20130417final_order_no_32790.pdf

Office of the Secretary
Service Date
April 17,20L3
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR A )CASE NO.IPC-E-13-02
DETERMINATION REGARDING ITS FIRM )
ENERGY SALES AGREEMENT WITH J.R.)
SIMPLOT COMPANY FOR THE SALE AND )ORDER NO.32790
PURCHASE OF ELECTRIC ENERGY.)
___________________________________________________________________________________________
)
On February 20,2013,Idaho Power Company filed an Application with the
Commission requesting a determination regarding the Firm Energy Sales Agreement (FESA,
Agreement)between Idaho Power and J.R.Simplot.The Application states that Simplot would
sell and Idaho Power would purchase electric energy generated by Simplot’s Pocatello
cogeneration plant (Facility)located near Pocatello,Idaho.Idaho Power stated that this request
is for a replacement Agreement applicable to an existing project.The Company is requesting
interim approval of its Agreement while the Application is reviewed because the current
Agreement expires on March 1.2013.The Company further requested that the Application be
processed by Modified Procedure.
On February 28,2013,the Commission issued a Notice of Application and Notice of
Modified Procedure setting a comment deadline of March 21 and a reply deadline of March 28.
2013.Order No.32754.The Commission granted interim approval of the Agreement,subject to
adjustments,until such time as the Agreement is approved by final Order of the Commission.
By this Order,we approve the Agreement between Idaho Power and J.R.Simplot without change
or condition.
THE APPLICATION
The Application states that Simplot has elected to contract with Idaho Power for a
two-year term using non-levelized published avoided cost rates as currently established by the
Commission for energy deliveries of less than 10 aMW.As a cogeneration plant,the Facility is
classified within the “other”category of the published rates.
A.The Agreement
The present Agreement has been negotiated to replace the existing Agreement which
expired on March 1,2013.The avoided cost rates contained in this Agreement are lower than
the avoided cost rates contained in the expiring Agreement.Because the Facility is an existing
ORDER NO.32790
QF whose previous contract with Idaho Power is expiring,this Agreement contains capacity
payments for the entire term of the Agreement.As an existing QF that has been delivering
energy to Idaho Power pursuant to an existing agreement,the replacement Agreement specifies
that the scheduled operation date for this Facility shall be no later than 120 days after a
Commission final non-appealable Order has been issued approving the replacement Agreement.
The nameplate rating of this Facility is 15.9 MW.Having chosen a published rate
contract,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.Under the terms of the Agreement,Idaho Power will accept the excess energy
(Inadvertent Energy),but will not purchase or pay for the Inadvertent Energy.
Various requirements have been placed upon Simplot in order for Idaho Power to
accept energy deliveries from this Facility.Idaho Power states that it will continue to monitor
compliance with these requirements through the full term of the Agreement.The Company
maintains that the Agreement,as signed and submitted,contains non-levelized published avoided
cost rates in conformity with applicable Commission Orders.Idaho Power further states that all
applicable interconnection charges and monthly operation and maintenance charges under
Schedule 72 will be assessed to Simplot.
The Application states that the Agreement was executed in compliance with
Commission Orders directing the implementation of PURPA for the State of Idaho.PURPA QF
generation must be designated as a network resource (DNR)to serve Idaho Power’s retail load
on its system.In order for this Facility to maintain its current DNR status there must be an
Agreement associated with its transmission service request (TSR)to maintain compliance with
Idaho Power’s non-discriminatory administration of its Open Access Transmission Tariff
(OATT)and compliance with FERC requirements.A lapse of time between the Facility’s
expiring agreement and replacement firm energy sales agreement places its status as a DNR and
its associated TSR in jeopardy.In order to provide for the continued and uninterrupted operation
of the cogeneration Facility and its associated plant (to maintain DNR status),the parties
requested,and were granted,interim approval of the Agreement while the Commission
completes its review.
By its own terms,the Agreement will not become finally effective until the
Commission has approved all of the Agreement’s terms and conditions and declares that all
ORDER NO.32790
payments made by Idaho Power to Simplot for purchases of energy will he allowed as prudently
incurred expenses for ratemaking purposes.Agreement ¶21.
THE COMMENTS
Staff was the only person or party to file comments.Staff reviewed the rates
contained in the Agreement and confirmed that they are in accordance with the currently
approved published avoided cost rates.Staff noted that the replacement Agreement contains
explicit language regarding curtailment pursuant to 18 C.F.R.§292.304.Staff also observed
that Mid-Columbia Market Energy Cost has been defined as the monthly volume weighted
average of Dow Jones Mid-C index prices.The prior agreement between the parties did not
specify that volume would be used to compute the weighted average.Based on its review,Staff
recommended that the Commission approve the Agreement’s terms and conditions.
FINDINGS AND COCLUSIONS
The Idaho Public Utilities Commission has jurisdiction over Idaho Power,an electric
utility,and the issues raised in this matter pursuant to the authority and power granted it under
Title 61 of the Idaho Code and the Public Utility Regulatory Policies Act of 1978 (PURPA).The
Commission has authority under PURPA and the implementing regulations of the Federal
Energy Regulatory Commission (FERC)to set avoided costs,to order electric utilities to enter
into fixed-term obligations for the purchase of energy from qualified facilities (QFs)and to
implement FERC rules.
The Commission has reviewed the record in this case,including the Application,the
replacement Agreement,and the comments and recommendations of Commission Staff We find
that the J.R.Simplot project is qualified to receive the non-levelized published avoided cost rates
contained in the Agreement.We further find that the proposed Agreement contains acceptable
contract provisions consistent with PURPA.FERC regulations and this Commission’s prior
Orders.We find it reasonable to allow payments made under the Agreement as prudently
incurred expenses for ratemaking purposes.
ORDER NO.32790
ORDER
IT IS HEREBY ORDERED that the February 19,2013,Firm Energy Sales
Agreement between Idaho Power Company and JR.Simplot is approved without change or
condition.We further declare that all payments made by Idaho Power to Simplot for purchases
of energy will be allowed as prudently incurred expenses for ratemaking purposes.
TI-uS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this /
day of April 2013.
PAUL KJ LAND,PRESIDENT
MACK A.REDFORD,COMMISSIONER
zi &kL
MARSHA H.SMITH,COMMISSIONER
ATTEST:
k’an D.Jewelli)
Commission Secretary
0:IPC-E-1 3-02ks2
ORDER NO.32790 4