20110607final_order_no_32261.pdf

Office of the Secretary
Service Date
June 7,2011
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF PACIFICORP DBA ROCKY MOUNTAIN )CASE NO.PAC-E-11-08
POWER FOR APPROVAL OF A FIRM )
ENERGY SALES AGREEMENT BETWEEN )
ROCKY MOUNTAIN POWER AND )ORDER NO.32261
CARGILL,INC.)
On February 16,2011,PacifiCorp dba Rocky Mountain Power filed an Application
requesting approval of a 10-year Firm Energy Sales Agreement (Agreement)between Rocky
Mountain Power and Cargill,Inc.The project (Facility)is located in Jefferson County,Idaho.
The project will be a “qualifying facility”(QF)under the applicable provisions of the federal
Public Utility Regulatory Policies Act of 1978 (PURPA).The Company requested that its
Application be processed by Modified Procedure.
On March 10,2011,the Commission issued a Notice of Application and Notice of
Modified Procedure setting an April 7,2011,comment deadline,and an April 14,2011,deadline
for reply comments.By this Order,the Commission approves the Agreement between Rocky
Mountain Power and Cargill without change or condition and declares that all payments made by
Rocky Mountain Power to Cargill be allowed as prudently incurred expenses for ratemaking
purposes.
THE AGREEMENT
On February 8,2011,Rocky Mountain Power and Cargill entered into an Agreement.
Cargill intends to own,operate and maintain a biogas-fueled digester generating facility for the
generation of electric power.Under the terms of the Agreement,the Facility agrees to sell
electric energy to Rocky Mountain Power for a 10-year term using the current non-levelized
published avoided cost rates as currently established by the Commission in Order No.31025 for
energy deliveries of less than 10 aMW.Application at 2.The nameplate rating of the Facility is
1.696 MW.Under normal andlor average conditions,the Facility will not exceed 10 aMW on a
monthly basis.Should the Facility exceed 10 aMW on a monthly basis,Rocky Mountain Power
will accept the energy,but will not purchase or pay for the inadvertent energy.Agreement ¶6.6.
The Facility has selected seven (7)days from the service date of the Commission’s
Order approving the Agreement as its Scheduled Commercial Operation Date.Application at 3.
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Rocky Mountain Power asserts that various requirements have been placed upon the Facility in
order for Rocky Mountain Power to accept the Facility’s energy deliveries.Rocky Mountain
Power states that it will monitor the Facility’s compliance with initial and ongoing requirements
through the term of the Agreement.The parties have agreed to delay liquidated damages and
security provisions.Agreement ¶J 2.4.1,10.1.Rocky Mountain Power states that the Facility
has also been made aware of and accepted the provisions in the Agreement regarding curtailment
or disconnection of the Facility should certain operating conditions develop on Rocky Mountain
Power’s system.Agreement ¶6.3.
By its own terms,the Agreement will not become effective until the Commission has
approved all of the terms and conditions and declares that all payments made by Rocky
Mountain Power to the Facility for purchases of energy “are just and reasonable,in the public
interest,and that the costs incurred by [Rocky Mountain Power]for purchases of capacity and
energy from [Cargill]are legitimate expenses,all of which the Commission will allow [Rocky
Mountain Power]to recover in rates in Idaho in the event other jurisdictions deny recovery of
their proportionate share of said expenses.”Agreement ¶2.1.
THE COMMENTS
StaffComments
The Facility is expected to generate 9,450 MWh in the first year of operation and
12,600 MWh annually thereafter.Under the non-levelized rates in the Agreement,the annual
energy payments by PacifiCorp for the expected generation will be approximately $0.48 million
in 2011 increasing to approximately $1.04 million in 2020,or a cumulative total of $8.80 million
over the 10-year term of the Agreement.The net present value of the energy payments over the
life of the Agreement will be approximately $5.72 million.
This Agreement contains rates from Order No.31025,the published rates currently
in effect.The rates in the Agreement are fully in conformance with Commission Orders.1 In
addition,all other terms and conditions in the Agreement are consistent with recent Commission
Orders.Consequently,Staff recommended approval of the Agreement as submitted.Staff
further recommends that the costs incurred by PacifiCorp for purchasing capacity and energy
On November 5,2010,Idaho Power Company,Avista Corporation,and PacifiCorp dba Rocky Mountain Power
(Utilities)filed a Joint Petition requesting that the Commission initiate an investigation to address various avoided
cost issues related to PURPA.On February 7,2011,the Commission issued Order No.32176 which temporarily
reduced the eligibility cap for published avoided cost rates from 10 aMW to 100 kW for wind and solar OFs only.
ORDER NO.32261 2
from Cargill be accepted as legitimate expenses.Staff recommended PacifiCorp be allowed to
recover in rates in Idaho the appropriate allocated costs under the Revised Protocol.
FINDINGS AND CONCLUSIONS
The Idaho Public Utilities Commission has jurisdiction over PacifiCorp dba Rocky
Mountain Power,an electric utility’,and the issues raised in this matter pursuant to the authority
and power granted it under Title 61 of the Idaho Code and the Public Utility Regulatory Policies
Act of 1978 (PURPA).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
February 8,2011,Agreement,and the comments and recommendations of Commission Staff.
As represented and pursuant to contract,under normal andior average conditions the Facility will
not exceed 10 aMW on a monthly basis.Based on the foregoing,we find that the proposed
Agreement submitted in this case contains acceptable contract provisions including the non
levelized published avoided cost rates approved by the Commission in Order No.31025.We
further find it reasonable to allow payments made under the Agreement as prudently incurred
expenses for ratemaking purposes.
ORDER
In consideration of the foregoing and as more particularly described above,IT IS
HEREBY ORDERED that the February 8,2011,Firm Energy Sales Agreement between
PacifiCorp dba Rocky Mountain Power and Cargill,Inc.is approved without change or
condition.
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.
ORDER NO.32261 3
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of June2011.
N
PAUL KJELLAN ER,PRESIDENT
MACK A.REDFOR,COMMISSIONER
MARSHA H.SMITH,COMMISSIONER
ATTEST:
Jn D.Jewe4Y
commission Secretary
O:PAC-E-11 -08ks2
ORDER NO.32261 4