20210104Exhibit 16.pdf

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Exhibit 16
REC ES An IDACORP Company
t3 Pit
DONOVAN E" WALKER
SenlorCoumel
dwalket0klahooower.com
At4ust 13,2010
VIA HAND DELIVERY
.lean D. Jewell, Secretary
ldaho Public Uti[ties Commission
472 West Washington Street
P.O.'Box 83720
Boise, ldaho 83720-007 4
Re Case No. IPC-E-10-22
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY
FOR APPROVAL OF A FIRM ENERGY SATES AGREEMENT WTH
YELLOWSTONE POWER,.Irc, FOR THE SAT,-E AND PURCHASE OF
ELECTRTC ENERGy tNC"t
Dear Ms. Jewell
Enclosed for filing please find an original and seven (7) copies of ldaho Power
Company'sApplication in the above mafter.
yours,f-Ab
E. Walker
DE:tA/:csb
Enclosures
t22l W. ldaho st. (83702)
P.O. Box 70
Boite, lD 83707
DONOVAN E. WALKER (lSB No. 5921)
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
P.O. Box 70
Boise, ldaho 83707
Telephone: (208) 38&5317
Facsimile: [phone]
dwa I ker@ id ahopovror.co m
[e-mail]
RECEIV T I]
t010fi1.ffi 13 H{ tr55
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Attomeys for ldaho Power Company
Strcet Address for Exoress Mail:
1221 West ldaho Street
Boise, ldaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF A FIRM ENERGY SALES
AGREEMENT WITH YELLOWSTONE
POWER, INC., FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY.
GASE NO. !PC-E-10-22
APPLICATION
ldaho Power Gompany ('ldaho Powef or the 'Companf), in accordance with
ldaho Code S 61-503 and RP 52 and the applicable provisions of the Public l.nility
Regulatory Policies Act of 1978 CPURPA"), hereby respectfully applies to the ldaho
Public Utilities Commission ("|PUC' or the "Commission") for an Order approving the
Firm Energy Sales Agreement between ldaho Power and Yellowstone Power, lnc.
(Yellowstone') under which Yellourstone uould sell and ldaho Power would purchase
electric energy generated by the Yellowstone Power Project ('Facility or "Projecf)
located in Gem County, ldaho.
APPLICATION - 1
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ln support of this Application ldaho Power represents as folloua:
l. EAgl(gRoullg
1. The Yellorrvstone Project is a biomass fueled, oombined heat and power
proiect to be co-tocated in Emmet, ldaho, with the recently commissioned Emerald
Forest Sawmill. Power will be generated using steam created from the controlled
buming of the woody biomass fuel. Waste heat from the Proiec't will be utilized to
operate the dry kilns associated with the sawmill.
2. Sections 201 and 210 of PURPA, and pertinent regulations of the Federal
Energy Regulatory Commissbn ("FERC"), require that regulated electric utilities
purchase pou€r producd by cogenerators or small power producers that obtain
qualifying facility ("QF") status. The purchase price a QF rcceives for the sale of its
power is genenally refened to as the aroided cost rate and is computed to be equal to
the incremental mst to an electric utility of electric energy or capacity or both, which, but
for the purchase from the QF, such utility rrrould generate itself or purchase from
another souroe. The Commission has authority under PURPA Sections 201 and 21O
and the implementing regulations of the FERC, 18 C.F.R. S 292, to set awided costs, to
order electric utilities to enter into fixed-term obligations for the purchase of energy from
QFs, and to implement FERC's PURPA rules.
ll. THE FlRt EIIIERGY SALES AGREEiIENT
3. On July 28, 2010, ldaho Power and Yellowstone entered into a Firm
Energy Sales Agreement (?greemenf) for the Facility pursuant to the terms and
conditions of the various Commission Orders applicable to this PURPA agreement.
See Order Nos. 30415, 30488, 30738, and 3074,4. A copy of the Agreement is attached
APPLICATION - 2
to this Applicatlon as Attachment No. 1. The Agreement is fur a term of 15 years and
ontains the non-levelized published avoided cost rates established by the Commissbn
in Order No. 30744 for energy deliveries of less than 10 average megawafts ("t\,lw').
4. The nameplate rating of the actually generator will be 11.7 MV\r; however,
subtraction of estimated parasitic loads (energy consumption required to operate the
genenator) result in the Facility nameplate rating being less than 10 lvfw. As defined in
paragraph 1.21 of the Agreement and as described in panagraph 4.1.3 of the
Agreement, Yellowstone will be required to provide data on the Facility that ldaho
Power will use to mnfirm that urder normal and/or average conditions the Facility will
not exceed 10 average [rlW on a monthly basis.
5. Yellowstone has elected a Scheduled Openation Date of December 31,
2011, for the Facility. tf the Facility has not achieved its Operation Date by that date,
Delay Liquidated Damages and associated Delay Security provisions within the
Agrcement arc applicable.
6. Section 21.1 of the Agreement provides that tre Agreement will not
become effiective until the Commission has approved all of the Agreemenfs terms and
oonditions and declared that all payrnents ldaho Power makes to Yellowstone for
purchases of energy will be allowed as prudently incuned expenses for natemaking
purposes.
7. All applicable interconnection study charges under Schedule 72 have
been assessed and collected frcm Yeltowstone. The final interconnection Feasibility
Study is complete and the final Facility Study has also been completed and all required
deposits are being made by Yellowstone. ldaho Power Power Supply has made
APPLICATION.3
application for applicable transmission capacity and has been notified that transmission
capacity is available.
lll'@
8. On March 16, 2010, in Order No. 30125 issued in Case No. GNR-E-10-01,
the Commission adopted new published avoided cost rates for the purchase by ldaho
Power of capacity enegy from PURPA QFs. The rates adopted in Order No. 31025 are
apprcximately 10 percent lower than the rates previously adopted in Case No. GNR-E-
09-Ol, Order No.30744. By its terms, Order No.31025 applim to new PURPA
contracts executed on and afier March 16, 2010. Because the Agreement is dated July
28,2010, Order No. 31025 would require that the rates to be paid Yellowstone under
the Agreement rrvould be the mtes set out in Order No. 31025 rather than the higher
rates approved by the Commission in Order No. 30744. However, this Commission has
recognized in prior orders that there arc situations when QF rates are changed that it is
appropriate to inctude a prior vintage of nates in a cunent PURPA oontract.l ln several
cases titigated in the early to mid-1990s, the Commission determined, and the ldaho
Supreme Court affimed, certain criteria that a QF developer must satisfy in order to
establish an entitlement to sell energy at a particular pubtished avoided cost nate.2 One
of the criteria that would qualifu a particular generating facility to receive the superseded
r:ate requiras that the developer have executed a power sales agreement with the utility
at the rate in question befure a successor rate becomes effective. lf the QF cannot
meet the first criteria, the seoond criteria requires that prior to the new rates effective
' The ldaho Supreme Court has confirmed that it ls within the Commission's iurisdiction to
determine wtrich vintage of QF rates should apply to a PURPA contract. $ee Empire Lumber v.
Washington Water Povrer,114 tdaho 191, 755 P.2d 122€- (19S8) and A.W. Brown h., lnc., v. ldaho
Power @mpany, 121 ldalp 81 2, 828 P.zd 84.'l (1 992).
2 A.W. Elrown, Rosebu4 131 ldaho.
APPLICATION.4
date, the QF developer must have filed a meritorious complaint allegirg that the project
was sufficiently matum and far enough along in the contnaciling prooess that but for the
conduct of the utiltty @mpany, the developer would have been able to sign a onfract
with the utihty containing the superseded rates.
9. ln this Gase, Yellortttone had rnt signed a contnact with ldaho Power to
purchase the Facility genemtion on or beforc March 16, 2010, nor has it flled a
comptaint alleging that ldaho Power acted unrcasonably or in bad faith by not signing
the Agreement by March 16 when the rates changed. However, this Commission has
not concluded that the requirement of the filing of such a complaint is alwaya the most
effective way of presenting the facts in "grandfathered" cases. By signing the
Agreement and voluntiarily submitting it to the Commission, Idaho Polrer has concluded
that Yellounstone meets the criteria described above and should be entitled to the nates
established by Order No. 30744 in Case No. GNR-E-0941.
10. The Company has reeived a number of requests for "grandfathering" of
QF oontracts. ln making a determination to file and support an application urging that a
particular QF project is entitled to the Order No. 30744 rates, the Company oncluded
that a project must have met ALL of the following criteria priorto March 16, 2010.
a. lnterconnec{ion and Transmission
i. Filed an intelconnection application;and
ii. Received and accepted an interconnestion feasibility study
report for the project and paid any nequested study deposits (or established credit) for
the next phase of the interconnection process in accordance with Schedule 72; and
iii. Received confirmation from ldaho Power that transmission
APPLICATION. s
capacity is available for the project and/or received and accepted transmission capacity
study results and cost estimates; and
b. Purchase PowerAoreement
i. An agreoment was materially mmplete prior to March 16,
2010, and except for routine ldaho Power final processing, an agreement would have
been executed by both parties prior to March 16, 2010.
1',. lt is ldaho Porrve/s opinion that the Yellowstone Facility meets the above-
referenced criteria. This proposed projec't is at the same site of a previous 10 I\llW
cogenenation facitity (BC Emmett). ln addition, the tl'ansmission capacity had been
previously revieurcd for a contemplated power plant fur this same site (Renewable
Energy of tdaho - Emmeft Power). Genera! reviews of the transmission capacity
indicated that the tnansmission capacity existed at this site. As strated by ldaho Power in
IPGE-10-16 (Rock Creek), IPGE-10-17 (Swagger Farms), and IPGE-10-18 (Double
B):
. . . in early February, the Company became awarc of some
new procedunal requirements from FERC that affected tte
way that the Facility trould qualifu for a Netrvork Resource
designation and thereby obtain the transmission needed to
bring the power to be generated by the Facility from the
interconnection to the Company load enters. The new
procedure required some changes to the intemal process at
ldalp Power. ldaho Power embarked upon interprcting the
regulations and implementing a process to be in ompliance.
ln ldaho Power's opinion, the Agreement uould have been
signed by both parties prior to March 16, 2010, except for
the time required by ldaho Power to implement the new
intema! transmission and netulork resoul@ proc€ss and, as
a result, the Facility should qualiff for a contract including
the Order No. 30744 rates.
APPLICATION.6
Subsequently, due to the new interpretations of FERC regulations, ldaho Power has
filed for transmission capacity for this proposed Project and receiraed confirmation that
adequate transmission capacity does exist with no additional returork upgrades and
upon completion of a PPA, the Project can be designated as an ldaho Power Network
resource. Yellowstone is cunent in all of its interconnectbn study payments, and so as
long as Yellowstone continues to provide requested information in a timely manner and
pay inroi,ces on time, it appears that the intermnnectbn can be ompleted in time for
Yellowstone to achieve its Scheduled Openation Date for the Facllity. As stated
previously, both a Feasibility and a Facility Study Agreement have been completed br
this Project.
12. During the early months of 2010 (prior to March 16, 2010) ldaho Power
and the principa! rnember of Ydllorustone Power, lnc., Mr. Richard Vinson, were in
fequent communication, usually by telephone, regarding the Proiect and the execution
of a Firm Energy Sales Agreement. As discussed in more detail below, another
company controlled by Mr. Mnson had previously executed a Firm Energy Sales
Agrcement with ldaho Power and, as a consequenoe, Mr. Mnson was familiar wtth the
terms and conditions contained in such agrcements. Wih respect to the povyer
purchase agreement criteria, Yellowstone and ldaho Power had rcsolved and agreed to
all materia! outstanding contract issues prior to Marc*r 16, 2010. Yellowstone has
reprcsented to ldaho Power that if Yellowstone had been made aware of any risk of the
March 16,2010, price change occuning, a written Firm Energy Sales Agreement would
have been requested as all terms ard onditions had already been agrced to, those
terms and conditions being identical to those in the attached Agreemeril. ldaho Power
APPLICATION.T
agre€s that allterms and conditions identicalto the terms and conditions of the attached
Agreement were agreed to with the Projec't prbr to March 16, 2010, and, in the normal
q)urse of business, a written agreemeril was to follow.
13. Since March 16, 2010, Mr. Vinson has been in discussion with both the
IPUC Staff and ldaho Power to determine his options in rcgards to a PURPA Firm
Energy Sates Agreement. ldaho Power has been reviewing the circumstances of this
specific Proied and routinely having discussions with Mr. Mnson. ln early June 2010,
ldaho Power agreed with Mr. Mnson that a reasonable case couH be made that this
Projec{ may be eligible for the contract terms and conditions (pricing) that existed prior
to March 16, 2010. Since early June 2010, ldaho Power has been rlvorking through
intemal contrad drafting and review prcoesses. Any perceived delays frrom early June
2010 to an execution date of July 28,2010, were not due to reconsideration of ldaho
Powefs agreement to pursue the attached Agreement. lnstead the perceived delays
were due to clrange in personnel, intemal review prccesses, and the efforts being
expended on other PURPA contracts and issues.
14. ln addition to the abovedescribed facrts, ldaho Power rcspecffully
requests that the Commission consider the fotlowing additional facts. Yellowstone's
Facility had previously executed a PURPA Firm Energy Sales Agreement with ldaho
Power under a different company for this same site. That company was Renewable
Energy of ldaho LLC ("Renewable Energf) and the Firm Energy Sabs Agreement was
approved in Case No. IPC-E{4{5, Order No. 294i}7. That agreement went into default
and was uftimately terminated when Renqrvable Energy, for reasons it alleges were
belond its contrrol, was unable to meet the operation date of the agreement. Thercafter,
APPLICATION.s
ldaho Power determined it had incuned damages for non-performance in the amount of
$106,804. ldaho Power presented this damage billing to Renenrable Energy and was
infurmed that Renewable Energy did not have the funds or assets b make payment, At
that time, Mr. Vinson oommitted that he was still pursuing derrelopment of both a
sawmitt and a genenation facili$ at this site and, upon @mpletion of a genenation
facility, at a future date he would honor this $106,804 obligation. At this time, the
sawmill has been constructed and is openating and, as evidenced by the attached
Agrement, Mr. Mnson is moving bnrtard with the generation facility.
15. Afthough it may be arguable that the non-performane damage is the
liabi!fi only of the now defunct Renewable Energy, and likely unrecoverable, Mr. Vinson
has agreed to pay the non-performance damage in the ful! amount as an offset to the
energy payments of the Yellowstone Agreement. Payment will be accomplished in 24
monthly installments as a debit against monthly amounts ldaho Power will owe
Yellorrvstone for monthly energy purchases under the Agreement su$ect to this
Application. By approval of the Agreement, the Commission willenable ldaho Pourcrto
recover, for the benefit of its cusbmers, non-perbrman@ damages which it otherwise
likely could not collect. Yellowstone's binding agreement to assume and repay this debt
is attached as Attachment No. 2.
