20080822Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
CO MMISSI 0 NER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:RICK STERLING
DATE:AUGUST 14 2008
RE:APPLICATION FOR APPROVAL OF A SCHEDULE 86, NON-FIRM
ENERGY SALES AGREEMENT BETWEEN IDAHO POWER AND
CARGILL ENVIRONMENTAL FINANCE; CASE NO. IPC-08-
On August 8, 2008, Idaho Power Company (Idaho Power; Company) submitted for
approval a Uniform Agreement under Schedule 86 between Idaho Power and Cargill
Environmental Finance (Cargill) for the purchase of non-firm energy (Agreement). Cargill is
developing a 2.25 MW anaerobic digester near Hansen, Idaho (Project). The Project will be a
qualifying small power production facility under the applicable provisions of the Public Utility
Regulatory Policies Act of 1978 (PURP A).
Idaho Power and Cargill have entered into the July 28, 2008, Agreement pursuant to
Idaho Power s Schedule 86, Cogeneration and Small Power Production-Non-Firm Energy tariff.
In accordance with Schedule 86, the purchase price will be equal to 85 percent of the weighted
average of the daily on-peak and off-peak Dow Jones Mid-Columbia Electricity Price Index for
non-firm energy. A copy ofthe Agreement, which includes Schedule 86, is attached as
Attachment A.
The Company requests that all of the terms and conditions of the Agreement be approved
without change or condition and that all payments to be made under the Agreement be allowed
as prudently incurred expenses for ratemaking purposes.
The Project is already operational. After the Project has operated under the Agreement
for a reasonable period of time, Idaho Power expects that Cargill and Idaho Power will enter into
a long-term firm energy sales agreement for the Project.
DECISION MEMORANDUM - I -AUGUST 14 2008
STAFF RECOMMENDATION
The Agreement is a standard agreement under Schedule 86 and contains non-firm energy
rates in conformance with posted tariffs and applicable Commission orders. Consequently, Staff
recommends that the Agreement be approved by minute entry without further notice or
procedure.
CO MMISSI ON D ECISI 0 N
Staff recommends that the Schedule 86 tariff Agreement with Cargill be approved by
minute entry without further notice or procedure. Does the Commission agree with Staffs
recommendation for contract approval?
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DECISION MEMORANDUM - 2 -AUGUST 14, 2008
IDAHO POWER COMPANY
SCHEDULE 86
UNIFORM AGREEMENT
For the Purchase of Non-Finn Energy From Qualifying Facilities
THIS AGREEMENT made this 1 ~day of CA.' 2008 , between
CARGILL ENVIRONMENTAL FINANCE whose mailing address is Attn: Rick Rud, 9350 Excelsior Boulevard, MS 139-
Hopkins, MN 55343, e-mail: Rick Rudrev,cargill.com hereinafter called Seller and IDAHO POWER COMPANY, a
corporation with its principal office located at 1221 West Idaho Street, Boise, Idaho hereafter called "Company
NOW, THEREFORE, The parties agree as follows:
1. Company shall purchase Energy produced by the Seller s Qualifying Facility located at or near 2940 South
4225 East near the town of Hansen, Idaho , County of Twin Falls State of Idaho, located in the of Section
Township 11 S , Range 19E , in the fonn of three phase 60 Hz and at a nominal phase to phase potential of
480 volts, subject to emergency operating conditions of the Company. Purchases under this Agreement are subject to the
Company s applicable Tariff provisions, including but not limited to Schedules 86 and 72 approved by and as may be hereafter
modified by the Idaho Public Utilities Commission ("Commission ) and the provisions of this Agreement.
2. Seller shall pay Company for all costs ofInterconnection Facilities as provided for in Exhibit A of this Agreement
and Schedule 72.
3. In addition to the charges provided under Paragraph 2, Seller shall pay to the Company the monthly Operations
and Maintenance Charge specified in Schedule 72 on the Investment by the Company in Interconnection Facilities which
investment is set forth in Exhibit A, attached hereto and made a part hereof. As such investment changes, in order to provide
facilities to serve Seller s requirements, Company shall notify Seller in writing of additions or deletions of facilities by
forwarding a dated revised Exhibit A, which shall become part of this Agreement. The montWy Operation & Maintenance
Charge will be adjusted to correspond to the Revised Exhibit A.
