IDAHO PUBLIC UTILITIES COMMISSION

Case No. IPC-E-06-09, Order No. 30201

December 15, 2006

Contact: Gene Fadness (208) 334-0339

 

Commission issues certificate for Evander Andrews Power Plant

 

The Idaho Public Utilities Commission today authorized Idaho Power Co. to pursue its intent to build an approximate $60 million, 170-megawatt natural gas power plant near Mountain Home.

 

The plant will function primarily as a “peaker” plant, providing power during those times when electrical demand on Idaho Power’s system is at its peak, typically during the summer months when air conditioners and irrigation pumps are operating. Use of peaker plants reduces the need for the company to buy power from the wholesale market during peak times when it is most expensive.

 

Regulated utilities are required to apply to the commission for a “Certificate of Public Convenience and Necessity,” before beginning construction of a power plant. The certificate states that current or future public convenience and necessity requires an additional power plant.

 

Idaho Power included the project as part of its 2004 Integrated Resource Plan for meeting customer demand over the next 10 years. In addition to natural gas sources, the company, in the same 2004 plan, said it would acquire 100 MW through conservation and energy-efficiency programs and issue Request for Proposals for 100 MW of wind power and 100 MW of geothermal energy.

 

The Evander Andrews Power Plant will be built at the existing 40-acre Evander Andrews Power Complex north of Mountain Home, already the site of two 45-MW gas fired generators built by Idaho Power in 2001.

 

When making its application to the commission last April, Idaho Power submitted a “commitment estimate” of $60 million to be recovered from customers for the construction of the plant. The commission’s order says Idaho Power may recover from customers the projected base price of $50 million and that any amount beyond that – up to the commitment estimate of $60 million – will be reviewed in a subsequent rate case. The $10 million above the base $50 million is for costs the company knows it will incur but cannot precisely quantify, such as sales taxes, allowances for funds used during construction and start-up fuel.

 

Construction costs for the plant itself do not include an estimated $22.8 million in construction costs for transmission and substation facilities required to deliver the power to the company’s Treasure Valley load center. The commission said the “reasonable and prudent actual costs,” for the transmission upgrade will be considered and reviewed in a later proceeding.

 

The Industrial Customers of Idaho Power argued the plant is not needed. ICIP said anticipated peak load deficiencies could be met if the company were to acquire more power from small-power projects and implement more DSM (demand-side management) programs.

 

The commission ruled the plant is needed in addition to the power generated from small-power projects and the implementation of programs to reduce customer load. The commission said customer response to conservation programs is out of the company’s control and that such programs do not offer the same level of reliability and effectiveness that a fully dispatchable resource like Evander Andrews would.

 

After a bid process that included 31 proposals from nine companies, Idaho Power selected Siemens Power Generation, Inc. to build the plant, the same firm that constructed the company’s Bennett Mountain Power Plant, also near Mountain Home.

 

The Industrial Customers of Idaho Power said Idaho Power did not choose the natural gas plant with the least cost, noting that the Siemens Power Generation bid was substantially higher than the runner-up due to transmission upgrades. But the commission said Idaho Power was right to include other “non-price,” factors when it awarded the bid. Further, the commission said, an upgraded transmission line between Mountain Home and Boise will improve the overall reliability of the transmission system and be available at times when Evander Andrews is not running.

 

The commission said the company should have included more detailed transmission costs in its application. Idaho Power said it was limited in the information it could provide because of federal requirements that Idaho Power’s power deliver unit department operate independently from its generation department. “While we understand that the company is bound by the FERC (Federal Energy Regulatory Commission) standards of conduct, we find it unacceptable for Idaho Power to bring a case before this commission seeking authorization to construct a costly generating resource without more detailed and firmer transmission costs,” the commission said.

 

The commission ordered the company to provide a transmission cost estimate next month and said that any future application for new generation include detailed transmission information and costs.

 

The commission also encouraged the company to pursue other alternatives to meet growing demand. “We continue to find that the programs or procedures that reduce critical peak hourly demand have great value to both ratepayers and the company,” the commission said. “Idaho Power must diligently and vigorously pursue all available, cost-effective DSM, conservation and pricing options that could potentially displace or defer the need for additional future peaking generation.”

 

Commissioners said they were particularly interested in Portland General Electric’s “virtual peaking plant.” Under that program, standby generation owned by the company’s customers is dispatched for up to 400 hours a year. The utility offers to provide maintenance and other support to the owners of the standby generation. The commission ordered Idaho Power to investigate and develop a proposal for a similar program here by no later than June 1, 2007.

 

Once the Evander Andrews plant is built, ownership would be transferred to Idaho Power. The plant is anticipated to be available to meet peak demand in the summer of 2008.

 

A copy of the company’s application and other documents related to the case can be found on the commission’s Web site at www.puc.idaho.gov. Click on “File Room,” and then on “Electric Cases,” and scroll down to Case No. IPC-E-06-09.

 

Interested parties may petition the commission for reconsideration by no later than Jan. 5. Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous. Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.

 

Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.