16. Additionally, the present Firm Energy Sales Agreement with Yellowstone
contains the most recent terms and conditions, including the delay and liquidated
damages, as wel! as the security provisions previously approved by the Commission in
the Arena Drop and the Cargill lncorporated cases, Oder Nos. 31060 and 31034,
rcspectiwly.
APPLICATION. g
17. Furthermore, Yellowstone has represented to ldaho Power the blbwing
circumstances, all oocuning prior to March 16, 2A10, which may bear on the
Commission's consideration:
a. The real property upon which the Project is to be located was
purchased from Boise Cascade, lnc., and Yellowstone is the fee ownefi
b. Required environmental remediation has been completed and the
ldaho Department of Envtronmental Quality has issued a final acceptance and permit to
construct; and
c. Significant pourer plant equipment, including boiler, fuel conveyors,
structural steet piping oontrols, and electrical equipment, was purchased at a cost in
ex@ss of $6,000,000 and is on the site or in storage ready for deployment.
18. Based on the foregoing, ldaho Power believes that the Agreement meets
the criteria established by the Commission in its prior orders and that,it would be in the
public intercst forthe Gommission to approve the Agreement as presented.
IV. ilODIFIED PROGEDURE
19. ldaho Power believes that a hearing is not necessary to consider the
issues presented herein and respectfully requests that this Application be processed
under Modifted Prccedure, i.e., by written submissions rather than by hearing. RP 201,
ef seg. lt however, the Commission determines that a technica! hearing is required, the
Company stands ready to present its testimony and support the Application in such
hearing.
APPLICATION.lO
v. coililruNlcATroNs Al{D sERvrcE oF pLEAprNGs
20. Communications and service of pleadings, exhibits, orders, and other
documents rclating to this prooeeding should be sent to the following:
Dorpvan E. Walker, SeniorCounsel
Lisa Nordstrom, Lead Counsel
ldaho Power Company
1221Weat ldaho Strcet
P.O. Box 70
Boise, ldaho 83707
dwalker@ id ahopower.com
[e-mail]
Randy C. Allphin
Energy Contract Adm inistnator
ldaho Pourcr Company
1221 West ldatrc Street
P.O. Box 70
Boise, ldaho 83701
[e-mail]
VI. REOUEST FOR RELIEF
21. ldaho Power Company rcspectfrrlly requests that the Commission issue
an Orden (1) authorilng that this malter may be processed by Modified Prccedure; (2)
approving the Firm Energy Sales Agreement between ldaho Power Company and
Yellovrrstone Power, lnc., wtthout change or condition; and (3) declaring that all
payments for purchases of energy under the Firm Energy Sales Agreement between
Idaho Power Company and Yellowstone Power, Inc., be allowed as prudently incuned
expenses for mtemaking purposes.
Respectftrlly submitted this 13h day of August 2Afi.
E. WALKER
Attomeyfor ldaho Power Company
AP,PI.ICATION. 11
CERTIFIGATE OF MAILING
I HEREBY CERTIFY that on tre 13h day of August 2010 t served a true and
conect copy of the foregoing APPLICATION upon the following named parties by the
method indicated below, and addressed to the followirg:
Yellovstone Pwer, lnc.
Dick Vinson
Yellowstone Power, lnc.
P.O. Box 1539
Thompson Falls, Montana 59873
_Hand DeliveredX U.S. Mail
_Ovemigtrt lvlail_F$(X Email [e-mail]
Dean J. Miler
McDEVITT & MILLER LLP
420 West Bannock Street
P.O. Box 256r"
Boise, ldaho 83701
_Hand DeliveredX U.S. Mail
_ Ovemight Mail
_FA)(X Email [e-mail]
a
E. Walker
APPLICATION, 12
BEFORE THE
IDAHO PUBLIC UTILITIES GOMMISSION
GASE NO. IPC-E-,0Az
IDAHO POWERCOMPANY
ATTACHMENT NO. 1
FIRM ENERGY SALES AGREEMENT
BETWEEN
IDAIIO POWER COMPATIY
A}ID
YELLOWSTONE POWER BIOMASS POWER PROJECT
TABLE OF CONTENTS
Article TTTLE
Definitions
No Reliance on Idaho Power
Warranties
Conditions to Acceptance of Energy
Term and Operation Datc
Puchase and Sale ofNet Enqgr
Purchas€ Price aod M€thod of Paymcnt
Environmental Attributes
Facility and Interconnection
Metering and Telemetry
Records
Opemations
Indemnifi cation and Insurance
Force Majeure
Liability; Dedication
Several Obligations
Waivcr
Choice of Iaws aod Ve,nue
Diqputes and Default
Crovernme, rtal Authorization
CommissionOrdsr
Successors andAssigns
Modification
Taxes
Notices
Additi@al Terms and Conditions
Severability
Counterparts
Eotire Agreement Signatures
I
2
3
4
5
6
7
8
9
l0
ll
t2
r3
r4
l5
16
17
l8
19
20
2t
22
23
24
25
26
27
28
29
Appendix A
Appendix B
Appendix C
Appendix D
FIRM ENERGY SALES AGREEMENT
(10 aI\{W or l".css)
Project Name: Yellowstone Power Biomass power pmject
Project Number: t I 866075
TIIIS AGREEMENT, cntcred into on W @UVofJuly 2010 befivm YELLOWSTONE POWE&
INC., a Montana Corporation authorized to conduct business in the State of Idaho (Seller), and IDAHO pOWER
COMPAIIY, an Idaho corporation (Idaho Power), hereimfter sometimes rcferredto collectivelyas "parties,, or
individually as *Party."
WTINESSETH:
WHEREAS, Seller will design, consffuct, own, maintain and operate an electric generdion facility; and
WHEREAS, Seller wishes to sell, and Idaho Power is willing to purchase, firm electric energr p,roduced
by the Seller's Facility.
THEREFORE, In consideration ofthe mutual covemnts and agreements horeinafter set fortb, the
Parties agrw as follows:
ARTICLEI: DEFINITIONS
As used in this egSeement and the appendices attached he,rcto, the following terms
shall have the following meanings:
l.l '@.-E!@'- Monthly Net Energy less than I l0% of the monthly Net Euergy Amount as specifiod
in paragraph 6.2 of this Agree,ment.
1.2 "e@lqiggigg" - The Idaho Public Utilities Commission.
1.3 @:eaf - The period comme,ncing each calendaryearon the same calendar date as the
Operation Date and ending 364 dap thereafter.
l-4 '@ - Damages payable to Idaho Power as calculated in paragraph 5.3,5.4,
5.5, 5.6 and 5.8.
- 1-
1.5 "DdEy-@" - All days past the Scheduled Operation Date until the Seller's Facility achieves the
Operation Date.
"Ddgyldgg" - The current month's Mid{olumbia Market Energy Cost mintrs the sur€,nt month's All
Hours Energy Price specified in paragraph 7.3 of this ageernent. If this calculation results in a value
less than 0, the result ofthis calculation will be 0.
*Designated Dispatch Facilitv'- Idaho Power's Systems Operations Group, orany subsoquelrt group
designated by Idaho Power.
"Ege!JE!y" - That electric generation facility described in Appendix B of this Agreement
"Fint_Egerg_Date' - The day commencing at 00:01 houns, Mormtain Time, following the day that
Seller has satisfied the require, ents of Article IV and the Seller begins delivering energy to Idaho
Power's system at the Point of Delivery.
"IIB14114ed [I1EE' - The daily hours beginning at 7:00 am, €ding at 11:00 pm Mormtain Time, (16
hours) orcluding all hours on all Sundays, New Years Day, Memrorial Dan Indepeirdence Day, labor
Day, Thanksgving and Christmas.
*Inad@en-!_Eosrg" - Eletric energy Seller does not intelrd to g€trerate.Inadvertent ooer$I is more
particularly described in paragraph 7.5 of this Agreem€nt.
"Interconnection Facilities" - All equipment specified in Schedule 72.
*Initial Capacity Determination' - The process by which Idaho Power confirms that under normal or
average design conditions the Facility will generate at no more than 10 average MW per month and is
therefore eligible to be paid the published rates in accordance with Commission Order No.29632.
"UgbJOgd Horuq'- The daily hours beginning at I l:00 pm, ending at 7:00 am Mountain Time (8
hours), plus all otherhours on all Sundays, New Years Day, Memorial Day,Independence Day, t abor
Day, Thanksgving and Christmas.
"loggesl'- The loss of elctrical energy expressed in kilowatt hours (kWh) occuning as a rezult of the
transfomration and transmission of energy between the point where the Facility's €nergy is meterpd and
the point the Facility's en6gy is delivered to the Idaho Power electrical system. The loss calculation
formula will be as specified in Appendix B of this Agreement.
1.6
1.7
1.8
1.9
1.10
1.ll
1.12
1.13
1.14
1.15
l.16 *Mafket hergy Refcrcoce Prioe" - Eighty-five perc€nt (8570) of the Mid-Cohrmbia Martet Encrgy
Cost.
t.t7
l.l8
"Mgg[4lE!9A&" - A Default (paragraph 19.2.1) subject to paragrryh 19.2.2.
"Maxi4um Capacity Amount" - The msximum capacity (MW) of the Facility wifl be as specified in
Apperdix B of this Agreemeirt.
'n4e&rigg-Eggi@eirf' - All equiprnent specified in Schedule 72, this Agreemelrt and any additional
equipnent specified in Appendix B required to measure, record andtelemaerbi directional power
flows betweeir the selleds electric generation plant and Idaho poweds syste,m.
"Mid- Columbia Market Energy Cost' - The monthly weigbted av€rage of the daily on-peak and ofl
peak Dow Jones Mid{olumbia Index (Dow Jones MidC Index) prices for non-firm energy. If the Dow
Jones Mid{olumbia Indor price is discontinued by the reporting agency, both Parties will muttrally
agree upon a rtplacemeirt index, which is similar to the Dow Jones Mid-Cohrmbia Index. The selected
replacemeirt index will be consist€nt with other similar.agp66gats and a commonly used index by the
electrical industry.
"Na!q@lg!9-eg@iff'-The full-load electrical quantities assigned bythe designerto a geireratorand its
prime mover or other piece of electrical equipment, such as hansformers and circuit breakers, under
st ndardized conditions, eryressed in ampercs, kilovolt-amperers, kilowatts, volts or other appropriate
units. Usually indicated on a nameplate attached to the individual machine or denice.
rog fuggf'- All of the elechic energy produced by the Facility, less Sation Use, less Losses,
expressed in kilowatt hours ftWh). Subject to the terms of this Agreemeot, Seller commits to deliver all
Net Eneqg5r to ldaho Power at the Point of Delivery for the full term of thc Agrcemeot. Net Energ;r does
not include Inadverte,nt Energy.
'.operationDate,'- Thc day commencing at 00:01 hours, Mountain Time, following the day that all
requfurments of paragraph 5.2 have beeo completed.
"Eqint of DeliYd'- The locatiou specified in Appendix B, where Idaho Power's and the Seller's
electrical facilities are interconnected and the elr€rgy frrom this Facility is delivered to the Idaho Power
electrical system.
-3-
1.19
1.20
t.2r
1.22
1.23
1.24
1.25
1.25
1.27
1.28
1.29
1.30
t.31
1,.32
'Pnrdeirt Electrical Practices" - Those pmactices, methods and equipmeirt that arre commonly and
ordioarily used in electical elrgine€ring and operations to operate electric equipment lawfully, safely,
dependably, efficiently and economically.
"@'-The date specified in Appendix B when Selleranticipates achievingthe
Operation Date. It is expec'ted that the Scheduled Operation Date provided by the Seller shall be a
reasonable estimate of the date tlrat the Seller anticipates that the Seller's Facility shall achisve the
Operation Date.
"schedule 7?'- Idaho Power's TariffNo l0l, Schedule 72 or its suscessor schedules as approved by
the Commission. The Seller shall be respo,nsible to pay all costs of interconnestion and integration of
this Facility into the Idaho Power electricat syst€Nn as specified within Schedule 72.
*E@' - The thr€e periods ideotifi€d in paragraph 6.2.1 of this Agreemeot.
"special Facilities" - Additions or alterations of transmission and/or disftibution lines and transformers
as fuctibed in Schedule 72.
"station fJsel - Elestric enerry that is used to operate equipment that is auxiliary or otherwise related to
the production of electricrty by the Facility.
"Sldus_Eoerg" - Is (1) Net Eneqgr produced by the Seller's Facility and delivered to the Idaho Power
elec{rical system during the month which exceeds 110% of the monthly Net Energy Amount for the
correspondiog month specified in paragraph 6.2. or (2) If the Net Encrgy produced by tbe Sellcr's
Facility and delivered to the Idaho Power electrical systern drning the month is less than 90plo of the
monthly Net Enerry Amount for the corresponding month specifid in paragraph 6.2,tha.all NC
Energy delivered by the Facility to the Idaho Power electical system forthat give'n month or (3) All Net
Euerry produced by the Seller's Facility and delivered by the Facility to the ldaho Power electrical
system priorto the Operation Date.
@'- The total cost of stmsturcs, equipment and appurtenances.
-4-
2.1
2.2
3.1
3.2
ARTICLE tr: NO RELIANCE ON IDATIO FOWER
Scller Indepe,nde,nt Investigation - Sellerwarrants and represents to Idaho Power that in entering into
this Agrpe,ment and the undertaking by Seller of the obligations set forrh herein, Seller has investigated
and daermined that it is capable of ffiorming hereunder and has not relied upon the advice,
experience or expertise of Idaho Power in connectiou with the tnansactions contemplated by this
Agreement.
Seller Indeoendeit Experts - All professimals or experts including, but not limited to, engineers,
attortreys or accouotants, that Seller may have consulted or relied on inundertaking the transactions
contemplated by this Agreement have beeir solely those of Seller.
ARTICLE trI: IIARRANTIES
No Warranty bL-Idaho Power - Any review, acceptanoe or failurc to review Seller's design,
specifications, eguipnent or facilities shall not be an eirdorsement or a confirmation by Idaho Power and
Idaho Power makes no wamanties, expressed or impliod, regarding any aspest of Selleds design,
specifications, equipme,nt or facilities, including but not limited to, safety, durability, reliability,
shength, capacity, adoquacy or economic feasibility.
Oualiftine Facility Status - Seller warrants that the Facility is a "Quali&ine Facility," as that term is
used and defind in l8 CFR 292.201et seq. After initial qualification, Seller will take such steps as may
be required to maintain the Facility's Quali$ing Facility status during the tenn of this fureement and
Seller's failurc to maintain Qualiffing Facility status will be a Material Breach of this Ageement.
Idaho Power r€serves the right to neview the Facility's Quatiffing Facility status and associated zupport
and compliance documeirls at anytime during the term of this Agrwment.
