LUCY BAXLEY. PRESIDENT 

STATE OF ALABAMA 

ALABAMA PUBLIC SERVICE COMMISSION 

P.O. BOX 304260 

MONTGOMERY, ALABAMA 36130-4260 

WALTER L. THOMAS. JR. 

TWINKLE ANDRESS CAVANAUGH. ASSOCIATE COMMISSIONER 

TERRY L. DUNN, ASSOCIATE COMMISSIONER 

SECRETARY 

Alabama Power Company, 

Petitioner 

BY THE COMMISSION: 

PETITION: For a certificate of convenience 

and necessity for the acquisition of rights and 

the assumption of payment obligations under a 

power purchase arrangement pertaining to a 

wind energy generating resource operated in 

Grant, Haskell and Finney Counties, Kansas, 

together with all transmission facilities and 

arrangements, appliances, appurtenances, 

equipment, acquisitions and commitments 

necessary for or incident thereto. 

DOCKET 31859 

ORDER 

I. INTRODUCTION 

Alabama Power Company ("Alabama Power" or "Company"), acting in accordance with 

the provisions of Rate CNP (Certificated New Plant) and Alabama Code § 37-4-28, filed with the 

Commission a petition for a certificate of convenience and necessity ("Petition"). By this Petition, 

the Company sought to certify a purchased power arrangement ("PPA") with Buffalo Dunes Wind 

Project, LLC ("Buffalo Dunes") involving up to 202 MW of wind energy supplied from a wind 

farm being developed by Buffalo Dunes in Grant, Haskell and Finney Counties, Kansas ("Buffalo 

Dunes PPA"). 

Following proper notice, an evidentiary hearing was held at which time the Company 

offered evidence in support of its petition. No opposing testimony or other evidence was offered 

by the intervening parties. Alabama Industrial Energy Consumers ("AlEC") did offer five joint 
DOCKET 31859- #2 

stipulations on behalf of itself and Alabama Power that set forth certain conditions proposed to be 

included in any order certifying the PPA. On the basis of the record compiled at the hearing and 

other available information, the Commission is of the opinion that the Company's Petition should 

be and hereby is granted. In so doing, the Commission adopts the conditions jointly recommended 

by AlEC and the Company. 

II. PROCEDURALBACKGROUND 

The Company filed its Petition with the Commission on June 5, 2012. In support, the 

Company submitted the testimony of John B. Kelley and a copy of the Buffalo Dunes PPA, with 

the latter reflecting redactions of commercially sensitive and proprietary business information. A 

Notice of Petition was issued by the Commission on June 8, 2012, advising interested parties of 

the Company's filing and prescribing a procedural schedule for any petitions to intervene and for 

any responsive testimony. By filing dated June 11, 2012, AlEC petitioned to intervene. The 

Office of the Attorney General subsequently petitioned to intervene as well. Neither AlEC nor the 

Office of the Attorney General filed responsive testimony or other evidence. 

A hearing on this petition was held on August 9, 2012. Mr. Kelley appeared as a witness 

and his direct testimony and the PPA were entered into the record as exhibits. Counsel for AlEC 

and the Office of the Attorney General were afforded an opportunity to conduct cross-examination, 

and a representative of the Commission Staff asked Mr. Kelley a number of clarifying questions. 

Subsequently, counsel for AlEC introduced an exhibit with five joint stipulations that had been 

agreed upon by AlEC and Alabama Power. The five joint stipulations were offered by AlEC and 

Alabama Power with a recommendation that they be made part of any order of the Commission, 

should it determine to grant Alabama Power's Petition and issue the requested certificate of 

convenience and necessity. 
DOCKET 31859- #3 

III. DISCUSSION 

Under the terms of the Buffalo Dunes PPA, the Company agrees to purchase up to 202 MW 

of wind energy. The contract term is twenty (20) years, with service expected to commence on or 

about December 31, 2013. Along with the energy, the Company also obtains rights to all related 

environmental attributes (which generally include any fuel-related, emissions-related, air qualityrelated credits and offsets), at no additional cost above the energy price. 

As the wind resource is located in southwestern Kansas, transmission service is required 

through the Southwest Power Pool and Entergy Services, Inc. balancing authority areas. Buffalo 

Dunes is responsible for procuring transmission rights to effectuate firm delivery of the resource's 

output to the Southern balancing authority area. Prior to deliveries under the PPA, these rights will 

be assigned to the Company, which will then be responsible for the associated costs. In the event 

Buffalo Dunes were to be unable to secure the requisite transmission service, the PPA would 

terminate without any cost responsibility to the Company. 

As described in the Company's Petition and discussed at the hearing, the Buffalo Dunes 

PPA is projected to bring positive benefits to customers over its term. Specifically, the delivered 

price of energy from the wind facility is expected to be below the Company's projected avoided 

costs (i.e. lower than the cost the Company would otherwise incur to produce that energy from 

available marginal resources), with the resulting energy savings flowing directly to the Company's 

customers. Staff has analyzed the PPA and its terms and conditions, and has reviewed the 

Company's economic analyses and supporting data in order to test the reasonableness of that data 

and the associated projections. In Staff's view, this information demonstrates that the Buffalo 

Dunes PPA reflects an opportunity to procure rights to a cost-effective renewable energy resource 

that can be expected to yield positive net benefits to customers over its term. 
DOCKET 31859- #4 

Staff also has reviewed the joint stipulations offered by Alabama Power and AlEC at the 

hearing. The five joint stipulations are as follows: 

1. The PPA provides for the following instances where, if a specified cost cap is exceeded 

and Buffalo Dunes does not undertake to pay the excess costs, Alabama Power has the 

option to incur the excess costs and continue to accept delivery of energy. 

