20070614Joint Motion to Approve Stipulation.pdf

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IDAHO
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An IDACORP Company
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Barton L. Kline
Senior Attorney
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June 13, 2007
Jean D. Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise, Idaho 83720-0074
Re:Case No. IPC-06-
Cassia Gulch Wind Park LLC and Cassia Wind Farm LLC v. Idaho
Power Company
Dear Ms. Jewell:
Please find enclosed an original and seven (7) copies of a Joint Motion to Approve
Stipulation and to Dismiss Complaint with attached Settlement Stipulation in the above--
referenced matter.
I would appreciate it if you would return a stamped copy of this transmittal letter
in the enclosed self-addressed , stamped envelope.
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Enclosures
O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
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Barton L. Kline (ISB No. 1526)
Lisa D. Nordstrom (ISB No. 5733)
ID AHO POWER COMPANY
1221 West Idaho Street
O. Box 70
Boise, ID 83707
Tel: [phone]
Fax: [phone]
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Attorneys for Idaho Power Company
Dean J. Miller (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Bannock Street
O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
joe (gJ mcdevitt -miller.com
Attorneys Cassia Wind Gulch Park LLC and
Cassia Wind LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASSIA GULCH WIND PARK LLC AND
CASSIA WIND FARM LLC Case No. IPC-O6-
Complainants JOINT MOTION TO APPROVE
STIPULATION AND TO DISMISS
COMPLAINT
IDAHO POWER COMPANY
Respondent
COMES NOW Idaho Power Company ("Idaho Power ) and Cassia Gulch Wind Park
LLC and Cassia Wind Farm LLC ("Cassia ) pursuant to RP 56 and 272 and move the
Commission for an Order approving the Settlement Stipulation dated June 13 , 2007
Stipulation ) and filed herewith and in support thereof respectfully show as follows , to wit:
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
Introduction and Background
As part of its integrated backbone electric transmission system, Idaho Power owns
and operates a 138 kV transmission system in the Twin Falls, Idaho, area. Idaho Power has
received requests for the integration of up to 200 MW of new generation to be connected to the
138 kV system. Most of the requests are from wind generating projects that are Qualifying
Facilities ("QFs ) under the Public Utility Regulatory Policies Act ("PURP A"). The Cassia
Projects are among those wind generation QFs requesting interconnection.The projects
requesting interconnection are placed in a "queue" which is man(j.ged by Idaho Power in
accordance with rules established by the Federal Energy Regulatory Commission (FERC).
Exhibit A to the Stipulation shows the Requesting Projects which have signed Facility Study
Agreements, paid the required deposits and remain in the queue in the order they made their
InterconnectIOn requests.
In June of 2006, Idaho Power, based on engineering studies, was of the opinion
that in order to interconnect with all of the projects in the queue, it would be necessary to
construct Network Upgrades to the transmission system with a total estimated cost of
approximately $60 million.
Cassia s Complaint in this case was filed on September 16 , 2006. In general, the
Complaint sought a determination of whom, as between a Qualifying Facility developer and the
utility, should be responsible for initial funding of Network Upgrades to the utility s transmission
system.On September 27, 2006, the Commission issued Order No. 30135 establishing a
comment period.On October 5 , 2006, the Commission issued Order No. 30147 granting
intervention to Exergy Inc. Comments and Reply Comments were filed by Cassia, Idaho Power
1 In this Motion, unless otherwise noted, capitalized terms have the same defined meanings that they have in the
Stipulation (Attachment 1).
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
Exergy, Avista and Rocky Mountain d/b/a PacifiCorp. Staff filed Reply Comments. Oral
argument was held, pursuant to notice, on November 28 2006. Thereafter, the Commission took
the matter under advisement.
In the intervening time, Idaho Power and Cassia have negotiated with each other
In good faith to resolve the issue of cost responsibility for Network Upgrades.These
negotiations have been protracted, taking into account the complexity of the issues involved. The
negotiations consisted of numerous conferences, further analysis and communication of technical
matters and exchanges of Stipulation drafts.
The resulting Stipulation, Attachment 1 , has several features which are explained
in more detail as follows:
Re-Dispatch and Reduced Network Upgrade Costs
A key component of the Stipulation is the concept of "Redispatch." In the electric
utility industry, the term "dispatch" or "dispatchable refers to the ability of the utility s load
control centers to increase or decrease on a real time basis the out-put of generating facilities to
meet system demand or to respond to system emergencies. Historically, projects with Qualifying
Facility status under PURP A have not been dispatchable.
Idaho Power s estimated cost of approximately $60 million to complete necessary
transmission Network Upgrades was based on the assumption that the Requesting Projects in the
Exhibit A queue would not be dispatchable.
Pursuant to the Stipulation ( Stipulation paragraph 9) Cassia has agreed to install
at its expense, equipment and communication facilities necessary to reduce its energy output to a
predetermined set-point within ten (10) minutes of when Idaho Power requires a reduction to the
set-point. Of course, Idaho Power cannot utilize these same facilities to increase Cassia
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
generation so the Cassia Projects are not fully "dispatchable" in the normal utility sense.
However, for convenience, in the Stipulation, Cassia s agreement to reduce generation is referred
to as "Cassia Redispatch." Idaho Power will call for Cassia Redispatch only when necessary to
respond to system emergencies or when other transmission lines specified in Exhibit C to the
Stipulation are out of service (Stipulation paragraph 11). Redispatch would be implemented pro-
rata with other Requesting Projects in the queue who have agreed to similar Redispatch
protocols.
Based on Cassia s commitment to Cassia Redispatch , and assuming the other
Requesting Projects in the queue made similar commitments, Idaho Power performed additional
analysis to determine Network Upgrades that would be necessary to preserve system integrity.
This is referred to in the Stipulation as the "Redispatch Study" and costs for each Requesting
Project are shown on Exhibit B, Table B-6 to the Stipulation. As can be seen , the original
estimate of $60 million decreases to approximately $11 million under the Redispatch Study.
