22.
In interlocutory Order No. 29839 issued in Case No. IPC-05-22 the Commission
reduced the size cap for QF wind generation facilities entitled to receive the published avoided
cost rates from 10 aMW to 100 kW. In its Order, the Commission further identified several
criteria that it would consider to determine whether a particular QF wind generation facility in
the negotiation queue was sufficiently mature so as to justify "grandfathering" the project to
entitlement to the published rates. These criteria are as follows:
(1) Submittal of a signed power purchase agreement to the utility, or(2) Submittal to the utility of a completed Application for Interconnection
Study and payment of fee.
In addition to a finding of existence of one or both of the preceding threshold
criteria, the QF must also be able to demonstrate other indicia of substantial
progress and project maturity, e.
(1) A wind study demonstrating a viable site for the project
(2) A signed contract for wind turbines(3) Arranged financing for the project, and/or(4) Related progress on the facility permitting and licensing path.
Order No. 29839, p. 10, August 4 2005; final Order No. 29851. In reconsideration Order No,
29872 issued on September 21 , 2005 in the same case, the Commission reaffirmed the
grandfathering criteria and changed the "grandfathering" eligibility deadline from the previously-
ordered July 1 , 2005, to August 4 2005 , the date of interlocutory Order No. 29839.
According to information provided by Idaho Power with its Application, Milner provided
a signed power purchase Agreement on June 17 2005. However, it appears that neither the
Milner, Lava Beds, Notch Butte nor Salmon Falls projects have submitted a completed
Application for Interconnection Study and paid the required fees. Nevertheless, by having a
signed power purchase Agreement, one of the two initial criteria necessary for entitlement to
published rates has been met.
With regard to additional criteria identified by the Commission in Order No. 29839
Milner has filed with the FERC for a QF certificate, completed a wind study demonstrating the
viability of the site, and signed a contract for wind turbines. Considering and weighing all of the
Commission-identified criteria, Idaho Power believes that the Milner project is sufficiently far
STAFF COMMENTS NOVEMBER 28 , 2005
enough along the development path that it should be "grandfathered" to the published rates.
Staff agrees.
Staff has reviewed the Agreement between Idaho Power and Milner and finds that it
comports with the terms and conditions of Commission Order No. 29632 (Us. Geothermal et al
v. Idaho Power), avoided cost Order No. 29646 and Commission Order Nos. 29839, 29851 and
29872 in Case No. IPC-05-22. The Agreement is for a 20-year term and contains the non-
levelized published avoided cost rates set forth in Order No. 29646.
RECOMMENDATION
Staff recommends approval ofthe Agreement with an effective date of October 14 2005.
Respectfully submitted this
0111
day of November 2005.
Scott D. Woodbury
Deputy Attorney General
Technical Staff: Rick Sterling
i :umisc:comments/ipceO5 ,30swrps
STAFF COMMENTS NOVEMBER 28, 2005
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A
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 28TH DAY OF NOVEMBER 2005
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-05-, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
BARTON L KLINE
MONICA MOEN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
RANDY ALLPHIN
CONTRACT ADMINISTRATOR
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
~~~
CERTIFICATE OF SERVICE