20200803Answer and Cross Complaint.pdf

DONOVAN WALKER
Lead Counsel
[e-mail]

August 3, 2020

VIA ELECTRONIC FILING

Jan Noriyuki, Secretary
Idaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, Idaho 83714

Re: Case No. IPC-E-20-28
Wood Hydro, LLC v. Idaho Power Company

Dear Ms. Noriyuki:

Attached for electronic filing in the above matter is Idaho Power Company’s Answer
and Cross-Complaint. If you have any questions about the enclosed documents, please do
not hesitate to contact me.

Very truly yours,

Donovan Walker

DEW/ cld
Enclosures
RECEIVED
2020 August 3, PM 1:14
IDAHO PUBLIC
UTILITIES COMMISSION
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 1
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]

Attorney for Idaho Power Company

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

WOOD HYDRO, LLC,

Complainant,
v.

IDAHO POWER COMPANY,

Respondent/Cross-
Complainant,

v.

WOOD HYDRO, LLC,

Cross-Respondent,

ENEL GREEN POWER NORTH
AMERICA, INC.

Cross-Respondent,

v.

CENTRAL RIVERS POWER US, LLC

Cross-Respondent.

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CASE NO. IPC-E-20-28

IDAHO POWER COMPANY’S
ANSWER AND CROSS-
COMPLAINT

IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 2
COMES NOW, Idaho Power Company (“Idaho Power” or “Company”) and
pursuant to Rule 54 and 57 hereby answers the Complaint of Wood Hydro, LLC (“Wood
Hydro” or “Mile 28”). Additionally, Idaho Power hereby brings a cross-complaint against
Wood Hydro and two other similarly situated PURPA1 QFs2 owned by Enel Green
Power North America, Inc. (“Enel” or “Rock Creek #2) and Central Rivers Power US,
LLC (“Central Rivers” or “Lowline #2”).3
I. INTRODUCTION, FACTS, AND CROSS COMPLAINT
1. Mile 28, Rock Creek #2, and Lowline #2, each have an old version of a
35-year, levelized rate, mandatory purchase, PURPA QF contract with Idaho Power.4
Each of the three projects are in the later portions of their respective contract terms:
Mile 28 expires in June of 2029; Rock Creek #2 expires in April of 2024; and Lowline #2
expires in April of 2023. Each of the projects have had extended periods of non-
generation constituting a permanent curtailment, or failure to deliver, their contractual
Annual Net Energy amounts. Their contracts contain specific provisions, designed to
ensure that the projects continue to generate through the later years of their levelized
rate contracts when they are paying back customers for the early years’ overpayments.
When each project permanently curtailed its Annual Net Energy amounts, Idaho Power
calculated the appropriate Lump Sum Repayment amount from the contracts and
assessed the same in a letter to the projects. Each project responded in writing alleging
that there had been no permanent curtailment and contesting the Lump Sum

1 Public Utility Regulatory Policies Act of 1978.
2 PURPA Qualifying Facility.
3 Wood Hydro, LLC owns/controls the Mile 28 hydroelectric QF, Enel Green Power NA, Inc.,
owns/controls the Rock Creek #2 hydroelectric QF, and Central Rivers Power US, LLC owns/controls the
Lowline #2 hydroelectric QF.
4 Attached hereto as Attachment No. 1 is the Mile 28 PURPA contract. Attached hereto as Attachment
No. 2. Is the Rock Creek #2 PURPA contract. Attached here as Attachment No. 3 is the Lowline #2
PURPA contract.
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 3
Repayment amounts claimed by Idaho Power on behalf of its customers. Mile 28 filed a
formal complaint alleging it has not permanently curtailed delivery of its Annual Net
Energy amounts and that the “liquidated damages clause in the Agreement is
unenforceable under Idaho law.” Wood Hydro Complaint, p 2.
2. All three contracts contain a nearly identical provision in Section 21 of the
Agreements stating,
If, at any time prior to the end of the term of the Agreement,
Seller permanently curtails in whole or in part its long-term
average deliveries of the Annual Net Firm Energy amount
specified in paragraph 6.3, Seller shall pay to Idaho Power,
as reasonable liquidated damages arising out of this
permanent curtailment of Annual Net Firm Energy deliveries,
the appropriate lump sum repayment amount specified in
Appendix D, multiplied by the difference in megawatt-hours
between the Annual Net Firm Energy amount specified in
paragraph 6.3 and the reduced Annual Net Firm Energy
amount after the permanent curtailment.

All three contracts also contain a table, Appendix D, that provides a Lump Sum
Repayment amount to be applied by contract year for which there is permanent
curtailment of the Annual Net Energy amounts. This is designed as a mechanism to
protect customers in the levelized agreement and to make sure projects continue to
generate in the later years to “pay back” customers for the levelized overpayment
amount from the early years of the contract.
3. Idaho Power respectfully requests that the Idaho Public Utilities
Commission (“Commission”) address the relevant contract provisions relating to the
Annual Net Energy amounts, permanent curtailment, Lump Sum Rayment amounts,
and any other necessary contractual provisions for all three cross-respondents, and
provide direction to Idaho Power and the QF cross-respondents as to the proper
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 4
interpretation of the contractual provisions as they relate to the Commission’s
implementation of PURPA’s mandatory purchase, legally enforceable obligation for
these projects in the state of Idaho.
Mile 28
4. On August 1, 2019, Idaho Power notified Wood Hydro that it had failed to
deliver any generation to Idaho Power under its active PURPA contract for a period
from November 2018 through July 2019 and remained off-line at the time of the letter.
See August 1, 2019, letter attached hereto as Attachment No. 4 and incorporated herein
by this reference. This letter states that because the contract is a levelized rate PURPA
agreement (“Agreement”), that Idaho Power was required to implement paragraph 21.3
of the agreement for Lump Sum Repayment Amounts should the project fail to deliver
the Annual Net Energy Amount agreed to by the project and defined in paragraph 6.3.
Paragraph 6.3 of the Agreement specifies the Annual Net Energy Amount for Mile 28
shall be 5,798,590 kWh. Paragraph 21.3 of the Agreement specifies that if Mile 28 fails
to deliver Net Energy as stated in Article 6.3 (Annual Net Energy Amount of 5,798,590
kWh), a Lump Sum Repayment Amount (“Repayment Amount”) shall be calculated and
payable to Idaho Power. The last completed Contract Year (6/1/2018 to 5/31/2019) was
Contract Year 25. In accordance with paragraph 21.3 of the Agreement, the calculation
of the Repayment Amount at the end of Contract Year 25 is: The Annual Net Energy
Amount of 5,798,590 kWh minus actual Net Energy delivered during Contract Year 25
of 3,355,049 kWh, the difference divided by 1,000 to convert to MWH and multiplied by
the Appendix D Lump Sum Repayment Amount for the 25th Contract Year of $476 per
annual MWH, which equals a total Lump Sum Repayment Amount of $1,163,125.
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 5
5. The August 1, 2019, letter also references paragraph 21.7 of the
Agreement which allows for a refund of up to 90% of the Lump Sum Repayment amount
should the project return to generating within a year’s time. The letter also recognized
the project’s ongoing activities to repair and replace equipment at the project, and
stated that the project could post a letter of credit to cover the $1,163,125 Lump Sum
Repayment amount, to be held for the next three years. Should the project come online
and resume generation in 2019, pursuant to paragraph 21.7 of the Agreement they
could be eligible to receive a refund of 90% of the Lump Sum Repayment amount,
leaving a balance of $116,312 that could either be netted against future monthly Net
Energy payments under the Agreement or paid in full by the project.
6. The project responded by letter dated August 7, 2019. Attached hereto as
Attachment No. 5 and incorporated herein by this reference. In this letter the project
acknowledges that is has not delivered generation under the Agreement, but states that
there has been no “permanent curtailment.” The letter describes some of the repairs it
was undertaking to be able to start generating again.
7. Idaho Power responded by letter dated August 14, 2019. Attached hereto
as Attachment 6 and incorporated herein by this reference.
8. Wood Hydro posted a letter of credit to cover the Lump Sum Repayment
amount on August 19, 2019. Attached hereto as Attachment No. 7 and incorporated
herein by this reference. The project cam back online in late August 2019. Attached
hereto as Attachment No 8 and incorporated herein by this reference.
9. On March 17, 2020, Idaho Power received a letter from legal counsel on
behalf of Mile 28. Attached hereto as Attachment No. 9 and incorporated herein by this
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 6
reference. This letter states “that there has never been a permanent curtailment of the
Annual Net Energy Amount …” This letter discusses a position in a legal brief by Idaho
Power many years ago regarding implementation of the 90%/110% firmness
requirement, and challenges the Lump Sum Repayment liquidated damages as not
complying with Idaho law because “Idaho Power has claimed that it has available to it
market electricity less expensive than PURPA power prices as found in the Agreement.
Also, energy sales upon transparent markets making any damage claim easily [sic] to
calculate.” The letter requests that Mile 28 “not be assessed as proposed in the
accompanying claim letters and promptly reimbursed for funds withheld from its power
generation payments.”
10. Idaho Power responded by letter dated April 15, 2020. Attached hereto as
Attachment No. 10 and incorporated herein by this reference. The letter explains the
related contract provisions and why the Commission included them in that vintage of
contract. The type of Firm Energy Sales Agreement executed by Mile 28, in general
terms, works as follows: Idaho Power will purchase and Seller will sell all of the Net
Firm Energy and Surplus Energy produced by the Seller (Section 6.1); the project
provides, as part of the contract, its monthly generation amounts, estimated based on
long-term historical water flow records and long-term average energy production
estimates (Section 6.2); the Annual Net Firm Energy amount is sum of the project’s
monthly estimates, in this instance 5,798,590 kWh, (Section 6.3); the project is paid a
base payment (Section 7.1.1) and an adjustable payment (Section 7.1.2) for its Net Firm
Energy; the project must deliver up to its Annual Net Firm Energy amount from Section
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 7
6.3 or be subject to a schedule of Lump Sum Refund Payment (Section 21.3; Appendix
D).
11. Mile 28’s PURPA contract is a type of levelized payment/price contract
whereby the base payment is a levelized/fixed price spread over the entire 35-year
contract term. Consequently, as with any levelized price contract compared to a non-
levelized and escalated rate contract, there is an “overpayment” to the project in the
early years that is offset by an “underpayment” in the outer years. To make sure that a
project does not just generate and take payments during the more lucrative
“overpayment” early years, and then fail to generate or under-generate in the later years
when customers are being repaid for the “overpayment” in the “underpayment” years,
the Commission set up certain mechanisms to make sure customers were not left
holding the bag in the outer years of the contract. These mechanisms include such
things as additional security today, and in this case the provisions found in Section 21.3
“Seller Permanent Curtailment”, Appendix D “Lump Sum Repayment for Permanent
Curtailment of Portion or All of Annual Net Energy Amount Under 35-Year Contract”,
and 21.7 “Refund of Lump Sum Repayment”. These sections of the contract, Section
21.3, Section 21.7, Section 6.3, and Appendix D, when read and considered together in
the context of the four corners of this contract are clear and tell us exactly what happens
when the project fails to deliver its Annual Net Firm Energy amount specified in Section
6.3.
12. As pointed out by both Idaho Power and by Mile 28 in their letters, the
relevant portion of Section 21.3, Seller Permanent Curtailment, states as follows:
If, at any time prior to the end of the term of the Agreement,
Seller permanently curtails in whole or in part its long-term
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 8
average deliveries of the Annual Net Firm Energy amount
specified in paragraph 6.3, Seller shall pay to Idaho Power,
as reasonable liquidated damages arising out of this
permanent curtailment of Annual Net Firm Energy deliveries,
the appropriate lump sum repayment amount specified in
Appendix D, multiplied by the difference in megawatt-hours
between the Annual Net Firm Energy amount specified in
paragraph 6.3 and the reduced Annual Net Firm Energy
amount after the permanent curtailment.

13. Section 6.3, Annual Net Firm Energy Amount, states, “The Annual Net
Firm Energy amount shall be 5,798,590 kWh and shall be the sum of the three (3)
Seasonal Net Firm Energy amounts Seller specified above.” Sections 6.2 and 6.4
reference how the Net Firm Energy Amounts the Seller has estimated are based upon
anticipated and historical long-term average water flows, long-term average energy
production estimates, Seller’s water right filings and the water records supporting those
projected water flows. Section 6.4 states, “The parties have reviewed these anticipated
water flows … and have agreed that, for purposes of this Agreement, the projected
water flows used to calculate the Annual Net Firm Energy amount in paragraph 6.3 are
reasonable and shall constitute the water flows available to the Facility under “average”
water conditions.”
14. Here, the project had zero deliveries to Idaho Power during the months of
November 2018, December 2018, January 2019, February 2019, March 2019, April
2019, May 2019, June 2019, and July 2019. Contract Year 25 ran from June 1, 2018
through May 31, 2019. The project had a total Net Firm Energy delivered during
Contract Year 25 of only 3,355,049 kWh, which is short of the required delivery of the
Annual Net Firm Energy Amount from Section 6.3 of 5,798,590 kWh. It is important to
note that these contract mechanisms and metrics function on an annual basis, and once
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 9
Contract Year 25 came and went with a substantial shortfall of delivered Net Firm
Energy, there was no way to “make-up” the shortfall by over-generating in a different
time period. There was a permanent curtailment of the project’s Annual Net Firm
Energy deliveries for Contract Year 25. The project also had curtailment of Net Firm
Energy deliveries during Contract Year 26, in that as of August 14, 2019, there had
been Zero deliveries to Idaho Power. However, this curtailment in Contract Year 26 did
not become a permanent curtailment invoking the provisions of Section 21.3 and
Appendix D because subsequent to August 14, 2019, and prior to the expiration of
Contract Year 26, the project met its requirement to deliver the 5,798,590 kWh Annual
Net Firm Energy amount from Section 6.3.
15. Because the project failed to deliver its Annual Net Firm Energy amount
from Section 6.3 during Contract Year 25, and thus permanently curtailed its annual
delivery for that year, the Lump Sum Repayment amount specified for Contract Year 25
from Appendix D is applied to the difference in Net Firm Energy delivered and the
Annual Net Firm Energy amount - which in this case is $1,163,125. However, the
contract anticipates that a permanent curtailment of Annual Net Firm Energy deliveries
may not continue for the entire remaining duration of the 35-year contract term, and
thus contains the provisions in Section 21.7, Refund of Lump Sum Repayment, which
states,
If Seller has made a lump sum repayment as required by
paragraph 21.3 and;

(1) Within three (3) years of said payment Seller becomes
capable of resuming production of the curtailed Net Firm
Energy and offers to resume sales to Idaho Power at the
rates, terms and conditions contained in this Agreement for
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 10
the number of Contract Years that were remaining under this
Agreement at the time of the permanent curtailment; then

(2) Idaho Power will resume its purchases from the Facility
and will refund a portion of the lump sum repayment as
follows:

(a) if sales resume within one (1) year of the payment
of the lump sum repayment amount, Idaho Power will
refund 90% of the lump sum repayment amount;

(b) if sales resume within two (2) years of the
payment of the lump sum repayment amount, Idaho
Power will refund 85% of the lump sum repayment
amount;

(c) if sales resume within three (3) years of the
payment of the lump sum repayment amount, Idaho
Power will refund 85% of the lump sum repayment
amount.

Consequently, because the project resumed generation in Contract Year 26 to meet the
Annual Net Firm Energy amount, Idaho Power forwent its entitlement to the actual
collection of the $1,046,812 lump sum repayment amount for the permanent curtailment
of Contract Year 25 Annual Net Firm Energy amount, and applied the 90% refund
upfront - thus merely applying the 10% balance of $116,312 - which Wood Hydro is now
contesting in its Complaint.
Rock Creek #2
16. On June 2, 2020, Idaho Power sent Enel a letter notifying it that Rock
Creek #2 had not generated at all during Contract Year 31, and informed Rock Creek
#2 of the Lump Sum Repayment amount due under its PURPA contract of $4,059,472.
Attached hereto as Attachment No. 11 and incorporated herein by this reference. Rock
Creek #2’s PURPA Agreement is an older levelized agreement where Idaho Power will
purchase and Seller will sell all of the Net Firm Energy and Surplus Energy produced by
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 11
the Seller (Section 6.1); the project provides, as part of the contract, its monthly
generation amounts, estimated based on long-term historical water flow records and
long-term average energy production estimates (Section 6.2); the Annual Net Firm
Energy amount is sum of the project’s monthly estimates for a Contract Year, in this
instance 14,073,550 kWh, (Section 6.3); the project is paid a base payment (Section
7.1.1) and an adjustable payment (Section 7.1.2) for its Net Energy; the project must
deliver up to its Annual Net Firm Energy amount from Section 6.3 or be subject to a
schedule of Lump Sum Refund Payment (Section 21.3.1; Appendix D).
17. This is a type of levelized payment/price contract whereby the base
payment is a levelized/fixed price spread over the entire 35-year contract term.
Consequently, as with any levelized price contract compared to a non-levelized and
escalated rate contract, there is an “overpayment” to the project in the early years that is
offset by an “underpayment” in the outer years. To make sure that a project does not
just generate and take payments during the more lucrative “overpayment” early years,
and then fail to generate or under-generate in the later years when customers are being
repaid for the “overpayment” in the “underpayment” years, the Agreement contains
certain mechanisms to make sure customers were not harmed in the outer years of the
contract. These mechanisms include such things as additional security in current
contracts, and in this case the provisions found in Section 21.3.1, Appendix D “Lump
Sum Repayment for Permanent Curtailment of Portion or All of Annual Net Firm Energy
Amount Under 35-Year Contract”.
18. Section 21.3.1 of Rock Creek #2’s contract states:
If, at any time prior to the end of the term of the Agreement,
Seller permanently curtails in whole or in part its long-term
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 12
average deliveries of the Net Firm Energy amount specified
in paragraph 6.3, Seller shall pay to Idaho Power, as
damages arising out of this permanent curtailment of Net
Firm Energy deliveries, the appropriate lump sum repayment
amount specified in Appendix D, multiplied by the difference
in megawatt-hours between the Annual Net Firm Energy
amount specified in paragraph 6.3 and the reduced Annual
Net Firm Energy amount.

Section 6.3, Annual Net Firm Energy Amount, states, “The Annual Net Energy shall be
14,073,550 kWh and shall be the sum of the three (3) Seasonal Net Energy amounts
Seller specified above.”
19. Rock Creek #2 had zero deliveries to Idaho Power during the months of
June 2019, July 2019, August 2019, September 2019, October 2019, November 2019,
December 2019, January 2020, February 2020, March 2020, April 2020, May 2020.
Contract Year 31 ran from April 2, 2019, through April 1, 2020. The Project had a total
Net Energy delivered during Contract Year 3 of only 978,479 kWh, which is short of the
required delivery of the Annual Net Firm Energy Amount from Section 6.3 of 14,073,550
kWh. It is important to note that these contract mechanisms and metrics function on an
annual basis, and once Contract Year 31 came and went with a substantial shortfall of
delivered Net Energy, there is no way to “make-up” the shortfall by over-generating in a
different time period. There was a permanent curtailment of the project’s Annual Net
Firm Energy deliveries for Contract Year 31.
20. Because Rock Creek #2 failed to deliver its Annual Net Firm Energy
amount from Section 6.3 during Contract Year 31, and permanently curtailed its annual
delivery for that year, the lump sum repayment amount specified for Contract Year 31
from Appendix D is applied to the difference in Net Energy delivered and the Annual Net
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 13
Energy amount - which in this case is $4,059,472 ($310/MWH multiplied by the
difference of 14,073.550 MWH and 978.479 MWH).
21. Rock Creek #2 responded to Idaho Power by letter on June 26, 2020,
stating its disagreement that there had been a permanent curtailment under the
contract, and protesting Idaho Power’s assessment of the Lump Sum Repayment
amount pursuant to the contract. Attached hereto as Attachment No. 12 and
incorporated herein by this reference.
Lowline #2
22. On May 22, 2020, Idaho Power sent Central Rivers Power a letter
notifying it that Lowline #2 had not delivered any generation since May of 2019, had
failed to deliver the Annual Net Energy amount required of its Agreement for Contract
Year 32, and informed Lowline #2 of the Lump Sum Repayment amount due under its
PURPA contract of $3,616,983. Attached hereto as Attachment No. 13 and
incorporated herein by this reference. Lowline #2’s Agreement is an older levelized
agreement whereby Idaho Power will purchase and Seller will sell all of the Net Energy
and Surplus Energy produced by the Seller (Section 6.1); the project provides, as part
of the contract, its monthly generation amounts, estimated based on long-term historical
water flow records and long-term average energy production estimates (Section 6.2);
the Annual Net Energy amount is sum of the project’s monthly estimates for a Contract
Year, in this instance 15,755,610 kWh, (Section 6.3); the project is paid a base payment
(Section 7.1.1) and an adjustable payment (Section 7.1.2) for its Net Energy; the project
must deliver up to its Annual Net Energy amount from Section 6.3 or be subject to a
schedule of Lump Sum Refund Payment (Section 21.2.1; Appendix D).
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 14
23. This is a type of levelized payment/price contract whereby the base
payment is a levelized/fixed price spread over the entire 35-year contract term.
Consequently, as with any levelized price contract compared to a non-levelized and
escalated rate contract, there is an “overpayment” to the project in the early years that is
offset by an “underpayment” in the outer years. To make sure that a project does not
just generate and take payments during the more lucrative “overpayment” early years,
and then fail to generate or under-generate in the later years when customers are being
repaid for the “overpayment” in the “underpayment” years, the Agreement contains
certain mechanisms to make sure customers were not harmed in the outer years of the
contract. These mechanisms include such things as additional security, and in this case
the provisions found in Section 21.2.1, Appendix D “Lump Sum Repayment for
Permanent Curtailment of Portion or All of Annual Net Energy Amount Under 35-Year
Contract”.
24. Section 21.2.1 of Lowline #2’s Agreement states:
If, at any time prior to the end of the term of the Agreement,
Seller permanently curtails in whole or in part its long-term
average deliveries of the Annual Net Energy amount Seller
shall pay to Idaho Power, as Idaho Power’s sole and
exclusive remedy for damages arising out of this permanent
curtailment of Net Energy deliveries, the appropriate lump
sum repayment amount specified in Appendix D, multiplied
by the difference in megawatt-hours between the Annual Net
Energy amount specified in paragraph 6.3 and the reduced
Annual Net Energy amount.

