20101119Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DON HOWELL
DEPUTY ATTORNEY GENERAL

DATE: NOVEMBER 19, 2010

SUBJECT: IDAHO POWER’S SIX APPLICATIONS FOR APPROVAL OF POWER
PURCHASE AGREEMENTS WITH WINDFARM DEVELOPERS: COLD
SPRINGS, DESERT MEADOW, HAMMETT HILL, MAINLINE,
RYEGRASS AND TWO PONDS LLCS, CASE NOS. IPC-E-10-38, IPC-E-
10-39, IPC-E-10-40, IPC-E-10-41, IPC-E-10-42, AND IPC-E-10-43,
RESPECTIVELY

On November 16, 2010, Idaho Power Company filed six Applications requesting
approval of six 20-year Firm Energy Sales Agreements (FESAs) between Idaho Power and Cold
Springs Windfarm, LLC; Hammett Hill Windfarm, LLC; Mainline Windfarm, LLC; Ryegrass
Windfarm, LLC; and Two Ponds Windfarm, LLC. The six projects are all located near
Mountain Home, Idaho. The identical Applications recite that each wind generating project will
have a maximum capacity amount of 23 MW. The projects will all be “qualifying facilities”
(QFs) under the applicable provisions of the federal PURPA.
THE FIRM ENERGY SALES AGREEMENTS
On November 12, 2010, Idaho Power and each of the six wind projects entered into
their respective FESAs. The Applications maintain that the terms and conditions of the FESAs
comport with the Commission’s Orders applicable to PURPA wind projects. Application at 2
citing Order Nos. 30415, 30488, 30738, and 30744. Under the terms of the FESAs, the wind
projects agree to sell energy to Idaho Power for a 20-year term using the current non-levelized
published avoided cost rates as currently established by the Commission in Order No. 31025 for
DECISION MEMORANDUM 2
energy deliveries of less than 10 aMW. The six FESAs were executed by the wind developers
on November 2, 2010.1
1. Output. The nameplate rating for each of the six wind projects is 23 MW. As
defined in Sections 1.17 and 4.1.3 of the FESA, each wind project will be required to provide
data to Idaho Power to confirm under normal and/or average conditions, that each project will
not exceed 10 aMW on a monthly basis. Application at ¶ 4. Should the project exceed 10 aMW
on a monthly basis, Idaho Power will accept the energy “that does not exceed 23 MW on a
monthly basis, but will not pay for the energy that exceeds 10 aMW on a monthly basis.” Id.
2. Mechanical Availability Guarantee. The parties’ Agreement contains a MAG
calculation in conformance with Commission Order No. 30488 (Case No. IPC-E-07-03). The
MAG provision approved in Order No. 30488 provides that the wind project demonstrate each
month (except for scheduled maintenance and force majeure events) that the wind project is
“physically capable of generating at full output during 85% of the hours in the month. Failure to
comply with the Mechanical Availability Guarantee would result in the payment of liquidated
damages.” Order No. 30488 at 6.
3. Damages and Security. The parties have agreed to Delay Liquidated Damages and
associated Delay Security provisions of $45 per kW of nameplate capacity.
4. Operational Date. Each FESA provides that the “Scheduled First Energy Date” is
December 31, 2011, and the “Scheduled Operation Date” is December 31, 2012. Application at
¶ 6. The Agreements further provide that it is the wind developer’s responsibility to work with
Idaho Power’s Delivery business unit to ensure that there is sufficient time and resources for
Idaho Power to construct the necessary “interconnection facilities, and transmission upgrades if
required, in time to allow that [project] to achieve the December 31, 2011, Scheduled Operation
Date.” Application at ¶ 9. Delay damages may be assessed if the wind developer is unable to
obtain the necessary interconnection facilities and transmission upgrade (if necessary). Idaho
Power anticipates that it will provide the wind developer a “Facility Study Report” containing
the technical information and payment schedules for the interconnection materials no later than
January 7, 2011. Id. at ¶ 8. Following the delivery of the Facility Study Report, the parties must
then enter into a Generator Interconnection Agreement. The Applications acknowledge that

1 Although Idaho Power filed a Joint Petition on November 5, 2010, seeking a reduction in the published avoided
cost rate eligibility cap from 10 aMW to 100 kW, the Company believes that these six FESAs “should not be
impacted by that filing.” Application at ¶ 3.
DECISION MEMORANDUM 3
Idaho Power can accommodate the output from the six wind projects without transmission
network upgrades. Id.
5. Energy Price. The parties’ FESAs provide for non-levelized published avoided
cost rates. The rates for the non-levelized energy are in accordance with the Commission’s
Order No. 31025, as adjusted by Order No. 30415 for heavy load and light load energy delivery;
and further adjusted in accordance with Commission Order No. 30488 for wind integration
charges and with seasonalized factors set out in Section 7 of the FESA. In addition, the
Agreements note that the developers will be responsible for paying applicable interconnection
charges and monthly operation and maintenance charges under Idaho Power’s Schedule 72.
Idaho Power requests that the Applications be processed under Modified Procedure.
STAFF RECOMMENDATION
The Commission Staff is in agreement with the Company’s request that these six
Applications be processed under Modified Procedure. Staff recommends that the Commission
set a 21-day comment period in each of these cases.
COMMISSION DECISION
Does the Commission agree with the recommendation that each of these six Power
Purchase Agreements be processed under Modified Procedure with a 21-day comment period?

bls/M:IPC-E-10-38 et al_dh