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Idaho Public Utilities Commission

Case No. IPC-E-08-20, Notice of Oral Argument

February 24, 2009

Contact: Gene Fadness [phone], 890-2712

Website:
http://www.puc.idaho.govwww.puc.idaho.gov

Commission to hear oral arguments in alleged breach of contract

Idaho Power Company is seeking $11.15 million in damages from a Glenns Ferry cogeneration plant for an alleged breach of contract.

The Idaho Public Utilities Commission has scheduled oral arguments in the matter for March 3 at 9:30 a.m. in the commission hearing room at 472 W. Washington St.

From 1996 through October of 2007, Glenns Ferry Cogeneration sold power to Idaho Power under the provisions of a 20-year PURPA[i] contract. The cogeneration plant used natural gas as an energy source which, as a byproduct, produced steam for the Idaho Fresh-Pak potato processing plant in Glenns Ferry. According to Idaho Power, power deliveries from the plant ended in October of 2007 and Idaho Fresh-Pak ceased its Glenns Ferry operation in February, 2008.

Glenns Ferry Cogeneration Partners argues that because Idaho Power’s complaint is a contract dispute and because the cogeneration plant is not a public utility, the dispute falls under the jurisdiction of the district court, not the commission. While the commission sets the terms and conditions under which utilities purchase electricity from PURPA providers, the commission is not the contract administrator, according to Glenns Ferry Cogeneration Partners.

Idaho Power argues that shaping, reviewing and approving contracts between cogeneration facilities and electric utilities is a proper function of the commission. PURPA contracts are unique, Idaho Power argues, alleging that both Glenns Ferry Cogeneration and Idaho Power looked to the commission for guidance regarding the unique provisions of the contract and “until faced with an actual dispute, Glenns Ferry Cogeneration advocated for resolving any dispute before the commission.”

Further, Idaho Power argues, federal law delegates to state commissions the obligation to oversee creation of wholesale PURPA contracts.

The contract between Idaho Power and Glenns Ferry Cogeneration was a “levelized” contract, under which the same amount is paid by the utility to the small-power producer over the entire 20-year contract. With levelized contracts, the utility pays more than the actual value of the electricity in the early years.

Oral arguments begin at 9:30 a.m. on March 3 in the commission hearing room at 472 W. Washington St. in Boise.

To read more about the case, go the commission’s Web site at
http://www.puc.idaho.govwww.puc.idaho.gov. Click on the electric icon, select “Open Electric Cases,” and scroll down to Case No. IPC-E-08-20.

[i] *PURPA, the federal Public Utility Regulatory Policies Act, requires electric utilities to offer to buy power produced by small-power producers or cogenerators who obtain Qualifying Facility (QF) status. The rate to be paid by utilities to small-power producers, called an “avoided cost rate,” is determined and published by state commissions. The avoided cost rate is to be equal to the cost the electric utility avoids if it would have had to generate the power itself or purchase it from another source.