Section 6.3, Annual Net Energy Amount, states, “The Annual Net Energy shall be
15,755,610 kWh and shall be the sum of the three (3) Seasonal Net Energy amounts
Seller specified above.”
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 15
25. Lowline #2 had zero deliveries to Idaho Power during the months of June
2019, July 2019, August 2019, September 2019, October 2019, November 2019,
December 2019, January 2020, February 2020, March 2020, April 2020 and continues
to remain curtailed as of the date of this letter. Contract Year 32 ran from April 29, 2019,
through April 28, 2020. The Project had a total Net Energy delivered during Contract
Year 32 of only 1,287,678 kWh (which was delivered during the month of May 2019
only), which is short of the required delivery of the Annual Net Energy Amount from
Section 6.3 of 15,755,610 kWh. It is important to note that these contract mechanisms
and metrics function on an annual basis, and once Contract Year 32 came and went
with a substantial shortfall of delivered Net Energy, there is no way to “make-up” the
shortfall by over-generating in a different time period. There was a permanent
curtailment of the project’s Annual Net Energy deliveries for Contract Year 32.
26. Because Lowline #2 failed to deliver its Annual Net Energy amount from
Section 6.3 during Contract Year 32, and permanently curtailed its annual delivery for
that year, the lump sum repayment amount specified for Contract Year 32 from
Appendix D is applied to the difference in Net Energy delivered and the Annual Net
Energy amount - which in this case is $3,616,983 ($250/MWH multiplied by the
difference of 15,755.610 MWH and 1,287.678 MWH).
27. Lowline #2 responded to Idaho Power by letter on June 15, 2020, stating
its disagreement that there had been a permanent curtailment under the contract, and
protesting Idaho Power’s assessment of the Lump Sum Repayment amount pursuant to
the contract. Attached hereto as Attachment No. 14 and incorporated herein by this
reference.
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 16

II. ANSWER
28. Idaho Power hereby answers Wood Hydro’s Complaint as follows: Idaho
Power denies any allegation not specifically admitted and reserves the right to
supplement and/or amend this Answer if Wood Hydro amends its Complaint, or if
additional defenses are ascertained during the course of discovery or otherwise.
29. Wood Hydro did not make specifically numbered allegations in its formal
complaint, but made general allegations written in the narrative. Consequently, Idaho
Power generally denies the allegations of Wood Hydro, and answers in the narrative
which includes the numbered paragraphs and statements contained herein as part of
Idaho Power’s cross-complaint above. To the extent that certain allegations of Wood
Hydro contain legal conclusions, no response is required by Idaho Power.
30. Idaho Power disagrees with Wood Hydro’s interpretation of the contractual
provisions, denies that Idaho Power improperly assessed and withheld funds from
Wood Hydro, and denies the allegation that the Lump Sum Repayment amounts are
unlawful liquidated damages. Wood Hydro improperly equates the liquidated damages
in Mile 28’s Agreement to a straight forward, replacement power comparison of market
prices to those contained in the PURPA Agreement and alleges they do not meet the
requirements for liquidated damages under Idaho law. However, the liquidated
damages refer to, as does the entire mechanism at issue in this case, the application of
a Lump Sum Repayment intended to protect customers when a project fails to continue
to provide generation pursuant to the contract sufficient to repay customers for the
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 17
overpayment inherent in the levelized rate contract. The application of the specific
amounts designated as Lump Sum Repayment amounts by contract year from the table
in Appendix D to the shortfall in Net Energy delivered compared to the Annual Net
Energy amount is both a reasonable forecast of just compensation for customers in the
inherent inequities when a project stops delivering generation after reaping the
overpayment part of the levelized rate - and this is something that is very difficult of
accurate estimation. The contract provisions meet the general requirements of Idaho
law for liquidated damages as cited by Wood Hydro.

III. AFFIRMATIVE DEFENSES
31. Wood Hydro’s Complaint, and all allegations and requests for relief
therein, fails to state a claim upon which relief can be granted.
32. Idaho Power acted at all times and in all respects, with regard to Wood
Hydro and its PURPA contract, in conformance and compliance with state and federal
law and the required and applicable rules, regulations, tariffs, and schedules for the
state of Idaho’s implementation of PURPA.
33. Idaho Power hereby reserves the right to assert any and all additional
defenses, ascertained during the course of discovery or otherwise, by amendment to
this answer as the Commission’s rules, procedures, and/or Orders may allow and/or
withdraw or amend the above affirmative defenses.

IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 18
IV. REQUESTED RELIEF
WHEREFORE, having fully answered, Idaho Power respectfully requests:
1. That the Commission issue its Order denying the relief sought by
Wood Hydro in its Prayer for Relief; and
2. That the Commission issue a Summons to Wood Hydro, Enel, and
Central Rivers Power directing them to answer the allegations in Idaho Power’s cross-
complaint; and
3. That the Commission subsequently establish a proper procedure as
it deems necessary to assist in its interpretation of the contractual provisions
implementing PURPA; and
4. That the Commission direct Wood Hydro, Enel, and Central River
Power to pay the amounts assessed by Idaho Power as Lump Sum Repayment
amounts due and owing to customers as compensation for the overpayment inherent in
these levelized rate contracts; or
5. Alternatively, that the Commission relieve Idaho Power of any
obligation to pursue Lump Sum Repayment amounts against Wood Hydro, Enel, and
Central Rivers Power under the facts present and pursuant their PURPA contracts; and
6. For such other relief as the Commission deems just and
reasonable.
Respectfully submitted this 3rd day of August 2020.

DONOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT - 19
CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 3rd day of August 2020, I served a true and
correct copy of IDAHO POWER COMPANY’S ANSWER AND CROSS-COMPLAINT
upon the following named parties by the method indicated below, and addressed to the
following:

Wood Hydro, LLC
C. Thomas Arkoosh
ARKOOSH LAW OFFICES
802 w. Bannock St. Suite LP 103
P.O. Box 2900
Boise, Idaho 83701
Email [e-mail]
[e-mail]

Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email

Idaho Public Utilities Commission Staff
Edward Jewell
Deputy Attorney General
Email: [e-mail]

Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email

Enel Green Power North America, Inc.
Randald Bartlett
Sr. Director, Hydro O&M
Email: [e-mail]
[e-mail]

Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email
Central Rivers Power US, LLC
Matthew Stanley
VP and General Manager
Email: [e-mail]

Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email

________________________________
Christy Davenport, Legal Secretary

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 1
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FIRM ENERGY SALES AGREEMENT
BETWEEN
IDAHO POWER COMPANY
AND
CONTRACTOR'S POWER GROUP, INC
TABLE OF CONTENTS
APPROVED PER CCMMISSICN
ORDER NO. 25354.
~.,/ c<_:7r;;~{!.zU .. c-
MYRNA J. WALTERS
COMMISSION SECRETARY
DEFINITIONS . . . . . • . . . . . . . . . • . . . . . . • • . . . . • . . . • . . . . . . . . . . . . . 1
NO RELIANCE ON IDAHO POWER ..............•...•..........•. 3
WARRANTIES .................................•.....•..... 4
CONDITIONS TO INTERCONNECTION ......••....••...•.......... 4
TERM EARLY' TERMINATION AND OPERATION DATE .••...•....•••.. 10
SALE OF NET FIRM ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . .. 11
PURCHASE PRICE AND METHOD OF PAYMENT;
ADJUSTMENT OF PURCHASE PRICE .....••....•.....••••.•...• 13
FACILITY AND INTERCONNECTION .....••...............•...•.• 14
DISCONNECTION EQUIPMENT ....................••••...•.... 15
METERING ...............................••..........••. 16
RECORDS .....•.........................•.....•••....... 17
PROTECTION ....•...•........•.......•....••....••...... 18
OPERATIONS ................•....•.......••......•..•••. 18
INDEMNIFICATION AND INSURANCE .•....•..•..•.•....•••.....• 20
LAND RIGHTS . • • . . • . . . • . . . . . . . . . . . • • . . . • • • . . • • • . . . • . • • . .• 23
FORCE MAJEURE •••..••........•.......•.•...•••••.•.•..• 24
LIABILITY; DEDICATION .•. . . . . . . . • . . . . . . . . . . . . • • • . . . • • . . . . .• 25
SEVERAL OBLIGATIONS . . . . . . . . . . . . . . . . . • . . . . . • • . . . . . • • . • . •. 25
WAIVER ...................................•..•••......• 25
CHOICE OF LAWS ...............................•••...•... 25
DISPUTES AND DEFAULT ...........................•........ 26
GOVERNMENTAL AUTHORIZATION ...........................•. 32
COMMISSION ORDER ...................................... 32
SUCCESSORS AND ASSIGNS .......................•....•.... 21
MODIFICATION ........................................... ::J3
TAXES .............•.......................•........... 33
NOTICE ...............................•....•........... 33
ADDITIONAL TERMS AND CONDITIONS ...............•....•..... 33
ENTIRE AGREEMENT· SIGNATURES ...............••.•......... 34
APPENDIX A .................................••....•.•... 36
APPENDIX B ........••......................•....•..••... 43
APPENDIX C ............................................. 47
APPENDIX D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 48
APPENDIX E .................................••.....•.... 49
APPENDIX F .................................•........... 51
FIRM ENERGY SALES AGREEMENT
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F~_oIity No: 31615154
Project: Mile 28
Less Than 10 MW
THIS AGREEMENT, entered into on this 13th day of August ,1993, is between
CONTRACTOR'S POWER GROUP, INC., an Idaho Corporation hereinafter referred to as "Seller", and
IDAHO POWER COMPANY, an Idaho corporation hereinafter referred to as "Idaho Power" hereinafter
sometimes referred to collectively as "Parties" or individually as "Party."
WIT N E SSE T H:
WHEREAS, Seller plans to construct, own and operate an electric generation Facility;
and
WHEREAS, Seller wishes to sell, and Idaho Power is legally obligated to purchase firm
electric energy generated by Seller's electric generation Facility.
THEREFORE, In consideration of the mutual covenants and agreements hereinafter set
forth, the Parties agree as follows:
ARTICLE I: DEFINITIONS
As used in this Agreement and the appendices attached hereto, the following terms shall
have the following meanings:
1.1 ' Annual Net Firm Energy" -The amount of Net Firm Energy Seller estimates it
will deliver to Idaho Power at the Point of Delivery during each Contract Year.
1.2 "Commission" -The Idaho Public Utilities Commission.
1.3 "Contract Year" -The period commencing each calendar year on the same
calendar date as the Operation Date and ending 364 days thereafter.
1.4 "Designated Disoatch Facility" -Idaho Power's Boise Bench System Dispatch
Center.
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1.5 "Disconnection Equipment" -Any device or combination of devices by which
Idaho Power can manually andlor automatically interrupt the flow of energy from the Seller to Idaho
Power's system, including enclosures or other equipment as may be required to ensure that only Idaho
Power will have access to the devices.
1.6 "Facilitv" -That electric generation facility described in Appendix B of this
Agreement.
1.7 "First Energy Date" -The date when the Seller begins delivering energy to Idaho
Power's system.
1.8 "Interconnection Facilities" -All facilities which are reasonably required by
Prudent Electrical Practices and the National Electric Safety Code to interconnect and to allow the
delivery of energy from the Seller's electric generation plant to Idaho Power's system including, but
not limited to, Special Facilities, Disconnection Equipment and Metering Equipment.
1.9 "losses" -The loss of energy occurring as a result of the transformation and
transmission of energy between the Facility and the Point of Delivery.
1.10 "Metering Equipment" -Equipment as described in Appendix B and Schedule
72 required to measure, record or telemeter power flows between the Seller's electric generation plant
and Idaho Power's system.
1.11 "Net Firm Energy" -Electric energy produced by the Facility, less Station Use
and less losses, expressed in kilowatt hours ("kWh"), which Seller commits to deliver to Idaho Power
at the Point of Delivery on a long-term average basis for the full term of the Agreement.
1.12 "Operation Date" -The day commencing at 0001 hours Mountain Time,
following the day on which the Facility demonstrates that it has been completed and reached a degree
of reliability such that it is capable of delivering Net Firm Energy continuously into Idaho Power's
system.
1.13 "Point of Deliverv" -The location specified in Appendix B, where Idaho Power's
and Seller's electrical facilities are interconnected.
1.14 "Prudent Electrical Practices· -Those practices, methods and equipment that
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are commonly and ordinarily used in electrical engineering and operations to operate electric equipment
lawfully and with safety, dependability, efficiency and economy.
1.15 "Replacement Cost" -The replacement value of damaged property without
deduction for depreciation.
1.16 "Scheduled Operation Date" -The date specified in Appendix B when Seller
anticipates achieving the Operation Date.
1.17 ·Schedule 72" -Idaho Power's Tariff No 101, Schedule 72 or its successor
schedules as approved by the Commission.
1 .18 "Season" -The three time periods identified in Article VI.
1.19 "Seasonal Net Firm Energy" -The amount of Net Firm Energy Seller estimates
it will deliver to Idaho Power at the Point of Delivery during each Season.
1.20 "Special Facilities" -Additions or alterations of transmission andlor distribution
lines and transformers as described in Appendix B and Schedule 72 required to safely interconnect the
Seller's electric generation plant to the Idaho Power's system.
1.21 "Station Use" -Electric energy which is used solely to operate the Facility's
equipment which is auxiliary or directly related to the production of electricity and which, but for the
generation of electricity, would not be consumed by Seller.
1.22 "Surplus Energy" -Electric energy which is delivered and accepted prior to the
Operation Date or which Seller does not commit to provide on a long-term average basis for the full
term of the Agreement.
1.23 "Total Cost of the Facility" -The total Replacement Cost of structures,
equipment and appurtenances.
ARTICLE II: NO RELIANCE ON IDAHO POWER
2.1 Seller Independent Investigation -Except for the Disconnection Equipment and
any other facilities exclusively within the control of Idaho Power, Seller warrants and represents to
Idaho Power that in entering into this Agreement and the undertaking by Seller of the obligations set
forth herein, Seller has investigated and determined that it is capable of performing hereunder and has
not relied upon the advice, experience or expertise of Idaho Power in connection with the transactions
contemplated by this Agreement.
2.2 Seller Independent Experts -Except for the Disconnection Equipment and any
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other facilities within the exclusive control of Idaho Power, all professionals or experts including, but
not limited to, engineers, attorneys or accountants, that Seller may have consulted or relied on in
undertaking the transactions contemplated by this Agreement, have been solely those of Seller.
ARTICLE III: WARRANTIES
3.1 No Warranty by Idaho Power· Any review, acceptance or failure to review
Seller's design, specifications, equipment or facilities shall not be an endorsement or a confirmation
by Idaho Power, and Idaho Power makes no warranties, expressed or implied, regarding any aspect
of Seller's design, specifications, equipment or facilities, including but not limited to safety, durability,
reliability, strength, capacity, adequacy or economic feasibility.
3.2 Qualifying Facility Status· Seller warrants that prior to interconnection with
Idaho Power the Facility will be a qualifying facility ("QF"). as that term is used and defined in 18 CFR,
§ 292.207. After initial qualification, Seller will take such steps as may be required to maintain the
Facility's QF status during the term of this Agreement and Seller's failure to maintain QF status will
be a material breach of this Agreement.
3.3 FERC License· Seller warrants that Seller possesses a valid license or exemption
from licensing from the Federal Energy Regulatory Commission ("FERC") for the Facility. Seller
recognizes that Seller's possession and retention of a valid FERC license or exemption is a material part
of the consideration for Idaho Power's execution of this Agreement. Seller will take such steps as may
be required to maintain a valid FERC license or exemption for the Facility during the term of this
Agreement, and Seller's failure to maintain a valid FERC license or exemption will be a material breach
of this Agreement.
ARTICLE IV: CONDITIONS TO INTERCONNECTION
4.1 Prior to the First Energy Date and as a condition of interconnection with Idaho
Power, Seller shall provide the following:
4.1 .1 Licenses and Permits· Submit proof to Idaho Power that all licenses,
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permits or approvals necessary for Seller's operations have been obtained from applicable
federal, state or local authorities, including but not limited to those licenses, permits or
approvals specified in Appendix C.
4.1 .2 Hvdrological Data -Submit proof to Idaho Power that the hydrological
data associated with the water flows applicable to the Facility and other factors relevant to the
future security of such water flows, assuming normal weather conditions, demonstrate that
the Application for Permit to appropriate water referred to in Appendix C provides Seller with
sufficient water rights to generate the Net Firm Energy as specified in this Agreement.
4.1 .3 Opinion of Counsel -Submit to Idaho Power an opinion of counsel
signed by an attorney admitted to practice and in good standing in the State of Idaho certifying
as follows:
(1 ) That Seller's licenses, permits and approvals as set forth
in paragraph 4.1.1 above are legally and validly issued, are held in the name of the Seller,
provide the rights set forth therein, and are enforceable in accordance with their terms; and
(2) That the attorney has reviewed the approved Application
for Permit to appropriate water referred to in Appendix C, that the Application for Permit to
appropriate water is legally and validly issued to Seller, is held in the name of Seller and grants
to Seller the rights therein specified, and is enforceable in accordance with its terms; and
(3) That downstream of the Facility, there are existing,
agricultural senior water rights sufficient to ensure the availability of the water rights applied
for in the Permit to Appropriate Water referred to in Appendix C; and
(4) That the agricultural water rights described in (3) above are
senior to the Facility's requested water rights and are not dependent on inflows below Seller's
Point of Diversion specified in the Permit to Appropriate Water referred to in Appendix C; and
(5) That the attorney has read Commission Order No. 21690
and it is his legal opinion that Seller possesses water rights that do not require the application
by Idaho Power of the "K" factor described in said Order.
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4.1.3.1 The opinion of counsel reQuired in 4.1.3 above will be in
a form acceptable to Idaho Power and will acknowledge that the attorney rendering the
opinion understands that Idaho Power is relying on said opinion. Idaho Power's
acceptance of the form will not be unreasonably withheld.
4.1 .4 Schedule 72 Payments -Make payment to Idaho Power for all costs
of Disconnection EQuipment, Metering EQuipment and Special Facilities as provided for in
Schedule 72 and Appendix B of this Agreement;
4.1 .5 Written Acceptance -Obtain written acceptance from Idaho Power as
provided in paragraph 8.3;
4.1.6 Insurance -Submit written proof to Idaho Power of all insurance
reQuired in Article XIV;
4.1 .7 Demonstration of Safe Operation -Demonstrate to Idaho Power's
reasonable satisfaction that Seller's Facility has been completed, and is capable of operating
safely to commence deliveries of electric energy into Idaho Power's system;
4.1.8 Maintenance Escrow Account -Demonstrate to Idaho Power's
satisfaction that the Seller has established and funded (1) a debt service reserve account in a
form and with a fund holder which complies with paragraph 21 .4.2 and (2) a maintenance
escrow account in a form and with an escrow manager which complies with Commission Order
Nos 21690 and 21 800. Said maintenance escrow account shall be structured and funded as
follows:
4.1.8.1 The escrow instructions establishing the maintenance
escrow account will provide that the funds in the maintenance escrow account will be
prudently invested and that all costs of implementing and operating the maintenance
escrow account shall be paid by the Seller. All interest earned on the funds on deposit
will be retained in the maintenance escrow account. At the end of the term of this
Agreement, any balance remaining in the maintenance escrow account shall be the
property of the Seller.
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4.1.8.2 Within sixty (60) days after the completion of each
Contract Year, the Seller will deposit cash in the maintenance escrow account in an
amount equal to five percent (5%) of the Facility's estimated gross income for the
ensuing Contract Year, less an amount equal to the Facility's actual maintenance,
repair and replacement expense (maintenance expenses) incurred during the prior
Contract Year.
4.1.8.3 The maximum amount of deposit retained in the
maintenance reserve account shall be two hundred thousand dollars ($200,000.00).
This maximum amount will be adjusted either upward or downward to reflect current
replacement cost of the turbine/generator. This adjustment will be made at a minimum
every fifth Contract Year during the term of this Agreement and will be based on the
Handy-Whitman Index "Cost Trends of Electricity Utility Construction --Plateau Region"
--"Hydro Production Plant" as published by Whitman Requardt & Associates, 2315
Saint Paul St, Baltimore, MD 21218.
4.1.8.4 At the time Seller makes the deposit described in
paragraph 4.1.8.2, Seller will provide both the escrow manager and Idaho Power with
a report prepared by an independent accounting firm showing the prior Contract Year's
actual maintenance expenses, identified by appropriate FERC maintenance account
number, and the estimate of the Facility's gross income for the ensuing Contract Year
used to compute the deposit amount, together with documentation supporting that
estimate of gross income.
4.1.8.5 If Seller determines that the maintenance expense for a
Contract Year will exceed five percent (5%) of the Facility's estimated gross income
for that Contract Year, the Seller may request that the escrow manager release funds
from the maintenance escrow account in an amount sufficient to pay the anticipated
additional maintenance expenses. The request must include documentation supporting
the Seller's projection of excess maintenance expense, identified by appropriate FERC
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maintenance account number. and such documentation shall be submitted to both the
escrow manager and Idaho Power. Following receipt of the request and documen­
tation, the escrow manager, shall, within five (5) working days, release the required
funds to Seller.
4.1.8.6 At the end of each Contract Year, Seller will provide Idaho
Power with evidence of compliance with the maintenance escrow account
requirements set out in this Agreement and Commission Order Nos 21690 and 21800.
This evidence of compliance will be provided in a manner and form acceptable to Idaho
Power. The maintenance escrow fund will be subject to the lien rights described in
4.1.9 below.
4.1.9 Securitv Interests -Provide Idaho Power with acceptable security
against Seller's default under this Agreement. Acceptable security will conform to Commission
Order Nos 21690 and 21800 and may include, but will not be limited to, title insurance,
security interests in the real property associated with the Facility, equipment, fixtures,
contracts, permits, the FERC license or exemption from licensing, water rights, including
evidence of third party downstream water rights, easements, rights-of-way, funds held in
escrow in which Seller has an interest and that relate to the operation of the Facility, and other
reasonable security arrangements consistent with the Facility's financing and ownership
arrangements.
4.1.9.1 Idaho Power's security interests will be superior and senior
to all liens other than the first mortgage lien and other security interests permitted in
accordance with paragraphs 4.1.9.2.
4.1.9.2 If Seller desires to incur a first mortgage lien or other
security interests that will be superior to Idaho Power's security interests in the
Facility, at least twenty-one (21) days prior to their execution Seller shall provide Idaho
Power with draft copies of the deeds of trust, mortgages and other security
agreements that will be used to secure such first lien. Upon their execution Seller shall
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documents shall not be assigned, amended, modified, or extended, and no replacement
or refinancing of any nature shall be undertaken, without Idaho Power's prior written
consent which consent shall not be unreasonably withheld. In no event will the amount
of any first mortgage lien exceed $950,000. The total amount of all refinanced or
replaced first liens shall not exceed the unpaid principal balance of the first mortgage
liens they replace.
4.1.9.3 Other than the first mortgage liens permitted herein, or
temporary mechanic's, statutory or similar liens incurred in the ordinary course of
business in an amount not to exceed in aggregate five thousand dollars ($5,000) Seller
will not permit any liens or encumbrances of any nature whatsoever. to be placed on
the Facility without Idaho Power's prior written consent, which consent will not be
unreasonably withheld. If any unpermitted lien or encumbrance is placed on the
Facility, Seller will provide Idaho Power with a bond, insurance or other security
acceptable to Idaho Power in an amount sufficient to secure the full discharge of such
unpermitted lien or encumbrance.
4.1.9.4 If, after the initial first lien has been established, Seller
desires to assign this Agreement or assign, replace or refinance said first lien, Seller will
reimburse Idaho Power for the reasonable out-of-pocket costs Idaho Power incurs for
document review and revision including any consents to assignment or subordination
agreements that Seller requests from Idaho Power. Idaho Power's out-of-pocket costs
will include but not be limited to filing fees, title insurance premiums, and fees of legal
counsel.
4.1.10 Confirmation -Obtain written confirmation from Idaho Power that all
conditions to interconnection have been fulfilled. Such written confirmation shall not be
unreasonably withheld by Idaho Power.
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ARTICLE V: TERM. EARLY TERMINATION. AND OPERATION DATE
5.1 Term -Except as otherwise provided, this Agreement shall become effective
on the date first above written, and shall continue in full force and effect for a period of thirty-five (35)
Contract Years.
5.2 Early Termination -Either Party may terminate this Agreement at the end of the
twentieth, twenty-fifth, or thirtieth Contract Years by giving the other Party written notice of
termination a minimum of one (I) year prior to the beginning of the twentieth, twenty-fifth, and
thirtieth Contract Years provided, however, that neither Party shall be allowed to terminate until at
least five (5) years after the date of expiration of the initial permanent first lien financing for the
project.
5.2.1 Liquidated Administrative Costs -If either Party exercises its
option to terminate, in addition to any payments due under paragraph 21.3, the Party
initiating termination will pay the other Party liquidated administrative costs which will
be determined according to the following formula:
(kWh) x (Rate/kWh) x (Percent) = liquidated administrative costs
Where:
"kWh" is the Annual Net Firm Energy amount shown in paragraph 6.3; and
"Rate/kWh" is the sum of the base payment shown in paragraph 7.1.1 plus the
adjustable payment in accordance with paragraph 7.1.2 as set on the July 1 st
immediately prior to the notification of intention to terminate; and
"Percent" is a multiplier based on the following schedule:
4 Year's prior notice of termination: 1.5%
3 Year's prior notice of termination: 2.0%
2 Year's prior notice of termination: 2.5%
1 Year's prior notice of termination: 3.0%
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5.2.2 Idaho Power -Early termination under this paragraph by Idaho Power
is not a default by the Seller and will not constitute a permanent curtailment under
paragraph 21 .3.
5.2.3 ~ -Early termination under this paragraph by the Seller will
constitute a permanent curtailment under paragraph 21.3.
5.3 Operation Date -The Operation Date may occur only after Seller has achieved
the First Energy Date, and the necessary degree of completion and reliability has been demonstrated
to Idaho Power's satisfaction, and Idaho Power has confirmed that satisfaction in writing. Seller shall
have the duty to obtain that confirmation and it will not be unreasonably withheld by Idaho Power.
Prior to the Operation Date, Seller must provide the following:
(1 ) As-built drawings of the Seller-furnished Interconnection Facilities, and
(2) An executed Engineer's Certification of Design & Construction
Adequacy, and an Engineer's Certification of Operations and Maintenance ("O&M") Policy as described
in Commission Order No 21690. These certificates will be in the form specified in Appendix F, but
may be modified to the extent necessary to recognize the different engineering disciplines providing
the certificates.
ARTICLE VI: SALE OF NET FIRM ENERGY
6.1 Deliverv and Acceptance of Net Firm Energy -Except when either Party's
performance is prevented by events of force majeure (Article XVI) or otherwise excused as provided
herein, Idaho Power will purchase and Seller will sell all of the Net Firm Energy and Surplus Energy
produced by the Facility and delivered by Seller to the Point of Delivery.
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6.2 Seasonal Net Firm Energy Amounts -Based on long-term historical water flow
records and long-term average energy production estimates based thereon, Seller estimates that it can
deliver Net Firm Energy in the following monthly amounts:
March 0 kWh
Season 1 April 446,515 kWh
May 892,746 kWh
June 927,547 kWh
Season 2 July 1,012,953 kWh
August 985,026 kWh
September 887,890 kWh
October 512,497 kWh
November 133.416 kWh
Season 3 December 0 kWh
January 0 kWh
February 0 kWh
6.3 Annual Net Firm Energy Amount -The Annual Net Firm Energy amount shall be
5,798,590 kWh and shall be the sum of the three (3) Seasonal Net Firm Energy amounts Seller
specified above. At Idaho Power's option the Annual Net Firm Energy amount and the resulting
Appendix D lump sum repayment amount may be adjusted based on the actual performance of the
Facility.
6.4 Average Water Conditions -The Net Firm Energy amounts Seller has estimated
it can supply are based upon the anticipated long-term average water flows at the Facility. The Parties
have reviewed these anticipated water flows, Seller's water right filings and the water records
supporting those projected water flows and have agreed that, for purposes of this Agreement, the
projected water flows used to calculate the Annual Net Firm Energy amount in paragraph 6.3 are
reasonable and shall constitute the water flows available to the Facility under "average" water
conditions. No later than one hundred twenty (1 20) days after the Operation Date, Seller will install
such water flow measuring equipment as is reasonably required to permit the Parties to monitor the
water flows at the Facility site. Seller will operate and maintain this water flow measuring equipment
and will perform such other water flow analyses as may be required to carry out the provisions of
Article XXI.
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6.5 Net Firm Energy Changes -
6.5.1 Increased Generation Capability -If, at any time during the term of this
Agreement, as a result of some action by Seller, i.e. procurement of additional long-term water
supplies or improvements to the efficiency of the installed generating equipment, Seller intends
to permanently increase the amount of Annual Net Firm Energy from the Facility above the
amount specified in paragraph 6.3 above, Seller will promptly notify Idaho Power of that intent.
If Idaho Power concurs that Seller is capable of actually providing such increased Net Firm
Energy, Idaho Power will have the option to purchase this increased amount of Net Firm Energy
in accordance with either of the following alternatives: (1) the purchase will be under the same
terms and conditions of this Agreement except that the rate for the incremental increase of Net
Firm Energy shall not be the rate in paragraph 7.1 of this Agreement, but instead will be priced
at the appropriate firm energy rate in effect at the time of such increase; or (2) the purchase
will be made under a separately negotiated agreement. The choice of purchase alternative will
be Idaho Power's.
ARTICLE VII: PURCHASE PRICE AND METHOD OF PAYMENT;
ADJUSTMENT OF PURCHASE PRICE
7.1 Net Firm Energy Purchase Price -The price to be paid to Seller for Net Firm
Energy will be the sum of the following payments:
7.1.1 Base Payment -
Season 1 36.03 Mills/kWh
Season 2 58.82 Mills/kWh
Season 3 49.02 Mills/kWh
7.1 .2 Adjustable Payment -In addition to the base payment specified in
paragraph 7.1.1, Idaho Power shall pay to Seller an adjustable payment which shall be
established by the Commission and subject to change pursuant to Commission Order effective
on July 1 of each year during the term of this Agreement. While the Parties do not know what
the adjustable payment amount will be as of the Operation Date under this Agreement, the
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Parties acknowledge that the adjustable payments as of the date of the signing of this
Agreement are as follows:
Season 1
Season 2
Season 3
7.34 Mills/kWh
11.99 Mills/kWh
9.99 Mills/kWh
7.2 Surplus Energy Purchase Price -Surplus Energy will be purchased at the non-
firm avoided energy rate computed in accordance with Option B in Idaho Power's Tariff 101, Schedule
86 or with its successor schedules as approved by the Commission.
7.3 Continuing Jurisdiction of the Commission -This Agreement is a special
contract and as such, the rates, terms and conditions contained in this Agreement will be construed
in accordance with Idaho Power Company Y.,. Idaho Public Utilities Comm'n and Afton Energy, Inc,
107 Idaho 781, 693 P2d 427 (1984), Idaho Power Company Y.,. Idaho Public Utilities Comm'n, 107
Idaho 1122, 695 P2d 1261 (Idaho 1985). Afton Energy, Inc, v. Idaho Power Company. 111 Idaho
925,729 P2d 400 (1986), Section 210 of the Public Utilities Regulatory Policies Act of 1978 and 18
CFR §292.303-308.
ARTICLE Viii: FACILITY AND INTERCONNECTION
8.1 Design of Facility -Seller shall design, construct, install, own, operate and
maintain the Facility and any Seller owned Interconnection Facilities so as to allow safe, reliable
delivery of electric energy to Idaho Power's system for the full term of this Agreement.
8.2 Interconnection Facilities -Except as specifically provided for in this Agreement,
interconnection of the Facility will be in accordance with Schedule 72. Seller will pay all costs of
