20070207Response to Idaho Windfarms reply comments.pdf

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IDAHO~POWER~
An IDACORP Company
Barton L. Kline
Senior Attorney
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February 7 2007
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-
In the Matter of the Application of Idaho Power Company for Approval
of a Firm Energy Sales Agreement for the Sale and Purchase
Electric Energy Between Idaho Power Company and Hot Springs
Windfarm LLC
Case No. IPC-06-
In the Matter of the Application of Idaho Power Company for Approval
of a Firm Energy Sales Agreement for the Sale and Purchase
Electric Energy Between Idaho Power Company and Bennett Creek
Windfarm LLC; and
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of Idaho Power
Company s Comments in Response to Idaho Windfarm LLC's Reply Comments 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
Barton L. Kline
BLK:sh
Enclosures
O. Box 70 (83707)
1221 W. Idaho St.
Boise, 1083702
BARTON L. KLINE , ISB # 1526
MONICA B. MOEN , ISB # 5734
Idaho Power Company
1221 West Idaho Street
P. O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
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Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR CASE NO. IPC-06-
APPROVAL OF A FIRM ENERGY SALES
AGREEMENT FOR THE SALE AND IDAHO POWER COMPANY'
PURCHASE OF ELECTRIC ENERGY COMMENTS IN RESPONSE TO
BETWEEN IDAHO POWER COMPANY IDAHO WINDFARM LLC'S REPLY
AND HOT SPRINGS WINDFARM LLC COMMENTS
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR CASE NO. IPC-06-
APPROVAL OF A FIRM ENERGY SALES
AGREEMENT FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY
BETWEEN IDAHO POWER COMPANY
AND BENNETT CREEK WINDFARM LLC
COMES NOW Idaho Power Company ("Idaho Power" or the "Company ), and
pursuant to RP. 203, responds to Idaho Windfarm LLC's ("Windfarm ) Reply
Comments.
INTRODUCTION
In these two cases , Idaho Power has requested that the Commission issue
orders ("the Orders ) approving two firm energy sales agreements ("the Agreements
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO
IDAHO WINDFARM LLC'S REPLY COMMENTS, Page
between Idaho Power and two PURPA qualifying facilities ("QFs ), Hot Springs
Windfarm LLC and Bennett Creek Windfarm LLC ("Projects
Staff Comments
Staff's comments describe the relationship between the type of transmission
service (firm vs. non-firm) acquired from Idaho Power Delivery Business Unit
Delivery ) and the Projects' entitlement to be paid the published avoided rates for firm
energy under the Agreements. In its comments the Commission Staff recommended
that the Commission approve the Agreements for ratemaking purposes but conditioned
that recommendation with several other recommendations. First, Staff recommended
that the Orders approving the Agreements include a requirement that the Projects
purchase firm transmission services and agree to fund required transmission upgrades
that may be necessary for Delivery to provide firm transmission of the energy to be
generated by the Projects.
Staff's comments also recommend that the Commission Orders include a
provision retaining the Commission s right to subsequently adjust the rates contained in
the Agreements downward if the Projects ultimately acquire non-firm transmission
service rather than firm transmission service from Delivery.
Idaho Windfarm Replv Comments
Idaho Windfarm objects to Staff's recommendations concerning the inclusion of
any conditions related to transmission services in the Orders. On page 2 of its Reply
Comments, in the Introduction section , Idaho Windfarm states:
While Idaho Windfarms recognizes the implicit linkage
between avoided cost calculations and firm transmission
services, this is not the proper proceeding to deal with
transmission related issues.
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO
IDAHO WINDFARM LLC'S REPLY COMMENTS, Page 2
Idaho Windfarm argues in its Reply Comments that the Orders should be silent
on any issues relating to the Projects' acquisition of transmission.
II.PAYMENT OF FIRM AVOIDED COST RATES REQUIRES FIRM
TRANSMISSION SERVICE
Idaho Windfarm s comments confirm that it recognizes that the determination of
avoided costs is linked to the firmness of the transmission services that OFs like the
Projects purchase from Delivery or other transmission providers. (Reply Comments of
Idaho Windfarm p. 2). The Projects have signed Firm Energy Sales Agreements with
Idaho Power. The avoided costs contained in the Agreements were established on the
assumption that the costs Idaho Power can avoid by purchasing firm energy from the
Projects are financially equivalent to the fixed and variable costs of a firm, dispatchable
combined cycle combustion turbine owned and operated by Idaho Power.