10.Idaho Power and Cassia believe this component of the Stipulation is in the public
interest for two reasons. First, the Redispatch approach allows Idaho Power to significantly
reduce the required investment to preserve system integrity and represents a least-cost, but
prudent, solution to the identified problem. Second, the "Cassia Redispatch" commitment
undertaken by Cassia allows the Cassia Projects to be available to Idaho Power as a resource
with some ability to respond to system emergencies.
Responsibility for Network Upgrade Costs
11.Paragraph 10 of the Stipulation contains the methodology for determining the cost
responsibility of Cassia and other Requesting Projects. It provides in part:
Cassia Cost Risk for Network Upgrades: Exhibit B to this
Stipulation sets out the Network Upgrades and their budgetary
JOINT MOTION TO APPROVE STIPULA TION AND TO DISMISS COMPLAINT-
estimated costs based on the (original) Study and the Redispatch
Study to interconnect the Requesting Projects with and without
being subject to Redispatch. The Network Upgrade costs will be
allocated to each Requesting Project, including the Cassia Projects
based on: a) their election of whether to be subject to Redispatch
b) their order in the Idaho Power Queue, and c) based on the
megawatt interconnection capacity of each Requesting Project
their prorata share of the cost for the Network Upgrade required to
interconnect one or more Requesting Project and the
interconnection capacity that the particular Network Upgrade adds.
12.Idaho Power and Cassia believe the above-described allocation method is in the
public interest because it fairly allocates costs actually incurred on a pro-rata basis taking into
account whether Requesting Projects elect to be subject to Redispatch, the Requesting Project's
order in the queue and megawatt interconnection capacity.Further, Idaho Power will be
responsible for on-going operation and maintenance costs of Network Upgrades.
Sharing of Network Upgrade Costs
13.Pursuant to paragraph 13 of the Stipulation, Idaho Power and the Requesting
Projects will share the costs of the five planned phases of Network Upgrade as follows:
Idaho Power will assume 100% cost responsibility for Phase I and include this
cost in its rate base. Phase I upgrades would likely have been required for native
load in the near future.
Remaining four phases:
25% of the costs will be provided by the project as a non-refundable
contribution in aid of construction ("CIAC"
25% of the costs will be funded by Idaho Power and included in Idaho
Power s rate base;
50% of the costs will be funded by projects as an advance in aid of
construction ("AIAC") subject to refund. These costs will be rate based
using standard regulatory accounting principles.
14.Idaho Power and Cassia believe this sharing formula is in the public interest.
Electric power transmission systems by their nature are joint-use facilities and, as illustrated by
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
the Comments and pleadings in this case, there are many economic theories relating to cost
allocation of joint-use facilities.While the proposed sharing formula is not based on any
rigorous cost study, it reflects the considered judgment of the parties that it is a reasonable
compromise of the competing points of view presented in this case.
In concluding that the proposed sharing formula is in the public interest, Idaho Power is
mindful of its position in this proceeding that - "but for" - the construction of the Requesting
Projects in the queue, the transmission upgrades originally identified by Idaho Power would not
be needed to provide adequate service to Idaho Power native load customers. As a result
amounts paid by customers for Network Upgrades could result in customers paying more than
avoided costs for generation from Cassia and other QFs because their generation requires
Network Upgrades. While this situation remains substantially unchanged, Idaho Power believes
that there are a number of cost savings that will mitigate, if not totally eliminate, the adverse
effects on customers.
First, Idaho Power is of the opinion that the transmission upgrades identified in Table B-
in Exhibit B to the Stipulation will provide the Company with a more robust transmission system
serving the Magic Valley and the Wood River Valley. For example, Idaho Power foresees
interconnecting the 230 kV transmission system to the 138 kV system at the King Substation at
some point in the future to serve customer load in the western portion of the Magic Valley.
It is impossible to quantify the precise amount of system benefit to native load customers
that is provided by the Network Upgrades identified in Table B-1. Nevertheless, Idaho Power
expects some future customer benefit to flow from the strengthened transmission system.
Second, power generation from QF projects, such as the Cassia Projects serves , to some
extent, to displace or defer the need for other generation projects in the Company s Integrated
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
Resource Plan ("IRP"). For example, Idaho Power s 2006 IRP identifies 150 MW s of wind
generation to be acquired and brought on-line in 2012. Of the approximately 300 MWs of
generation in the Twin Falls cluster shown in Table A-I in Exhibit A to the Stipulation
approximately 230 MWs come from wind resources. Of that 230 MWs of wind resource
approximately 20 MWs are not currently considered in the Company s 2006 IRP. Based on
contract discussions with other wind QF resource developers , outside the Twin Falls cluster, the
Company has reason to believe that if the Cassia settlement is approved and the Company is
permitted to utilize the terms and conditions of the settlement as a template for other QF
resources requiring Network Upgrades (see paragraph 19 below), another 60-80 MWs of wind
QF resources outside the Twin Falls cluster will proceed with development.
If approval of this Stipulation allows these additional QF wind resources to develop, the
total additional new QF wind resource may be sufficient to defer or replace all or a portion of the
150 MWs of wind resource identified in the 2006 IRP for acquisition in 2012. If this occurs, in
effect, the QF resources facilitated by acceptance of the Stipulation will utilize an amount of
Network Upgrade capacity that would have been required for the 150 MWs of such IRP wind
generation projects scheduled for 2012. The cost for Network Upgrades for the 150 MWs of
2012 IRP generation projects would have been recovered from native load customers, either
embedded in the energy rate in a power purchase agreement or as a Company transmission
investment included in rate base.