ARTICLE IV: CONDITIONS TO ACCEPTA}.ICE OF ENERGY
Prior to the First Energy Date and as a condition of Idaho Power's acceptance of deliveries of e,nergy
from the Seller under this Agreement, Seller shall:
4.1
-5-
4.t.1
4.t.2
4.1.3
Submit proof to Idaho Power that all lioenses, p€rmits or approvals nec€ssary for Seller's
operations have been obtained from applicable federal, state or local auhorities, inoluding, but
not limited to, evidence of compliance with Subpart B, I 8 CFR 292.201 et s€q. as a certified
Quali&ing Facility.
Opinion of Counsel - Submit to Idaho Power an Opinion [-ettur signed by an atlorney admitted
to practice and in good sAnding in the State of Idaho pnoviding an opinion that Seller's lic€nses,
p€rmits and approvals as s€f forth in paragaph 4.1.1 above are legatly and validly iszued, are
held in the name of the Seller and, based on a reasonable independent review, counsel is of the
opinion that Srell€r is in substantial compliance with said permits as of the darc of the Opinion
I.ettor. The Opinion L€tt€r will be in a form acceptable to Idaho Power and will acknowledge
that the attomey rendering the opinion uderstands that ldaho Power is relying on said opinion.
Idaho Power's apc€,ptance of the form will not be unreasonably withheld. The Opinion l.e/,lur
will be govemed by and shall be interpnreted in accordance with the legal opinion accord of the
American Bar Association Section of Business Law (1991).
Initial Capacity Deternrination - Submit to Idaho Power such data as Idaho Power may
reasonably require to perform the Initial Capacity Determination. Such dsta will include but not
be timited to, Nameplate Capacrty, specifications, prime mover dat& r€source
chaxacteristics, normal and/or average oe€rating design conditions and Station Use data. Upon
receipt of this infmmation, Idaho Power will review the providd data and if necessary, rcquct
additional data to complete the Initial Capacity Determination within a reasonable time.
4.1.3.1 If the Maximum Capacity specified in Appendix B of this Agree,ment and the
cumulative manufacture Nameplate Capacity rating of the individual generation units at
this Facility is less than 10 MW. The Seller shall submit detaile( manufacturer,
verifiable data of the Nameplatc Capacity ratings ofthe actual individual generation
units to be installed at this Facility. Upon verification by Idaho Power that the data
provided establishes the combined Nameplate Capacity rating of the generation units to
-6-
4.1.4
4.1.5
4.t.6
4.1.7
4.1.8
4.1.9
be installed at this Facility is less than l0 MW, it will be deemd that the Seller has
satisfied the Initial Capacity Determination forthis Facility.
Namelrlate Cryacity - Submit to Idaho Power manufacturer's and e'ngineering documentation
that establishes the Nanreplate Capacity of each iadividual generation unit that is included
within this entire Facility. Upon reoeip of this data, Idaho Power shnll review the provided data
and determine if the Nameplate Cryacity specified is reasonable based upon the manufacturer's
specified generation rdings for the specific generation units.
Engineer's Certifications - Submit an executed Engiueeds Cectification of DcsigD &
Constnrction Adequacy and an Fngrn66ds Certification of Operations and Maintenance (O&M)
Policy as described in Commissioa Orrder No.21690. These certificates will be in the form
specified in App€ndix C but may be modified to the extent rccessary to recognize the differcot
engineering disciplines providing the certifi cates.
Insrumnce - Submit written proof to Idaho Power of all insurance required in Article XItr.
Interconnection - Provide written confirmation fum Idaho Power's delivery business tmit that
Seller has satisfied all interconnection rquirements.
Network Resource Dcsignation - The Seller's Facility has been designated as a networt
resouroe capable of delivering firm eirergyup to the amount of the Maximum Capacity.
Written Acceptanc€ -Request and obtain written confirmation from Idaho Powerthat all
conditions to acceptance of energy have beeo fulfilled. Such writteir confirmation shall be
provided within a commcrcially reasonable time following the Seller's request and will not be
unreasonably withheld by Idaho Power.
5.1
ARTICLE V: TERM A}.iD OPERATION DATE
Term - Subjoct to the provisions of paragraph 5.2 below, this Agreement shall become cffegtive on the
date first written and shall continue in full force and elfect for a period of Fifteen (15) Contract Years
from the Operation Date.
7
5.2 Operation Date - The Operation Date may occur only after the Facility has achieved all of the following:
a) Achiwed the First Energy Date.
b) Commission approval of this Agreemelrt in a form acceptable to Idaho Power has be€rr
received-
c) Seller has dernonstrated to ldaho Power's satisfaction that the Frcility is complAe and able
to p,rovide coergly in a consistenf reliable and safe mann€f,'.
d) Seller has requested an Operation Date from Idaho Power in a written format.
e) Seller has received written confinnation frrom Idaho Powq of the Operation Date. This
confirmation will not beunreasonablywithheld by Idaho Power.
5.3 Operation Date Delay - Seller shall cause the Facility to achieve the Operation Date on or before the
Scheduled Operation Date. Delays in the interconnection and tnansmission network upgrade study, design
and constnrction prcces$ that ere not Force Majeure eveirts acc€eted by both Parties, shdl not preve' rt
Delay Liquidatod Damages from being due and owing as calculated in accordance with this Agreement.
5.3.1 If the Operation Date occurs after the Scheduled Operation Date but on or prior to 90 days
following the Scheduled Operation Date, Sell€r shall pay Idaho Power Delay Liquidated
Damages calculated at the eird of each caleirdar month after the Schcduled Operation Date as
follows:
Delay Liquidated Damages ax€ equal to (Currerf month's Initial Year Net Enerry
Amount as qpecified in paragraph 6.2.1 divided by the number of dap in the current
month) multiplied by the number of days in the Delay Period in the current month)
multiplied by the cur€,lrt month's Delay Price.
5.3.2 If the Operation Date does not occur within ninety (90) days following the Scheduled Operation
Date the Seller shall pay Idaho Pon'er Delay Liquidatod Damages, in addition to those provided
in paragraph 5.3.1, calculated as follows:
Forfy five dollam ($45) multiplied by the Maximum Capacity with the lvla:rimum
Capacity being measured in kW.
-8-
5.4 If Seller fails to achieve the Operation Date within ninety (90) days following the Scheduled Operation
Date, such frilure will be a Material Breach and Idaho Power may terminate this Agreement at any time
until the Seller cures the Material Breach. Additional Delay Liquidatd Damages beyond those
calculated in 5.3.1 and 5.3.2 will be calculated and payable using the Delay Liquidated Damage
calculation d€scriH in 5.3.1 above for all days orcecding 90 days past the Scheduted Opcration Date
until such time as the Seller ctres this Matedal Breach or Idaho Power terminates this Agreement.
Seller shall pay Idaho Power any calculated Delay Damages or Delay Liquidat€d Daoages within 7
dap of when Idaho Power calculates and prcsents any Delay Damages or Delay Liquidated Damages
billings to the Sell€r. Seller's failure to pay these damages within the specified time will be a Marcrial
Breach of this Agreement and Idaho Power shall draw funds frrom the Delay Security provided by the
Seller in ao amount equal to the calculated Delay Damages or Delay Liquidat€d Damages.
Thc Parties agree that the damages Idaho Power would incur due to delay in thc Facility achieving the
Operation Date on or before the Scheduled Operation Date would be difficult or impossible to predict
with certainty, and that the Delay Liquidatd Damages are an appropride 4proximation of zuch
damages.
Prior to the Seller executing this Agreement, the Seller shall have agrced to and executed a trtter of
Understanding with Idaho Power that contains at minimum the following rcquirem€ots:
a) Seller has filed for interconnection and is in compliance with all palmeots and
requiremcots of the interconnection process
b) Seller has received aud accesed an interconnection feasibility study for this
Facility.
c) Seller has provided all information required to enable ldaho Power to file an initial
tansmission capacity request.
d) Results of the initial transmission capacity request are tnown and acceptable to the
Seller.
5.5
5.6
5.7
-9-
5.8
e) Seller acknowldges responsibility for all intercoonection costs and any costs
associated with acquiring adequate firm transmission capacity to enable the project
to be classified as an Idaho Power firm network resounce.
f) If the Facility is located outside of the Idaho Power serrdce territory in addition to
the above requirements, the Seller must provide evidonce that the Seller has
acqufu€d firm hansmission capacity ftom all requiredtansmiring entities to deliver
the Facility's energy to an acceptable point of delivery on the Idaho Power
el*trical system.
Within thify (30) days of the date of a final non-appealabte ordcr as specified in Article XIO approving
this Agreemelrt the Seller shall post liquid sectrity (Detay S€curiy) in a form as described in
Appendix D equal to or exceeding the amount calculated in paragraph 5.8.1.
5.8.1 Delay Security The great€r of forty five ($45) multiplied by the Maximum Capacrty with the
Maximum Capacrty being measued in kW or the sum of three month's estimated revenue.
Where the estimated three months of revenue is the estimated revetrue associatod with the first
thrce full months following the estimated Scheduled Ope,ration Date, the estimated kWh of
€n€rgy production as specified in paragraph 6.2.1 for those tbree months multiplied by the All
Hours Energy Price specified in paragraph 7.3 for each of those three months.
5.8.1.1 In the evelrt (a) Seller provides Idaho Power with certifrcatioo that (1) a generation
interconnection agreement speci&ing a schedule that will enable this Facility to achieve
Oe Operation Date no later than the Scheduled Operation Date has been complaed and
the Seller has paid all required intercoonection costs or (2) a geoeration interconnection
agreement is substantially complete and all material costs of interconnection have been
identified and agreed upon and the Seller is in compliance with all terms and
conditions of the generation intercormection agreom€Nrt, the Delay S€curity calculated
in accordance with paragraph 5.8.1 will bc reduced by teo percent (10olo).
5.8.1.2 If the Seller has received a rpduction in the calculated Delay Sectrity as specified in
paragraph 5.8.1.1 and subsequently (1) at Seller's requ€st, the generation
- 10,
interconnection agree,ment specified in paragpaph 5.8.1.1 is revised and as a result the
Facility will not achieve its Operation Date by the Schedrled Operation Date or (2) if
the Seller does not maintain compliance with the geoeration interconnection agreemenl
the full amount of the Delay S€curity as calculated inparagraph 5.8.1 will be zubject to
reinstatement and will be due and owrng within 5 business days ftom the date Idaho
Power reqtrests rcinstatement. Failure to timcly reinshte the Delay Secwity will be a
Material Brpach ofthis Agreement.
5,8.2 Idaho Power shnll r€lease any remaining sesurity posted hereund€r aftcr all calculated Delay Damages
and/or Delay Liquidat€d Damages are paid in full to Idaho Power and the earlier of (1) 30 days after the
Operation Date has be€o achieved or (2) 60 days after the Agreemeot has been terminated.
6.1
6.2
ARTICLE VI: PTJRCHASE AT.ID SALE OF NET ENERGY
DeliveryandAcceptanceofNetEnerg -Except when either Party's performance is excused as
provided herein, Idaho Power will purchase aod Seller will sell all of the Net Energr to Idaho Power at
the Point of Delivery. All Inadverte,nt Eneqgy producd by the Facility will also be dclivered by the
Seller to Idaho Power at the Point of Delivery. At no time will the total amouat of Na Energy and/or
Inadverte,nt Energy produced by the Facility and delivered by the Seller to the Point of Delivery exceed
the Maximum Capacrty Amormt.
Net EnerEy Amormts - Seller intends to produce and deliver Net Enerry in the following monthly
amounts:
6.2.1 Initial Year Monthly Net Energy Amounts:
Month
Season I
March
April
May
- 1l-
HE
7,440,000
7,200,000
7,440,000
Season 2
July
August
November
Deember
June
September
October
January
February
7,440,000
7,W,Wo
7,2oo,ooo
7,M0,N0
7,200,000
7,200,000
7,4ll0,000
4A@,0W
6,720,004
Season 3
6.2.2 Ongoing Monthlv Net Energy Amounts - Sella shall initially provide Idaho Powcr with one
year of monthly generation estimates (Initial Year Monthly Nct Eneryy Amounts) and
beginning at the end of month nine and every thrce months thereafter prcvide Idaho Power with
an additional three months of forward gencration estimates beyond those generation estimates
previously provided. This information will be providod to Idaho Power by writte,n notice in
accordance with paragraph 25.1, no lat€r thao 5:00 PM of the 56 day following the end of the
prwious month. If the Seller does not provide the Ongoing Monthly Net Enerry Amounts in a
timely ftlnner, Idaho Powcr will use the most rcc€nt 3 montbs of the Initial Year Monthly Nct
EnergSr Amounts specified in paragraph 6.2.1 for the next 3 months of monthly Net Energy
amounts.
6.2.3 Seller's Adiusheirt of Nef EncrgirAmount
6.2.3.1 No later than the Operation Dat6, by written notice given to Idaho Power in apcordance
with paragraph 25.1, the Seller may revise all of the previously provided Initial Year
Monthly Net Energy Amounts.
6.2.3.2 Beginning with the end of the 9th month aftEr the Operation Date aod d the end of
every third month therreafter: (l) the Seller may not revisc the immediate next tfuee
months of previously providod Net Energy Amountso (2) but by written notice given to
Idaho Power in accordance with paragraph 25.1, no fuler rhan 5:00 PM of the 5* duy
following the end of the previous month, the Seller may revise all other previously
- 12-
6.2.4
p(ovided Net Energ5r Amounts. Failure to provide timely writteo notice of changed
amounts will be deemed to be an election of no change.
Idaho Power Adiustuent of Net Enerw Amormt - If ldaho Power is excusod Aom accepting the
Seller's Net Energr as specified in paragraph 12.2.1 or if the Seller declares a Suspensioa of
Eaerg5r Deliveries as specified in paragraph 12.3.1 and the Scller's d€clared Suspension of
Eneqgy Doliveries is accepted by ldaho Power, the Net Eneqgy Amount as specified in
paragmph 6.2 fot the specific month in which the reduction or suspeirsion uader paragraph
12.2.1 or 12.3.1 occurs will be rduced in accordance with the following:
Where:
NEA Current Moath's Net Energr Amount (Paragraph 6.2)
SGU a-) If Idaho Power is er(cused from accepting the Seller's Net
Energy as specified in paragraph 12.2.1 this value will be
equal to the p€rcentage of curailment as specified by
Idaho Powermultiplied by the TGU as defined below.
b.) If the Seller declares a Suspension of Energr Deliveries as
sp*ified in paragraph I2.3.1 this value will be the sum of
the individual gene,ration units size natings as specified in
Appeodix B that arc impactod bythe circumstances
causing the Sellerto declarc a Suspension of Encqgy
Deliveries.
TGU Sun of all ofthe individual generatorratings of the generation
units at this Facility as specified in Appendix B ofthis
agrc€meNrt.
