20140905notice_of_modified_procedure_order_no_33119.pdf

Office of the Secretary
Service Date
September 5.2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-14-19
APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH )NOTICE OF
GRAND VIEW PV SOLAR TWO,LLC,)MODIFIED PROCEDURE
FOR THE SALE AND PURCHASE OF )
ELECTRIC ENERGY.)ORDER NO.33119
On July 25,2014,Idaho Power filed an Application with the Commission for
approval or rejection of an Energy Sales Agreement with Grand View PV Solar Two,LLC,for
the sale and purchase of electric energy.The Commission issued a Notice of Application on
August 20,2014.
THE APPLICATION
Idaho Power requests that the Commission accept or reject the Energy’Sales
Agreement between Idaho Power and Grand View PV Solar Two,LLC (Grand View),under
which Grand View would sell and Idaho Power would purchase electric energy generated by
Grand View’s 80 megawatt (MW)solar photovoltaic project located approximately 20 miles
southwest of Mountain Home,Idaho,The Agreement between the parties was executed on July
17.2014.
The Agreement is for a term of 20 years.Idaho Power states that the Agreement was
executed in compliance with the Commission’s orders directing the implementation of PURPA
for the State of Idaho and contains negotiated avoided cost rates based upon the incremental cost,
integrated resource plan pricing methodology available to solar projects whose generation will
exceed 100 kilowatts (kW).Idaho Power explains that the Agreement also contains negotiated
solar integration charges as directed by the Commission in Order No.33043,as well as several
other negotiated provisions requiring specific Commission approval.
The proposed project is expected to consist of approximately 340,480 polysilicon
photovoltaic panels installed on a single axis tracking system,supported by a fixed post and
beam structure.Grand View selected July 1,2016,as its Scheduled Operation Date.Various
requirements have been placed upon Grand View in order for Idaho Power to accept energy
NOTICE OF MODIFIED PROCEDURE
ORDERNO.33119 1
deliveries from the project.Idaho Power states that it will continue to monitor compliance with
these requirements throughout the term of the Agreement.
Idaho Power explains that this Agreement is the first of its type submitted for
approval that contains negotiated avoided cost rates based upon the incremental cost,integrated
resource plan pricing methodology.Prices were determined on an incremental basis with the
inclusion of this project in its queued position of proposed projects on Idaho Power’s system.
Over the 20-year term of the Agreement,monthly rates vary from approximately $3 1/megawatt
hour (MWh)for light load hours in early months of the Agreement to as high as $159/MWh for
heavy load hours in the later years of the Agreement.The equivalent 20-year levelized avoided
cost rate would amount to approximately $73.4 1/MWh.
The Agreement also contains a solar integration charge that was negotiated and
agreed to by the parties.Although the integration charge is based on Idaho Power’s solar
integration study,the study was not yet complete during contract negotiations.However,the
most currently available data and analysis from the study was used by the parties in the course of
negotiations.The negotiated solar integration charge starts at $0.99/MWh for the first year of
the Agreement (2015)and escalates to $1 .84/MWh in 2036.The equivalent 20-year levelized
solar integration charge would amount to approximately $1 .28/MWh.Idaho Power states that
the 20-year estimated contractual obligation based upon estimated generation levels,including
avoided cost rates and solar integration charges,is approximately $310,237,634.
The Agreement does not contain a 90/110 firmness requirement;instead it contains
provisions for a Mechanical Availability Guaranty (MAG),solar forecasting fees,solar
integration charge,and a pricing adjustment.Idaho Power states that it prefers that 90/110
firmness be included in all PURPA QF agreements.The project preferred a MAG and
forecasting costs.Idaho Power maintains that the use of a MAG is not a replacement for the
firmness determinations of the 90/110 provisions;however,based on negotiations and an agreed
to price adjustment,the Company states that it is comfortable and confident that the Agreement
contains provisions to reasonably assure that the project performs in conformance with its
generation estimates and,if not,the project receives a reduced price for the non-conforming
month’s generation.The Agreement allows for a 5%deviation in the monthly net energy
deliveries from the generation profile estimates without assessing a price adjustment.If the
project’s actual generation deviates downward by more than 5%of its generation estimates,then
NOTICE OF MODIFIED PROCEDURE
ORDERNO.33119
a corresponding percentage adjustment to the monthly price is imposed.However,the
adjustment is limited to a maximum price reduction of 10%.Idaho Power states that consistent
and material deviations from the hourly energy estimates in the generation profile will be
considered by Idaho Power to be a material breach of the Agreement.
New provisions providing for actual delay damages as opposed to liquidated damages
are included in the Agreement,consistent with Order No.32697.The parties negotiated a 50/50
split of environment attributes (aka renewable energy credits).As with all PURPA QF
generation,the project must be designated as a network resource (DNR)to serve Idaho Power’s
retail load on its system.Consequently,the Agreement contains provisions requiring completion
of a Generator Interconnection Agreement (GIA),compliance with GIA requirements,and
designation as an Idaho Power network resource as conditions of Idaho Power accepting delivery
of energy and paying for the same under the Agreement.In order for the project to maintain its
DNR status,there must be a power purchase agreement associated with its transmission service
request that maintains compliance with Idaho Power’s non-discriminatory administration of its
Open Access Transmission Tariff (OATT)and maintains compliance with FERC requirements.
Article 21 of the Agreement provides that the Agreement will not become effective
until the Commission has approved all of the Agreement’s terms and conditions and declared
that all payments Idaho Power makes to Grand View for purchases of energy will be allowed as
prudently incurred expenses for ratemaking purposes.
NOTICE OF MODIFIED PROCEDURE
YOU ARE HEREBY NOTIFIED 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
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 Friday,October 31,2014.The comment must contain a statement of reasons
supporting the comment.Persons desiring a hearing must specifically request a hearing in their
NOTICE OF MODIFIED PROCEDURE
ORDERNO.33119 3
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 83720-0074 P0 Box 70
Boise,ID 83 707-0070
Street Address for Express Mail:E-mail:dwalker(Ziidahopower.com
472 W.Washington Street Randy C.Aliphin
Boise,ID 83702-59 18 Energy Contract Administrator
Idaho Power Company
P0 Box 70
Boise,ID 83 707-0070
E-mail:iiphin(didahopower.co
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 filed no later than
Friday,November 7,2014.
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.
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 www.puc.idaho.gov.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.
NOTICE OF MODIFIED PROCEDURE
ORDERNO.33119 4
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Cornmissions 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 31.01.01.000.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 October 31,2014.
IT IS FURTHER ORDERED that reply comments be filed no later than November 7,
2014.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of September 2014.
I
PAUL KJELLANDER,PRESIDENT
c
i_\/I P
3
MACK A.REDFORD,COMMISSIONER
Out of the Office on this Date
MARSHA H.SMITH,COMMISSIONER
ATTEST:
JeanD.Jewell
Commission Secretary
O:IPC-E-14-I9ks
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ORDERNO.33119 5