Third, under the settlement arrangement set out in the Stipulation , Idaho Power believes
it would be able to successfully defend a comparability claim brought by a FERC jurisdictional
customer claiming that Idaho Power and the Commission have given unlawful preferential
treatment to QF resources. The 25% non-refundable contribution of the QF Developers and the
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
fact that only 50% of the costs of the Network Upgrades is refundable (but only if the QF
contract stays in good standing), provide evidence that QFs are not being given preferential
treatment.
The final reason Idaho Power believes the Stipulation is fair is that the non-refundable
25% portion funded by the QF project will never be placed in rate-base. This combination and
the fact that 50% of the Network Upgrade will be refundable over time will provide an economic
signal to QFs with the objective of balancing optimal siting of energy resource with
interconnection costs. By requiring QF projects to contribute a portion of costs on a non-
refundable basis, an incentive is created for QF projects to make economically-efficient
decisions regarding the siting of projects.
Refunds and Interest on Refunds
15.Pursuant to paragraphs 14 and 15 of the Stipulation, amounts paid by Cassia to
Idaho Power as Advances in Aid of Construction ("AIAC") will be repaid in monthly
installments commencing when the Projects achieve commercial operation, with all advances to
be refunded within a period not to exceed ten (10) years from the commercial operation date.
Payments in any month will be contingent on the Projects being in good standing (no uncured
defaults in energy sales agreements) and the Projects meeting a mechanical availability standard
in that month.
16.Interest on refunds will be calculated in accordance with the method prescribed by
FERc.
17.Idaho Power and Cassia believe these provIsIOns are In the public interest.
Refunds will not commence until commercial operation is achieved and will not be paid during
such time as the Projects are either in contractual default or not available for the generation of
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
energy, thereby protecting Idaho Power and its ratepayers. The ten (10) year refund period
provides Cassia with a return of its advanced capital within a reasonable period of time. Idaho
Power follows the FERC method of interest computation when it constructs Network Upgrades
for non-QF generators and using it in this circumstance would avoid the necessity of maintaining
duplicate accounting systems for computing and tracking interest accumulation and payments.
Security for Payment
18.The Stipulation in paragraph 17 recites that Cassia will provide liquid security to
secure its commitment to advance or contribute funds necessary for the construction of Cassia
share of Network Upgrades, recognizing the amount of required security may fluctuate
depending on whether other projects in the Queue are constructed and interconnected.
Idaho Power and Cassia believe this provision is in the public interest. It assures Idaho
Power that Cassia s commitment to fund Network Upgrades is secured while providing Cassia
with a degree of financial flexibility. Most importantly, it protects customers from bearing the
risk of overbuilding Network Upgrades if subsequent projects in the queue do not proceed to
construction.
Recommended Procedure for Processing This Motion and the Stipulation
19.While the Stipulation and this Motion describe the settlement agreement
negotiated between Idaho Power and Cassia, a number of other QFs seeking to interconnect their
projects to Idaho Power s energy delivery system are similarly situated with Cassia and the
Requesting Projects in the Twin Falls queue ("Other Requesting QFs ). These Other Requesting
QFs are of sufficient size and in locations such that their interconnection to the Company
system will require Network Upgrades. To provide uniform treatment to these Other Requesting
QFs, Idaho Power desires to utilize the terms and conditions contained in the Stipulation as a
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
template for negotiation of additional interconnection agreements with the Requesting Projects in
the Twin Falls queue and for the Other Requesting QFs. For example, for the Other Requesting
QFs, Idaho Power proposes to allocate the costs of the Network Upgrades with 25% of the cost
to be contributed by the QF, 25% to be contributed by Idaho Power and the balance to be
refundable to the Other Requesting QF. The refunds would be made utilizing the same refund
criteria and interest rate calculation described in the Stipulation.Other provisions in the
Stipulation, including the requirement for QFs to provide security for future upgrade payments
would also be applied to the interconnection agreements with Other Requesting QF developers in
a manner consistent with the settlement outlined in the Stipulation.
20.Because Idaho Power proposes to utilize the Stipulation as a template for
negotiating interconnection agreements with all of the Requesting Projects and the Other
Requesting QFs, the Company has delivered copies of this Motion and the Stipulation to all
Requesting Projects in the queue and potential Other Requesting QFs that the Company is aware
of. A copy of the pro-forma transmittal letter is enclosed as Attachment 2. Copies of this
Motion and the Stipulation are also posted on the Company s OASIS and its website.
21.Idaho Power requests that the Commission, as part of its Order in this case
indicate its concurrence with Idaho Power s proposal to utilize the terms and conditions set out
in the Stipulation as a template for interconnection agreements between Idaho Power and other
QFs where interconnection requires Network Upgrades. This will allow Idaho Power and QFs to
better quantify interconnection and Network Upgrade costs associated with their Projects and
will facilitate the development of new QF resources.
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT.
Conclusion
22.Idaho Power and Cassia further request that the Commission process this Motion
by modified procedure in accordance with RP 201 et seq.
23.For the reasons cited herein , Idaho Power and Cassia respectfully submit that the
Stipulation is in the public interest and hereby jointly request that, after appropriate review , the
Commission enter its order (1) approving the Stipulation; (2) dismissing Cassia s Complaint; and
(3) authorizing Idaho Power to utilize the terms and conditions in the Stipulation as a template
for interconnection agreements under Schedule 72 for QFs, in addition to Cassia, which involve
the construction of Network Upgrades.
Respectfully submitted this day of June 2007.
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Dean J. Miller
Attorneys for Cassia
Barton L. Kline
Attorney for Idaho Power Company
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
CERTIFICA TE OF SERVICE
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I hereby certify that on the day of June 2007, I caused to be served, via the
methodes) indicated below, true and correct copies of the foregoing document, upon:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, ID 83720-0074
David J. Meyer
Vice President, Chief Counsel for
Regulatory and Governmental Affairs
O. Box 3727
1411 E. Mission Avenue
Spokane, W A 99220-3727
Peter Richardson
Richardson & O'Leary
515 N. 27th Street
Boise, Idaho 83702
[phone]
Brian Dickman
Dean Brockbank
PacifiCorp/dba Rocky Mountain Power
201 S. Main St. Suite 2200
Salt Lake City, UT 84111
Lawrence R. Lieb
Exergy Development Group of Idaho LLC
910 W. Main Street, Ste. 310
Boise, ID 83702
Telephone: [phone]
Fax: [phone]
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( ) Email: iiewell(gJpuc.state.id.