4. The initial date of acceptance of Energy under this Agreement is subject to the Company s ability to obtain
required labor, materials, equipment, satisfactory rights of way, and comply with governmental regulations.
5. The tenn of this Agreement shall become effective on the date fIrst above written, and shall continue to full force
and effect until canceled by Seller upon sixty (60) days prior written notice.
6. This Agreement and the rates, tenns, and conditions of service set forth or incorporated herein, and the respective
rights and obligations of the parties hereunder, shall be subject to valid laws and to the regulatory authority and orders, rules
and regulations of the Commission and such other administrative bodies having jurisdiction.
7. Nothing herein shall be construed as limiting the Commission from changing any rates, charges, classification or
service, or any rules, regulation or conditions relating to service under this Agreement, or construed as affecting the right of the
Company or the Seller to unilaterally make application to the commission for any such change.
8. This Agreement shall not become effective until the Commission approves all tenns and provisions hereof without
change or condition and declares that all payments to be made hereunder shall be allowed as prudently incurred expenses for
ratemaking purposes.
ENVIRONMENTAL FINANCE
(Seller)
EXHIBIT A
FACILITY AND POINT OF DELNERY
PROJECT NO. 31615100
Bettencourt Dry Creek BioFactory, LLC
DESCRIPTION OF FACILITY
This Facility will consist of an Anaerobic Digester waste processing unit that will supply fuel to 3 Guascor
SFGLD 560 engines that will drive three (3) Stamford Newage PI 736D generators, each with a nameplate
rating of 750 kW. Connected to Idaho Power Company using Gen-Tec GENCON II controls, ABB Isomax
Breaker, and Beckwith m3410A protective relays.
LOCATION OF FACILITY
Near: Hansen, Idaho 2940 South 4225 East Twin, Falls Idaho
Sections: Township: T11 S Range: R19E County: Twin Falls ill.
SCHEDULED OPERATION DATE
Seller has selected Julv 31, 2008 as the estimated Scheduled Operation Date.
Idaho Power, based on the information supplied by the Seller, will schedule its construction in accordance
with Schedule 72 and the Generation Interconnection Process.
MAXIMUM CAPACITY AMOUNT: This value will be MW which is consistent with the value
provided by the Seller to Idaho Power in accordance with Schedule 72. This value is the maximum energy
(MW) that potentially could be delivered by the Seller s Facility to the Idaho Power electrical system at
any moment in time.
POINT OF DELNERY
Point of Delivery" means , unless otherwise agreed by both Parties, the point of where the Sellers
Facility s energy is delivered to the Idaho Power electrical system. Schedule 72 will determine the specific
Point of Delivery for this Facility. The Point of Delivery identified by Schedule 72 will become an
integral Dart of this Agreement.
LOSSES
If the Idaho Power Metering equipment is capable of measuring the exact energy deliveries by the Seller to
the Idaho Power electrical system at the Point of Delivery, no Losses will be calculated for this Facility.
the Idaho Power Metering is unable to measure the exact energy deliveries by the Seller to the Idaho Power
electrical system at the Point of Delivery, a Losses calculation will be established to measure the energy
losses (kWh) between the Seller s Facility and the Idaho Power Point of Delivery. This loss calculation
will be initially set at 2% of the kWh energy production recorded on the Facility generation metering
equipment. At such time as Seller provides Idaho Power with the electrical equipment specifications
(transformer loss specifications, conductor sizes, etc) of all of the electrical equipment between the Facility
and the Idaho Power electrical system, Idaho Power will configure a revised 10ss calculation formula to be
agreed to by both parties and used to calculate the kWh Losses for the remaining term of the Agreement.
If at any time during the term of this Agreement, Idaho Power determines that the loss calculation does not
correctly reflect the actual kWh losses attributed to the electrical equipment between the Facility and the
Idaho Power electrical system, Idaho Power may adjust the calculation and retroactively adjust the
previous months kWh loss calculations.
