20110131Comments.pdf

KRSTINE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 6618
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 A
DETERMINATION REGARDING A FIRM
ENERGY SALES AGREEMENT BETWEEN
IDAHO POWER AND DEEP CREEK WIND
PARK,LLC
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR A
DETERMINATION REGARDING A FIRM
ENERGY SALES AGREEMENT BETWEEN
IDAHO POWER AND COTTONWOOD WIND
PARK,LLC
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR A
DETERMINATION REGARDING A FIRM
ENERGY SALES AGREEMENT BETWEEN
IDAHO POWER AND ROGERSON FLATS
WIND PARK, LLC
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR A
DETERMINATION REGARDING A FIRM
ENERGY SALES AGREEMENT BETWEEN
IDAHO POWER AND SALMON CREEK WIND
PARK,LLC
STAFF COMMENTS
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) CASE NO. IPC-E-IO-47
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) CASE NO. IPC-E-IO-48
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) CASE NO. IPC-E-IO-49
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) CASE NO. IPC-E-IO-50
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) COMMENTS OF THE
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1 JANUARY 31, 2011
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
Applications and Notice of Modified Procedure issued in Order No. 32154 on January 10,2011, in
Case Nos. IPC-E-1O-47, IPC-E-I0-48, IPC-E-I0-49 and IPC-E-1O-50, submits the following
comments.
BACKGROUND
On December 10,2010, Idaho Power Company filed Applications requesting an Order
accepting or rejecting four 20-year Firm Energy Sales Agreements (Agreements) between Idaho
Power and Deep Creek Wind Park, LLC; Cottonwood Wind Park, LLC; Rogerson Flats Wind
Park, LLC; and Salmon Creek Wind Park, LLC. The four projects (Facilities) are all located near
Rogerson, Idaho. The identical Applications recite that each wind generating project wil have a
maximum capacity amount of20 MW. The projects wil all be "qualifying facilties" (QFs) under
the applicable provisions of the federal PURP A.
On December 10,2010, Idaho Power and each of the four wind projects entered into their
respective Agreements. Under the terms of the Agreements, the wind projects each agree to sell
electric 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 energy
deliveries of less than 10 aMW. Idaho Power warants that the Agreements comport with the
terms and conditions of the various Commission Orders applicable to PURP A agreements for a
wind resource. Order Nos. 30415, 30488, 30738 and 31025.
Each Facilty has selected May 30, 2012, as its Scheduled First Energy Date and June 30,
2012, as its Scheduled Operation Date. Agreement, Appendix B. Idaho Power asserts that various
requirements have been placed upon the Facilities in order for Idaho Power to accept the Facilities'
energy deliveries. Idaho Power states that it wil monitor the Facilties' compliance with initial
and ongoing requirements through the term of the Agreements. The paries have each agreed to
liquidated damages and security provisions of$45 per kW of nameplate capacity. Agreement, ~~
5.3.2,5.8.1.
STAFF ANALYSIS
Staffhas reviewed the Agreements and confirms that they comport with all of the terms
and conditions of the various Commission Orders applicable to PURP A agreements. The
STAFF COMMENTS 2 JANUARY 31, 2011
Agreements contain the same rates, terms and conditions as other recently-approved contracts, thus
Staff does not believe that any discussion of these items is necessar. However, while not new, the
Agreements do contain a couple of provisions that Staff believes are worthy of mention because of
the relatively recent approval of numerous contracts for purchase of wind generation by Idaho
Power.
The Agreements specify a Scheduled Operation Date of June 30, 2012. Idaho Power
asserts that it has advised each Facility of the Facility's responsibility to work with Idaho Power's
Delivery business unit to ensure that sufficient time and resources wil be available to construct the
interconnection facilties, and transmission upgrades if required, in time to allow each Facilty to
achieve its Scheduled Operation Date. The Applications state that each Facilty has been advised
that delays in the interconnection or transmission process do not constitute excusable delays, and if
a Facility fails to achieve its Scheduled Operation Date, delay damages wil be assessed.
