20130307Motion and Termination.pdf

IDAHO
PIOMRS RE \!r'
pj 3: 1 2
An IDACORP Company
LUI
DONOVAN E WALKER Lead Counsel
dwaIkercidahopower.com
March 7, 2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-13-03
Termination of Dynamis Energy, LLC's Firm Energy Sales Agreement -
Idaho Power Company's Motion for Approval of Settlement Agreement
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of Idaho
Power Company's Motion for Approval of Settlement Agreement.
Very yours,
i-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]
dwaIker(äidahoDower.com
Ct
201t-7 PM 3: 12
-; I
TiLTH: MMSSO
Attorney for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE TERMINATION )
OF THE FIRM ENERGY SALES ) CASE NO. IPC-E-13-03
AGREEMENT BETWEEN IDAHO )
POWER COMPANY AND DYNAMIS ) IDAHO POWER COMPANY'S
ENERGY, LLC. ) MOTION FOR APPROVAL OF
) SETTLEMENT AGREEMENT
I. MOTION
Idaho Power Company ("Idaho Power" or "Company") hereby moves the Idaho
Public Utilities Commission ("Commission") pursuant to Idaho Code § 61-502, RP 56,
and RP 274 for an Order approving the Settlement Agreement executed between Idaho
Power and Dynamis Energy, LLC ("Dynamis"). This Motion is based on the following:
II. BACKGROUND
1. On November 16, 2011, Idaho Power and Dynamis entered into a Firm
Energy Sales Agreement ("FESA") pursuant to the Public Utility Regulatory Policies Act
of 1978, which provides that Dynamis own, operate, and maintain a 22 megawatt landfill
waste to energy generating facility to be located in Idaho Power's service territory near
Boise, Idaho, and that Idaho Power will buy electric energy produced by the facility. On
IDAHO POWER COMPANY'S MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT -1
February 24, 2012, the Commission approved the FESA. Order No. 32470, Case No.
IPC-E-1 1-25.
2.The FESA contains a Scheduled Operation Date of February 15, 2014.
On or around January 4, 2013, Dynamis requested voluntarily termination of the FESA
prior to the February 15, 2014, Scheduled Operation Date.
3.A voluntary termination of an existing FESA, prior to a default or material
breach of the FESA, is not specifically contemplated in the FESA. Various provisions
within the FESA are triggered once a project misses its Operation Date or is otherwise
in material breach of the agreement. However, the FESA terms and conditions do not
specifically address a voluntary termination initiated by the project prior to the Operation
Date.
4.On March 6, 2013, Idaho Power and Dynamis executed a Settlement
Agreement, attached hereto, that provides for the immediate termination of the FESA.
The parties agreed that Idaho Power collect damages from the security being held by
Idaho Power and that Idaho Power will return any remaining balance from the security
being held. The amounts of damages and returned security are confidential and have
been redacted from the Settlement Agreement.
5.The Settlement Agreement provides that Dynamis will exercise its right to
terminate the Generator Interconnection Agreement ("GIA") in accordance with the
provisions of the GIA and Schedule 72 and that all interconnection deposit refunds,
equipment removal, etc., will be in accordance with the GIA and Schedule 72
processes.
6.The Settlement Agreement contains a provision stating that all terms and
conditions of the Settlement Agreement are subject to approval by this Commission and
IDAHO POWER COMPANY'S MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT -2
that only after such approval, without material change or modification, has been
received shall the Settlement Agreement be valid.
7.The Settlement Agreement is a fair, equitable, and final resolution to this
matter, and is in the public interest. Idaho Power respectfully requests that the
Commission grant this Motion and approve the Settlement Agreement in its entirety,
without material change or condition, pursuant to RP 274.
III PROCEDURE
8.Pursuant to RP 274, the Commission has discretion to determine the
manner with which it considers a proposed settlement. In this matter, the two parties to
the FESA have reached agreement on how to resolve their private dispute. The
Settlement Agreement is reasonable and in the public interest. The parities request that
the Commission approve the Settlement Agreement without further proceedings.