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(),) Email: dmever(gJ avistacorp.com
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dean. brockbank (gJpaci ficorp.com
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(JJjJ Barton L. Kline
JOINT MOTION TO APPROVE STIPULATION AND TO DISMISS COMPLAINT-
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O6-
IDAHO POWER COMPANY
ATTACHMENT NO.
JOINT MOTION
Barton L. Kline (ISB No. 1526)
Lisa D. Nordstrom (ISB No. 5733)
IDAHO POWER COMPANY
1221 West Idaho Street
O. Box 70
Boise, ID 83707
Tel: [phone]
Fax: [phone]
Attorneys for Idaho Power Company
Dean J. Miller (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Bannock Street
O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
joe (gJmcdevitt -miller.com
Attorneys Cassia Wind Gulch Park LLC and
Cassia Wind LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASSIA GULCH WIND PARK LLC AND
CASSIA WIND FARM LLC Case No. IPC-O6-
Complainants SETTLEMENT STIPULATION
ID AHO POWER COMPANY
Respondent
This Settlement Stipulation ("Stipulation ) is entered into by and among the
Complainants, Cassia Gulch Wind Park LLC and Cassia Wind Farm LLC (hereinafter jointly
SETTLEMENT STIPULATION -
and severally referred to as "Cassia ), and the Respondent, Idaho Power Company ("Idaho
Power" or "the Company" and individually as a "Party" or collectively, "the Parties
INTRODUCTION
The Parties agree this Stipulation represents a fair, just and reasonable
compromise of the issues raised in Cassia s Complaint filed herein and this Stipulation is in the
public interest. The Parties believe this Stipulation, and its acceptance by the Idaho Public
Utilities Commission (the "Commission ), represents a reasonable resolution of the issues
identified in this matter. The Parties , therefore, recommend that the Commission, in accordance
with Rule of Procedure (RP) 274, approve this Stipulation and all of its terms and conditions
without material change or condition.
BACKGROUND
Each of the wind energy projects to be developed by Cassia Wind Park LLC and
Cassia Wind Farm LLC (collectively, the "Cassia Projects ) are Qualifying Facilities ("QFs
within the meaning of the Public Utility Regulatory Policies Act of 1978 ("PURPA"). Each of
the Cassia Projects has signed Commission-approved Firm Energy Sales Agreements ("FESAs
with Idaho Power. See Case No. IPC-06-10; Order No. 30086; Case No. IPC-06-11; Order
No. 30086.Each of the Cassia Projects will sell its entire output to Idaho Power and
accordingly, the interconnection of the Cassia Projects is under the jurisdiction of the
Commission and is , other than as provided for in this Stipulation, subject to Schedule 72 of Idaho
Power s IPUC No. 28 Tariff No. 101.
A number of generation projects seeking Network Resource Interconnection
Service, (as that term is defined in FERC Order 2003 and Idaho Power s FERC approved Open
Access Transmission Tariff ("OATT")) including the Cassia Projects, propose to interconnect to
SETTLEMENT STIPULATION -
the portion of Idaho Power s transmission system where the Cassia Projects are located in the
Twin Falls area, and have submitted interconnection requests to Idaho Power during the period
January 1 , 2005 through June 29, 2006 (collectively, the "Requests" or "Requesting Projects
The Requests include (1) interconnection of PURPA QF projects , under jurisdiction of the
Commission (2) interconnection of non-qualifying generation facilities, under FERC
jurisdiction, and (3) interconnection of generation facilities planned by Idaho Power, under
FERC jurisdiction.
In accordance with FERC Order 2003, Idaho Power s OATT, and in the interest
of maintaining comparability and economic efficiency in responding to the Requests, Idaho
Power has established an "Idaho Power Queue" for generation interconnection projects. Exhibit
A shows the Requesting Projects by project number in the order they made their interconnection
request. Idaho Power has conducted a Generation Interconnection System Impact Study dated
June 2006 ("the Study ) to determine transmission system improvements required to
interconnect the Requests ("Network Upgrades ). Idaho Power subsequently expanded the study
to include an option, to be offered to each Requesting Project, to be subject to generation
restriction, under specified line outage conditions, to a maximum level of energy output
(generally "Redispatch" and specifically "Cassia Redispatch" as further defined in paragraph 9).
The expanded Study is hereinafter referred to as the "Redispatch Study." In return for the ability
to Redispatch the Requesting Projects , the Company has determined the associated reduced
investment required to construct the needed Network Upgrades covering all the Requests in the
Idaho Power Queue as of the filing date of this Stipulation. The cost under the Redispatch Study
for each Request is shown on Exhibit A. Network Resource Interconnection Service, or its
equivalent in the case of QF projects, would be provided to meet all the Requests in the Idaho
SETTLEMENT STIPULATION -
Power Queue. However, the cost of the required Network Upgrades allocated to Requesting
Projects electing to be subject to Redispatch would be less on a per megawatt of Request
capacity basis than for those Requesting Projects declining to be subject to Redispatch. The
Company has applied the FERC Large Generator Interconnection Procedures (LGIP) and Small
Generator Interconnection Procedures (SGIP), as appropriate, in responding to the Requests.
The position of a generator in the Idaho Power Queue is determined by the date of the
generator s request for interconnection filed with Idaho Power s delivery business unit. The
Cassia Projects are in the Idaho Power Queue.
Cassia is ready and willing to start immediate construction of the Cassia Projects.
