20141106notice_of_application_order_no_33163.pdf

Office of the Secretary
Service Date
November 6,2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.IPC-E-14-27
OF IDAHO POWER COMPANY FOR )
APPROVAL OR REJECTION OF AN )NOTICE OF APPLICATION
ENERGY SALES AGREEMENT WITH )
POCATELLO SOLAR 1,LLC FOR THE )NOTICE OF
SALE AND PURCHASE OF ELECTRIC )MODIFIED PROCEDURE
ENERGY.)
__________________________
)ORDER NO.33163
On October 17,2014,Idaho Power Company filed an Application with the
Commission requesting acceptance or rejection of a 20-year Energy Sales Agreement
(Agreement)between Idaho Power and Pocatello Solar 1,LLC (Facility,Project).The
Application states that Pocatello Solar 1 would sell and Idaho Power would purchase electric
energy generated by the Project’s solar photovoltaic facility located in Power County,Idaho.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that the Application states that the proposed Project
expects to use mono crystalline solar modules with Tier 1 inverters and utilize a single axis
tracking system for its 19.98 megawatt (MW)solar project.Application at 3.The Facility will
be a QF under the applicable provisions of the Public Utility Regulatory Policies Act of 1978
(PURPA).The Agreement is for a term of 20 years and contains incremental,integrated
resource planning (IRP)avoided cost rates applicable to solar projects that exceed 100 kilowatts
(kW).Idaho Power states that 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,the monthly rates vary from approximately $34/megawatt-hour
(MWh)for light load hours in early months of the Agreement to as high as $11 5/MWh for heavy
load hours in the latter years of the Agreement based on linear escalations of light load and
heavy load monthly rates.The equivalent 20-year levelized avoided cost rate is approximately
$61 .87/MWh.
YOU ARE FURTHER NOTIFIED that the Agreement also contains negotiated solar
integration charges as directed by the Commission in Order No.33043.The solar integration
charge starts at a charge of $1.1 8/MWh for the first year of the Agreement (2017)and escalates
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDERNO.33163 1
to $3.66/k Wh in 2036 in the same manner as the monthly energy rates (linear escalation).The
equivalent 20-year levelized solar integration charge is approximately $2.01/MWh.The 20-year
estimated contractual obligation based upon the estimated generation levels applied to the
avoided cost rates and solar integration charges is approximately $75.634,801.
YOU ARE FURTHER NOTIFIED that the Project has selected December 31.2016,
as its Scheduled Operation Date.id.at 4.Idaho Power asserts that various requirements have
been placed upon the Facility in order for Idaho Power to accept the Project’s energy deliveries.
Idaho Power states that it will monitor the Facility’s compliance with initial and ongoing
requirements through the term of the Agreement.
YOU ARE FURTHER NOTIFIED that Idaho Power explains that the Agreement
contains several terms and conditions that vary from previously approved agreements in order to
comply with the Commission’s recent orders and in order to properly implement the negotiated
rates and integration charges.In addition.Idaho Power and Pocatello Solar have agreed to
changes in some provisions that the parties propose for Commission approval.
YOU ARE FURTHER NOTIFIED that the Agreement contains provisions for a
90/110 firmness requirement.solar integration charge and pricing adjustment.Idaho Power
states that the 90/110 requirement addresses the Commission’s definition of firmness for
entitlement to avoided cost rates determined at the time of contracting for the duration of the
contract.The solar integration charge addresses the increased system operation costs (holding
reserves,upward and downward regulation)because of the variable and intermittent nature of the
generation.The parties further negotiated and agreed to provisions that provide for a new type
of price adjustment that is uniquely applicable to contracts that utilize the incremental IRP
pricing methodology.The purpose of this price adjustment mechanism is to require that the
Project performs in conformance with the generation profile that the Project submits,which
forms the basis for the avoided cost pricing that is contained in the Agreement and locked in for
the 20-year term.If the Project does not perform in conformance with the generation profile as
submitted,then a corresponding adjustment is made to the price paid for that month of
generation.The Agreement allows for a 2%deviation in the monthly Adjusted Estimated Net
Energy Amount from the generation profile estimates before a price adjustment is applied.
Consistent and material deviations from the hourly energy estimates in the generation profile will
be considered a material breach of the Agreement.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDERNO.33163 2
YOU ARE FURTHER NOTIFIED that 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.
YOU ARE FURTHER NOTIFIED that all terms and conditions have been negotiated
and agreed to by the parties,with the exception of the appropriate applicable capacity deficit
period.The parties have agreed to submit two alternative pricing schedules to the Commission
with the remainder of the Agreement,and have further agreed that each party will accept,abide
by,and be bound by the Commission’s determination as to the appropriate pricing schedule for
this Agreement.
YOU ARE FURTHER NOTIFiED that,by its own terms,the Agreement will not
become effective until the Commission has approved all of the Agreement’s terms and
conditions and declares that all payments made by Idaho Power to Pocatello Solar for purchases
of energy will be allowed as prudently incurred expenses for ratemaking purposes.Agreement ¶
21.1.
YOU ARE FURTHER NOTIFIED that Idaho Power requests that its Application be
processed by Modified Procedure.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER 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 3 1.01.01.201-204.The Commission notes that Modified Procedure and
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ORDERNO.33163 3
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,December 19,2014.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:dwalkeridahopower.com
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:rallphinaidahopower.corn
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.gpy.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,December 26,2014.
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
3 1.01.01.204.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDERNO.33163 4
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 pijjo.oy.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 December 19,2014.
IT IS FURTHER ORDERED that reply comments be filed no later than December
26,2014.
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DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of November 2014.-
PA[l.KJI:Ii ANDIR.PRI:s!DI:\I
MACK A.REDFORD,COMMISSIONER
MARSHA H.SMITH,COMMISSIONER
ATTEST:
Jean D.Jewell
Commission Secretary
O:IPC-E-14-27ks
NOTICE OF APPLICATION
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ORDERNO.33163 6