20110523Vol III Boise.pdf

ORIGINAL.BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMI SSION i S
INVESTIGATION INTO DISAGGREGATION
AND AN APPROPRIATE PUBLISHED
AVOIDED COST RATE ELIGIBILITY CAP
STRUCTURE FOR PURPA QUALIFYING
FACILITIES.
CASE NO. GNR-E-11-01
BEFORE
COMMISSIONER MARSHA SMITH (Presiding)
COMMISSIONER PAUL KJELLANDER
COMMISSIONER MACK REDFORD.
PLACE:Commission Hearing Room
472 West Washington Street
Boise, Idaho
DATE:May 11, 2011
VOLUME III ~ Pages 390 - 578
.,
CSB REPORTING
Constance S. Bucy, CSR No. 187
23876 Applewood Way * Wilder, Idaho .83676
[phone] * [phone]
Email csb~heritagewifi.com
~..-if ;.-: mI' ('to, m:b -.:z rn60..
o
.
.
.
10
11
12
13
14
15
16
17
20
21
22
23
24
25
1 APPEARANCES
2
3 For the Staff:Kristine Sasser, Esq.
Deputy Attorney General
472 West Washington
Boise, Idaho 83720-0074
Donovan Walker, Esq.
and Jason Williams, Esq.
Idaho Power Company
Post Office Box 70
Boise, Idaho 83707-0070
LOVINGER KAUFMANN
by Kenneth E. Kaufmann, Esq.
825 NE. Multnomah
Suite 925
Portland, Oregon 97232-2150
Michael G. Andrea, Esq.
Avista Corporation
1411 East Mission Avenue
Spokane, Washington 99202
RICHARDSON & 0 i LEARY
by Peter J. Richardson, Esq.
Post Office Box 7218
Boise, Idaho 83702
Williams Bradbury, P. C.
by Ronald L. Williams, Esq.
1015 West Hays Street
Boise, Idaho 83702
McDEVITT & MILLER
by Dean J. Miller, Esq.
Post Office Box 2564
Boise, Idaho 83701-2564
4
5
6 For Idaho Power Company:
7
8
9
For PacifiCorp dba Rocky
Mountain Power:
For Avista Corporation:
For NIPPC:
18
19 For Cedar Creek Wind:
For Intermountain
Wind, LLC and Renewable
Northwest Proj ect:
CSB REPORTING
[phone]
APPEARANCES
.
.
.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1 A P PEA RAN C E S (Continued)
2
3 For North Side Canal
Company & Twin Falls
Canal Company:
Barker Rosholt & Simpson
by Shelley M. Davis, Esq.
Post Office Box 2139
Boise, Idaho 83701
4
5
6 For Idaho Conservation
League:Benjamin J. Otto, Esq.
Attorney at Law
Idaho Conservation League
Post Office Box 844
Boise, Idaho 83701
7
8
9
For Snake River Alliance:Mr. Ken Miller
Snake River Alliance
Post Office Box 1731
Boise, Idaho 83701
10
11
For Renewable EnergyCoalition:
(Telephonically)
John R. Lowe
12050 SW Tremont Street
Portland, Oregon 97225
CSB REPORTING
[phone]
APPEARANCES
.
.
.
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
1 I N D E X
PAGE
390
393
419
447
454
458
462
477
481
488
490
505
512
517
526
528
530
534
537
553
556
558
561
568
570
575
2
3 WITNESS EXAMINATION BY
4 Mr. Miller (Direct)
Prefiled Direct Testimony
Prefiled Rebuttal Testimony
Ms. Sasser (Cross)
Mr. Kaufmann (Cross)Mr. Jason Williams (Cross)
Mr. Andrea (Cross)
Commissioner Kj ellanderMr. Miller (Redirect)
Megan Decker
(RNP)
5
6
7
8
9 Mr. Richardson (Direct)
Pre filed Rebuttal Testimony
Ms. Sasser (Cross)
Mr. Kaufmann (Cross)
Mr. Walker (Cross)
Mr. Andrea (Cross)
Commissioner Smith
Mr. Richardson (Redirect)
Dr. Don Reading
(NIPPC)
Rick Sterling
(Staff)
Ms. Sasser (Direct)
Prefiled Direct TestimonyMs. Davis (Cross)
Mr. Otto (Cross)
Mr. Miller (Cross)
Mr. Richardson (Cross)
Mr. Walker (Cross)
Mr. Kaufmann (Cross)Ms. Sasser (Redirect)
25
CSB REPORTING
[phone]
INDEX
.
.
.
1
2
3 NUMBER
EXHIBITS
DESCRIPTION
4 FOR RENEWABLE NORTHWEST PROJECT:
10
11
12
13
19
20
21
22
23
24
25
5 1901.
6
1902.
7
8 1903.
Discussion Draft
January 19, 2011
Exhibit "A" to PartialStipulation
Excerpt from Department of
Energy_330 090
Staff's Opening Brief before
the PUC of Oregon
Questions for determiningwhen energy proj ects are
separate projects
LexisNexis Minnesota
Annotated Statutes
Single Proj ect Requirement
Excerpt from Order 29632
Resume of Don C. Reading
FOR THE STAFF:
Premarked
Premarked
Premarked
Premarked
Premarked
Premarked
Premarked
Identified
Premarked
Premarked
PAGE
487
9
1904.
1905.
1906.
14
1907.
15
1910.
16
17
FOR NIPPC:
18
401.
301.Single Proj ect Requirement
CSB REPORTING
[phone]
EXHIBITS
.
.
.
20
1 BOISE, IDAHO, WEDNESDAY, MAY 11, 2011, 9:00 A. M.
2
3
4 COMMISSIONER SMITH: Good morning, ladies
5 and gentlemen. Welcome back to the second day of our
6 hearing. If there are no preliminary matters that have
7 come up overnight, we i 11 go to Mr. Miller for his
8 wi tness. Seeing none, Mr. Miller.
9 MR. MILLER: Thank you, Madam Chairman.
10 The Renewable Northwest Proj ect calls Megan Decker.
11
12 MEGAN DECKER,
13 produced as a witness at the instance of the Renewable
14 Northwest Proj ect, having been first duly sworn, was
15 examined and testified as follows:
16
17 DIRECT EXAMINATION
18
19 BY MR. MILLER:
Q Ms. Decker, would you state your name and
21 tell the Commission by whom you are employed?
22 A My name is Megan Decker, last name is
23 D-e-c-k-e-r, and Ilm employed by the Renewable Northwest
24 Proj ect which is a regional coalition of public interest
25 and renewable energy industry groups that advocate for
CSB REPORTING
[phone]
390 DECKER (Di)
RNP
.
.
.
1 policy related to renewable energy.
2 Q Ms. Decker, did you previously have
3 occasion to prefile written testimony, written direct
4 testimony, consisting of --
5
6
7
8
9 exhibits?
10
11
12 correct?
13
14
15
16
A
Q
A
Q
A
Q
A
Q
Q
You i d have to be more specific.
-- 14 pages?
Yes, I did.
And accompanying that testimony were there
Yes.
Exhibits 1901, 1902, 1903; is that
That i S correct.
Through 1906?
COMMISSIONER SMITH: Yes.
BY MR. MILLER: Did you also have occasion
17 on April 22nd to file written rebuttal testimony?
20
21
18
19
A
Q
A
Q
Yes, I did.
Consisting of 15 pages?
Yes, that i s correct.
And accompanying the rebuttal testimony
22 were there Exhibits 1907
23
24
25
A
Q
Yes, just Exhibit 1907.
Ms. Decker, if I asked you the questions
that are contained in your written direct and rebuttal
CSB REPORTING
[phone]
391 DECKER (Di)
RNP
.
.
.
20
21
22
23
24
25
1 testimony today, would your answers be the same as they
2 are written in your testimony?
3 A Yes, they would.
4 MR. MILLER: Madam Chairman, we i d request
5 that the direct and rebuttal testimony of Megan Decker be
6 spread on the record as if read and the exhibits be
7 marked.
8 COMMISSIONER SMITH: If there i s no
9 obj ection, it is so ordered.
10 (The following prefiled direct and
11 rebuttal testimony of Ms. Megan Decker is spread upon the
12 record.)
