20060501final_order_no_30028.pdf

Office of the Secretary
Service Date
May 1 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF A FIRM ENERGY SALES
AGREEMENT FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY
BETWEEN IDAHO POWER COMPANY
AND J. R. SIMPLOT COMPANY
ORDER NO. 30028
CASE NO. IPC-06-
On February 10, 2006, Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of a
Firm Energy Sales Agreement between Idaho Power and J.R. Simplot Company (Simplot) dated
February 8 , 2006 (Agreement).
Simplot currently owns, operates and maintains an 18.75 MW cogeneration facility
(Project) at its industrial site near Pocatello, Idaho. The facility is located in the South 1/2 of
Section 7, Township 6 South, Range 34 East, Boise Meridian, Power County, Idaho. The Project
is a qualified cogeneration facility under the applicable provisions of the Public Utility
Regulatory Policies Act of 1978 (PURPA). As reflected in the Company s Application, the
Simplot Project is currently interconnected to Idaho Power and is selling energy to Idaho Power
as a qualifying facility (QF) in accordance with a Firm Energy Sales Agreement dated June 18
2004 and an approved effective date of March 1 2004. Reference Case No. IPC-04-, Order
No. 29577.
The existing Firm Energy Sales Agreement is a one-year agreement which permits
automatic renewals of one year on March 1 of each year. The Agreement also specifies that
with appropriate notice, either party may terminate the Agreement effective March 1. Simplot
has timely requested to terminate the existing Firm Energy Sales Agreement for this Project and
enter into a new Firm Energy Sales Agreement for its Pocatello facility. Idaho Power contends
that the terms of the new Agreement conform to the terms and conditions of Commission Order
No. 29632 (Us. Geothermal et at. v. Idaho Power) and Commission avoided cost Order No.
29646 (Case No. IPC-04-25) for energy deliveries ofless than 10 aMW.
Under the terms of the submitted Agreement, Simplot has elected to contract with
Idaho Power for a seven-year term. The Agreement contains non-Ievelized published avoided
ORDER NO. 30028
cost rates established by the Commission in Order No. 29646 (December 2004) for energy
deliveries less than 10 aMW for a contract year beginning February 8, 2006.
As reflected in Agreement ~ 1.13 and specified in Item B-3 of the Agreement
Appendix B, the maximum capacity of the cogeneration facility is 12 MW. As defined in
Agreement ~ 1.9 and as described further in ~ 4.1.3 , Simplot will be required to provide data on
the facility that Idaho Power will use to determine whether, under normal and/or average
conditions, the facility will not exceed 10 aMW on a monthly basis. Idaho Power states that it
has reviewed the historical generation data for the Simplot facility. As reflected in Agreement ~
, should the Simplot facility exceed 10 aMW on a monthly basis, Idaho Power will accept any
energy (Inadvertent Energy) that does not exceed the maximum capacity amounts; however
Idaho Power will not purchase or pay for this Inadvertent Energy.
Agreement ~ 25 provides that the Agreement will not become effective until the
Commission has approved without change all the Agreement terms and conditions and declared
that all payments to Simplot that Idaho Power makes for purchases of energy will be allowed as
prudently incurred expenses for ratemaking purposes.
On March 3 , 2006, the Commission issued Notices of Application and Modified
Procedure in Case No. IPC-06-3. The deadline for filing written comments was March 24
2006.Comments were received from Commission Staff and a Caldwell customer of the
Company. The customer sees no reason that Idaho Power can t buy Simplot's power as long as
the utility doesn t come back next week and request a rate increase. Commission Staff
recommends that the Agreement be approved.
Staff notes that there are two primary differences between the submitted Agreement
and the one it replaces. First, under the terms of the submitted Agreement, Simplot has elected
to contract with Idaho Power for a seven-year term. This eliminates the automatic annual
renewals that occurred under the prior Agreement. Staff notes that because the prior Agreement
was renewed automatically at the prevailing avoided cost rates during each renewal year, the
submitted Agreement contains the same rates as it would have contained under the prior
Agreement. The second primary difference revises the definition of the 10 MW threshold for
eligibility for published avoided cost rates. Under the prior Agreement, Simplot was limited to
generating no more than 10 000 kWh per hour. Under the submitted Agreement, Simplot is
ORDER NO. 30028
limited to generating no more than 10 aMW per month. This revised generation limit is
consistent with the definition of the 10 MW threshold established in the US Geothermal case
(Order No. 29632).
Commission Findings
The Commission has reviewed and considered the filings of record in Case No. IPC-
06-, including the underlying Agreement and the comments and recommendations of
Commission Staff. We have also reviewed public comment filed in support of the project.
Idaho Power requests approval of a February 8, 2006 Firm Energy Sales Agreement
between Idaho Power and lR. Simplot Company for Commission consideration and approval.
The nameplate rating of the cogeneration facility is 18.75 MW. The contract is for a seven-year
term and contains non-Ievelized published avoided cost rates for energy deliveries not exceeding
10 aMW on a monthly basis. The Commission finds that the Agreement submitted in this case
contains acceptable contract provisions and rates and comports with the terms and conditions of
Order Nos. 29632 and 29682 in Case Nos. IPC-04-8; 04-10.
The Commission finds it reasonable that the submitted Agreement be approved
without further notice or procedure. IDAP A 31.01.01.204. We further find it reasonable to
allow payments made under the Agreement as prudently occurred 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 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
In consideration of the foregoing, IT IS HEREBY ORDERED and the Commission
does hereby approve the February 8, 2006 Firm Energy Sales Agreement between Idaho Power
Company and J.R. Simplot Company for an effective date of February 8, 2006.
ORDER NO. 30028
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 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
f"ltl.,yday of Apri1 2006.
b?t~PAUL KJELLANDER, PRESIDE
L1~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
bls/O:IPC-06-03 sw
ORDER NO. 30028