= Actual hours the Facility's Net Energy deliveries were either
reduced or suspended under paragraph 12.2.1 or 12.3.1
= Actual total hours in the current month
Resulting formula being:
Adjusted
Net Energy =
Amouut
RSH
TH
NEA ((x NEA ) x( rH ) )TGU
This Adjusted Net Energy Amount will be usod in applicable Surplus Eneqgy calculations for only thc
specific month in which Idaho Power was excused from acoepting the Seller's Net Energy orthe Seller
- 13-
6.3
7.1
7.2
Year
2010
2011
20t2
2013
2014
2015
20t6
2017
2018
2At9
2020
2021
2422
2423
20?4
2025
2026
2027
2A28
2029
2030
2031
declared a Suspension ofEnergy.
Unless excused by an event of Force Majeure, Seller's failure to deliver Net Energy in any Contract
Year in an amount equal to at leasJ ten p€rceot (10y") of the sum of the Initial Yar Net Energy
Amounts as specified in paragraph 6.2 shall oonstitute an evelil of default.
ARIICLE YII PI.]RCHASE PBLCE AND METHOD OF PAYMEM
Base EnergyHeavy Ioad Purchase Price - For all Base Energy rweived during Heavy Inad Hours,
Idaho Power will pay the non-lwelized energr price iu accordance with Commission Order 3W44,
30738 and adjusted in accordance with Commission Order 30415 for Healy toad Hour Energy
deliveries with seasonalization factors applied:
Season l -Q3.50Vo)
MilsftWh
57.98
59.54
61.22
62.62
64.05
65.52
67.10
68.63
70.29
71.91
73.56
7s.26
76.99
78.78
80.60
82.47
84.75
87.10
89.53
92.03
94.60
96.69
Season2-(l20.A0Yo)
Mills/kWh
94.67
97.21
99.9s
r02.23
104.57
106.97
109.55
112.0s
r14.77
117.40
120.10
t22.87
125.70
128.61
l3l.s9
134.65
138.37
142.21
r46.t7
150.2s
154.45
157.85
Season3-(1@.007o)
Mils/kWh
78.89
81.01
83.29
85.19
87.14
89.14
9t.29
93.38
95.@
97.83
100.08
102.39
r04.75
107.18
109.66
l12.2l
1I5.31
118.51
l2l.8l
125.21
t28.71
131.55
Base EnergtrLieht l.oad Purchas€ Price - For all Base Energy received during Light Inad Hours, Idaho
Power will pay the nonlevelized coergy price in accordance with Commission Orr(ler 3074/.,30738 and
-t4-
adjusted in accordancc with Commission Order 30415 for Light toad Hour Eneryy deliveries with
seasonalization factors applied :
7.3
Year
2010
201 I
2012
2013
20r4
2015
2016
2017
zot8
2019
2020
202t
2022
2423
2024
2025
2026
2027
2428
2029
2030
2A3t
Year
2010
2011
2At2
2013
20t4
2015
2016
20t7
20r8
20t9
Season | -(7350YA
Mills&Wh
52.63
54.t9
55.87
57.27
58.70
60.17
6t.75
63.28
&.94
66.s6
68.21
69.90
71.64
73.42
75.25
77.12
79.40
81.75
84.18
86.68
89.25
91.33
Season 2-(120.A0W
Mills/kwh
85.93
88.47
91.21
93.49
95.83
98.23
100.81
103.32
106.03
108.66
l 11.36
tt4.t3
tt6.n
I19.88
r22.86
125.9t
129.il
133.48
137.43
141.51
145.7t
149.t2
Season3-(100.0070)
Mills/kWh
71.61
73.73
76.0t
77.9t
79.86
81.86
84.01
86.10
88.36
90.5s
92.80
9s.11
97.47
99.90
102.38
104.93
108.03
111.23
114.53
1t7.93
121.43
|u.27
All Hours Ener8ry hice - The price to bc used in the calculation of the Surptus Energy Price and Delay
Damage Price shall be the non-lerrelized en€rgy price in accordance with Commission Order 30744 and
30738 with seasonalization factors ryplied:
Season l -(73.50YA
Mills/k}lrh
55.60
57.16
58.84
60.24
6t.67
63-14
il.72
66.25
67.91
69.s3
Season2 -(120.0oYo)
Mills/kWh
90.78
93.32
96.06
98.34
100.68
103.08
105.66
108.17
u0.88
113.51
Season3-(100.00o/o)
Mills&Wh
75.6s
77.77
80.0s
81.95
83.90
85.m
88.05
90.14
92.N
94.59
- 15-
2020
2A2r
2022
2023
2024
202s
2026
20n
2028
2029
2030
203r
71.18
72.87
74.6t
?6.39
78.22
80.09
82.37
u.72
87.15
89.64
92.22
94.30
tt6.2l
I18.98
121.82
124.72
tn.7l
130.76
1t4.49
138.32
t42.28
tM.36
150.56
r53.n
96.84
99.15
101.51
103.94
106.42
108.97
ttz.07
1t5.27
118.57
121.97
125.47
128.31
7.4
7.5
7.6
Surplus Energy Price - For all Surplus Energy, Idaho Power shall pay to the Seller the current month's
Mar&et Energy Reference Price orthe Alt Hours Energy Price specified in paragraph 7.3, whichwer is
lower.
Inadvertent Enerw-
7.5.1 Inadvertent Energy is electric eirergy produced by the Facility, expre$sed in kWL which the
Setler detvers to Idaho Power at the Point of Delivery that exceeds [0,000 kW multiplied
by the hours in the specific month in which the energy was delivered. (For example
January contains 744 hours. 744 hours times 10,000 kW = 7,44,000 kwh. Eneqgy
delive,red in January in excess of 7 A40,000 kwh in this example would be lnadvertent
Energy.)
7.5.2 Although Setler intends to design and operate the Facility to generate no more than
l0 average MW andthcrefore does not intend to generate lradvertent Energy, Idaho Powel
will accept Inadverte,lrt Energ5r that does not exoed the Maximum Capacity Amount but
will not purchase or pay for Inadverte,nt Eneqgy.
Payment Due Date - Undisputed Energy payments, less any pa)'m€ots due to Idaho Power will be
disbursed to the Seller within 30 days of the date which Idaho Power receives and accepts the
documentation of the monthly Net Energy actually delivered to Idaho Power as specified in
AppendixA.
- t6-
7.7 Continuins Jurisdiction of the Commission,This Agreement is a special conhact ao{ as such, the rates,
terms and conditions contained in this Agreement will be consfired in accondance with ldaln Power
comwnv v. Hano nofu utilffieg conntsston ond , 107 rdaho 781, 693 P.zd 427
(1984), Idaho Power Comwny v. Idaho Publie Utilities Commission.l0T Idaho ll?2,695 P.?A I 261
(1985), ,4fion Energt.Inc. v. Idaho Power,Convnny,lll Idaho 925,729 P.2d 400 (1986), Sestion 210
of the Public Utilities RegulatoryPolicies Act of 1978 and 18 CFR $292.303-308
ARTICLE VIft ENVIRONMENTAL ATTRIBUTES
8.1 Seller retains ournership underthis Agroement of Green Tags and Reirewable Energy Certificate
(RECs), or the equivalent environmental atfibutes, directly assooiatod with the production of energy
from the Selleds Facility soldto Idaho Power.
9.1 Desigr of Facility - Sellerwill design, consEucto instalt, own, operate and maintain the Facility and any
Seller-owned Iaterconnection Facilities so as to allow safe and reliable geireration and delivery of Net
Energy and Inadverteirt Energy to the Idaho Power Point of Delivery for the full term of the Agreement.
ARTICLE X: METERING A}.ID TELEMETRY
10.1 Meterine - Idahq Power shall, for the acoormt of Seller, prcvide, install, and maintain Metering
Equipment to be locatd at a mutually agreed upon location to record and measure power flows to Idaho
Power in accordance withthis Agree,ment and Schedule 72. TheMetering Equipment wilt be at the
location and the tlpe r€quired to measurc, record and report the Facility's Net Energy, Station Use,
Inadvertelrt Eneqgy and maximum energy deliveries (kW) at the Point of Delivery in a manner to
provide Idaho Power adequate energymeasurement data to administerthis Agrc€ment andto integrate
this Facility's energyproduction into the Idaho Powerelechical syttem.
10.2 Telemety - Idaho Power will install, orperate and maintain at Selleds expoNrse communications and
telemetry equipment which will be capable of providing Idaho Power with contintrous instantaneous
- t7-
telemetry of Sellels Net Energr and Inadverteirt Eneryy produced and delivercd to the Idaho Power
Point of Delivery to Idaho Poweds Designated Dispatch Facility.
ARTICLE XI - RECORDS
I I .l Mainte,rance of Records - Seller shall maintain at the Facility or such other location mutually acceptabte
to the Parties adequate total gene,ration, Net Energy, Station Use, Inadverte,lrt Energy and maximum
generation ftW) records in a form aud content acceptableto Idaho Power.
ll.2 Inspection - Either Parfy, aft€r reasonable notice to the other Party, shall have the rigbt furing normal
business hours, to inspect and audit any or all generation, Net Enetgl, Station Use, Inadvertent Energy
and marimum gene,ration ftW) records pertaining to the Sellet's Facility.
ARTICLE XII: OPERATIONS
12.l Communications - Idaho Power and the Seller shall maintain appropriate operating communications
through Idaho Power's Designated Dispatch fasility in accordance with Appendix A of this Agreement.
12.2 EnergyAcceptance-
12.2.1 ldaho Power shall be excused from accepting and paying for Net Energy or accepting
Inadvertent Energy which would have otherwise been produced bythe Facility and deliveredby
the Seller to the Point of Delivery, if it is prevented fmm doing so by an event of Force
Majeure, or temporary disconnection of the Facility in accordance with Schedule 72. lf, for
reasons other than an ev€nt of Force Majeure, a temporry disconnection uuder Schedule 72
exceeds tw€Nty (20) days, beginning with the twenty-first day of such intemrptio'n, sutailn€ot
or reduction, Seller will be deemed to be delivering Net Enerry at a rate equivale'nt to the pro
rata daily average of the amounts spwified for the applicable month in paragraph 62. Idaho
Power will notiS Seller when the intdmrption, curtailment or rduction is terminated.
12.2.2 lf,in the ncasonable opinion of Idaho Power, Selleds operation of the Facility or Interconnectim
Facilities is unsafe or may otherwise adversely affect Idaho Poweds equipme,nt, personnel or
service to its customers, Idaho Power may temporarily disconnect the Facility from Idaho
- 18-
t2.2.3
12.2.4
Power's transmission/distnlbution system as specified within Schedule 72 or take such other
reasonable steps as Idaho Power doems appopriate.
Under no circuostaoces will th Seller deliver Net Energy and/or Inadvertent Enrgl from the
Facility to the Point of Delivery in an amount that €xceeds the Maximum Capcity Amount.
Seller's failure to limit deliveries to the Maximum Capactty Amount will be a Material Breach
of this Agreement.
If ldaho Power is unable to accept the energy from this Facility and is not orcused from
acc€ptitrg the Facility's €nergy, Idaho Power's damagcs shall be limitd to only the value ofthe
estfunatod €trergy that Idaho Power was unable to acoept. Idaho Power will have no
responsibility to pay for any other costs, lost revenue or consoqueotial d"mages the Facility may
lncur.
12.3 Seller Declared Suspension of Energy Deliverics
12.3.1 If the Seller's Facility experiences a forced outage due to frilure which is not causd
by an event of Force Mqjeure or by neglectn disrepair or lack of adequate preventative
maintenance of the Sellerns Facility, Seller may, after giving notice as provided in paragraph
12-3.2 below, temporarily suspend all deliveries of Na Energyto Idaho Power from the Facility
or fr,om individual generation uoi(9 within the Facility impactd by the forced outage for a
period of not less than 48 hours to correct the forced outage condition ("Dsclarcd Suspension of
Energy Deliveries'). The Seller's Declared Suspension of Eneqgy Deliveries will begin at the
start of the next full hour following &e Seller's telephone notificatiou as specified in paragraph
12.3.2 and will conrtinue for the time as speified (not less than 48 hours) in the nrritte,n
notilication provided by the Seller. In the month(s) in which the Delared Suspensioa of Enerry
occurred, the Net Energ5r Amount will be adjusted as specified mparagraph6.2.4.
12.3-2 If the Seller desircs to initiate a Declared Suspeirsion of Eneqgr Deliveries as provided in
paragaph 12.3.1, the Seller wilt notiff the Designated Dispatch Facility by telephone. The
beginning hour of the Declared Suspension of Energy Deliveries will be at the earliest the next
full hour after making telephooe contact with Idaho Power. The Seller will, within 24 hours
- t9-
after the telephone contact, provide Idaho Power a written notice in accordanoe with XX[V that
will contain the beginning hour and dtration of the Declared Suspe, sion of Eoergy Deliveries
and a descripion of the conditions that caused the Seller to initiate a Declared Suspeirsion of
Energy Deliveries. Idaho Power will review the documentation provided by the Seller to
determine ldaho Power's acc€ptaroe of the describod forced outage as quali$ing for a Declarpd
Suspension of Energy Deliveries as specifiod in paragraph 12.3.1. Idaho Power's acccptanoe of
the Seller's forced outage as an acceptable forced outage will be based upon the clar
documentation provided by the Seller that the forced outage is not due do an evelrt of Force
Majeure or by neglect, disr€pair or lack of adequate preventative mainte,nance of the Seller's
Facility.
12.4 Schcduled Maintenance - On or before January 3l of each caleirdar year, Seller shall submit a written
proposed maint€nanco schedule of significant Facility maintenance for that calendar year aad Idaho
Power and Seller shall mutually agree as to the acceptability of the proposed schedule. The Parties
determination as to the acceptability of the Seller's timetable for scheduled mainteirmce will take into
consideration Prudeirt Electrical Practices, Idaho Power system requirements and the Seller's preferred
schodule. Neither Party shall unreasonably withhold acceptance of the pro,posed mainteirance schedule.
12.5 Mainteqance Coordination - The Seller md Idaho Power shall, to the exteirt practical, coordinate their
respective line and Facility maintenance schedules such that they occur simultaneously.
12.6 Contact Priorto Curtailment - Idaho Po*,er will make a reasonable att€mpt to oontact the Seller prior to
exe,rcising its rights to interruprt interconnection or curtail deliveries from the Seller's Facility. Seller
understands that in the case of emerge,ncy circumstan@s, real time operations of the elecfical system,
and/or unplanned events Idaho Power may not bc able to provide notice to the Seller prior to
intemrption, curtailme,nt, or reduction of electrical energy deliveries to Idaho Power.
