20080204notice_of_modified_procedure_order_no_30495.pdf

Office of the Secretary
Service Date
February 4, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPROPRIATE
DISPOSITION OF PROCEEDS FOR THE
SALE OF IDAHO POWER COMPANY'S S02
EMISSION ALLOWANCES IN CY 2007 NOTICE OF
MODIFIED PROCEDURE
CASE NO. IPC-07-
ORDER NO. 30495
On November 9, 2007, Idaho Power Company filed a report disclosing that the
Company sold 35 000 sulfur dioxide (SO2) emission allowances in calendar year 2007 for a total
amount (less brokerage fees) of $19 642 250. Report/Motion at 2. The after-tax amount of
proceeds allocated to Idaho for SO2 emissions is $10 131 560. Id at ~ 5. Rather than utilizing
the proceeds from the SO2 sales to offset purchased power costs in this year s Power Cost
Adjustment (PCA) case, Idaho Power recommended the Commission explore other possible uses
for the SO2 proceeds. The Company requested that the Commission convene a public workshop
for the purpose of allowing interested persons to discuss other possible alternatives. On
December 20 2007, the Commission issued Order No. 30478 granting the Company s request to
convene a public workshop. Because the participants at the workshop were unable to reach
consensus regarding the disposition of the SO2 proceeds, the Commission issues this Notice
seeking public comment as set out in greater detail below.
BACKGROUND
A. SOl Allowances
Title IV of the Clean Air Act Amendments of 1990 established a national program
for the reduction of acid rain. 42 US.C. 99 7651 et seq. The centerpiece of the acid rain
program is the incentive- or market-based "cap and trade" SO2 program. Under the cap and
trade program, the Environmental Protection Agency (EP A) sets a cap or ceiling on the total
amount of SO2 emissions allowed nationwide. Based upon this cap, EP A allocates a certain
number of SO2 emission allowances to thermal power plant owners. Each allowance provides
the authority to emit one ton of SO2. See Order No. 29852 at 1.
Each year a thermal power plant owner must hold sufficient allowances to cover
actual SO2 emissions. A power plant that does not possess sufficient allowances to cover its
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30495
annual emissions must purchase additional allowances or it is automatically fined and must
surrender future year allowances to cover the shortfall. A thermal power plant holding surplus
SO2 allowances in a given year may retain the allowances or sell them. SO2 allowances are
fully marketable commodities and can be traded on the open market or in special EP A-sponsored
auctions. Id Idaho Power has an ownership interest in three thermal power plants in the west:
Jim Bridger, North Valmy, and Boardman.
B. The Public Workshop
The public workshop to discuss the SO2 proceeds was held January 15, 2008. The
following persons or entities attended the workshop: Idaho Power, the US. Department of
Energy, the Idaho Energy Education Project, Ridgeline Energy, the Snake River Alliance
Windland, A vista Utilities, the Idaho Conservation League, the Commission Staff, Micron, Dean
J. Miller, and the Industrial Customers ofldaho Power (ICIP).
THE WORKSHOP AL TERNA TIVES
The participants generally discussed four possible uses for the SO2 proceeds. First
as was the case last year, SO2 proceeds could be included in the annual PCA case this year.
included in the PCA, the amount of the SO2 revenue would be grossed up to approximately $16
million. This amount would offset the PCA deferral account and mitigate any pending increase
in the PCA rates this summer. Staff disclosed at the workshop that the current PCA deferral
balance was about $90 million. Staff, Micron and ICIP favored this alternative.
Second, Idaho Power suggested that SO2 proceeds could be used to purchase multi-
year streams of "renewable energy certificates ('green tags ) from the owners of renewable
generation facilities" that have entered into PURP A contracts with Idaho Power. Order No.
30478 at 3 citing Idaho Power s Report/Motion at ~ 8. Idaho Power suggested that if Congress
enacts a renewable portfolio standard (RPS)I for electric utilities, Idaho Power will be required
to purchase green tags at prices expected to be higher than those existing today.
Third, Idaho Power next suggested that the SO2 proceeds could be used to purchase a
wind project's developmental rights. Under such an approach, Idaho Power would enter into
negotiations or issue a request for proposal (RFP) to purchase a permitted wind generation
project. In essence, the Company would be purchasing the wind project with capital contributed
I A RPS typically requires that a certain percentage of an electric utility's generating resources be renewable
resources (such as wind, solar, biomass, etc.) by a certain year.
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30495
by customers. This would result in a reduction in the Company s rate base. See Order No.
30478 at 4. The wind developers supported the third option and Idaho Power supported either
the second or third options.
Fourth, the Idaho Energy Education Project suggested that approximately $500 000
could be used to develop and implement classroom education programs about energy efficiency.
The remaining balance of the proceeds could be directed to energy efficiency operations or other
beneficial uses.
Because the workshop participants were unable to reach consensus regarding the
appropriate use of the SO2 proceeds, they recommended the Commission process the case under
Modified Procedure. This would allow interested persons and the public to comment on the
appropriate disposition of the SO2 proceeds. Consequently, the participants recommended that
the Commission process this case under Modified Procedure with a 21-day comment period.
NOTICE OF MODIFIED PROCEDURE
YOU ARE HEREBY NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission s Rules
of Procedure IDAPA 31.01.01.201 through .204.The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on the
four discussed alternatives or other uses of the SO2 proceeds may file a written comment in
support or opposition with the Commission within twenty-one (21) days from the service date of
this Notice. The comment must contain a statement of reasons supporting the comment. Persons
desiring a hearing must specifically request a hearing in their written comments. Written
comments concerning this Application shall be mailed to the Commission and Idaho Power at
the addresses reflected below:
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30495
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
Lisa Nordstrom, Attorney II
John R. Gale, Vice President Regulatory Affairs
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
Mail: lnordstrom~idahopower.com
Mail: rgale~idahopower.com
472 W. Washington Street
Boise, ID 83702-5918
These comments should contain the case caption and case number shown on the first page of this
document. Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.idaho.gov. Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to Idaho Power at the e-mail addresses listed
above.
YOU ARE FURTHER NOTIFIED that the Commission specifically invites the
workshop participants to address the four alternative uses of the SO2 proceeds that were
discussed at the public workshop. The Commission further invites public comment regarding the
four alternatives discussed above or other possible uses of the proceeds. Persons submitting
comments should also indicate how their recommendations conform to the 2007 Idaho Energy
Plan. The Idaho Energy Plan may be found at: http://www.legislature.idaho.gov/
sessioninfo/2007/energy plan 0126.pdf
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that to facilitate the exchange of comments, the
participants at the public workshop shall serve their comments on the other participants via
electronic mail. Staff counsel has disseminated the e-mail addresses of the workshop attendees
to the participants.
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30495
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code 99 61-316, 61-502, 61-503, 61-523 , and 61-524. The Commission may enter any
final Order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAP A 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Persons interested in submitting written comments regarding the use of the SO2 proceeds or
protesting the use of Modified Procedure must do so no later than twenty-one (21) days from the
service date of this Order.
IT IS FURTHER ORDERED that servIce among the workshop participants be
accomplished by electronic mail pursuant to Rule 63, IDAPA 31.01.01.063.
IT IS FURTHER ORDERED that an original and four copies of comments be filed
with the Commission Secretary pursuant to Rule 61.03 , IDAPA 31.01.061.03.
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30495
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this '-f 111
day of February 2008.
'1\~A
. .
MACK A. REDFORD, PRESIDENT
'--
MARSHA H. SMITH, COMMISSIONER
ATTEST:
je D. Jewell
Commission Secretary
bls/O:IPC-07-18 dh2
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30495