20101122Comments.pdf

KRISTINE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 6618
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR APPROVAL ) CASE NO. IPC-E-09-25
OF A FIRM ENERGY SALES AGREEMENT )
FOR THE SALE AND PURCHASE OF ) COMMENTS OF THE
ELECTRIC ENERGY BETWEEN IDAHO ) COMMISSION STAFF
POWER COMPANY AND IDAHO WINDS LLC. )
)
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
Attorney of record, Kristine A. Sasser, Deputy Attorney General, and in response to the Notice
of Filng and Notice of Modified Procedure issued in Order No. 32103 on November 1, 2010, in
Case No. IPC-E-09-25, submits the following comments.
BACKGROUND
On September 10, 2009, Idaho Power fied an Application with the Commission
requesting approval of a 20-year Firm Energy Sales Agreement between Idaho Power and Idaho
Winds LLC dated September 1, 2009. The Application was processed by Modified Procedure.
After reviewing and considering the Application and comments fied by Staff and other
interested paries in the case, the Commission found it reasonable to accept termination of the
STAFF COMMENTS 1 NOVEMBER 22,2010
Alkali Wind Project! contract and approve the September 1, 2009, Firm Energy Sales Agreement
between Idaho Power and Idaho Winds LLC for the Sawtooth Wind Project. Order No. 30964.
On October 5, 2010, Idaho Power filed a Motion with the Commission for approval of a
Generator Interconnection Agreement (GIA; Agreement) between Idaho Winds LLC and Idaho
Power regarding the Sawtooth Wind Project (Project). The Company's Motion states that
interconnection of the Project is provided at 138 kV at an estimated cost to the Project of
approximately $844,000. In addition, the Project wil require substantial network transmission
system upgrades to Idaho Power's system at an estimated cost of approximately $2,176,000.
The estimated construction completion date is July 22, 2011.
STAFF ANALYSIS
In 2006, numerous PURP A Qualifying Facilty projects were proposed to be developed
in the Magic Valley area of southern Idaho (the "Twin Falls queue"). Because these proposed
projects were clustered in a defined geographic area, were subject to many of the same
transmission constraints, and would utilze common transmission facilties, all of the proposed
facilties in the Twin Falls queue were considered in adoption of a Settlement Stipulation in Case
No. IPC-E-06-21 (the "Cassia Case"). In the Cassia Case, a cost sharing formula was adopted
for determining how the costs of necessar transmission upgrades would be allocated amongst
proposed projects and Idaho Power. In Order No. 30414, the Commission concluded that use of
the Cassia Formula was appropriate for the Cassia Wind Farms as well as the other PURPA
generation projects in the Twin Falls 138 kV transmission queue. However, the Commission did
not authorize the Company to automatically apply the Cassia Formula in other locations on its
system where transmission upgrades would be required. The Commission indicated that
application of any terms or conditions approved as a par of the settlement in the Cassia case to
other QF interconnection requests "will depend on the specific characteristics of that situation."
(Order No. 304I4,p. 11.)
This Agreement is the second outside of the Twin Falls queue involving PURP A
generating facilties subject to Idaho Power's Schedule 72 which require substantial upgrades to
i The Alkali Wind Project was a proposed 18 MW facilty to be constructed at the same location as the Sawtooth
Wind Project. A power sales agreement for the Alkali Wind Project was approved on Februaiy 26, 2007, but the
facilty was never built. Hence, Idaho Winds requested that the power sales agreement for the Alkali project be
terminated at the same time it asked for approval of the Sawtooth power sales agreement.
STAFF COMMENTS 2 NOVEMBER 22, 2010
Idaho Power's transmission system. The Commission nrst authorized a sharing formula for
transmission upgrade costs outside of the Twin Falls queue in Case Nos. IPC-E-06-34 and
IPC-E-06-35 - Hot Springs Windfar and Bennett Creek Windfar, respectively?
Idaho Power asserts that the Sawtooth Wind Project will be interconnected to the same
transmission line as the Hot Springs and Bennett Creek projects and the network transmission
upgrades required to interconnect will have a similar impact. Therefore, as a similarly situated
project, Idaho Power and Idaho Winds LLC believe it is appropriate for this Agreement to
include the cost sharing allocation developed and accepted in the Cassia case and approved by
the Commission in the Hot Springs and Bennett Creek interconnection agreements. Under the
cost sharing allocation,
. 25% of the costs wil be funded by Idaho Power and included in
Idaho Power's rate base;
· 25% of the costs will be paid by the Project as a non-refudable
contribution in aid of constrction (CIAC);
· 50% of the costs wil be funded by the Project as an advance in
aid of constrction (AIAC), subject to refud by Idaho Power
over a term of up to 10 years. This portion of the costs wil be
rate based over time as refuds are made.
In its Application, Idaho Power offers the following arguments in support of applying the
Cassia Formula to the Sawtooth Wind Project:
(1) But for the constrction of the Sawtooth Wind Project, Idaho Power would not
have constructed the transmission upgrades to provide adequate service to its
native load customers. Therefore, Idaho Power believes a contribution by the
developer of a portion of the transmission upgrade cost is appropriate.
