20060626Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:CECELIA A. GASSNER
DATE:JUNE 19,2006
SUBJECT:IN THE MATTER OF THE APPLICATION OF IDAHO POWER
COMP ANY FOR APPROV AL OF A FIRM ENERGY SALES
AGREEMENT WITH CASSIA GULCH WIND PARK, LLC, CASE NO.
IPC-06-
On April 20, 2006, Idaho Power Company ("Idaho Power" or "Company ) filed an
Application requesting approval of a Firm Energy Sales Agreement dated April 7, 2006 with
Cassia Gulch Wind Park, LLC ("Cassia Gulch"
).
Under the Agreement, Cassia Gulch would sell
and Idaho Power would purchase electric energy generated by Cassia Gulch's wind generating
facility near Hagerman, Idaho. The Company asks the Commission to approve the Agreement
and declare that all payments for purchases of energy under the Agreement be allowed as
prudently incurred expenses for ratemaking purposes. On June 2, 2006, the Commission issued
a Notice of Application and Modified Procedure requesting any comments to the matter. See
Order No. 30061. No comments were received other than those filed by Staff.
THE AGREEMENT
According to the Application, Cassia Gulch proposes to design, construct, install
own operate and maintain an 18.9 MW wind generating facility near Hagerman, Idaho (the
Facility ). The Facility will be a qualified small power production facility under the applicable
provisions of the Public Utility Regulatory Policies Act of 1978 ("PURP A"
Under the terms of the Agreement, Cassia Gulch has elected to enter into the
Agreement with Idaho Power for a 20-year term. Cassia Gulch further elected to contract with
the Company using the non-Ievelized published avoided cost rates as currently established by the
Commission for energy deliveries of less than 10 aMW. All applicable interconnection charges
DECISION MEMORANDUM
and monthly operation and maintenance charges under Schedule 72 will be assessed to Cassia
Gulch.
Cassia Gulch has elected August 31 , 2006 as the scheduled first energy date and
December 31 , 2006 as the scheduled operation date for the Facility. Certain requirements have
been placed on Cassia Gulch for Idaho Power to accept energy deliveries from the Facility.
Idaho Power will monitor compliance with these initial requirements, as well as ongoing
requirements throughout the term of the Agreement.
ST AFF COMMENTS
Based on its review, Staff believes that the Agreement between Cassia Gulch and
Idaho Power comports with the terms and conditions of Commission Order No. 29632 (Us.
Geothermal et al v. Idaho Power) and avoided cost Order No. 29646. Section 24 of the
Agreement provides that the Agreement will not become effective until the Commission has
approved all the Agreement's terms and conditions and declared that all payments that Idaho
Power makes to Cassia Gulch for purchases of energy will be allowed as prudently incurred
expenses for ratemaking purposes. The proposed effective date of the Agreement is April 7
2006. Staff recommends approval of the Agreement.
COMMISSION DECISION
Does the Commission desire to approve the Firm Energy Sales Agreement between
Idaho Power and Cassia Gulch?
cece
M:IPC-O6-cg2
DECISION MEMORANDUM