At this time, Idaho Power has no reason to believe that the Projects will not
acquire firm transmission to allow deliveries of firm energy to Idaho Power. Idaho
Power does not know what system upgrade costs, if any, the Projects may be asked to
pay so that Delivery can provide firm transmission and the Projects can deliver firm
energy to Idaho Power. Finally, there is no indication that the Projects intend to do
anything differently than what they have contractually committed to do, that is , deliver
firm energy to Idaho Power.
All that being said , Idaho Power is in full agreement with Staff's comments that
the Projects are not entitled to be paid the published avoided cost rates contained in the
Agreements unless the Projects contract for firm transmission service to be provided for
the full twenty (20) year term of the Agreement.
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO
IDAHO WINDFARM LLC'S REPLY COMMENTS, Page 3
Idaho Windfarms is correct that there are numerous moving parts surrounding
the question of the funding of system upgrade costs for OFs and other users of Idaho
Power s transmission system. Idaho Power does not believe that the Orders should
preclude Idaho Windfarms from seeking to obtain firm transmission on the best terms
available.
III.NEITHER IDAHO POWER NOR IDAHO WINDFARMS SHOULD
REQUIRED TO WAIVE THEIR RIGHTS
Idaho Windfarms' Reply Comments object to the recommendation by the
Commission Staff that the Projects agree to pay for system upgrades required to obtain
firm transmission service. However, Idaho Windfarms' proposed response to Staff's
recommendation is for the Commission to remain silent on the relationship between firm
avoided costs and firm transmission in the Orders. That resolution is not reasonable.
Idaho Power is concerned that if the Commission fails to address the link
between the firmness of transmission and the entitlement to published avoided cost
rates in the Orders and the Projects eventually contract with Delivery for non-firm
transmission services in order to avoid paying transmission upgrade expenses, Idaho
Power may be precluded from objecting. At that point, if Idaho Power objects, the
Projects could argue that Idaho Power waived its right to object. The Projects would
argue that the issue was presented in these dockets, the Commission Order was silent
and the matter is now res judicata and immune from attack. That result would be
manifestly unfair.
IV.IDAHO POWER'S RECOMMENDATION
Idaho Power recommends that the Commission include findings in the Orders
confirming that the published avoided cost rates are only available to OFs that obtain
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO
IDAHO WINDFARM LLC'S REPLY COMMENTS, Page 4
firm transmission for the full term of the firm energy sales agreements. The Orders
should also provide that the requirement to obtain firm transmission would not preclude
OFs from seeking lower cost firm transmission service. Finally, the Orders should
provide that after the Projects have entered into transmission arrangements, then Idaho
Power or Staff can ask the Commission to review the transmission arrangements to
confirm that the rates contained in the Agreements are appropriate based on the type
of transmission the Projects have acquired.
Respectfully submitted this ih day of February 2007.
BARTON L. KLINE
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO
IDAHO WINDFARM LLC'S REPLY COMMENTS, Page 5
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this ih day of February 2007, I served a true and
correct copy of the within and foregoing upon the following named parties by the
method indicated below, and addressed to the following:
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington Street
Post Office Box 83720
Boise, Idaho 83720-0074
) U.S. Mail, Postage Prepaid
(X) Hand Delivered
) Overnight Mail
) Facsimile
(X) Email Scott.woodburv~puc.idaho.qov
Dean J. Miller
Attorney for Bennett Creek
McDevitt & Miller LLP
420 W. Bannock
Boise, ID 83701
) U.S. Mail , Postage Prepaid
) Hand Delivered
) Overnight Mail
) Facsimile
(X) Email: ioe~mcdevitt-miller.com
(:iliJ~
Barton L. Kline
IDAHO POWER COMPANY'S COMMENTS IN RESPONSE TO
IDAHO WINDFARM LLC'S REPLY COMMENTS, Page 6