20150610final_order_no_33318.pdf

Office of the Secretary
Service Date
June 10,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S APPLICATION TO APPROVE )CASE NO.IPC-E-15-09
FIRST AMENDMENT TO ITS POWER )
PURCHASE AGREEMENT WITH )
TELOCASET WIND POWER PARTNERS,)ORDER NO.33318
LLC )
On April 1,2015,Idaho Power Company filed an Application asking the Commission
to approve the First Amendment to its Power Purchase Agreement (PPA)with Telocaset Wind
Power Partners,LLC.The PPA is not a contract under the Public Utility Regulatory Policies Act
(PURPA),but includes many provisions similar to those in PURPA contracts.See Order No.
30259 at 2.
The parties’proposed Amendment deletes and replaces the PPA’s Section 12.1 and
Appendix J.The new Section 12.1 changes the nature of financial statements Telocaset must
provide in order to adapt to administrative changes implemented by Telocaset’s new parent
organization.Application at 2-3.The amended Appendix J resolves the parties’conflicting
interpretations of the PPA’s provisions regarding assumption of curtailment risk.Id.at 6.
Idaho Power asked that its Application for approval of the First Amendment to its
PPA with Telocaset be processed under Modified Procedure.Id.at 9.On April 28,2015,the
Commission issued a Notice of Application and Notice of Modified Procedure,setting a 21-day
comment period.Commission Staff filed written comments,and the Company advised Staff it
did not intend to file a reply.The Commission now approves the Amendment to the PPA.
BACKGROUND
The Commission approved Idaho Power’s PPA with Telocaset in 2007.Order No.
30259.Under the PPA,Idaho Power purchases energy generated by Telocaset’s 100.65
megawatt (MW)Elkhorn Wind Park facility,located in eastern Oregon between Baker City and
La Grande.Application at 2.The facility is connected directly to Idaho Power’s La Grande
Brownlee 230 kilovolt transmission line,Id.at 2.
Under PPA Section 9.2 and Appendix J,Idaho Power could —on notice to Telocaset —
elect to pay lower prices (“Post-Operation Date Alternative Pricing”)for energy deliveries,but in
exchange,Idaho Power would accept more financial risk for possible curtailment.Id.at 4.In
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December 201 1.Idaho Power gave notice to Telocaset that it would use the Post-Operation Date
Alternative Pricing.Id.In August 2012,Telocaset sent its first invoice to Idaho Power
requesting payment for Lost Output”related to transmission curtailments from March through
July 2012;this was followed by additional monthly invoices for Lost Output.Id.at 4-5.On
review of its documented curtailments and the applicable provisions of the PPA,Idaho Power
disagreed with Telocaset’s Lost Output calculations.Id.at 5.
On December 31,2012,Idaho Power paid Telocaset the undisputed Lost Output
amount of $485,985.33 for the period from January 2012 through September 2012.Id.at 6.On
May 21.2013,Idaho Power paid Telocaset an additional undisputed Lost Output amount of
$52.544.05,for the period from October 2012 through December 2012.Id.The remaining
disputed balance is $145,378.97.Id.In essence,the remaining dispute concerned the parties’
disagreement about how Appendix J applies to the PPA.Id.
Throughout 2013 and 2014,the parties engaged in meetings and discussions about
their interpretations of Appendix J.Id.at 7.Under Telocaset’s interpretation of Appendix J,
Idaho Power “assumed curtailment risk for the full 100.65 [megawatt (MW)]nameplate rating of
the Facility.”Id.at 6.Under Idaho Power’s interpretation of Appendix J.Idaho Power “only
accepted curtailment risk for the 66 MW of the Facility’s nameplate rating,as the Facility elected
to only secure 66 MW of network transmission capacity for its output”under Section 6.8 of the
PPA.Id.On December 19,2014,the parties agreed to and signed the First Amendment for
which they now seek the Commission’s approval.Id.at 7.