interconnecting the Facility with Idaho Power.
8.3 Idaho Power Review-To assure the Facility and Seller-furnished Interconnection
Facilities are of suitable size and are compatible with Idaho Power's system, Seller shall submit the
designs, plans, specifications and performance data for the Facility and Seller-furnished Interconnection
Facilities to Idaho Power for review. Idaho Power shall, in writing and in conformance with paragraph
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4.1.5, notify Seller of its acceptance and confirmation of system compatibility or conversely, notify
Seller, in writing, of any changes which, consistent with Prudent Electrical Practices, Idaho Power
determines are necessary to assure the safe delivery of electric energy from the Facility to Idaho
Power's system.
ARTICLE IX: DISCONNECTION EQUIPMENT
9.1 Disconnect Equipment -Idaho Power will, at Seller's expense, provide, own,
operate, and maintain all Disconnection Equipment. At Seller's request, Idaho Power will provide Seller
with the general specifications and an itemization by category of the costs of such Disconnection
Equipment. Idaho Power will establish the settings of Disconnection Equipment to disconnect auto­
matically from the Facility for the protection of Idaho Power's system and personnel consistent with
Prudent Electrical Practices. Upon Seller's request, Idaho Power will notify Seller as to the original
setting and any adjustments thereof. Except as otherwise required by Prudent Electrical Practices, Dis­
connection Equipment will be designed so that the closure of any breaker or other disconnecting device
which connects the Facility to Idaho Power's system shall be controlled by equipment which will
perform the following:
(1 ) Automatically monitor the status of the electrical system on Idaho
Power's side of the disconnecting device; as to voltage and frequency; and
(2) Prohibit closure or reconnection until voltage and frequency have been
within approved limits for a continuous period of not less than five (5) minutes; and
(3) Operate so that if Idaho Power's system is de-energized within sixty
(60) seconds after closure of the disconnecting device, the disconnecting device will immediately open
and not close again until it has been manually reset andlor Idaho Power can safely reclose the
Disconnecting Equipment.
9.2 Security of Disconnect Equipment -The Disconnection Equipment will be
located in an enclosure secured by a lock or otherwise secured in a manner designed to ensure that
only Idaho Power's authorized personnel will have access to the disconnecting devices.
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9.3 Remote Disconnection -Other Disconnection Equipment, including equipment
which will provide Idaho Power's operating personnel with the ability to remotely control and monitor
the status of the breaker or other disconnecting device by radio or hard-wire circuit between the
Facility and the Designated Dispatch Facility may be specified by Idaho Power when, in Idaho Power's
reasonable judgment, such equipment is required by Prudent Electrical Practices. Seller recognizes that
such remote control equipment may not initially be required by Idaho Power, but at such time as
operating conditions on Idaho Power's system dictate, Idaho Power will install this remote control
equipment at Seller's expense. If Seller disputes Idaho Power's determination that the installation of
such remote Disconnection Equipment is required, such dispute shall be submitted to the Commission
for resolution.
9.4 Interference with Disconnection Equipment -If Seller attempts to modify, adjust
or otherwise interfere with the Disconnection Equipment or its enclosure, such action shall constitute
an event of default pursuant to Article XXI and a material breach of this Agreement.
ARTICLE X: METERING
10.1 Metering and Telemetry -Idaho Power shall, for the account of Seller, provide,
install, and maintain required Metering Equipment to be located at a mutually agreed upon location to
record and measure power flows to Idaho Power in accordance with the standards set forth in
Appendix A of this Agreement. If required by Idaho Power, metering will also include measurement
of kilovar-hours in a manner agreed to by both Parties. All Metering Equipment and installation costs
shall be borne by Seller, including costs incurred by Idaho Power for inspecting and testing such
equipment at reasonable intervals at Idaho Power's actual cost of providing this Metering Equipment
and services. The point of metering shall be at the location described in Appendix B of this Agreement.
All meters used to determine the billing hereunder shall be sealed and the seals shall be broken only
by Idaho Power when the meters are to be inspected, tested or adjusted.
10.2 Meter Inspection -Idaho Power shall inspect and test all meters upon their
installation and at least once every four (4) years thereafter. If requested by Seller, Idaho Power shall
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make a special inspection or test of a meter and Seller shall pay the reasonable costs of such special
inspection. Both Parties shall be notified of the time when any inspection or test shall take place, and
each Party may have representatives present at the test or inspection. If a meter is found to be
inaccurate or defective, it shall be adjusted, repaired, or replaced, at Idaho Power's expense, in order
to provide accurate metering. If a meter fails to register, or if the measurement made by a meter
during a test varies by more than two percent (2 %) from the measurement made by the standard meter
used in the test, adjustment (either upward or downward) to the payments Seller has received shall
be made to correct those payments affected by the inaccurate meter for the actual period during which
inaccurate measurements were made. If the actual period cannot be determined, corrections to the
payments will be based on the shorter of (1) a period equal to one-half the time from the date of the
last previous test of the meter to the date of the test which established the inaccuracy of the meter;
or (2) six (6) months.
10.3 Telemetry -Consistent with Appendix A of this Agreement, Idaho Power will
install, operate and maintain at Seller's expense metering, communications and telemetry equipment
which will be capable of providing Idaho Power with continuous instantaneous telemetry of Seller's
net generation to Idaho Power's Designated Dispatch Facility.
ARTICLE XI: RECORDS
11 .1 Maintenance of Records -Seller shall maintain at the Facility or such other
location mutually acceptable to the Parties, adequate metering and related power production records,
in a form and content recommended by Idaho Power.
11.2 Inspection -Either Party, after reasonable notice to the other Party, shall have
the right, during normal business hours, to inspect and audit any or all such metering and related power
production records pertaining to Seller's account.
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ARTICLE XII: PROTECTION
1 2.1 Seller shall construct, operate and maintain the Facility and Seller-furnished
Interconnection Facilities in accordance with Appendix A, Prudent Electrical Practices, the National
Electrical Code, the National Electrical Safety Code and any other applicable local, state, and federal
codes. If, in the reasonable opinion of Idaho Power, Seller's operation of the Facility or Interconnection
Facilities is unsafe or may otherwise adversely affect Idaho Power's equipment, personnel, or service
to its customers, Idaho Power may physically interrupt the flow of energy from the Facility or take such
other reasonable steps as Idaho Power deems appropriate. Except in the case of an emergency, Idaho
Power will attempt to notify Seller of such interruption prior to its occurrence as provided in paragraph
13.8. Seller shall provide and maintain adequate protective equipment sufficient to prevent damage
to the Facility and Seller-furnished Interconnection Facilities. In some cases, some of Seller's
protective relays will provide back-up protection for Idaho Power's facilities. In that event, Idaho
Power will test such relays annually and Seller will pay the actual cost of such annual testing.
ARTICLE XIII: OPERATIONS
13.1 Emergency Conditions -Seller agrees that in the event of and during a period
of a shortage of power on Idaho Power's system as declared by Idaho Power in its reasonable
discretion, Seller shall, at Idaho Power's request and within the limits of reasonable safety requirements
as determined by Seller, use its best efforts to provide the requested energy, and shall, if necessary,
delay any scheduled shutdown of the Facility.
13.2 Communications -Idaho Power and Seller shall maintain appropriate operating
communications through Idaho Power's Designated Dispatch Facility, and Seller shall report to Idaho
Power at the times and in the manner set forth in Appendix A of this Agreement.
13.3 Energy Acceptance -Idaho Power shall be excused from accepting and paying
for Net Firm Energy delivered by Seller to the Point of Delivery under the following circumstances:
13.3.1 If it is prevented from doing so by an event of force majeure.
13.3.2 If Idaho Power determines that curtailment, interruption or reduction
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of Net Firm Energy deliveries is necessary because of line construction or maintenance
requirements, emergencies, operating conditions on its system, or as otherwise required by
Prudent Electrical Practices. If, for reasons other than an event of force majeure, Idaho Power
requires such a curtailment, interruption or reduction of Net Firm Energy deliveries for a period
that exceeds twenty (20) consecutive days, beginning with the twenty-first day of such
interruption, curtailment or reduction, Seller will be deemed to be delivering Net Firm Energy
at a rate determined by dividing the monthly Net Firm Energy amount specified in paragraph
6.2 for the month in which the interruption or curtailment occurs by the number of hours in
that month. Idaho Power will notify Seller when the interruption, curtailment or reduction is
terminated.
13.4 Voltage Levels -Seller shall use its best efforts to minimize voltage fluctuations
and to maintain voltage levels acceptable to Idaho Power. Idaho Power may, upon one hundred eighty
(180) days' notice to Seller, change its nominal operating voltage level by more than ten percent (10%)
at the Point of Delivery, in which case Seller shall modify, at Idaho Power's expense, Seller's
equipment as necessary to accommodate the modified nominal operating voltage level.
13.5 Generator Ramping -Idaho Power shall have the right to limit the rate that
generation is changed at startup, during normal operation or following reconnection to Idaho Power's
system. Generation ramping may be required to permit Idaho Power's voltage regulation equipment
time to respond to changes in power flow.
13.6 Scheduled Maintenance -On or before January 1 of each year, Seller shall
submit a written proposed maintenance schedule for that year and Idaho Power and Seller shall
mutually agree as to the acceptability or unacceptability of the proposed date(s). The Parties'
determination as to the acceptability of Seller's timetable for scheduled maintenance will take into
consideration Prudent Electrical Practices and neither Party shall unreasonably withhold its acceptance
of the proposed date for scheduled maintenance.
13.7 Maintenance Coordination -The Parties shall, to the extent practical, coordinate
their respective line and Facility maintenance schedules such that they occur simultaneously.
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13.8 Contact Prior to Curtailment -Idaho Power will make a reasonable attempt to
contact Seller prior to exercising its rights to curtail, interrupt or reduce deliveries from Seller. Seller
understands that in the case of emergency circumstances, no notice will be given to Seller prior to
interruption, curtailment, or reduction.
ARTICLE XIV: INDEMNIFICATION AND INSURANCE
14.1 Indemnification -Each Party shall agree to hold harmless and to indemnify the
other Party, its officers, agents, and employees against all loss, damage, expense and liability to third
persons for injury to or death of person or injury to property, proximately caused by the indemnifying
Party's construction, ownership, operation or maintenance of, or by failure of, any of such Party's
works or facilities used in connection with this Agreement. The indemnifying Party shall, on the other
Party's request, defend any suit asserting a claim covered by this indemnity. The indemnifying Party
shall pay all costs that may be incurred by the other Party in enforcing this indemnity.
14.2 Insurance -During the term of this Agreement, Seller shall secure and
continuously carry the following insurance coverages:
14.2.1 Commercial General Liability Insurance for both bodily injury and
property damage with limits equal to fifteen percent (15%) of the Total Cost of the Facility, ill
$1,000,000, whichever is greater, each occurrence, combined single limit. The deductible for
such insurance shall not exceed one-half of one percent (0.5%) ofthe Total Cost of the Facility.
14.2.2 All Risk Property Insurance with minimum limits not less than ninety
percent (90%) of the Total Cost of the Facility. The Property Insurance coverage must be
written on a Replacement Cost basis and will include:
(a) Standard fire policy.
(b) Extended coverage endorsement.
(c) Vandalism and malicious mischief endorsement.
(d) The deductible for the above property insurance coverage shall not
exceed five percent (5%) of the Total Cost of the FacilitY or $25,000 whichever is greater.
14.2.3 Boiler and Machinery Insurance with minimum limits not less than ninety
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percent (90%) of the total Replacement Cost of the equipment covered in (a) below:
(a) All boiler and machinery coverage must be written on a ·comprehensive
form· basis to provide coverage against the sudden and accidental breakdown of all boilers,
machinery and electrical equipment, turbines, generators, and switchgear;
(b) Coverage under this insurance must be written on a Replacement Cost
basis; and
(c) The deductible for this insurance shall not exceed five percent (5%) of
the total Replacement Cost of the equipment covered in (a) above .Q! $25,000 whichever is
greater.
14.2.4 Earthquake & Rood (catastrophic perils) Insurance with limits not less
than sixty percent (60%) of the Total Cost of the Facility. The deductible for this insurance
shall not exceed five percent (5%) of the Total Cost of the Facility.
14.2.5 Business Interruption (Loss of Income) Insurance with minimum daily
limits not less than seventy-five percent (75%) of the Facility's estimated gross daily electrical
revenue and total policy limits not less than twenty percent (20%) of the Facility's estimated
gross annual revenue from the sale of electrical energy;
(a) Coverage will include Seller's loss of earnings when business
operations are curtailed or suspended because of a loss due to an insured peril. Coverage may
be written on an actual loss sustained basis.
(b) This insurance coverage must be endorsed to both the All Risk
Property Insurance Policy and the Boiler and Machinery Insurance Policy;
(c) The deductible for this insurance coverage shall not exceed thirty (30)
days gross daily revenues from the sale of electrical energy; and
(d) The estimated gross daily revenue and estimated gross annual revenue
shall be computed on the basis of the kWh production estimates contained in paragraph 6.2.
14.2.6 All of the above insurance coverages shall be placed with insurance
companies with an A.M. Best rating of A-or better and shall include:
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(a) An endorsement naming Idaho Power as an additional insured and loss
payee as applicable;
(b) A provision stating that such policies shall not be canceled or their
limits of liability reduced without sixty (60) days' prior written notice to Idaho Power; and
(c) In the case of the insurance coverages described in sub-
paragraphs 14.2.1, 14.2.2 and 14.2.3 above, the Total Cost of the Facility will include any
Seller-furnished Disconnection Equipment andlor Interconnection Facilities. The Total Cost of
the Facility and total Replacement Cost of equipment will be adjusted either upward or
downward to reflect the current replacement cost of the Facility or equipment. This adjustment
will be based on either (1) an appraisal made by, or for, the Seller's insurance company, or (2)
the Handy-Whitman Index "Cost Trends of Electric Utility Construction --Plateau Region" -­
"Hydro Production Plant" as published by Whitman, Requardt & Associates, 2315 Saint Paul
St, Baltimore, MD 21218. Such adjustment shall be made, at a minimum, every fifth Contract
Year during the term of this Agreement. A copy of these computations andlor appraisals will
be submitted to Idaho Power for Idaho Power's review and approval.
14.3 Seller to Provide Certificates of Insurance -Seller shall annually furnish Idaho
Power certificates of insurance, together with the endorsements required therein, evidencing the
coverages as set forth above.
14.4 Seller to Provide Copies of Policies of Insurance -Within one hundred twenty
(120) days after the Operation Date, and within ninety (90) days of the effective date of any
modifications to the policy, Seller will furnish to Idaho Power a certified copy of the original of each
insurance policy and all endorsements for each of the insurance coverages described above. In the
case of policy renewals, Seller may provide a certificate from the insurance carrier that there have been
no changes to the policy in lieu of providing the required certified copy of the policy.
14.5 Seller to Notify Idaho Power of Lapse of Coverage -If any of the insurance
coverages required by paragraph 14.2 shall lapse for any reason, Seller will immediately notify Idaho
Power in writing. The notice will advise Idaho Power of the specific reason for the lapse and the steps
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Seller is taking to reinstate the coverage.
ARTICLE XV: LAND RIGHTS
15.1 Seller to Provide Access -Seller hereby grants to Idaho Power for the term of
this Agreement all necessary rights-of-way and easements to install, operate, maintain, replace, and
remove Idaho Power's Metering Equipment, Disconnection Equipment and other Special Facilities
necessary or useful to this Agreement, including adequate and continuing access rights on property
of Seller. Seller warrants that it has procured sufficient easements and rights-of-way from third parties
so as to provide Idaho Power with the access described above. All documents granting such
easements or rights-of-way shall be subject to Idaho Power's approval and in recordable form.
15.2 Use of Public Rights-of-Way -The Parties agree that it is necessary to avoid the
adverse environmental and operating impacts that would occur as a result of duplicate electric lines
being constructed in close proximity. Therefore, subject to Idaho Power's compliance with paragraph
15.4, Seller agrees that should Seller seek and receive from any local, state or federal governmental
body the right to erect, construct and maintain Seller-furnished Interconnection Facilities upon, along
and over any and all public roads, streets and highways, then the use by Seller of such public right-of­
way shall be subordinate to any future use by Idaho Power of such public right-of-way for construction
andlor maintenance of electric distribution and transmission facilities and Idaho Power may claim use
of such public right-of-way for such purposes at any time. Except as required by paragraph 15.4,
Idaho Power shall not be required to compensate Seller for exercising its rights under this
paragraph 5.2.
15.3 Joint Use of Facilities -Subject to Idaho Power's compliance with paragraph
15.4, Idaho Power may use and attach its distribution andlor transmission facilities to Seller's
Interconnection Facilities, may reconstruct Seller's Interconnection Facilities to accommodate Idaho
Power's usage or Idaho Power may construct its own distribution or transmission facilities along, over
and above any public right-of-way acquired from Seller pursuant to paragraph 15.2, attaching Seller's
Interconnection Facilities to such newly constructed facilities. Except as required by paragraph 15.4,
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Idaho Power shall not be required to compensate Seller for exercising its rights under this paragraph
15.3.
15.4 Conditions of Use -It is the intention of the Parties that the Seller be left in.
substantially the same condition, both financially and electrically, as Seller existed prior to Idaho
Power's exercising its rights under this Article XV. Therefore, the Parties agree that the exercise by
Idaho Power of any of the rights enumerated in paragraphs 15.2 and 15.3 shall: (1) comply with all
applicable laws, codes and Prudent Electrical Practices, (2) equitably share the costs of installing,
owning and operating jointly used facilities and rights-of-way. If the Parties are unable to agree on the
method of apportioning these costs, the dispute will be submitted to the Commission for resolution and
the decision of the Commission will be binding on the Parties, and (3) shall provide Seller with an
interconnection to Idaho Power's system of equal capacity and durability as existed prior to Idaho
Power exercising its rights under this Article XV.
ARTICLE XVI: FORCE MAJEURE
As used in this Agreement, "force majeure" or "an event of force majeure" means any
cause beyond the control of the Seller or of Idaho Power which, despite the exercise of due diligence,
such Party is unable to prevent or overcome, including but not limited to an act of God, fire, flood,
explosion, strike, sabotage, an act of the public enemy, civil or military authority, court orders, laws
or regulations, insurrection or riot, an act of the elements or lack of precipitation resulting in reduced
water flows for power production purposes. If either Party is rendered wholly or in part unable to
perform its obligations under this Agreement because of an event of force majeure, both Parties shall
be excused from whatever performance is affected by the event of force majeure, provided that:
(1 ) The non-performing Party shall, as soon as is reasonably possible after
the occurrence of the event of force majeure, give the other Party written notice describing the
particulars of the occurrence.
(2) The suspension of performance shall be of no greater scope and of no
longer duration than is required by the event of force majeure.
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(3) No obligations of either Party which arose before the occurrence
causing the suspension of performance and which could and should have been fully performed before
such occurrence shall be excused as a result of such occurrence.
ARTICLE XVII: LIABILITY; DEDICATION
Nothing in this Agreement shall be construed to create any duty to, any standard of
care with reference to, or any liability to any person not a Party to this Agreement. No undertaking
by one Party to the other under any provision of this Agreement shall constitute the dedication of that
Party's system or any portion thereof to the other Party or to the public, nor affect the status of Idaho
Power as an independent public utility corporation, or Seller as an independent individual or entity.
ARTICLE XVIII: SEVERAL OBLIGATIONS
Except where specifically stated in this Agreement to be otherwise, the duties,
obligations and liabilities of the Parties are intended to be several and not joint or collective. Nothing
contained in this Agreement shall ever be construed to create an association, trust, partnership, or joint
venture or impose a trust or partnership duty, obligation or liability on or with regard to either Party.
Each Party shall be individually and severally liable for its own obligations under this Agreement.
ARTICLE XIX: WAIVER
Any waiver at any time by either Party of its rights with respect to a default under this
Agreement, or with respect to any other matters arising in connection with this Agreement, shall not
be deemed a waiver with respect to any subsequent default or other matter.
ARTICLE XX: CHOICE OF LAWS
This Agreement shall be construed and interpreted in accordance with the laws of the
State of Idaho.
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ARTICLE XXI: DISPUTES AND DEFAULT
21 .1 Disputes -All disputes related to or arising under this Agreement, including, but
not limited to, the interpretation of the terms and conditions of this Agreement, will be submitted to
the Commission for resolution.
21 .2 Default -If either Party fails to perform any of the terms or conditions of this
Agreement, (an "event of default") the nondefaulting Party shall cause notice in writing to be given
to the defaulting Party, specifying the manner in which such default occurred. If the defaulting Party
shall fail to cure such default within the sixty (60) days after service of such notice, then, and only
then, may the nondefaulting Party pursue its legal or equitable remedies
21 .3 Seller Permanent Curtailment -If, at any time prior to the end ofthe term ofthe
Agreement, Seller permanently curtails in whole or in part its long-term average deliveries of the Annual
Net Firm Energy amount specified in paragraph 6.3, Seller shall pay to Idaho Power, as reasonable
liquidated damages arising out of this permanent curtailment of Annual Net Firm Energy deliveries, the
appropriate lump sum repayment amount specified in Appendix D, multiplied by the difference in
megawatt-hours between the Annual Net Firm Energy amount specified in paragraph 6.3 and the
reduced Annual Net Firm Energy amount after the permanent curtailment. The Annual Net Firm Energy
amount in Article VI and the resulting Appendix D lump sum repayment amount may be adjusted from
time to time based on the actual performance of the Facility. The lump sum repayment amount will
bear interest from sixty (60) days after Idaho Power gives or receives notice of Seller's permanent
reduction of the Annual Net Firm Energy amount, until paid, at a rate equal to interest rates specified
in Idaho Code §28-22-104(2) or its successor Idaho Code provision in effect during each month of that
period. For purposes of this paragraph, neither reduced deliveries of Net Firm Energy due to short-term
below-normal, water conditions (paragraph 6.4) nor Idaho Power's voluntary termination in accordance
with paragraph 5.2.2 shall be considered a permanent curtailment. The Parties further agree that this
paragraph does not constitute a waiver by Idaho Power of its right to pursue its remedies under
paragraph 21.6 or by either Party of their right to an award of pre and post judgement interest, costs
and attorneys fees as permitted by law in any litigation arising out of this Agreement.
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21 .4 Security for Repayment Obligation -During the full term of this Agreement,
Seller will provide Idaho Power with adequate assurance that Seller will be able to repay the amounts
owing Idaho Power if Seller defaults under this Agreement. In accordance with Commission Order
Nos 21690 and 21800, and Declaratory Order 23949 and subject to the provisions of paragraph 21.2
above, this assurance will be provided as follows:
21.4.1 Insurance -Seller shall comply with the provisions of paragraph 14.2. If Seller
fails to comply, such failure will be an event of default.
(a) In the case of the liability insurance coverage, (paragraph 14.2.1), a
default will be a material breach and may only be cured by Seller supplying evidence that the
liability insurance coverage has been replaced or reinstated.
(b) For all other insurance coverages described in paragraph 14.2, the
default may be cured by replacement or reinstatement of the insurance, or by Seller posting
liquid security in accordance with paragraph 21.5 in an amount equal to one hundred percent
(100%) of the accumulated overpayment liability specified for that year in Appendix D.
21 .4.2 Debt Service Reserve Account -(a) Because the Facility is located on
the canal system of the Milner-Gooding Canal Project and therefore receives the benefits of the
American Falls Reservoir District No. 2's senior water rights, Idaho Power is willing to permit
Seller to establish a debt service reserve account until conforming low water insurance
becomes available. Said debt service reserve account will be separate from the maintenance
escrow account and shall be structured as follows:
(b) During the period of time in which the Facility acts as security for a first
mortgage lien which is senior to Idaho Power's security interest in the Facility as described in
paragraph 4.1.9 above, Seller shall maintain a debt service reserve account in cash or an
irrevocable standby letter of credit in an amount equal to twenty percent (20%) of the
Facility's estimated gross revenue for the first Contract Year rounded to the nearest $1,000.
(c) Upon full satisfaction of the above-referenced first mortgage lien and