9.In the alternative, should the Commission determine that further
proceedings are required to consider the Settlement Agreement, pursuant to RP 201,
the parties believe the public interest does not require a hearing to consider the issues
presented by this Motion and request it be processed as expeditiously as possible by
Modified Procedure.
IV. REQUESTED RELIEF
NOW, THEREFORE, Idaho Power respectfully requests that the Commission
enter its Order approving the Settlement Agreement without material change or
condition, and without further proceedings.
Respectfully submitted this 7th day of Ma 2013.
NOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT -3
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 7th day of March 2013 I served a true and
correct copy of IDAHO POWER COMPANY'S MOTION FOR APPROVAL OF
SETTLEMENT AGREEMENT upon the following named parties by the method
indicated below, and addressed to the following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Dynamis Energy, LLC
Ronald L. Williams
WILLIAMS BRADBURY, P.C.
1015 West Hays Street
Boise, Idaho 83702
C. Lloyd Machaffey, Chairman and CEO
Wade D. Thomas, General Counsel
Dynamis Energy, LLC
776 East Riverside Drive, Suite 150
Eagle, Idaho 83616
X Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email kris.sassercpuc.idaho.gov
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email roncwiIliamsbrad bury. com
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email IIoydcdynamisenerqy.com
wthomas(ädynamisenergy.com
OkAAMa QLucuA
Christa Bearry, Legal Assistant
IDAHO POWER COMPANY'S MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT -4
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-13-03
REDACTED SETTLEMENT AGREEMENT
f •
An 10ACORP Company
March 1, 2013
Randy C. Aliphin
Energy Contracts Coordinator, Ldr
Tel: [phone]
ra1lphin(idahopower.com
Dynamis Energy, LLC
C. Lloyd Mahaffey, CEO
776 E. Riverside Drive, Suite 150
Eagle, ID 83616
Original: US Mail
E-mail Copy: Lloyd Machaffey [e-mail]
Wade D. Thomas [e-mail]
Ron Williams ron(williamsbradbury.com
Re: Dynamis Energy, LLC - Settlement Agreement Relating to termination of the Firm
Energy Sales Agreement and the Generator Interconnection Agreement - IPUC
Case No. IPC-E-1 1-25
Mr. Mahaffey:
The Firm Energy Sales Agreement ("FESA") between Idaho Power Company ("Idaho Power")
and Dynamis Energy LLC ("Dynarnis") dated November 16, 2011, was approved by the Idaho Public
Utilities Commission ("IPUC") on February 24 0 , 2012, by Order No. 32470. This FESA contains a
Scheduled Operation Date of February 15 d', 2014, for the Dynamis Ada County Landfill Project.
In a meeting between Idaho Power, yourself and other Dynamis representatives on January
2013, Dynamis requested that Idaho Power review the FESA and propose a solution that would allow
Dynamis to voluntarily terminate this FESA.
The FESA does not specifically address voluntary termination prior to the Scheduled Operation
Date. However, it does specify that if the project fails to meet its Operation Date within 90 days of the
Scheduled Operation Date (February 15th, 2014) liquidated damages in the amount of $1,035,000 would
be payable to Idaho Power Company.
As you are aware, this FESA is a negotiated PURPA agreement that required significant analysis
and review from both parties and approval from the IPUC. A unique feature of this FESA is that, because
of the nature of the generation technology, the project elected to only deliver energy to Idaho Power
Page 1 of
P 0 Box 70 Boise, Idaho 83707 1221 W Idaho St. Boise, Idaho 83702
during Heavy Load hours to maximize the value of the energy payments to the project. This FESA also
provided that Idaho Power was to receive 50% of the Environmental Attributes associated with the
project for the full 20 year term of the agreement. The provision of energy deliveries during Heavy Load
hours only, and the 22 megawatt size of this project - along with the projects close proximity to Idaho
Power's Boise load center, and the ownership of 50% of the Environmental Attributions from the project
all contribute significantly more value to Idaho Power and its customers than comparable standard QF
agreements, and QF agreements for variable and intermittent resources that Idaho Power must execute.
