20080617Application.pdf

~IDA""POR~
t:..n An IDACORP Company
BARTON L. KLINE
Senior Attorney
June 16,2008
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-08-13
In the Matter of Idaho Power Company's Application for an Accounting Order
Authorizing the Inclusion of Power Supply Expenses Associated with the
Purchase of Capacity and Energy From PPL EnergyPlus, LLC, in the Power
Cost Adjustment
Dear Ms. Jewell:
Enclosed please find for filing an original and seven (7) copies of Idaho Power's
Application and Request for Expedited Consideration in the above matter.
In addition, enclosed are an original and eight (8) copies of the testimony and
exhibits of Karl Bokenkamp that are being submitted in support of Idaho Power's enclosed
filing. One copy of the testimony has been designated as the "Reporter's Copy." Also, a
CD containing Mr. Bokenkamp's testimony in Word format has been labeled and enclosed
for the reporter.
Finally, I would appreciate it if you would return a stamped copy of this letter for my
file in the enclosed stamped, self-addressed envelope.ve(r~
Barton L. Kline
BLK:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
BARTON L. KLINE (ISB No. 1526)
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: 208-338-6936
bkline((idahopower.com
dwalker((idahopower.com
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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 IDAHO POWER )
COMPANY'S APPLICATION FOR AN ) CASE NO. IPC-E-08-13
ACCOUNTING ORDER AUTHORIZING )
THE INCLUSION OF POWER SUPPLY ) APPLICATION AND REQUEST FOR
EXPENSES ASSOCIATED WITH THE ) EXPEDITED CONSIDERATION
PURCHASE OF CAPACITY AND ENERGY )
FROM PPL ENERGYPLUS, LLC, IN THE )
POWER COST ADJUSTMENT. )
Idaho Power Company ("Idaho Power" or the "Company"), pursuant to RP 52,
hereby applies to the Idaho Public Utilities Commission ("Commission") for an order (1)
approving the Power Purchase Agreement ("PPA") between Idaho Power and PPL
EnergyPlus, LLC ("PPL EnergyPlus") and (2) authorizing accounting treatment that
allows Idaho Power to include the expenses associated with the PPA in the Company's
Power Cost Adjustment.
The Company is also requesting that consideration of this Application be
expedited by processing it under modified procedure under RP 202. To facilitate
APPLICATION AND REQUEST FOR EXPEDITED CONSIDERATION-1
expedited consideration, the direct testimony of Company witness Karl Bokenkamp is
filed concurrently with this Application. This Application is based on the following.
BACKGROUND
1. In Order No. 29286 issued on July 8, 2003, Case No. IPC-E-03-08, the
Commission approved a fixed-term power purchase contract between Idaho Power and
PPL Montana, LLC ("PPL Montana Contract"). The PPL Montana Contract allows Idaho
Power to purchase power during heavy load hours in the months of June through
August of each year for five years, 2004 through 2009. The PPL Montana Contract
provides Idaho Power with 83 megawatts per hour of firm capacity and energy during
the Company's summer peak-load period.
2. Recognizing that the PPL Montana Contract wil expire at the end of the
summer of 2009, in the spring of 2008, the Company issued a Request for Proposals
("RFP") to consider offers for a contract to specifically replace the PPL Montana
Contract. PPL EnergyPlus was the successful bidder in the RFP.
3. Idaho Power has successfully negotiated a firm wholesale power
agreement with PPL EnergyPlus. A copy of the agreement with PPL EnergyPlus (the
"PPA") is enclosed as Attachment NO.1 to this AppHcation and is included as Exhibit
No. 1 to the direct testimony of Company witness Karl Bokenkamp, which testimony has
been concurrently filed with the Commission in support of this Application.
GENERAL DESCRIPTION OF THE PPL ENERGYPLUS PPA
4. The PPA provides firm power during the heavy load hours of the months
of June, July, and August 2010 and 2011. These are the Company's critical peak hours
as identified in the Company's 20061RP. The term of the PPA is two years.
APPLICATION AND REQUEST FOR EXPEDITED CONSIDERATION - 2
5. Under the PPA, Idaho Power wil purchase 83 megawatts ("MW") from
PPL EnergyPlus ata price of $92.25 per megawatthour ("MWh"). In addition to power
costs under the PPA, Idaho Power wil purchase firm monthly transmission service
across Northwestern Energy's transmission system to the Jefferson point of delivery. At
current rates under Northwestern Energy's Open Access Transmission Tariff, the
maximum charge for monthly firm transmission service to Jefferson is $3.42 per kilowatt
of reserved capacity per month. Losses are charged at four percent. After
consideration of losses and transmission costs, Idaho Power wil incur a total cost of
approximately $101 per MWh under the PPA.