when Idaho Power's security interest becomes the senior security interest in the Facility, the
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escrow manager will pay to Seller the amount in the debt service reserve account which
exceeds five percent (5%) of the Facility's estimated gross revenue for the next Contract Year
rounded to the nearest $1,000.
(d) The amount to be retained in the debt service reserve account will be
recalculated every five (5) years to reflect any increases or decreases in the adjustable payment
amount under paragraph 7.1.2 of this Agreement.
(e) During the period when the Facility is security for a first mortgage lien
that is senior to Idaho Power's lien, the escrow manager of the debt service reserve account
will be instructed to only release funds from the debt service reserve account to the holder of
the first mortgage lien. Funds from said account shall be released only when, and only to the
extent that Seller certifies to the escrow manager that after payment of all operating costs, the
Facility's revenues are insufficient to make .full debt service and/or lease payments on the
Facility.
(f) During the period when Idaho Power's security interest is the senior
security interest in the Facility, the escrow manager will be instructed to only release funds
from the debt service reserve account to pay operating costs for the Facility.
(g) For purposes of the debt service reserve account, operating costs are
limited to those costs necessary for the operation of the Facility such as taxes, insurance
expenses, lease payments and other ordinary and necessary operating expenses. Operating
costs shall not include any disbursements other than lease payments which would constitute
a profit or return on investment.
(h) After any release of funds by the escrow manager, Seller shall be
obligated to restore the debt service reserve account to the amounts provided for in paragraphs
21.4.2(b) and (c), which ever is applicable, prior to Seller disbursing funds which would
constitute a profit or return on investment. Until the debt service reserve account is fully
restored, Seller will, within sixty (60) days of the completion of each Contract Year, provide
the escrow manager and Idaho Power with a report prepared by Seller's outside accountants
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showing that Seller has not breached its obligations under this paragraph 21.4.2(h).
(i) Any breach of paragraph 21.4.2(h) by Seller will be an event of default
and will require posting liquid securitY in accordance with paragraph 21.5 in an amount equal
to one hundred percent (100%) of the accumulated overpayment amount specified for that
year in Appendix D.
21.4.3 Engineer's Certification -Every three (3) years for the first twelve (12)
years after the Operation Date, and every two (2) years thereafter during the full term of this
Agreement, Seller will supply Idaho Power with a Certification of Ongoing O&M from a
Registered Professional Engineer licensed in the State of Idaho, which Certification of Ongoing
O&M shall be in the form specified in Appendix F. Seller's failure to supply the required certi­
ficate will be an event of default. Such a default may be cured by Seller providing the required
certificate or by posting liquid security in accordance with paragraph 21.5 in an amount equal
to twenty percent (20%) of the accumulated overpayment liabilitY specified for that year in
Appendix D.
21.4.4 Maintenance Escrow -During the full term of this Agreement, Seller
shall maintain and fund the maintenance escrow account described in paragraph 4.1 .8 and
Commission Order No 21690. If at any time Seller fails to maintain or fully fund that
maintenance escrow account, such a failure will be an event of default. Such default may be
cured by reinstating the required reserve fund or by Seller posting liquid security in accordance
with paragraph 21.5 in an amount equal to twenty percent (20%) of the accumulated
overpayment liabilitY specified for that year in Appendix D.
21.4.5 Security Interests -During the full term of this Agreement, Seller shall
maintain compliance with all of the requirements of Idaho Power's securitY interests described
in paragraph 4.1.9 of this Agreement and Commission Order No 21690. Seller's failure to
comply with those requirements, will be an event of default and in addition to any other
remedies available under this Agreement, Commission Order No 21690, and the securitY
interests, Seller will be required by Idaho Power to post liquid securitY in accordance with
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paragraph 21.5 in an amount equal to thirty-five percent (35%) of the accumulated
overpayment liability specified for that year in Appendix D. Seller recognizes that in
accordance with Commission Order No 21690, an event of default under either or both of
paragraphs 21.4.3 or 21.4.4 constitutes an event of default under paragraph 21.4.5 and in
that event the obligation to post liquid security under paragraphs 21.4.3 through 21.4.5 is
cumulative.
21 .4.6 Licenses and Permits -During the full term of this Agreement, Seller
shall maintain compliance with all permits and licenses described in paragraph 4.1.1 of the
Agreement. In addition, Seller will supply Idaho Power with copies of any new or additional
permits or licenses Seller is required to obtain during the term of this Agreement including, but
not limited to, the Application for Permit to appropriate water within a reasonable time after
their issuance. At least every fifth Contract Year, Seller will update the documentation
described in paragraph 4.1 .1 . If at any time Seller fails to maintain compliance with the
permits and licenses described in paragraph 4.1.1 or to maintain its water rights, or to provide
the documentation required by this paragraph, such failure will be a default.
(a) In the case of non-compliance with the required governmental permits,
an event of default will be a material breach and may only be cured by Seller submitting to
Idaho Power evidence of compliance from the permitting agency.
(b) In the case of non-compliance with Seller's obligation to secure and
maintain adequate water rights, an event of default may be cured by Seller reacquiring the
required water rights or by posting liquid security in accordance with paragraph 21.5 in an
amount equal to one hundred percent (100.0%) of the accumulated overpayment liability
specified for that year in Appendix D.
21.5 Liquid Security -If, pursuanttothis Agreement or Commission OrderNo 21690,
Seller becomes obligated to post liquid security, such obligation may be satisfied by (1) Seller's
depositing cash in an escrow to be held and managed by a bank or savings & loan association located
and in good standing in the State of Idaho. The escrow holder and the escrow instructions will be
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acceptable to both Idaho Power and Seller. Payment of all taxes on the amounts deposited in the
escrow will be the obligation of the Seller. The liquid security escrow account will be maintained
separately from the maintenance reserve account described in paragraph 4.1.8; or (2) Providing liquid
security in the form of irrevocable standby letter{s) of credit, book entry certificate{s) of deposit or
other cash equivalents acceptable to Idaho Power. The banks, issuing the letters of credit and other
cash equivalents will be located and in good standing in the State of Idaho. Failure to maintain and
provide the liquid security required by this Agreement and Commission Order Nos 21690 and 21800
shall be an event of default.
21.6 Equitable Remedies -If as described in paragraph 21.3, Seller permanently
curtails all or part of its deliveries of Net Firm Energy to Idaho Power and (1) within three (3) years
after said curtailment Seller or its successors or assigns sells or delivers or attempts to sell or deliver
said curtailed capacity or energy to any entity other than Idaho Power without Idaho Power's prior
written consent, such sale or delivery or attempt sale or delivery shall be a breach of this Agreement;
or (2) if, within three (3) years after such permanent curtailment Seller or its successors or assigns
attempts to require Idaho Power to purchase said permanently curtailed Net Firm Energy at a rate that
exceeds the rates contained in this Agreement, such attempt will be a breach of this Agreement. The
remedy at law for the above described breaches shall be inadequate and Idaho Power shall be entitled
to injunctive relief and specific performance of this Agreement. The provisions of this paragraph 21.6
shall survive any termination of this Agreement (other than an optional termination under paragraph
5.2) for the periods provided for in this paragraph.
21.7 Refund of Lump Sum Repayment -If Seller has made a lump sum repayment
as required by paragraph 21.3 and;
(1) Within three (3) years of said payment Seller becomes capable of resuming
production of the curtailed Net Firm Energy and offers to resume sales to Idaho Power at the
rates, terms and conditions contained in this Agreement for the number of Contract Years that
were remaining under this Agreement at the time of the permanent curtailment; then
(2) Idaho Power will resume its purchases from the Facility and will refund
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a portion of the lump sum repayment amount as follows:
(a) If sales resume within one (1) year of the payment of the lump sum
repayment amount, Idaho Power will refund 90% of the lump sum repayment amount;
(b) If sales resume within two (2) years of the payment of the lump sum
repayment amount, Idaho Power will refund 85 % of the lump sum repayment amount;
(c) If sales resume within three (3) years of the payment of the lump sum
repayment amount, Idaho Power will refund 85 % of the lump sum repayment amount.
ARTICLE XXII: GOVERNMENTAL AUTHORIZATION
This Agreement is subject to the jurisdiction of those governmental agencies having
control over either Party of this Agreement.
ARTICLE XXIII: COMMISSION ORDER
This Agreement shall become finally effective upon the Commission's approval of all
terms and provisions hereof without change or condition and declaration that all payments to be made
to Seller hereunder shall be allowed as prudently incurred expenses for ratemaking purposes.
ARTICLE XXIV: SUCCESSORS AND ASSIGNS
This Agreement and all of the terms and provisions hereof shall be binding upon and
inure to the benefit of the respective successors and assigns of the Parties hereto, except that no
transfer by merger or otherwise nor any assignment hereof by Seller shall become effective without
the written consent of Idaho Power being first obtained. Such consent shall not be unreasonably
withheld. This article shall not prevent a financing entity with recorded or secured rights from
exercising all rights and remedies available to it under law or contract. Idaho Power shall have the right
to be notified by the financing entity that it is exercising such rights or remedies.
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(
ARTICLE XXV: MODIFICATION
No modification to this Agreement shall be valid unless it is in writing and signed by
both Parties and subsequently approved by the Commission.
ARTICLE XXVI: TAXES
26.1 Each Party shall pay before delinquency all taxes and other governmental
charges which if failed to be paid when due could result in a lien upon the facility or Interconnection
Facilities.
ARTICLE XXVII: NOTICES
All written notices under this Agreement shall be directed as follows, and shall be
considered delivered when deposited in the U S Mail, first-class postage prepaid, as follows:
To Seller:
To Idaho Power:
President
Contractor's Power Group, Inc.
Box 820
Twin Falls, ID 83303-0820
Vice President, Power Supply
Idaho Power Company
POBox 70
Boise, Idaho 83707
ARTICLE XXVIII: ADDITIONAL TERMS AND CONDITIONS
This Agreement includes the following appendices, which are attached hereto and
included by reference:
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
Appendix F
-Standards for Interconnection and Metering
-Special Facilities, Point of Delivery,
Metering, and Operation Date
-Schedule of Required Licenses and Permits
Lump Sum Refund Payment
-Operating Instructions for Plants over 750 kW
-Engineer's Certifications
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(
ARTICLE XXIX -ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of the Parties concerning the subject
matter hereof and supersedes all prior or contemporaneous oral or written agreements between the
Parties concerning the subject matter hereof.
IN WITNESS WHEREOF, The Parties hereto have caused this Agreement to be executed
in their respective names on the dates set forth below:
IDAHO POWER COMPANY CONTRACTOR'S POWER GROUP, INC.
BY---::#9-~~~~~~_
Dated __ ic_e..l.~'Sr,L;;Z.L.: ... d ~;;cn'7~"-' .L.p-,,~_w«:.e_r_s_u_p_P_IY ___ _
1.
2.
3.
4.
"Idaho Power"
H F Wright
B L Kline
R W Stahman
W AMott
5.
6.
7.
J M Collingwood
L R Gunnoe
J W Marshall
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STATE OF IDAHO
County of Ada
) ss
)
#J..
On this ~ day of , 1993, before me, the undersigned, a
Notary Public, personally appeared Jan B Pa wood, personally known, who being duly sworn, did say
that he is the Vice President, Power Suppl of the corporation that executed the within instrument,
and acknowledged to me that such corporation executed the same as the free act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day
and year in this certificate first above written.
STATEOF~~~~~
County of .,:-rc...:.::::....::.:,-,-=c:=
) ss
)
~~UlOU otary PUfic for Idaho
Residing at Boise, Idaho
On thiso{ t/ ~ay of , 1993, before me, the undersigned, a
Notary Public, personally appeared Jo J Strau har, personally known, who being duly sworn, did
say that he is the President of the corporation that executed the within instrument, and acknowledged
to me that he executed the same as the free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day
and year in this certificate first above written.
(NOTARIAL SEAL) ~~ NOfYPUbliCcr;;~
Residing at: A#nZ-u
jI
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APPENDIX A
STANDARDS FOR INTERCONNECTION AND METERING
A-1 GENERAL PROVISIONS
A-1 .1 It is the policy of Idaho Power to permit Seller to operate its Facility in parallel with Idaho
Power's electric system. whenever this can be done without adverse effect to Idaho Power's
equipment, personnel or other customers.
A-1.2 These guidelines contain the minimum metering, interconnection, protection, operation, and
communications requirements for the safe and effective parallel operation of Seller's Facility with Idaho
Power's system. Although these guidelines .are established to provide a uniform approach for
evaluating Seller's generation projects. each interconnection must be examined by Idaho Power indivi­
dually. Idaho Power and the Seller will be guided by this document, which is a part-of the Firm Energy
Sales Agreement, in planning an interconnection between Idaho Power's system and the Seller.
A-1.3 Idaho Power may provide limited technical assistance for Seller, but will not perform any
engineering, construction or repair work on power production equipment.
A-2 GENERAL DESIGN CONSIDERATIONS
A-2.1 All Seller generators larger than twenty (20) kV A shall be three-phase generators connected
to three-phase circuits. Generators twenty (20) kVA and smaller may be either three-phase or single­
phase, as approved by Idaho Power.
Due to physical limitations within Idaho Power's transmission and distribution systems,
induction machine sizes will be limited to confine voltage flicker within acceptable limits. Each
generation site is unique and Idaho Power will determine the appropriateness of any proposed machine
type for the site and interconnection.
A-2.2 Except in certain instances to be determined by Idaho Power, Seller'S generator(s) shall be
isolated from Idaho Power's system by a transformer. Transformer type and connection will be
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(
specified by Idaho Power. The Seller may be required to limit the fault current contribution to Idaho
Power's system by generator impedence, neutral grounding, transformer connections or other means.
A-2.3 Idaho Power will not assume any responsibility for protection of the Seller's generator or of any
other portion of the Seller's electrical equipment. The Seller is fully responsible for protecting its
equipment from faults or disturbances on Idaho Power's system. For example, most transmission and
distribution line circuit breakers on Idaho Power's system will reclose automatically after they have
attempted to clear a fault. The reclose time delays and system impedances are available from Idaho
Power and should be considered very carefully by the Seller to determine if damage to the Seller's
facility is possible. Dead line and synchronism check systems can be installed, at Seller'S expense,
that will minimize the possibility of a line reclosing into a generator while it is still connected to the
system.
A-2.4 Seller is hereby notified that certain conditions on Idaho Power's system may cause negative
sequence currents to flow in the Seller's generator. It is the sole responsibility of the Seller to protect
its equipment from excessive negative sequence currents, reverse power flow, and single phasing.
A-3 METERING AND TELEMETRY REQUIREMENTS
A-3.1 Unless otherwise agreed by the Parties, metering will be provided for recording net output of
the Facility and will be separate from any metering of Seller's load. Metering required will be
determined by Idaho Power on a case-by-case basis, but will generally follow the guidelines below:
A-3.1.1 Capacity Under 750 kW -Two kWh/demand meters; one measuring power flow
into Seller's facilities and one measuring power flow into Idaho Power's system;
A-3.1.2 Capacity of 750 kW to 4999 kW - A bi-directional, electronic meter installation
with load profiling and communication port capability will be installed, and connected to the
project voice communications circuit supplied by the developer with a first priority given to
Idaho Power's use of said communication circuit. An electro-mechanical kWh backup meter
will also be installed. Additionally, if a project is interconnected with Idaho Power's
transmission system, all necessary telemetry and communication equipment and a dedicated
voice Quality unconditioned data line may be installed to provide continuous instantaneous
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F (
telemetering of net generation to Idaho Power's Designated Dispatch Facility;
A-3.1.3 Capacity of 5000.kW and Above -Abi-directional,electronicmeterinstallation
with load profiling and communication port capability will be installed, and connected to a voice
communications circuit supplied by the developer with a first priority given to Idaho Power's
use of said communication circuit. An electro-mechanical kWh backup meter will also be
installed. In addition, all necessary telemetry and communication equipment and a dedicated
voice quality unconditioned data line will be installed to provide continuous instantaneous
telemetering of net generation to Idaho Power's Designated Dispatch Facility.
A-4 FACILITY PROTECTION
A-4.1 The Seller has full responsibility for the maintenance of its generating equipment and the
equipment protecting the Facility. If, in the opinion of Idaho Power, the Seller has failed to provide
proper maintenance of the Facility or its protection equipment, and this failure could adversely impact
Idaho Power or other Idaho Power customers, Idaho Power can require the Seller to cease parallel
operation.
A-5 SYNCHRONOUS GENERATORS
A-5.1 Idaho Power or the Seller may specify a governor. If a governor is used, the governor
characteristics shall be capable of adjustment to at least five percent (5%) speed droop. The initial
droop setting will be five percent (5%). Idaho Power may specify changes in the setting within the
five percent (5%) capability.
A-5.2 A check interlock for synchronizing of the Seller's generator(s) is required.
A-5.3 Synchronous generators shall be capable of operating continuously at maximum power output
within five percent (5%) of rated voltage and anywhere within a power factor range of from ninety
percent (90%) lagging to ninety-five percent (95%) leading.
Unless otherwise approved by Idaho Power, synchronous generators shall be equipped with
an excitation system and voltage regulator that are capable of automatically controlling generator
voltage over the full range of generator power and reactive capability. In some cases, depending upon
system requirements, one or more of the following control methods may be required, as specified in
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Appendix B:
1} a power factor regulator may be required as well as a voltage regulator;
2} a programmable controller capable of varying the reactive output based upon a preset
time schedule;
3} a remote signal provided by Idaho Power to adjust the voltage or power factor regulator
settings. Idaho Power will provide this remote signal from within Idaho Power's
system and transmit the signal to the Facility at the Seller's expense, as specified in
B-ll of Appendix B.
The generator excitation system shall have over and under excitation limiter equipment which
will permit voltage regulator action to control the reactive output within the range of the generator's
capability .
The reactive capability of the Facility shall be operated as specified by Idaho Power, within the
generator reactive capability, to regulate either the interconnection voltage or Facility output power
factor or both. Idaho Power will provide the desired voltage, power factors, and schedules required
by the Seller to set voltage regulators, power factor regulators and programmed or remote signal
controllers. Idaho Power may change these desired values from time to time as system requirements
change.
If the Facility is not operated to control reactive output in the manner specified and after
notification, or the Seller does not make necessary corrections within a reasonable time, a default will
be declared pursuant to Article XXI.
A-5.4 Due to the ability of large synchronous generators to influence Idaho Power's system,
protective and control relaying in addition to the usual voltage frequency, and fault relaying will be
specified by Idaho Power. This will consist of generator relaying for phase-to-phase and three-phase
fault detection. Idaho Power will specify the relay type and determine settings. This relay will be
tested annually by Idaho Power and the actual cost of this testing will be paid by the Seller.
A-6 INDUCTION GENERATORS
A-6.l Overvoltage can become a serious problem when an induction generator and a portion of the
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transmission or distribution facilities are isolated from the system. Overvoltage relaying shall be
provided that will open the generator breaker in the event that the voltage reaches predetermined limits
consistent with the overvoltage capability of the generator and the system. Undervoltage protection
may also be required. On larger units, underfrequency and overfrequency relaying may both be
required.
A-S.2 Induction generators require reactive support to operate. The supplemental reactive required
is that amount required to correct the Facility to unity power factor. The reactive may be supplied by
either Idaho Power's system or from capacitive correction at the Facility or both. Idaho Power will
charge the Seller (as specified in Appendix B) for reactive that is provided from Idaho Power's system.
At some Facilities, because of system considerations, it may not be practical to provide all of
the reactive compensation at the Facility. In these instances, Idaho Power shall specify the power
factor and compensation necessary at the Facility.
The Seller will have the option to furnish the reactive compensation that is required at the
Facility. If the Seller furnishes the reactive compensation, the Facility must be operated at a power
factor that is within five percent (5%) of the specified power factor. The Seller must also design the
Facility to avoid possible overvoltage that can occur under certain conditions when capacitors are
applied to the generator terminals.
A-7 DC IQ AC CONVERTERS
A-7.l Direct current generators may be operated in parallel with Idaho Power's system through a
synchronous inverter. The inverter installation will be designed such that an Idaho Power system
interruption will result in the immediate removal of the inverter power flow to Idaho Power. Harmonics
and/or spurious frequencies generated by the Seller's generator-inverter combinations must be limited
to avoid causing any reduction in quality of electric service to Idaho Power's customers.
A-S SWITCHING REQUIREMENTS
A-S.l Idaho Power reserves the right to open and secure by lock any disconnecting device without
prior notice to Seller for any of the following reasons:
A-S.l.l System emergency;
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A-S.1.2 Inspection ofthe Seller's Facility protective equipment reveals a condition which
might adversely impact Idaho Power or Idaho Power's customers;
A-S.l.3 Seller's generating equipment interferes with Idaho Power's customers, or with
Idaho Power's system.
A-S.2 Seller shall maintain a written record of all operating (opening and closing) by Seller of the
Seller's interconnection with Idaho Power. Each operation will be recorded by the date, hour and
minute and will include the generator kWh reading at the time of the operation. This record will be
maintained on a monthly basis and the original will be mailed to Idaho Power on the first business day
of the following month. Idaho Power will provide the forms necessary for filing this monthly switching
report.
A-9 GENERATION SCHEDULING AND REPORTING
A-9 GENERATION SCHEDULING AND REPORTING
A-9.1 For Projects under 750 kW
A-9.1.1 Each time the Seller either opens or closes the Facility's interconnection with Idaho Power,
the date, time, and kWh reading of the generator(s) will be recorded on the Monthly Power Production
and Switching Report (Form CAD-A-l) provided by Idaho Power. This record will be maintained on a
monthly basis.
A-9.1.2 Within the 24-hour period following 12:00 noon on the last day of each month, the Seller
will read the meter(s) which record Facility generation (Facility Output), Station Use (Local Service).
and Auxiliary Service (if any) and enter those readings on the same Monthly Power Production and
Switching Report designated in paragraph A-9.l.l above.
A-9.1.3 The written record of the end-of-month meter readings on the Monthly Power Production
and Switching Report, subject to subsequent review and correction by Idaho Power, will be the basis
of payment for energy purchased by Idaho Power from the Seller. An adjustment in the kWhs
delivered will be made to compensate for the Losses in B-6.
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1\
A-9.l.4 At the end of each month, the Monthly Power Production and Switching Report will be
mailed to:
Idaho Power Company
Operations and Joint Facilities Accounting
POBox 70
Boise, Idaho 83707
A-9.l.5 Payment to the Seller will be made no later than thirty (30) days following receipt of the
Monthly Power Production and Switching Report by Idaho Power.
A-9.2 For Projects 750 kW and Larger
, A-9.2.l In addition to the requirements of paragraph A-9.l.l through A-9.l.5, Projects larger than
750 kW must meet the requirements of Appendix E.
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APPENDIX 8
SPECIAL FACILITIES, POINT OF DELIVERY, METERING,
AND OPERATION DATE
PROJECT NO 31615154
MILE 28 HYDRO PROJECT
8-1 DESCRIPTION OF FACILITY
The Seller's Facility is described as two induction generators with nameplate ratings of 750 kW
each, 480 Volt, three phase, 60 hertz, driven by Kaplan turbines.
8-2 LOCATION OF FACILITY
8-3
The Facility is located in the SW Quarter of Section 7, Township 8 South, Range 20 East, 80ise
Meridian, Jerome County, Idaho.
SCHEDULED OPERATION DATE
Seller has selected May 15, 1994, as the Scheduled Operation Date and April 15, 1994, as the
First Energy Date. In making these selections, Seller recognizes that to allow for an adequate
testing of the Facility's degree of completion and reliability, it must achieve its First Energy Date
at least thirty (30) days prior to the Operation Date. Idaho Power, based on the information
supplied by the Seller, will schedule its construction so that all Special Facilities, Disconnection
Equipment and Metering Equipment will be completed in time so as not to delay Seller achieving
the First Energy Date. However, if Seller fails to pay the costs specified in 8-11 below at the
time specified therein, or materially changes the specifications or design of the Facility or Seller­
furnished Interconnection Facilities from what was previously provided to Idaho Power, Idaho
Power may be required to reschedule its construction of these facilities which could adversely
impact Seller's ability to achieve its scheduled specified First Energy Date.
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8-4 FAILURE TO ACHIEVE OPERATION DATE