13
14
15
16
17
18
19
CSB REPORTING
[phone]
392 DECKER (Di)
RNP
.
.
.
1 Q WHAT is YOUR NAME AND OCCUPATION?
2 A My name is Megan Decker. i am Senior
3 Staff Counsel with Renewable Northwest Proj ect (RNP).
4 RNP is a regional coalition of public interest and
5 industry groups who advocate for policy supporting the
6 expansion of responsibly sited new renewable energy. i
7 am responsible for overseeing state regulatory acti vi ties
8 in the four states that RNP covers-Washington, Oregon,
9 Idaho and Montana-and I occasionally assist with siting
10 policy issues. I also represent RNP on the Green-E
11 Governance Board and the Energy Trust of Oregon Is
12 Renewable Resources Advisory Council.
13 Q PLEASE DESCRIBE YOUR EDUCATION AND
14 PROFESSIONAL EXPERIENCE.
15 A I hold a Juris Doctor from the
16 University of Washington and a Bachelor of Arts from
17 Stanford Uni versi ty. During Summer 2000, I was a legal
18 intern with the Washington Utili ties and Transportation
19 Commission. From 2003 to 2005, I was a judicial clerk
20 with the United States Court of Appeals for the Ninth
21 Circuit. From 2005 to 2010, I practiced law at Ball
22 Janik LLP in Portland, Oregon, focusing on land use
23 permitting, appeals, and miscellaneous litigation. I
24 joined RNP as Senior Staff Counsel in May 2010.
25 Q WHAT IS THE PURPOSE OF YOUR
393 Decker, Di-Test 2
RNP
.
.
.
20
21
22
23
24
25
1 TESTIMONY?
2 A The purpose of my testimony is to
3 share information about different methods by which
4 agencies in other states have attempted, wi thin a variety
5 of policy schemes, to discern whether particular
6 renewable generation should be considered a single large
7 proj ect or multiple smaller proj ects. I also will
8 explain my understanding of the rationale for
9 distinguishing between smaller, published rate proj ects
10 and larger, negotiated proj ects wi thin the regulatory
11 scheme established by the Public Utilities Regulatory
12 Policy Act of
13 /
14 /
15 /
16
17
18
19
394 Decker, Di-Test 2a
RNP
.
.
.
1 1978 (PURPA), as implemented by various states and by the
2 Idaho Public Utilities Commission ("Commission") in
3 particular. Finally, I will present my opinion about the
4 most important characteristics and methods that Idaho
5 could use to distinguish multiple small proj ects from
6 single large projects for purposes of implementing PURPA.
7 I wish to be clear that the purpose of my testimony is
8 not to express a policy preference for small renewable
9 proj ects. Larger proj ects, by taking advantage of
10 economies of scale, can be the most efficient form of
11 renewable generation for utilities and their customers.
12 Thus, in addition to adopting a framework to limit
13 published rates to single proj ects smaller than 10 aMW,
14 the Commission also should support larger proj ects by
15 developing (1) a fair and transparent avoided cost
16 methodology for qualified facilities (QFs) above the
17 PURPA published rate threshold and (2) strong integrated
18 resource planning and competi ti ve procurement policies to
19 support large-scale commercial generation.
20 Q WHY DOES RNP SUPPORT A METHODOLOGY
21 FOR DISTINGUISHING SMALL PROJECTS FROM LARGE PROJECTS?
22 A RNP has two primary reasons for
23 supporting a methodology to distinguish small from large
24 projects.
25 The most immediate reason is to enable development
395 Decker, Di-Test 3
RNP
.
.
.25
1 of small wind and solar proj ects to continue while the
2 Commission considers the diverse issues related to Idaho
3 Power i s rapid increase in PURPA wind generation, which
4 may not be problematic but has nonetheless prompted this
5 threshold reduction. When the Commission last made
6 published rates unavailable to projects larger than 100
7 kW, all PURPA development hal ted for several years.
8 There is no reason for development of small and community
9 scale proj ects to be stifled for several years while the
10 Commission again takes up a wide
11 /
12 /
13 /
14
15
16
17
18
19
20
21
22
23
24
396 Decker, Di -Test 3a
RNP
.
.
.
1 range of PURPA issues. By allowing small and community
2 scale proj ects to go forward, the Commission can avoid
3 addi tional rapid increases in PURPA generation over the
4 next several years without stifling all development of
5 smaller-scale renewable generation.
6 A second reason that RNP has supported a workable
7 distinction between PURPA published rate proj ects,
8 negotiated PURPA proj ects, and large commercial scale
9 proj ects is our belief that good policy reasons support
10 treating these three categories differently.
11 Q WHAT is THE RATIONALE FOR
12 DISTINGUISHING AMONG THESE THREE PROJECT CATEGORIES?
13 A The purpose of published rates and
14 standard contracts is to remove transaction costs that
15 act as market barriers for small generators. Small and
16 community scale projects may not anticipate revenues high
17 enough to justify the upfront legal costs to negotiate an
18 agreement with the utility, and certainty about rates may
19 improve financing prospects for small and community scale
20 generation. Broader market barriers for QFs also include
21 asymmetric information (i. e., a utility will know much
22 more about its own system costs and capabilities than any
23 QF) and a unbalanced playing field (i. e., utili ties have
24 superior bargaining positions and no incentive to
25 negotiate promptly or to reach agreements with QFs). At
397 Decker, Di -Test 4
RNP
.
.
.
20
21
22
23
24
25
1 the same time, standard rates and contracts may overlook
2 proj ect characteristics that cause the utility i s cost
3 savings from a particular QF to differ from the utility Is
4 actual avoided costs. In requiring published rates for
5 the smallest QFs, FERC balanced eliminating market
6 barriers with accurate pricing and said:
7 "The (Federal Energy Regulatory Commission) is
8 aware that the supply characteristics of a
9 particular facility may vary in value from the
10 average rates set forth in the utility IS
11 standard rates required by this paragraph. If
12 the Commission
13 /
14 /
15 /
16
17
18
19
398 Decker, Di-Test 4a
RNP
.
.
.
1 were to require individualized rates, however,
2 the transaction costs associated with
3 administration of the program would likely
4 render the program uneconomic for this size of
5 qualifying facility." Order No. 69, Small Power
6 Production and Cogeneration Facilities, FERC
7 Regulation Preambles 1977-1981 ~ 30,128, 45
8 12,214 (Feb. 25, 1980, 45 Fed. Reg. 24, 126
9 (Apr. 9, 1980).
10 States determine the appropriate size threshold for
11 published rates in order to eliminate these market
12 barriers. See 18 C.F.R. 292.304(c) (2).
13 Larger QFs differ from smaller QFs in that they may
14 have sufficient revenues and access to financing to
15 overcome at least the narrowest set of transaction costs.
16 In addition, the potential asymmetry between the supply
17 value of a larger QF and the standard rates can have
18 greater consequences for utility portfolios and customer
19 costs. Thus, because larger QFs have greater ability to
20 negotiate proj ect-specific avoided cost rates, published
21 rates may not be appropriate for larger QFs. Yet, at the
22 same time, larger QFs experience the same market
23 barriers-asymmetric information about the utility IS
24 system and inferior bargaining positions-as small QFs in
25 negotiating with utilities. Therefore, it is appropriate
399 Decker, Di-Test 5
RNP
.
.
.
1 to reduce market barriers and economic impediments for
2 larger QFs by adopting improved negotiation parameters
3 and guidelines and mandating greater transparency in the
4 negotiation process. At the same time as the Commission
5 works to ensure that published rates are only available
6 to projects under the 10 aMW threshold, RNP urges the
7 Commission to make a careful examination of the fairness
8 and transparency of the IRP methodology employed by the
9 utili ties for calculating avoided cost in negotiated
10 PURPA contracts and of other elements that can make
11 negotiation between utilities and QFs more fair and
12 transparent.
13 /
14 /
15 /
16
17
18
19
20
21
22
23
24
25
400 Decker, Di -Test 5a
RNP
.
.
.
1 Finally, RNP believes that large commercial proj ects
2 above the 80 MW PURPA threshold should compete through a
3 transparent and regulated utility RFP process in which
4 decisions are based on price and other negotiated terms.