ARTICLE XItr: INDEMNIFICATION AND INSURANCE
l3.l Indemnification - Each Party shall agree to hold harmless and to ind€miiry the other Party, its officers,
ageuts, affiliates, subsidiaries, parcnt company and e,mployees against all loss, damage, expense and
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liability to third persorn for iljury !o or death ofperson or injury to property, caused by the
indemniffing Party's (a) constnrction, ownership, operation or maintenance o{, or by failure of any of
such Party's worts or facilities used in connec'tion with this Agroement or (b) negligent or intentional
acts, emrs or omissions. The inde,mnifinng Party shall, on the other Party's roquesl defend any suit
asserting a claim covened by this indomnity. The inde,mni$nng Party shall pay all documented costs,
including r€asonable attonrey fees that maybe incurred bythe other Party,in enforcing this ind€mnity.
13.2 Insurance - During the term of this Agre€m€Nrt, Seller shall secrue aod continuously carry the following
insuraoce coverage:
13.2.1 Comprehensive General Liability Insurance for both bodily injury and property damage with
limits equal to $1,000,000, each occuxrcnce, combined singls limit. The deductible for srch
insurance shall be consisteirt with current Insurance Industry Utility practices for similar
property.
13.2.2 The above insurance ooverage shall be placed with an insurance company with an AJvI. Best
Companyrating of A- orbetterand shall include:
(a) An endorseinent naming ldaho Power as an additional imured and loos payee as
applicable; and
O) A provision stating that such policy shall not be caaceled or the limits of liability
reduced without sixty (60) days' prior written notice to Idaho Power.
13.3 Seller to Provide Certificate of Insurance - As required in paragraph 4.1.5 hercin and anmally
thercaft€r, Seller shall fumish ldaho Power a certificate of insurance, together with the endorsements
requircd therein, evidencing the coverage as set forth above.
13.4 Seller to Notify Idaho Power of [,oss of Coverage - If the insuran€ coverage required by paragraph
13.2 shall lapse for any reason, Seller will immediately notiff Idaho Power in writitlg. Tho notice will
advise Idaho Power of the specific neason for the lapse and the steps Seller is taking to reinstate the
coverage. Failure to provide this notice and to cxpeditiously reinstate or replace the coverage will
constitute a Material Breach ef this Ageement.
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t4.l
ARTICLE XIV: FORCE MAJEI.JRE
As used in fhis Agrcement,'Torce Majeure'or "an eveirt of Force Majeure'msans any cause beyond
the contnol of the Seller or of Idaho Power which, despite the exercise of due diligence, such Party is
unable to prevent or overcomc. Force Majeure includes, but is not limitd to, acts of Go4 fire, flood"
stoms, wars, hostilities, civil strife, strikes and other labor dishrtancc, earthquakeso fiires, lightning
epidemics, sabotage, or changes in law or regulation occuning after tbe effective date, which, by the
exe,rcise ofreasonable foresight such party could not reasonably have been expected to avoid and by the
exercise of due diligence, it shall be unable to ovcrrcome. If either Party is rendered wholly or in part
unable to perform its obligations under this Agreemeot becaus of an event of Force Majerrre, both
Parties shall be excused from whatever performance is affected by the eveirt of Force Majeure, provided
tbat:
(t) The non-performing Party shall, as soon as is reasonably possible after the oocurrense
of the Force Majeure, give the other Party written notioe describing the particulars of
the occurrence.
@ The suspension of performance shall be of no greater scope and of no longer duration
than is required by the event of Fonce Majeure.
(3) No obligations of either Party which arose before the occurence causing the suspe,nsion
of performance and which could and should have been fully performed bcfore such
occturcncc shall be excusod as a result of such (rcurElrce.
ARTICLE XV: LIABILITY: DEDICATION
l5.l Limitqtion of Liability. Nothing in this Agreement shall be constnred to create any duty to, any
standard of care with refer€Nrce to, or any liability to any person not a Party to this Agreement. Neither
party shall be liable to the other for any indirect, special, conseqreirtial, nor punitive damages, except as
expressly authorizd by this Agrwment. Consequential demrges will include, but not be limited to, the
nalue of renewable eoergy certfficate aod if the Facility is fueled by gas pmducd by an anaerobic
-22-
digester syste,m" any diminution or loss of anaerobic activity dtre to the inability of Idaho Power to
accept eneryy from the Facility.
15.2 Dedication. No undertaking by one Party to the other under any provision of this Agree,ment shall
conctitute the dedication of that Party's syste,m or any portion thercof to the Party or the public or affect
the status of ldaho Power as an independeit public utility corporatior or Seller as an independent
individual orentity.
ARTICLE XVI: SEVERAL OBLIGATIONS
l6.l Except whe,fe 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 Aqreement
shall wer be conshud to create an association, trust, partnc,rship or joint venture or impose a trust or
partnership duty, obligation or liability on or with r€gard to either Party. Each Party shall be
individually and severally liable for its own obligations underthis
ARTICLE XVII: WATVER
17.L Any waiver at any time by either Party of its rights with respect to a default under this Agrecmcnt or
with respect to any other matters arising in connection with this Agreement shall aot be dee,med a
waiver with respect to any zubsequent ddault or othermatter.
ARTICLE XVII} CHOICE OF LAWS A}'ID VENI.JE
l8.l This Agreement shall be constnred and interpreted in accordance with the laws of the State of Idaho
without reference to its choice of law provisions.
18.2 Veirue for any litigation arising out of or related to this Agreement will lie in the Distric{ Court of the
Fourth Judicial District of Idaho in and forthe Counfy of Ada.
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ARTICLE XD(: DISPUTES A}.ID DEFAULT
19.1 Disputes - All disputes related to or arising under this Agrcemelrt, including b,ut not limited to, the
interpretation of the terms and conditions of this Agreement, wil be submitted to the Commission for
resolution.
19.2 NoticeofDefault
19.2.1 Defaults. If either Party fails to perform any of the terms or conditions of this Agreement
(an *eveirt of default"), the aondefaulting Party shall cause notice in writing to be givelr to
. the defaulting Parly, 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, or
if the ddaulting Pary reasonably deinonstrates to the other Party that the default can be
curd within a commercially reasonable time but not within such sixty (60) day period and
then fails to diligently pursue such curc, the,o, the nondefaulting Party may, at its option,
terminate this Agreemeirt and/or pursue its legal or equitable remedies.
19.2.2 Material Breaches - The notice and cure provisions in paragraph 19.2.1 do not apply to
defaults idontified in this Ageement as Material Breaches. Mat€rial Breaches must be curpd
as expeditiously as possible following oscurr€noe of the breach.
19.3 Security for Performance - Prior to the Operation Date and thereafter for the full term of this
Agreement, Seller will provide Idaho Power with the following:
19.3.1 Insurance - Evidence of compliance with the provisions of paragraph 13.2. If Seller fails to
comply, such faihue will bs a Material Breaph and may only be cured by Seller supplying
evidence that the requird insurance coverage has be€n replaced or reinstat€d;
19.3.2 Enginoer's Certifications - Every three (3) years after the Operdion Date, Seller will supply
Idaho Power with a Certification of Ongoing Operations and Maintenance (O&IVI) from a
Registered Professional Engrnoer licensed in the State of Idaho, which Certification of
Ongoing O & M shall be in the form specifiod in Ap,pendix C. Seller's failure to zupply the
requirod certificate will be an eve,nt of dcfault. Such a default may only be cured by Seller
providing the required certificate; and
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19.3.3 Licemses and Permits - During the full tcrm of this Agreemeirt, Seller shall naintain
compliance with all permits md licenses described in paragraph 4.1.1 of this Agreement. In
addition, Seller will $rpply ldaho Power with corpies of any new or additional permits or
licenses. At least every fiffh Contract Year, Seller will update the documentation describod
in Paragraph 4.1.1. If at any time Seller fails to mainain compliance with the permits and
liccnses deseribed in paragraph 4.1.1 or to p,rovide the documeotatim required by this
paragraph, such failure will be an ev€Nrt of default and may only be cured by Seller
submitting to Idaho Power evidence of compliance from the permitting ag€ncy.
ARTICLE )OC GOVERNMENTAL AUfiIORIZATION
20.1 This Agreement is subject to the jurisdiction of those governmeirtal age,ncies having contnol ovcr either
Party of this Agree,ment.
ARTICLE XXI: COMMI$SION ORDER
2l.l This Agreement shall bocome finally effective upon the Commissionos apprcval of all terms and
provisions hereof without change or condition md declaration that all palments to be made to Seller
hereunder shall be allowed as prudently incurred ere€nses for ratemaking pupos€s.
22.1
ARTICLE )OilI: SUCCESSORS A}.ID ASSIGNS
This Ageement and all of the terms and provisions hereof shall be binding upon ard inure to the benefit
of the respective zuccessors and assigns of the Parties hereto, except ttrat no 6ssignmcot henoof by either
Pafiy shall become effestive without the vniten coos€,nt of both Parties being first obtained. Such
conseirt shall not be unreasonably withheld. Notwithstanding the foregoing aoy party which Idaho
Power may consolidate, or into which it may mcrge, orto which it may coovey or traosfor substantially
all of its electric utility ass€ts, shall automatically, without firther act, and without need of consent or
approval by the Seller, succeed to all of ldaho Power's rights, obligations and interests under this
Agreement. This article shall not prrwent a finaacing entity with rocorffi or secured rights fr,om
exercising aU rights and remedies available to it under law or contract. Idaho Power shall have the right
-25-
to be notified by the financing elrtity that it is exencising such rigfts or remedies.
ARTICLE rcfift MODIFICATION
23.1 No modificatio116 rhis Agre€ment stnll be valid unless it is in writing and signed by both Parties and
zubsequently approved by the Commission.
ARTICLE )OfiV_:_TA)GS
24.1 Each Paty shall pay before delinquency all tanes and other governmental chrges whicb, if failed to be
paid whe,n due, could result in a lien upon the Facility or the Interconnoc-tion Facilities.
ARTICLE XXV: NOTICES
25.t All wdttm notices under this Agreemeirt shall be directed as follows and shall be considered
delivered when faxed, emailed and confirrred with deposit in the U.S. Mail, firet-class,
postage pr€paid, as follows:
To Sellen
Original dmument to:
Yellowstone Power,Inc
Aun: DickVinson
PO Box 1539
Thompson Falls, Montana 59873
Telephone:
Cell:
FAX:
N6-8n-3574
4M-250-1842
406-8n4s76
E-mail : dick@blackfootnst
Copy of document to:
Yellowstone Power, Inc
Attn: Mark Costello
7602 Emerald Meadows Court
Kafy, Texas 77494
E-mail : ruthannacostello@.rahoo.com
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To Idaho Power:
Orisiml doqm€otto:
Vice President Power Supply
Idaho Power Company
PO Box 70
Bois€, Idaho 83707
Email : LGgow@i dahoppwer.com
Copy ofdocurnent to:
Cogeneration and Small Powcr hoductioo
Idaho Power Company
PO Box 70
Boise, Idaho 83707
E-mail: [e-mail]
Either Party may change the contact person and/or address information listed above, byproviding written notice
from an authorizedpersonrcFes€oting the Party.
ARTICLE )Ofl/I; ADDITIONAL TERMS AI.ID CONDITIONS
26.1 This Agreement includes the following appendices, which tre attached hereto aod included by
refercnce:
Apperdix A
App€rdixB
Appendix C
Appendix D
Ge,neration Scbeduling and Reporting
Facility and Point of Delivery
Engineer' s Certifi cations
Forms of Liquid Security
ARTICLE)O(VII: SEVERABILITY
27.1 The inralidity or une,nforceability of any term or provision of this Agpemeot shall not affect thc
validity or €rforceability of auy other terms or provisions and this Agreemeot shall be construed in all
other reepw'ts as if the invalid or tmenforceable term or provision werc omitted.
ARTICLE )O(VI[ COUNTERPARTS
28.1 This Agree,ment may be executed in two or more counterparts, each of which shall be dcemed an
original but all of which together shall constiturc one and the sanre instrument.
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ARTICLE X)O(: ENTIRE AGREEMENT
29.1 This Agreeme,nt cmstitutes the entire Agreemeirt ofthe Panies cmcerning the s$ject matter hercof md
supersodes all pnor or contemporaneous o,ral or writt€o agreemorts betweeir the Parties conoerning the
zubjoct matter hereof.
IN WTINESS WHEREOF, The Parties hereto have causedthis fureement to be executed in
their respective names on the dates set forth below:
Idaho Power Coupany Yellowstone Power, Inc.
,By By
Lisa AGrow
Sr. Vice Presidelrt Power Sup,ply
Richard Vinson, President
Datd 1.Zo'to z/"/*Dated
// *r"uo'"Idaho Powei"
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APPENDD( A
A _I MONTHLY POWER PRODUCTION A}.ID SWTTCHING REPORT
At the end of each month the following requir€d documentation wil bc submittod to:
Idaho Power Company
Attn: Cogeneration and Small Power Prroduction
PO Box 70
Boise,Idaho 83707
The meterreadings requird onthis report will bethe readings on the Idaho PowerMeterEquipmc,nt mcasuring
the Facility's total energyprcduction and Station Usage delivered to Idaho Power and the maximum generated
enerry GW) as r€corded on the Metering Equipment and/or any other rcquir€d errcrgy measurEm€nts to
ad€quatcty administer this Agreement. This documeot shall be the document to enablc Idaho Power to begin the
€Nreqgy paym€ot calsulation and payneot process. The meter readiugs on this report shall not be used to
calculate the actual payment, but instead will be a check of the automated meter reading information that will be
gathered as described in item A-2 below:
-29-
Idaho Power Company
Cogeneration and Smdl Power Produc{ion
MONIELY FOWT,R PRODUCTION AND SWITCHING REBORT
Month Year
Profect Nemc
Addrcsi
Ctty
Project Number:
PhoneNumber:
State w
Feciltty
Outout
Stedon
Uorgc
Stedon
Ustae
Metered
M$glUCcnor*oe
kw
Meter Nnmber:
End of Month k\ilh Meter Roedlng:
neghntns of Month kWhMeter:
I!'lffercnce:
Tlmer Meter Conrtent:
kWh for the Month:
Metened Demand:
Net GeneTedon
Brerker OpcnlngRecord Bretker QlsdngRmrd
Date *Reecon Ilrte Ilme Meler
r BreakerooenlmRersonCoder
I Lack of Adequete Prime Mover
2 Forced Outege of Fecllity
3 Dlshrbanceof IPtCo Syrtem
4 Schedut€d Malntenrnce
5 Terdng of Protecdon Systemr6 Ceure Unknown
7 Other @rphia)
I herrby cerdfy ttrt the ebovc mcter reedingr re
truc and correct er of Mdnight on the lrrt day of thc
above month rnd thet the cwltchlng rocord ls eccurete
and complete ar requtcd by the Firm Energy Sales
Agreement to whlch I im i Ptrty.