One or more Requesting Projects which precede or follow Cassia in the Idaho Power Queue are
not yet prepared for immediate construction or may not be constructed at all.
Pursuant to the Redispatch Study, Idaho Power has identified five phases of
Network Upgrades that are necessary to provide Network Resource interconnection service for
all the Requests listed in Exhibit A.
This Stipulation sets forth the basic principles of a settlement agreement between
Cassia and Idaho Power. Upon approval of this Stipulation by the Commission, consistent with
the provisions of Schedule 72, Cassia and Idaho Power will negotiate definitive interconnection
agreements (the "Interconnection Agreement ), and amendments or addenda to the FESAs and
other documents or instruments that may be required that conform to this Stipulation.
TERMS OF THE STIPULATION
Cassia Redispatch: The maximum level of power to be generated by the Cassia
Projects at any moment depends on the number of turbines synchronized to the grid and ready to
generate and on the wind speed at that time (the "Maximum Hourly Output ). The Cassia
SETTLEMENT STIPULA TION -
Projects will, at their sole expense, install, operate and maintain the equipment and
communications facilities necessary to enable the Maximum Hourly Output to be reduced to
not-to-exceed set point, to be determined by Idaho Power, within ten (10) minutes of when Idaho
Power calls for the reduction to the set point (" Cassia Redispatch"). Cassia Redispatch cannot
and shall not be asked to increase the output above such Maximum Hourly Output for the then
existing turbine and wind conditions.Cassia Redispatch will normally, subject to those
conditions, seek to maximize the energy output for the Cassia Projects, but Cassia Redispatch
will limit the output of the Cassia Projects whenever the Maximum Hourly Output level would
otherwise exceed the required set point in any scheduling hour.
10.Cassia Cost Risk for Network Upgrades : Exhibit B to this Stipulation sets out
the Network Upgrades and their budgetary estimated costs based on the Study and the
Redispatch Study to interconnect the Requesting Projects with and without being subject to
Redispatch. The Network Upgrade costs will be allocated to each Requesting Project, including
the Cassia Projects, based on: a) their election of whether to be subject to Redispatch, b) their
order in the Idaho Power Queue, and c) based on the megawatt interconnection capacity of each
Requesting Project, their prorata share of the cost for the Network Upgrade required to
interconnect one or more Requesting Project and the interconnection capacity that the particular
Network Upgrade adds. The Cassia Projects will be obligated under this Stipulation and under
the Interconnection Agreement, which shall conform to this Stipulation and shall be
subsequently entered into by Cassia and Idaho Power, to pay non-reimbursed amounts of no
more than 25% of the actual as-constructed cost of the Cassia Project's currently allocated share
of the Network Upgrades listed in Exhibit B as required to interconnect the Cassia Projects
without Cassia Redispatch.
SETTLEMENT STIPULATION -
11.Cassia Redispatch Rights Idaho Power may issue a set point or limit and
initiate Cassia Redispatch to respond to transmission system emergencies , or respond to
circumstances where the transmission line(s) specified in Exhibit C are out of service and for
which Cassia Redispatch was determined necessary and did lower the amount of Network
Upgrade cost obligation for Cassia. In most circumstances, Cassia Redispatch will not be
required where all the lines specified in Exhibit C are in service. Any use of Cassia Redispatch
to establish a set point below the Cassia Project capacity shall be pro-rata with other Requesting
Projects subject to Redispatch. Idaho Power will not purchase or pay for energy which would
have been produced by the Cassia Projects , but for operation of Cassia Redispatch.
12.Responsibility for Network Upgrade Costs: In addition to funding all costs of
directly interconnecting the Cassia Projects to Idaho Power s system, Cassia will pay its pro-rata
share of the Network Upgrade costs actually incurred by Idaho Power to provide finn Network
Resource Interconnection Service to Cassia for the Cassia Projects and Cassia shall not be
obligated to share the on-going operation and maintenance costs of such Network Upgrades.
Cassia recognizes that the final cost of its share of the Network Upgrades will not be
known until construction is completed. Cassia also recognizes that its share of the final Network
Upgrade cost will increase or decrease, subject to the provisions of paragraph 10 , depending on
whether other projects , both earlier and later in the Idaho Power Queue are constructed. The
examples shown in Exhibit B illustrate, on a hypothetical basis, how these costs can change.
13.Sharing of Network Upgrade Costs
Cassia and Idaho Power will share the five phases of Network Upgrade costs
attributable to the Cassia Projects as follows:
SETTLEMENT STIPULATION -
Phase 1: Idaho Power will assume 100% cost responsibility for Phase 1 and
include this cost in its rate base.
Phases 2, 3 4 and 5:
(a)25% of the costs will be provided by Cassia as a non-refundable
contribution in aid of construction ("CIAC"
(b)25% of the costs will be funded by Idaho Power and included in Idaho
Power s rate base.
(c)50% of the costs will be funded by Cassia as an advance in aid of
construction ("AIAC") subject to refund as provided in section 14 below. As refunds are
made, the refunded amounts will be included in rate base using standard regulatory
accounting principles.
As projects in the Idaho Power Queue are interconnected, Idaho Power will
reallocate the CIAC and AIAC portions of the costs of Phases 2 through 4. For example, when
additional projects in the Idaho Power Queue are constructed after the Cassia Projects are
constructed, Idaho Power will collect monies from these subsequent projects and refund monies
to Cassia. It is Idaho Power s intent that each QF Project in the Idaho Power Queue will pay its
respective pro-rata share, based on nameplate generation capacity, of each phase of the Network
Upgrade they utilize. Tables B- 7, 8, 9 and 10 in Exhibit B illustrates how this re-allocation
would occur on a hypothetical basis.
Idaho Power will accelerate refunds of AIAC advances if, pnor to the
construction of the Network Upgrades described in Exhibit A, the Commission authorizes Idaho
Power to construct alternative transmission facilities that would eliminate or reduce the costs of
Network Upgrades.