5 Competi tion and negotiation among large proj ects is
6 appropriate due to the sophisticated development and
7 financing teams involved in commercial development. In
8 addition, it is sensible for utili ties to have greater
9 control over larger additions to their portfolios.
10 In short, RNP generally supports different
11 approaches for the three different "buckets" described
12 above, and believes there is value in developing a
13 rigorous method to determine which "bucket" a given
14 project or projects fall within. At the same time, RNP
15 recognizes that the absence of supportive policy in the
16 larger acquisition categories has prevented those methods
17 from being successful in bringing significant penetration
18 of new renewable generation to Idaho utili ties.
19 Q HAS RNP PROPOSED A METHOD FOR
20 DETERMINING ELIGIBILITY FOR PUBLISHED RATES?
21 A In Case No. GNR-E-10-04, RNP
22 submitted joint public reply comments with Idaho
23 Conservation League. Attachment 1 to those comments was
24 a Discussion Draft for a "Single Qualifying Facility
25 Requirement," which is attached as Exhibit 1901 to this
401 Decker, Di -Test 6
RNP
.
.
.
1 testimony (hereafter, "Discussion Draft"). RNP viewed
2 this proposal as a starting point for discussion rather
3 than a final proposal. Indeed, as RNP has conducted
4 further discussion and research on the issue, RNP i s view
5 of the Discussion Draft has shifted. For instance, upon
6 further research, RNP has concluded that a distance
7 requirement between separate proj ects is an important
8 element that is not likely preempted by federal law.
9 Also, RNP has come to believe that j oint financing,
10 contracting, equipment .
11 /
12 /
13 /
14
15
16
17
18
19
20
21
22
23
24
25
402 Decker, Di-Test 6a
RNP
.
.
.
1 purchases, and revenue sharing are indicators that are as
2 important as ownership in determining which proj ects are
3 eligible for the published rate. In this testimony, I
4 will share the results of that research and discussion
5 but will not make an alternate proposal at this time.
6 Q WHAT SOURCES HAS RNP CONSULTED TO
7 GAIN INFORMATION ABOUT WAYS TO DETERMINE PROJECT SIZE?
8 RNP has reviewed several different examples of methods
9 and characteristics that have been or could be used to
10 distinguish between single large proj ects and multiple
11 small proj ects. They are as follows:( 1) Oregon PUC
12 Order No. 06-586, Appendix B, pages 11-12 (setting forth
13 principles for determining eligibility for published
14 rates), attached as Exhibit 1902 to this testimony; (2)
15 Oregon Administrative Regulations (OAR), section
16 33-090-0120 (2) (b) (setting forth factors for determining
17 whether separate applications for state tax incentives
18 should be combined), attached as Exhibit 1903 to this
19 testimony; (3) Oregon PUC Docket No. UE 200, Staff1s
20 Opening Brief at 8-9 and PacifiCorp i s Opening Brief at
21 8-11 (dispute over whether PacifiCorp i s two 99 MW
22 facili ties should have been treated as one facility and,
23 therefore, subject to the RFP requirement for projects
24 100 MW or larger), attached as Exhibit 1904 to this
25 testimony; (4) set of fifteen questions, attached as
403 Decker, Di-Test 7
RNP
.
.
.24
25
1 Exhibi t 1905 to this testimony, that the Oregon Energy
2 Facility Siting Council (EFSC) staff once used informally
3 to obtain information relevant to applying EFSC IS
4 jurisdictional threshold to a specific proj ect; and (5)
5 Minnesota Statutes section 216F.011 (2010) (setting forth
6 method for making a "size determination" to determine
7 which level of government has siting jurisdiction),
8 attached as Exhibit 1906 to this testimony.
9 /
10 /
11 /
12
13
14
15
16
17
18
19
20
21
22
23
404 Decker, Di -Test 7a
RNP
.
.
.
1 Each of these examples provides helpful background in
2 thinking about how the Commission should determine
3 eligibility for published rates. However, most of the
4 methods and proj ect characteristics used in these
5 examples are motivated by quite different policy goals
6 than the one facing the Commission: namely, to ensure
7 that access to published rates is limited to proj ects
8 that require the greatest level of assistance in
9 eliminating transaction costs and other market barriers.
10 They also differ in their method for ensuring compliance.
11 In many cases, a regulatory agency makes the initial
12 determination; in PURPA examples, by contrast, the
13 utility makes the threshold determination and disputes
14 are settled by the Commission.
15 Q WHAT ARE THE PROJECT CHARACTERISTICS
16 MOST FREQUENTLY CONSIDERED IN DETERMINING SINGLE OR
17 MULTIPLE PROJECT STATUS?
18 A The following is a list of the
19 proj ect characteristics used in the various regulatory
20 schemes I have come across in my research to date:
21 .Ownership. Because separate corporate
22 entities. Are simple to create, regulators look beyond
23 the first level of legal ownership to see whether the
24 companies are related through a parent corporation or
25 other beneficial owner. The Oregon PUC approach excludes
405 Decker, Di -Test 8
RNP
.
.
.
20
21
22
23
24
25
1 common passive investors from this evaluation where the
2 primary ownership interest is not in the proj ect itself
3 but in "utilizing production tax credits, green tag
4 values and (tax) depreciation" from the proj ect. See
5 Exhibit 1902.
6 .Location. There are two different approaches
7 to evaluating location. One is the proximity of the
8 facilities (i. e. , within one mile or five miles) .
9 Another is whether the proj ects are located on the same
10 or adj acent parcels.
11 /
12 /
13 /
14
15
16
17
18
19
406 Decker, Di -Test 8a
RNP
.
.
.
1 . Financing. The presence of separate financing
2 arrangements that are not interdependent can be an
3 indicator of separate projects.
4 .Timing. Applications, construction, and
5 in-service dates close in time (usually within 12 months
6 of one another) can favor treatment as a single project.
7 .Siting Application (s). Single siting permit
8 applications tend to suggest single proj ects, even where
9 those siting permit applications have different phases.
10 .Purchase of Generating Equipment. Combined
11 negotiation and a single agreement to purchase generating
12 equipment are one indicator of a possible single proj ect.
13 . Power Purchase and Transmission Agreements.
14 Separate power marketing acti vi ties, power purchase
15 agreements, and transmission agreements suggest separate
16 proj ects. This factor is not as relevant for PURPA
17 regulation, as each QF by definition has a separate PPA
18 with the utility (and possibly a separate transmission
19 agreement as well).
20 .Transmission Infrastructure. As with many of
21 these factors, sharing transmission infrastructure
22 (collector lines, substations) does not in itself
23 indicate a single project, but is considered by some
24 regulators in evaluating the totality of the
25 circumstances.
407 Decker, Di -Test 9
RNP
.
.
.
20
21
22
23
24
25
1 . Construction Contract (s). At least one
2 regulatory scheme considers a single contract with a
3 general contractor, or multiple contracts entered wi thin
4 a year of another, to suggest a single proj ect.
5 .Staffing/personnel. Where multiple proj ects
6 share personnel for output dispatching decisions and/or
7 operations and maintenance, this can be a factor
8 suggesting a single larger proj ect.
9 /
10 /
11 /
12
13
14
15
16
17
18
19
408 Decker, Di -Test 9a
RNP
.
.
.
1 . Operations and Dispatch Decisions. Where
2 operational and power output dispatch decisions are made
3 for several projects in the aggregate, this can be a sign
4 that multiple proj ects should be treated as a single,
5 interdependent proj ect.
6 .Control Room and Equipment. Proj ects operated
7 from separate control rooms or buildings, with separate
8 control equipment, may be separate proj ects. Shared
9 infrastructure among truly separate proj ects should not
10 be discouraged, however.
11 .Related/Supporting Facilities. Shared access
12 roads, substations, O&M structures, perimeter fencing,
13 water supply or discharge lines, storage areas, parking
14 areas, etc., can be considered in the totality of the
15 circumstances to support a finding of a single proj ect.
16 .Expenses and Revenues. Where several proj ects
17 agree to share proj ect expenses and revenues, this can
18 support consideration as one larger proj ect.
