20060227Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:FEBRUARY 21, 2006
SUBJECT:CASE NO. IPC-06-3 (Idaho Power)
FIRM ENERGY SALES AGREEMENT - J. R. SIMPLOT COMPANY
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 (PURP A). 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
DECISION MEMORANDUM
No. 29632 (Us. Geothermal et al. 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
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 has reviewed
the historical generation data for the Simplot facility. As reflected in Agreement ~ 7., 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.
CO MMISSI 0 N D ECISI
Commission Staff recommends that the Application in Case No. IPC-06-3 for
approval of the Firm Energy Sales Agreement between Idaho Power and J.R. Simplot Company
be processed pursuant to Modified Procedure, i., by written submission rather than by hearing.
Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204. Does the Commission
agree that Modified Procedure is appropriate?
Scott Woodbury
bls/M:IPC-O6-03 sw
DECISION MEMORANDUM