20130315Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

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

FROM: KARL KLEIN
DEPUTY ATTORNEY GENERAL

DATE: MARCH 14, 2013

SUBJECT: IDAHO POWER’S MOTION FOR APPROVAL OF SETTLEMENT
AGREEMENT, CASE NO. IPC-E-13-03

On March 7, 2013, Idaho Power Company moved the Commission to approve Idaho
Power’s March 6, 2013 Settlement Agreement with Dynamis Energy, LLC. If approved, the
Settlement Agreement will immediately terminate the November 16, 2011 Firm Energy Sales
Agreement (“FESA”) pursuant to which Idaho Power is to buy electricity from Dynamis under to
the Public Utility Regulatory Policies Act of 1978 (“PURPA”). Idaho Power asks the Commission
to approve the Settlement Agreement “without material condition or modification,” pursuant to RP
274 or via Modified Procedure. See Idaho Power Company’s Motion for Approval of Settlement
Agreement (“Motion”) at 3.
BACKGROUND
Under the FESA, Dynamis is to own and operate a 22 megawatt landfill waste-to-energy
facility near Boise in Idaho Power’s service territory, and Idaho Power is to buy electricity
produced by that facility. The FESA contains a scheduled operation date of February 15, 2014.
The Commission approved the FESA on February 24, 2012. See Order No. 32470, Case No. IPC-
E-11-25.
THE MOTION
According to Idaho Power’s Motion, on or about January 4, 2013, Dynamis asked the
Company to voluntarily terminate the FESA. Motion at 2. As the FESA does not discuss voluntary
termination before the scheduled operation date, the parties executed the Settlement Agreement to
discuss that situation. It provides: (1) the parties will immediately terminate the FESA; (2) Idaho
Power will collect a confidential amount of damages from Dynamis; (3) Dynamis will terminate the

DECISION MEMORANDUM 2
Generator Interconnection Agreement (“GIA”); and (4) all interconnection deposit refunds,
equipment removal, etc. will be in accordance with the GIA and Schedule 72. Id. The Settlement
Agreement further states that the Commission must approve it before it takes effect. Id. at 2-3.
Idaho Power’s Motion represents that the Settlement Agreement is in the public interest and a fair
and equitable final resolution to this matter. Id. at 3.
STAFF REVIEW AND RECOMMENDATION
After reviewing the record and the Settlement Agreement, Staff recommends that the
Commission approve the Settlement Agreement. Staff concurs that the proposed settlement is
reasonable and in the public interest. First, ratepayers will avoid paying about $189 million (with a
net present value $82 million) to Dynamis over the 20-year term of the Agreement. Second, Idaho
Power will retain a portion of the security deposit as damages while returning the balance to
Dynamis. Finally, settlement will resolve this matter without litigation and thus conserve resources
(both time and money).
Given the benefits of the proposed settlement, Staff believes it is appropriate for the
Commission to approve it without further proceedings. Pursuant to RP 274, the Commission has
the discretion to determine the manner in which it considers proposed settlement. For example, “the
Commission may summarily accept settlement of an essentially private dispute or may convene an
evidentiary hearing to consider the reasonableness of the settlement.” See Commission Order No.
32743, at 3. Here, the two parties have agreed to resolve their private dispute, and Idaho Power and
Staff assert that the settlement is reasonable and in the public interest. Accordingly, Staff
recommends that the Commission summarily approve the Settlement Agreement.
COMMISSION DECISION
Does the Commission wish to enter an Order approving the Settlement Agreement without
further proceedings?

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