20110211final_order_no_32181.pdf

Office of the Secretary
Service Date
February 11 2011
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 SE HAZEL TON
LP. FOR THE SALE AND PURCHASE OF
ELECTRIC ENERGY.
CASE NO. IPC-I0-
ORDER NO. 32181
On December 10, 2010, Idaho Power Company filed an Application with the
Commission requesting approval of a IS-year Firm Energy Sales Agreement (Agreement)
between Idaho Power and SE Hazelton A, LP. (Hazelton) dated December 8, 2010. The
Application states that Hazelton would sell and Idaho Power would purchase electric energy
generated by the Hazelton A Hydroelectric Project (Facility) located near Jerome, Idaho.
On January 10, 2011 , the Commission issued a Notice of Application and Notice of
Modified Procedure setting a 21-day comment deadline. Staff was the only party to file
comments. By this Order, the Commission approves the Agreement between Idaho Power and
Hazelton without change or condition and declares that all payments made by Idaho Power to
Hazelton be allowed as prudently incurred expenses for ratemaking purposes.
THE AGREEMENT
The Application states that Hazelton has, in compliance with an existing agreement
approved by the Commission in February 1989 (Order No. 22326), designed, constructed
installed, owns, operates and maintains an 8.1 MW hydroelectric generating facility. I The
present Agreement has been negotiated to replace the existing agreement which expires on
December 31 , 2010. Idaho Power warrants that the Agreement comports with the terms and
conditions of the various Commission Orders applicable to PURP A agreements (Order Nos.
30415 and 31025).
The Application states that the Agreement contains the current non-Ievelized
published avoided cost rates established by the Commission in Order No. 31025 for energy
deliveries of less than 10 average megawatts ("aMW"). The nameplate rating of the Facility is
1 MW. Hazelton has elected January 1 , 2011 , as its First Energy Date and Scheduled
I Hazelton is an iITigation canal hydroelectric facility that generates power only during the
irrigation season.
ORDER NO. 32181
Operation Date. Because this Facility is already interconnected and operating under its existing
agreement, the processing to attain the First Energy and Scheduled Operation Date under this
Agreement will include review and either acceptance or updating of previously provided
documentation as well as any new requirements as specified by this Agreement. Application at
4. The Application states that, should the Commission approve the Agreement, Idaho Power
intends the effective date of the Agreement to be January 1 , 2011.
Idaho Power maintains that the Facility is in compliance with the utility's current
tariff Schedule 72 and interconnection and transmission processes. Even though the Facility will
continue to utilize its existing interconnection and transmission facilities and capacity, Idaho
Power will require completion of a Generator Interconnection Agreement (GIA) and
Transmission Service Requests (TSR) in order to bring the Facility up-to-date with Idaho
Power s current tariffs and processes. Hazelton and Idaho Power have agreed to liquidated
damages and security provisions of $45 per kW of nameplate capacity. Agreement, ~~ 5.3.2
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 Hazelton for purchases of energy will be allowed as prudently incurred expenses
for ratemaking purposes. Agreement ~ 21.
THE COMMENTS
As previously stated, the Agreement submitted for approval is a successor agreement
to an earlier 20-year power sales agreement for the same facility that expired on December 31
2010. The Hazelton A project has operated successfully for 20 years, and Staff has no reason to
believe that it cannot continue to operate successfully for the proposed IS-year term of the new
Agreement. The project is still certified as a qualifying facility under FERC rules; consequently,
Staff believes that it is entitled to a new power sales agreement at published avoided cost rates.
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 agreements. The
Agreement is substantially identical to other recently-approved contracts and presents no new
issues that merit discussion by Staff.
Although Idaho Power filed a Joint Petition with the Commission on November 5
2010, seeking a reduction in the published avoided cost rate eligibility cap from 10 aMW to 100
ORDER NO. 32181
, Idaho Power does not believe that this Agreement should be impacted by that filing. Staff
agrees. The Agreement was signed by Hazelton A on December 7, 2010, and by Idaho Power on
December 8, 2010. Moreover, Idaho Power s Application seeking approval of the Agreement
was filed with the Commission prior to the December 14, 2010, effective date established by the
Commission for its decision in Case No. GNR-I0-04. Consequently, Staff recommended that
the Commission approve all of the Agreement's terms and conditions and declare that all
payments made by Idaho Power to Hazelton for purchases of energy 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
Title 61 of the Idaho Code and the Public Utility Regulatory Policies Act of 1978 (PURPA). 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
Agreement, and the comments and recommendations of Commission Staff. Based on the record
we find that the proposed Agreement submitted in this case contains acceptable contract
provisions including the non-Ievelized published avoided cost rates approved by the Commission
in Order No. 31025. We further find it reasonable to allow payments made under the Agreement
as prudently incurred expenses for ratemaking purposes.
ORDER
IT IS HEREBY ORDERED that the December 8, 2010, Firm Energy Sales
Agreement between Idaho Power and Hazelton is approved without change or condition.
IT IS HEREBY CERTIFIED that if the energy project identified in this Order is
constructed as specified above, the completed facility will generate at least twenty-five (25)
kilowatts of electricity and may be eligible for a tax rebate pursuant to Idaho Code 963-3622QQ.
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)
2 Case No. GNR-l 0-04.
ORDER NO. 32181
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this / jj'll
day of February 2011.
'?-
ll JI . EMPTON, P IDENT
th~ MARSHA H. SMITH, COMMISSIONER
MACK A. REDF
ATTEST:
O:IPC-IO-45 ks2
ORDER NO. 32181