METERING AND TELEMETRY
Schedule 72 will determine the specific metering and telemetry requirements for this Facility. At the
minimum the Metering Equipment and Telemetry equipment must be able to provide and record hourly
energy deliveries to the Point of Delivery and any other energy measurements required to administer this
Agreement. These specifications will include but not be limited to equipment specifications, equipment
location, Idaho Power provided equipment, Seller provided equipment, and all costs associated with the
equipment, design and installation of the Idaho Power provided equipment. Seller will arrange for and
make available at Seller s cost communication circuit(s) compatible to Idaho Power s communications
equipment and dedicated to Idaho Power s use terminating at the Idaho Power facilities capable of
providing Idaho Power with continuous instantaneous information on the Facilities energy production.
Idaho Power provided equipment will be owned and maintained by Idaho Power, with total cost of
purchase, installation, operation, and maintenance, including administrative cost to be reimbursed to Idaho
Power by the Seller. Payment of these costs will be in accordance with Schedule 72 and the total metering
cost will be included in the calculation of the Monthly Operation and Maintenance Charges specified in
Schedule 72.
NETWORK RESOURCE DESIGNATION AND TRANSMISSION SERVICE REQUEST
Idaho Power cannot accept or pay for generation from this Facility until a Transmission Service Request
TSR") and a Network Resource Designation ("NRD") application have been accepted by Idaho Power
delivery business unit. Federal Energy Regulatory Commission ("FERC") Rules require Idaho Power to
prepare and submit the TSR and NRD. Because much of the information Idaho Power needs to prepare the
TSR and NRD is specific to the Seller s Facility, Idaho Power s ability to file the TSR and NRD in a
timely manner is contingent upon timely receipt ofthe required information from the Seller. Seller
failure to provide complete and accurate information in a timely manner can delay the First Energy
Date and may result in Seller paying higher costs for interconnection.
Transmission Service Request (TSR)- Idaho Power will prepare and submit the TSR
within a reasonable period of time after the Seller (a) provides written confirmation that
the Generation Interconnection Agreement ("GIA") between Seller and Idaho Power
delivery business unit has been executed for this Facility and (b) provides all of the
Facility-specific details required to complete the TSR.
ii.Network Resource Designation - Idaho Power will complete and file the NRD application
within a reasonable period oftime after a) this Agreement has been executed by both
parties and b) the TSR has been filed and accepted and c) all necessary information has
been received from the Seller to enable Idaho Power to complete the NRD application.
Idaho Power Company
I.P.C. No. 29, Tariff No. 101 Ori inal Sheet No. 86-
IDAHO PUBLIC UTILITIES COMMISSIONApproved EffectiveFeb. 29, 2008 March 1 , 2008
Per O.N. 30508
Jean D. Jewell SecretarySCHEDULE 86
COGENERATION AND SMALL
POWER PRODUCTION NON-FIRM
ENERGY
AVAILABILITY
Service under this schedule is available throughout the Company s service territory within the
State of Idaho.
APPLICABILITY
Service under this schedule is applicable to any Seller that:1. Owns or operates a Qualifying Facility with a nameplate capacity rating of less than 10
MW and desires to sell Energy generated by the Qualifying Facility to the Company on a non-firm , if, as
and when available basis;2. Meets all applicable requirements of the Company s Schedule 72 and the Generation
Interconnection Process.
DEFINITIONS
Avoided Enerqy Cost is the weighted average of the daily on-peak and off-peak Dow Jones Mid-
Columbia Electricity Price Index (Dow Jones Mid-C Index) prices for nonfirm energy published in the Wall
Street Journal. If the Dow Jones Mid-C Index prices are not reported for a particular day or days, the
average of the immediately preceding and following reporting periods or days will be used.
Desiqnated Dispatch Facility is the Company s Boise Bench Dispatch Center.
Enerqy means the non-firm electric energy, expressed in kWh , generated by the Qualifying
Facility and delivered by the Seller to the Company in accordance with the conditions of this schedule.
Energy is measured net of Losses and Station Use.
Generation Facility means equipment used to produce electric energy at a specific physical
location, which meets the requirements to be a Qualifying Facility.
Generation Interconnection Process is the Company s generation interconnection application and
engineering review process developed to ensure a safe and reliable generation interconnection.
Interconnection Facilities are all facilities reasonably required by Prudent Electrical Practices and
the National Electric Safety Code to interconnect and safely deliver Energy from the Qualifying Facility to
the Company s system, including, but not limited to , connection , transformation, switching, metering,
relaying, communications, disconnection, and safety equipment.