Signature
Ilme Meter
- 30-
IDete
A.2 AUTOMATED METER. READING COLLECTION PROCESS
Monthly, Idabo Power will use the provided Metering and Telerretry equipment and processes to collwt the
mcterreading information fromthe Idaho Power provided Meterhg Equipment that measures the Nct Energy
and eirergy delivered to sup,ply Station Usc for the Facility recorded at 12:00 AI\,I (Midnigbt) of the last day of
themonth..
The meter information collected will includebut not be limitedto energyproduction, Station Usen the maximum
generated poxrer (kltr) and any other requirod €n€rgy meastu€ments to adquately administer this
A-3 ROUilNE REPORTING
Once the Facility has achieved its Ope,rarion Date and has operated in a reliablc and consistent rnaon€r
for a reasonable period of time, the Parties may mutually agrce to modifr this Routinc Reporting
requiremeirt.
Idaho Power Contast Information
Daily Energy Production Reoortine
Call daily by l0 a.m., 1.800-3564328 or l-800535-1093 and leave the following information:
r Pnojoct Ideirtification - Project Name and Prrojoct Numbero Currcnt MeterReadingo Estimated Creneration forthe current dayo Estimated Generation forthe next day
Planned and Unplaoned hoject outages
Call l-800-345-1319 and leave the following information:
o Project Id€ntification - Project Name and Project Numbero Approximate time outage occurredo Estimated day and time ofproject coming back online
- 31-
Seller's Contact Information
2tt-Hour hojest Op€rational Contact
Name:
Tele,phoneNumben
Cell Phone:
RichardVinson
4M-8n4574
40G250-1842
Pnoiest On-sit€ Contact information
Name: RichdVinson
TelephoneNnmber: 4o6250-1842
-32-
APPENDD( B
FACILITY Al.lD POINT OF DELWERY
Project Name: Yellowstone Power Biomass Powerproject
Project Numbec I I 866075
B-l DESCRIPTION OF FACILTTY
The Facility will consist of a boiler and associated equipment which will detiver steam to a horizontal
cylindrical revolving generator, the nameplate capacrty of which will be 11.7 MW. Some portion of the
turbine output will be utilized for driving plant equipment and not more that lO aIUW will be delivcrcd
to Idaho Power.
Var Capability @oth leading and lagging: trading is 7.13 Lagging is Z.l3
8.2 TOCATION OF FACILITY
Near: Emmett, Idaho, West lvlain and Plynood Road
Sectious: l't arrdT Township: 6 North, Range 2 West and I West.
County: Gem,Idaho
Description of Int€rconnestion location: At Idaho PowerBECE Subetation
Nearest ldaho Power Substation: BECE Station
B-3 SCHEDT'LED FIRST ENERGY A}'ID OPERATION DATE
Seller has selected Septencber 30. 201I as the Scheduled First Energy Date.
seller has sebe"ted December 31. 201 I as the scbeduled operation Date.
la making these selections, Seller recognizT that adequate testing of the Facility and completion of all
quir€m€nts in paragraph 5.2 of this Agreement must be completd prior to the projet being granted
an Operation Date.
- 33-
B4 MAXIMT,'M CAPACITY AMOUNT
This vatue will be t0 MW which is consisteirt with the value provided by the Seller to Idaho Power in
acco,rdanee with Schedule 72. This value is the maximum energiy (MW) that potentially could be
delivered by the Seller's Facility to the Idaho Power electrical system at any momert in time.
B-5 POINT OF DELIVERY
*Point of Delivery" m€ars, unless othersrise agreed by both Parties, the point of where the Sellers
Facility's en€q$/ is delive,red to the ldaho Power eleotricat system. Schedule T2wildetermine the
specific Point of Delivery for this Facility. The Point of Delivery identificd by Schedule 72 wrllbecome
an integral part ofthis Agreement.
B-6 r,ossEs
If the Idaho Power Metering equipment is capable of measuring the exact elrergy deliveries by the Seller
to the Idaho Power elec.tricat system at the Point of Delivery, no Losses will be calculated for this
Facitity. If the Idaho Power Metcring is rmable to measure the exact €Nr€rgy deliveries by the Seller to
the Idaho Power electrical system at the Point of Delivery, a Losses calculation will be wtablished to
measur€ the energy losses (kWh) between the Seller's Facility aud the Idaho Power Poiot of Delivery'
This loss calculation will be initially set at}Voof the kWh energr production recorded on the Facility
generation metering equiprment. At zuch time as Seller provides Idaho Power with the electrical
equipment specifications (transformer loss specifications, conductor sizes, etc) of all of the electrical
equipment betwee,n the Facility and the Idaho Power elecrical s},st€,m' Idaho Power will configure a
revised loss calculation formula to be agfeed to by both parties and used to calculate the kWh Losses for
the remaining tem of the Agreemeirt. If at any time during the term of this Agreemcnt, Idaho Power
determines that the loss calculation does not correctly reflect the actual kWh losses attributed to the
electrical equipment between the Facility and the Idaho Power electical syst€ot, Idaho Power may
adust the calculation and retroactively adjust the prwious months kWh loss calculations.
-34-
B:I METERINGA}.IDTELEMETRY
Schedule 72 wtll detsmine the specifrc metering and telemetry requirements for this Facility. At the
minimum the Metering Equipment and Telemetry oquipment must be able to provide and record hourly
eNrergy deliveries to the Point of Delivery and any other energr measurcments required to administer
this Agreemeirt. Thes€ specifications will inolude but not b€ limitod to equipment specifications,
equipment location, Idaho Power provided equipment, Seller provided equipment, and all costs
associated with the equipmeirt, design and installation of the Idaho Power provided equipment. Seller
will arrange for and make arrailable at Selleds cost communication circuit(s) compatible with ldaho
Power's commrmications equipme,nt and dedicated to Idaho Poweds use terminating at the Idaho Power
facilities capable of pr,oviding Idaho Power with continuous instantaneous information on the Facilities
energy podustim Idaho Power provided equipment will be oumed and maintained by Idaho Power,
with toal cost of purchase, installation, operation, and maintenaace, including administrative cost to be
reimbursed to Idaho Power by the Seller. Palment of these costs will be ia accordanoe with Schedule
72 afi the total metering cost will be included iu the calculation of the Monthly Operation and
Maintemance Charges specified in Schedule 72.
B-8 MTWORK RESOTJRCE DESTGNATION
Idaho Power cannot accept or pay for ge,neration from this Facility until a Network Resource
Designation C'NRD') application has b€€o acccptd by Idaho Power's delivery business unit. Fed€ral
Energy Regulatory Commission ('FERC') Rules require Idaho Power to pr€pare aod submit thc NRD.
Because much of the information Idaho Power needs to pr€pax€ the NRD is specific to the Seller's
Facility, Idaho Power's ability to file the NRD in a timely rnanner is contingelrt upon timely receipt of
the required infonnation from the Seller. Prior to Idaho Power beginning the process to eirable ldaho
Power to submit a request for NRD status for this Facility, the Seller shall have completed all
requirements as specified in Paragraph 5.7 of this fureement. Seller's failure to provlde complete
lnd accurate infomation in e tinely mrnner can cigniEcanffy lmpac{ Idaho Poner'r ebility end
- 35-
oost to Ettiin the ItlRIl deignetion for the SeIIer's f,'aclllty end the Scller shell berr the costs of
eny ofthem delays thrt ane e result ofrny action or inrction by the Seller.
- 36-
APPENDD( C
ENGINEER'S CERTIFICATION
OF
OPERATIONS & MAINTENANCE POLICY
The undersigned on behalf ofhimself and
, hereinaftcr collectively referrcd to 69 nFngin€€,r'," hcreby states and certifics to tbe Seller as
follows:
l. That Engineer is a Licensed Professional Engineo in good standing in the State of ldaho.
2, That Engineer has reviewod the Energy Sales Agreement, hereinafter'rAgreemen!" betweeir ldaho
PowerasBuyer, and Seller, datd
3. That the cogeneration or mall power production project which is the subject of the Agroement and this
Statement is ideotified as IPCo Facility No.and is hereinafter referred to as the "Project.rr
4. That the hoject, which is commonly known as thc is locatod in
Section Township_ Range Boise Meridian,County,Idaho.
5. That Engineer rccogdzes that the Agrwmeirt provides for the Project to furnish electrical €n€rgy to
Idaho Power for a _ year period.
6. Thar Engineer has substantial experience in the design, construction and operation of elechic power
plants of the same type as this Project.
7. That Engineer has no economic relationstrip to the Design Engineer of this Prroject.
8. That Engineer has reviewod and/or supcrvised the review of the Policy for Operation and Maintenance
('O&M') for this Prroject and it is his professional opinion that, provided said Project has been designed and
built to approp,riate standards, adhere,nce to said O&M Policy will result in the Prrojwt's prodtrcing at or near the
design eloctrical output, efficie,ncy and plant factor for a fifteen (15) year period.
9. That Engineerrecognizes that Idaho Power, in accordance with paragraph 52 of the Agree,ment, is
-37-
relying 66 F.ngrneeds representations and opinions Tfain€d in this Statement.
10. Tha4 Engineer certifies that the above statements are complete, tnre md accurde to the best of his
knowledge and therefor€ s€ts his hand and seal bclow.
By
(P.E. Stamp)
Date
- 38-
APPENDX C
ENGINEER' S CERTIFICATION
OF
ONGOING OPERATIONS A}ID MAINTENAI\ICE
Thermdersigned on bchalfof himself and
hereinafter collectively reGred to as."Engineer,' hereby states and oertifies to
the Seller as follows:
t. That Engheer is a Liceirsed Professional Engnee" in good standing in the State of ldaho.
2. That Engineer has rwicwed the Ene,rg5r Sales Agreemcnt, hereinafter *Agreemcnt," betwecn Idaho
Power as Buyer, and-as Seller, dated . .
3. That the cogenerdion or small power produuion project which is the subjec't of tle Agreement md this
Statement is identified as IPCo Facility No. and hereinafter referred to as the *Prroject".
4. That the Project, which is commonly knou,n as the Proiect, is located in
Section
-Township
Range Boise Meridian, County, Idaho.
5. That hgineer recognizes that the Agreement provides for the Pr,oject to firnish electrical eocrgy to
Idaho Powerfor a fifteen (15) year pedod.
6. That Engineerhas subsantial experience in the design, constnrctioq aod ope,ration of electric pow€r
plants ofthe same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Projoct.
-39-
8. That Enginer has mad€ a physical inspection of said hoject, its operations and maintrnance records
since the last previous certified inspoction. It is Engineer's professional opinion, based m the Project's
appearanoe, that its ongoing O&M has been substantially in accodance with said O&M Policy; that it is in
reasonably good operating condition; and that if adherence to said O&Ivt Policy continues, the Projcct wifl
continue produciug at or near its design electriel output, efficicncy and plant factor for the Emaining
years ofthe Agreement.
9. That Enginoer recognizes that Idaho Power, in accodance with paragraph 5.2 of the Agreemen! is
relying on Engineer's represeirtations and opinions contained in this Stateme,lrt.
10. That Engincr certifies that the above stat€melrts are complete, hue and accurate to the best of his
knowledge and therefore sets his hand and seal below.
By
(P.8. Stamp)
Date
-lm-
APPEhIDD(C
ENGINEER'S CERTIFICATION
OF
DESTGN & CONSTRUCTTON ADEQUACY
Theundersigned onbehalf ofhimself and
_ hercinafter collectively ref€rred to as "Engineed', hereby stat€s and certifies to
Idaho Poweras follows:
l. That Engineer is a Licensed Professional Enginoer in good standing in the State of Idaho.
2. That Engin€er has reviewed the Firm Energy Sales Agr,eenoent, hereinafter "Agreement", behneen Idaho
Power as Buyer, and as Seller, dated .
3. That the cogeneration or small power p,roduction projec! which is the subject of the Agree,melrt and this
Stat€melil, is ide,ntified as IPCo Facility No _ and is hereinafter referred to as the "Projoct".
4. That the hojecq which is commonly knourn as the is located in
Section _ Township
-
Range Boise Meridian, Cotmty, Idaho.
5. That Engineer recognizes that the Agre€m€rrt provid€s for the Pnoject to fumish electrical en€rgy to
Idaho Power for a fifteen (15) year pcriod.
6. That Enginoer has substantial experience in the design, constnrction and operation of electric pow€r
plants ofthe sare t)?e as this Project.
7. That Engineer has no ecmomic relationship to the Design Engineer of this Prroject and has made the
aalysis of the plans and specifications independeirtly.
8. That Engineer has reviewed the engineering d€sign and constnrction of the Project, including the civil
work, electicat work, generating equipment, prime mover conv€yance syste,m, Seller firnished Interconnection
Facilities and other Project facilities and equipment.
9. That the ftojec{ has been consf:ucted in accordance with said plans and specifications, all applicable
-41-
codes and oonsistent with Prud€tf Electrical Practices as that t€rm is described in the Agreement.
10. That the desip and constnrction of the Projcct is such that with reasoruble and pnr&nt operation md
maintenaoce praitices by Seller, the Projec{ is capable of performing in accordanoe withthe terms ofthe
Agrwmcril aud withPrudent Eleccrical Practices fora_ yearperiod.
I I. That Elrgineer recognizes that Idaho Power, in accordance with paragpaph 5.2 of the Agree,nreirt, in
interconnecting the Prroject with its syst€m, is rclying on Engineeds reprreseirtations and opinions coiltaioed in
this Staement
12. That Enginer certifies that the above shtements are complde, tnre and accurate to the beet of his
knowledge and therefore sets his hand aod seal below.
By
(P.E. Shmp)
Date
-42-
APPEI{DX D
FORMS OF LTQT,JID SECLJRTTY
The Seller shall provide ldaho Powerwith commereiallyreasonable seurity instnrmeirts such as Cash
Escrow Security, Guarantee or Irtter of Crodit as those terms are defined below or other forms of liquid
financial s€curity that would p,mvide readily ayailable cash to Idaho Power to satisfy the Delay Security
rcquirement within this Agreement:
Forthe pupose of this Appendix D, the term'Credit Requirements" shall mean acceptable financial
creditworthiness of the entity providing the security instrument in relation to the term of the obligation
in the reasonable judgment of Idaho Power, provided that any guaraotee and/or lett€r of credit issred by
any other entity with a shorttqm or long-term investment grade credit rating by Standad & Poorns
Corporation orMoody's Investor Senriccs, Inc. shall be deemed to have acceptable financial
creditworthiness.
1. Cash Escnow Security - Seller shall deposit fimds in an escmrv acoount established by the Seller in
a banking institution acceptable to bothParties equal to tb Delay S€qrity.
2. Guarantee or [.€tt€r of Credit Security- Seller shall post and maintain in an amount equal
to the Delay Security: (a) a guaranty ftom a party that satisfies the Credit Requirune,nts, in
a form acceptable to Idaho Power at its discretion, or (b) a Letter of Credit in a form
acceptable to ldaho Power, in favor of ldalro Power. The Letter of Credit will be issued by
a financial institution acceptable to both parties.