If Seller has not achieved the Operation Date within eleven (11) months of the Scheduled
Operation Date, such failure shall be deemed to be an event of default pursuant to Article XXI.
8-5 POINT OF DELIVERY
The Point of Delivery of energy from the Seller to Idaho Power will be where the Seller's 35 kV,
three phase distribution line interconnects with Idaho Power's fused disconnects located
approximately 3 miles south west of the project site in the SW 1/4 of Section 29, Township 8
South, Range 20 East, Boise Meridian, Jerome County, Idaho.
8-6 LOSSES
Until modified by mutual agreement, Losses shall be set at 2.00% of the metered energy
delivered. When Seller has supplied Idaho Power with data needed to properly analyze the
Losses associated with the Facility, Idaho Power and Seller will review that data and re-set the
loss factor for the Facility. If the Parties are unable to agree, they will submit the dispute to the
Commission for resolution. Any adjustment will be retroactive to the First Energy Date.
8-7 METERING AND TELEMETRY
The Metering Equipment will be on the 480 Volt side of the Seller's step-up transformer. Idaho
Power provided Metering Equipment will consist of: current and potential transformers, a meter
enclosure, meter test blocks, an electronic bidirectional meter for measuring net generation, and
all meter wiring. Seller provided metering equipment will consist of all conduit and junction
boxes from the metering transformers to the meter enclosure. Seller will install all Seller
provided material as well as the metering transformers and the enclosure. Seller will arrange for
and make available at Seller's cost a telephone circuit dedicated to Idaho Power's use
terminating in an RJ-11 receptacle at the meter enclosure. The meter will register kilowatt-hours
and kilowatts of demand. Idaho Power provided meter equipment will be owned and maintained
by Idaho Power, with total cost of purchase, installation, operation, and maintenance, including
administrative cost to be reimbursed to Idaho Power by the Seller.
8-8 SPECIAL FACILITIES
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Idaho Power will provide a fused disconnect with pole and other necessary materials at the point
of delivery and the upgrade of two 34.5 kV capacitor bank control circuits. The total cost of
these facilities will be reimbursed to Idaho Power by the Seller.
8-9 REACTIVE POWER
Total reactive power required to be supplied by Idaho Power to the Seller is 808 KVAR, based
on information provided by the Seller. Idaho Power will install and maintain facilities on its
system so as to meet this requirement with total cost of installation to be reimbursed to Idaho
Power by the Seller.
B-10 DISCONNECTION EQUIPMENT
Disconnection Equipment is required to insure that the Seller's Facility will be disconnected from
Idaho Power's system in the event of a disturbance on either Idaho Power's system or the
Seller's Facility. This equipment is for the protection of Idaho Power's equipment only and will
be located at the Seller's Facility. Idaho Power will supply the disconnection equipment which
consists of three 15 kVA transformers with fused disconnects, a 34.5 kV recloser with control
enclosure containing relays and associated logic, 34.5 kV main disconnects, poles, conductor,
arresters, batteries and other miscellaneous hardware. The Seller will provided approximately
50 feet of three phase 35 kV primary underground cable and a 34.5/19.9 kV grounded wye to
4801277 V grounded wye padmounted transformer. Seller will install all Seller supplied
equipment, control wire and conduit necessary for the operation of the disconnection equipment.
Idaho Power will supply details for the disconnection panel and will test the equipment prior to
operation of the Facility. Seller will provide drawings of their interconnection wiring for
engineering approval before installation. The total cost of the disconnection equipment,
connection and testing will be reimbursed to Idaho Power by the Seller.
8-11 COSTS
The cost of Special Facilities is $5,000. The cost of the metering equipment is $6,129. The
cost of reactive power supplied is $6,787. The cost of the disconnecting equipment is
$47,680. The total cost to be paid by the Seller is $65,596. This represents the amount that
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will be charged by Idaho Power if the Seller makes the payment on or before September 6,
1993. If the Seller does not make this payment by the specified date, the costs will be subject
to update. Idaho Power will not schedule construction or order materials which are not
ordinarily maintained in Idaho Power's inventory until payment has been made. In addition to
the installation and construction charges above, during the term of this Agreement, Seller will
pay Idaho Power the operation and maintenance charge specified in Schedule 72
INTERCONNECTIONS TO NON-UTILITY GENERATION or its successor schedules(s). The total
cost shown above is an estimate calculated on the basis of average costs. When the actual
total cost is determined, Idaho Power will adjust the total cost amount to reflect the actual total
cost incurred by Idaho Power. Beginning with the month of this adjustment, the operation and
maintenance charges will also be adjusted. When the actual total cost is known, within sixty
(60) days Idaho Power will refund any overpayment or Seller will remit any underpayment.
B-12 SALVAGE
No later than sixty (60) days after the termination or expiration of this Agreement, Idaho Power
will prepare and forward to Seller an estimate of the remaining value of those Idaho Power
furnished Interconnection Facilities described in this Appendix, less the cost of removal and
transfer to Idaho Power's nearest warehouse, if the Interconnection Facilities will be removed.
If Seller elects not to obtain ownership of the Interconnection Facilities but instead wishes that
Idaho Power reimburse the Seller for said Facilities the Seller may invoice Idaho Power for the
net salvage value as estimated by Idaho Power and Idaho Power shall pay such amount to Seller
within thirty (30) days after receipt of the invoice. Seller shall have the right to offset the
invoice amount against any present or future payments due Idaho Power.
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APPENDIX C
SCHEDULE OF REQUIRED LICENSES AND PERMITS
1 . Evidence of compliance with Part 1 of the Federal Power Act. Acceptable evidence of
compliance will be an Order from FERC: (1) issuing a valid License for the Facility, or (2) validly
exempting the Facility from Licensing.
2. Approved Application for Permit to appropriate water for power production purposes issued by
the Idaho Department of Water Resources.
3. Evidence of compliance with Subpart B of 18 CFR §292.207.(a).
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APPENDIX D
LUMP SUM REFUND PAYMENT FOR PERMANENT CURTAILMENT
OF PORTION OR ALL OF ANNUAL NET ENERGY AMOUNT
UNDER 35-YEAR CONTRACT
DOLLARS PER ANNUAL MEGAWATT HOUR
Contract Year
of Curtailment
Commencement
Facility Operation Date
l.lliM
1 _ ...••.....•..................• 32
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 67
3 •••....•.....•.......•......... 105
4 ...••.....••. _ ••........•.•.... 125
5 _ .•••..........•......•........ 146
6 .••••.••••...••......•.•....... 167
7 ......•........................ 189
8 ...•...•.....•........•........ 211
9 ....................•.......... 233
10 .....•........................ 255
11 .............................. 277
12 ......•.............•......... 299
13 .............................. 320
14 .••...•....................... 341
15 .............................. 362
16 .............................. 382
17 .............................. 401
18 .•....•................•...... 419
19 ..•.........•................. 435
20 •............................. 449
21 .............................. 461
22 ...•.......................... 470
23 .............................. 476
24 .••....................•...... 478
25 ....•.......•.............•... 476
26 .............................• 469
27 ••••....•...............•..... 456
28 ...•••.....•....•............. 435
29 •..•...••..................... 408
30 ...•••...••.•................. 371
31 ............•.....•........... 323
32 .............................. 265
33 .............................. 192
34 .............................. 105
35 ............................... 52
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APPENDIX E
OPERATING INSTRUCTIONS FOR PLANTS OVER 750 KW
1 . Prior 12 initial start-up at least .2!!.!l. day in advance the Project shall:
A. Provide Idaho Power's System Scheduling at the Boise Bench System Dispatching
Center with an estimate of the hourly generation that is expected to be produced
during the first scheduled test day. The phone number for System Scheduling is listed
below.
B. Notify the Division Substation Supervisor of project start up plans. The phone number
is listed below.
C. The kWh meter should be read and entered on the Monthly Power Production and
Switching Report (Form No: Cogen CAD-A-1).
2. Before 10:00 a.m. on each normal work day, after the initial start-up, the project will report
to the system scheduling office the previous day's actual generation based upon midnight to
midnight meter readings and the estimate of generation planned for the following day or
days. The phone number to report the actual generation and scheduling estimate is listed
below. Note that the System Scheduling number is answered only between the hours of 8
a.m. to 5 p.m. Mountain Time, on weekdays and that generation estimates must be provided
for weekend days and holidays.
3. Each time the generator breaker is closed or opened (including testing and normal operation),
Idaho Power's system dispatchers must be notified by phone as soon as possible. Prompt
reporting is very important. The Designated Dispatch Facility is manned 24 hours a day, 7
days a week, and the phone number is listed below.
4. In addition to promptly notifying the system dispatchers, the record of each breaker opening
and closing must be entered on the Monthly Power Production and Switching Report
mentioned in 1-C above.
5. For questions or problem concerning:
Power Scheduling:
System Dispatching:
Metering: Meter Engineer -Boise
or
Division Metering Supervisor
Payette
Boise
Twin Falls
Pocatello
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[phone]
[phone]
[phone]
[phone]
[phone]
[phone]
[phone]
Substations: Division Substation Supervisor
Billing:
Contracts:
Payette
Boise
Twin Falls
Pocatello
Operations and Joint
Facilities Accounting -Boise
Customer Generation -Boise
6. Toll free numbers for Operating Reporting:
System Scheduling
System Dispatching
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[phone]
[phone]
[phone]
[phone]
[phone]
[phone]
1-800-356-4328
1-800-348-4328
APPENDIX F
ENGINEER'S CERTIFICATION OF DESIGN &
CONSTRUCTION ADEQUACY
The undersigned _______________ , on behalf of himself and
________________ , hereinafter collectively referred to as "Engineer", hereby
states and certifies to Idaho Power as follows:
1 . That Engineer is a Licensed Professional Engineer in good standing in the State of
Idaho.
2. That Engineer has reviewed the Firm Energy Sales Agreement, hereinafter
"Agreement" , between Idaho Power as Buyer, and
___________ as Seller, dated ____________ '
3. That the cogeneration or small power production project which is the ,subject of the
Agreement and this Statement is identified as IPCo Facility No _______ and is further
designated as Federal Energy Regulatory Commission Hydro Project No _____ and is hereinafter
referred to as the "Project".
4. That the Project, which is commonly known as the
________________ Project, is located in Section ___ , Township ___ ,
Range ___ , Boise Meridian, ________ County, Idaho.
5. That Engineer recognizes that the Agreement provides for the Project to furnish
electrical energy to Idaho Power for a _________ ,) year period.
6. That Engineer has substantial experience in the design, construction and operation
of electric power plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project
and has made the analysis of the plans and specifications independently.
8. That Engineer has reviewed the engineering design and construction of the Project,
including the civil work, electrical work, generating equipment, water conveying equipment, Seller
furnished Interconnection Facilities and other Project facilities and equipment.
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(
9. That the Project has been constructed in accordance with said plans and
specifications, all applicable codes and consistent with Prudent Electrical Practices as that term is
described in the Agreement.
10. That the design and construction of the Project is such that with reasonable and
prudent operation and maintenance practices by Seller, the Project is capable of performing in
accordance with the terms of the Agreement and with Prudent Electrical Practices for a
______ (_) year period.
11. That Engineer recognizes that Idaho Power, in accordance with paragraph 5.3(2)
of the Agreement, in interconnecting the Project with its system, is relying on Engineer's
representations and opinions contained in this Statement.
12. That Engineer certifies that the above statements are complete, true and accurate
to the best of his knowledge and therefore sets his hand and seal below.
By ____ ~=-~--~----_
(P.E. Stamp)
Date ____________ _
STATE OF IDAHO
) ss
County of ________ )
On this __ day of ________ , 1 9 __ , before me, the undersigned, a Notary
Public, personally appeared __________ " personally known, who being duly sworn, did
say that he is the individual who executed the within instrument, and acknowledged to me that he
executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day
and year in this certificate first above written.
(NOTARIAL SEAL) Notary Public for Idaho
Residing at: _______ _
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APPENDIX F
ENGINEER'S CERTIFICATION OF
OPERATIONS & MAINTENANCE POLICY
The undersigned _______________ , on behalf of himself and
________________ " hereinafter collectively referred to as "Engineer", hereby
states and certifies to Idaho Power as follows:
1 . That Engineer is a Licensed Professional Engineer in good' standing in the State of
Idaho.
2. That Engineer has reviewed the Firm Energy Sales Agreement, hereinafter
"Agreement", between Idaho Power as Buyer, and
___________ as Seller, dated ___________ _
3. That the cogeneration or small power production project which is the subject of the
Agreement and this Statement is identified as IPCo Facility No _______ and is further
designated as Federal Energy Regulatory Commission Hydro Project No _____ and is hereinafter
referred to as the "Project".
4. That the Project, which is commonly known as the
________________ Project, is located in Section ___ , Township __ _
Range ___ " Boise Meridian, ________ County, Idaho.
5. That Engineer recognizes that the Agreement provides for the Project to furnish
electrical energy to Idaho Power for a ________ I year period.
6. That Engineer has substantial experience in the design, construction and operation
of electric power plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project.
8. That Engineer has reviewed and/or supervised the review of the Policy for Operation
and Maintenance ("O&M") for this Project and it is his professional opinion that, provided said Project
has been designed and built to appropriate standards, adherence to said O&M Policy will result in the
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Project's producing at or near the design electrical output, efficiency, and plant factor for a
__________ ( __ ) year period.
9. That Engineer recognizes that Idaho Power, in accordance with paragraph 5.3(2)
of the Agreement, is relying on Engineer's representations and opinions contained in this Statement.
10. That Engineer certifies that the above statements are complete, true and accurate
to the best of his knowledge and therefore sets his hand and seal below.
STATE OF IDAHO )
) ss
County of )
By ___ ~~~~ __ __
(P.E. Stamp)
Date __________ _
On this __ day of , 1 9 __ , before me, the undersigned, a Notary
Public, personally appeared , personally known, who being duly sworn, did
say that he is the individual who executed the within instrument, and acknowledged to me that he
executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day
and year in this certificate first above written.
(NOTARIAL SEAL) Notary Public for Idaho
Residing at: _______ _
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(
APPENDIX F
ENGINEER'S CERTIFICATION OF ONGOING
OPERATIONS AND MAINTENANCE
The undersigned _____________ ~, on behalf of himself and
________________ , hereinafter collectively referred to as "Engineer", hereby
states and certifies to Idaho Power as follows:
1 . That Engineer is a Licensed Professional Engineer in good standing in the State of
Idaho.
2. That Engineer has reviewed the Firm Energy Sales Agreement, hereinafter
"Agreement", between Idaho Power as Buyer, and
___________ as Seller, dated ___________ _
3. That the cogeneration or small power production project which is the subject of the
Agreement and this Statement is identified as IPCo Facility No _______ and is further
designated as Federal Energy Regulatory Commission Hydro Project No _____ and is hereinafter
referred to as the "Project".
4. That the Project, which is commonly known as the
________________ Project, is located in Section ___ " Township ___ '
Range ___ , Boise Meridian, ________ County, Idaho.
5. That Engineer recognizes that the Agreement provides for the Project to furnish
electrical energy to Idaho Power for a _____ , ____ ,) year period.
6. That Engineer has substantial experience in the design, construction and operation
of electric power plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project.
8. That Engineer has made a physical inspection of said Project, its operations and
maintenance records since the last previous certified inspection, and the Project's Policy for Operation
and Maintenance ("O&M") bearing the words "CERTIFIED FOR IDAHO P.U.C. SECURITY APPROVAL"
and the Stamp of the Certifying Engineer. It is Engineer's professional opinion, based on the Project's
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appearance, that its ongoing operation and maintenance has been substantially in accordance with said
O&M Policy; that it is in reasonably good operating condition; and that if adherence to said O&M Policy
continues, the Project will continue producing at or near its design electrical output, efficiency, and
plant factor for _____ { __ I years.
9. That Engineer recognizes that Idaho Power, in accordance with paragraph 21.4.3
of the Agreement, is relying on Engineer's representations and opinions contained in this Statement.
10. That Engineer certifies that the above statements are complete, true and accurate
to the best of his knowledge and therefore sets his hand and seal below.
By ______ ~~~--~----__
(P.E. Stamp)
Date ________ ~ ______ ___
STATE OF IDAHO )
) ss
County of )
On this __ day of ________ , 19 __ , before me, the undersigned, a Notary
Public, personally appeared ___________ ,' personally known, who being duly sworn, did
say that he is the individual who executed the within instrument, and acknowledged to me that he
executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day
and year in this certificate first above written.
(NOTARIAL SEAL) Notary Public for Idaho
Residing at: _______ _
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(
!Intra-Company correspondence)
Re: Contractor's Power Group, Inc -Mile 28
(lPCo Project 31615154)
To: Legal Department -Original
R K Christensen/R C Allphin
R P Meyer
J D Roholt
J H Willmorth/C A Jones
I M Staab/J D Collins
Date: November 19, 1993
From: John Ferree (jc;
Attached for your file are four pages which have been changed in the Firm
Power Sales Agreement for the above referenced project. These changes were
necessitated by a Commission Order regarding the insurance requirements.
As the changes were made with the approval of the Contractor's Power Group
and prior to Idaho Power's submitting the Agreement to the IPUC for approval, no
amendment will be required. Please insert each of the attached sheets into your
copy of the Agreement and destroy the sheets originally received.
If you have any questions, please do not hesitate to give me a call.
JF/ekg
Enclosures (4)
(
are commonly and ordinarily used in electrical engineering and operations to operate electric equipment
lawfully and with safety, dependability, efficiency and economy.
1.15 "Replacement Cost" -The replacement value of damaged property without
deduction for depreciation.
1.16 "Scheduled Operation Date" -The date specified in Appendix B when Seller
anticipates achieving the Operation Date.
1.17 "Schedule 72" -Idaho Power's Tariff No 101, Schedule 72 or its successor
schedules as approved by the Commission.
1 .1 8 "Season" -The three time periods identified in Article VI.
1 .19 "Seasonal Net Firm Energy" -The amount of Net Firm Energy Seller estimates
it will deliver to Idaho Power at the Point of Delivery during each Season.
1.20 "Special Facilities" -Additions or alterations of transmission and/or distribution
lines and transformers as described in Appendix B and Schedule 72 required to safely interconnect the
Seller's electric generation plant to the Idaho Power's system.
1.21 "Station Use" -Electric energy which is used solely to operate the Facility's
equipment which is auxiliary or directly related to the production of electricity and which, but for the
generation of electricity, would not be consumed by Seller.
1.22 "Surplus Energy" -Electric energy which is delivered and accepted prior to the
Operation Date or which Seller does not commit to provide on a long-term average basis for the full
term of the Agreement.
1.23 "Total Cost of the Facility" -The total Replacement Cost of structures,
equipment and appurtenances.
ARTICLE Ii: NO RELIANCE ON IDAHO POWER
2.1 Seller Independent Investigation -Except for the Disconnection Equipment and
any other facilities exclusively within the control of Idaho Power, Seller warrants and represents to
Idaho Power that in entering into this Agreement and the undertaking by Seller of the obligations set
forth herein, Seller has investigated and determined that it is capable of performing hereunder and has
not relied upon the advice, experience or expertise of Idaho Power in connection with the transactions
contemplated by this Agreement.
2.2 Seller Independent Experts -Except for the Disconnection Equipment and any
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13.8 Contact Prior to Curtailment -Idaho Power will make a reasonable attempt to
contact Seller prior to exercising its rights to curtail, interrupt or reduce deliveries from Seller. Seller
understands that in the case of emergency circumstances, no notice will be given to Seller prior to
interruption, curtailment, or reduction.
ARTICLE XIV: INDEMNIFICATION AND INSURANCE
14.1 Indemnification -Each Party shall agree to hold harmless and to indemnify the
other Party, its officers, agents, and employees against all loss, damage, expense and liability to third
persons for injury to or death of person or injury to property, proximately caused by the indemnifying
Party's construction, ownership, operation or maintenance of, or by failure of, any of such Party's
works or facilities used in connection with this Agreement. The indemnifying Party shall, on the other
Party's request, defend any suit asserting a claim covered by this indemnity. The indemnifying Party
shall pay all costs that may be incurred by the other Party in enforcing this indemnity.
14.2 Insurance -During the term of this Agreement, Seller shall secure and
continuously carry the following insurance coverages:
14.2.1 Commercial General Liability Insurance for both bodily injury and
property damage with limits equal to fifteen percent (15%) of the Total Cost of the Facility, ill
$1,000,000, whichever is greater, each occurrence, combined single limit. The deductible for
such insurance shall not exceed one-half of one percent (0.5%) of the Total Cost of the Facility.
14.2.2 All Risk Property Insurance with minimum limits not less than ninety
percent (90%) of the Total Cost of the Facility. The Property Insurance coverage must be
written on a Replacement Cost basis and will include:
(a) Standard fire policy.
(b) Extended coverage endorsement.
(c) Vandalism and malicious mischief endorsement.
(d) The deductible for the above property insurance coverage shall not
exceed five percent (5%) of the Total Cost of the Facility or $25,000 whichever is greater.
14.2.3 Boiler and Machinery Insurance with minimum limits not less than ninety
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percent (90%) of the total Replacement Cost of the equipment covered in (a) below:
(a) All boiler and machinery coverage must be written on a • comprehensive
form' basis to provide coverage against the sudden and accidental breakdown of all boilers,
machinery and electrical equipment, turbines, generators, and switchgear;
(b) Coverage under this insurance must be written on a Replacement Cost
basis; and
(c) The deductible for this insurance shall not exceed five percent (5%) of
the total Replacement Cost of the equipment covered in (a) above or $25,000 whichever is
greater.
14.2.4 Earthquake & Flood (catastrophic perils) Insurance with limits not less
than sixty percent (60%) of the Total Cost of the Facility. The deductible for this insurance
shall not exceed five percent (5%) of the Total Cost of the Facility.
14.2.5 Business Interruption (Loss of Income) Insurance with minimum daily
limits not less than seventy-five percent (75%) of the Facility's estimated gross daily electrical
revenue and total policy limits not less than twenty percent (20%) of the Facility's estimated
gross annual revenue from the sale of electrical energy;
(a) Coverage will include Seller's loss of earnings when business
operations are curtailed or suspended because of a loss due to an insured peril. Coverage may
be written on an actual loss sustained basis.
(b) This insurance coverage must be endorsed to both the All Risk
Property Insurance Policy and the Boiler and Machinery Insurance Policy;
(c) The deductible for this insurance coverage shall not exceed thirty (30)
days gross daily revenues from the sale of electrical energy; and
(d) The estimated gross daily revenue and estimated gross annual revenue
shall be computed on the basis of the kWh production estimates contained in paragraph 6.2.
14.2.6 All of the above insurance coverages shall be placed with insurance
companies with an A.M. Best rating of A-or better and shall include:
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(
(a) An endorsement naming Idaho Power as an additional insured and loss
payee as applicable;
(b) A provision stating that such policies shall not be canceled or their
limits of liability reduced without sixty (60) days' prior written notice to Idaho Power; and
(c) In the case of the insurance coverages described in sub-
paragraphs 14.2.1, 14.2.2 and 14.2.3 above, the Total Cost of the Facility will include any
Seller-furnished Disconnection Equipment and/or Interconnection Facilities. The Total Cost of
the Facility and total Replacement Cost of equipment will be adjusted either upward or
downward to reflect the current replacement cost of the Facility or equipment. This adjustment
will be based on either (1) an appraisal made by, or for, the Seller's insurance company, or (2)
the Handy-Whitman Index "Cost Trends of Electric Utility Construction --Plateau Region" -­
"Hydro Production Plant" as published by Whitman, Requardt & Associates, 2315 Saint Paul
St, Baltimore, MD 21218. Such adjustment shall be made, at a minimum, every fifth Contract
Year during the term of this Agreement. A copy of these computations and/or appraisals will
be submitted to Idaho Power for Idaho Power's review and approval.
14.3 Seller to Provide Certificates of Insurance -Seller shall annually furnish Idaho
Power certificates of insurance, together with the endorsements required therein, evidencing the
coverages as set forth above.
14.4 Seller to Provide Copies of Policies of Insurance -Within one hundred twenty
(120) days after the Operation Date, and within ninety (90) days of the effective date of any
modifications to the policy, Seller will furnish to Idaho Power a certified copy of the original of each
insurance policy and all endorsements for each of the insurance coverages described above. In the
case of policy renewals, Seller may provide a certificate from the insurance carrier that there have been
no changes to the policy in lieu of providing the required certified copy of the policy.
14.5 Seller to Notify Idaho Power of Lapse of Coverage -If any of the insurance
coverages required by paragraph 14.2 shall lapse for any reason, Seller will immediately notify Idaho
Power in writing. The notice will advise Idaho Power of the specific reason for the lapse and the steps
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BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 2

