20070914Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:SEPTEMBER 14,2007
SUBJECT:CASE NO. IPC-06-34 (Idaho Power/Hot Springs)
CASE NO. IPC-06-35 (Idaho Power/Bennett Creek)
On September 12, 2007 , Idaho Power Company (Idaho Power; Company) filed an
Application in Case Nos. IPC-06-34 and IPC-06-35 requesting approval of Generation
Intercoimection Agreements (GIA) between the Company and Hot Springs Windfarm LLC (Hot
Springs) and Bennett Creek Windfarm LLC (Bennett Creek).
The Commission has previously approved Firm Energy Sales Agreements between
Idaho Power and Hot Springs (Order Nos. 30246 and 30398) and Bennett Creek (Order Nos.
30245 and 30399).
The Generation Interconnection Agreements are the first involving PURP A
generating facilities subject to Idaho Power Schedule 72 which involve substantial upgrades to
Idaho Power s transmission system. The allocation of costs from the transmission upgrades for
the two projects were not addressed in Commission Order No. 30414 in Case No. IPC-06-
(the Cassia Gulch Wind Park and Cassia Wind Farm (collectively Cassia) case).
In the Cassia case, the Commission approved a settlement which implemented a cost-
sharing arrangement (Cassia Formula) under which Idaho Power will contribute 25% of the cost
of the needed transmission upgrades, Cassia will make a non-refundable 25% contribution in aid
of construction (CIAC) to support the transmission upgrades and Cassia will make an advance in
aid of construction (AlA C) for the remaining balance of the cost of the upgrades. The AIAC will
be refunded to the Cassia projects over time if they fully perform their Firm Energy Sales
Agreements with Idaho Power.
DECISION MEMORANDUM
In Order No. 30414, the Commission concluded that use of the Cassia Formula was
appropriate for the Cassia Wind Farms as well as the other PURP A generation projects in the
Twin Falls 138 kV transmission queue. However, the Commission did not authorize the
Company to automatically apply the Cassia Formula in other locations on its system where
transmission upgrades would be required. Instead, the Commission indicated that the application
of any terms or conditions approved as a part of the settlement in the Cassia case to other QF
interconnection requests "will depend on the specific characteristics of that situation." Order No.
30414, p. 11.
In the GIAs between Idaho Power and Bennett Creek and Hot Springs, the parties
have agreed to apply the Cassia Formula to share the costs of the transmission upgrades.
In concluding that it is appropriate to use the Cassia Formula for sharing costs of
transmission upgrades, Idaho Power applied the Commission findings and conclusions in Order
No. 30414 as follows:
1. But for the construction of the Hot Springs and Bennett Creek
Windfarms, Idaho Power would not have constructed the transmission
upgrades described in the Generator Interconnection Agreements to
provide adequate service to its native load customers. Therefore, a
contribution by the developers of a portion of the transmission upgrade
cost is appropriate.
2. Idaho Power believes that in Order No. 30414, the Commission directed
the Company to assess the benefits of individual transmission upgrades
taking into consideration "the system wide benefits that accrue to all
customers on an integrated transmission grid." Order No. 30414, p. 10.
One way to approach that assessment is to compare the level of benefits
that the upgrades will provide to the system with the level of benefits
provided in the Cassia case. The Company acknowledges that it is nearly
impossible to precisely quantify the relative system benefits conferred by
two distinct and geographically separate transmission upgrades.
However, transmission engineers can exercise their judgment and their
knowledge of transmission systems they have designed and operate.
Based on their informed judgment, Idaho Power s transmission engineers
are of the opinion that the transmission upgrades identified in the GIAs
will provide different benefits than the transmission system benefits the
Cassia upgrades will provide. Where the Cassia upgrade will install a
new transformer to interconnect the 230 and 138 kV transmission
systems in the western portion of the Magic Valley, the improvements
contemplated .herein will upgrade (replace the line conductor) and update
(replace poles, insulators and hardware not capable of supporting the
larger conductor) an older transmission line. Some facilities on the line
interconnecting the Bennett Creek and Hot Springs projects may have
DECISION MEMORANDUM
been providing service since 1921. The use of the Cassia Formula is
reasonable in this circumstance.
3. The Company is also of the opinion that the application of the Cassia
Formula in this case will maintain the balance between "the benefits
accruing to the customers of the grid with the cost responsibility of the
QF necessitating the timing and the construction of the upgrade." Order
No. 30414, p. 11.
4. Hot Springs and Bennett Creek, like the QF projects in the Twin Falls
queue, will displace or defer the need for other or similar generation
projects in the Company s Integrated Resource Plan (IRP) that would
likely require related transmission investment by the Company. Order
No. 30414, p. 11.
5. Idaho Power believes that application of the Cassia Formula in this
instance will allow it to successfully defend a comparability claim
brought by Federal Energy Regulatory Commission (FERC)
jurisdictional customer claiming that Idaho Power and the Commission
had given unlawful, preferential treatment to QF resources.
Idaho Power requests that the Commission process this Motion by Modified
Procedure.
CO MMISSI ON D ECISI
Idaho Power submits Generation Interconnection Agreements for Bennett Creek and
Hot Springs and contends that they are consistent with Schedule 72, the Commission s Cassia
Order No. 30414, and that they are in the public interest. Staff recommends that the Company
Motion for approval of the Generation Interconnection Agreements be processed pursuant to
Modified Procedure, i., by written submission rather than by hearing. Reference Commission
Rules of Procedure, IDAPA 31.01.01.201-204. Staff recommends a comment period of 14 days.
Does the Commission agree with Staff s recommended procedure?
Scott Woodbury
bls/M:IPC-O6-34 IPC-O6-35 sw2
DECISION MEMORANDUM