HomeMy WebLinkAbout20111212Decision Memo.pdfDECISION MEMORANDUM 1
DECISION MEMORANDUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
FROM: KRISTINE SASSER
DEPUTY ATTORNEY GENERAL
DATE: DECEMBER 10, 2011
SUBJECT: IDAHO POWER’S APPLICATION FOR A DETERMINATION
REGARDING THE FIRM ENERGY SALES AGREEMENT WITH
DYNAMIS ENERGY, CASE NO. IPC-E-11-25
On November 22, 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 Dynamis Energy, LLC (Dynamis Energy) dated
November 16, 2011. The Application states that Dynamis Energy would sell and Idaho Power
would purchase electric energy generated by the Dynamis Ada County Landfill project (Facility)
located near Boise, Idaho.
THE AGREEMENT
The Application states that Dynamis proposes to own, operate and maintain a 22 MW
(maximum capacity, nameplate) landfill waste to energy generating facility. Application at 2.
The Facility will be a QF under the applicable provisions of the Public Utility Regulatory
Policies Act of 1978 (PURPA). The Agreement is for a term of 20 years and contains avoided
cost rates calculated through the use of the Integrated Resource Plan (IRP) methodology. Idaho
Power notes that the energy price identified by the IRP methodology for this Facility is
equivalent to a 20-year levelized price of $92.35 per MWh. Application at 5. The Agreement
includes shared ownership of the Renewable Energy Certificates (RECs) generated over the 20-
year term of the Agreement. Id. at 3.
Dynamis Energy selected October 15, 2013, as its Scheduled First Energy Date and
February 14, 2014, as its Scheduled Operation Date. Id. Idaho Power asserts that various
1 The actual energy pricing stream varies throughout the term of the contract based upon the time of year and time of
day during which the energy is delivered to Idaho Power.
DECISION MEMORANDUM 2
requirements have been placed upon the Facility in order for Idaho Power 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 Dynamis Energy. 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 5. Dynamis Energy and Idaho Power have agreed to liquidated
damage and security provisions. Agreement ¶¶ 5.3, 5.8.1.
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.” Application at 6-7.
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 Dynamis Energy 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 with comments
due no later than February 2, 2012.
DECISION MEMORANDUM 3
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure with
comments due no later than February 2, 2012?
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