Idaho Public Utilities Commission

Case No. IPC-E-10-03, Order No. 30999

February 19, 2010

Contact: Gene Fadness (208) 334-0339, 473-8791

Website: www.puc.idaho.gov

 

PUC plans workshop on competitive bidding guidelines

 

 

Staff from the Idaho Public Utilities Commission will be conducting a public workshop Thursday in Boise regarding the possible creation of commission-established bidding guidelines for Idaho Power Company.

 

Independent power producers, as well as group representing industrial and irrigation customers, last November filed a petition with the commission asking that it consider establishing competitive bidding guidelines for the procurement of major generation projects by Idaho’s three major electric utilities. However, Rocky Mountain Power, which operates in eastern Idaho, and Avista Utilities in northern Idaho are already subject to guidelines established by other states in which they operate. Because those utilities currently use those guidelines for projects that serve Idaho, the original application was modified to include only Boise-based Idaho Power Company.

 

The groups petitioning the commission contend that Idaho Power is free to issue bid requests that are “designed and administered completely without commission or other stakeholder input.”

 

The petitioners pointed specifically to the $400 million, 330-megawatt Langley Gulch natural gas plant the commission approved last fall. The Idaho Power-owned plant is under construction near New Plymouth.  

 

In that case, Idaho Power initiated a bid process that was reviewed by a third party. Idaho Power received five valid proposals that represented 13 alternative sources, including a proposal by the company to build the plant itself. Idaho Power selected its own self-build plan, claiming it will have a revenue requirement impact of about $95 million less than the next competing proposal.

Some parties in the case argued the bid process was flawed, because, among other reasons, the bid evaluator was hired by the company and there was not an independent scoring by the bid evaluator. The parties also maintained that Idaho Power should have more seriously considered a “build-and-transfer project.” which would allow a third party to build the plant and then turn it over to Idaho Power to operate.

In approving the project, the commission acknowledged the bid process could have been more transparent and that the “total universe of potential bidders was perhaps not realized.” However, the commission said, “Based on the evidence presented, we cannot conclude that a lower price and better project would have resulted” if the bid process had been better designed. The commission said it was apparent that the competitors were “sophisticated bidders and that the short list of projects were all competitive.”

As a result of the questions raised in the Langley Gulch case, the commission said it would open a case to investigate bidding guidelines. “The actual and perceived flaws in the RFP (Request for Proposals) process, we find, while not fatal to the company’s resource selection, clearly demonstrate a need for a separate proceeding to consider RFP competitive bidding rules and guideline,” the commission said.

The workshop will begin at 9:30 a.m., Thursday, Feb. 25, in the commission hearing room at 472 W. Washington St., Boise. A complete copy of the commission’s order, including draft guidelines proposed by Idaho Power, are available on the commission’s Web site at www.puc.idaho.gov. Click on the electric icon, then on “Open Electric Cases,” and scroll down to Case No. IPC-E-10-03.