6. As consideration for PPL EnergyPlus' agreement to hold the price in the
PPA firm during the time it takes for Commission review and approval, Idaho Power has
paid PPL EnergyPlus a deposit in the amount of $100,000 that is refundable if this
Application is approved by the Commission no later than August 4, 2008. If the PPA
does not receive Commission approval by that deadline, the Company wil forfeit the
deposit and either part to the PPA may terminate the agreement.
ADVANTAGES OF THE PPA
7. The PPA is advantageous because it provides many of the benefits
previously associated with the PPL Montana Contract. PPL EnergyPlus, LLC, is the
marketing arm of PPL Montana. As a result, it has access to the generating resources
owned and operated by PPL Montana. PPL Montana acquired most of the generating
assets sold by the Montana Power Company when the state of Montana restructured its
electric utility industry several years ago. Consequently, PPL EnergyPlus has access to
over 1200 MW of generation capacity located in Montana to supply the PPA.
APPLICATION AND REQUEST FOR EXPEDITED CONSIDERATION - 3
8. PPL EnergyPlus' access to generation on the east side of Idaho Power's
system and PPL EnergyPlus' investment grade credit rating make the PPA a good
resource for the structured power acquisition that the Company needs.
9. In addition, and as described in the direct testimony of Company witness
Karl Bokenkamp, the costs associated with this PPA are favorable when compared with
alternative resource operations. Moreover, the limited duration of the PPA reduces risk
by dovetailing with the Company's ongoing efforts to develop demand management
programs that target the Company's summer peak loads and with the Company's
planned acquisition of new base load resources in 2012 through its pending request for
proposals.
SERVICE OF PLEADINGS
10. Service of Pleadings, exhibits, orders, and other documents relating to this
proceeding should be served on the following:
Barton L. Kline
Donovan E. Walker
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
bkline((idahopower.com
dwalker((idahopower.com
John R. Gale
Courtney Waites
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
rgale((idahopower.com
cwaites((idahopower.com
MODIFIED PROCEDURE
11. Because of the need for expedited consideration, the Company requests
this matter be processed under modified procedure.
REQUEST FOR ORDER
12. Idaho Power respectfully requests that the Commission issues its order (1)
approving the PPA between Idaho Power and PPL EnergyPlus, LLC, and (2) approving
APPLICATION AND REQUEST FOR EXPEDITED CONSIDERATION - 4
Idaho Power's requested accounting treatment for inclusion of the power purchase
expenses associated with the PPA in the Power Cost Adjustment as set forth in Mr.
Bokenkamp's testimony in support of this Application.
'''
DATED at Boise, Idaho, this I (p-- day of June 2008.ß#i~
BARTON L. KLINE
Attorney for Idaho Power Company
APPLICATION AND REQUEST FOR EXPEDITED CONSIDERATION - 5
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-13
IDAHO POWER COMPANY
ATTACHMENT NO.1
~'JUN. 3. 2008 3:~IPM
45 Basin Crek Road
Butt. MT 59701
(406) 533-nO
(406) 5330208 - fax
CONFIRMATION
NO. ó3J9 P. 2. . j\ ,J. '.. ....IAJ #~~...,;....
PPIE~~'\ .." 'T
PPL ~u II t 40ó~33ULU I, .
Date:
seller:
Purchaser:.
Agrement:
June 2, 2008
PPl EnergyPlus, lLC
Idaho Power COmpany i/
WSpp Agreme and Service Scheule C ,/
Prce:
Total Priæ:
-
This Confirmtion is provided to ccnflrm the oral agreent ente into beeen Purchaser and Seller on May
28, 2008; whereby Seller agre to sell and deliver to Purchaser and Purchaser agl' to purchase and recve
fmm Seller Firm capacitVlEnergy Sale or Ðcchange Seice, as descibed in WSpp !érvice Scule C ("Firm
Energy"), pursant to the fOllOWing terms and mnditons~
Contract Term: Frm the eai1;er of (i) the dat of IPUC approval of the final wrien Confrmation for this
trnscton (the "Confirmatonj or (ii) the date of Purcasers writtn notiætion to seleof accptance of the Confrmon, through Augus 31, 2011~ _./ i/ VI.. ..
June l)rough A~us 31 for years 2010 !pd 2011, Hour Ending (HE)ß700 through HE
2200, Pacfic Preilng Time (PPl, Monday through saturiay, exluc3ng Sundays and
NERC Holidays.
$92.25 per MWh..
$19,111,248 ./
Delivery Term:
Quantity: 83 MWh per hour ,/
Total Quantity 207,168 MWh .,
Delivery"Points: sellers choice int NorthWes Energys trnsmission sym (NWM../
seller and Purchaser agre to the above transacton pursuant to and in accordnce wi the terms and
conditins of the WSPP Ãgreement and 5erviæ Schedule C, as amended and efectve as of April 1, 200
("Agrement''), the WSPP Creit Support Anne dat Marc 25, 2003 and amended January 8, 2004, and those
additonal tersand conditons provided for in Speial Provsions below.