19 Again, the above is a summary of the factors I came
20 across in my research across a variety of regulatory
21 schemes that require determination of whether multiple
22 proj ects are truly separate. None of the factors alone
23 would be a sufficient indication, nor does their presence
24 in another regulatory scheme mean that any or all of them
25 is right for Idaho i s implementation of PURPA. The
409 Decker, Di-Test 10
RNP
.
.
.
17
18
19
20
21
22
23
24
25
1 purpose of summarizing them is merely to demonstrate that
2 there is a wide range of factors that have been
3 considered across many different regulatory schemes in
4 making this determination.
5 Q WHAT is THE MOST APPROPRIATE METHOD
6 FOR EVALUATING THESE FACTORS?
7 A Several of the regulatory schemes I
8 have reviewed for distinguishing multiple from single
9 proj ects involve a flexible application of the above
10 factors by the decision making
11 /
12 /
13 /
14
15
16
410 Decker, Di-Test lOa
RNP
.1 agency. Flexibility and discretion to apply the factors
2 can help to prevent technicalities from controlling
3 decisions. In other schemes, however, application of
4 specific criteria is absolute and not discretionary, and
5 regulators do not make a determination unless a dispute
6 arises between the negotiating parties. This approach
7 requires less regulatory involvement, and is more
8 susceptible to self-policing through contract provisions
9 that will be reviewed by lenders, but can make it harder
10 to capture all of the situations where aggregation occurs
11 and, at the same time, to avoid capturing truly separate
12 proj ects..13
14
In the PURPA context, it may be most appropriate to
establish non-discretionary criteria. Utili ties, rather
15 than regulators, will be the first point of contact for
16 developers. It does not seem appropriate to allow
17 discretion to one interested negotiating party to apply a
18 set of subj ecti ve factors in evaluating eligibility for
19 published rates. Therefore, unless the Commission or
20 another neutral regulatory agency is available to make a
21 threshold determination based on discretionary factors
22 for every QF, I believe that the non-discretionary Oregon
23 PUC partial stipulation is a good approach. There, QFs
24 provide the utility with documentation upon which the.25 utili ty makes an initial determination; only disputes are
411 Decker, Di -Test 11
RNP
.
.
.
15
16
17
18
19
20
21
22
23
24
25
1 presented to the PUC for resolution. One way to gain
2 some of the benefits of flexibility even while using this
3 approach would be for the Commission to adopt
4 non-discretionary criteria to be applied initially by the
5 utility; then, if a dispute arose, the Commission could
6 make its ruling based on a broader set of more flexible
7 cri teria.
8 Q WHICH OF THE ABOVE PROJECT
9 CHARACTERISTICS DOES RNP BELIEVE ARE MOST SIGNIFICANT FOR
10 DETERMINING ELIGIBILITY FOR PUBLISHED RATES?
11 /
12 /
13 /
14
412 Decker, Di-Test lla
RNP
.
.
.
1 A The most appropriate characteristics
2 to consider will be driven by the purpose of the
3 regulatory scheme. For permitting thresholds, which are
4 intended to require more robust land use and
5 environmental review for large proj ects, shared
6 facili ties and geographic proximity may be the most
7 salient factors. For enforcing the PURPA published rate
8 threshold, where the rationale for published rates is
9 dri ven by the QF i S level of economic and bargaining
10 power, the most important characteristics may be
11 financial in nature: beneficial ownership, financing,
12 cost and revenue sharing, combined purchases of
13 generating equipment, and combined construction
14 contracts. However, because each of those factors could
15 be relatively easy to obscure with extra paperwork and
16 possibly difficult to determine at the time of initial
17 contracting, a distance factor between proj ects may be a
18 necessary addition to the framework.
19 Q HOW MUCH DISTANCE SEPARATION WOULD BE
20 APPROPRIATE AND EFFECTIVE?
21 A Although any distance rule can be
22 overcome with creative planning, a larger distance
23 requirement is more likely to deter a project from
24 organizing into smaller pieces to obtain published rates.
25 Both the Partial Stipulation used by the Oregon PUC for
413 Decker, Di -Test 12
RNP
.
.
.
1 eligibili ty for published rates and the Minnesota
2 Statutes section pertaining to siting jurisdiction use
3 five miles as the geographic limitation. Because states
4 clearly have been delegated the authority to set the
5 published rate threshold (18 C.F.R. 292.304 (c) (2)), I do
6 not understand a legal basis on which a state would be
7 preempted in applying a distance requirement for the
8 published rate threshold that is different from the
9 one-mile threshold that FERC uses to apply the 80 MW
10 threshold for non-eligible facilities (18 C. F. R.
11 292.204 (a) (2)). It should be noted that FERC does not
12 use the one-mile rule for
13
14
15 /
16
17
18
19
20
21
22
23
24
25
/
/
414 Decker, Di -Test 12a
RNP
.1 hydroelectric facilities, but rather considers them to be
2 at the same site if they "use water from the same
3 impoundment for power generation." 18 C. F. R.
4 292.204 (a) (2). A different type of aggregation principle
5 could be applied for hydroelectric QFs in Idaho as well.
6 Q HOW SHOULD COMMON OWNERSHI P BE
7 EVALUATED?
8 A The presence of separate LLCs should
9 not determine whether ownership is separate, because
10 separate LLCs are relatively simple to create. Common
11 ownership can be evaluated by looking wi thin those
12 corporate entities to understand whether they are related.13
14
by a parent corporation or, still further, whether there
is overlap in the companies i underlying beneficial
15 ownership.
16 At the same time, I believe that it is important not
17 to combine multiple proj ects merely because of common
18 passive investors whose sole purpose is to use tax
19 credi ts or depreciation or to acquire the proj ect i s RECs.
20 Finding a pass-through partner is a critical piece of
21 economic viability for many renewable proj ects that
22 depend on incentives; this is probably even more
23 important for small and community scale developers who
24 lack significant tax appetite. Moreover, the few REC.25 marketers in the country may provide value streams to a
415 Decker, Di -Test 13
RNP
.
.
19
20
21
22
23
24.25
1 number of small proj ects in the same area, but may have
2 nothing to do with any proj ect i s development, ownership,
3 control, or management.
4 Q HOW SHOULD SHARED INFRASTRUCTURE BE
5 EVALUATED?
6 A Shared infrastructure and related
7 facili ties should not be a threshold factor for
8 disqualification from published rates. Shared facilities
9 among separate proj ects should continue to be encouraged
10 as a method of improving the efficiency of the power
11 system. Only when combined with revenue sharing,
12 negotiations for generating equipment,
13 /
14 /
15 /
16
17
18
416 Decker, Di-Test 13a
RNP
.
.
.
1 combined financing and contracting, revenue and expense
2 sharing, and related ownership structures does shared
3 infrastructure have any bearing on the economic power and
4 bargaining position of the QFs. Shared infrastructure
5 should be a minor factor for purposes of applying the
6 PURPA published rate threshold.
7 Q HOW CAN FINANCIAL ARRANGEMENTS BE
8 PART OF THE DETERMINATION WITHOUT FORCING A QF TO RELEASE
9 PROPRIETARY INFORMATION TO THE UTILITY?
10 A Evaluating combined financial
11 arrangements without compromising proprietary information
12 is important. Relying on review by Commission staff or
13 proj ect lenders appears to be the only way to avoid
14 making utili ties the recipient of sensitive contract
15 documents. A standard contract provision warranting
16 separate financing, construction contracts, etc., could
17 be a way to encourage lenders to self-police projects,
18 since lenders presumably see all of these agreements in
19 the course of proj ect financing due diligence. In
20 addition, the Commission could require presentation of
21 such agreements, subj ect to a protective order, in any
22 proceeding to resolve disputes about eligibility for
23 published rates.
24 Q DO YOU HAVE ANYTHING ELSE TO ADD TO
25 YOUR
417 Decker, Di-Test 14
RNP
1 TESTIMONY?.A Not at this time.
2 /
3 /
4 /
5
6
7
8
9
10
11
12
13.14
15
16
17
18
19
20
21
22
23
24.25
418 Decker, Di -Test 14a
RNP
.
.
.