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 3

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 4

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 5

1032 Grandview Drive
Ivins, UT 84738
Office [phone]
Fax [phone]
[e-mail]

August 7, 2019

Jerry Jardine
Idaho Power Company
1221 W Idaho Street
Boise, ID 83702

Re: Mile 28 Hydro Generation Facility

Dear Jerry,

We are in receipt of your letter dated August 1 regarding the Mile 28 Project and the repairs we
have been performing there that have taken longer than anticipated. While we acknowledge that Idaho
Power has not received the deliveries it expected from the project this summer, we have read through the
Firm Energy Sales Agreement and do not read the provisions you set out in your letter as requiring a
Lump Sum Repayment.

You highlight Section 21.3 as providing for a Lump Sum Repayment in an amount that is then
calculated in the letter. However, Section 21.3 provides for such repayment where the Seller
“permanently curtails” its long-term average deliveries. There is no permanent curtailment in this
circumstance. We are working very hard to make repairs at the facility to improve its functionality. We
are rebuilding the switchgear to prevent the types of trips that have happened in the past, improving the
trash rake system to deal with the extremely high volume of weeds and debris at the facility, and are
winterizing the facility to take advantage of available recharge water. We anticipated that these repairs
would be complete during the winter months when the project does not typically produce. As
unfortunately sometimes happens, these repairs have taken much longer than planned, despite our diligent
efforts. We appreciate Idaho Power’s concerns and we want to do our best to find a solution that is
agreeable. As mentioned above, we anticipate the project being able to make up this lost production once
we finish our repairs and can take advantage of recharge water. We believe that these repairs will be
complete within the next two to three weeks.

We appreciate your time and consideration and look forward to finding an agreeable solution.
We would also like to extend an invitation to your team to come visit the facility once it is complete so
that you can see the results of our efforts.

Sincerely,

Ted S Sorenson, Manager
Wood Hydro LLC

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 6

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 7

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 8
Archived: Monday, August 3, 2020 10:36:03 AM
From: Miriah ElliottSent: Tue, 17 Sep 2019 14:56:17To: Jardine, Jerry
Cc: Ted S. Sorenson; Darrington, MichaelSubject: [EXTERNAL]Re: Mile 28 Annual Net Energy Notice
Sensitivity: Normal
KEEP IDAHO POWER SECURE! External emails may request information or contain malicious links or attachments. Verify the sender before proceeding, and check for additional warning messagesbelow.
Jerry and Michael,
Ted wanted me to let you know that the Mile 28 Project is up and running and has been running since late August. Please let me know if you need additional information at this point.
Warm Regards,Miriah
From: Jardine, Jerry <[e-mail]>Sent: Wednesday, August 14, 2019 3:46 PM
To: Miriah Elliott <[e-mail]>Cc: Ted S. Sorenson <[e-mail]>; Darrington, Michael <[e-mail]>; Walker, Donovan <[e-mail]>Subject: RE: Mile 28 Annual Net Energy Notice

From: Miriah Elliott <[e-mail]> Sent: Wednesday, August 07, 2019 4:49 PMTo: Jardine, Jerry <[e-mail]>Cc: Ted S. Sorenson <[e-mail]>Subject: [EXTERNAL]RE: Mile 28 Annual Net Energy Notice KEEP IDAHO POWER SECURE! External emails may request information or contain malicious links or attachments. Verify the sender before proceeding, and check for additional warning messagesbelow.
Jerry,
Attached please find a letter from Ted responding to your August 1 letter regarding the Mile 28 project.
Best,
Miriah
Miriah R. ElliottDirector of Business Operationsoffice: [phone]cell: [phone]email: [e-mail]1032 Grandview DriveIvins, UT 84738
sig pic

Begin forwarded message:
From: "Jardine, Jerry" <[e-mail]>
Date: August 1, 2019 at 2:10:06 PM MDTTo: "'Ted S. Sorenson'" <[e-mail]>Subject: Mile 28 Annual Net Energy Notice
Ted,
Attached is the Mile 28 Annual Net Energy Notice that we discussed yesterday by phone. Regards, Jerry Jardine
Energy ContractsIdaho Power Company
IDAHO POWER LEGAL DISCLAIMERThis transmission may contain information that is privileged, confidential and/or exempt from disclosure under applicable law. If you are not the intended recipient, youare hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is STRICTLY PROHIBITED. If youreceived this transmission in error, please immediately contact the sender and destroy the material in its entirety, whether in electronic or hard copy format. Thank you.

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 9
802 West Bannock Street, Suite LP 103, P.O. Box 2900, Boise, ID 83701 | Tel: [phone] | Fax: [phone]
C. Tom Arkoosh
March 17, 2020
Donavan Walker Idaho Power Company PO Box 70
Boise, ID 83707
[e-mail]
Re: Mile 28 Original Energy Sales Agreement
Dear Donovan:
There is ongoing dispute of contact interpretation between Idaho Power Company (“Idaho Power”) and Wood Hydro, LLC, (“Wood”), the successor in interest to the Mile 28 Hydro Generation Facility (“Project”) Firm Energy Sales Agreement of August 23, 1993
(“Agreement”). Enclosed you will find correspondence between the parties that adequately
describes the background of this dispute.
In summary, because the project was “off line” from April to mid-August, 2019, Idaho Power staff seeks to assess Wood $116,312.00 based upon a calculation explained by Idaho
Power staff as the difference between the Annual Net Energy Amount estimation and the actual
Net Energy Delivered times the Lump Sum Repayment amount from Appendix D of the Agreement for permanent curtailment in the 25th year.
The difficulty with the assessment is that there has never been a permanent curtailment of
the Annual Net Energy Amount by reason of not producing energy from April to mid-August.
Before reviewing the actual wording of the contract, please recall the context in which Idaho Power advocated before the Idaho Public Utilities Commission for the adoption of the 90/110 performance band to create reliability in deliveries. As to the Agreement, and
agreements like it, entered before the age of the 90/110 performance band, Idaho Power wrote:
The Commission Should Consider the Distinction Between Firm and Non-Firm QF Energy In Light Of Current Conditions
In seeking leave to file a post-hearing brief, counsel for U.S. Geothermal
indicated that it was his intention to use the post-hearing brief to address the Commission’s prior orders that define the terms ‘non-firm’ and ‘firm’ in the
Page - 2
March 17, 2020
context of energy purchased from QFs. Idaho Power does not believe there is any dispute as to how the Commission has traditionally used those terms. In Order No. 15746 in Case No. P-300-12, The Commission noted that, ‘under
Section 292.304(d) of the FERC rules, a small power producer has the option
of selling power to a utility either on an ‘as-available’ basis or ‘pursuant’ to a legally enforceable obligation.’ In Order No. 15746 and subsequently in Order No. 18190 issued in 1983 in Case No. U-1006-200, the Commission defined the ‘as-available sale’ to correspond to non-firm energy and the
‘pursuant to a legally enforceable obligation’ to correspond to firm energy.
As the Commission noted in Order No. 18618 issued in Case No. U-1006-216, ‘The Company is correct, therefore, when it asserts that Order Nos. 18190 and 18358 distinguish between firm and non-firm energy prices and that it is the ‘quality of the energy produced’ by the co-generator or small power
producer that determines its price.’ (Order No. 18618, p.3.)
In Order No. 18618, the Commission also stated:
“…energy is considered firm if it is provided by the seller pursuant to a
legally enforceable obligation to deliver and if it is of sufficient reliability
that it can serve to defer or avoid construction of the company’s own plants. Hydro projects --- both those of the company and those of small power producers --- have always been assumed to meet this definition.” (Order No. 18618, p.9).
As Idaho Power noted in its direct testimony in this case, using the definition of firm energy established in the early 1980’s, a QF is only obligated to sign a contract and provide an estimate of what it thinks it will generate each month over the twenty (20) to thirty-five (35) year term of its agreement to be entitled to
receive firm energy prices. As Mr. Gale noted, in today’s world, the actual
firmness of the energy deliveries under these 1980’s vintage contracts more closely resemble non-firm energy deliveries than firm energy deliveries. In the Firm Energy Sales Agreements (‘FESA’s’) without the 90%/110% band provision, QF developers provide an estimate of what they expect to generate
each month, but there is no requirement, nor is there any economic incentive, for
QF developers to provide accurate estimates or to actually deliver energy in the monthly amounts they estimate they will provide in the Firm Energy Sales Agreement. The actual amount of energy delivered by QF’s under these agreements can fluctuate between 0 MW and 10 MW, hour-to-hour, day-to-day,
month-to-month, either because the project has lost its motive force or the
developer has chosen to reduce generation for some other reason. With the exception of the five new QF contracts which include the 90%110% band, Idaho Powers QF contracts do not require QF’s to provide the higher value firm energy Idaho Power’s customers are paying for. Post-Hearing Brief, Page 4, Cases Nos.
IPC-E-04-08 and 10.
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March 17, 2020
The language of Idaho Power’s Post Hearing Brief relevant here to the operation of the Agreement deserves emphasis: there is no requirement … for QF developers to provide accurate estimates, or to actually deliver energy in the monthly amounts they estimate they
will provide in the Firm Energy Sales Agreement.
***
With the exception of the five new QF contracts which include the 90%110% band, Idaho
Powers QF contracts do not require QF’s to provide the higher value firm energy Idaho Power’s customers are paying for.
The Post Hearing Brief does not support Idaho Power’s argument about liquidated damages. The language of the Agreement does not support the conclusion that the failure of the
Project to deliver power between April and mid-August authorizes Idaho Power to withhold
monies from Wood.
Idaho Power relies upon this language from section 21.3 of the Agreement:
If, at any time prior to the end of the term of the Agreement, Seller permanently
curtails in whole or in part its long-term deliveries of the Annual Net Firm Energy amount specified in paragraph 6.3, Seller shall pay to Idaho Power, as reasonable liquidated damages arising out of this permanent curtailment of the Annual Net Firm Energy deliveries, the appropriate lump sum repayment amount specified in
Appendix D, multiplied by the difference in megawatt-hours between the Annual
Ned Firm Energy amount specified in paragraph 6.3 and the reduced Annual Net Firm Energy amount after the permanent curtailment.
Please note that “Annual Net Firm Energy,” is defined in section 1.1 of the Agreement as
“[t]he amount of Net Firm Energy Seller estimates it will deliver to Idaho Power at the Point of
Delivery during each Contract Year.” [Emphasis added.] Nowhere in the claim letters of Idaho Power does Idaho Power assert that Wood seeks to change the Annual Net Firm Energy estimates found at section 6.2 of the Agreement.
Further, not only has Wood not changed the estimates of the Annual Net Firm Energy
deliveries but has done absolutely nothing permanent or long-term concerning deliveries from the Project.
The language of Idaho Power’s Post Hearing Brief and the representations Idaho Power
made to the Idaho Public Commission make clear that section 21.3 does not allow the attempted
assessment unless and until Wood permanently changes the estimates in the Agreement. Other provisions indicate section 21.3 is the section addressing the estimates and changes in those estimates, but not the actual deliveries. Section 21.3 itself provides that interest begins only 60 days after a Seller receives “notice of Seller’s permanent reduction of the Annual Net Firm
Energy Amount.” Read in context, this sentence makes clear that the permanent reduction must
be a permanent reduction of the estimate.
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March 17, 2020
It is also important to note that in addressing available adjustments to the Agreement, Idaho Power may adjust the estimates in the contract, the Annual Net Firm Energy Amount, based on actual performance, again confirming that section 23.1 addresses the estimate, and not
the actual delivered energy, because it is inconceivable that Idaho Power can adjust the amount
of actual energy delivered.
Further, the liquidated damages clause found in section 23.1 appears unenforceable.
“In determining the validity of liquidated damage clauses, we have adhered to the
rule set forth in the Restatement of Contracts section 339 (1932); ‘An agreement, made in advance of breach, fixing the damages therefor, is not enforceable as a contract and does not affect the damages recoverable for the breach, unless
(a) The amount so fixed is a reasonable forecast of just compensation for the
harm that is caused by the breach, and
(b) The harm that is caused by the breach is one that is incapable or very
difficult of accurate estimation.’”
Young Electric Co. v. Capps, supra [94 Idaho] at 521, 492 P.2d at 60; Graves v. Cupic, 75 Idaho 451, 457, 272 P.2d 1020, 1023-24 (1954).
Repeatedly and historically, Idaho Power has claimed that it has available to it market
electricity less expensive than PURPA power prices as found in the Agreement. Also, energy sales upon transparent markets making any damage claim easily to calculate.
Finally, Idaho Power will over time receive the energy claimed to be deficient addressed
in the claim letters, contradicting the assertion that Idaho Power customers will be harmed. In
fact, as more particularly described in the attached correspondence, the repairs and upgrades at the facility will make the facility more reliable, providing additional benefit to Idaho Power customers. The facility has been online and operating reliably since August.
For the forgoing reasons, we request confirmation that Wood will not be assessed as proposed in the accompanying claim letters and promptly be reimbursed for funds withheld from its power generation payments.
Sincerely,
ARKOOSH LAW OFFICES
C. Tom Arkoosh CTA/sf
Cc/client
Enclosures

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 10

DONOVAN E. WALKER Lead Counsel
[e-mail]

April 15, 2020

C. Tom Arkoosh
Arkoosh Law Offices
802 W. Bannock Street, Suite LP 103
P.O. Box 2900
Boise, ID 83701

VIA ELECTRONIC MAIL: [e-mail]

Re: Mile 28 Hydro

Dear Tom:

I write in response to your letter dated March 17, 2020, which references an
“ongoing dispute of cont[r]act [sic] interpretation between Idaho Power Company
(“Idaho Power”) and Wood Hydro, LLC, (“Wood”)” regarding a PURPA QF Firm Energy
Sales Agreement dated August 23, 1993 (“Agreement”) for the Mile 28 hydro project.

The bulk of your letter quotes and discusses IPUC orders and Idaho Power
testimony mainly from the 1980’s which frankly I have a hard time seeing as relevant or
understanding the point you are trying to make. The particular Agreement, and the
terms and conditions thereof between Mile 28 and Idaho Power are straight-forward and
clear. Granted the terminology is a bit difficult to work through, but such is the case with
every PURPA QF contract I have ever encountered. This particular vintage of PURPA
QF contract has many provisions that are no longer employed in such contracts by the
IPUC. However, this does not in and of itself make such contract provisions invalid
even though the concepts and provisions are no longer required or utilized in mandatory
QF purchases by Idaho Power.

This type of Firm Energy Sales Agreement, in general terms, works as follows:
Idaho Power will purchase and Seller will sell all of the Net Firm Energy and Surplus
Energy produced by the Seller (Section 6.1); the project provides, as part of the
contract, its monthly generation amounts, estimated based on long-term historical water
flow records and long-term average energy production estimates (Section 6.2); the
Annual Net Firm Energy amount is sum of the project’s monthly estimates, in this
instance 5,798,590 kWh, (Section 6.3); the project is paid a base payment (Section
7.1.1) and an adjustable payment (Section 7.1.2) for its Net Firm Energy; the project
must deliver up to its Annual Net Firm Energy amount from Section 6.3 or be subject to
a schedule of Lump Sum Refund Payment (Section 21.3; Appendix D).

C. Tom Arkoosh
April 15, 2020
Page 2 of 4

This is a type of levelized payment/price contract whereby the base payment is a
levelized/fixed price spread over the entire 35-year contract term. Consequently, as
with any levelized price contract compared to a non-levelized and escalated rate
contract, there is an “overpayment” to the project in the early years that is offset by an
“underpayment” in the outer years. To make sure that a project does not just generate
and take payments during the more lucrative “overpayment” early years, and then fail to
generate or under-generate in the later years when customers are being repaid for the
“overpayment” in the “underpayment” years, the IPUC set up certain mechanisms to
make sure customers were not left holding the bag in the outer years of the contract.
These mechanisms include such things as additional security, and in this case the
provisions found in Section 21.3 “Seller Permanent Curtailment”, Appendix D “Lump
Sum Repayment for Permanent Curtailment of Portion or All of Annual Net Energy
Amount Under 35-Year Contract”, and 21.7 “Refund of Lump Sum Repayment”. These
sections of the contract, Section 21.3, Section 21.7, Section 6.3, and Appendix D, when
read and considered together in the context of the four corners of this contract are clear
and tell us exactly what happens when the project fails to deliver its Annual Net Firm
Energy amount specified in Section 6.3.

As pointed out by both Idaho Power and by you in your letter, the relevant portion
of Section 21.3, Seller Permanent Curtailment, states as follows:

If, at any time prior to the end of the term of the Agreement,
Seller permanently curtails in whole or in part its long-term
average deliveries of the Annual Net Firm Energy amount
specified in paragraph 6.3, Seller shall pay to Idaho Power,
as reasonable liquidated damages arising out of this
permanent curtailment of Annual Net Firm Energy deliveries,
the appropriate lump sum repayment amount specified in
Appendix D, multiplied by the difference in megawatt-hours
between the Annual Net Firm Energy amount specified in
paragraph 6.3 and the reduced Annual Net Firm Energy
amount after the permanent curtailment.

Section 6.3, Annual Net Firm Energy Amount, states, “The Annual Net Firm
Energy amount shall be 5,798,590 kWh and shall be the sum of the three (3) Seasonal
Net Firm Energy amounts Seller specified above.” Sections 6.2 and 6.4 reference how
the Net Firm Energy Amounts the Seller has estimated are based upon anticipated and
historical long-term average water flows, long-term average energy production
estimates, Seller’s water right filings and the water records supporting those projected
water flows. Section 6.4 states, “The parties have reviewed these anticipated water
flows … and have agreed that, for purposes of this Agreement, the projected water
flows used to calculate the Annual Net Firm Energy amount in paragraph 6.3 are
reasonable and shall constitute the water flows available to the Facility under “average”
water conditions.”

C. Tom Arkoosh
April 15, 2020
Page 3 of 4

Here, the project had Zero deliveries to Idaho Power during the months of
November 2018, December 2018, January 2019, February 2019, March 2019, April
2019, May 2019, June 2019, and July 2019. Contract Year 25 ran from June 1, 2018
through May 31, 2019. The project had a total Net Firm Energy delivered during
Contract Year 25 of only 3,355,049 kWh, which is short of the required delivery of the
Annual Net Firm Energy Amount from Section 6.3 of 5,798,590 kWh. It is important to
note that these contract mechanisms and metrics function on an annual basis, and once
Contract Year 25 came and went with a substantial shortfall of delivered Net Firm
Energy, there was no way to “make-up” the shortfall by over-generating in a different
time period. There was a permanent curtailment of the project’s Annual Net Firm
Energy deliveries for Contract Year 25. The project also had curtailment of Net Firm
Energy deliveries during Contract Year 26, in that as of August 14, 2019, there had
been Zero deliveries to Idaho Power. However, this curtailment in Contract Year 26 did
not become a permanent curtailment invoking the provisions of Section 21.3 and
Appendix D because subsequent to August 14, 2019, and prior to the expiration of
Contract Year 26, the project met its requirement to deliver the 5,798,590 kWh Annual
Net Firm Energy amount from Section 6.3.

Because the project failed to deliver its Annual Net Firm Energy amount from
Section 6.3 during Contract Year 25, and thus permanently curtailed its annual delivery
for that year, the lump sum repayment amount specified for Contract Year 25 from
Appendix D is applied to the difference in Net Firm Energy delivered and the Annual Net
Firm Energy amount - which in this case is $1,046,812. However, the contract
anticipates that a permanent curtailment of Annual Net Firm Energy deliveries may not
continue for the entire remaining duration of the 35-year contract term, and thus
contains the provisions in Section 21.7, Refund of Lump Sum Repayment, which states,

If Seller has made a lump sum repayment as required by
paragraph 21.3 and;

(1) Within three (3) years of said payment Seller becomes
capable of resuming production of the curtailed Net Firm
Energy and offers to resume sales to Idaho Power at the
rates, terms and conditions contained in this Agreement for
the number of Contract Years that were remaining under this
Agreement at the time of the permanent curtailment; then

(2) Idaho Power will resume its purchases from the Facility
and will refund a portion of the lump sum repayment as
follows:

(a) if sales resume within one (1) year of the payment
of the lump sum repayment amount, Idaho Power will
refund 90% of the lump sum repayment amount;

C. Tom Arkoosh
April 15, 2020
Page 4 of 4

(b) if sales resume within two (2) years of the
payment of the lump sum repayment amount, Idaho
Power will refund 85% of the lump sum repayment
amount;

(c) if sales resume within three (3) years of the
payment of the lump sum repayment amount, Idaho
Power will refund 85% of the lump sum repayment
amount.

