20000127Order No 28272.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR APPROVAL OF SECOND AMENDMENTS TO FIRM ENERGY SALES AGREEMENTS FOR THE ROCK CREEK II, DIETRICH DROP, LOWLINE II, AND BARBER DAM HYDROELECTRIC GENERATING PROJECTS.
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CASE NO. IPC-E-99-12

ORDER NO. 28272

On December 1, 1999, Idaho Power Company (Idaho Power; Company) filed an Application with the Idaho Public Utilities Commission (Commission) in Case No. IPC-E-99-12 requesting approval of proposed Second Amendments to Firm Energy Sales Agreements between Idaho Power and Bonneville Pacific Corporation for the Dietrich Drop, Rock Creek II and Low Line II projects, and Interwest Hydro, Inc. for the Barber Dam small hydro electric generating project. The amendments seek to modify the requirements for escrow accounts as security provisions for overpayment liability.
The current owner of the Dietrich Drop, Rock Creek II and Low Line II projects is BP Hydro Associates. CHI Hydro, Inc. is a general partner of BP Hydro Associates. Fulcrum, Inc. is the owner of the Barber Dam project. Fulcrum, Inc. and CHI Hydro, Inc. are both part of the CHI Energy, Inc. family of companies.
Pursuant to the Public Utilities Regulatory Policies Act of 1978 (PURPA) Idaho Power is required to purchase energy from qualifying small power production facilities (QFs). The Dietrich Drop, Rock Creek II, Low Line II and Barber Dam projects are QFs. In Order No. 21690 in Case No. U-1006-292, the Commission established security provisions for the overpayment liability that results from levelized QF contracts. The Commission’s Order required QFs to establish maintenance reserve and low water reserve escrow accounts in an Idaho financial institution.
Since the Commission initially established the requirement for escrow accounts, Idaho Power reports that it has become extremely difficult for QF developers to find local banks to provide the escrow account services of the nature required by the Commission’s Orders. (Reference amendment to Firm Energy Sales Agreement for Magic Reservoir project—Case No. IPC-E-98-14, Order No. 27839).
CHI has contacted Idaho Power and proposed a simplified alternate escrow account arrangement for each of the four projects in a manner identical to the procedure the Commission approved in Order No. 27839 for Magic Reservoir. The procedure described in the Second Amendments would allow funds from the maintenance account and low water reserve account to be mingled in a single account with separate accounting for each of the two reserved amounts. Permitted withdrawals from the single account requires two signatures, either by two Idaho Power signatories or by one Idaho Power signatory and one QF signatory. Idaho Power states that such an arrangement will allow it to effectively monitor and control disbursements from the account.
On December 30, 1999, the Commission issued Notices of Application and Modified Procedure in Case No. IPC-E-99-12. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204. The deadline for filing written comments or protests was Thursday, January 20, 2000. Commission Staff was the only party to file written comments (attached). Staff recommends that the alternative escrow arrangements and the proposed Second Amendments be approved. Staff believes that the alternative arrangements are superior to the original arrangements.

COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. IPC-E-99-12 including the filed comments of the Commission Staff. We have reviewed the underlying security requirements established in Case No. U-1006-292. We have reviewed the Commission’s records regarding the underlying Firm Energy Sales Agreements for the identified QF projects. We continue to find security provisions for overpayment liability to be necessary and reasonable. We find the substitute escrow arrangement set out in the submitted Second Amendments to be reasonable and acceptable. Reference Order No. 21690. We continue to find payments made under the Agreements to be prudently incurred expenses for ratemaking purposes.

CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company, an electric utility, pursuant to the authority and power granted it under Title 61 of the Idaho Code.
The Idaho Public Utilities Commission has authority under the Public Utility Regulatory Policies Act of 1978 (PURPA) and implementing regulations of the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric utilities to enter into fixed term obligations to purchase energy from small power producers and to implement FERC rules.

O R D E R
In consideration of the foregoing and as more particularly described above, IT IS HEREBY ORDERED that the submitted Second Amendments to the Firm Energy Sales Agreements between Idaho Power Company and Bonneville Pacific Corporation for the Dietrich Drop, Rock Creek II and Low Line II projects, and Interwest Hydro, Inc. for the Barber Dam small hydroelectric generating project be and the same are hereby approved.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this _______ day of January 2000.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

vld/O:IPC-E-99-12_sw

ORDER NO. 28272 1

Office of the Secretary
Service Date
January 27, 2000