20060922Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:SEPTEMBER 20, 2006
SUBJECT:CASE NO. IPC-06-21 (Idaho Power)
CASSIA WIND FARM LLC ET AL. V. IDAHO POWER
On September 13 2006, Cassia Gulch Wind Park, LLC and Cassia Wind Farm, LLC
(collectively Cassia or the Projects) filed a complaint against Idaho Power Company (Idaho
Power; Company) with the Idaho Public Utilities Commission (Commission) requesting a
Commission declaration and determination that, as a matter of law and policy, the cost
responsibility for transmission system upgrades to meet N-1 contingency planning conditions
should not be assigned to PURP A qualifying facilities (QFs) connecting to the system, but rather
should be rolled into the utility s plant-in-service rate base and recovered from rates and charges
for utility service of native load and other transmission customers.
Cassia Gulch Wind Park, LLC and Cassia Wind Farm, LLC are QFs within the
meaning of the Public Utility Regulatory Policies Act of 1978 (PURP A). Each of the Projects
have signed Commission approved Firm Energy Sales Agreements with Idaho Power. Reference
Case No. IPC-06-, Order No. 30086; Case No. IPC-06-, Order No. 30086. The
Projects will sell their entire output to Idaho Power.
As reflected in the Cassia filing, this complaint involves a dispute concerning the
terms and conditions of interconnection by QFs to Idaho Power s high voltage transmission
system. While the Federal Energy Regulatory Commission (FERC) has jurisdiction with respect
to interconnection for non-QF generators, state commissions, including the Idaho Commission
have jurisdiction with respect to interconnection terms for PURP A qualifying facilities when the
facilities sell their entire output to regulated utility. Citing FERC Docket No. RM02- 12-000
DECISION MEMORANDUM
Order No. 2006 Standardization of Small Generator Interconnection Agreements and Procedures
May 12, 2005 , 'II 517 ("States continue to exercise authority over QF interconnections when the
owner of the QF sells the output of the QF only to the interconnected utility or to on-site
customers
BACKGROUND
As reflected in the complaint, 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. Under normal operating conditions (") the existing
Idaho Power transmission has capacity sufficient to absorb the potential new generation in the
Twin Falls area. It, however, is common utility practice to model or evaluate the operation of
backbone transmission assuming that one line of a system is out of service ("N -1 contingency
Idaho Power believes that under N-1 contingency conditions the addition of 200 MW of
generation at the Twin Falls 138 kV system could create thermal overloads within its integrated
system. To prevent the possible occurrence of thermal overloads under N-1 contingency
conditions Idaho Power proposes to construct a series of transmission system upgrades in four
phases. The estimated total cost of the transmission system upgrade is approximately $60
million. With the exception of a relatively small portion of the system upgrade costs to be borne
by Idaho Power, the Company claims and asserts that the $60 million cost of its transmission
system upgrades should be borne, in the first instance, by the QFs proposing to connect to the
Idaho Power transmission system. The magnitude of these additional transmission system
upgrade costs is such that, if assigned to Cassia, the economic viability of the Projects would be
seriously compromised.
Cassia requests that the Commission process its request for an Order regarding QF
responsibility for transmission upgrade costs pursuant to Modified Procedure, i., by written
submission rather than by hearing. Reference Commission Rules of Procedure, IDAP A
31.01.01.201-204. Specifically Cassia recommends a 30-day comment period for the utility to
file a responsive pleading (including a complete statement of its argument and legal authorities)
followed by a 14-day comment period for reply brief or memorandum. Thereafter, the matter
could be set for oral argument, after which the matter would be fully submitted to the
Commission for decision. Cassia requests that the Commission specify that any service dates are
DECISION MEMORANDUM
in-hand" dates, with servIce to be accomplished by personal delivery or electronic mail.
Cassia s filing in this case is accompanied by supporting memorandum and affidavit.
CO MMISSI 0 N D ECISI 0 N
The Commission is apprised that Idaho Power and Cassia agree that it is procedurally
appropriate to initially determine the policy issue as to whether transmission system upgrade
costs required to meet N-1 contingency planning conditions can be allocated to QFs connecting
to the system. Not at issue are the engineering and planning assumptions of Idaho Power and the
Company s underlying claim that system upgrades are in fact necessary. Staff contends that the
policy issue raised by Cassia is one of generic consequence. Staff has provided electronic copies
of Cassia s complaint to both PacifiCorp and Avista and recommends that the utilities be
provided the opportunity to address the generic policy issue raised by Cassia. Staff recommends
that a schedule for filing initial and reply comments, memorandum and legal authorities be
established and that tentative date for oral argument be scheduled. Does the Commission agree
with the recommended procedure?
Scott Woodbury
blsfM:IPC-O6-21 sw
DECISION MEMORANDUM