20060324Comments.pdf

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SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 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 APPROVAL )
OF A FIRM ENERGY SALES AGREEMENT
FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY BETWEEN IDAHO
POWER COMPANY AND J. R. SIMPLOT COMPANY
CASE NO. IPC-O6-
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 of Comment/Protest Deadline issued on
March 3, 2006, submits the following comments,
BACKGROUND
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 loR. 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,
STAFF COMMENTS MARCH 24, 2006
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 of less than 10 aMW.
ANALYSIS
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 will eliminate the automatic annual renewals that occurred under
the prior Agreement, thereby establishing greater certainty with regard to the length of Simplot'
generation commitment. Staffhas no objection to a seven-year contract term.
The second primary difference between the submitted Agreement and the prior Agreement
lies in the definition of the 10 MW threshold for eligibility for published avoided cost rateso Under
the prior Agreement, Simplot was limited to generating no more than 10 000 kWh per hour. Under
the submitted Agreement, Simplot is limited to generating no more than 10 average MW per month.
This revised generation limit is consistent with the definition of the 10 MW threshold as established
in the Us. Geothermal case (Order No. 29632). The revised generation limit is considerably less
restrictive than the limit under the prior Agreement.
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 per
month for a contract year beginning February 8, 2006. Because the prior Agreement was renewed
STAFF COMMENTS MARCH 24, 2006
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.
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., 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 ~ 70 , 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 Energyo This provision is consistent with provisions that have been included in all
Idaho Power PURP A contracts signed after Order No. 29632 in the Us. Geothermal caseo
The estimated annual generation amount under the submitted Agreement has been revised
upwards from the prior Agreement by approximately 10 percent to more accurately reflect the
actual historical generation. Despite the revised generation estimates, however, the Project is still
estimated to generate considerably less than 10 aMW per month.
RECOMMENDATION
Staff recommends approval of the Agreement with an effective date of February 8, 20060
Respectfully submitted this day of March 2006.
cA 5iiP,
Scott Woodbury
Deputy Attorney General
Technical Staff: Rick Sterling
i: umisc :commen tslipceO6, 3 sWl1Jsdes
STAFF COMMENTS MARCH 24, 2006
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 24TH DAY OF MARCH 2006
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NOo IPC-06-, BY MAILING A COpy THEREOF POSTAGE PREPAID , TO
THE FOLLOWING:
MONICA MOEN
BARTON L KLINE
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
RANDY ALLPHIN
CONTRACT ADMINISTRATOR
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
SECRETAR
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CERTIFICATE OF SERVICE