20100422final_order_no_31060.pdf

Office of the Secretary
Service Date
April 22 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF A FIRM ENERGY SALES
AGREEMENT FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY
BETWEEN IDAHO POWER COMPANY
AND RIVERSIDE INVESTMENTS, LLC
ORDER NO. 31060
CASE NO. IPC-I0-
On March 9, 2010, Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of a
March 8, 2010, Firm Energy Sales Agreement (Agreement) between Idaho Power and Riverside
Investments, LLC (Riverside).
AGREEMENT
Riverside is the owner/developer of a 450 kW hydro-generation facility (Arena Drop)
located near Parma, Idaho in an area more particularly described as near Stephan Lane in Section
, Township 4 N, Range 5 W, Canyon County, Boise Meridian. Riverside warrants that it is a
qualified small power generation facility (QF) as defined in Sections 201 and 210 of the Public
Utility Regulatory Policies Act of 1978 (PURP A) and the implementing regulations of the
Federal Energy Regulatory Commission (FERC), 18 C.R. g 292. '113.2.
The purchase price for Riverside generation are the non-Ievelized published avoided
cost rates in effect on the date of contract signing for monthly energy deliveries of less than 10
average megawatts (aMW). Order Nos. 30744, 30738 and 30415; Agreement Article VII.
Should the facility exceed 10 aMW on a monthly basis, Idaho Power will accept the energy
(Inadvertent Energy) that does not exceed the Maximum Capacity Amount (.52 MW), but will
not purchase or pay for this Inadvertent Energy. '117.
The term of the Agreement is 20 years. 'II 5.1. The scheduled Operation Date for
Arena Drop is July 15, 2010. If the facility has not achieved its Operation Date prior to 90 days
past that date, Delay Liquidated Damages of $45 per nameplate kW rating will be assessed and
collected from the facility. 'II 5.3.2. In addition, within 30 days of the date of the Commission
Order approving this Agreement, Riverside shall post security of $45 per nameplate kW rating.
'115.
ORDER NO. 31060
Idaho Power represents that an interconnection feasibility study was not required for
the Arena Drop facility. A final Facility Study was completed on March 4, 2010. All applicable
interconnection charges and monthly operation and maintenance charges under Schedule 72 will
be assessed and collected from Riverside.
The Idaho Power/Riverside Firm Energy Sales Agreement will not become effective
until the Commission has approved all of the Agreement's terms and conditions and declared
that all payments the Company makes to Riverside for purchases of energy will be allowed as
prudently incurred expenses for ratemaking purposes. '1120.
On March 17, 2010, the Commission issued Notices of Application and Modified
Procedure in Case No. IPC-IO-05. The deadline for filing written comments was April 1
2010. Comments were filed by Commission Staff and two members of the public. The public
comments were split, one supporting the proposed project, the other contending that the purchase
price is too high.
STAFF COMMENTS
Commission Staff recommends that the Agreement be approved. The rates contained
in the Agreement, Staff states, are consistent with the non-Ievelized published avoided cost rates
for projects smaller than 10 aMW that were approved and in effect at the time the Agreement
was signed by both parties. The Agreement, Staff notes, was submitted for Commission
approval on March 9 2010, exactly one week before the Commission issued Order No. 31025
significantly lowering the published avoided cost rates.
Staff notes that the Delay Liquidated Damages provisions of the Agreement and the
associated requirement for Delay Security of $45 per kW were reached through mutual
agreement of the parties. Staff believes that the amount should be high enough to cover possible
damages and to motivate owners to complete projects on time, yet not so high as to make it too
difficult for owners and developers to post the security and obtain project financing. In this case
Delay Security is equal to the greater of $45 per kW or the sum of three months' estimated
revenue, approximately $20 250. Staff believes that the $45 Delay Security amount is
reasonable. Whether the Arena Drop project achieves its scheduled operation date, Staff
contends, is mostly in control of the project owner. The Facility Study needed to determine
interconnection requirements for the project has already been completed by Idaho Power.
ORDER NO. 31060
Construction by Idaho Power of the necessary interconnection facilities commences once the
project owner pays the expected interconnection cost.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case No. IPC-
lO-, including the proposed Agreement and filed comments. Idaho Power has presented for
Commission approval a Firm Energy Sales Agreement with Riverside Investments LLC.
represented and pursuant to Agreement, under normal and/or average conditions the project will
not exceed 10 aMW on a monthly basis. We thus find the project is qualified to receive the
published avoided cost rates in effect on the date of contract signing.
The Commission finds that the proposed Agreement submitted in this case contains
acceptable contract provisions and includes non-Ievelized published avoided cost rates approved
by the Commission in Order No. 30477. We find it reasonable that the submitted Agreement be
approved without further notice or procedure. IDAP A 31.01.01.204. We further find it
reasonable to allow payments made under the Agreement as prudently occurred expenses for
ratemaking purposes.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company,
an electric utility, pursuant to the authority and power granted it under Title 61 of the Idaho Code
and the Public Utility Regulatory Policies Act of 1978 (PURP A).
The Commission has authority under PURP A and the implementing regulations of
the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric
utilities to enter into fixed-term obligations for the purchase of energy from qualified facilities
and to implement FERC rules.
ORDER
IT IS HEREBY ORDERED and the Commission does hereby approve the March 8
2010 Firm Energy Sales Agreement between Idaho Power Company and Riverside Investments
LLC.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code g 61-626.
ORDER NO. 31060
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this :::' ;J.
day of April 2010.
JI . KEMPTON PRES ENT
MARSHA H. SMITH, COMMISSIONER
~~'-~ ~
MACK A. REDFORD, COMMISSIONER
ATTEST:
bls/O:IPC-IO-OS sw2
ORDER NO. 31060