20100914final_order_no_32068.pdf

Office of the Secretary
Service Date
September 14 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 WITH GRAND VIEW
SOLAR PV 1, LLC FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY
) CASE NO. IPC-10-
) ORDER NO. 32068
On June 14, 2010, Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of a
20-year Firm Energy Sales Agreement between Idaho Power and Grand View Solar PV One
LLC (Grand View) dated June 8, 2010 (Agreement).
Under the terms of the Agreement, Grand View will sell and Idaho Power will
purchase electric energy generated by the Grand View photovoltaic solar power project (Facility)
located on approximately 180 acres, 16 miles west of Mountain Home, Idaho. The location of
the Facility is more particularly described as Sections 4 & 5 , Township 5 S, Range 4 E, Elmore
County, Idaho. Appendix B-2. Grand View warrants that the Facility is a qualifying facility
(QF) under applicable provisions of the Public Utility Regulatory Policies Act of 1978 (PURP A).
~ 3.
The nameplate rating of the Facility is 24 DC and 20 MW Ac. Appendix B-1. The
Maximum Capacity Amount is 20 MW. Appendix B-4. Under normal and/or average
conditions, the Facility will not exceed 10 aMW on a monthly basis. 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; however, the Company will not purchase or pay for
the Inadvertent Energy. ~ 7.
The Agreement contains the non-levelized 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. Grand View has selected
a default Scheduled Operation Date of January 1 , 2011. Appendix B-
Idaho Power notes that the purchase rates set forth in the Agreement, Order No.
30744, had on the June 8, 2010, date of contract signing been replaced by the lower rates of
Order No. 31025 approved by the Commission on March 16, 2010, in Case No. GNR-10-01.
ORDER NO. 32068
Idaho Power recites that the Commission has previously determined grandfathering eligibility 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 filed with the
Commission demonstrating project maturity and that but for the actions of the utility a sales
agreement would have been signed prior to the change in rates. Although a complaint was not
filed with the Commission, by signing the Agreement and voluntarily presenting it to the
Commission, Idaho Power represents that Grand View meets the second test of the Commission
and should be entitled to the rates established by Order No. 30744.
In determining that Grand View was entitled to grandfathering under the higher rates
of Order No. 30744, the Company concluded that Grand View satisfied the following
grandfathering criteria prior to March 16, 2010:
a. Interconnection and Transmission
Filed an interconnection application; and
11.Received and accepted an interconnection feasibility 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
111.Received confirmation from Idaho Power that transmission capacity is
available for the project and/or received accepted transmission capacity
study results and cost estimates.
b. Purchase Power Agreement
An agreement was materially complete prior to March 16, 2010, and
except for routine Idaho Power final processing, an agreement would
have been executed by both parties prior to March 16 2010.
It is Idaho Power s opinion that the Grand View Facility meets all of the above-referenced
criteria.
With respect to the Power Purchase Agreement criteria, the Company contends that
Grand View and Idaho Power had resolved all material outstanding contract issues prior to
March 16 2010. However, the Company was also evaluating an alternative non-PURPA power
purchase agreement with Grand View regarding this Facility. Idaho Power completed this
evaluation and review on or about May 6, 2010, and elected not to proceed with a non-PURPA
ORDER NO. 32068
contract for this project. The effect of pursuing the evaluation of a non-PURP A power purchase
with the Facility, the Company states, was essentially to place the otherwise complete, but
unexecuted, PURPA Agreement on hold, during which time the Commission s Order No. 31025
was issued changing the published avoided cost rate. In Idaho Power s opinion the Agreement
would have been signed by both parties prior to March 16 2010, except for the time required by
Idaho Power to evaluate and pursue a possible non-PURP A power purchase agreement and, as a
result, the Facility should qualify for a contract including the Order No. 30744 rates.
With respect to the Interconnection and Transmission criteria, Idaho Power represents
that Grand View is current in all its interconnection study payments and so long as Grand View
continues to provide requested information in a timely manner and pay invoices on time, it
appears that the interconnection can be completed in time for Grand View to achieve its
Scheduled Operation Date for the Facility.
In further support of its request for grandfathering, Idaho Power states that the
Facility Agreement contains the most recent contract terms and conditions, including the
liquidated damages and security provisions previously approved by the Commission in the
contracts for the Arena Drop hydro project and the Dry Creek anaerobic digester project
contracts, Order Nos. 31060 and 31034, respectively.
Agreement ~ 20.1 provides that the Grand View Agreement will not become effective
until the Commission has approved all of the Agreement's terms and conditions and declared
that all payments Idaho Power makes to Grand View for purchases of energy from the Facility
will be allowed as prudently incurred expenses for ratemaking purposes.
On July 1 , 2010, the Commission issued a Notice of Application and Modified
Procedure in Case No. IPC-10-19. The deadline for filing written comments was August 19
2010. Comments were filed by Commission Staff (who recommend approval) and three of the
Company s customers (two of whom support the Application and one who opposes it).
