20130220Application.pdf

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DONOVAN E. WALKER
Lead Counsel -
dwalkercidahopower.com UT1L1TS COMM' O
February 20, 2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-13-02
J.R. Simplot Company - Idaho Power Company's Application Regarding
Energy Sales Agreement
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of Ida,ho
Power Company's Application.
Very yours,
Donovan E. Walker
DEW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
. .
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwaIkeridahopower.com
Attorney for Idaho Power Company
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r U I (LI i t: ULMMIsiL
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
A DETERMINATION REGARDING THE
FIRM ENERGY SALES AGREEMENT FOR
THE SALE AND PURCHASE OF ELECTRIC
ENERGY BETWEEN IDAHO POWER
COMPANY AND J.R. SIMPLOT COMPANY
CASE NO. IPC-E-13-02
APPLICATION
Idaho Power Company ("Idaho Power" or "Company"), in accordance with RP 52
and the applicable provisions of the Public Utility Regulatory Policies Act of 1978
("PURPA"), hereby respectfully applies to the Idaho Public Utilities Commission
("Commission") for an Order accepting or rejecting the Energy Sales Agreement ("ESA")
between Idaho Power and J.R. Simplot ("Simplot" or "Seller") under which Simplot
would sell and Idaho Power would purchase electric energy generated by the Simplot-
Pocatello cogeneration plant ("Facility") located near Pocatello, Idaho. This request is
for a replacement ESA applicable to an existing project.
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Additionally, the parties respectfully request interim approval of this ESA during
the Commission's review, as the current agreement expires on March 1, 2013. In
support of this Application, Idaho Power represents as follows:
I. INTRODUCTION
1.Simplot currently has a PURPA Firm Energy Sales Agreement ("FESA")
with Idaho Power for this Facility that expires on March 1, 2013. The ESA submitted
herewith is a replacement contract for the same Qualifying Facility ("QF") contracting
with the same utility for a new term and with a new contract. This ESA complies with
the Commission's Order Nos. 32697 and 32737 from Case No. GNR-E-11-03. The
ESA contains published rates for projects of 10 average megawatts ("aMW") or less.
Because the Facility is an existing QF whose previous contract with Idaho Power is
expiring (replacement contract) the ESA contains capacity payments for the entire term
of the agreement, with no sufficiency period. Pursuant to the Commission's direction in
its Reconsideration Order No. 32737, the rates were calculated by Commission Staff for
a QF in the "other" categorization pursuant to the Surrogate Avoided Resource (SAR)
avoided cost methodology.
2.The avoided cost rates contained in this ESA are lower than the avoided
cost rates contained in the expiring FESA. The ESA was signed by Simplot on
February 15, 2013, was signed by Idaho Power on February 19, 2013, and is for a term
of two years. The ESA was executed in compliance with the Commission's Orders
directing the implementation of PURPA for the state of Idaho, contains the most recent
avoided cost rates pursuant to the Commission's February 5, 2012, Order, and the
Facility has been delivering energy to Idaho Power under a previously existing, but
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expiring, PURPA FESA. To provide for the continued and uninterrupted operation of
this cogeneration Facility and its associated plant, the parties hereby respectfully
request interim approval of the ESA during the Commission's review of the same.
II. BACKGROUND
3.Sections 201 and 210 of PURPA, and pertinent regulations of the Federal
Energy Regulatory Commission ("FERC"), require that regulated electric utilities
purchase power produced by cogenerators or small power producers that obtain QF
status. The rate a QF receives for the sale of its power is generally referred to as the
"avoided cost" rate and is to reflect the incremental cost to an electric utility of electric
energy or capacity or both, which, but for the purchase from the QF, such utility would
generate itself or purchase from another source. The Commission has authority under
PURPA Sections 201 and 210 and the implementing regulations of FERC, 18 C.F.R. §
292, to set avoided costs, to order electric utilities to enter into fixed-term obligations for
the purchase of energy from QFs, and to implement FERC rules.
4.On December 18, 2012, the Commission issued Order No. 32697 which
established parameters for published and negotiated avoided cost rate calculations.
The Commission further established and defined numerous contractual terms and
conditions for standard power purchase agreements entered into between regulated
utilities and qualifying QFs. On January 2, 2013, the Commission issued Errata to
Order No. 32697, which corrected published avoided cost rates to include energy
payments not discounted by transmission and line loss. On February 5, 2013, the
Commission issued Reconsideration Order No. 32737, which further clarified certain
terms and conditions of power purchase agreements and established published avoided
APPLICATION -3
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cost rates for "replacement" contracts. This Application seeks the Commission review,
and approval, of the ESA containing published avoided cost rates as calculated by
Commission Staff for a replacement ESA applicable to an existing project.
III. THE ENERGY SALES AGREEMENT
5.On February 19, 2013, Idaho Power and Simplot entered into an ESA
pursuant to the terms and conditions of the various Commission Orders applicable to
this PURPA agreement for a replacement contract. See Order Nos. 32697 and 32737.
A copy of the ESA is attached to this Application as Attachment 1. Under the terms of
this ESA, Simplot elected to contract with Idaho Power for a two-year term using the
non-levelized "other" published avoided cost rates as currently established by the
Commission for energy deliveries of less than 10 aMW and for a replacement ESA.
This ESA was executed by Simplot on February 15, 2013. It was subsequently
executed by Idaho Power on February 19, 2013, and now filed for the Commission's
review on February 20, 2013.
6.Simplot proposes to operate and maintain a 15.9 megawatt ("MW")
(Maximum Capacity Amount) cogeneration facility to be located near Pocatello, Idaho.
