20130208Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DON HOWELL
DEPUTY ATTORNEY GENERAL

DATE: JANUARY 28, 2013

SUBJECT: IDAHO POWER COMPANY’S MOTION FOR APPROVAL OF A
CONFIDENTIAL SETTLEMENT AGREEMENT, CASE NO. IPC-E-13-01

On January 24, 2013, Idaho Power Company filed a “Motion” requesting that the
Commission approve a “Confidential Settlement Agreement” entered into by Idaho Power and
Grand View Solar One PV, LLC. If approved, the settlement agreement would provide for the
“voluntary termination” of a Power Purchase Agreement (PPA) that Idaho Power and Grand
View executed in June 2010, pursuant to the Public Utility Regulatory Policies Act (PURPA).
Idaho Power’s Motion requests that the Commission process this matter via Modified Procedure
and approve the confidential settlement “without material condition or modification.” Motion at
3.
BACKGROUND
In June 2010, Idaho Power and Grand View Solar entered into a PPA which obligated
Grand View to construct and operate a photovoltaic (PV) solar generating facility (with a
nameplate rating of 20 MW) and to sell the output from the solar facility to Idaho Power. Order
No. 32068 at 1. The PPA contemplated a monthly output of 10 average MW for the PURPA
qualifying facility (QF) at the published avoided cost rate in effect prior to March 16, 2010. Id.
The PPA provided that the QF’s scheduled commercial operation date was January 1, 2011. In
September 2010, the Commission approved the Company’s application and the PPA. Order No.
32068.
On April 11, 2012, Idaho Power filed a “Letter of Understanding” regarding the PPA.
As set out in the Letter, the parties agreed to postpone the commercial operation date until no
DECISION MEMORANDUM 2
later than January 12, 2013, and agreed that Grand View would post a security deposit in the
amount of $810,000 no later than April 6, 2012. On July 12, 2012, the Commission issued Order
No. 32593 approving the Letter of Understanding as a modification to the PPA.
THE MOTION
On January 9, 2013, Grand View Solar advised Idaho Power that it would not be in
commercial operation by the scheduled operation date (January 12, 2013) as specified in the
Letter of Understanding. Grand View requested that it be allowed to “voluntarily terminate the
[PPA] prior to the January 12, 2013, date.” Motion at ¶ 3. The parties maintain that neither the
PPA nor the subsequent Letter of Understanding address the status of the security deposit if the
PPA is voluntarily terminated “prior to a default or material breach.” Id. at ¶ 4. Consequently,
the parties executed the Confidential Settlement Agreement1 which “provides for the immediate
termination of the [PPA], the collection of damages, and the disposition of the [QF’s] Delay
Security held by Idaho Power.” Id. at ¶ 5.
The parties maintain that the terms of the Confidential Settlement Agreement are fair,
equitable, and in the public interest. While the settlement agreement is subject to approval by the
Commission, Idaho Power requests that the Commission approve the Confidential Settlement
Agreement “in its entirety, without material change or condition pursuant to RP 274.” Id. at ¶ 7.
STAFF REVIEW AND RECOMMENDATION
After reviewing the underlying PPA, the Letter of Understanding, the Motion and the
Confidential Settlement Agreement, Staff recommends that the Commission approve the
Confidential Settlement Agreement. Staff concurs with the parties that the proposed settlement
is reasonable and in the public interest for several reasons. First, Staff believes it is reasonable to
allow voluntary termination of the PPA prior to the scheduled operation date. From Idaho
Power’s perspective, the utility (and its ratepayers) avoid paying for generation that Idaho Power
generally claims that it does not need to meet its current service obligations. From a ratepayer
perspective, ratepayers avoid paying more than $86 million over the 20-year life of the PPA
(without considering generation offsets).
Second, the settlement allows Idaho Power to retain a portion of the security deposit
while returning the balance to Grand View. From Grand View’s perspective, it recovers the

1 Idaho Power claims that the Confidential Settlement Agreement is exempt from public disclosure because the
Agreement “is a trade secret or privileged or confidential as described in” the Public Records Act, Idaho Code § 9-
340 and the Trade Secrets Act, Idaho Code § 48-801 et seq. See Rule 67, IDAPA 31.01.01.067.
DECISION MEMORANDUM 3
balance of its security deposit. Third, resolution of this matter will avoid extensive litigation
regarding the parties’ conduct. Settlement will conserve resources (both time and money). The
settlement represents a significant benefit to Grand View, Idaho Power and ratepayers.
Given the benefits of the proposed settlement, Staff believes it is appropriate for the
Commission to approve the settlement without further proceedings. Pursuant to Rule 274, the
Commission has the discretion to determine the manner in which it considers proposed
settlement. Here, the two parties have agreed to resolve their private dispute. The parties and
the Commission Staff assert that the settlement is reasonable and in the public interest.
COMMISSION DECISION
Does the Commission find that the proposed settlement is reasonable and in the
public interest?
Pursuant to Rule 274, does the Commission wish to approve this settlement based
upon its review and the particular facts of this case without Modified Procedure?

bls/M:IPC-E-13-01_dh