STAFF COMMENTS
Staff recommends approval of the Company s Application. Based on its analysis
Staff concludes that the Company has demonstrated that Grandview is eligible for grandfathered
rates. Idaho Power represents that Grandview and the Company had resolved all material
outstanding contract issues prior to March 16, 2010 (the date of Order No. 31025). In Idaho
ORDER NO. 32068
Power s opinion, the Agreement would have been signed by both parties prior to March 16
2010, if the Company had not taken additional time to evaluate and pursue a possible non-
PURP A Power Purchase Agreement. Application, p. 6. The following is a chronology of
contract negotiation:
. December 24, 2009:
. February 18 2010:
. March 8, 2010:
. March 9, 2010:
. March 16 2010:
. May 6 2010:
. June 8 2010:
. June 14 2010:
Idaho Power receives a letter and signed agreement
from Grand View Solar. Because the agreement
not in the most current form, Idaho Power treats this
communication as an invitation to negotiate.
Idaho Power presents a negotiated PURP A agreement
to Grand View Solar.
Grand View Solar suggests discussion of a non-
PURP A agreement for this project. The initial offer
(price, RECs, etc.) appears to have merit so Idaho
Power begins evaluating the non-PURP A agreement
suggested by Grand View Solar.
Idaho Power s previously filed Transmission Service
Request is accepted by the Idaho Power Transmission
group, granting 20 MW of Transmission Capacity
with no significant network upgrades required.
The Commission issues Order No. 31025 changing
the avoided cost rate.
Idaho Power completes its evaluation of a non-
PURP A agreement with Grand View Solar and elects
not to proceed. The Company notifies Grand View
Solar that it should advise the Company if it wishes to
pursue a PURP A agreement.
Grand View Solar and Idaho Power execute the
PURP A agreement originally contemplated and
negotiated in February 2010.
Idaho Power filed an Application seeking
Commission approval of the PURP A agreement
entered into with Grand View Solar.
Although solar generation is an intermittent resource and an upward and downward
ramping of generation can present operational challenges for the utility, the Agreement contains
no integration adjustment to rates. Staff notes that the Company has no data or analysis to
ORDER NO. 32068
support a solar integration charge. Staff recommends that the utility be encouraged to collect
data and start performing the analysis necessary to quantify solar integration costs.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. IPC-1O-
including the comments and recommendations of the Company s customers and Commission
Staff.
While approval of the Agreement is opposed by one of the Company s customers, we
note that solar is a qualifying renewable energy resource under PURP A that Idaho Power is
required to purchase. As does Staff, the customer notes the intermittent nature of the resource
and the necessity for the Company to provide backup. We acknowledge this aspect of solar
generation contracts but agree with Staff that insufficient data exists to calculate an integration
adjustment.
Staff recommended that the Commission approve the Agreement as submitted. In
doing so, we are asked to acknowledge that Grand View is eligible and entitled to the higher
grandfathered published rates of Order No. 30744, rates that were superseded by our Order No.
31025 on March 16, 2010. In deciding grandfather eligibility we note that we have been
presented in this case with a negotiated contract. We accept the representations of Idaho Power
as to the contract negotiations of the parties. The Company s role regarding appropriate rates is
one of gatekeeper, assuring that its customers are not being asked to pay more than the
Company s avoided cost. We find no reason to doubt the Company s representations. We find
that the Company in its Application has fairly represented our past grandfathering criteria
requirements. We further find the Company s approach in this case regarding contract rates to
be consistent with the spirit of those prior grandfathering cases. See A. W Brown v. Idaho
Power 121 Idaho 812, 828 P.2d 841 (1992); Order No. 29872, Case No. IPC-05-22.
In this case, Idaho Power and Staff believe that Grand View is entitled to
grandfathering and the rates of Order No. 30744. Idaho Power represents that all outstanding
contract issues had been resolved prior to March 16, 2010, and that but for consideration by the
Company of a non-PURP A contract for the project, a contract would have been signed prior to
March 16, 2010.As represented and pursuant to contract terms, under normal/average
conditions we find that the generation from the Grand View facility will not exceed 10 aMW on
a monthly basis. Based on the record established in this case, we find that Grand View is entitled
ORDER NO. 32068
to the grandfathered rates of Order No. 30744. The Commission finds that the Agreement
submitted in this case contains acceptable contract terms. We further find it reasonable to allow
payments made under the Agreement as prudently incurred expenses for ratemaking purposes.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power, an electric
utility, and the issues raised in this matter 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
(QFs) and to implement FERC rules.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission does hereby approve the June 8 2010, Firm Energy
Sales Agreement between Idaho Power and Grand View Solar PV One for the Grand View
photovoltaic solar power project.
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. 32068
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this '-I 1-1.
day of September 2010.
~(/
. JIM D. KEMP SIDENT
~~
d~AA
MARSHA H. SMITH, COMMISSIONER
~~.
MACK A. REDFO SIONER
ATTEST:
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Commission Secretary
bls/O:IPC-IO-19 sw2
ORDER NO. 32068