20100623Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 1895
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20m JUN23 PH": 00
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-IO-18
OF A FIRM ENERGY SALES AGREEMENT )
FOR THE SALE AND PURCHASE OF ) COMMENTS OF THE
ELECTRIC ENERGY BETWEEN IDAHO ) COMMISSION STAFF
POWER COMPANY AND NEW ENERGY )
THREE, LLC (DOUBLE B). )
)
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of
Application, Notice of Modified Procedure and Notice ofComment/rotest Deadline issued on
June 3, 2010 in Case No. IPC-E-1O-18, submits the following comments.
BACKGROUND
On May 25,2010, Idaho Power Company (Idaho Power; Company) filed an Application
with the Idaho Public Utilties Commission (Commission) requesting approval of a 15-year Firm
Energy Sales Agreement between Idaho Power and New Energy Three, LLC dated May 24,2010
(Agreement).
Under the terms of the Agreement, New Energy wil sell and Idaho Power purchase electric
energy generated by the Double B Dairy Anaerobic Digester Power Project (Facility) located near
STAFF COMMENTS 1 JUE 23, 2010
Murtaugh in Cassia County, Idaho. The nameplate rating of the Facilty is 2 MW. Appendix B-1.
New Energy warrants that the Facilty is a qualifying facilty (QF) under applicable provisions of
the Public Utilty Regulatory Policies Act of 1978 (PURPA). , 3.2.
The Agreement contains the non-Ievelized published avoided cost rates approved in Order
No. 30744 and comports with the terms and conditions of Order Nos. 30738 (SAR non-fueled cost
variables) and 30415 (daily load shape adjustment). , 7.1. New Energy has selected a Scheduled
Operation Date of December 1,2012. Appendix B-3.
STAFF ANALYSIS
Staff has carefully reviewed the Agreement and notes that all of the terms and conditions
included in the Agreement are identical to those contained in other recent PURP A contracts
approved by the Commission. The purchase rates contained in the Agreement are consistent with
the non-Ievelized published avoided cost rates for projects smaller than 10 aMW of Order No.
30744. However, there is a legitimate question as to whether the Facilty should be grandfathered
under the higher rates of Order No. 30744 instead of the lower rates of Order No. 31025, the
avoided cost rates in effect on the date of contract signing.
The purchase rates set forth in the Agreement (Order No. 30744) had on the May 24, 2010
date of contract signing been replaced on March 16, 2010 by the lower rates of Order No. 30125
(Case No. GNR-E-lO-Ol). Idaho Power states that the Commission has previously determined
grandfathering eligibilty for (older and higher) published avoided cost rates by requiring (1) a
signed power sales agreement be executed prior to the change in rates; or (2) a meritorious
complaint fied with the Commission demonstrating project maturity and that but for the actions of
the utilty a sales agreement would have been signed prior to the change in rates.
In this case, New Energy had not signed a contract with Idaho Power to purchase the
Facilty generation on or before March 16,2010. On April 15, 2010, New Energy fied a
Complaint with the Commission alleging that it was entitled to three contracts containing the
higher Order No. 30744 rates. Upon fuher review of the facts, and by signing this Agreement
and voluntaly submitting it to the Commission, Idaho Power has concluded that New Energy
satisfies the second test described above and should be entitled to the rates established by Order
No. 30744 in Case No. GNR-E-09-01.
STAFF COMMENTS 2 JUNE 23, 2010
Idaho Power reports that it has received a number of requests for "grandfathering" ofQF
contracts. In making a determination to file and support an application urging that a paricular QF
project is entitled to the Order No. 30744 rates, the Company concluded that a project must have
met ALL of the following criteria prior to March 16,2010:
a. Interconnection and Transmission
1. Filed an interconnection application; and
ii. Received and accepted an interconnection feasibilty study report for the
project and paid any requested study deposits (or established credit) for the
next phase of the interconnection process in accordance with Schedule 72;
and
ll. Received confirmation from Idaho Power that transmission capacity is
available for the project and/or received an accepted transmission capacity
study results and cost estimates.
b. Purchase Power Agreement
1. An agreement was materially complete and would have been executed by
both paries prior to March 16, 2010, and except for routine Idaho Power
final processing, an agreement would have been executed prior to March 16,
2010.
It is Idaho Power's opinion that the New Energy Facility satisfies all of the above-referenced,
criteria.
With respect to the Power Purchase Agreement criteria, the Company contends that New
Energy and Idaho Power had resolved all material outstanding contract issues. Both paries
expected the final review to be a relatively straightforward process. However, in early February,
the Company became aware of some new procedural requirements from the Federal Energy
Regulatory Commission (FERC) that affected the way that the Facilty would qualify for a
network resource designation and thereby obtain the transmission needed to bring the power to be
generated by the Facilty from the interconnection to the Company load centers. The new
procedure required some changes to the internal process at Idaho Power. Idaho Power maintains
that it embarked upon interpreting the FERC regulations and implementing a process to be in
compliance. In Idaho Power's opinion the Agreement would have been signed by both paries
prior to March 16, 2010, except for the time required by Idaho Power to implement the new
internal transmission and network resource process and, as a result, the Facilty should qualify for
a contract including the Order No. 30744 rates. New Energy is curent in all its interconnection
study payments and so long as New Energy continues to provide requested information in a timely
STAFF COMMENTS 3 JUE 23, 2010
manner and pay invoices on time, it appears to the Company that the interconnection can be
completed in time for New Energy to achieve its Scheduled Operation Date for the Facilty.
In fuher support of its request for grandfathering, Idaho Power states that the Facilty
Agreement contains the most recent contract terms and conditions, including the liquidated
damages and security provisions previously approved by the Commission in several recent
contracts.
Staff believes that the grandfathering criteria developed and applied by Idaho Power
in this case are fair and reasonable. Based on the facts presented in this case, Staff believes that
but for the actions of Idaho Power, the Agreement would have been fully-executed prior to
March 16,2010. Consequently, Staff concludes that the grandfathered purchase rates (Order
No. 30744) contained in the Agreement are appropriate.
RECOMMENDATION
Staff recommends that the Commission approve all of the Agreement's terms and
conditions as submitted, and declare that all payments Idaho Power makes to New Energy Three
for purchases of energy from the Double B Facilty wil be allowed as prudently incurred expenses
for ratemaking puroses.
Respetfly submittd this c: ~ ." day of June 20 i O.
c4~'1Scott 00 ury
Deputy Attorney General
Technical Staff: Rick Sterling
i:umisc:commentslipce i o. i 8swrps.doc
STAFF COMMENTS 4 JUE 23, 2010
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 23RD DAY OF JUE 2010,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-I0-18, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
DONOV AN E WALKER
LISA D NORDSTROM
IDAHO POWER COMPANY
POBOX 70
BOISE ID 83707-0070
E-MAIL: dwalker($idahopower.com
lnordstrom($idahopower .com
RANDY C ALLPHIN
ENERGY CONTRACT ADMINISTRATOR
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: rallphin($idahopower.com
il~SECRET ÃRY.' --
CERTIFICATE OF SERVICE