(2) In the Cassia case, the Commission directed Idaho Power to assess the benefits
of individual transmission upgrades taking into consideration "the system wide
benefits that accrue to all customers on an integrated transmission grid." (Order
No. 30414, p. 10). Idaho Power suggests that one way to approach that
2 These windfar projects shared the same developer, interconnection, and generator interconnection agreement.
STAFF COMMENTS 3 NOVEMBER 22,2010
assessment is to compare the level of benefits that the Sawtooth upgrades wil
provide to the system with the level of benefits provided in the Cassia case.
The Company acknowledges that it is nearly impossible to precisely quantify
the relative system benefits conferred by two distinct and geographically
separate transmission upgrades. However, Idaho Power states, transmission
engineers can exercise their judgment and their knowledge of transmission
systems they have designed and operate. Based on their informed judgment,
Idaho Power's transmission engineers are of the opinion that the transmission
upgrades required for the Sawtooth Project wil provide different benefits than
the transmission system benefits the Cassia upgrades provide. Consequently,
the Company believes that the use of the Cassia Formula is reasonable in this
circumstace.
(3) The Company is also of the opinion that the application of the Cassia Formula
in this case wil maintain the balance between "the benefits accruing to the
customers of the grid with the cost responsibilty of the QF necessitating the
timing and the construction of the upgrade." (Order No. 30414, p. 11).
(4) Sawtooth, like the QF projects in the Twin Falls queue, wil displace or defer
the need for other or similar generation projects in Idaho Power's Integrated
Resource Plan that would likely require related transmission investment by the
Company. (Order No. 30414, p. 11).
(5) Idaho Power believes that application of the Cassia Formula in this instace
wil allow it to successfully defend a comparabilty claim brought by a Federal
Energy Regulatory Commission ("FERC") jurisdictional customer claiming that
Idaho Power and the Commission had given unlawfl, preferential treatment to
QF resources.
One of the key elements of the Agreement is related to Generator Output Limit Control
or "Re-dispatch." Under these provisions, Idaho Power is permitted to direct Sawtooth Wind to
forcibly reduce its generation output if and when outages on specified transmission lines occur.
STAFF COMMENTS 4 NOVEMBER 22,2010
Certainly, if enough transmission upgrades were made, Idaho Power could ensure that Sawtooth
would be able to deliver its full output to Idaho Power's system under all loading conditions. To
do so however, would require more substantial and much more costly upgrades than those
required in this Agreement. Although the possibilty of transmission outages stil exists with the
amount of upgrades required in this GIA, Idaho Power believes that the likelihood and
frequency of load-related outages on the specified transmission lines is extremely remote.
Because the likelihood of transmission outages is so remote and because the cost of transmission
upgrades would be so much higher to ensure deliverabilty under all conditions, Idaho Winds
has agreed to be subject to re-dispatch in exchange for Idaho Power requiring less extensive
transmission system upgrades. Furthermore, Idaho Power believes that the need for possible re-
dispatch wil likely be relieved in the future if the Gateway West project is built, sometime after
2015, making re-dispatch a relatively short-term possibilty.
Staff acknowledges, however, thatiftoo many projects in the Twin Falls queue or in
other locations nearby are permitted to re-dispatch, in the rare event transmission is severely
constrained, Idaho Power wil not have access to the generation provided by these facilties. The
aggregate amount of generation from these facilties has grown to several hundred megawatts,
collectively making it a major resource. Staffs concern is negated somewhat, however, because
of the fact that most of the projects subject to re-dispatch are wind facilties, which are unlikely
to be generating at or near capacity during the extremely hot hours of the year when
transmission congestion is most likely to occur. Consequently, Idaho Power does not plan to
rely on output from these facilities durng extreme events anyway. Nevertheless, there is no
discount to the avoided costs paid to facilties subject to re-dispatch, which, although extremely
rare, is most likely to occur when generation from the facility is needed most.
RECOMMENDATIONS
Re-dispatch provisions similar to those contained in the Idaho Winds GIA have been
included in other GIAs for projects in the Twin Falls queue and also for the Hot Springs and
Bennett Creek projects. Because the Sawtooth project faces similar circumstaces as these other
projects, Staff believes that including re-dispatch provisions in the Idaho Winds GIA is also
appropriate. Staff recommends approval of the Generation Interconnection Agreement between
Idaho Winds, LLC and Idaho Power without change or condition.
STAFF COMMENTS 5 NOVEMBER 22,2010
N~
Respectfully submitted this )2- day of November 2010.
~;'" a'S-4JA~
Kris ne A. Sasser
Deputy Attorney General
Technical Staff: Rick Sterling
i: umisc:commentslipce09 .25ksrps comments. doc
STAFF COMMENTS 6 NOVEMBER 22,2010
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 22ND DAY OF NOVEMBER 2010,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-09-25, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
DONOV AN WALKER
BARTON L KLINE
IDAHO POWER COMPANY
POBOX 70
BOISE ID 83707-0070
E-MAIL: dwalkeraYidahopower.com
bklineaYidahopower .com
RANDY C ALLPHIN
CONTRACT ADMINISTRATOR
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: rallphinaYidahopower.com
TOM FETZER
IDAHO WIND FARMS LLC
4255 S NICKEL CREEK PLACE
MERIDIAN ID 83642
~~
SECRETARY.
CERTIFICATE OF SERVICE