-43-
]BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-10-22
IDAHO POWER COMPANY
AITACHMENT NO.2
J
z,
E(D
au(f
ASSUMPTION OF DEBT AND AGREEMENT TO REPAY
BY
YELLOWSTONE POWER, INC
This Agreement between ldaho Power Company-..(ldaho Powef) and
Yellowstone Power, lnc., (Yellowstone") is entered into this /Strday of August 20/.A.
WHEREAS:
Yellowstone and Idaho Power have executed a Firm Energy Sales Agreement
pursuant to the Public Utility Regulatory Policies Act of 1978 ("PURPA") under which
Yellowstone would sell and ldaho Power would purchase electric energy generated by
the Yellowstone Power Project ('Facility'' or'Project') located in Gem County, ldaho;
and
The Yellowstone Project is a biomass fueled, small power producer project to be
co-located in Emmet, ldaho, with the recently oommissioned Emerald Forest Sawmill.
Power will be generated using steam created from the controlled burning of the woody
biomass fuel, and waste heat will also be used to operate the drying kiln at the sawmill;
and
Yellowstone's Facility had previously executed a PURPA Firm Energy Sales
Agreement with ldaho Power under a different company, Renewable Eneryy of ldaho
lNC.,, for this same project. That Firm Energy Sates Agreement was approved in Case
No. IPGE-04-05, Order No. 29437. That Agreement went into default and was
ultimately terminated when Renewable Energy was unable to meet the operation date
of the Agreement. Thereafter, ldaho Power determined it had incuned damages for
non-performance in the amount of $106,804; and
Yellowstone has agreed to pay the above-referenced non-performance damages
of $106,804 previously assessed to Renewable Energy of ldaho LLC., in full.
NOW THEREFORE:
Yellowstone Power, lnc., hereby agrees to pay to ldaho Power Company the
amount of $106,804. This amount shall be paid in twenty-four (2$ monthly installments
as a debit against the monthly amounts ldaho Power will owe to Yellowstone pursuant
to the July 28, 201A, Firm Energy Sales Agreement between the parties.
Payment in full of the $106,804 will satisff and discharge the previously incuned
non-performance damages of Renewable Energy of ldaho LLC, pursuant to its 2004
Firm Eneqy Sales Agreement with ldaho Power.
ASSUMPTION OF DEBT AND AGREEMENT TO REPAY BY YELLOWSTONE POWER, INC., . 1
The parties' July 28,2010, Firm Energy Sales Agreement is hereby incorporated
into this document by this reference. Any payments, notices, terms, and conditions
pursuant to this Agreement shall be accomplished according to the provisions of the
parties' Firm Energy Sales Agreement.
This Agreement is conditioned upon the approval of same by the ldaho Public
Utilities Commission ("|PUC"), as well as approval of the parties' Firm Energy Sales
Agreement pursuant to PURPA. Because this Agreement arises out of the parties'
PURPA contracts over which the IPUC has jurisdiction, it is hereby agreed and
stipulated that the IPUC has and retains jurisdiction over this matter, its enforcement,
and any disputes arising therefrom.
Datedtnis [Z+\ dayof August 2010.
VI
Principal for Yellowstone Power, lnc., and for
Renewable Energy of ldaho LLC
Vice President, Power Supply for ldaho
Power Company
ASSUMPTION OF DEBT AND AGREEMENT TO REPAY BY YELLOWSTONE PO\A/ER, INC., - 2
Office ofthe Secretary
Service Date
November 2,2010
BEFORE THE IDAHO PT]BLIC UTILITIES COMMISSION
IN TIIE MATTER OF THE APPLICATION
OF IDAHO POWER COMPAI\IY BOR
APPROVAL OF A FIRM EIYERGY SALES
AGREEMENT WTTH YELLOWSTONE
POWE& INC. FOR TIIE SALE AND
PURCHASE OF ELECTRIC ENERGY.
CASE NO. IPC.E-I0.22
oRDER NO. 32104
On August 13, 2010, Idaho Power Company frled an Application with the
Commission requesting approval of a lS-year Firm Energy Sales Agreement (the "Agreemenf')
between Idatro Power and Yellowstone Power, Inc. dated July 28, 2010 (the '?roject"). The
Application states that the Project is a biomass fueled combined heat and power project to be co-
located in Emmett, Idaho, with the recenfly commissioned Emerald Forest Sawmill. Power will
be generated using steam meated from the conholled buming of the woody biomass fuel. Waste
heat from the Project will be utilized to operate the dry kilns associated with the sawmill.
Application at 2. Idaho Power warants that the Agreement comports with the terms and
conditions of the various Commission Orders applicable to PURPA agreements (Order Nos.
30415, 30488, 30738, and30744). Id. ldaho Power requested that its Application be processed
by Modified Procedure.
On September 3, 2010, the Commission issued a Notice of Applicationllvlodified
Procedtre and set an October 1, 2010, comment deadline. Order No. 32065. Staff was the only
person or party to file comments. In response to Staffs comments, Yellowstone Power filed a
Motion on October l, 2010, to permit reply comments. The Commission granted Yellowstone's
Motion and established a reply eomment deadline of October 18, 2010, for all interested persons
or parties. Order No. 32083. Reply comments were filed by Yellowstone Power, Idaho Power,
Rocky Mountain Power and Exergy Development Group of Idaho, LLC.
On October 7,2010, Yellowstone filed a Motion requesting oral argument following
the filing of reply comments. The Commission granted Yellowstone's Motion and heard oral
arguments from Yellowstone, Idatro Power and Commission Staffon October 26,2010. Order
No.32094.
ORDER NO. 32rc4
)
)
)
)
)
)
THE APPLICATION
A. The Agreement
The Agreement is for a term of 15 years and contains the non-leveliznd published
avoided cost rates established by the Commission in Order No, 30744 for energy deliveries of
less than 10 average megawatts ("aMW'). Although the nameplate rating of the generator will
be 11.7 MW, under normaVaverage conditions the Project will not exceed 10 aIvIW on a monthly
basis.
Because the Agreement is dated July 28, 2010, Order No. 31025 (effective March 16,
2010) would require that the rates paid to Yellowstone Power under the Agreement be the rates
set out in Order No. 31025 rather than the previously higher rates approved by the Commission
in Order No. 30744. However, the Application states ttrat with respect to the Power Pwchase
Agreement criteria" Yellowstone Power and Idatro Power had resolved and agreed to all material
outstanding contract issues prior to March 16, 2010. Application at 7. The Application further
asserts that Yellowstone Power represents that "if [it] had been made aware of any risk of the
March 16, 2010, price change occurring, a written Firm Energy Sales Agreement would have
been requested as all terms and conditions had already been agreed to. . . ." /d Therefore, Idaho
Power determined that Yellowstone Power meets the criteria to be "grandfathered" and receive
the avoided cost rate established by Order No. 30744. Id. at 5.
In its Application, Idaho Power states that the Commission has recognized in prior
Orders that there are situations when PURPA Qualiffing Facility (QF) rates are changed that it is
appropriate to allow a prior vintage of rates in a cunent PUFJA contract.l The first criterion that
would qualiS a particular generating facility to receive a superseded rate requires that the
developer execute a power sales agreement with the utility at the rate in question before the
successor rate becomes effective. If the QF cannot meet the first criterion, the second criterion
requires that prior to the new rates' effective date, the QF developer must have filed a
meritorious complaint alleging that the Project was sufficiently mature and far enough along in
the contracting process that, but for the conduct of the utility company, the developer would have
been able to sign a contract with the utility containing the superseded rates.
I Th. Iduho Supreme Court has oonfirmed that it is within the Commission's jurisdiction to determine which
vintage of QF rates should apply to a PURPA contract. See Empire Lumber v. Washington Water Power,l 14 Idaho
191,755 P.2d1229 (1988); A.IY. BrownCo.,Inc.v,ldqhoPowerComparry,l2l Idaho 812,828P.2d841(1992).
oRDERNO. 32104 ,)
Idaho Power's Application concedes that Yellowstone had neither signed a contract
to purchase the QF generation on or before March 16, 2010, nor had Yellowstone filed a
complaint alleging that Idaho Power acted unreasonably or in bad faith by not signing an
agreement before March 16 when the rates changed. However, Idaho Power maintains that the
Yellowstone Project is entitled to the Order No. 30744 rates because it satisfied the following
criteria:
a. Interconnection and Transmission
i. Filed an interconnection application; and
ii. Received and accepted an interconnection feasibility study report for
the project and paid any requested study deposits (or established
medit) for the next phase of the interconnection process in accordance
with ScheddeT2;and,
iii. Received confirmation from Idatro Power that transmission capacity is
available for the project and/or received and accepted transmission
capacity study results and cost estimates; and
b. Purchase Power Agreement
i. An agreement was materially complete prior to March 16, 2010, and
except for routine Idatro Power final processing, an agreement would
have been executed by both parties prior to March 16, 2010.
It is undisputed that Yellowstone met all of the interconnection and transmission criteria listed
above. Idaho Power asserts that, in addition, the Power Purchase Agreement was materially
complete and lacked only routine Idaho Power final processing.
B. Actians tn Furtherance of the Agreernent
Idaho Power maintains that throughout 2009 and continuing into 2010, Yellowstone
was in contact with Idaho Power in regard to a proposed biomass generation facility. Idaho
Power rcports that Yellowstone expressed interest in siting this facility in Emmett, adjacent to a
sawmill the developer was constructing. Yellowstone advised Idaho Power that it had multiple
equipment sizes available, some of them greater than 10 MW. The parties agreed that prior to
Idatro Power providing a Power Purchase Agreement there was merit in evaluating this Project as
a larger than 10 aMW project. Beginning in early March 2010 and continuing through May
2010, Yellowstone provided ldaho Power the data (monthly estimated energy production)
0RDER NO. 32104 3
required to enable the development of eoergy pricing for a larger than l0 aI\,lW facilrty. At the
request of Yellowstone, Idaho Power prepared and supplied AURORA-based energy pricing for
a project larger than l0 aI\4W. During this time period, Idatro Power maintains that extensive
discussions were conducted betru'een the parties regarding the complete details of a PURPA
power purchase agreement.
Immediately following the change in avoided cost rates on March 15, 2010, Idaho
Power reports that it was contasted by Yellowstone, inquiring as to the impact the price change
would have upon the ongoing power purchase agreement discussions. Idaho Power states that it
informed Yellowstone that it was continuing to work on the requested pricing for a larger than l0
alvlw project. Idaho Power relates that after evaluation of the larger equipment specifications
and AURORA-based energy price, Yellowstone determined that the larger facility was not
economically feasible.
In early June 2010, Yellowstone apparently made a grandfathering request for a
project smaller than 10 alvIw. After review, Idaho Power concluded that the Yellowstone
Project might be eligible for a grandfathered rate and therefore, the parties began exchanging
written draft agreements to that effect. Idaho Power contends that the only purpose for
exchanging these draft agteements prior to a final agreement was to complete the "fill in"
information and that no terms or conditions were debated or negotiated.
Sinee early Jrme 2010, Idaho Power reports that it has been working through intemal
contract drafting and review procosses. Any perceived delays from early June 2010 to an
execution date of luly 28, 2010, Idaho Power maintains, were due to change in personnel,
intemal review processes, and the efforts being expended on numerous other PURPA contacts
and issues.
As additional support for approval of the Agreement, Idaho Power states that
Yellowstone represents that, prior to March 16, 2010, it already acquired from Boise Cascade,
Inc. the property upon which the Project is to be located. In addition, Yellowstone represents
that it completed the required environmental remediation at the Project site, and the Idaho
Department of Environmental Quality (DEQ) issued a final acceptance and permit to constnrct
prior to March 16, 2010. Third, significant power plant equipment (including boiler, fuel
conveyors, structural steel piping controls, and electrical equipment) was purchased prior to
ORDER NO. 32104 4
March 16, ZAl0, at a cost in excess of $6 million and is on the site or in storage ready for
deployment.
Yellowstone Power selected a Scheduled Operation Date of December 31,2011, for
the Project. Idaho Power asserts that Yellowstone Power is current in all of its interconnection
study payments and, so long as it continues to provide requested information in a timely manner
and pay invoices on time, it appears that the interconnection can be completed by the Scheduled
Operation Date.
By its own t€rms, the Agreement will not become effective until the Commission has
approved all of the Agreement's terms and conditions and declares that all payments made by
Idaho Power to Yellowstone Power for purchases of energy will be allowed as prudently
incurred expenses for ratemaking purposes. Agreement tf 2l.l.
C. The Pfior QF Proiect
A PURPA Firm Energy Sales Agreement between Idaho Power and Renewable
Energy of Idaho LLC was previously executed for this same site. Richard Vinson, one of the
principals of Yellowstone Power, was also a principal member of Renewable Energy. The sales
agreement with Renewable Energy was approved in Case No. IPC-E-04-05, Order No. 29437.
That agreement went into default and was ultimately terminated when Renewable Energy, for
reasons it alleges were beyond its control, was unable to meet the operation date of the
agreement. Thereafter, Idatro Power determined it had incr.rred damages for non-performance in
the amount of $106,804. Renewable Energy did not have the funds or assets to make payment.
Although the non-perfonnance damage is the liability of the now defunct Renewable Energy,
and not Yellowstone Power, Mr. Vinson has agreed in writing to pay the non-perfonnance
damage in the full amount as an offset to the energy payments of the Yellowstone Agreement.
THE COMMENTS
StatfComnune
Staff first noted that all of the terms and conditions in this Agreement are the same as
those contained in other PURPA agreements recently approved by the Commission, including
updated delay and liquidated damages, as well as updated security provisions. Additionally,
Staffacknowledged that the Yellowstone Project is intended to be an integral part of the Emerald
Forest Sawmill in Emmett. The sawmill began operating earlier this summer and is expected to
employ up to 47 workers in Gem County, an economically depressed area. Staffspeculated as to
oRDER NO . 32104 5
whether the economic viability of the Emerald Forest Sawmill is dependent on the Yellowstone
Power facility, or if the viability of the Yellowstone facility hinges on whether the Commission
rules that it is entitled to grandfathered rates. Clearly, securing grandfathered rates would bolster
the economic viability of the Yellowstone Project,
Staff recognized that, unlike intermittent generation projects, the Yellowstone Project
is expected to provide steady, predictable generation around the clock, with an extremely high
capacity factor. This high capacity factor and renewable co generation project would be a
valuable addition to help diversi$ Idaho Power's resource portfolio. However, the primary issue
in this case is whether the Project and the July 28, 2010 Agreement should be grandfathered
under the published avoided cost rates of Order No. 30744 - rates superseded on March 16, 201 0
by the lower rates of Order No. 31025.
