20061218Application.pdf

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Monica B. Moen
Attorney II
An IDACORP Company
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December 15 , 2006
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- "3 (
In the Matter of the Application of Idaho Power Company for an
Accounting Order Authorizing the Inclusion of Power Supply
Expenses Associated With the Purchase of Capacity and Energy
From Telocaset Wind Power Partners , LLC in the Company s Power
Cost Adjustment
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of Idaho Power
Company s Application for 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.
Very truly yours
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Monica B. Moen
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Enclosures
Telephone [phone] Fax [phone] E-mail MMoenf?Pidahopower.com
MONICA MOEN ISB # 5734
BARTON L. KLINE ISB # 1526
Idaho Power Company
O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
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Attorneys for Idaho Power Company
Street Address for Express Mail
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AN
ACCOUNTING ORDER AUTHORIZING THE
INCLUSION OF POWER SUPPLY
EXPENSES ASSOCIATED WITH THE
PURCHASE OF CAPACITY AND ENERGY
FROM TELOCASET WIND POWER
PARTNERS , LLC IN THE COMPANY'
POWER COST ADJUSTMENT.
CASE NO. IPC-06- '3 (
APPLICATION FOR AN
ACCOUNTING ORDER
COMES NOW, IDAHO POWER COMPANY ("Idaho Power" or the
Company ), and, pursuant to Rule of Procedure 52, hereby applies to the Idaho Public
Utilities Commission ("IPUC" or the "Commission ) for an accounting order authorizing
Idaho Power to include the expenses associated with the purchase of capacity and
energy from Telocaset Wind Power Partners, LLC ("Telocaset" or the "Project") in the
Company s Power Cost Adjustment.
This Application is based on the following:
APPLICATION FOR AN ACCOUNTING ORDER , Page
BACKGROUND
Idaho Power identified a need for wind-powered electric generation
in the Company s 2004 Integrated Resource Plan ("I RP"
).
Specifically, the 2004 IRP
indicated that Idaho Power would issue an RFP for 200 MW of wind-powered
generation during the fall of 2004. Furthermore, the 2004 IRP anticipated the need for
an additional 150 MW of wind-powered resources in 2008. The Company issued an
RFP for 200 MW of wind-powered generation on January 13, 2005 ("2005 Wind RFP"
In response to the Company s 2005 Wind RFP, the Company
received a total of seven bids by March 10, 2005, the offer due date. The bids ranged
between 45 and 200 MW and represented nineteen projects. In April 2005, the 2005
Wind RFP Evaluation Team selected offers submitted by four short-listed respondents
for further consideration.
On June 17 , 2005 , the Company filed a Petition with the
Commission (Case No. IPC-05-22) in which Idaho Power requested that the
Commission issue an order temporarily suspending Idaho Power s obligation under 99
201 and 210 of the Public Utility Regulatory Policies Act of 1978 ("PURPA") and various
Commission orders to enter into new contracts to purchase energy generated by
qualifying wind-powered small power production facilities ("QFs" or "Qualifying
Facilities
In its Petition , Idaho Power requested that a temporary suspension
of wind-powered QF resources remain in effect for a period of time sufficient to allow the
Commission to investigate the impacts on Idaho Power s customers arising out of the
addition of substantial amounts of wind-powered generation projects. Among other
APPLICATION FOR AN ACCOUNTING ORDER, Page 2
things, the Company requested that the Commission examine whether the avoided cost
methodology which was used to establish the published rates correctly measures the
power supply costs the Company can actually avoid by adding intermittent wind-
powered QF generating resources.
On August 4 , 2005, the Commission issued Interlocutory Order
29839 in Case No. IPC-05-22. That Order reduced the published avoided cost rate
eligibility cap for non-firm QF wind projects to 100 kW, required individual negotiation for
larger wind QFs and established criteria for determining whether some QFs larger than
100 kW should be "grandfathered" to receive the published avoided cost rate.
While Case No. IPC-05-22 was pending and the various
grandfathering" requests were being evaluated , the Company postponed further
consideration of the short-listed bids received in response to the 2005 Wind RFP until
late September 2005. In September 2005, Idaho Power advised the short-listed bidders
that the Company intended to resume the 2005 Wind RFP process and requested that
those bidders submit a renewed proposal for 100 MW of nameplate capacity. The
amount was reduced from the previous 200 MW level because of the quantity of wind
the Company anticipated receiving from Qualifying Facilities under PURPA.The
Company also directed the short-listed bidders to obtain interconnection costs for each
of the projects.