1 Q PLEASE STATE YOUR NAME.
2 A My name is Megan Decker.
3 Q ARE YOU THE SAME MEGAN DECKER WHO
4 SUBMITTED DIRECT PRE-FILED TESTIMONY IN THIS MATTER?
5 A Yes, I am.
6 Q WHAT IS THE PURPOSE OF YOUR REBUTTAL
7 TESTIMONY?
8 A I will discuss proposals for
9 development of a "single QF rule" that have been
10 submi tted in this docket by Staff, the Idaho Conservation
11 League and Rocky Mountain Power and offer suggestions for
12 improvements to the Staff and Rocky Mountain proposals.
13 Q WHAT IS THE PURPOSE OF DEVELOPING A
14 FRAMEWORK TO DISTINGUISH BETWEEN SINGLE AND MULTIPLE
15 PROJECT S?
16 A The purpose of adopting such a
17 framework would be to prevent large proj ects from gaining
18 access to published rates by disaggregating, while
19 retaining availability of published rates for smaller
20 projects that have less economic power to negotiate
21 avoided cost rates. See Idaho Public Utili ties
22 Commission, Order No. 32176, page 11. Any framework must
23 strike a balance between those two principles.(A future
24 phase of this proceeding should address the
25 reasonableness of the current system for negotiating
CASE NO. GNR-E-ll-0l
April 22, 2011
419 Decker, R (DI) 2
RNP
.
.
.
21
23
24
25
1 avoided cost rates for PURPA proj ects above 10 aMW.) I
2 recognize the challenge in structuring a framework that
3 successfully restricts large, dis aggregated projects from
4 access to published rates without being so restrictive
5 that single, smaller projects are also captured and
6 eliminated from eligibility. But the Commission should
7 take care not to err too far on the side of
8 restrictiveness. Paying attention to how the framework
9 affects
10 /
11 /
12 /
13
14
15
16
17
18
19
20
22
CASE NO. GNR-E-ll-0l
April 22, 2011
420 Decker, R (DI) 2a
RNP
.1 single, smaller renewable energy proj ects is necessary to
2 carrying out the dual purposes for adopting the
3 framework.
4 Q HOW DO YOU CHARACTERI ZE THE
5 METHODOLOGY REFLECTED IN THE PROPOSALS PUT FORWARD IN
6 THIS DOCKET?
7 A As I explained in my Direct
8 Testimony, the identity of the decision maker and the
9 amount of discretion available to that decision maker are
10 the most significant features of a framework for
11 distinguishing between single and multiple proj ects.
12 (Decker, Di - Page 10, Line 20 through Page 11, Line 20.).13
14
The "Single Proj ect Requirement" proposed in Exhibit No.
301 to the Direct Testimony of Rick Sterling on behalf of
15 Staff of the Idaho Public Utilities Commission (" Staff Is
16 Proposal") gives nearly absolute discretion to the
17 utilities and the Commission in applying a broad list of
18 factors. The "Proposed Criteria for Published Avoided
19 Cost Eligibility" contained in Exhibit No. 203 to the
20 Direct Testimony of Bruce W. Griswold on behalf of Rocky
21 Mountain Power ("RMP i S Proposal") retains significant
22 discretion, but requires the utilities and the Commission
23 to find that at least three elements or categories
24 pertaining to single project status are met: project.25 location (5 miles), timing of construction (24 months),
CASE NO. GNR-E~11-01
April 22, 2011
421 Decker, R (DI) 3
RNP
.
.
24.25
1 and a discretionary factor focused on evidence of
2 economic linkage among proj ects. The "Strawman Mechanism
3 for Determining the Size of a Qualifying Facility That is
4 Eligible to Receive the Published Rate" filed by Idaho
5 Conservation League (" ICL i S Proposal") is a
6 non-discretionary framework containing four specific
7 criteria-energy source, ownership, location, and
8 timing-that must be met to find that aggregation is
9 present. ICL i S Proposal is a refinement of the RNP-ICL
10 Discussion Draft presented in public comments in Case No.
11 GNR-E-l0-04, (see Decker, Di - Page 6, Lines 15-23
12 through Page 7, Lines
13 /
14 /
15 /
16
17
18
19
20
21
22
23
CASE NO. GNR-E-ll-0l
April 22, 2011
422 Decker, R (DI) 3a
RNP
.
.
.
1 1-4 and Exhibit 1901), which also formed a starting point
2 for Staff i s Proposal (Sterling, Di - Page 6, Lines
3 22-25).
4 Q HOW DO YOU EVALUATE THOSE DISTINCT
5 METHODOLOGIES?
6 A As I stated in my Direct Testimony, a
7 discretionary framework is more appropriate when a
8 neutral regulatory body is the decision maker, and less
9 appropriate when the framework will be applied by an
10 interested negotiating party, as in the PURPA context.
11 (Decker, Di - Page 10, Line 20 through Page 11, Line 20.)
12 I also, however, noted that flexibility and discretion
13 can prevent technicalities from controlling decisions.
14 (Decker, Di - Page 11, Lines 1-2.) In other words,
15 flexibility and discretion can prevent "gaming, II and also
16 can prevent unusual proj ect characteristics from
17 eliminating a single proj ect i s eligibility for published
18 rates. Because I believe that comments on crafting a
19 workable, compromise discretionary framework will be most
20 helpful to the Commission, my testimony will focus
21 primarily on reactions to Staff i s Proposal and RMP IS
22 Proposal, which both involve discretion and subj ectivity.
23 To illustrate one way in which my general
24 comments on Staff i s Proposal could be translated into a
25 compromise framework, I have included a red-lined version
CASE NO. GNR-E-ll-0l
Ap r i 1 22, 2011 423 Decker, R (DI) 4
RNP
.
.
.
20
21
22
23
24
25
1 of Staff i s Proposal as Exhibit 1907 to this testimony.
2 My red-lined version of Staff i s Proposal is similar in
3 structure and substance to RMP i S Proposal. RMP IS
4 Proposal contains a mix of obj ecti ve and subj ecti ve
5 cri teria, in addition to the virtues of brevity and
6 clari ty. With the refinements I suggest below, RMP IS
7 Proposal could be the best foundation for a compromise
8 framework.
9 Q WHAT is YOUR PRIMARY CONCERN WITH
10 STAFFI S PROPOSAL, AND HOW WOULD YOU ADDRESS THAT CONCERN?
11 /
12 /
13 /
14
15
16
17
18
19
CASE NO. GNR-E-ll-0l
April 22, 2011
424 Decker, R (DI) 4a
RNP
.
.
.
1 A My primary concern with Staff IS
2 Proposal is that, taken as literally written, it would
3 permi t proj ects to be combined for purposes of the
4 eligibili ty threshold upon finding only one of factors
5 (a) - (0) was satisfied. There is no rational basis on
6 which to find aggregation of two proj ects that share, for
7 example, only the same motive force or fuel source, or
8 only close proximity, or only the same operations and
9 maintenance entity. It may be that Staff did not intend
10 to allow each single factor alone to result in a
11 conclusion that multiple projects will be considered a
12 single project (i.e., a "one strike, youlre out"
13 framework). Staff may rather have intended to give the
14 utilities and the Commission the widest possible
15 discretion to reach a "we know it when we see it"
16 conclusion. Whatever Staffl s intent, it is not helpful
17 for a written framework to state that a single one of the
18 factors (a) - (0) would be sufficient to conclude that
1 9 multiple proj ects will be aggregated for purposes of the
20 eligibili ty threshold.
21 It may be that the intent of Staff i s Proposal
22 was to provide the utilities and the Commission with
23 absolute discretion to decide when multiple proj ects
24 should be combined. In that case, I believe that Staff IS
25 Proposal allows for more subj ecti vi ty-and offers less
CASE NO. GNR-E-ll-0l
April 22, 2011
425 Decker, R (DI) 5
RNP
.
.
20
24.25
1 certainty and predictability-than is reasonably
2 appropriate for this type of regulatory framework. The
3 Commission will be delegating its policy judgment to the
4 utilities as the initial and, likely, most frequent
5 arbi ters of proj ect size. With such a broad delegation
6 of authority comes the responsibility to establish
7 guidance and parameters for the exercise of authority.