Special Prosions:
1. seller shall be responsible fot contingenc reerv tht satisf the reuirements of the WECC applicable
In th WECC-certfied Balandng Autori not to exce the sum of fi percent of the Quantit provide
from hydropoer generation and sen percnt of the Quantit proded from thermal generation (fift
pernt of which shall be spinning) and of no diferent quality than currentl reuire.
2. Purchase shall acuire and pay for transmisson seivce from the Delivry Points to Jeffrsn
("ransmission Servce''). Such obligaton indude paying fo all losse in conecon with such
Transmission Servic.
If seller holds firm Transmissiorl service for any poon of the Quantity fo the DeliVry Term in any
year dunng the Conact Term, th Partes agre that sele shall ressign such firm Transmission
Service to Purchase and Purchaser shall accpt such ressignment prior to the beinning of such
Delivery Term. Purchaser will pay all cost and expense at th actual tari ra for such TransmiSsion
Servìce that applies during the Delivery Term. The trnsissin ressignment wil be in a form mutll
. agreed to bY the Parties and wil be in acxrdance wi all FEC requireents.
By Ocber 1 of each year during the Contrct Term, Purchaser will contct seller to detrmine seller's
intnton to rollover such Transmission Service. If seller determines it will not roloer such
Transmission Servce, Seller wil notify Purchasr thereof. Purchaser may ef at any time within 10
Busines Days aftr receipt of any such notie, to request that Seller rolloer such Transmission 5ece
Idaho 20 i 0.20 11 Jun Jut Aug 83MW WSPP Conf. Sehed C (2) fial
JUN. j, LUUti J: 'JtiPM PPL ~Ullt 4UÓ~JJULUI NO. &339 P. 3.. . ,~ , I. I.. ~ ... I ,
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45 Basn Creek Road
Butte. MT 59701
(406) 533-onO
(40) 533.0208 - fa
and assign such Transmission Seivic to Purchaser fo the enre term and entire quantity of the
rollover.
3. Within three Business Days following execution of this Confrmation pursuant to the terms of the
Agrement (the "Final Agreement Dare"), Purchaser shall pay a deposil to Seller in the amount of
$100,000. Purchasr shall thn have 60 days from the Final Agreement Date (th "Approval Period'1 to
see and obtin Idaho Public utilit Commission (the "iPUC¡ approval of the Cofirmation. The
COnfirmation shaR becme effe on the earlier of 1) the date the ¡PUC issues a final ordr approving
the Confirmatio as submitted (or with mutually accptable changes) within the Approval Period; or 2)
any dåte during the Aproval Perio on which Purchasr notifes Seller in writing of Purmaser's elecon
to confirm and accept the COnfrmation. Seller shall, wihin three Business Days following reipt of a
copy of such final order or Purcaser's accptanc of the Cofirmation, refund the $100,000 deposit to
Purchaser.
If Purchaser has not accept the Confirmation and if the IPUC has not issued a final order approving
the Confirmation as submited (or wit mutually accble changes) within the Approval Perid, then
either Part may immediately teinate the Confrmtion by providing writtn notiæ to the other Part
within 5 Business Days aftr the end of the Approval Period. If the COnfirmatin is terminate by eiter
Part during such time period, Purchaser wil forfeit the $100,000 deposit.
Notwithstnding any other provsion of this Agrement, in no event shall any interuption or curtßment of
transrnission servce resulting from or arising out of any acton taken by or at the direction of any reliabilty
cordinator under or pursuant to the WECC's Unsheduled Row Mitgation Plan (or any replacemen or success
plan) constit an Uncntrollable Foræ for purpes of this Agreement, and in no event shall any Part be
entitled to daim Uncontrollable Fo to excuse any failure to make avilable capacty or deliver or reive
energy as a result of any such interruption or curtilmen of trnsmission service.
Upon receipt of this Confirmation, Purchaser shall notify ~ler of it approvl by exeutng and returning this
COnfirmation by fax to [phone] within five (5) Business Days, This Confirmation shall be final and
binding, whether or not signe or çonfirmed by Purchaser, unle Purcaser advises Seller in writng of any
inaccuracy within five (5) Business Days follOWing the rept of this Confirmatio.
Purdaser
Idaho Power CompanySG~~~~Nam . oM c. M. \ \.'-tLTItl: il..~ ';offb'
Date: J '-r-"' ': i 'z.oCß
seller
PPL EneyPlus, LLC .
Signed:
Name: Kibey J. Ttelheway
Title: Team Leader -Trading Contrs
Date: /¡,,3-Of
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