20140626notice_of_application_order_no_33064.pdf

Office of the Secretary
Service Date
June 26,2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.IPC-E-14-15
OF IDAHO POWER COMPANY FOR )
APPROVAL OR REJECTION OF AN )NOTICE OF APPLICATION
ENERGY SALES AGREEMENT WITH )
CLARK CANYON HYDRO,LLC,FOR THE )NOTICE OF
SALE AND PURCHASE OF ELECTRIC )MODIFIED PROCEDURE
ENERGY FROM THE CLARK CA1 VON )
PROJECT.)ORDER NO.33064
On June 4.2014,Idaho Power Company filed an Application requesting that the
Commission accept or reject an Agreement between Idaho Power and Clark Canyon Hydro,LLC
(Clark Canyon),for the sale and purchase of electric energy generated by the Clark Canyon
hydroelectric Project.Idaho Power asks that its Application be processed by Modified
Procedure.
BACKGROUND
On viay 20,2011.this Commission approved an agreement between Idaho Power
and Clark Canyon for a 4.7 megawatt (MW)hydro project at a facility located near Dillon,
Montana.Order No.32294.The agreement contained a scheduled operation date of March 31,
2013.Idaho Power states that,for various reasons,the project was unable to meet the March
2013 scheduled operation date.Idaho Power agreed to extend the operation date until December
31,2013,based on Clark Canyon’s agreement to forfeit the posted delay security as liquidated
damages.Idaho Power required that the project post an additional security amount as delay
security associated with the revised,December 2013,scheduled operation date.The extension
agreement was approved by the Commission on May 24,2013.Order No.32814.The project
subsequently failed to meet its revised,December 2013,operation date.
Ultimately,Idaho Power and the project entered into a Memorandum of
Understanding (MOU)that addressed termination of the previously approved agreement and
execution of a new seasonal hydro QF agreement.The MOU provides for:
•Termination of the previously approved agreement;
•Collection of delay liquidated damages;
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•Negotiation and execution of a new seasonal hydro agreement that retains
the delay liquidated damages provision,requires the Project to post delay
security for the new agreement at $45 per kilowatt of nameplate,and
allows the Project to offset this delay security by the previously forfeited
delay security;
•Any energy deliveries to Idaho Power in the months of March or April
will be paid the market value of energy and not the SAR published
avoided cost rate;
•If the Project fails to meet the seasonal hydro requirements (i.e.,55%of
generation delivered during the months of June,July and August),
payments will be revised to reflect non-seasonal hydro SAR published
avoided cost rates;and
•The provision in the approved/terminating contract with regard to
ownership of renewable energy credits is retained for the new agreement
(Idaho Power owns 50%and Clark Canyon owns 50%).
Idaho Power states that,“in negotiating these terms and conditions with Clark Canyon,Idaho
Power adhered to its PURPA obligation to contract with this new proposed QF project,
addressed the project’s previous lack of performance,satisfied the project’s requests to contract
and purchase in a timely and reasonable manner,and maintained the value from the terminated
[Agreement]for Idaho Power and its customers by requiring terms and conditions that would
carry certain provisions from the terminated [Agreement]forward into the new [Agreement].”
Application at 4.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that,on May 30,2014,Idaho Power and Clark
Canyon entered into a new Agreement pursuant to the terms and conditions of various
Commission Orders applicable to PURPA agreements for seasonal hydro projects.Idaho Power
states that Clark Canyon now proposes to operate and maintain a 7.55 megawatt (MW)seasonal
hydro energy facility located near Dillon,Montana.The Company maintains that the project will
be a qualified facility (QF)under the applicable provisions of the Public Utility Regulatory
Policies Act (PURPA).
YOU ARE FURTHER NOTIFIED that,under the terms of the Agreement,Clark
Canyon elected to contract with Idaho Power for a 20-year term using the non-levelized seasonal
hydro published avoided cost rates as currently established by the Commission in Order No.
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32817 for energy deliveries of less than 10 average MW (aMW).As defined in paragraphs 1.23
and 4.1.4 of the Agreement,Clark Canyon 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.As described in paragraph 7.5 of the Agreement,should the
facility exceed 10 aMW on a monthly basis,Idaho Power will accept the inadvertent energy that
does not exceed the maximum capacity amount,but will not purchase or pay for inadvertent
energy.
YOU ARE FURTHER NOTIFIED that,in its new Agreement,Clark Canyon has
selected June 1,2017,as the project’s Scheduled Operation Date.Various requirements have
been placed upon the project in order for Idaho Power to accept energy deliveries from this
facility.Idaho Power will monitor compliance with these requirements.Idaho Power will
continue to monitor the ongoing requirements throughout the term of the Agreement.
YOU ARE FURTHER NOTIFIED that the Agreement provides that all applicable
interconnection charges and monthly operational or maintenance charges under Schedule 72 will
be assessed to Clark Canyon.A Schedule 72 Generator Interconnection Agreement (GIA)
between Clark Canyon and Idaho Power was executed on August 10,2011,for a 4.7 MW
facility.Idaho Power maintains that the Company has constructed the required interconnection
facilities pursuant to the executed GIA.With the increase in nameplate capacity from 4.7 MW to
7.55 MW,Idaho Power states that Clark Canyon has been advised that it will need to submit an
additional interconnection request to accommodate the additional 2.85 MW,and execute a GIA
increasing the interconnection capacity to 7.55 MW.
