20090709Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 1895
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
PACIFICORP DBA ROCKY MOUNTAIN )
POWER FOR APPROVAL OF A POWER )
PURCHASE AGREEMENT BETWEEN )
PACIFICORP AND LOWER VALLEY )ENERGY, INC. )
)
)
CASE NO. P AC-E-09-5
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
Attorney of record, Scott Woodbur, Deputy Attorney General, and responses to the Notice of
Application and Notice of Modified Procedure issued on June 17,2009. The Staff submits the
following comments.
BACKGROUND
On May 28, 2009, PacifiCorp dba Rocky Mountain Power (PacifiCorp; Company) fied an
Application requesting approval of a Power Purchase Agreement (Agreement) between
PacifiCorp and Lower Valley Energy, Inc. (Lower Valley) dated May 22,2009.
Lower Valley intends to construct, own, operate and maintain a ru-of-river hydroelectric
generating facilty for the generation of electric power located near the town of Afton, Wyoming
(the Facility). The project is located on Swift Creek in Lincoln County, Wyoming, parially
STAFF COMMENTS 1 JULY 9, 2009
within the Bridger-Teton National Forest. The Facilty wil be a qualified, small power
production facilty (QF) under the applicable provisions of the Public Utilty Regulatory Policies
Act of 1978 (PURP A).
The Agreement between PacifiCorp and Lower Valley is for a three-year term expiring
May 1,2012. Agreement i! 2.1. Under terms of the Agreement (i! 5.1), PacifiCorp will pay
Lower Valley non-Ievelized, conforming energy or non-conforming energy purchase prices for
capacity and energy adjusted for seasonality and on-peakoff-peak hours in accordance with
Commission Order No. 30480.
The Swift Creek facilty 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 facilties operated by Bonnevile Power Administration (BPA). Lower Valley wil
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 ofBPA of Lower
Valley's net output.
The total nameplate capacity of the Swift Creek facilty is 940 kilowatts. Lower Valley
has elected June i, 2009 as the commercial operation date for the Swift Creek Facilty.
Agreement i! 2.2.5. Staff is informed that Lower Valley is cirently serving Swift Creek output
into its own load and wil 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 for
energy and capacity are just and reasonable, in the public interest, and that the costs incured 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.
STAFF ANALYSIS
The rates included in the Agreement are non-Ievelized rates adjusted for seasonality and
on- and off-peak hours, and are in accordance with Commission Order 30480 and its Errata. With
only a few exceptions, which will be discussed in more detail below, all other terms and
conditions contained in the Agreement are typical of previous PacifiCorp QF contracts.
STAFF COMMENTS 2 JULY 9, 2009
Lower Valley Energy
Probably the most unique feature of this Agreement is that the owner of the generation
facility is an electric utilty 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 Jackson! Afton area in Wyoming and extends to cover the Swan Valley/Palisades area in
Idaho. This Agreement would mark the first in Idaho in which a project is developed as a
PURP A Qualifying Facility by one utility and the output sold to another regulated utility.
Prior to 2006, PURP A (CFR § 292.206) required that a cogeneration facilty or small
power production facilty not be owned by a person primarily engaged in the generation or sale of
electric power. Effectively, electric utilties could not hold more than a 50 percent equity interest
in any cogeneration or small power production facility in order to be eligible as a QF. However,
the Energy Policy Act of 2005 completely eliminated this ownership restriction. As of March
2006, any electric utility can be the owner of a QF and is therefore able to sell the QF's output to
another utilty at the purchasing utilty's avoided cost rate.
On July 15,2008, Lower Valley submitted to FERC a Notice of Self Certification as a
Small Power Production Facility. Under FERC rules for self certification, no fuher notice wil
be issued. Consequently, Lower Valley's facilty is already deemed to be a Qualifying Facilty
(QF08-641-000) and is therefore entitled to sell power to PacifiCorp at PacifiCorp's avoided cost
rates.
Contract Length
Although the maximum length of a PURP A contract in Idaho is currently 20 years, this
Agreement is for a term of approximately three years. It is Staffs understanding that some
portion of the power Lower Valley curently receives under an existing power supply agreement
with BP A will not be available in three years. After its agreement with BP A expires, Staff
believes Lower Valley intends to use power from the Swift Creek facilty to serve its own load.
RECOMMENDATIONS
Staff recommends approval of the Agreement as submitted. Staff fuher recommends that
the costs incured by PacifiCorp for purchasing capacity and energy from Lower Valley be
accepted as legitimate expenses. Staff recommends PacifiCorp be allowed to recover in rates in
Idaho the appropriate allocated costs under the Revised Protocol.
STAFF COMMENTS 3 JULY 9, 2009
q-lRespectfully submitted this
Technical Staff: Rick Sterling
i :umisc:commentspace09 .5swrps comments
STAFF COMMENTS
day of July 2009.
~Scott Woodb
Deputy Attorney General
4 JULY 9, 2009
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 9TH DAY OF JULY 2009, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. PAC-E-09-05, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
BRUCE GRISWOLD, DIRECTOR
SHORT-TERM ORIGINATION
PACIFICORP
825 NW MUL TNOMAH SUITE 600
PORTLAND OR 97232
E-MAIL: bruce.griswoldCipacificorp.com
DANIEL E SOLANDER
TED WESTON
ROCKY MOUNTAIN POWER
201 S MAIN, SUITE 2300
SALT LAKE CITY UT 84111
E-MAIL: daniel.solanderCipacificorp.com
ted. westonCipacificorp.com
Jo~
SECRETA
CERTIFICATE OF SERVICE