In June 2006, after the interconnection cost studies for each of the
short-listed projects were completed and provided to the Company, the Company
concluded the 2005 Wind RFP selection process and advised Telocaset Wind Power
Partners , LLC , of Houston , Texas that it was the preferred bidder.The parties
APPLICATION FOR AN ACCOUNTING ORDER, Page 3
commenced negotiations of a Power Purchase Agreement ("PPA"). Those negotiations
concluded in December 2006.
GENERAL DESCRIPTION OF THE TELOCASET PPA
The PPA with Telocaset guarantees an output of 196,000 MWh and
a planned capacity of 100.65 MW. Total installed nameplate capacity will not exceed
104 MW. The term of the PPA is 20 years beginning with the operation date. Idaho
Power has an option to extend the term of the agreement an additional ten years.
Should Telocaset choose to sell its facility, the PPA provides that Telocaset first offer to
sell its facility to Idaho Power.
The Project, located in eastern Oregon , will deliver its energy to a
point on the LaGrande-Brownlee 230 kV transmission line. The Project expects to have
an attractive output profile with considerable generation in the summer coincident with
high irrigation loads, considerable generation in the winter during the heating demand
season and lesser generation in the spring and fall shoulder months.
10.Prices under the PPA will be seasonally adjusted. The price for
energy will start at a base rate of $48.00/MWh with an annual escalation rate of 3%. No
payment is required by Idaho Power for energy deliveries over maximum contract
amounts. The price paid for all energy delivered includes the value of all renewable
attributes (Green Tags) associated with wind generation.
11.The PPA requires that Telocaset deliver detailed forecasting data
including wind velocity and duration , to the Company. The Project will provide Idaho
Power with real time access to the forecasting service used by Telocaset, including
forecasts of the energy to be delivered during the next hour, next day, and next week.
APPLICATION FOR AN ACCOUNTING ORDER , Page 4
Access to the real time wind forecasting data is expected to assist Idaho Power when
integrating the wind generation into the Company s resource supply mix.
12.The PPA contains provisions similar to the 90%-110% delivery
provisions contained in the Company s QF contracts. Should the Telocaset Project fail
to provide good and reliable forecasts and useful data, the Company may invoke 90%-
110% delivery requirements. In addition to the shortfall damages that the Company
would receive under the 90%-110% provisions of the PPA, the Project would also be
subject to additional damages and caps.
13.The PPA also includes penalties should the Project fail to deliver
the guaranteed annual output of 196,000 MWh. If the Project is unable to make up its
delivery obligations to the Company during a three year true-up period (including the
year at issue), the Project will pay Idaho Power an amount equal to the rate of
$25.00/MWh , subject to a cap of $500 000/year. The PPA provides that both the price
to be paid for shortfalls and the cap of the Project's liability for energy delivery shortfalls
will be escalated at 3% per year.
14.The obligations of the Project will be secured by a guaranty issued
by Goldman Sachs.Should the credit rating of Goldman Sachs fall below a
predetermined level , Goldman Sachs will be required , by the terms of the PPA, to post a
liquid form of performance assurance. The obligations of Idaho Power will be secured
by Idaho Power s balance sheet.
15.The PPA provides for certain "bridge" financing to Telocaset by
Idaho Power to cover Telocaset's cost exposure to acquire certain long lead-time items
such as a transformer and certain engineering and design expenditures while the
APPLICATION FOR AN ACCOUNTING ORDER, Page 5
Commission is considering this Application. To that end , Idaho Power will establish a
reserve account and fund the cost to enable Telocaset to proceed prior to IPUC
approval of this Application.
SERVICE OF PLEADINGS
16.Service of pleadings, exhibits , orders and other documents relating
to this proceeding should be served on the following:
Monica B. Moen
Barton L. Kline
Idaho Power Company
O. Box 70
Boise , ID 83707
Jim Miller
Sr. VP - Power Supply
Idaho Power Company
O. Box 70
Boise , ID 83707
Ric Gale
VP - Pricing and Regulatory
Idaho Power Company
O. Box 70
Boise , ID 83707
MODIFIED PROCEDURE
17.The Company requests that this matter be processed under
modified procedure.
REQUEST FOR ORDER
18.Idaho Power respectfully requests that the Commission issue its
order finding that the Power Purchase Agreement with Telocaset Wind Power Partners
LLC is prudent and approving inclusion of the prudently incurred power purchase
expenses associated with the Telocaset PPA in the Company s Power Cost Adjustment.
DATED at Boise , Idaho, this 15th day of December 2006.
16,
MONICA B. MOEN
Attorney for Idaho Power Company
APPLICATION FOR AN ACCOUNTING ORDER, Page 6