20070102Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:DECEMBER 28, 2006
SUBJECT:CASE NO. IPC-06-35 (Idaho Power)
FIRM ENERGY SALES AGREEMENT
WINDFARMLLC
BENNETT CREEK
On December 26, 2006, Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of a
20-year Firm Energy Sales Agreement between Idaho Power and Bennett Creek Windfarm LLC
(Bennett Creek) dated December 20, 2006 (Agreement).
Background
On August 4, 2005 , the Idaho Public Utilities Commission (Commission) in Case
No. IPC-05-, Order No. 29839, reduced the eligibility cap for avoided cost published rates
for non-firm wind projects from 10 aMW to 100 kW, required individual negotiation for larger
wind qualifying facilities (QFs), and established criteria for assessing QF contract entitlement.
Reference Public Utility Regulatory Policies Act of 1978 (PURP A). By Commission Order No.
29872 the date for grandfathering eligibility was changed from July 1 , 2004, the Notice of
Petition date, to August 4 2005, the date ofInterlocutory Order No. 29839.
Agreement
The Bennett Creek facility will be located within Sections 22, 23, 26 (less southeast
quarter) and 27, Township 4 S, Range 8 E, Boise Meridian, Elmore County, Idaho. Bennett
Creek warrants the facility will be a qualified small power production facility (QF) under the
applicable provisions of the Public Utility Regulatory Policies Act of 1978 (PURP A). The
facility will consist of 12 Vestas wind turbines with individual nameplate ratings of 1.65 MW for
DECISION MEMORANDUM
each unit, for a total facility nameplate generator rating of 19.8 MW. The Agreement contains
the non-Ievelized, published avoided cost rates set forth in Order No. 29391. Under normal
and/or average operating conditions, Bennett Creek will not generate more than 10 aMW on a
monthly basis. Energy delivered in excess of this monthly amount is Inadvertent Energy. Idaho
Power will accept Inadvertent Energy that does not exceed the Maximum Capacity Amount (20
MW) but will not purchase or pay for Inadvertent Energy. Agreement ~ 7.
Based on Idaho Power Company s review of the information provided by the
developer and in light of the procedure the Commission accepted in Cassia Wind Order No.
29954, Case No. IPC-05-, Idaho Power has determined that it would be reasonable to
grandfather the Bennett Creek facility based on satisfaction of the following criteria identified by
the Commission in Order No. 29839, Case No. IPC-05-
Primary criteria:
Prior to August 5 , 2005 , the developer had tendered a signed Firm Energy
Sales Agreement to Idaho Power for the facility. This satisfies one of the two
primary criteria for grandfathering.
Secondary criteria:
As of August 5, 2005, the facility did not have a signed contract for turbines.
Idaho Power has reviewed the information provided by the developer and
determined that this developer believed that obtaining financing was the
highest priority on the critical path to project development and directed its
resources to that goal rather than turbine acquisition. As a result, prior to
August 4, 2005 , the developer had entered into binding commitments to
obtain financing. The Company has also confirmed that as of August 4
2005, the facility had made substantial progress on the other secondary
criteria, except for acquisition of turbines. As in the case of Cassia Wind, the
developer has now obtained a firm commitment for turbines for the facility
and filed the necessary applications for interconnection to satisfy the second
primary criteria.
Idaho Power notes that there are three provisions the Commission should be aware of
in its consideration of the Agreement:
1. In the negotiations of this project, Idaho Power and Bennett Creek agreed
that an on-line date of December 2007 is crucial to demonstrate that the
project was a viable project in August of 2005. This Agreement contains
delay damage provisions that require the project pay Idaho Power
damages if the project comes on-line after December 31 2007. The delay
damages will accrue for a period of up to 90 days.
DECISION MEMORANDUM
2. The Agreement contains the methodology for computing shortfall energy
payments the Commission approved in the Firm Energy Sales Agreement
between Idaho Power and Fossil Gulch Wind Park, LLC (Case No. IPC-
04-, Order No. 29630) and recently approved for Magic Wind Park
in Order No. 30206 issued in Case No. IPC-06-26. Bennett Creek has
voluntarily selected the Fossil Gulch Method. Use of the Fossil Gulch
methodology is a negotiated term of the Agreement and is mutually
acceptable to Idaho Power and Bennett Creek.
3. The Agreement reflects the changes to Idaho Power s Schedule 72
(Uniform Interconnection Agreement) approved in Order No. 30179
issued on November 17,2006 in Case No. IPC-06-18.
Bennett Creek has selected March 31 , 2007 as the Scheduled First Energy Date and
December 31 , 2007 as the Scheduled Operation Date
Section 24 of the Agreement provides that the Agreement will not become effective
until the Commission has approved all of the Agreement's terms and conditions and declared
that all payments Idaho Power makes to Bennett Creek for purchases of energy will be allowed
as prudently incurred expenses for ratemaking purposes.
COMMISSION DECISION
Staff recommends that the Application in Case No. IPC-06-35 be processed
pursuant to Modified Procedure , i., by written submission rather than by hearing. Reference
IDAPA 31.01.01.201-204. Does the Commission agree that Modified Procedure is appropriate?
Scott Woodbury
bls/M:IPC-O6-35 sw
DECISION MEMORANDUM