HomeMy WebLinkAbout20110527Decision Memo.pdfDECISION MEMORANDUM 1
DECISION MEMORANDUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: KRISTINE SASSER
DEPUTY ATTORNEY GENERAL
DATE: MAY 26, 2011
SUBJECT: IDAHO POWER’S APPLICATION FOR A DETERMINATION
REGARDING THE FIRM ENERGY SALES AGREEMENT WITH
CLARK CANYON, CASE NO. IPC-E-11-09
On May 24, 2011, Idaho Power Company filed an Application with the Commission
requesting acceptance or rejection of a 20-year Firm Energy Sales Agreement (Agreement)
between Idaho Power and Clark Canyon, LLC (Clark Canyon) dated May 20, 2011. The
Application states that Clark Canyon would sell and Idaho Power would purchase electric energy
generated by the Clark Canyon hydroelectric project (Facility) located near Dillon, Montana.
THE AGREEMENT
The Application states that Clark Canyon proposes to own, operate and maintain a 4.7
MW (maximum capacity, nameplate) hydroelectric generating facility. Application at 2. The
Facility will be a QF under the applicable provisions of PURPA. 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”). Should the Facility exceed 10 aMW on a monthly basis, Idaho Power will accept the
energy that does not exceed the maximum capacity amount, but will not purchase or pay for the
inadvertent energy. Agreement ¶ 7.5.
Clark Canyon selected November 1, 2012, as its Scheduled First Energy Date and
March 31, 2013, as its Scheduled Operation Date. Application at 3. Idaho Power asserts that
various requirements have been placed upon the Clark Canyon facility in order for Idaho Power
DECISION MEMORANDUM 2
to accept the Facility’s energy deliveries. Idaho Power states that it will monitor the Facility’s
compliance with initial and ongoing requirements through the term of the Agreement.
The Application maintains that all applicable interconnection charges and monthly
operation or maintenance charges under Schedule 72 will be assessed to Clark Canyon. Idaho
Power states that the Facility is currently in the generator interconnection process. “Upon
resolution of any and all upgrades required to acquire transmission capacity for this Facility’s
generation, and upon execution of the FESA and the GIA, this Facility may then be designated as
a network resource.” Id. at 4. Clark Canyon and Idaho Power have agreed to liquidated damage
and security provisions of $45 per kW of nameplate capacity or the sum of three month’s
estimated revenue. Agreement ¶¶ 5.3.2, 5.8.1. Ownership of environmental attributes (i.e.,
Green Tags, Renewable Energy Credits) associated with this Facility are addressed in a separate
agreement. Application at 3.
Idaho Power states that the Facility has also been made aware of and accepted the
provisions in the Agreement and Idaho Power’s approved Schedule 72 regarding non-
compensated curtailment or disconnection of its Facility should certain operating conditions
develop on Idaho Power’s system. The Application notes that the parties’ intent and
understanding is that “non-compensated curtailment would be exercised when the generation
being provided by the Facility 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] ability to manage its thermal, hydro, and other resources in order to meet its
obligation to reliably serve loads on its system.” Id. at 5.
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 Clark Canyon for purchases of energy will be allowed as prudently incurred
expenses for ratemaking purposes. Agreement ¶ 21.1.
Idaho Power requests that its Application be processed by Modified Procedure
pursuant to Commission Rules of Procedure 201-204. IDAPA 31.01.01.201-.204.
STAFF RECOMMENDATION
Staff recommends that the case be processed by Modified Procedure.
DECISION MEMORANDUM 3
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure?
M:IPC-E-11-09_ks