20070110Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 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 THE AGREEMENT FOR SALE AND
PURCHASE OF SURPLUS ENERGY BETWEEN)
IDAHO POWER COMPANY AND THE
AMALGAMATED SUGAR COMPANY LLC TWIN FALLS FACILITY.
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
December 19, 2006, submits the following comments.
BACKGROUND
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 (T ASCO) under which Idaho Power agrees to purchase up
to 3 MW of surplus electric energy from T ASCO' s refined sugar production facility in Twin
Falls (Twin Falls Plant) at prices that are less than market-based non-firm energy prices. The
STAFF COMMENTS JANUARY 10 2007
term of the Agreement will run for one year following the initial service date. Should the
Commission approve this Agreement, Idaho Power intends to consider the Effective Date of the
Agreement to be November 20 2006.
This Agreement replaces an August 11 , 2001 agreement that was previously approved by
the Commission in Order No. 28910. The prior agreement was for a five-year term, which
expired in August 2006. This new Agreement is identical to the prior agreement with the
exception of changes to the term from five-years to annual renewals. The Agreement may be
terminated by either party upon 60 days notice. In addition, minor changes were required in the
new Agreement to reflect the continuity with the previously expired agreement.
ANALYSIS
Electric energy to be sold under the Agreement is non-firm energy and will only be
available ifTASCO does not consume the electric energy in the Twin Falls Plant. The surplus
energy to be purchased from TASCO is priced at 85% of the monthly weighted average non-firm
Dow Jones Mid-Columbia Index price. Because the price to be paid under the Agreement is a
percentage of market price rather than a fixed price, the amount paid by Idaho Power will
increase or decrease as market prices change. When Idaho Power 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 full market price and credit the
revenue to its power sales account.
Staff believes that the prices agreed to in this Agreement are attractive to Idaho Power
and its ratepayers. These prices are the same as would be paid by Idaho Power to other non-firm
generation under Schedule 86. Customers will benefit from the Agreement by Idaho Power
offsetting higher purchase power costs or reselling power it does not need.
Idaho Power requests that all payments for surplus energy under the Agreement be
allowed as prudently incurred expenses for ratemaking purposes. Staff believes that the
payments should be treated as system power supply costs similar to other PURP A power supply
costs.
Negotiation and execution of the Agreement by TASCO pre-dated Order No. 30179
issued by the Commission in Case No.IPC-06-, the Company s Application for authority to
institute a Schedule 72 Uniform Interconnection Agreement. The submitted Agreement
therefore, does not include the modifications approved in that Order. One of those modifications
STAFF COMMENTS JANUARY 10 2007
is the provision for an interconnection agreement that is separate from the power sales
agreement. Other modifications related to the adoption of IEEE 1547 standards. Because the
Twin Falls Plant is an existing facility that is already interconnected and that has already been
selling surplus energy to Idaho Power, in Staffs opinion, none of the recent modifications to
Schedule 72 are particularly germane or critical anyway. In this Agreement, interconnection
requirements are included as part of the power sales Agreement.
RECOMMENDATION
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 also recommends that all payments for purchases of energy under the Agreement
for Sale and Purchase of Surplus Energy between Idaho Power Company and The Amalgamated
Sugar Company, LLC - Twin Falls Facility be allowed as prudently incurred expenses for
ratemaking purposes.
Respectfully submitted this
I tJ 7J,
day ofJanuary 2007.
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Scott Woodbury
Deputy Attorney General
Technical Staff: Rick Sterling
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STAFF COMMENTS JANUARY 10 2007
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 10TH DAY OF JANUARY 2007
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-06-, BY MAILING A COpy THEREOF POSTAGE PREPAID, TO
THE FOLLOWING:
BARTON L KLINE
MONICA B MOEN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
RANDY C ALLPHIN
CONTRACT ADMINISTRATOR
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
Jo~~
SECRET
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CERTIFICATE OF SERVICE