Losses are the loss of electric energy occurring as a result of the transformation and transmission
of electric energy from the Qualifying Facility to the Point of Delivery.
IDAHO
Issued per Order No. 30508
Effective - March 1 , 2008
Issued by IDAHO POWER COMPANY
John R. Gale , Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, ID
Idaho Power Company
I.P.C. No. 29 Tariff No. 101 Oriqinal Sheet No. 86-
IDAHO PUBLIC UTILITIES COMMISSIONApproved Effective
Feb. 29, 2008 March 1 , 2008
Per O.N. 30508
Jean D. Jewell SecretarySCHEDULE 86
COGENERATION AND SMALL
POWER PRODUCTION NON-FIRM
ENERGY
(Continued)
DEFINITIONS (Continued)
Point of Delivery is the location where the Company s and the Seller s electrical facilities are inter-
connected.
Prudent Electrical Practices are those practices, methods and equipment that are commonly used
in prudent electrical engineering and operations to operate electric equipment lawfully and with safety,dependability, efficiency and economy.
PURPA means the Public Utility Regulatory Policies Act of 1978.
Qualifvinq Facility is a cogeneration facility or a small power production facility which meets the
PURPA criteria for qualification set forth in Subpart B of Part 292, Subchapter K, Chapter I , Title 18, of theCode of Federal Regulations.
Schedule 72 is the Company s service schedule which provides for interconnection to non-utility
generation or its successor schedule(s) as approved by the Commission.
Seller is any entity that owns or operates a Qualifying Facility and desires to sell Energy to the
Company.
Standby Power is electrical energy or capacity supplied by the Company during an unscheduled
outage of a Qualifying Facility to replace energy consumed by the seller which is ordinarily supplied by
the Seller s Qualifying Facility.
Station Use is electric energy used to operate the Qualifying Facility which is auxiliary to or directly
related to the generation of electricity and which, but for the generation of electricity, would not be
consumed by the Seller.
Supplementary Power is electric energy or capacity supplied by the Company which is regularly
used by a Seller in addition to the Energy and capacity which the Qualifying Facility usually supplies to
the Seller.
PURCHASE PRICE
The Company will pay the Seller monthly, for each kWh of Energy delivered and accepted at the
Point of Delivery during the preceding calendar month, an amount equal to 85 percent of the monthlyAvoided Energy Cost.
IDAHO
Issued per Order No. 30508
Effective - March 1 , 2008
Issued by IDAHO POWER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, ID
Idaho Power Company
I.P.C. No. 29 Tariff No. 101 Oriqinal Sheet No. 86-
IDAHO PUBLIC UTILITIES COMMISSIONApproved Effective
Feb. 29, 2008 March 1 , 2008
Per O.N. 30508
Jean D. Jewell SecretarySCHEDULE 86
COGENERATION AND SMALL
POWER PRODUCTION NON-FIRM
ENERGY
(Continued)
CONDITIONS OF PURCHASE AND SALE
The conditions listed below shall apply to all transactions under this schedule.
Company.
The Company shall purchase Energy from any Seller that offers to sell Energy to the
As a condition of interconnection with the Company, the Seller shall:a. Complete and maintain all requirements of interconnection in accordance with
Schedule 72.b. Complete and maintain all requirements of the Company Generation
Interconnection Process.
Submit proof to the Company of all insurance required by paragraph 12.d. Obtain written confirmation from the Company that all conditions to
interconnection have been fulfilled prior to operation of the Generation Facility. Such
confirmation shall not be unre asonably withheld by the Com pany.3. The Seller shall never deliver or attempt to deliver energy to the Company s system
when the Com pany s system serving the Seller s Generation Facility is de-energized for any reason.4. The Seller and the Company shall each indemnify the other, their respective officers
agents, and employees against all loss, damage, expense, and liability to third persons for injury to or
death of persons or injury to property, proximately caused by the indemnifying party s construction
ownership, operation or maintenance of, or by failure of, any of such party s works or facilities used in
connection with purchases under this schedule. The indemnifying party shall , on the other party
request, defend any suit asserting a claim covered by this indemnity. The indemnifying party shall pay
all costs that may be incurred by the other party in enforcing this indem nity.5. The Company shall offer to provide Standby Power and Supplementary Power to the
Seller. Charges for Supplementary and Standby Power will be in accordance with the Company
Schedule 7 as that schedule is modified from time to time by the Commission.
