20110131Comments.pdf

KRISTINE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 6618
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tOll JAN 3\ Aiili: 50
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 APPROV AL )
OF A FIRM ENERGY SALES AGREEMENT )
WITH HIDDEN HOLLOW ENERGY 2, LLC )
FOR THE SALE AND PURCHASE OF )ELECTRIC ENERGY. )
)
CASE NO. IPC-E-IO-44
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Kristine A. Sasser, Deputy Attorney General, and in response to the Notice of
Application and Notice of Modified Procedure issued in Order No. 32156 on January 10, 2011, in
Case No. IPC-E-1O-44, submits the following comments.
BACKGROUND
On December 10, 2010, Idaho Power Company fied an Application with the Commission
requesting approval of a 20-year Firm Energy Sales Agreement (Agreement) between Idaho Power and
Hidden Hollow Energy 2, LLC (Hidden Hollow) dated December 8, 2010. The Application states that
Hidden Hollow would sell and Idaho Power would purchase electric energy generated by the Hidden
Hollow Landfill Gas Project (Facility). The Application further states that Hidden Hollow proposes to
design, construct, install, own, operate and maintain a 3.2 MW landfill gas generating facilty to be
located at Ada County's Hidden Hollow Landfill (Landfill) near Boise, Idaho. Application at 2. An
STAFF COMMENTS 1 JANUARY 31, 2011
existing 3.2 MW landfill gas-powered generating unit owned by G2 Energy Hidden Hollow, LLC (G2)
is already operating at the Landfill. Order No. 29928. Hidden Hollow is proposed by a separate
affliate company utilizing the same landfill gas reserves as its fuel source.
Idaho Power warants that the Agreement comports with the terms and conditions of the
varous Commission Orders applicable to PURP A agreements (Order Nos. 30415 and 31025). The
Agreement is for a term of 20 years and contains the current non-levelized published avoided cost rates
established by the Commission in Order No. 31025 for energy deliveries of less than 10 average
megawatts (aMW). The Application states that, should the Commission approve the Agreement, Idaho
Power intends the effective date of the Agreement to be December 8, 2010 - the date the paries
entered into the Agreement.
Hidden Hollow selected Februar 28,2012, as its Scheduled First Energy Date and its
Scheduled Operation Date. Agreement, Appendix B. Idaho Power asserts that various requirements
have been placed upon the Hidden Hollow Facilty in order for Idaho Power to accept the Facility's
energy deliveries. Idaho Power states that it wil monitor the Facilty's compliance with initial and
ongoing requirements through the term of the Agreement. The Application maintains that all
applicable interconnection charges and monthly operational or maintenance charges under Schedule 72
wil be assessed to Hidden Hollow. Idaho Power states that the Facilty is currently in good standing
with the generator interconnection process. Hidden Hollow and Idaho Power have agreed to liquidated
damages and security provisions of$45 per kW of nameplate capacity. Agreement, ~~ 5.3.2,5.8.1.
STAFF ANALYSIS
Staff has reviewed the Agreement and confirms that it comports with all of the terms and
conditions of the various Commission Orders applicable to PURP A agreements. The Agreement
contains the same rates, terms and conditions as other recently-approved contracts, thus Staff does not
believe that any discussion of these items is necessary.
The only unique feature of this Agreement is that it essentially represents an expansion of the
previously approved G2 project and that it wil utilze the same landfill gas fuel source. Because this
Facilty utilzes the same fuel source, Idaho Power has negotiated provisions for the Hidden Hollow
project intended to preserve the lower rates of the existing G2 contract while stil enabling additional
generation to be developed at this location. The Hidden Hollow Agreement provides that the first
STAFF COMMENTS 2 JANUARY 31, 2011
1100 scfm of fuel is dedicated to the generation units under the G2 contract. i The Hidden Hollow
Agreement also allows Idaho Power to audit the fuel distribution to the various generation units. By
these terms, the parties' intent is to preserve the value of the lower rates applicable to power provided
under the G2 contract and prevent the Hidden Hollow Facility from providing power at a higher cost
before G2' s nameplate capacity is reached. Staff supports these contract provisions and believes that
they adequately preserve the value of the existing contract for Idaho Power and its ratepayers.
On November 5, 2010, a Joint Petition was fied with the Commission requesting an immediate
reduction in the published avoided cost rate eligibilty cap from 10 aMW to 100 kW. Reference Case
No. GNR-E-1O-04. The Commission is processing the case by Modified Procedure with comment
deadlines and a date for oral argument having already passed. Order No. 32131. The Commission has
indicated that any decisions it makes in the GNR-E-1O-04 case wil be effective as of December 14,
2010. The Agreement submitted for approval was executed by Hidden Hollow on December 6,2010
and by Idaho Power on December 8, 2010. The Agreement was fied for Commission approval on
December 10,2010. Because the Agreement was executed prior to December 14,2010, Staff does not
believe it should be impacted by any decisions the Commission issues in the GNR - E-l 0-04 case.
RECOMMENDATIONS
Staff recommends that the Commission approve all of the Agreement's terms and conditions
and declare that all payments made by Idaho Power to Hidden Hollow for purchases of energy wil be
allowed as prudently incured expenses for ratemaking purposes.
Respectfully submitted this ~ I g day of Januar 2011.
fi:..) !1. ~Kri me A. Sasser
Deputy Attorney General
Technical Staff: Rick Sterling
i:umisc:commentsipce i 0.44ksrps comments
i The 1100 scfm is an engineering calculated value of the quantity of the average fuel quality required to operate the first
generation units at their nameplate capacity.
STAFF COMMENTS 3 JANUARY 31, 2011
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 31ST DAY OF JANUARY 2011,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-I0-44, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
DONOV AN E WALKER
LISA D NORDSTROM
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: dwalker(iidahopower.com
lnordstrom(iidahopower.com
RANDY C ALLPHIN
ENERGY CONTRACT ADMIN
IDAHO POWER COMPANY
POBOX 70
BOISE ID 83707-0070
E-MAIL: rallphin(iidahopower.com
THOMAS J GESICKI
PRESIDENT
FORTISTAR METHANE GROUP
5087 JUCTION ROAD
LOCKPORTNY 14094
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SECRETARY
CERTIFICATE OF SERVICE