Consequently, because the project resumed generation in Contract Year 26 to meet the
Annual Net Firm Energy amount, Idaho Power forwent its entitlement to the actual
collection of the $1,046,812 lump sum repayment amount for the permanent curtailment
of Contract Year 25 Annual Net Firm Energy amount, and applied the 90% refund
upfront - thus merely applying the 10% balance of $116,312 - which you are now
contesting.

Mr. Jardine’s letters are quite clear and run through the relevant portions of the
Agreement as well as the failure of the project to generate its Annual Net Firm Energy
amount in Contract Year 25. Idaho Power stands by its previously sent letters and
claims with regard to the project’s failure to generate and meet its Annual Net Firm
Energy amount requirement. As previously referenced above this is a contract
mechanism that accompanies the levelized nature of the payments in this vintage of
PURPA QF contract as a protection for customers in the nature of the “overpayment” of
a levelized rate in the early years and the “underpayment” in the later years - and part of
the assurance that projects do not simply take the more lucrative early year
“overpayments” and then under-generate and/or abandon projects in the
“underpayment” later years.

Idaho Power understands that the lack of project generation may have predated
Wood Hydro’s involvement and recognizes that Mr. Sorenson was able to make
necessary improvements to the project once he took it over to enable it to hopefully
continue to generate and meet the requirements of its Agreement. However, the
provisions of the contract are clear in that the project permanently curtailed its Annual
Net Firm Energy amount for Contract year 25 - and is also quite clear in the application
of the Lump Sum Refund Payment for the shortfall in Contract year 25. The project can
pay the remaining balance of $116,312, 10% Lump Sum Refund Payment, or have
Idaho Power continue to net this amount against the Facility’s monthly Net Energy
payments until the balance is zero. Please let us know how you would like to proceed.

Sincerely,

Donovan E. Walker

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 11

Jerry Jardine
Energy Contracts [e-mail]

June 2, 2020

Chuck Salo
Regional Manager
Geothermal & Solar O&M
Enel Green Power North America
200 South Virginia Street, Suite 400
Reno, Nevada 89501

VIA ELECTRONIC MAIL: Chuck Salo, [e-mail];
Conrad St. Pierre, [e-mail]
Randald Bartlett, [e-mail]
Lisa Szot, [e-mail];
Greg Rizzo, [e-mail];

Re: Rock Creek #2 Curtailment and Lump Sum Refund Repayment

Dear Mr. Salo:

Enel Green Power North America, Inc (“Enel”) has a Firm Energy Sales Agreement
dated July 13, 1987 (“Agreement”) with Idaho Power for the sale and purchase of
energy from the Rock Creek #2 Hydro Project (“Project”). Idaho Power received an
email from Kyle Brown on June 26, 2019, while he was still employed with Enel, with
notification that the Project had a failed thrust bearing, babbitt and thrust discs. As of the
date of this letter, the project has not delivered any energy to Idaho Power since the end
of May 2019. Contract Year 31 ended last month and the Project failed to deliver the
Annual Net Energy amount required by the Agreement.

This Agreement is an older levelized agreement and a brief explanation of the terms of
the Agreement would be beneficial. Idaho Power will purchase and Seller will sell all of
the Net Firm Energy and Surplus Energy produced by the Seller (Section 6.1); the
project provides, as part of the contract, its monthly generation amounts, estimated
based on long-term historical water flow records and long-term average energy
production estimates (Section 6.2); the Annual Net Firm Energy amount is sum of the
project’s monthly estimates for a Contract Year, in this instance 14,073,550 kWh,
(Section 6.3); the project is paid a base payment (Section 7.1.1) and an adjustable
payment (Section 7.1.2) for its Net Energy; the project must deliver up to its Annual Net
Firm Energy amount from Section 6.3 or be subject to a schedule of Lump Sum Refund
Payment (Section 21.3.1; Appendix D). The Agreement is a levelized payment/price
Page 2 of 3

contract with liquidated damages provisions should the Project fail to deliver the Annual
Net Firm Energy amount specified in paragraph 6.3.

This is a type of levelized payment/price contract whereby the base payment is a
levelized/fixed price spread over the entire 35-year contract term. Consequently, as
with any levelized price contract compared to a non-levelized and escalated rate
contract, there is an “overpayment” to the project in the early years that is offset by an
“underpayment” in the outer years. To make sure that a project does not just generate
and take payments during the more lucrative “overpayment” early years, and then fail to
generate or under-generate in the later years when customers are being repaid for the
“overpayment” in the “underpayment” years, the Agreement contains certain
mechanisms to make sure customers were not harmed in the outer years of the
contract. These mechanisms include such things as additional security, and in this case
the provisions found in Section 21.3.1, Appendix D “Lump Sum Repayment for
Permanent Curtailment of Portion or All of Annual Net Firm Energy Amount Under 35-
Year Contract”.

Section 21.3.1, states as follows:

If, at any time prior to the end of the term of the Agreement,
Seller permanently curtails in whole or in part its long-term
average deliveries of the Net Firm Energy amount specified
in paragraph 6.3, Seller shall pay to Idaho Power, as
damages arising out of this permanent curtailment of Net
Firm Energy deliveries, the appropriate lump sum repayment
amount specified in Appendix D, multiplied by the difference
in megawatt-hours between the Annual Net Firm Energy
amount specified in paragraph 6.3 and the reduced Annual
Net Firm Energy amount.

Section 6.3, Annual Net Firm Energy Amount, states, “The Annual Net Energy shall be
14,073,550 kWh and shall be the sum of the three (3) Seasonal Net Energy amounts
Seller specified above.”

For this curtailment, the Project had zero deliveries to Idaho Power during the months of
June 2019, July 2019, August 2019, September 2019, October 2019, November 2019,
December 2019, January 2020, February 2020, March 2020, April 2020, May 2020 and
continues to remain curtailed as of the date of this letter. Contract Year 31 ran from April
2, 2019, through April 1, 2020. The Project had a total Net Energy delivered during
Contract Year 3 of only 978,479 kWh, which is short of the required delivery of the
Annual Net Firm Energy Amount from Section 6.3 of 14,073,550 kWh. It is important to
note that these contract mechanisms and metrics function on an annual basis, and once
Contract Year 31 came and went with a substantial shortfall of delivered Net Energy,
there is no way to “make-up” the shortfall by over-generating in a different time period.
There was a permanent curtailment of the project’s Annual Net Firm Energy deliveries
for Contract Year 31.

Page 3 of 3

Because the project failed to deliver its Annual Net Firm Energy amount from Section
6.3 during Contract Year 31, and permanently curtailed its annual delivery for that year,
the lump sum repayment amount specified for Contract Year 31 from Appendix D is
applied to the difference in Net Energy delivered and the Annual Net Energy amount -
which in this case is $4,059,472 ($310/MWH multiplied by the difference of 14,073.550
MWH and 978.479 MWH).

Your email dated May 19, 2020, indicates that the Project may start repairs in the
coming weeks but did not provide an estimate of when the Project would complete the
repairs. Please confirm when you expect the project to return to service and start
delivering energy to Idaho Power per the Agreement.

The lump sum refund payment of $4,059,472 is now due. Idaho Power would consider
making arrangements for a monthly payment plan if you are unable to pay the entire
balance in a single payment. Please let me know how you would like to proceed.

Sincerely,

Jerry Jardine

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 12
1

VIA EMAIL and US MAIL

June 26, 2020

Jerry Jardine
Energy Contracts
Idaho Power Company
1221 W. Idaho St.
P.O. Box 70
Boise, Idaho 83707
[e-mail]

Dear Mr. Jardine,
This letter is in response to your letter dated June 2, 2020 (the “June 2 Notice”) regarding the
Firm Energy Sales Agreement dated July 13, 1987, as amended from time to time (the “Agreement”)
between BP Hydro Associates (successor in interest to Bonneville Pacific Corporation) (“Seller”) and
Idaho Power Company (“Idaho Power”) for the purchase and sale of energy from the Rock Creek #2
Hydro Project (the “Facility”). Capitalized terms used herein and not otherwise defined have the
meanings ascribed thereto in the Agreement.

Seller completely disagrees with the assertion in the June 2 Notice that temporary failure of the
Facility to deliver energy entitles Idaho Power to a lump sum refund payment of $4,059,472. On its face,
this sum is overreaching and the analysis used to arrive at number is not supported by the terms of the
Agreement. Section 6.1 of the Agreement obligates Idaho Power to purchase “all of the Net Firm Energy
that and Surplus Energy produced by the Facility and delivered by Seller to the Point of Delivery.” “Net
Firm Energy” is defined as the “electric energy produced by the Facility, less Station Use and Losses…”
The Agreement does not guarantee the amount of Net Firm Energy that will be produced by the Facility
and delivered to the Point of Delivery, but simply estimates the aggregate amounts based on historical
data in 1987 and refers to that estimated amount as the “Annual Net Firm Energy”.

In addition, Section 21.3.1 refers to a “permanent” curtailment of the long-term average
deliveries of the Net Firm Energy as determined by the Seller. Seller never intended for, nor conveyed to
Idaho Power that the shut-down of the Facility was going be permanent, but rather has made diligent
efforts to both repair the Facility and keep Idaho Power apprised of the status of the repairs on the Facility.
The Facility is now back in service as of June 18, 2020 and the Seller expects to deliver Net Firm Energy
to the Point of Delivery going forward.

Finally, Section 21.2 of the Agreement requires a non-defaulting party to give notice to the other
party in the event of failure to perform an obligation under the Agreement and the Seller has 60 days to
cure. The June 2 Notice was the first notice that Seller received from Idaho Power claiming Seller’s
failure to comply with the terms of the Agreement, yet it stated that there were zero deliveries in June
2019 and that zero deliveries continued to the date of the June 2 Notice - a full year later. Based on
extreme amounts Idaho Power is now claiming to be owed as stated in the June 2 Notice, it appears that
Idaho Power stayed silent for a whole year and did nothing to mitigate any damages in order to make this
extremely high claim based on a false assertion of a permanent curtailment. Such actions run contrary to
basic contract and equity principles and the failure to provide timely notice of a default under the
2

Agreement effectively waived any claims to which Idaho Power may be entitled to from the Seller for the
time that the Facility was down.

Seller is pleased to report that the Facility is back on line, but disputes that any lump sum
payment is due to Idaho Power and will take all actions necessary if Idaho Power persists in this claim.

Sincerely,

Randald Bartlett, P.E.
Sr. Director, Hydro O&M
Enel Green Power North America, Inc.

cc: [e-mail]

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 13

Jerry Jardine
Energy Contracts [e-mail]

May 22, 2020

Ryan McQueeney Chief Financial Officer
Central Rivers Power US, LLC
Lowline #2 PURPA Hydro Project
4920 Elm Street, Suite 205
Bethesda, MD 20814

VIA ELECTRONIC MAIL: [e-mail]

Re: Lowline #2 Curtailment and Lump Sum Refund Repayment

Dear Ryan:

Central Rivers Power US, LLC (“CRP”) has a Firm Energy Sales Agreement dated
September 12, 1986 (“Agreement”) with Idaho Power for the sale and purchase of
energy from the Lowline #2 Hydro Project (“Project”). Idaho Power received an email
from Kyle Brown on May 28, 2019, with notification that the Project had a catastrophic
failure of the turbine over Memorial Day weekend 2019. As of the date of this letter, the
project has not delivered any energy to Idaho Power since the end of May 2019.
Contract Year 32 ended last month and the Project failed to deliver the Annual Net
Energy amount required by the Agreement.

This Agreement is an older levelized agreement and a brief explanation of the terms of
the Agreement would be beneficial. Idaho Power will purchase and Seller will sell all of
the Net Energy and Surplus Energy produced by the Seller (Section 6.1); the project
provides, as part of the contract, its monthly generation amounts, estimated based on
long-term historical water flow records and long-term average energy production
estimates (Section 6.2); the Annual Net Energy amount is sum of the project’s monthly
estimates for a Contract Year, in this instance 15,755,610 kWh, (Section 6.3); the
project is paid a base payment (Section 7.1.1) and an adjustable payment (Section
7.1.2) for its Net Energy; the project must deliver up to its Annual Net Energy amount
from Section 6.3 or be subject to a schedule of Lump Sum Refund Payment (Section
21.2.1; Appendix D). The Agreement is a levelized payment/price contract with
liquidated damages provisions should the Project fail to deliver the Annual Net Energy
amount specified in paragraph 6.3.

This is a type of levelized payment/price contract whereby the base payment is a
levelized/fixed price spread over the entire 35-year contract term. Consequently, as
with any levelized price contract compared to a non-levelized and escalated rate
Page 2 of 3

contract, there is an “overpayment” to the project in the early years that is offset by an
“underpayment” in the outer years. To make sure that a project does not just generate
and take payments during the more lucrative “overpayment” early years, and then fail to
generate or under-generate in the later years when customers are being repaid for the
“overpayment” in the “underpayment” years, the Agreement contains certain
mechanisms to make sure customers were not harmed in the outer years of the
contract. These mechanisms include such things as additional security, and in this case
the provisions found in Section 21.2.1, Appendix D “Lump Sum Repayment for
Permanent Curtailment of Portion or All of Annual Net Energy Amount Under 35-Year
Contract”.

Section 21.2.1, states as follows:

If, at any time prior to the end of the term of the Agreement,
Seller permanently curtails in whole or in part its long-term
average deliveries of the Annual Net Energy amount Seller
shall pay to Idaho Power, as Idaho Power’s sole and
exclusive remedy for damages arising out of this permanent
curtailment of Net Energy deliveries, the appropriate lump
sum repayment amount specified in Appendix D, multiplied
by the difference in megawatt-hours between the Annual Net
Energy amount specified in paragraph 6.3 and the reduced
Annual Net Energy amount.

Section 6.3, Annual Net Energy Amount, states, “The Annual Net Energy shall be
15,755,610 kWh and shall be the sum of the three (3) Seasonal Net Energy amounts
Seller specified above.”

For this curtailment, the Project had zero deliveries to Idaho Power during the months of
June 2019, July 2019, August 2019, September 2019, October 2019, November 2019,
December 2019, January 2020, February 2020, March 2020, April 2020 and continues
to remain curtailed as of the date of this letter. Contract Year 32 ran from April 29, 2019,
through April 28, 2020. The Project had a total Net Energy delivered during Contract
Year 32 of only 1,287,678 kWh (which was delivered during the month of May 2019
only), which is short of the required delivery of the Annual Net Energy Amount from
Section 6.3 of 15,755,610 kWh. It is important to note that these contract mechanisms
and metrics function on an annual basis, and once Contract Year 32 came and went
with a substantial shortfall of delivered Net Energy, there is no way to “make-up” the
shortfall by over-generating in a different time period. There was a permanent
curtailment of the project’s Annual Net Energy deliveries for Contract Year 32.

Because the project failed to deliver its Annual Net Energy amount from Section 6.3
during Contract Year 32, and permanently curtailed its annual delivery for that year, the
lump sum repayment amount specified for Contract Year 32 from Appendix D is applied
to the difference in Net Energy delivered and the Annual Net Energy amount - which in
this case is $3,616,983 ($250/MWH multiplied by the difference of 15,755.610 MWH
and 1,287.678 MWH).

Page 3 of 3

Kyle Brown’s email dated May 18, 2020, indicates that the Project may start delivering
energy to Idaho Power at the end of August 2020. Please confirm when you expect the
project to return to service and start delivering energy to Idaho Power per the
Agreement.

The lump sum refund payment of $3,616,983 is now due. Idaho Power would consider
making arrangements for a monthly payment plan if you are unable to pay the entire
balance in a single payment. Please let me know how you would like to proceed.

Sincerely,

Jerry Jardine

BEFORE THE

IDAHO PUBLIC UTILITIES COMMISSION

CASE NO. IPC-E-20-28

IDAHO POWER COMPANY

ATTACHMENT 14
Central River Power US, LLC
670 N. Commercial Street, Suite 204
Manchester, NH 03101

June 15, 2020

VIA U.S. MAIL AND ELECTRONIC MAIL: [e-mail]

Idaho Power Company
1221 W. Idaho Street (83702)
Boise, ID 83707
Attention: Mr. Jerry Jardine, Energy Contracts

Idaho Power Company
P.O. Box 70
Boise, ID 83707
Attention: Vice President, Bulk Power Markets

Re: Idaho Power Company’s May 22, 2020 Letter Regarding Lowline #2 Curtailment and
Lump Sum Refund Repayment (the “May 22nd Letter”)

Dear Jerry:

Reference is made to: (i) the Firm Energy Sales Agreement, dated September 12, 1986 (as amended May
3, 1996 and November 24, 1999, the “Agreement”), between Idaho Power Company (“Idaho Power”) and
Lowline Rapids, LLC, as successor in interest to Bonneville Pacific Corporation (“Seller”); and (ii) the
May 22nd Letter. Capitalized terms used but not defined in this letter have the meanings assigned to them
in the Agreement.

As you know, Central Rivers Power US, LLC (“Central Rivers”) recently acquired, indirectly, Seller and
the Facility from Enel and GE. As the new owners of the Facility, we are committed to completing
repairs on the turbine and returning the Facility to normal operations as soon as possible. At this time,
Central Rivers anticipates the Facility will return to normal operations on or about September 2, 2020.

In the May 22nd Letter, Idaho Power asserts that “[t]here was a permanent curtailment of the project’s
Annual Net Energy deliveries for Contract Year 32.” Idaho Power further asserts that “[b]ecause the
project failed to deliver its Annual Net Energy amount from Section 6.3 during Contract Year, and
permanently curtailed its annual delivery for that year, the lump sum repayment amount specified for
Contract Year 32 from Appendix D [of the Agreement] is applied to the difference in Net Energy
delivered and the Annual Net Energy amount – which in this case is $3,616,983 ($250/MWH multiplied
by the difference of 15,755.610 MWH and 1,287.678 MWH).” Finally, the May 22nd Letter concludes
that “[t]he lump sum refund payment of $3,616,983 is now due.”

Seller does not agree with Idaho Power’s interpretation of the Agreement or its conclusion that Seller is
responsible for a lump sum repayment amount pursuant to Section 21.2 and Appendix D of the
Agreement. First, Idaho Power implies that the Agreement requires Seller to deliver the Annual Net
Energy amount each Contract Year pursuant to Section 6.3 or be liable for liquidated damages in the form
of a lump sum repayment amount pursuant to Section 21.2. The Agreement does not support this
position. The Annual Net Energy amount in Section 6.3 is an estimate of Net Energy to be produced by
the Facility based on long-term historical water flow records and average long-term energy estimates
based thereon. Pursuant to Section 6.1, Idaho Power purchases all of the Net Energy delivered by Seller
Central River Power US, LLC
670 N. Commercial Street, Suite 204
Manchester, NH 03101

to the Point of Delivery. Neither Section 6.1, Section 6.3, nor any other provision in the Agreement
establish a firm requirement of Seller to deliver the Annual Net Energy amount in any Contract Year.

Second, Seller does not believe that the provisions of Section 21.2 and Appendix D are applicable to the
current circumstances. Idaho Power entirely glosses over the requirement in Section 21.2 that there be a
permanent curtailment of Net Energy deliveries. That the reduction must be permanent is underscored by
the express language in Section 21.2. Although not specifically defined in the Agreement, the Oxford
Dictionary defines “permanent” as “lasting or intended to last or remain unchanged indefinitely.” Seller’s
current inability to supply Idaho Power Net Energy is not permanent.

As noted in the May 22nd Letter, delivery of Net Energy from the Facility was significantly impacted
because of a catastrophic failure of the Facility’s turbine. After the failure, Seller began the process to
undertake major repairs to the turbine and Central Rivers has accelerated these repairs and expects to have
them completed by August 25, 2020. These circumstances do not constitute a permanent reduction of Net
Energy deliveries. Once the repairs are completed, Seller expects the Facility to return to normal
operations and to resume delivery of Net Energy to Idaho Power.

Moreover, the very nature of the lump sum repayment amount in Section 21.2 and Appendix D
demonstrates that these provisions are intended to address permanent reductions in Net Energy, and not
penalize Seller for temporary reductions of Net Output. This is especially the case where, as here, the
temporary reduction is caused by a limited term mechanical breakdown, and Seller is diligently engaged
in repairing the Facility and returning it to normal operations.

Seller reserves all of its rights and remedies under the Agreement.

Should you like to discuss the matters in this letter further, I can be reached at the number below.

Sincerely,

Matthew Stanley
Vice President & General Manager
Central Rivers Power US, LLC
670 N. Commercial Street, Suite 204
Manchester, New Hampshire 03101
Phone: [phone]