20070119final_order_no_30220.pdf

Office of the Secretary
Service Date
January 19, 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF THE AGREEMENT FOR
SALE AND PURCHASE OF SURPLUS
ENERGY BETWEEN IDAHO POWER
COMPANY AND AMALGAMATED
SUGAR COMPANY, LLC - TWIN FALLS
FACILITY
CASE NO. IPC-06-
ORDER NO. 30220
On November 21 , 2006, Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of an
Agreement for Sale and Purchase of Surplus Energy (Agreement) between Idaho Power and
Amalgamated Sugar Company LLC (TASCO) under which Idaho Power agrees to purchase
surplus electric energy up to 3 MW from TASCO's refined sugar production facility in Twin
Falls at prices that are less than market-based non-firm energy prices.
The submitted Agreement dated November 20, 2006 replaces a prior Agreement
dated August 11 , 2001. The prior surplus energy agreement was approved by the Commission in
Order No. 28910 dated December 6, 2001. The prior agreement was for a five-year term that
expired in August 2006. The initial term of the new Agreement is for one contract year. The
Agreement renews automatically from year to year unless terminated pursuant to contractual
notice requirements.
As reflected in the Application, Idaho Power states that negotiation of the Agreement
and execution of the Agreement by TASCO predated Order No. 30179 issued by the
Commission in Case No. IPC-06-, the Company s Application for authority to institute a
uniform Schedule 72 interconnection agreement. Therefore, the Agreement, the Company states
does not include the modifications approved in that Order.
Idaho Power under the Agreement will purchase up to 3 MW of surplus electric
energy generated by the electric generating equipment located at T ASCO Twin Falls plant. The
energy purchased will be surplus energy not otherwise consumed by TASCO at the Twin Falls
plant. Electric energy to be sold under the Agreement is non-firm energy and will be available
only ifTASCO does not consume the electric energy in the Twin Falls plant. The surplus energy
ORDER NO. 30220
to be purchased from T ASCO is priced at 85% of the monthly weighted average non-firm Dow
Jones Mid-Columbia Index Price. Setting the purchase price at a discount from market price
Idaho Power contends, assures that when the Company needs the energy, the price will always
be more attractive than buying from the market. When it does not need the power, Idaho Power
should be able to resell the energy at the higher wholesale market price.
Idaho Power requests that the Agreement be approved without change or condition
and requests a Commission determination that all payments for purchases of energy incurred
under the Agreement be allowed as prudently incurred expenses for ratemaking purposes.
Should the Commission approve the Agreement, Idaho Power intends to consider the effective
date of the Agreement to be November 20 2006.
On December 19, 2006, the Commission issued a Notice of Application and
Modified Procedure in Case No. IPC-06-29. The deadline for filing written comments was
January 10, 2007. The Commission Staff was the only party to file comments. Staff
recommends that the Agreement between Idaho Power and the Amalgamated Sugar Company
for its Twin Falls plant be approved. Staff believes that the Agreement will help Idaho Power
meet expected loads while reducing the Company s reliance on purchases at full market price
thus minimizing power supply costs. Staff believes that the prices agreed to are attractive to
Idaho Power and its ratepayers. Customers will benefit from the Agreement by Idaho Power
offsetting higher purchase power costs or reselling power it does not need.
Commission Findings
The Commission has reviewed and considered the filings of record in Case No. IPC-
06-, including the underlying Agreement and the filed comments and recommendation of
Commission Staff. Idaho Power has presented for Commission consideration and approval an
Agreement for the Sale and Purchase of Surplus Energy with Amalgamated Sugar Company
(TASCa). Based on our review of the record, we continue to find it reasonable to process this
case pursuant to Modified Procedure, i.e., by written submission rather than by hearing.
Reference IDAP A 31.01.01.204.
The Commission finds the proposed November 20, 2006 Surplus Energy Agreement
to be a reasonable means of securing additional electric energy and minimizing the Company
power supply costs. We note that the parties to the Agreement envision use of an "evergreen
clause " whereby the one-year contract, without notice of termination, would annually renew for
ORDER NO. 30220
an additional one year. Agreement ~ 3.2. Given the subject matter of the contract (purchase of
surplus generation) and the purchase terms (Agreement ~ 4.1), we find the evergreen clause to
be acceptable. We find the contract terms and negotiated purchase price to be just and
reasonable and in the public interest. We further find it reasonable to allow payments made
under the Agreement as prudently incurred expenses for ratemaking purposes.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company,
an electric utility, pursuant to the authority and power granted it under Title 61 of the Idaho
Code, the Commission s Rules of Procedure, IDAP A 31.01.01.000 et seq.and the Public Utility
Regulatory Policies Act of 1978 (PURP A).
The Commission has authority under PURP A and the implementing regulations of
the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric
utilities to enter into fixed term obligations for the purchase of energy from qualified facilities
and to implement FERC rules.
ORDER
In consideration of the foregoing, IT IS HEREBY ORDERED and the Commission
does hereby approve the terms of the November 20, 2006 Agreement for Sale and Purchase of
Surplus Energy between Idaho Power Company and the Amalgamated Sugar Company, LLC
(TASCO) - Twin Falls Facility.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30220
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this I q j-"
day of January 2007.
€f~
ARSHA H. SMITH, COMMISSIONER
ATTEST:
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Commission Secretary
bls/O:IPC-O6-29 sw
ORDER NO. 30220