SETTLEMENT STIPULATION -
14.Refund Provisions:Cassia will be entitled to a cash repayment, in monthly,
equal installments, for the total AIAC amount Cassia advances to Idaho Power for Network
Upgrades, including any tax gross-up or other tax related payments associated with the AIAC for
Network Upgrades. Reimbursement will occur over a term not to exceed ten (10) years after the
date the Cassia Projects achieve commercial operation. Payment of such repayments in any
month will be contingent on the FESA's being in good standing (no uncured defaults) and Cassia
achieving a mechanical availability in that month in excess of 50%, defined as 100% multiplied
by the ratio of (1) the sum of the capacity available to generate in each hour, over all hours of the
month, divided by (2) the installed capacity multiplied by the number of hours in the month.
computing the mechanical availability, the capacity available in each hour will not be reduced
from the installed capacity, if the reason for the reduction is an event of force majeure, (as that
term is defined in the FESA) or a reduction in generation due to Cassia Redispatch required by
Idaho Power as described in paragraphs 5 and 9.
15.Interest on Refunds : Monthly refund payments on AIAC amounts shall include
interest calculated in accordance with the methodology set forth in FERC regulations at
F.R. 35.19a(a)(2)(iii) from the date of any payment for Network Upgrades through the date on
which Cassia receives repayment.
16.No effect on 90-110 Production of energy forgone because of curtailments
ordered by Idaho Power, as provided in paragraph 11 , will not be considered in the calculation of
Surplus Energy as defined by paragraph 1.25 of the FESAs.
17.Security for Payment Until it is finally determined which of the Projects in
Exhibit A will be constructed and interconnected and the final cost of those interconnections is
determined, upon executing an Interconnection Agreement which conforms with this Stipulation
SETTLEMENT STIPULATION -
Cassia will provide and maintain a cash escrow or a letter of credit to Idaho Power in a form and
by an issuer satisfactory to Idaho Power as security for payment, initially in the amount of
Cassia s allocation of Network Upgrade costs as stated in Exhibit B and adjusted from time to
time pursuant to the status of the Requests in Exhibit A. The total security amount at any time
will not exceed the amount that would be owed if the Requests then remaining in the Idaho
Power Queue that are scheduled for construction later than the Cassia Projects are not
constructed.Other QF participants in the Idaho Power Queue will be held to a similar
requirement.
18.Cassia Redispatch Protocols The Interconnection Agreement will provide for
interconnection of the Cassia Projects to the Idaho Power transmission system with Network
Resource Interconnection Service in accordance with this Stipulation.However, Cassia
acknowledges that, until sufficient Network Upgrades are installed to allow the Cassia Projects
to qualify for Network Resource Interconnection Service, the Cassia Projects will be subject to
Cassia Redispatch as described in paragraphs 5 and 9. The Interconnection Agreement will
provide additional detail regarding the protocols for Redispatch of the Cassia Projects energy
generation and the other Requesting Projects in Exhibit A.Cassia Redispatch will not be
initiated for the sole purpose of reducing Idaho Power s costs but Idaho Power will take
economic principles into account when making a determination as to which Network Resources
as between the Cassia Projects and other resources in Exhibit A that may be subject to
Redispatch that reduced Network Upgrade costs and other Network Resources, should be
reduced to comply with transmission congestion reduction orders.Idaho Power will not be
obligated to compensate Cassia for any energy curtailed in accordance with Cassia Redispatch.
SETTLEMENT STIPULATION -
19.Network Upgrade Cost Determination:Network Upgrade costs, allocated to the
Cassia Projects for initial funding, will be determined in a comparable manner and with the same
criteria used by Idaho Power when studying the interconnection of other generation, whose
output can be changed within ten (10) minutes, at other locations on its transmission system.
Upon request by the Cassia Projects, Idaho Power will provide a written explanation of the
methods and assumptions leading to any such allocation of Network Upgrade cost obligation to
the Cassia Projects.
20.ReQuest Uncertainty: Idaho Power will follow good utility practice, the LGIP and
SGIP, and all Commission orders in processing the Idaho Power Queue. Any Requests that fail
to meet those requirements to remain in the Idaho Power Queue, or fail to proceed to construct
their interconnection or fail to initially fund or secure their allocated share of the Network
Upgrade costs, will forfeit their position in the Idaho Power Queue and their rights to the
interconnection and transmission system capacity associated with their Request.
21.Cassia Project Responsibility for Network Upgrade Costs Idaho Power will
initially and throughout the life of the Cassia Projects, consistent with good utility practice
determine the least cost solution , given the current status of the Requests in the Idaho Power
Queue , that will result in the lowest reasonable allocation of initial funding responsibility for
Network Upgrades to the Cassia Projects. Idaho Power will apply the same criteria to all QF
Projects in the Idaho Power Queue.
22.Reasonable Compromise: The Parties agree that this Stipulation represents a
compromise of the positions of the Parties in this case. As provided in RP 272, other than any
testimony filed in support of the approval of this Stipulation , and except to the extent necessary
for a Party to explain before the Commission its own statements and positions with respect to
SETTLEMENT STIPULATION -
this Stipulation, all statements made and positions taken in negotiations relating to this
Stipulation shall be confidential and will not be admissible in evidence in this or any other
proceeding.
23.Best Efforts for Approval The Parties submit this Stipulation to the
Commission and recommend approval in its entirety pursuant to RP 274. The Parties shall
support this Stipulation before the Commission and no Party shall appeal a Commission Order
approving this Stipulation or an issue resolved by this Stipulation.If this Stipulation is
challenged by any person not a party to this Stipulation, the Parties to this Stipulation reserve the
right to file testimony, cross-examine witnesses and put on such case as they deem appropriate to
respond fully to the issues presented, including the right to raise issues that are incorporated in
the settlements embodied in this Stipulation. Notwithstanding this reservation of rights, the
Parties to this Stipulation agree that they will continue to support the Commission s adoption of
the terms of this Stipulation.