Application at 6. The Applications further maintain that each Facility has acknowledged and
accepted the risk inherent in proceeding with its Agreement without knowledge of the
requirements of interconnection and possible transmission upgrades. ¡d. at 7. Although the risk of
delay and uncertain costs associated with interconnection and transmission upgrades has been
addressed in the Agreements, Staff has some concerns that this risk is not being mitigated prior to
the paries signing the power sales Agreements. One way to mitigate this risk would be to require
that a Generation Interconnection Agreement (GIA), in which interconnection and transmission
upgrade costs are specified with certainty, be submitted concurently with the power sales
Agreement. If disputes arise in the future over delays or costs related to interconnection and
transmission, the Commission may wish to consider concurrent filings.
Another feature of the Agreements worth pointing out is provisions regarding non-
compensated curtailment or disconnection of a Facility should certain operating conditions develop
on Idaho Power's system. The Applications note that the parties' intent and understanding is that
"non-compensated curtailment would be exercised when the generation being provided by the
Facilty in certain operating conditions exceeds or approaches the minimum load levels of (Idaho
Power's) system such that it may have a detrimental effect upon (Idaho Power's) abilty to manage
its thermal, hydro, and other resources in order to meet its obligation to reliably serve loads on its
system." ¡d. Staff has no objection to the contract provisions, but believes that if non-
compensated curtailment becomes a frequent event, the economic viability of numerous QFs could
be adversely affected.
STAFF COMMENTS 3 JANUARY 31, 2011
Idaho Power's Applications specifically note the Joint Petition filed with the Commission
on November 5, 2010, requesting an immediate reduction in the published avoided cost rate
eligibility cap from 10 aMW to 100 kW. Application at 2. Reference Case No. GNR-E-I0-04.
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 will be effective as of December 14,2010. Each
of the four Agreements submitted for approval were executed by the Sellers on December 9,2010
and by Idaho Power on December 10, 2010. The Agreements were fied for Commission approval
on December 10,2010. Because the Agreements were executed prior to December 14,2010,
Staff does not believe they should be impacted by any decisions the Commission issues in the
GNR-E-10-04 case.
In its Applications, Idaho Power states that it is aware of and in compliance with its
ongoing obligation under federal law, FERC regulations, and Idaho Public Utilties Commission
Orders to enter into power purchase agreements with PURPA QFs. ¡d. at 3. However, Idaho
Power asserts in each of its wind park Applications that "the request in this Application. . . is
made with the specific reservation of rights and incorporation of the averments set forth in the
Joint Petition regarding the possible negative effects to the (sic) both the utilty and its customers
of additional and unfettered PURPA QF generation on system reliabilty, utilty operations, and
costs of incorporating and integrating such a large penetration level of PURP A QF generation into
the utilty's system." Idaho Power's Applications further maintain "that the continuing and
unchecked requirement for the Company to acquire additional intermittent and other QF
generation regardless of its need for additional energy or capacity on its system not only
circumvents the Integrated Resource Planing process and creates system reliabilty and
operational issues, but it also increases the price its customers must pay for their energy needs."
¡d. at 4.
Although Staff understands and sympathizes with some of the concerns expressed by Idaho
Power in its Applications, Staff does not believe there are sufficient grounds for the Commission
to provide any relief due to the fact that the Agreements were fully executed and submitted prior to
December 14,2010, the proposed effective date of the Commission's forthcoming order in Case
No. GNR-E-I0-04.
STAFF RECOMMENDATION
STAFF COMMENTS 4 JANUARY 31, 2011
Staff recommends that the Commission approve all of the terms and conditions of the four
Agreements and declare that all payments made by Idaho Power to the Facilties for purchases of
energy wil be allowed as prudently incurred expenses for ratemaking purposes.
Respectfully submitted this .~ I ~ day of January 201 1.
if~t1. ~4ÅkKri me A. Sasser
Deputy Attorney General
Technical Staff: Rick Sterling
i:umisc:commentsipcelO.47 _48_49 _59ksrps comments
STAFF COMMENTS 5 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
NOS. IPC-E-1O-47_ 48_49_50, 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: dwalkerCiidahopower.com
lnordstromCiidahopower. com
RANDY C ALLPHIN
ENERGY CONTRACT ADMIN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: rallphinCiidahopower.com
JAMES CARKULIS
DEEP CREEK WIND PARK LLC
802 W BANNOCK STE 1200
BOISE ID 83702
\~.Kf
SECRETARY
CERTIFICATE OF SERVICE