8 Merely making review of utility decisions available,
9 without communicating what the Commission believes are
10 the key overarching principles or most significant
11 determinants of single/multiple proj ect status, would
12 leave the utilities to guess at the Commission IS
13 unexpressed policy judgment. Moreover, the absence of
14 any
15 /
16 /
17 /
18
19
21
22
23
CASE NO. GNR-E-ll-0l
Ap r i 1 22, 2011
426 Decker, R (DI) 5a
RNP
.
.
.
1 defined parameters for applying the framework will make
2 it impossible for potential proj ect owners and financing
3 partners to make an educated assessment of which proj ects
4 are likely to be eligible for published rates.
5 To address what may be either excessive
6 restricti veness or excessive subj ecti vi ty in Staff IS
7 Proposal, I suggest (1) isolating at least one factor as
8 a threshold criterion that must be met in addition to the
9 discretionary analysis; and (2) for the discretionary
10 portion of the determination, requiring a finding that at
11 least two factors are present. Specifically, I would
12 make same motive force/fuel source and a defined
13 geographic proximity the obj ecti ve threshold criteria,
14 and reform the list of discretionary factors to ensure
15 that a conclusion of aggregation will be based on at
16 least two appropriate indicia of economic linkage between
17 projects. I note that these changes, illustrated in
18 Exhibit 1907, would make Staffl s Proposal more similar in
19 structure to RMP i S Proposal, which contains a mix of
20 objective criteria and subjective factors.
21 Q WHICH FACTORS IN STAFF i S PROPOSAL ARE
22 DUPLICATIVE OR OF LIMITED RELEVANCE IN DETERMINING
23 ECONOMIC LINKAGE BETWEEN PROJECTS?
24 A As I stated in my Direct Testimony,
25 the purpose of PURPA published rates is to reduce
CASE NO. GNR-E-ll-0l
Ap r i 1 22, 2011 427 Decker, R (DI) 6
RNP
.
.
.
22
23
24
25
1 transaction costs for proj ects that lack economic power
2 and may not anticipate revenues sufficient to negotiate
3 unique avoided costs and contracts with utili ties.
4 (Decker,
5 Di - Page 4, Line 7 through Page 6, Line 12.) A
6 single/mul tiple proj ect framework therefore should
7 attempt to determine the extent to which proj ects are
8 jointly developed and economically interdependent.
9 Several of the criteria in Staff i s Proposal are
10 duplicative or of limited relevance in determining
11 economic linkage between proj ects.
12 /
13 /
14 /
15
16
17
18
19
20
21
CASE NO. GNR-E~11-01
April 22, 2011
428 Decker, R (DI) 6a
RNP
.
.
.
1 The first is factor (h) from Staff i s Proposal,
2 which reads, Ilis operated and maintained by the same
3 enti ty. " A reality of smaller proj ects is that their
4 owners, often local landowners or local governments, do
5 not have the expertise to operate and maintain renewable
6 energy proj ects. Another reality is that there are very
7 few operations and maintenance ("O&M") service providers
8 willing to serve small -scale proj ects. Therefore, it is
9 very likely that economically distinct projects will be
10 serviced by the same O&M provider. Thus, while it could
11 be relevant to ask whether multiple projects are serviced
12 under the same O&M agreement , receiving O&M service from
13
14
15
the same entity is in no way predictive of economic
linkage.
Similarly, I would clarify factor (j) ("uses
16 common debt or equity financing") to ensure that it
17 applies only to interdependent financing-i. e., financing
18 pursuant to the same or interdependent agreements or
19 collateral packages-and not merely to using the same
20 financing entity. As with O&M providers, there are only
21 a limited number of financial partners nationally that
22 will work with smaller proj ects.
23 Another factor that I believe to be of limited
24 relevance in determining economic linkage is factor
25 (d) -shared interconnection facilities. While shared
CASE NO. GNR-E-ll-0l
April 22, 2011
429 Decker, R (DI) 7
RNP
.
.
.
22
23
24
25
1 interconnection facilities is a characteristic of many
2 aggregated projects, it is nota predictor of
3 aggregation. In other words, connection to the same
4 substation would not indicate economic linkage or
5 interdependence; rather, it would indicate that the
6 proj ects are close together and that unnecessary
7 duplication of transmission infrastructure is not good
8 public or business policy. The same would be true, for
9 example, of a shared access road. As I said in my Direct
10 Testimony, it may be appropriate to consider shared
11 transmission infrastructure in the totality of the
12 circumstances, but it would only be relevant if factors
13 /
14 /
15 /
16
17
18
19
20
21
CASE NO. GNR-E-ll-0l
Ap r i 1 22, 2011 430 Decker, R (DI) 7a
RNP
.
.
.
1 significant to economic linkage between proj ects are also
2 present.(Decker, Di - Page 13, Line 19 through Page 14,
3 Line 4.) A better solution would be to remove shared
4 transmission infrastructure entirely as a determinant of
5 aggregation, as it is essentially duplicative of
6 geographic proximity.
7 Likewise, while common timing is an appropriate
8 factor to consider in connection with other factors, it
9 is not alone a predictor of connection between proj ects.
10 Therefore, a timing factor would not be appropriate in a
11 "one-strike" framework. If a "two-strike" or
12 "three-strike" framework were to be employed, I would
13 recommend combining factors (c) and (g), which both
14 pertain to timing, so that a conclusion of aggregation
15 Cannot be based on timing and distance with no other
16 evidence of connection between proj ects.
17 Q DO YOU HAVE ANY CONCERNS WITH THE
18 ADMINISTRATION AND ENFORCEMENT ELEMENTS OF THE STAFF
19 PROPOSAL?
20 A If the Commission declines to refine
21 the factors and eligibility criteria in Staff i s Proposal
22 to introduce more obj ecti vi ty and predictability, as I
23 have outlined above, then I do not believe that the
24 utility should have a decision making role. The first,
25 and only determination of compliance should come from the
CASE NO. GNR-E-ll-0l
April 22, 2011
431 Decker, R (DI) 8
RNP
.
.
.
22
23
24
25
1 Commission applying its own policy judgment. Without
2 addition of guideposts for the analysis, I also believe
3 that it would be impossible for a seller to warrant that
4 its proj ect satisfied the Single Proj ect Requirement.
5 If the Commission did introduce more
6 obj ecti vi ty and predictability into the application of
7 the criteria, then Staff i s basic administration and
8 enforcement model could be appropriate, with three
9 refinements. The first is a better definition of the
10 administrative process. To promote certainty in the
11 process, utilities shoul~ be required to make
12 determinations of single proj ect status wi thin a defined
13 time period, in writing,
14 /
15 /
16 /
17
18
19
20
21
CASE NO. GNR-E-ll-0l
Ap r i 1 22, 2011
432 Decker, R (01) 8a
RNP
.
.
.
1 and with reference to particular facts and criteria, and
2 proj ect proponents should be required to seek Commission
3 review wi thin a defined period of time.
4 The second refinement relates to
5 confidentiality. Documentation of factors pertaining to
6 economic linkage may require disclosure of proprietary
7 contracts and financial arrangements to the utility. The
8 Commission should make clear that documentation provided
9 to the utili ties is permitted to be heavily redacted and
10 subj ect to a confidentiality agreement or protective
11 order, and to provide an administrative process for
12 resolving disputes about sensi ti ve information and
13 appropriate documentation.
14 The third refinement relates to the seller
15 warranty. When originally proposed by RNP and Idaho
16 Conservation League in public comments in GNR-E-l0-04,
17 the concept of a seller warranty was proposed as a way to
18 promote self-policing of objective, non-discretionary
19 criteria by involving the project lender in due diligence
20 regarding disaggregation. With discretionary factors,
21 however, it will not be possible for a seller or lender
22 to predict how those factors will be applied or whether
23 the project will be found to satisfy them. Therefore, a
24 seller warranty will not serve the purpose for which RNP
25 originally intended it.
CASE NO. GNR-E-ll-0l
April 22, 2011
433 Decker, R (01) 9
RNP
.
.
.