• Section 10.4- Exceeding Buyer's Additional Charges Cap. 

• Section 10.6 - Termination of Agreement Due to Exceeding Seller's 

Additional Charges Cap. 

Prior to the exercise of either option, Alabama Power will make a submission to the 

Commission Staff that includes the economic justification for the exercise of the option 

and any other information reasonably necessary for Staff to assess the decision. Absent 

written notice of disapproval within seven (7) business days of the submission (or 

within such other period agreed to by Staff and Alabama Power), Staff shall be deemed 

to have concurred in the exercise of the option by Alabama Power. 

2. Proceeds received by Alabama Power pursuant to the PPA, and consistent with other 

applicable rates, related to the sale to third parties of energy will be credited against 

Rate ECR, subject to the right of the Commission to review, at its option or upon 

recommendation by Alabama Power, whether revenues Alabama Power receives from 

any such sales should be credited to other rate mechanisms as the Commission 

determines would be in the public interest. 

3. Proceeds received by Alabama Power pursuant to the PPA, and consistent with other 

applicable rates, related to the sale to third parties of transmission rights or RECs will 

be credited against Rate CNP-B, subject to the right of the Commission to review, at its 
DOCKET 31859 - #5 

option or upon recommendation by Alabama Power, whether revenues Alabama Power 

receives from any such sales should be credited to other rate mechanisms as the 

Commission determines would be in the public interest. 

4. The PPA certified by the Commission may not be materially altered or amended 

without prior notice and approval of such alteration or amendment by the Commission, 

as provided under applicable laws and regulations. 

5. In the event the PPA is terminated for any reason, the authority conferred by the order 

of the Commission granting the certificate of public convenience and necessity shall, 

from that point forward, be deemed cancelled without the need for further action by the 

Commission. 

Staff supports the adoption of these stipulations, as does the Commission. Notably, these 

stipulations are consistent with stipulations that we approved as part of a certificate of convenience 

and necessity sought by the Company in Docket No. 31653, also for a wind PPA. Those 

stipulations, which like these had been jointly proposed by AlEC and Alabama Power, were 

supported by Staff as being within the authority of the Commission and not otherwise unduly 

injecting Staff or the Commission into the managerial decisions of Alabama Power. 1 For these 

reasons, and given the facts and circumstances presented by this proceeding as well as Staff's 

support for the adoption of the stipulations, the Commission finds the stipulations offered here to 

be appropriate for inclusion in the certificate pertaining to the Buffalo Dunes PPA. 

1 The review procedure described in the first stipulation (and as supported by Alabama Power) represents a vehicle 

whereby the Company will communicate the economic justification to Staff for its consideration and feedback, after 

consultation with the Commission. Accordingly, any "notice of disapproval" under this process will, by law, be issued 

by the Commission, and absent such notice, the Company's proposed exercise of the subject contractual option will be 

deemed approved pursuant to this Order. 
DOCKET 31859 - #6 

IV. FINDINGS AND CONCLUSIONS 

In review of the foregoing, and after consideration of the recommendation by Staff, the 

materials of record and other information available to the Commission, the Commission FINDS 

that it is in the interest of the Company and the public served by it that a certificate of convenience 

and necessity be issued for the Buffalo Dunes PPA, conditioned upon the five stipulations recited 

above. 

IT IS, THEREFORE, ORDERED BY THE COMMISSION, that the June 5, 2012 

Petition of Alabama Power be and hereby is granted. 

IT IS FURTHER ORDERED BY THE COMMISSION, that with the issuance of this 

certificate of convenience and necessity to Alabama Power pertaining to the Buffalo Dunes PPA, 

the Commission does hereby grant and convey upon Petitioner, Alabama Power Company, its 

successors and assigns, all of the rights, power and authority, which under the laws of the State of 

Alabama, the Commission is authorized to confer for the purposes of acquiring the rights and 

assuming the payment obligations under the described Buffalo Dunes PPA, together with all 

transmission facilities and arrangements, appliances, appurtenances, equipment, acquisitions and 

commitments necessary for or incident thereto. 

IT IS FURTHER ORDERED BY THE COMMISSION, that the Company is authorized 

to recover all costs related to energy purchased and to credit all revenues it receives for energy sold 

to third parties under the terms of the PPA through Rate ECR (Energy Cost Recovery), subject to 

the right of the Commission to review, at its option or upon recommendation by the Company, 

whether revenues the Company receives from any such sales should be credited to other rate 

mechanisms as the Commission determines would be in the public interest. 
DOCKET 31859- #7 

IT IS FURTHER ORDERED BY THE COMMISSION, that the Company is authorized 

to recover all other costs and to credit all other revenues it receives, including those derived from 

the resale of transmission rights and sale of renewable energy credits to third parties under the 

terms of PPA, in accordance with the provisions of Part B of Rate CNP and other applicable rates, 

subject to the right of the Commission to review, at its option or upon recommendation by the 

Company, whether revenues the Company receives from any such resales or sales should be 

credited to other rate mechanisms as the Commission determines would be in the public interest. 

IT IS FURTHER ORDERED BY THE COMMISSION, that jurisdiction in this cause is 

hereby retained for any further order or orders that this Commission may find just and reasonable 

under the circumstances. 

IT IS FURTHER ORDERED BY THE COMMISSION, that this Order shall be 

effective as of the date hereof. 

DONE at Montgomery, Alabama, this 

-111 /1- day of September, 2012. 

ALABAMA PUBLIC SERVICE COMMISSION 

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Lucy Baxley, President < 

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