PROPOSED AMENDMENT
As noted in the Application,“as part of the Amendment,each party agreed to settle
and release any and all claims arising under or pursuant to Appendix J ...including,but not
limited to,the disputed Lost Output payment claim of $145,378.97.”Id.at 8.The parties also
agreed to amend the language in the PPA that led to the parties’disparate interpretations.To this
end,the parties have “mutually resolved and agreed to [language]...memorialized in the
Amended Appendix J.”Id.
In addition,the parties agreed to replace Section 12.1,which requires Telocaset to
provide audited financial statements to Idaho Power,with a new Section 12.1,that requires
Telocaset to provide unaudited financial statements.Id.at 7.This amendment accommodates
administrative changes implemented by Telocaset’s new parent organization.Id.at 3.Because
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Telocaset is already required “to post $10 million of Performance Assurance”under an existing
(and unaltered)provision in the PPA.“Idaho Power believes there is little to no impact by
accepting the proposed change in tinancial reporting requirements.”Id.at 3.
STAFF COMMENTS
Staff reviewed the Application and attachments.including the original Appendix J.
In particular,Staff evaluated the parties’agreement to settle claims “relating to payment for Lost
Output”resulting from transmission curtailments,and the parties’agreement that Telocaset
provide unaudited rather than audited financial statements to satisfy its reporting requirements.
Regarding the claims for Lost Output under Appendix J,Staff believes the “original
Appendix J leaves considerable room for interpretation,”and “neither party’s interpretation is
more compelling than the other.”Staff Comments at 3.Staff noted that Idaho Power paid
Telocaset $485,985 and $52,544,for Lost Output;the remaining disputed amount was $145,379.
Id.at 4.Staff believes the parties’agreement to settle and release all claims,including the
$145,379 for Lost Output,is fair and reasonable,and thus supports the proposed Amendment.
Id.
As to the change in Telocaset’s reporting requirement,Staff agreed with Idaho Power
that it is more important for “Telocaset [to]provide adequate Performance Assurance,”than for
Telocaset to provide audited (rather than unaudited)financial statements.Id.Staff believes that
Telocaset’s unaltered requirement in the PPA to post $10 million for Performance Assurance is
adequate,and thus does not oppose the proposed change in Section 12.1,that Telocaset must
provide unaudited rather than audited financial statements.
Staff recommended that the Commission approve Idaho Power’s First Amendment to
its PPA with Telocaset,without change or condition.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over Idaho Power and the issues raised in this
matter under the authority and power granted it under Title 61 of the Idaho Code,specifically
Idaho Code §61-129,61-307,61-501,61-502,and 61-503,and the Commission’s Rules of
Procedure,IDAPA 31 .01 .01.000 ci seq.We have reviewed the record in this case,including the
Application,its attachments,and Staff’s Comments.
Given the parties’disparate interpretations about how the original Appendix J applies
to the PPA,we find that the proposed amended Appendix J appropriately resolves the parties’
ORDERNO.33318 3
differing interpretations,and conclude that the amended Appendix J is just and reasonable.We
commend the parties for their efforts in resolving the disputed payments and find that the parties’
agreement to settle and release all remaining claims under Appendix J is a reasonable outcome.
Id.With the agreement to settle and release all claims,Idaho Power avoids both litigation
expenses and the disputed $145,379 in Lost Output which would have been passed on to
ratepayers.Accordingly,we also find this aspect of the agreement to be just,fair,and
reasonable.
Finally,we find that the $10 million that Telocaset is required to post under the original
and amended PPA provides sufficient Performance Assurance such that it is immaterial whether
Telocaset reports audited or unaudited financial statements.We therefore find that the proposed
change in Telocaset’s reporting requirement,from audited to unaudited statements —to
accommodate changes implemented by Telocaset’s new parent organization —is also fair,just,
and reasonable.
ORDER
IT IS HEREBY ORDERED that Idaho Power’s Application to approve the First
Amendment to its Power Purchase Agreement with Telocaset Wind Power Partners is approved
without change or condition.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626.
ORDER NO.33318 4
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this /O
day of June 2015.
PAULDIDENN
MACK A,REDFORD,COMMISSIONER
STONER
ATTEST:
ommission Secretary
O:IPC-E-1 5O9djh2
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