24.Right to Withdraw: If the Commission rejects any part or all of this Stipulation
or imposes any additional material conditions on approval of this Stipulation, each Party reserves
the right, upon written notice to the Commission and the other Parties to this proceeding, within
7 days of the date of such action by the Commission , to withdraw from this Stipulation, and each
Party shall be entitled to seek reconsideration of the Commission s Order, file testimony as it
chooses, cross-examine witnesses, and do all other things necessary to put on such case as it
deems appropriate. In such case, the Parties immediately will request the prompt convening of a
prehearing conference for purposes of establishing a procedural schedule for the completion of
the case. The Parties agree to cooperate in development of a schedule that concludes the
SETTLEMENT STIPULATlON-
proceeding on the earliest possible date , taking into account the needs of the Parties in
participating in hearings and preparing briefs.
25.Public Interest: The Parties agree that this Stipulation is in the public interest and
that all of its terms and conditions are fair, just and reasonable.
26.Commission Approval: The obligations of the Parties under this Stipulation are
subject to the Commission s approval of this Stipulation in accordance with its terms and
conditions.
27.Counterparts : This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.
Respectfully submitted this
\').
day of June 2007.
McDEVITT & MILLER LLP
VJP.~
Dean J. Miller
Attorneys for Cassia
IDAHO POWER COMPANY~eJ
Attorneys for Idaho Power Company
SETTLEMENT STIPULATION-
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O6-
IDAHO POWER COMPANY
EXHIBIT A
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Exhibit B
The System Impact Study for the addition of generation to the 138 kV transmission
system west of Twin Falls produced the transmission network upgrades identified in
Table B-1. The allocation of project capacity to the network upgrade phases is shown in
Table B-2 and the allocation of project cost per phase is shown in Table B-
Table B-1: Transmission upgrade projects with no generation redispatchTotal PhaseCapacity Capacity
Phase Available (MW) Added (MW)Project Cost
Upper Salmon Series Reactor 290,000
Lower Malad Series Reactor 290 000
King 230/138 Transformer 135 $10,320,000
Reconductor Midpoint Dram 230 kV line 305 170 $47 525,000
Total $58,425 000
Table B-2: Project capacity allocation by network upgrade phase with no generation
redispatch , allocation assuming all projects comIJlete construction
Project
No.Capacity Phase I Phase 2 Phase 3 Phase 4 Phase 5 Total
114
116 10.10.10.
117 101.39.101.
128 10.10.10.
134 18.16.4 18.
135
136
154
155
157
158
159 13.
170
Totals 310.170 310.
Exhibit B
Table B-3: Project cost allocation by network upgrade phase with no generation
redispatch allocation assuming all projects complete construction
Project
No.Capacity Phase I Phase 2 Phase 3 Phase 4 Phase 5 Total
114 $ 16,415 16,415
116 10.$ 57,453 57,453
117 101.$216 132 $ 8,531 200 $ 8,747 332
128 10.$ 1,444 800 $ 1,444 800
134 18.344 000 $ 4 584 765 $ 4 928,765
135 $ 5,591 176 $ 5 591 176
136 $17 891,765 $17 891 765
154 642 985 642 985
155 $ 5,032 059 $ 5,032 059
157 $ 5,032 059 $ 5,032 059
158 $ 5,032 059 $ 5,032 059
159 $ 3,718,132 $ 3 718 132
170
Totals 310,$290,000 $10 320,000 $47 525 000 $58,135,000
The System Impact Study for the addition of generation with ability to redispatch the
generation,to the 138 kV transmission system west of Twin Falls produced the
transmission network upgrades identified in Table B-4. The allocation of project capacity
to the network upgrade phases is shown in Table B-5 and the allocation of project cost
per phase is shown in Table B-
Project
Table B-4: Transmission upgrade projects with generation redispatchTotal PhaseCapacity Capacity
Phase Available (MW) MW added Cost
Upper Salmon Series Reactor 290 000
Lucky Peak Series Reactor 290,000
Lower Malad Series Reactor 153 290,000
Midpoint 1/3 Series Capacitor Bypass 156 100 000
King 230/138 Transformer 330 174 $10,320,000
Total $11 290,000
Exhibit B
Table B-5: Project capacity allocation by network upgrade phase with all projects
committing to redispatch, allocation assuming all projects complete
construction
Project
No.Capacity Phase I Phase 2 Phase 3 Phase 4 Phase 5 Total
114
116 10.10.10.
117 101.21.101.
128 10.10.10.
134 18.18.18.
135
136
154
155 11.11.11.
157
158
159
170
Totals 304.148.304.
Table B-6: Project cost allocation by network upgrade phase with all projects committing
to redisgatch allocation assuming all projects complete construction
Project
No.Capacity Phase I Phase 2 Phase 3 Phase 4 Phase 5 Total
114
116 10.
117 101.290,000 137 627 427 627
128 10.610 610
134 18,898 898
135 864 100 000 $ 1 051 815 $ 1 159 679
136 $ 4 371 179 $ 4 371 179
154 157 089 157 089
155 11.793,642 793 642
157 $ 1 229,394 $ 1 229,394
158 $ 1 229,394 $ 1 229,394
159 $ 1 229 394 $ 1 229 394
170 68,300 68,300
Totals 304.$ 290 000 $ 290,000 100,000 $10 130 207 $ 10,810,207
Exhibit B
Table B- 7 and B-8 demonstrate the adjustment of cluster project costs for the addition of
generation with ability to redispatch the generation,based on project #117 hypothetically
electing not to construct.
Table B-7: Hypothetical project capacity allocation by network upgrade phase assuming
project #117 is not constructed
Project
No.Capacity Phase I Phase 2 Phase 3 Phase 4 Phase 5 Total
114
116 10.10.10.
