20090716final_order_no_30864.pdf

Office of the Secretary
Service Date
July 16, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF P ACIFICORP DBA ROCKY MOUNTAIN
POWER FOR APPROVAL OF A POWER
PURCHASE AGREEMENT BETWEEN
ACIFICORP AND LOWER VALLEY
ENERGY, INc.
ORDER NO. 30864
CASE NO. P AC-09-
On May 28, 2009, PacifiCorp dba Rocky Mountain Power (PacifiCorp; Company)
filed an Application with the Idaho Public Utilities Commission (Commission) requesting
approval of a May 22, 2009 Power Purchase Agreement (Agreement) between PacifiCorp and
Lower Valley Energy, Inc. (Lower Valley). The Commission in this Order approves
PacifiCorp s Power Purchase Agreement with Lower Valley as more fully set forth below.
THE AGREEMENT
Lower Valley intends to construct, own, operate and maintain a run-of-river
hydroelectric generating facility for the generation of electric power located in or near the town
of Afton, Lincoln County, Wyoming, with an expected nameplate capacity rating of 940-
kilowatts (the Facility). The project is located on Swift Creek in Lincoln County, Wyoming,
partially within the Bridger-Teton National Forest at approximately 420 43' north and 1100 54'
west. The Facility will be a qualified small power production facility (QF) under the applicable
provisions of the Public Utilities Regulatory Policy Act of 1978 (PURP A).
The Agreement between PacifiCorp and Lower Valley is for a three-year term
expiring May 1 2012. Agreement 'II 2.1. Under terms of the Agreement ('115.1) PacifiCorp will
pay Lower Valley non-Ievelized, conforming energy or non-conforming energy purchase prices
for capacity and energy adjusted for seasonality and on-peak/off-peak hours in accordance with
Commission Order No. 30480.
The Swift Creek facility is interconnected to Lower Valley s electrical system and
Lower Valley will transmit net output to PacifiCorp at the Goshen Substation in Idaho by way of
transmission facilities operated by Bonneville Power Administration (BP A). Lower Valley will
acquire and pay for a transmission services agreement to schedule and deliver the power to
PacifiCorp and PacifiCorp intends to accept scheduled firm delivery by way of BP A of Lower
Valley s net output.
ORDER NO. 30864
The total nameplate capacity of the Swift Creek facility is 940 kW. Lower Valley
will be required to provide data on the Facility that PacifiCorp will use to determine whether
under normal and/or average conditions: (I) the feasibility that Facility net energy will equal or
exceed 4 696 298 kWh in each full calendar year for the full term of the Agreement; and (2) the
likelihood that the Facility, under average design conditions, will generate at no more than
MW in any calendar month. Agreement'll 7. Should the Facility exceed 10 aMW on a monthly
basis, PacifiCorp will accept the energy (Inadvertent Energy) that does not exceed the maximum
capacity amount, but will not purchase or pay for this Inadvertent Energy. Agreement'll 5.
Lower Valley has elected June 1 , 2009 as the commercial operation date for the Swift Creek
Facility. Agreement'll 2.
PacifiCorp requests that the Commission approve the Power Purchase Agreement
without change or condition. The Company also requests that the Commission declare that the
prices for energy and capacity are just and reasonable, in the public interest, and that the costs
incurred by PacifiCorp for purchasing capacity and energy from Lower Valley are legitimate
expenses, all of which the Commission will allow PacifiCorp to recover in rates in Idaho in the
event other jurisdictions deny recovery of their proportionate share of said expenses.
On June 17, 2009, the Commission issued a Notice of Application and Modified
Procedure in Case No. P AC-09-05. The deadline for filing written comments was July 9
2009. Commission Staff was the only party to file comments.
COMMENTS
Commission Staff recommends approval of the Agreement as submitted. The rates
are those established in avoided cost Order No. 30480 and the terms and conditions in the
Agreement, Staff contends, are typical of those contained in previous QF contracts approved by
the Commission. Staff in its comments notes that probably the most unique feature of this
Agreement is that the owner of the generation facility is an electric utility rather than a private
developer. Lower Valley Energy is a rural electric cooperative with over 13 000 members.
Lower Valley s service territory roughly covers the JacksoniAfton area in Wyoming and extends
to cover the Swan Falls/Palisades area in Idaho. This Agreement would mark the first in Idaho
in which a project is developed as a PURPA qualifying facility by one utility and the output sold
to another regulated utility. Prior to 2006, PURPA (18 C.R. ~ 292.206) required that a
ORDER NO. 30864
cogeneration facility or small power production facility not be owned by a person primarily
engaged in the generation or sale of electric power. Effectively, this restricted electric utilities to
a minority interest in a QF project. The Energy Policy Act of 2005 eliminated the ownership
restriction.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. P AC-09-
including the underlying Agreement and the filed comments and recommendation of Staff. We
continue to find it reasonable to process the Company s Application under Modified Procedure.
IDAPA 31.01.01.204.
PacifiCorp has presented a Firm Energy Sales Agreement with Lower Valley Energy,
Inc. for Commission consideration and approval. The Agreement is for a 940 k W hydro-
generating facility located on Swift Creek in Lincoln County, Wyoming. As represented and
pursuant to Agreement, PacifiCorp will accept delivery of generation from Swift Creek at the
Goshen Substation in Idaho. Under normal and/or average conditions the project will not exceed
10 aMW on a monthly basis. We thus find the project is qualified to receive the published
avoided cost rates approved by the Commission.
The Commission finds that the Agreement submitted in this case contains acceptable
contract provisions and includes the non-Ievelized published rates approved by the Commission
in Order No. 30480. We find it reasonable that the submitted Agreement be approved without
further notice or procedure. We further find it reasonable to allow payments made under the
Agreement as prudently incurred expenses for ratemaking purposes.
CONCLUSIONS OF LA W
The Idaho Public Utilities Commission has jurisdiction over PacifiCorp dba Rocky
Mountain Power, an electric utility, pursuant to the authority and power granted it under Title
of the Idaho Code and the Public Utility Regulatory Policies Act of 1978 (PURP A). The
Commission has authority under PURP A 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 with the purchase of energy from qualified facilities and to
implement FERC rules.
ORDER NO. 30864
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission approves the May 22, 2009, Power Purchase
Agreement between PacifiCorp dba Rocky Mountain Power and Lower Valley Energy, Inc.
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 ofthe Idaho Public Utilities Commission at Boise, Idaho this /6 t4'
day of July 2009.
MD. K MPT SIDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
Commission Secretary
bls/O:PAC-O9-
ORDER NO. 30864