HomeMy WebLinkAbout20090612Decision Memo.pdfDECISION MEMORANDUM 1
DECISION MEMORANDUM
TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
DATE: JUNE 9, 2009
SUBJECT: CASE NO. PAC-E-09-05 (PacifiCorp)
POWER PURCHASE AGREEMENT WITH LOWER VALLEY
ENERGY, INC.
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).
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 42° 43' north and 110° 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 (PURA).
The Agreement between PacifiCorp and Lower Valley is for a three-year term
expiring May 1, 2012. Agreement ¶ 2.1. Under terms of the Agreement (¶ 5.1) PacifiCorp
will pay Lower Valley non-levelized, 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
DECISION MEMORANDUM 2
way of transmission facilities operated by Bonneville Power Administration (BPA). 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
BPA of Lower Valley’s net output.
The total nameplate capacity of the Swift Creek facility is 940 kilowatts. Lower
Valley will be required to provide data on the Facility that PacifiCorp will use to determine
whether under normal and/or average conditions: (l) 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 10 MW in any calendar month. Agreement ¶ 7. Should the Facility exceed 10 average MW
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 ¶ 5.3. Lower Valley has elected June 1, 2009 as the commercial operation date for
the Swift Creek Facility. Agreement ¶ 2.2.5. Staff is informed that Lower Valley is currently
serving Swift Creek output into its own load and will continue to do so until the Agreement is
approved.
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 to be 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.
COMMISSION DECISION
PacifiCorp requests that the Commission issue an Order approving the three-year
May 22, 2009 Power Purchase Agreement between PacifiCorp and Lower Valley without change
or condition. The Company further requests a Commission finding that all payments for
purchases of energy under the Agreement will be allowed as prudently incurred expenses for
ratemaking purposes.
DECISION MEMORANDUM 3
Staff recommends that the Company’s Application in Case No. PAC-E-09-05 be
processed pursuant to Modified Procedure, i.e., by written submission rather by hearing.
Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204. Does the Commission
agree with Staff’s recommended procedure?
Scott Woodbury
Deputy Attorney General
bls/M:PAC-E-09-05_sw