20110407Comments.pdf

KRSTINE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 6618
RECEIVED
10n APR -1 AM 8: 46
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorneys for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MA TIER OF THE APPLICATION
OF PACIFICORP DBA ROCKY MOUNTAIN
POWER FOR APPROVAL OF A FIRM
ENERGY SALES AGREEMENT BETWEEN
ROCKY MOUNTAIN POWER AND
CARGILL, INC.
)
) CASE NO. PAC-E-ll-08
)
)
) COMMENTS OF THE
) COMMISSION STAFF
)
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
Attorney of record, Kristine A. Sasser, Deputy Attorney General, submits the following comments
in response to the Notice of Application and Notice of Modified Procedure issued on March 10,
2011, Order No. 32202 and its errata issued on March 15, 2011.
BACKGROUND
On Februar 16,2011, PacifiCorp dba Rocky Mountain Power fied an Application
requesting approval of a 10-year Firm Energy Sales Agreement (Agreement) between Rocky
Mountain Power and Cargil, Inc. The project (Facility) is located in Jefferson County, Idaho.
The project will be a "Qualifying Facilty" (QF) under the applicable provisions of the Public
Utilty Regulatory Policies Act of 1978 (PURP A).
On Februar 8, 2011, Rocky Mountain Power and Cargil entered into the Agreement.
Cargil intends to own, operate and maintain a biogas-fueled digester generating facilty for the
generation of electric power. Under the terms of the Agreement, the Facility agrees to sell electric
STAFF COMMENTS APRIL 7, 2011
energy to Rocky Mountain Power for a 10-year term using the current non-Ievelized 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 and/or average conditions, the Facilty will not exceed 10 aMW on a monthly
basis. Should the Facilty exceed 10 aMW on a monthly basis, Rocky Mountain Power wil accept
the energy, but wil not purchase or pay for the inadvertent energy. Agreement ~ 6.6.
The Facility has selected seven days from the service date of the Commission's Order
approving the Agreement as its Scheduled Commercial Operation Date. Application at 3. 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 wil monitor the Facility's compliance with initial and ongoing requirements through the term
of the Agreement. The paries have agreed to delay liquidated damages and security provisions.
Agreement ~~ 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 curailment or disconnection of the
Facilty 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 incured by (Rocky Mountain Power) for purchases of capacity and energy from
(Cargil) are legitimate expenses, all of which the Commission wil 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.
STAFF ANALYSIS
The Facilty is expected to generate 9,450 MWhs in the first year of operation and 12,600
MWhs annually thereafter. Under the non-Ievelized rates in the Agreement, the anual energy
payments by PacifiCorp for the expected generation wil be approximately $0.48 milion in 2011
increasing to approximately $ i .04 milion in 2020, or a cumulative total of $8.80 milion over the
1 O-year term of the Agreement. The net present value of the energy payments over the life of the
Agreement will be approximately $5.72 milion.
STAFF COMMENTS 2 APRIL 7, 2011
Temporary Lowering of the Eligibilty Cap for Published Rates
On November 5, 2010, Idaho Power Company, Avista Corporation, and PacifiCorp dba
Rocky Mountain Power (Utilties) fied a Joint Petition requesting that the Commission initiate an
investigation to address various avoided cost issues related to PURP A. While the investigation is
underway, the Petitioners also requested that the Commission "lower the published avoided cost
rate eligibilty cap from 10 aMW to 100 kW (to) be effective immediately. . . ." Petition at 7. On
December 3, 2010, the Commission issued Order No. 32131, Notice of Joint Petition, Notice of
Intervention Deadline, and Notice of Oral Argument. In the Order, the Commission declined to
immediately reduce the published avoided cost rate eligibilty cap, but did establish a schedule for
processing the Utilties' request to reduce the eligibilty cap via Modified Procedure and to schedule
an oral argument. In paricular, the Commission stated its desire to receive comments regarding the
following:
(1) the advisabilty of reducing the published avoided cost eligibilty cap;
(2) if the eligibility cap is reduced, the appropriateness of exempting non-wind QF
projects from the reduced eligibilty cap; and
(3) the consequences of dividing larger wind projects into 10 aMW projects to utilze the
published rate.
In its Order, the Commission went on to state "Finally, it is our intent that our decision regarding
the 'Joint Motion' to reduce the published avoided cost eligibility cap shall become effective on
December 14,2010." Reference Order No. 32131 at 5-6. By stating its intent, paries were given
clear, unambiguous, advance notice that the eligibilty cap may be reduced.
Written comments were submitted by the paries on December 22, 2010, written reply
comments were submitted on Januar 19,2011, and Oral Argument was heard on January 27,2011.
On Februar 7,2011, the Commission issued Order No. 32176 which temporarily reduced the
eligibilty cap for published avoided cost rates from 10 aMW to 100 kW for wind and solar QFs
only. In accordance with its stated intent in Order No. 32131, Order No. 32176 confirmed that the
reduction in the eligibilty cap would be effective December 14,2010. Reference Order No. 32176
at 11-12.
The Agreement contains rates from Order No. 31025, the published rates currently in effect.
Because the Agreement is for a biogas facility at a dairy, and not a wind or solar facilty, the
temporar reduction in the eligibilty cap for published rates does not apply. Consequently, the
STAFF COMMENTS 3 APRIL 7, 2011
rates in the Agreement are fully in conformance with Commission Orders. In addition, all other
terms and conditions in the Agreement are consistent with recent Commission Orders.
STAFF RECOMMENDATION
Staff recommends approval of the Agreement as submitted. Staff further recommends that
the costs incurred by PacifiCorp for purchasing capacity and energy from Cargil be accepted as
legitimate expenses. Staff recommends PacifiCorp be allowed to recover in rates in Idaho the
appropriate allocated costs under the Revised Protocol.
Respectfully submitted this íU!day of April 2011.
~.t"â. ~,
Kr1l. Sasser
Deputy Attorney General
Technical Staff: Rick Sterling
i:umisc:commentslpace 11.8ksrps comments
STAFF COMMENTS 4 APRIL 7, 2011
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 7TH DAY OF APRIL 2011, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. PAC-E-II-08, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
TED WESTON
ID REG AFFAIRS MGR
ROCKY MOUNTAIN POWER
201 S MAIN ST STE 2300
SALT LAKE CITY UT 84111
E-MAIL: ted.weston(ßpacificorp.com
DANIEL E SOLANDER
ROCKY MOUNTAIN POWER
201 S MAIN ST STE 2300
SALT LAKE CITY UT 84111
E-MAIL: daniel.solander(ßpacificorp.com
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
datarequest(ßpacificorp.com
L~.\(Qr
SECRETARY
CERTIFICATE OF SERVICE