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
PO WER CO MP ANY AND SALMON FALLS 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 Comment/Protest 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 Salmon Falls
Wind Park LLC (Salmon Falls) dated October 14, 2005. Under the Agreement, Salmon Falls
will sell and Idaho Power will purchase electric energy generated by Salmon Falls, a project
located near Hagerman, Idaho , south of the Bell Rapids area, in an area more particularly
described as Sections 25 and 36, Township 8 S , Range 12 E, Boise Meridian, Twin Falls County,
STAFF COMMENTS NOVEMBER 28, 2005
Idaho; and Sections 30 and 31 , Township 8 S , Range 13 E, Boise Meridian, Twin Falls County,
Idaho. The project will consist of fourteen 1.5 MW GE wind turbines. The nameplate rating of
the project is 21.0 MW. Under normal and/or average conditions, the project 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 22.40 MW
Maximum Capacity Amount, but will not purchase or pay for it. Agreement ~ 7.3.2; Appendix
The Salmon Falls 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.
Salmon Falls has selected November 2006 as the scheduled first energy date and May
2007 as the scheduled operation date. As reflected in Agreement Section 24, 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 Salmon Falls for purchases
of energy will be allowed as prudently incurred expenses for ratemaking purposes.
STAFF ANALYSIS
The Salmon Falls 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 proj ects 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
STAFF COMMENTS NOVEMBER 28, 2005
others. Furthermore, Staff does not believe any of the four could be considered additions to any
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 oflarger projects 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
Salmon Falls 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
STAFF COMMENTS NOVEMBER 28, 2005
weighing all of the Commission-identified criteria, Idaho Power believes that the Salmon Falls
project is sufficiently far 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 Salmon Falls and finds that
it comports with the terms and conditions of Commission Order No. 29632 (Us. Geothermal
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 of the Agreement with an effective date of October 14, 2005.
Respectfully submitted this 2rday of November 2005.
Scott D. Woodbury
Deputy Attorney General
Technical Staff: Rick Sterling
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STAFF COMMENTS NOVEMBER 28 , 2005
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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
SECRETARY
CERTIFICATE OF SERVICE