117
128 10.10.10.
134 18.18.
135
136
154
155 11.11.11.
157
158
159
170
Totals 202.46.202.
Table B-8: Hypothetical project cost allocation by network upgrade phase assuming
project #117 is not constructed
Project
No.Capacity Phase I Phase 2 Phase 3 Phase 4 Phase 5 Total
114
116 10.
117
128 10.
134 18.$ 44 058 058
135 $ 111 ,538 111 538
136 $ 134,404 $ 196 119 330,522
154 11 ,305 11 ,305
155 11.115 115
157 25,461 $ 100,000 $ 2 124 704 $ 2 250,165
158 $ 3 894 569 $ 3,894 569
159 $ 3,894 569 $ 3,894 569
170 216 365 216,365
Totals 202.$ 290 000 $ 290,000 $ 100,000 $10,130,207 $10 810 207
Exhibit B
Table B-9 and B-lO demonstrate the adjustment of cluster project costs for the addition of
generation with ability to redispatch the generation,based on projects #135 through #170
hypothetically electing not to construct.
Table B-9: Hypothetical project capacity allocation by network upgrade phase assuming
projects #135 through #170 are not constructed
Project
No.Capacity Phase I Phase 2 Phase 3 Phase 4 Phase 5 Total
114
116 10.10.10.
117 101.21.101.
128 10.10.10.
134 18.18.18.
135
136
154
155
157
158
159
170
Totals 151.4 57.151.4
Table B-lO: Hypothetical project cost allocation to network upgrade phase assuming
projects #135 through #170 are not constructed
Project
No.Capacity Phase I Phase 2 Phase 3 Phase 4 Phase 5 Total
114 0 $
116 10.
117 101.$290,000 $141,463 $431,463
128 10.$ 53,049 $ 53 049
134 18.$ 95,488 $ 95,488
135
136
154
155
157
158
159
170
Totals 151.4 $290,000 $290,000 $580 000
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O6-
IDAHO POWER COMPANY
EXHIBIT C
SETTLEMENT STIPULATION
Exhibit C
The following Idaho Power network transmission facilities have been identified to be
affected by the addition of the Requesting Projects in the Twin Falls area. An outage of
any of these facilities may result in over loads on the remaining facilities. Such outages
may require the initiation of the Cassia Redispatch.
Boise Bench - Midpoint 230 kV transmission line
Boise Bench - Rattle Snake 230 kV transmission line
Rattle Snake - Midpoint 230 kV transmission line
Dram - Midpoint 230 kV transmission line
Hubbard - Danskin 230 kV transmission line
King 138/230 kV transformer
Danskin - Mountain Home Junction 138 kV transmission line
Upper Salmon - Mountain Home Junction 138 kV transmission line
Lower Malad - Mountain Home Junction 138 kV transmission line
Upper Salmon - Mountain Home Junction 138 kV line reactor
Lower Malad - Mountain Home Junction 138 kV line reactor
Lucky Peak - Mountain Home Junction 138 kV line reactor
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O6-
IDAHO POWER COMPANY
ATTACHMENT NO.
JOINT MOTION
BARTON L. KLINE
Senior Attorney
June -, 2007
Re:OF Interconnection Agreements Involving Network Upgrades
Dear
Our records indicate that you may have an interest in developing a co-generation or
small power production facility ("Oualifying Facility" or "OF") and selling the energy to Idaho
Power. As part of that development process, it will be necessary for you to obtain an
Interconnection Agreement from Idaho Power s Delivery Business Unit. As a part of the
interconnection review process , the Company s Delivery Business Unit will consider
whether it will be necessary to upgrade Idaho Power s transmission system in order to
accommodate energy deliveries from your project ("Network Upgrades
As you may be aware , there is currently pending before the Idaho Public Utilities
Commission a proceeding in which the Commission has been asked by OF wind
developers, Cassia Wind Farm and Cassia Gulch Wind Park ("Cassia ) to decide whether
they should be responsible for funding Network Upgrades to Idaho Power s transmission
system. (IPUC Case No. IPC-06-21). That case is fully submitted to the Commission.
While awaiting a Commission decision , Idaho Power and Cassia have negotiated
with each other in good faith to resolve the issue of cost responsibility for Network
Upgrades. As a result of those negotiations, Idaho Power and Cassia have entered into a
Stipulation which settles all of the issues of cost responsibility for Network Upgrades in a
manner that is acceptable to Cassia, Cassia s financier John Deere Credit and Idaho
Power. If the Commission accepts the Stipulation , it will resolve Case No. IPC-06-21.
While this Stipulation is between Idaho Power and Cassia, Idaho Power
requesting that the Commission allow the Company to utilize the terms and conditions
contained in the Stipulation as a template for developing interconnection agreements with
other qualifying facilities where Network Upgrades are required for interconnection.
Attachment 2
June -, 2007
Page 2
Enclosed for your review is a copy of the Stipulation and the Joint Motion to Approve
the Stipulation filed by Idaho Power and Cassia. As noted in the Motion , Idaho Power
believes that the terms and conditions in the Settlement Agreement are reasonable and
should be applied to all future interconnections where Network Upgrades are required.
If you have any questions regarding the terms and conditions in the Stipulation that
you would like to direct to Idaho Power please email Dave Angell at
danqell(g?idahopower.com If you desire to provide comments to the Commission
regarding the Joint Motion, the Stipulation and Idaho Power s request that the Commission
authorize the Company to apply the terms and conditions of the Stipulation to future
interconnection agreements between Idaho Power and OFs , you should go to the
Commission s website for instructions on how to provide comments.
The Commission will be issuing a Notice of Request for Public Comment on the
Motion and Stipulation in the near future. You may want to contact the Commission and
have them put you on their mailing list for receipt of notices regarding this proceeding.
Very truly yours
Barton L. Kline
BLK:sh
Attachment 2