YOU ARE FURTHER NOTIFIED that Idaho Power states that 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 and maintain compliance with
Idaho Power’s non-discriminatory administration of its Open Access Transmission Tariff
(OATT)and FERC requirements there must be a power purchase agreement (PPA)associated
with its transmission service request.
YOU ARE FURTHER NOTIFIED that Idaho Power further explains that the recent
hydro agreements are the first hydro-based agreements submitted for approval “that contain
revised terms and conditions subsequent to the Commission’s final and reconsideration orders
from Case No.GNR-E-1 1-03.As such,the form of the [Agreementi has several terms and
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conditions that vary from previously approved agreements in order to comply with the
Commission’s recent orders.”Application at 4.
YOU ARE FURTHER NOTIFIED that Idaho Power and Clark Canyon also agreed
to changes in some standard provisions that the parties now propose for Commission approval.
In addition to the specifically negotiated provisions pursuant to the MOU,Idaho Power identifies
the major changes as follows:
•Change to the definition of “Mid-Columbia Market Energy Cost”to
replace reference to the Dow Jones index with reference to the
Intercontinental Exchange (ICE)index and formula consistent with the
proposed settlement in Case No.IPC-E-13-25’;
•Addition of definitions and provisions,paragraphs 1.29,1.41,1.42,3.4
and 7.6 to incorporate definitions of “non-seasonal hydro facility”and
“seasonal hydro facility”as well as “seasonal hydro facility test periods”
to incorporate and maintain separate rates for seasonal and non-seasonal
hydro projects and to ensure that seasonal hydro projects perform within
the requirements of generating 55 percent of their annual generation in the
months of June,July and August;
•Change to paragraph 6.2 to allow Clark Canyon to adjust the “Initial Year
Monthly Net Energy Amounts”on a monthly,rather than quarterly,basis;
•Revision to paragraph 12.4 relating to Scheduled Maintenance;and
•Several other minor revisions in an attempt to add clarity.
YOU ARE FURTHER NOTWIED that Article 21 of the Agreement provides that the
PPA will not become effective until the Commission has approved all terms and conditions and
declared that all payments Idaho Power makes to Clark Canyon for purchases of energy will be
allowed as prudently incurred expenses for ratemaking purposes.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTWIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules
of Procedure,IDAPA 31.01.01.201-204.The Commission notes that Modified Procedure and
l This change is relevant to the 90/110 performance requirement.The settlement was approved by the Commission
on June 10,2014.Order No.33053.
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written comments have proven to be an effective means for obtaining public input and
participation.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or in opposition with the Commission no
later than Tuesday,August 5,2014.The comment must contain a statement of reasons
supporting the comment.Persons desiring a hearing must specifically request a hearing in their
written comments.Written comments concerning this Application may be mailed to the
Commission and Idaho Power at the addresses reflected below:
Commission Secretary Donovan E.Walker
Idaho Public Utilities Commission Lead Counsel
P0 Box 83720 Idaho Power Company
Boise,ID 83 720-0074 P0 Box 70
Boise,ID 83707-0070
E-mail:dwalkerãidahopower.corn
Street Address for Express Mail:Randy C.Allphin
472 W.Washington Street Energy Contract Administrator
Boise,ID 83702-5918 Idaho Power Company
P0 Box 70
Boise,ID 83707-0070
E-mail:rallphinidahopower.com
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission’s home page located at www.puc.idaho.gov.Click the “Case Comment or Question
Form”under the “Consumers”tab,and complete the comment form using the case number as it
appears on the front of this document.These comments must also be sent to Idaho Power at the
e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that reply comments may be tiled no later than
Tuesday,August 12,2014.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the deadline,the Commission may consider the matter on its merits and may
enter its Order without a formal hearing.If comments or protests are filed within the deadline,
the Commission will consider them and in its discretion may set the matter for hearing or may
decide the matter and issue its Order based on the written positions before it.IDAPA
31.01.01.204.
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YOU ARE FURTHER NOTIFIED that the Application and supporting workpapers
have been filed with the Commission and are available for public inspection during regular
business hours at the Commission offices.The Application is also available on the
Commission’s web site at wvw.puc.idaho,cov.Click on the “File Room’tab at the top of the
page,scroll down to “Open Electric Cases,”and then click on the case number as shown on the
front of this document.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and that the
Commission may enter any final order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 3 1.01.01.000,etseq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons and the parties may file written comments no later than August 5,2014.
IT IS FURTHER ORDERED that reply comments be filed no later than August 12,
2014.
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DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of June 2014.
PAUL KJELL R,PRESIDENT
MACDFOMIS SlONER
a
MARSHA I-I.SMITH,COMMISSIONER
ATTEST:
I -
I -
Jtan D.Jewel1
Commission Secretary
O:IPC-E-14-15 ks
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