Yellowstone had not signed a contract with Idaho Power to purchase the facility
generation on or before March 16,2010. Both parties acknowledge that there were not even any
draft power purchase agreements prepared and exchanged between the parties prior to March 16,
2010. Nor had Yellowstone filed a complaint alleging that Idaho Power acted unreasonably or in
bad faith by not signing an agreement by March 16 when tlre rates changed. As for the
alternative criteria applied by Idaho Power, Staff does not dispute that Yellowstone meets all of
the interconnection and transmission criteria. The critical question (based on Idaho Power's
criteria) is whether the Power Purchase Agreement was materially complete prior to March 16,
2010, except for routine Idaho Power final processing.
Idaho Power noted that Mr. Vinson provided a signed affrdavit representing that if he
had been made aware of any risk of the March 16, 2010, price change occurring, a written Firm
Energy Sales Agreement would have been requested and signed because Yellowstone had
already agreed to all of the terms and conditions that are contained in the final Agreement. In its
Application, Idaho Power agrces that all terms and conditions identical to the terms and
conditions of the final Agreement were agreed to with the Project prior to March 16, 2010,
Idaho Power states that in the normal course of business, a written agreement was to follow.
Nevertheless, Staff observed that it is undisputed there was no signed agreement prior
to March 16, 2010, nor had there been any draft agreements exchanged between the parties prior
to that date. [n fact, Staff is not aware of any documentation indicating that there was a meeting
of the minds prior to March 16, 2010. There was no enforceable obligation to sell or purchase
0RDER NO. 32104 6
power. There are simply the oral representations of both parties that there were no outstanding
contract issues or disagreements on any terms or conditions prior to March 16, 2010.
Staff noted that the published avoided cost rates adopted in Order No. 31025 on
March 16,2010, are approximately 13 percent lower than the superseded rates of Order No.
30744. By its terms, Order No. 31025 applies to new PURPA contacts executed on and after
March 16, 2010. Staff has applied both the rates from Order Nos. 31025 and 30744 to the
Yellowstone Agreement to compare the difference in rates. The value of the Agreement over its
l5-year term is greater by approximately $23.5 million under the higher rates of Ordei No.
30744. Id. at7.
Staff supports repayment of Renewable Energy's non-performance damages by
Yellowstone, and recognizes the payment as a good faith gesture by Mr. Vinson. However,
despite the recovery of non-performance damages and other positive athibutes of Yellowstone
Power's Project, Staff was not convinced that a Power Purchase Agreement was materially
complete prior to March 16,2010, in order to allow for grandfathering and application of the
avoided cost rate contained in Order No. 30744. Therefore, Staffwas rmable to recommend that
the Commission approve the Idaho PowerlYellowstone Agreement.
Yellowstone Reply Commen$
Yellowstone filed reply comments on October 18, 2010. Yellowstone asks the
Commission to look beyond the two rigid parameters set by the Commission in previous
grandfathering cases and urges the Commission to consider the oral and circumstantial evidence
that supports a determination that the Power Purchase Agreement was materially complete prior
to March 16,2010. Yellowstone stresses that Nk. Vinson, one of the principals of Yellowstone,
has substantial experience in the business of electic power generation and, in 2004, was
involved in the negotiation of Renewable Energy's power purchase agreement with Idaho Power.
As a result Mr. Vinson was already familiar with the standard terms and conditions of ufiat
would become the Yellowstone Power Purchase Agreement.
Yellowstone admits that oral evidence might carry less weight than written evidence
if there were a dispute between the parties about the existence or substance of an agreement.
However, in this instance, Idaho Power and Yellowstone agree that there was a meeting of the
minds and a materially complete agreement prior to March 16, 2010. In the absence of a
oRDER NO. 32104 7
disagreement Yellowstone asserts that its representations of the existenoe of an agreement are
entitled to significant weight.
Yellowstone maintains that further evidence of its project's maturity is demonstrated
by the purchase of real property where the Project will be located; completion of required
environmental remediation and issuance of a final acceptance and permit to construct by the
Idaho DEQ; and the purchase of more than $6 million in power plant equipment currently on site
or in storage and ready for deployment.
Yellowstone points out that the Cornmission is not a court of law, bound by the rigid
principles of stare decisis. Consequently, to the extent the Commission believes that the facts of
this case do not fit squarely within pre-determined criteria for grandfathered avoided cost rates,
the Commission may depart from such criteria. Yellowstone submits that the required departure,
if any, would be small, and is outweighed by the public interest benefits of this project.
Yellowstone emphasizes that, unlike intermittent energy projects, the Yellowstone Project will
generate base load electic power with an estimated annual average capacrty of approximately
87,600,000 kWh with anticipated availability of nearly 95%. Without pre-March 16 power
purchase rates, Yellowstone states that the viability of its project is impaired. Moreover, Project
financing, specifically bond money allocated by the ldaho Housing & Finance Agency, is based
on the Power Purchase Agreement signed by Idaho Power and Yellowstone on July 28,2010.
Finally, Yellowstone reiterates that its project will employ approximately 50 workers
in an economically depressed area. Yellowstone firther maintains that it will pay in excess of
$200,000 in properly tbxes annually to Gem County. For these reasons, Yellowstone asserts that
the Project is strongly supported by local elected officials, the Idaho Department of Commerce
and the Executive Branch of the State of Idaho. As such, Yellowstone requests that the
Commission approve its Power Purchase Agreement and allow the Project to move forward.
Idaho Power Reply Comments
Idaho Power filed reply comments on October 18, 2010. Idaho Power asserts that
Commission approval of criteria allowing for grandfathered avoided cost rates is situational,
based on the facts of the cases presented, and not intended to be exclusive. Indeed,Idatro Power
points out that the Commission has recently approved five power purchase agreements
containing grandfathered rates that did not meet the established criteria. Idaho Power maintains
that the very nature of the criteria causie the majority of claims for grandfathering to fall outside
oRDER NO. 32104 8
of the established parameters. It is therefore axiomatic that it is within the Commission's
authority and discretion to consider whether it is in the public interest, and supported by the
particular facts ofthe case, to approve grandfathered rates.
Idaho Power argues that the only pertinent difference between the facts of this case
and the prior five Commission-approved grandfathered cases is the lack of an exchange of a
written draft power purchase agreement prior to the March 16, 2010, change in rates. Idaho
Power asserts that although it lacks written documentation, the parties had an oral agreement as
to all of the material terms and conditions of its agreement prior to the change in rates. Because
of Idaho Power's previous history and course of dealing with Mr. Vinson, Idatro Power was
confident in its oral communications with Yellowstone.
Idaho Power notes the public interest considerations noted by all parties that weigh in
favor of approval of its Power Purchase Agreement with Yellowstone. In particular, Idaho
Power underscores Yellowstone's agreement to repay the non-performance damages of
Renewable Energy. Idaho Power emphasizes that this inclusion in the Power Purchase
Agrcement will allow ldaho Power to recover, for the benefit of its customers, non-performance
damages that it would otherwise be unable to collect.
Finally, Idatro Power stresses that, prior to agreeing to grandfathered avoided cost
rates, it rigorously examined the facts and equities of the Yellowstone Project and determined
that Yellowstone was entitled to a grandfathered rate. Idaho Power requests that the
Commission approve the Idaho Power/Yellowstone Power Purchase Agreement without change
or condition and declare that all payments for purchases of energy under the terms of the
Agreement be allowed as prudently incurred expenses for ratemaking purposes.
Rocky Mountain Power Reply Comments
Rocky Mountain Power frled reply comments on October 18,2010. Rocky Mountain
states that, although it has no direct interest in the Idaho Power/Yellowstone Agreanent, it is
cunently defending a complaint by a QF developer who seeks a grandfathered avoided cost rate.
Therefore, Rocky Mountain asserts an interest in how the Commission applies the grandfathering
criteria.
Rocky Mountain supports Staffs characterization of the Commission's
grandfathering criteria and urges the Commission to retain the established criteria. Rocky
Mountain believes that the curr€nt criteria establish a clear and easily understood test that
0RDER NO. 32104 9
benefits ratepayers, QF developers, and regulated utilities by setting clear standards and
expectations. Rocky Mountain believes that the existing criteria also assure compliance with
PURPA by ensuring that ldaho's regulated electric utilities and their ratepayers do not pay more
than the avoided cost for QF energy.
If the Commission approves an exception to its existing grandfathered rate criteria,
Rocky Mountain urges the Commission to carefully limit the exception to prevent it from
superseding the rule. Rocky Mountain expresses no opinion whether, under the faets of this
case, an exception is warranted.
Exergt Reply Comments
Exergy Development Group of ldaho, LLC, filed reply comments on October 18,
2010. Exergy did not take a position on whether Yellowstone is entitled to grandfathered
avoided cost rates. However, Exergy asserts that the standard for determining whether a QF is
entitled to grandfathered avoided cost rates is much broader than the position stated by Staff and
uged by Rocky Mountain Power. Exergy maintains that a broader standard has been
consistently applied by the Commission in the past and is clearly set forth in FERC decisions.
Exergy argues that Commission and Idaho Supreme Court precedent require that QFs
engage in some negotiations and provide the utility with a binding offler containing the essential
elements of the power purchase agleement prior to the avoided cost rate change in order to
obtain grandfathered rates. Specifically, the QF must prove that but for the utility's action or
inaction, the parties would have entered into a signed agreement prior to the rate change. Exergy
maintains that requiring extensive negotiations after the QF has tendered the essential elements
of an agreement would not be a faithful implementation of the federal regulations.
Exergy alleges that Supreme Court review of the Commission's grandfathering
criteria merely established that the Commission was within its authority to consider such factors
- not that the grandfathering criteria were legally required to be applied to every situation or that
the criteria were the only factors to consider in determining grandfathering eligibility. Exergy
states that the Commission is free to adopt whatever policy it deems reasonable, within the
constraints of PURPA and FERC.
ORAL ARGUMENT
On October 26,2010, the Commission permitted the parties an opportunity to present
oral argument of their respective positions regarding this case. Yellowstone, Idaho Power and
ORDERNO. 32104 l0
Commission Staff participated. The parties' comments accurately summarize the content of
material presented during oral argument.
During questioning by the Commission, Yellowstone disclosed that one explanation
for the lack of written negotiations between Mr. Vinson and Idatro Power is Mr. Vinson's
aversion to e-mail communications. Specifrcally, Mr. Vinson does not use e-mail. Thus, there
are no e-mail communications to evidence an agreement between the parties.
Idaho Power was asked if it conducted the type of rigorous review of Yellowstonens
contract that the Commission is accustomed to seeing from Idatro Power in its business dealings.
Idaho Power assured the Commission that it did no less of a rigorous review than it would
perform on any other contract.
FII\IDINGS AND CONCLUSIONS
The Idaho Public Utilities Commission has jurisdiction over Idaho Power, an electric
utility, and the issues raised in this matter pursuant to the authority and power granted it under
Title 6l of the Idaho Code and the Public Utility Regulatory Policies Act of 1978 (PUPJA).
The Commission has authority under PURPA and the implementing regulations of
the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric
utilities to enter into fixed-term obligations for the purchase of energy from qualified facilities
(QFs) and to implement FERC rules. The Commission has reviewed the record in this case,
including the Application, the July 28, 2010 Agreement, filed comments and the arguments of
the parties at the hearing.
In deciding grandfather eligibility, we note that this case presents us with a negotiated
and signed contract. There is no reason to question the representations of Idaho Power and
Yellowstone as to when the contract negotiations of the parties occurred. Although having no
Company financial risk involved in proposing a previously published avoided cost rate, we
intend for the Company to assist the Commission in its gatekeeper role of asswing that utility
customers are not being asked to pay more than the Company's avoided cost for the QF
contracts. We expect tdaho Power to rigorously review such contracts.
The parties have fairly represented our past grandfathering criteria requirements and
their application to the particular facts of previously decided cases. Idaho Power and
Yellowstone assert in filed comments and in oral argument before the Commission that all
outstanding contact issues with Yellowstone were resolved prior to March 16, 2010. Mr.
0RDER NO. 32104 1l
Vinssl's familiarity with PURPA projects aod the standaxd tenns of Idatro Power's power
purchase agreements led the parties to neglect written documentation evidencing that the parties'
agreement was materially complete prior to March 16, 2010. However, both the oral assertions
of the parties and the circumstantial evidence indicating that Yellowstone made decisions in
reliance on the existence of a contact demonstate the existence of an agreement prior to March
16.
The Yellowstone Project will provide steady, predictable generation for Idaho Power
around the clock. This high capacity factor, renewable, cogeneration project will be a valuable
addition to help diversift Idaho Power's resource portfolio. The Project will also inject jobs and
revenue into an ldaho county that has been economically hit hard over the past l0 years.
Furthennore, the Agreement allows Idatro Power to recover more than $100,000 in non-
performance damages, for the benefit of ratepayers, that it could not otherwise collect. This
combination of factors, coupled with evidence of an agreement prior to March 16,2010, make it
clear that approval of the Agreement's grandfathered avoided cost rate is in the public interest.
Based on the record established in this case, we find that Yellowstone is entitled to
the grandfathered rates of Order No. 30744. We furdrer find the Company's approach in this
case regarding contact rates to be consistent with the spirit of those prior grandfathering cases.
See A.W. Brown v. Idaho Power, l2l Idaho 812,828 P.2d 841 (1992); Order No. 29872. The
Commission finds that the Agreement submitted in this case contains aoceptable contract terms.
We further find it reasonable to allowpayments made under the Agreement as prudently incurred
expenses for ratemaking purposes.
Notvrdthstanding the approval of this Agreement based on the totality of the
circumstances, we are troubled by the apparent lack of any written documentation in this case
evidencing that terms of a power purchase agreement were materially complete. The
Commission expects that, in the future, Idaho Power will be more diligent in its efforts to
document oral communications of its internal staff and business partners in writing. Oral
discussions and decisions nahrally flow from ongoing communications with interested parties
and potential business partrrers. However, as a sophisticated party to the transaction, it is Idaho
Power's responsibility, ond in its own best interest, to reduce such communications to
documented sunmaxy writings as the parties move through oral decision points leading to
negotiated project agreement. We will hold other regulated electric utilities to this standard.
oRDER NO. 32104 12
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED that the July 28, 2010, Firm Energy Sales Agreement btween Idaho
Power and Yellowstone Power is approved.
IT IS FURTHER ORDERED that ttre Commission Secretary serve this Order on
Avista and Rocky Mountain Power. Electric utilities subject to our jurisdiction shall comply
with the written documentation guidelines set out above when negotiating with QF developers.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See ldaho Code $ 6l-626.
DONE by Order ofthe Idatro Fublic Utilities Commission at Boise,Idaho this I tf
day of November 2010.
D
MARSHA H. SMITH, COMMISSIONER
MACK A. REDFORD,
ATTEST:
/L^fr /L^^,{^(
(eh D. Jewelfl
Commission Secretary
O:IPC-BlG22_ks4
0RDERNO.32104 l3