22
23
24
25
1 Wi th some refinements to Staff i s Proposal,
2 however, a seller warranty could help to ensure the
3 accuracy of the facts relied upon by the utility or the
4 Commission in making the final discretionary
5 determination and could help to prevent the seller from
6 later modifying the proj ect to alter the facts upon which
7 the final determination relied. After receiving a
8 wri tten determination of single proj ect status, in which
9 specific facts are applied in relation to defined
10 criteria, the seller would be able to warrant that those
11 particular facts are accurate and that they will not
12 change in the future. In othe.r words, it
13 /
14 /
15 /
16
17
18
19
20
21
CASE NO. GNR-E-ll-0l
April 22, 2011
434 Decker, R (01) 9a
RNP
.
.
.
1 would not be reasonable to ask a seller to warrant that
2 it met a set of discretionary factors, but once those
3 factors have been applied in a specific way, it could be
4 reasonable to ask a seller to confirm that the particular
5 application of those factors was based on accurate facts
6 and conclusions.
7 Q CAN YOU SUMMARIZE YOUR RESPONSES TO
8 STAFFI S PROPOSAL?
9 A In summary, my primary comments in
10 response to Staff i s Proposal are (1) as literally
11 written, it suggests a "one strike, youl re out" standard;
12 (2) even if not intended as a "one strike" framework, it
13
14
is too discretionary to be consistently applied by the
utilities or understood by those who must meet it (and
15 warrant that they meet it); (3) several of the factors
16 could capture small proj ects that are not linked in any
17 economically significant way; and (4) the administration
18 and enforcement provisions are vague, and should be
19 modified to contain timelines and to adapt the seller
20 warranty to a discretionary framework. These comments
21 are incorporated into Exhibit 1907.
22 In the next section of my testimony, I will
23 respond to RMP i S Proposal.
24
25
Q WHAT IS YOUR GENERAL REACTION TO
RMP i S PROPOSAL?
CASE NO. GNR-E-ll-0l
Ap r i 1 22, 2 0 1 1
435 Decker, R (DI) 10
RNP
.
.
.
1 A First, RNP appreciates RMP IS
2 willingness to engage in discussion toward developing a
3 framework for distinguishing single from aggregated
4 proj ects, even though such a framework may not be RMP IS
5 first choice of outcomes. Second, I continue to be
6 concerned with the use of a discretionary framework that
7 is to be applied by an interested party in the
8 negotiation. Provision (a) (3) of RMpi s Proposal is
9 open-ended and allows the decision maker to exercise
10 significant subj ecti vi ty and discretion in determining
11 whether sufficient characteristics of a single
12 development are found. Nonetheless, I have focused my
13 comments on whether a framework could channel discretion
14 and reduce
15 /
16 /
17 /
18
19
20
21
22
23
24
25
CASE NO. GNR-E-ll-0l
April 22, 2011
436 Decker, R (DI)lOa
RNP
.
.
.
1 subj ecti vi ty sufficiently to form a compromise solution.
2 In that spirit, I believe that the Commission should give
3 serious consideration to RMP i S Proposal.
4 RMP i S Proposal addresses several of my primary
5 concerns with Staff i s Proposal and, in its structure and
6 much of its substance, is similar to the red-lined
7 version of Staff i s Proposal that I drafted to illustrate
8 my comments (Exhibit 1907). RMpl s Proposal contains a
9 mix of obj ective and subj ecti ve criteria. Importantly,
10 it contains threshold criteria-motive force, distance and
11 timing-that will signal to utilities and potential
12 proj ect owners when a discretionary analysis of the more
13 subj ective indicia of aggregation will be necessary.
14 RMP i S Proposal also defines the timeline and form for the
15 utility IS initial decision. Finally, by including an
16 illustrative application form for gathering information
17 relevant to the size determination, RMP gives a very
18 helpful indication of how its Proposal would be applied.
19 One further benefit of RMpl s Proposal is that it is
20 wri t ten very clearly and succinctly.
21 In short, although I believe that some
22 refinements to RMP i S Proposal are needed, it represents a
23 solid foundation from which the Commission could develop
24 a compromise solution.
25 Q HOW WOULD YOU MODIFY RMP i S PROPOSAL?
CASE NO. GNR-E-ll-0l
April 22, 2011
437 Decker, R (DI) 11
RNP
.
.
.
19
20
21
22
23
24
25
1 A My primary concern with RMP IS
2 Proposal is to make sure that it would not allow shared
3 interconnection and other factors that are not predictive
4 of economic interdependence from being relied upon too
5 heavily as determinants of aggregated status. I
6 described those factors above in my discussion of Staff IS
7 Proposal (supra Page 6, Line 4 through Page 7, Line 7).
8 The simplest way to modify RMP i S Proposal to resolve this
9 concern would be to add a sentence like the following to
10 the end of (a) (3): "None of the
11 /
12 /
13 /
14
15
16
17
18
CASE NO. GNR-E-ll-0l
April 22, 2011
438 Decker, R (DI)lla
RNP
.
.
.
1 following characteristics, whether alone or in
2 combination with one another, may be relied upon as the
3 sole determinant of single development status; shared
4 interconnection facilities; unrelated arrangements with
5 the same operations and maintenance entity; unrelated
6 arrangements with the same financing provider."
7 RMP i S Proposal appears not to contemplate that
8 proj ects would provide copies of financial agreements,
9 but rather relies upon an attestation by the project
10 proponent that answers to questions about those elements
11 are accurate. See RMP Exhibit No. 203, page 3.
12 Confidentiality concerns are mitigated by this approach,
13 but if other forms of documentation are requested then
14 they should be permitted to be redacted and kept
15 confidential to protect proprietary information.
16 I recommend two additional minor modifications
17 to RMP i S Proposal. First, I would replace "nameplate
18 capacity" with "expected monthly average energy
19 generation" to correspond with Idahol s 10 aMW published
20 rate threshold. Second, I would specify that project
21 generating equipment must be separated by five miles.
22 Cf., e.g., 18 C.F.R. § 292.204(a) (2) (ii) (FERC rules
23 defining one-mile separation with reference to generating
24 equipment). Because completely separate proj ects in a
25 similar area may share a connection to an existing
CASE NO. GNR-E-ll-0l
April 22, 2011
439 Decker, R (DI) 12
RNP
.
.
.
1 substation, that connection point should not determine
2 their distance from one another.
3 Q CAN YOU SUMMARIZE YOUR RESPONSE TO
4 RMP i S PROPOSAL?
5 A In summary, I believe that RMP IS
6 Proposal is a good foundation for a compromise framework
7 because it contains a mix of obj ecti ve and subj ecti ve
8 elements, defines timelines and content for utility
9 decisions and review, and is succinct and clear. I would
10 introduce additional parameters to the discretionary
11 portion of RMP i S Proposal, by
12 /
13 /
14 /
15
16
17
18
19
20
21
22
23
24
25
CASE NO. GNR-E-ll~Ol
April 22, 2011
440 Decker, R (DI)12a
RNP
.1 directing utili ties not to base their determination with
2 respect to criterion (a) (3) solely on three specific
3 factors that are not predictive of economic linkage.
4 Before I conclude my testimony, I will address
5 two other issues raised in various parties i direct
6 testimony: "gaming" and the published rate threshold.
7 Q WILL USING A FIVE-MILE DISTANCE
8 CRITERION PROMOTE "GAMING"?
9 A Retaining a defined distance
10 criterion like the five-mile criterion in RMP i S Proposal
11 is very important. If a discretionary framework is to be
12 used, it is necessary to have some threshold obj ecti ve.13
14
cri teria to channel the analysis and give some
predictabili ty to both utili ties and potential proj ects.
15 At the same time, some have expressed concern that a
16 definite, obj ective proximity criterion is susceptible to
17 gaming in that developers of aggregated proj ects would be
18 able to defeat any application of the rule by placing
19 generating equipment 5.1 miles apart. One way to address
20 this concern without losing all of the benefits of a
21 defined, predictable distance criterion could be to allow
22 for exceptions to the distance criterion in special cases
23 where projects within 10 miles of one another also
24 present a greater than usual number of characteristics.25 suggesting economic interdependence.
CASE NO. GNR-E-ll-0l
April 22, 2011
441 Decker, R (DI) 13
RNP
.
