HomeMy WebLinkAbout20071105min.docIDAHO PUBLIC UTILITIES COMMISSION
MINUTES OF DECISION MEETING
November 5, 2007 – 1:30 P.M.
In attendance were Commissioners Mack Redford, Marsha Smith and Jim Kempton.
Commissioner Redford called the meeting to order. The first order of business was approval of the CONSENT AGENDA, items 1 – 5. There was no discussion. Commissioner Smith made a motion to approve the Consent Agenda. A vote was taken on the motion and it carried unanimously.
The next order of business was MATTERS IN PROGRESS:
Petition to Modify Fuel Cost Component Methodology for Published QF Rates, Case No. IPC-E-07-15 (Idaho Power) – Discussion Regarding Status/Further Procedure. [No Memo. Scott Woodbury, Attorney.]
Mr. Woodbury provided an overview of the case, summarizing Idaho Power’s position, Staff’s alternate position, and the opposing positions of Exergy, Idaho Wind and Intermountain Wind. He said Avista and PacifiCorp also filed comments recommending adoption of Staff’s proposed methodology. He stated Idaho Wind Farms, Intermountain Wind and Exergy all characterize the company’s proposal to change the fuel cost component methodology as a single-issue rate case. He said Intermountain Wind and Idaho Wind Farms contend the company’s proposal is an impermissible collateral attack on the final order establishing the methodology. He said those parties in opposition to Idaho Power’s petition to continue with the existing methodology are contending it is inappropriate to change only one of the components. He said the matter is before the Commission to determine whether the lack of consensus in this case merits some further procedure as opposed to processing it in the manner the Commission would normally process the case—i.e. under modified procedure as a fully submitted matter. Mr. Woodbury noted that Exergy and the others opposed the company’s proposal and not the proposals of Staff, PacifiCorp and Avista. He said one way to handle this matter might be to issue a proposed order and establish further comment, or if the Commission believes the record is complete then it could move it under Fully Submitter Matters and resolve it there.
Commissioner Smith noted that Peter Richardson, attorney for Exergy, was present as well as Chuck McDevitt, who was standing in for Joe Miller. She asked Mr. Richardson if he agreed with what Staff, Avista, and PacifiCorp had proposed. Mr. Richardson stated Exergy was not supportive of Staff’s comments or those of the other companies.
Commissioner Kempton commented that from his perspective, the Commission needed to take a position on the separation of the fuel cost forecast from the other items and the question of whether to go ahead with more analysis. He said the issues brought from both sides have some merit individually. He stated that since the fuel forecast is such a large part of the average system cost, he believed it is appropriate to separate it out, and he supported additional staff analysis to find a reasonable way of incorporating the fuel forecast into the rate case itself.
Commissioner Redford stated it could be done by further comment or the Commission could have a hearing where the parties could fully articulate their comments. He said he was concerned the Commission was moving along a little too quickly without having the opportunity for all to participate. He said he didn’t see any consensus and thought the Commission would be hard pressed to make any findings until there is full opportunity for Staff to further review the matter or there is a hearing. He asked for a comment from Idaho Power.
Bart Kline, attorney for Idaho Power, stated the company was filing its reply comments that afternoon. He suggested the Commission give anyone else the opportunity to file comments and then look at the comments and make a determination whether a full blown technical hearing is needed to analyze the legal and factual issues presented.
Commissioner Redford concurred and stated he would like to postpone any decision on this matter in order to give all parties an opportunity to reply. He suggested the matter be held 30 days, to be reviewed again as a matter in progress.
Commissioner Smith asked if existing rates would remain in effect while the matter is being reviewed. Mr. Woodbury replied the rates prior to the most recent forecast would remain in effect. Commissioner Smith asked if the rates were higher or lower than the rates after the forecast. Mr. Kline replied the current rates would be a little lower than the rates that would go into effect under the changed rates based on the Northwest Power and Conservation Council’s forecast or on either of the alternatives proposed by staff or Idaho Power.
Mr. McDevitt stated they would not have any comments until they had seen Idaho Power’s reply comments.
Commissioner Redford said the Commission would postpone the matter for 30 days and would consider it again on the first Monday after 30 days have transpired in order to give everyone an opportunity to comment or file reply comments.
Mr. Kline stated the company would like the opportunity to have one last chance to comment after seeing all the other comments. He said he would consult with staff and all the parties and come up with a schedule for filing comments.
Commissioner Redford said he wanted to impress on everyone that all should get an opportunity to reply, and the Commission could still order a hearing. He requested that the parties get together and work out a schedule whereby everyone has an opportunity to comment and the petitioner will have an opportunity to file its reply comments.
Wind Integration Adjustment, Case Nos. IPC-E-07-03 (Idaho Power); PAC-E-07-07 (PacifiCorp); AVU-E-07-02 (Avista) – Discussion Regarding Status/Further Procedure. [No Memo. Scott Woodbury, Attorney.]
Mr. Woodbury reviewed the three cases before the Commission regarding the companies’ proposed wind integration adjustments. He said a joint motion to approve a settlement stipulation was submitted in each docket between the utilities and Renewable Northwest Project and Northwest Energy Coalition. He said the matter was processed pursuant to modified procedure and Commission Staff recommended the settlements be approved. Mr. Woodbury stated there are comments in opposition filed by Exergy that offer strident opposition to what is being proposed, and Exergy, represented by Peter Richardson, would best be able to articulate its position with respect to further procedure.
Mr. Richardson stated Exergy’s opposition to the settlement is based on its belief that the issues raised in a wind integration case are so complex that an evidentiary hearing is needed in order for the Commission to make a decision, rather than just hearing the utilities’ version of what their wind integration costs are. He said Exergy’s opposition is in part based upon the fact that the settlement stipulation in the Idaho Power case is between just two parties out of twelve, and in the other two cases just one party. He said another part of Exergy’s opposition is the fictitious assertion that each utility has a certain amount of wind already online, and the assumption they have multiple hundreds of wind megawatts online when in fact they have less than 100 megawatts on line. He said it would be a violation of basic ratemaking that cost-causers pay for their costs when we are applying fiction in terms of the wind penetration levels right now. He said it is one of Exergy’s positions that there could be a graduated wind integration rate that adjusts to true-up to actual wind penetration levels. He stated the PacifiCorp wind integration study assumes several thousand megawatts of wind penetration and they have less than 100 MW online now, which is another one of Exergy’s fundamental problems with this case. Mr. Richardson reiterated this is cutting-edge stuff, not only for this Commission, but across the country, and for such a complicated and difficult case to be processed by modified procedure without hearing from other experts—not even the Staff proposed an alternative methodology—is relying on the utilities’ version of what the world would look like if they got the wind penetration levels they want. He said there is also a clear case of discriminatory treatment among resource types because other resources will have integration costs associated with them, but they are being ignored as well.
Commissioner Smith commented that there are a number of interests that are tired of the hiatus in wind development, including the Commission. She said the Commission probably needs to have a full blown hearing, but in the meantime, she asked if the Commission could set a rate so that the uncertainty surrounding wind development is removed for the period of time it takes to do a hearing to figure out precise wind integration costs. She asked how to move forward and counter the criticism that we need to move on.
Mr. Richardson said he shares Commissioner Smith’s frustration, as his client has sometimes been the lone voice on the developers’ side for quite awhile. He stated one possible compromise in order to accommodate the need for a thorough evidentiary hearing and to allow wind projects to start getting built and coming on line would be to establish two sets of rates, and the rate the Commission should set would be the rate recommended by the three utilities, but not until they reach the penetration levels that rate is designed to beat. He said for example, if Idaho Power’s rate is set on an assumed 500 MW of online wind, and if they have 100 MW of online wind, those 100 MW would pay 20% of the rate, and if they get 250 MW, those would pay 50% of the rate, and in the meantime the wind developers would all know that rate is the maximum number this Commission would allow for wind integration rates, so it would give some certainty to the wind developers.
Commissioner Redford asked what Mr. Richardson thought if the Commission were to set a rate subject to true-up at the time of the conclusion of any hearing the Commission might have. Mr. Richardson responded that it would be acceptable if the wind development community had some certainty that there was a ceiling on that true-up, and a reasonable number for that ceiling would be the numbers the utilities told the Commission their wind integration costs are. He said as the case is litigated, the developers will be arguing the wind integration numbers the utilities have offered are at the maximum reasonable level.
Commissioner Redford stated he is also in favor of a hearing and the details of the rates until then will require further discussion. He said he has been on the Commission for about ten months and since then the Commission has been struggling with wind integration costs, and he has never been given the opportunity to review any wind integration costs, so he was very interested in doing that. He said he wanted to make sure any settlement has the blessing of all parties involved.
Mr. Richardson stated all parties were provided an opportunity to participate in the settlement, and he didn’t want to leave the impression Exergy was not asked to sign the settlement, but none of the other parties other than those who signed the settlement chose to do so.
Mr. Kline commented that the settlement presented to the Commission was the product of multiple discussions between ten or fifteen different parties over time. He noted there was a wide discrepancy between the types of folks who are developing wind resources and each has individual views of what is going to work for their project as opposed to what might work for the wind industry as a whole. He said the question of whether or not the Commission is comfortable with a settlement that has less than unanimous support is a policy decision it has to make. He said the settlement presented to the Commission addresses all the issues Mr. Richardson raised in his comments to the Commission, and he urged the Commission to take another look at those and see they have been addressed; for example, Idaho Power does have 100 MW of wind under contract right now in eastern Oregon and another 250 MW of wind contracts in Idaho, of which Exergy represents about 150 MW, so to set the integration costs just on the amount of wind that is currently almost ready to come online and ignore the fact there is going to be a whole lot more in the very near future is short sighted. He suggested that if the Commission is going to set a cap, it ought to be the cap that is contained in Idaho Power’s and Avista’s wind integration studies. He stated the numbers presented to the Commission in the settlement are just that—a compromise of rates that Idaho Power thinks ought to be a little higher than they are as presented in the settlement, and the wind developers believe they are too high—so it was a compromise that was presented so if there is going to be a cap it ought to be what is actually in Idaho Power’s wind integration study and not the compromise number that has been presented.
Commissioner Redford asked if that means Idaho Power is scrapping the compromise. Mr. Kline replied that he thought the Commission ought to accept the compromise because it is a very good settlement. He said it is going to take a long time with all kinds of experts presenting their expert opinions as to what wind integration costs are, and he wasn’t sure the Commission would get a better number than the one that has been presented, which is why Staff and others have agreed that this is a reasonable compromise.
Commissioner Redford commented that others might understand what the wind integration costs are but he didn’t think the Commission knows, and the Commission can read the compromise, which is just that—a compromise. He said because the Commission is venturing into a new area that is so tremendously important to customers in Idaho and also to the wind developers, this matter needs to be fully explored. He asked Mr. Kline what he thought about having a true-up.
Mr. Kline stated that if the Commission wanted to set a rate subject to a true-up in the future, it could certainly be done but he suggested that if the Commission is going to put a cap on the rate that would be subject to true-up, it ought to be the rate that the companies—Idaho Power and Avista—actually filed in their wind integration studies. He said in Idaho Power’s case, that is about $8 per megawatt hour, and the settlement presented to the Commission was more in the nature of $5 per megawatt hour, so if the Commission is going to have a cap, it ought to be the higher number, not the compromise number because the company thought it would be able to demonstrate that the higher number is closer to the real wind integration costs. Mr. Kline added that because it is an area where a lot of judgment has to be applied and a lot of equity has to be weighed, the company was willing to go for a lower number as a part of the compromise to get this thing resolved and get the wind industry moving again. He said he thought everyone was sensitive to the fact that there has been a delay in the development of some resources as a result of this pending proceeding.
Commissioner Smith made a motion that the Commission issue a proposed order establishing an interim rate while it outlines a schedule for further proceedings in this matter. Commissioner Smith clarified what she meant by a proposed order and explained how a proposed order is used to get feedback before becoming an official order of the Commission. Commissioner Kempton asked about timing of the Commission’s actions, and Commissioner Smith stated the Commission would set the comment deadlines in the proposed order and then deliberate expeditiously after the deadline has passed. Commissioner Redford confirmed the motion includes further hearing in the event the Commission determines a hearing is necessary. Mr. Woodbury asked if the Commission envisions separate dockets for each of the respective utility wind integration cases. Commissioner Smith replied that they have been filed separately and commented on separately so it would be best to keep the orders separate in the event of an appeal. There was no further discussion. A vote was taken on the motion and it carried unanimously.
Commissioner Redford stated that the only other item on the agenda was under the category of FULLY SUBMITTED MATTERS and it would be deliberated privately. He then adjourned the meeting.
DATED this ______ day of November, 2007.
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COMMISSION SECRETARY
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