The Facility will be a QF under the applicable provisions of PURPA. As defined in
paragraph 1.18 and paragraph 4.1.3 of the ESA, Simplot will be required to provide data
on the Facility that Idaho Power will use to confirm that under normal and/or average
conditions, the Facility will not exceed 10 aMW on a monthly basis. Furthermore, as
described in paragraph 7.5 of the ESA, should the Facility exceed 10 aMW on a
monthly basis, Idaho Power will accept the energy (Inadvertent Energy) that does not
APPLICATION -4
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exceed the Maximum Capacity Amount, but will not purchase or pay for this Inadvertent
Energy.
7.As the Facility is an existing QF that has been delivering energy to Idaho
Power pursuant to a previously existing FESA, the ESA specifies the Scheduled
Operation Date for this Facility shall be no later than 120 days after a final, non-
appealable Order has been issued approving this agreement. See Appendix B.
However, the intent of the parties is to seek interim approval of this ESA and to provide
for the continued and uninterrupted operation of the Facility pursuant to the new terms
and conditions, including the lower avoided cost rates, contained in this new ESA.
Various requirements have been placed upon Simplot in order for Idaho Power to
accept energy deliveries from this Facility. Idaho Power will continue to monitor
compliance with these requirements. In addition, Idaho Power will monitor the ongoing
requirements through the full term of this ESA.
8.The ESA, as signed and submitted by the parties thereto, contains non-
levelized published avoided cost rates in conformity with applicable Commission
Orders. All applicable interconnection charges and monthly operation and maintenance
charges under Schedule 72 will be assessed to Simplot.
9.The Facility, and its previous agreement, predates Idaho Power's
Schedule 72 and the current generator interconnection requirements applicable to a
PURPA QF on Idaho Power's system. The previous "interconnection agreement" was
contained within the expiring FESA. As such, it was necessary for Simplot, as part of
this ESA, to execute a Generator Interconnection Agreement ("GIA") pursuant to
Schedule 72. A Schedule 72 GIA between Simplot and Idaho Power was executed on
APPLICATION -5
February 19, 2013. PURPA QF generation must be designated as a network resource
("DNR") to serve Idaho Power's retail load on its system. In order for the Facility to
maintain its DNR status, there must be a power purchase agreement associated with its
transmission service request ("TSR") in order to maintain compliance with Idaho
Power's non-discriminatory administration of its Open Access Transmission Tariff
(OATT) and to maintain compliance with FERC requirements. A lapse in the Facility's
power purchase agreement with Idaho Power places its status as a DNR and its
associated TSR in jeopardy. As such, the parties respectfully request interim approval
of this ESA in order to provide for the continuous operation of the Facility, no resulting
lapse in its power sales agreement with Idaho Power, and ensure that the current DNR
status is maintained.
10.Article 21 of the ESA provides that the ESA will not become effective until
the Commission has approved all of the ESA's terms and conditions and declared that
all payments Idaho Power makes to Simplot for purchases of energy will be allowed as
prudently incurred expenses for ratemaking purposes.
IV. MODIFIED PROCEDURE
11.Idaho Power believes that a hearing is not necessary to consider the
issues presented herein and respectfully requests that this Application be processed
under Modified Procedure; i.e., by written submissions rather than by hearing. RP 201
et seq. If, however, the Commission determines that a technical hearing is required, the
Company stands ready to prepare and present its testimony in such hearing.
12.Additionally, the parties request interim approval of the ESA, during the
Commission's review of the same, prior to the March 1, 2013, expiration of the existing
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FESA in order to ensure the continued operation of the Facility, to prevent a potential
lapse in the power sales agreement, and to ensure the Facility's DNR status and TSR
remains intact.
V. COMMUNICATIONS AND SERVICE OF PLEADINGS
13.Communications and service of pleadings, exhibits, orders, and other
documents relating to this proceeding should be sent to the following:
Donovan E. Walker
Lead Counsel
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
dwaIkeridahopower.com
Randy C. Allphin
Energy Contract Administrator
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
raIIphinDidahopower.com
VI. REQUEST FOR RELIEF
14.Idaho Power respectfully requests that the Commission issue an Order:
(1) authorizing the interim approval of the ESA to take effect upon the March 1, 2013,
expiration of the existing FESA; (2) authorizing that this matter may be processed by
Modified Procedure; (3) accepting or rejecting the ESA between Idaho Power Company
and J.R. Simplot Company, without change or condition; and (4) declaring that all
payments for purchases of energy under the ESA between Idaho Power Company and
J.R. Simplot Company, be allowed as prudently incurred expenses for ratemaking
purposes.
Respectfully submitted this 20th of February 2013.
DONOVAN E. WALKER
Attorney for Idaho Power Company
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CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 20th day of February 2013 I served a true and
correct copy of the within and foregoing APPLICATION upon the following named
parties by the method indicated below, and addressed to the following:
J.R. Simplot Company Hand Delivered
Attention: Corporate Secretary X U.S. Mail
J.R. Simplot Company Overnight Mail
P.O. Box 27 FAX
Boise, Idaho 83707 X Email don.sturtevantsimplot.com
Peter J. Richardson Hand Delivered
RICHARDSON & O'LEARY, PLLC X U.S. Mail
515 North 27th Street (83702) Overnight Mail
P.O. Box 7218 FAX
Boise, Idaho 83707 X Email peterrichardsonandoIeary.com
Christa Bearry, Legal Assistant ( '
APPLICATION -8