20101216final_order_no_32138.pdf

Office of the Secretary
Service Date
December 16 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 AGPOWER
JEROME, LLC, FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY.
ORDER NO. 32138
CASE NO. IPC-IO-
On October 20, 2010, Idaho Power Company filed an Application with the
Commission requesting approval of a 20-year Firm Energy Sales Agreement (the "Agreement"
between Idaho Power and AgPower Jerome, LLC, (AgPower) dated October 13, 2010. The
Application states that AgPower would sell and Idaho Power would purchase electric energy
generated by the Double A Digester Project (the "Facility ) located in Lincoln County, Idaho.
The Company requested that its Application be processed by Modified Procedure.
On November 16, 2010, the Commission issued a Notice of Application/Notice of
Modified Procedure setting a December 8 , 2010, comment deadline. Staff was the only party to
file comments. By this Order, the Commission approves the Agreement between Idaho Power
and AgPower without change or condition and declares that all payments made by Idaho Power
to AgPower for purchases of energy shall be allowed as prudently incurred expenses for
ratemaking purposes.
THE AGREEMENT
The Agreement is for a term of 20 years and contains the non-levelized published
avoided cost rates established by the Commission in Order No. 30744 for energy deliveries of
less than 10 average megawatts ("aMW"). The maximum capacity of the Facility is expected to
be 4.5 MW. Idaho Power warrants that the Agreement comports with the terms and conditions
of the various Commission Orders applicable to PURPA agreements (Order Nos. 30415 , 30488
30738, and 30744). Application at 2.
Although the Agreement is dated October 13 , 2010, Idaho Power submits that
AgPower should be entitled to the avoided cost rates set out in Order No. 30744 (rates
superseded on March 16, 2010, by Order No. 31025). Idaho Power asserts that, but for a
disagreement as to the damage and security provisions, the Agreement would have been signed
by both parties prior to March 16 2010. The Agreement, as submitted, contains the most recent
ORDER NO. 32138
terms and conditions, including liquidated damages and security provisions. As such, Idaho
Power maintains that this Agreement is similarly situated to other power purchase agreements
approved by this Commission that contain grandfathered avoided cost rates.
Idaho Power asserts that AgPower is current in all of its interconnection study
payments. AgPower selected a Scheduled Operation Date of January 1 , 2012, for its Facility.
By its own terms, the Agreement will not become effective until the Commission has approved
all of the Agreement's terms and conditions and declares that all payments made by Idaho Power
to AgPower for purchases of energy will be allowed as prudently incurred expenses for
ratemaking purposes. Agreement ~ 21.
THE COMMENTS
Staff identified AgPower s entitlement to grandfathered rates as the only issue of real
significance in this case. Staff noted that on April 9 , 2010, AgPower filed a complaint against
Idaho Power with the Commission alleging that AgPower was entitled to a contract containing
the higher avoided cost rates of Order No. 30744. Idaho Power filed an answer on May 5, 2010
alleging that AgPower was not entitled to Order No. 30744 avoided cost rates because AgPower
was disputing damage and security provisions that are part of Idaho Power s "standard" terms
and conditions for PURP A agreements. Application at 6.
Subsequent to AgPower s complaint, the parties entered into negotiations to attempt
to resolve their dispute over damage and security provisions. As evidenced by the submitted
Agreement, the parties have resolved their dispute. The Agreement contains the most recent
terms and conditions, including liquidated damages and security provisions. In effect, the
Agreement contains all of the terms, conditions and rates that Idaho Power maintained were
appropriate in the beginning, before the dispute arose.
Idaho Power maintains that this Agreement is similarly situated to other power
purchase agreements approved by this Commission that contain grandfathered avoided cost rates.
Staff agrees. Consequently, Staff recommended the Commission approve all ofthe Agreement's
terms and conditions and declare that all payments made by Idaho Power to AgPower for
purchases of energy will be allowed as prudently incurred expenses for ratemaking purposes.
FINDINGS AND CONCLUSIONS
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
ORDER NO. 32138
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.
The Commission has reviewed the record in this case, including the Application, the
October 13, 2010 Agreement, and the comments and recommendations of Commission Staff.
The Agreement contains the non-Ievelized published avoided cost rates established by the
Commission in Order No. 30744. Because the Agreement is dated October 13 2010, Order No.
31025 (effective March 16, 2010) would require that the rates paid to AgPower under its
Agreement be the rates set out in Order No. 31025 rather than the previously higher rates
approved by the Commission in Order No. 30744. However, Idaho Power asserts that, but for
the disagreement as to liquidated damages and security provisions, the Agreement would have
been signed by both parties prior to March 16 2010.
We find that Idaho Power has fairly represented our past grandfathering criteria
requirements and their application to the particular facts of previously decided cases. We further
find Idaho Power s approach in this case regarding published rates to be in concert with the spirit
of those prior grandfathering cases. See A. W Brown v. Idaho Power 121 Idaho 812, 828 P .
841 (1992); Order No. 29872. Consequently, based on the record established in this case, we
find that AgPower is entitled to the grandfathered rates of Order No 30744. We further find it
reasonable to allow payments made under the Agreement as prudently incurred expenses for
ratemaking purposes.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED that the October 13 2010, Firm Energy Sales Agreement between Idaho
Power and AgPower is approved without change or condition.
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 9 61-626.
ORDER NO. 32138
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this /&1""
day of December 2010.
MARSHA H. SMITH, COMMISSIONER
'---., ,. y
MACK A. REDFORD, COMMISSIONER
ATTEST:
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D. Jewel
Commission Secretary
O:IPC-IO-ks2
ORDER NO. 32138