The Seller shall maintain voltage levels acceptable to the Company.7. The Seller shall maintain at the Qualifying Facility or such other location mutually
acceptable to the Company and Seller, adequate metering and related power production records, in a
form and content recom mended by the Company.
IDAHO
Issued per Order No. 30508
Effective - March 1 , 2008
Issued by IDAHO POWER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, ID
Idaho Power Company
I.P.C. No. 29. Tariff No. 101 Ori inal Sheet No. 86-
IDAHO PUBLIC UTILITIES COMMISSIONApproved EffectiveFeb. 29, 2008 March 1 , 2008
Per O.N. 30508
Jean D. Jewell SecretarySCHEDULE 86
COGENERATION AND SMALL
POWER PRODUCTION NON-FIRM
ENERGY
(Continued)
CONDITIONS OF PURCHASE AND SALE (Continued)
Either the Seller or the Company after reasonable notice to the other party, shall have the right,
during normal business hours, to inspect and audit any or all such metering and related power
production records pertaining to the Seller s account.8. During a period of shortage of energy on the Company s system, the Seller shall, at the
Company s request and within the limits of reasonable safety requirements as determined by the Seller
use its best efforts to provide requested Energy, and shall , if necessary, delay any scheduled shutdown
of the Qualifying Facility.9. The Company and the Seller shall maintain appropriate operating communications
through the Designated Dispatch Facility.
10. The Company shall not be obligated to accept, and the Company may require the Seller
to curtail , interrupt or reduce deliveries of Energy if the Company, consistent with Prudent Electrical
Practices, determines that curtailment, interruption or reduction is necessary because of line
construction or maintenance requirements, emergencies , or other critical operating conditions on its
system.
11. If the Company is required by the Commission to institute curtailment of deliveries of
electricity to its Customers, the Company may require the Seller to curtail its consumption of electricity
in the same manner and to the same degree as other Customers within the same Customer class who
do not own Generation Facilities.
12. The Seller shall secure and continuously carry liability insurance coverage for both
bodily injury and property damage liability in the amount of not less than $1 000 000 each occurrence
combined single limit.
Such insurance shall include an endorsement naming the Company as an additional insured
insofar as liabil ity arising out of operations unde r this schedule and a provision that such I iability policies
shall not be canceled or their limits of liability reduced without 30 days' written notice to the Company.
The Seller shall furnish the Company with certificates of insurance together with the endorsements
required herein. The Company shall have the right to inspect the original policies of such insurance.
13. The Seller shall grant to the Company all necessary rights of way and easements to
install , operate, maintain , replace, and remove the Company s metering and other Interconnection
Facilities including adequate and continuing access rights to the property of the Seller. The Seller
warrants that it has procured sufficient easements and rights of way from third parties as are necessary
to provide the Company with the access described above. The Seller shall execute such other grants
deeds, or documents as the Company may require to enable it to record such rights of way and
easements.
IDAHO
Issued per Order No. 30508
Effective - March 1 , 2008
Issued by IDAHO POWER COMPANY
John R. Gale , Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, ID
Idaho Power Company
LP.C. No. 29 Tariff No. 101 Oriqinal Sheet No. 86-
IDAHO PUBLIC UTILITIES COMMISSIONApproved Effective
Feb. 29, 2008 March 1, 2008
Per O.N. 30508
Jean D. Jewell SecretarySCHEDULE 86
COGENERATION AND SMALL
POWER PRODUCTION NON-FIRM
ENERGY
(Continued)
CONDITIONS OF PURCHASE AND SALE (Continued)
14. Depending on the size and location of the Seller Qualifying Facility, it may be
necessary for the Company to establish additional requirements for operation of the Qualifying Facility.
These requirements may include, but are not limited to , voltage, reactive, or opera ting requirements.
IDAHO
Issued per Order No. 30508
Effective - March 1 , 2008
Issued by IDAHO POWER COMPANY
John R. Gale , Vice President, Regulatory Affairs
1221 West Idaho Street, Boise , ID