20080625notice_of_application_ipc.pdf

Office of the Secretary
Service Date
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
June 25, 2008
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
CASE NO. IPC-O8-
NOTICE OF APPLICATION
NOTICE OF
MODIFIED PROCEDURE
NOTICE OF
COMMENT/PROTEST DEADLINE
YOU ARE HEREBY NOTIFIED that on June 16, 2008, Idaho Power Company
(Idaho Power; Company) filed an Application with the Commission for an Order approving a
firm wholesale Power Purchase Agreement (Agreement) between Idaho Power and PPL
EnergyPlus, LLC (EnergyPlus). The Company requests accounting treatment that will allow
Idaho Power to include the expenses associated with the purchase of capacity and energy from
EnergyPlus in the Company s Power Cost Adjustment (PCA). Included in the Company s filing
in this case is the prefiled direct testimony of Karl Bokenkamp, General Manager of Power
Supply Operations.
The EnergyPlus Agreement replaces an Idaho Power/PPL Montana contract that will
expire at the end of August 2009. Reference Order No. 29286, Case No. IPC-03-08. In the
spring of 2008, the Company issued a Request for Proposals (RFP) to replace the expiring
contract. EnergyPlus was the successful bidder. EnergyPlus is the marketing arm of PPL
Montana. As a result, it has access to the generating resources owned and operated by PPL
Montana.
Contracting with EnergyPlus is advantageous, the Company contends, because
existing constraints on the west side of Idaho Power s system made power purchases on the east
side of the Company s system preferable. The principal provisions of the Power Purchase
Agreement with EnergyPlus call for a firm power purchase for the heavy load hours, six days a
week (Monday through Saturday), 16 hours a day (6 x 16) in the months of June, July and
August (except for NERC holidays). These are the time periods identified in the Company
2006 IRP as critical peak hours. The term of the Agreement is two years, June 1 through August
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
31 of each year beginning in 2010 and ending in 2011. The quantity of energy purchased is 83
MW per hour. The price to be paid for this energy is $92.25 per MWh. After adjusting for
losses, Idaho Power will actually receive approximately 80 MW per hour under the PP
The Company contends that the energy costs of $92.25/MWh are competitive and
favorable when compared to alternative resource options. The Company s heavy load forward
price curves for Mid-Columbia (Mid-C) are slightly above the PP A contract price. The limited
duration of the PP A reduces the risk by dovetailing with the Company s ongoing efforts to
develop energy efficiency 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 current request
for proposals. Cost comparisons are detailed in the Company s prefiled testimony. To give the
Commission an idea of current market prices, in accordance with the Company s risk
management policy, Idaho Power states it has already purchased heavy load energy for August
2008 at prices between $110 and $120 per MWh.
As consideration for EnergyPlus s agreement to hold the price in the PP A firm to
allow time for Commission review and approval, Idaho Power has paid EnergyPlus a deposit in
the amount of $100 000 that is refundable if the Application is approved by the Commission no
later than August 4, 2008. If the Commission does not approve the Agreement by that deadline
the Company will forfeit the deposit and either party may terminate the Agreement.
In addition to power costs under the Agreement, Idaho Power states it will 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 (OA TT), the maximum charge for monthly firm transmission service is $3.42
per kW of reserved capacity per month. Losses are charged at four percent. After consideration
of losses and transmission costs, Idaho Power will incur a total cost of approximately $101 per
MWh under the PP
Idaho Power proposes that costs associated with acquiring firm monthly transmission
servIce from Northwestern Energy s transmission system be booked in Book Account 565
Transmission of Electricity by Others. These monthly transmission costs will not flow through
the Company s Power Cost Adjustment (PCA). Idaho Power proposes that the cost for power
acquired through the EnergyPlus Agreement be booked in FERC Account 555, Purchased
Power, and that the costs upon contract approval flow through the Company s PCA. Until the
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
costs of the contract are included in a general revenue proceeding, any contract costs associated
with the Agreement will be considered deviation from the base and, therefore, only 90% of the
Idaho jurisdictional costs will be borne by customers.
Idaho Power requests that the Commission issue an Order approving the Power
Purchase Agreement between Idaho Power and EnergyPlus and approving Idaho Power
requested accounting treatment for inclusion of the power purchase expenses associated with the
EnergyPlus Agreement in the Company s Power Cost Adjustment.
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of
record in Case No. IPC-08-13. The Commission has preliminarily found that the public
interest in this matter may not require a hearing to consider the issues presented and that issues
raised by the Company s filing may be processed under Modified Procedure , by written
submission rather than by hearing. Reference Commission s Rules of Procedure, IDAPA
31.01.01.201-204.
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments or
protests with respect to Idaho Power s Application and the use of Modified Procedure in Case
No. IPC-08-13 is Thursday, July 24, 2008.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the deadline, the Commission may consider the matter on its merits and may
enter its Order without a formal hearing. If comments or protests are filed within the deadline,
the Commission will consider them and in its discretion may set the matter for hearing or may
decide the matter and issue its Order based on the written positions before it. Reference IDAP
31.01.01.204.
YOU ARE FURTHER NOTIFIED that written comments concerning Case
No. IPC-08-13 should be mailed to the Commission and the Company at the addresses
reflected below.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
Barton L. Kline
Donovan E. Walker
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
Mail: bkline~idahopower.com
dwalker~idahopower .com
472 W. Washington Street
Boise, ID 83702-5918 John R. Gale
Courtney Waites
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
E-mail: rgale~idahopower.com
cwaites~idahopower .com
Street Address for Express Mail:
1221 W. Idaho Street
Boise, ID 83702
All 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 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 the set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Application in Case No. IPC-08-
may be viewed at www.puc.idaho.gov by clicking on "File Room" and "Electric Cases " or can
be viewed during regular business hours at the Idaho Public Utilities Commission, 472 W.
Washington Street, Boise, Idaho and at the general business office of Idaho Power Company,
1221 West Idaho Street, Boise, Idaho.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
DATED at Boise, Idaho this ;1.
-f4-day of June 2008.
Je . Jeweil
Co mission Secretary
blslN:IPC-08-13 sw
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE