20140820notice_of_application_ipc.pdf

Office of the Secretary
Service Date
August 20.2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-14-20
APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH )
BOISE CITY SOLAR,LLC,FOR THE )NOTICE OF APPLICATION
SALE AND PURCHASE OF ELECTRIC )
ENERGY.)
On July 25,2014,Idaho Power filed an Application with the Commission for
approval or rejection of an energy sales agreement with Boise City Solar,LLC,for the sale and
purchase of electric energy.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that Idaho Power requests that the Commission
accept or reject the Energy Sales Agreement between Idaho Power and Boise City Solar,LLC,
under which Boise City Solar would sell and Idaho Power would purchase electric energy
generated by the project’s 40 megawatt (MW)solar photovoltaic project located in Ada County
on South Cloverdale Road between Boise and Kuna,Idaho.The Agreement between the parties
was executed on July 17,2014.
YOU ARE FURTHER NOTIFIED that 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.
YOU ARE FURTHER NOTIFIED that the proposed project is expected to use mono
crystalline solar modules with Tier 1 inverters and utilize a dual axis tracking system.The
facility has a nameplate rating of 39.989 MW AC.Boise City Solar selected January 16,2016,
as its Scheduled Operation Date.Various requirements have been placed upon Boise City Solar
in order for Idaho Power to accept energy deliveries from the project.Idaho Power states that it
NOTICE OF APPLICATION 1
will continue to monitor compliance with these requirements throughout the term of the
Agreement.
YOU ARE FURTHER NOTIFIED that Idaho Power explains that this Agreement is
the first of its type (along with Grand View Solar)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 $44/megawatt hour (MWh)for light load
hours in early months of the Agreement to as high as $11 3/MWh for heavy load hours in the
later years of the Agreement.The equivalent 20-year levelized avoided cost rate would amount
to approximately $72.15/MWh.
YOU ARE FURTHER NOTIFIED that 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 $l.34/MWh for the first year of the Agreement (2015)and escalates to $3.1 1/MWh in
2036.The equivalent 20-year levelized solar integration charge would amount to approximately
$2.0 1/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 $161,461,924.
YOU ARE FURTHER NOTIFIED that the Agreement contains provisions for a
90/110 firmness requirement,as well as a solar integration charge,and a pricing adjustment.
Idaho Power affirms that it prefers that 90/110 firmness be included in all PURPA QF
agreements and the Company does not consider solar integration charges to be a replacement for
the 90/110 requirements.Idaho Power states that 90/110 firmness requirements and solar
integration charges address different concerns:90/110 addresses the Commission definition of
firmness for entitlement to an avoided cost rate determined at the time of contracting for the
duration of the contract whereas solar integration charges address the increased system operation
costs incurred because of the variable and intermittent nature of the generation.Based on
negotiations and an agreed to price adjustment,the Company states that it is comfortable and
NOTICE OF APPLICATION
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 two (2)percent deviation
in the monthly Adjusted Estimated Net Energy Amount (as estimated for the 90/110 provisions)
from the generation profile estimates without assessing a price adjustment.If the project’s actual
generation deviates downward by more than 2%of its generation estimates,then 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.
YOU ARE FURTHER NOTIFIED that Idaho Power states that the parties negotiated
a deviation from the requirement of only allowing for quarterly adjustments to the Estimated Net
Energy Amounts relevant to the 90/110 provisions.The Agreement provides for the ability to
change Estimated Net Energy Amounts on a monthly basis.New provisions providing for actual
delay damages as opposed to liquidated damages are also included in the Agreement,consistent
with Order No.32697.The Application further states that the parties negotiated a 50/50 split of
environment attributes (aka renewable energy credits).
YOU ARE FURTHER NOTIFIED that,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.
YOU ARE FURTHER NOTIFIED that Article 2 i 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 Boise City Solar for
purchases of energy will be allowed as prudently incurred expenses for ratemaking purposes.
NOTICE OF APPLICATION 3
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.
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 31 .01.01.000,e!seq.
DATED at Boise,Idaho this day of August 2014.
,1 j’7
/
JeanD Jevell
Commission Secretary
N :IPC-E-1 4-2Oks
NOTICE OF APPLICATION 4