Consequently, the termination of this FESA will have significantly more impact to Idaho Power and its
customers than the termination of smaller standard QF agreements.
The parties agreed in the FESA to forego a calculation of actual damages and agreed to apply
liquidated damages in the event the Operation Date did not occur within 90 days of the Scheduled
Operation Date. However, in consideration of the project's request for early termination and the other
factors and impacts that termination of this FESA will have, Idaho Power proposes the following:
SETTLEMENT AGREEMENT
The parties (Idaho Power Company and Dynamis Energy LLC), after consultation and advice of their
own respective legal counsel, hereby agree to the following:
(1)The FESA between the parties dated November 16 th , 2011, will be immediately terminated with no
further notice required, nor legal challenges to the termination thereof;
(2)Idaho Power will immediately collect damages of from the cash security that is
currently held by Idaho Power.
(3)Dynamis Energy LLC will exercise its right to terminate the Generation Interconnection
Agreement ("GIA") in accordance with the GIA and Schedule 72. All interconnection deposit
refunds, equipment removal, etc. will be in accordance with the GIA and Schedule 72 processes.
(4)All terms and conditions of this Settlement Agreement are subject to approval by the Idaho Public
Utilities Commission ("IPUC"). Only after such approval, without material change or
modification, has been received shall this Settlement Agreement be considered to be valid.
(5)Within 10 business days of execution of this Settlement Agreement by both parties Idaho Power
will prepare and file this agreement at the IPUC seeking approval of the same.
(6)Upon receipt of a final non-appealable order from the IPUC, Idaho Power shall refund to Dynamis
Energy LLC any remaining cash security being held by Idaho Power net of the above referenced
in damages payable to Idaho Power.
(7)Prior to Dynamis Energy LLC, (or any affiliate of Dynamis Energy LLC, or any organization with
substantially the same principle investors, managers, engineering or designers) executing an energy
sales agreement for a facility located at the same site, or in the immediate vicinity of the proposed
Dynamis Ada County Landfill Project, payment in full of the liquidated damages set
forth in the FESA, net any damage payments made to Idaho Power under this settlement
agreement, shall be first paid to Idaho Power.
(8)Idaho Power and Dynamis Energy agree that the amount of damages and amount of returned
Page 2 of 3
P 0 Box 70 Boise, Idaho 83707 1221 W Idaho St. Boise, Idaho 83702
security specified in this Settlement Agreement shall be confidential. This Settlement Agreement
will be filed as a public document with the Idaho Public Utilities Commission with those amounts
redacted.
The offer of settlement represented by this Settlement Agreement is only valid until March 15,
2013, 5:00 p.m. Mountain Time. Failure of Dynamis Energy LLC to execute and return two signed
copies to Idaho Power by that time will result in this proposed settlement being withdrawn by Idaho
Power. Email of the executed copies by the designated time followed up by overnight delivery of the
original signed agreements will meet this requirement.
Each party's signature below indicates that party's acceptance of all terms and conditions of this
Confidential Settlement Agreement set forth herin.
DATED this day of March 2013.
Agreed to and Accepted on behalf of Idaho Power Company:
Daniel B. Minor Donovan Walker
Executive Vice President and Lead Counsel
Chief Operating Officer Idaho Power Company
Idaho Power Company
Agreed to and Accepted on behalf of Dynamis Energy, LLC:
C. Lloyd Mahaffey á1b' Z
Chairman and CEO Legal Counsel
Dynamis Energy LLC Dynamis Energy LLC
Page 3 of 3
P 0 Box 70 Boise, Idaho 83707 1221 W Idaho St. Boise, Idaho 83702