.
.
1 Q HOW DO YOU RESPOND TO THE UTILITIES i
2 CONCERN THAT THE PARTIAL STIPULATION IN PLACE AT THE
3 OREGON PUBLIC UTILITIES COMMISSION (OPUC) HAS NOT
4 PREVENTED "GAMING"?
5 A The Partial Stipulation used by the
6 OPUC is an agreed upon set of obj ecti ve criteria for
7 applying the PURPA published rate threshold. (See Decker,
8 Di - Exhibit No. 1902; Griswold, Di - Exhibit No. 202.)
9 No set of objective regulatory criteria will eliminate
10 100% of the behavior that the criteria are intended to
11 address, but a regulation may still
12 /
13 /
/14
15
16
17
18
19
20
21
22
23
24
25
CASE NO. GNR-E-ll-0l
April 22, 2011
442 Decker, R (DI)13a
RNP
.
.
.
1 capture most of that behavior. In that vein, it is worth
2 noting that each of the utili ties points to the same 65
3 MW aggregated proj ect as its example of why the OPUC
4 Partial Stipulation has not prevented gaming.(Kalich,
5 Di - Page 32, Line 12 through Page 33, Line 2; Stokes,
6 Di - Page 15, Lines 11-15; Griswold, Di - Page 18, Line
7 19 through Page 20, Line 12.) In other words, they
8 demonstrate that one proj ect that most would consider to
9 be aggregated leaked through the Partial Stipulation. It
10 is significant that, since Oregon modified its rules for
11 evaluating single/multiple project status for purposes of
12 the Business Energy Tax Credit in response to that same
13 65 MW project (Decker, Di - Exhibit 1903), no similar
14 anecdotes have emerged.
15 The Partial Stipulation is a completely
16 different model from the frameworks put forth by Staff
17 and RMP in this proceeding and addressed in this
18 testimony. The Partial Stipulation represents an
19 entirely obj ecti ve, non-discretionary framework. This
20 structure can be preferable where there is a desire to
21 minimize involvement of agency regulators or other
22 parties in making subj ecti ve, discretionary
23 determinations, but it can be more susceptible to
24 "gaming." With a compromise that contains both objective
25 and subj ecti ve elements, as offered by RMP and discussed
CASE NO. GNR-E-ll-0l
April 22, 2011
443 Decker, R (DI) 14
RNP
.
.
.
21
22
23
24
25
1 herein, there is less opportunity for "gaming."
2 Q is RNP i S SUPPORT FOR A COMPROMISE
3 FRAMEWORK PREDICATED ON RETAINING THE 10 aMW SIZE
4 THRESHOLD?
5 A Yes. Retaining the 10 aMW published
6 rate threshold for single proj ects is the reason that RNP
7 could support a compromise framework for preventing
8 aggregated proj ects from receiving the published rate.
9 /
10 /
11 /
12
13
14
15
16
17
18
19
20
CASE NO. GNR-E-ll-0l
April 22, 2011
444 Decker, R (DI)14a
RNP
.
.
.
1 At the same time, it is important to point out
2 that permanently setting the published rate threshold at
3 100 kW, as the utilities recommend, is not the only
4 al ternati ve mechanism available to the Commission to
5 address the consequences of disaggregation. There is a
6 vast distance between 100 kW and 10 aMW, and there is no
7 support for the suggestion that only proj ects smaller
8 than 100 kW are "truly small." (Cf., e. g., Kalich,
9 Di - Page 35, Lines 7 -8. ) Even if proj ects in the lower
10 end of that range were to be aggregated, the consequences
11 to the utili ties would be much less significant than
12 those with which the Commission is now concerned.
13 Indeed, because the consequences of aggregation
14 at smaller proj ect sizes are much more limited than they
15 are when proj ects approach the 10 aMW threshold, the
16 Commission may wish to consider requiring only projects
17 with a nameplate capacity larger than three or four
18 megawatts (or some other number) to be evaluated in the
19 single/multiple project framework. Applying the
20 single/mul tiple proj ect framework will require some
2 1 administrative effort on the part of proj ects, utili ties,
22 and the Commission. To reduce administrative burden
23 while still achieving the Commission i s goal to avoid
24 significant consequences from aggregation, the Commission
25 could establish a minimum size larger than 100 kW for
CASE NO. GNR-E-ll-0l
April 22, 2011
445 Decker, R (DI) 15
RNP
.
.
.
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1 application of the single/multiple proj ect framework.
2 Q DO YOU HAVE ANYTHING ELSE TO ADD TO
Not at this time.
3 YOUR TESTIMONY?
4 A
5 /
6 /
7 /
8
9
CASE NO. GNR-E-ll-0l
Ap r i 1 22, 2011
446 Decker, R (DI)15a
RNP
.
.
.
1
2 open hearing.)
(The following proceedings were had in
MR. MILLER: And Ms. Decker is available
4 for cross-examination.
20
21
22
23
24
25
3
5
6
7
8
9
10
11
12
13 Madam Chairman.
COMMISSIONER SMITH: Thank you.
Mr. Otto, do you have any questions?
MR. OTTO: I do not, Madam Chairman.
COMMISSIONER SMITH: Thank you.
Ms. Davis?
MS. DAVIS: No questions.
COMMISSIONER SMITH: Mr. Richardson?
MR. RICHARDSON: No questions,
COMMISSIONER SMITH: Ms. Sasser?
MS. SASSER: I have a couple, Madam Chair.
CROSS-EXAMINATION
Good morning.
Good morning.
Ms. Decker, if you i II refer to page 3,
Of my direct?
14
15
16 Thank you.
17
18
19
BY MS.SASSER:
Q
A
Q
line 22 and 23.
A
CSB REPORTING
[phone]
447 DECKER (X)
RNP
.
.
.
1 Q Your direct testimony.
2 A Page 3, line 22 and 23.
3 Q You refer to small and community scale
4 projects. How do you define small and/or community scale
5 versus large proj ects?
6 A I think there i s no one-size-fi ts-all
7 answer to that question. What I meant to refer to in
8 this context was the projects of a size lower than
9 Idaho i s published avoided cost rate threshold of 10
10 average megawatts. I think that both small -- what I
11 would refer to as small and community scale proj ects fall
12 wi thin that range.
13
14
Q So you would be willing to acknowledge
that whatever your definition of community scale is, it i s
15 larger than small, but it i S some degree?
16 A You know, community scale proj ects is a
17 term that I probably shouldn i t have used in testimony
18 because it i s so ambiguous. There are, you know, folks in
19 the industry that use that term, but, for instance, I
20 don i t think there i s anything, you know, at FERC or
21 something that defines that term. It i S more of an
22 industry term or policy term.
23 Q If you can move to page 4, line 11 of your
24 direct testimony, you state that small and community
25 scale proj ects may not anticipate revenues high enough to
CSB REPORTING
[phone]
448 DECKER (X)
RNP
.
.
.
1 justify the upfront legal costs to negotiate an agreement
2 wi th the utility. What upfront costs are you referring
3 to there? Do you have a ball park dollar figure?
4 A No, I don It. I would -- the purpose of
5 this discussion was to layout the policy foundations,
6 reasons why published rates exist and I think that in
7 different markets that could be a different number. I
8 don i t know what the number is, nor do I think it needs to
9 be that specific. It i s just sort of a generalized policy
10 reason why it makes -- why there are published rates,
11 which are sort of a generalization that for the benefit
12 of smaller proj ects balances reducing their market
13 barriers against some loss of accuracy in pricing their
14 supply characteristics or their individual
15 characteristics.
16 Q Okay, on line 15, a few lines down from
17 there, you mention an unbalanced playing field that
18 favors the utili ties. Do you have any examples or can
19 you give me an example or definition of that that you
20 see?
21 A That i s just a policy conclusion based on
22 my organization IS 17 years of working with folks active
23 in the renewable energy industry.
24 Q That PURPA in general and that policies
25 favor utili ties?
CSB REPORTING
[phone]
449 DECKER (X)
RNP
.
.
.
1 A Well, that I suppose PURPA in general is
2 not set up as a voluntary negotiation. You know, there
3 are negotiations where both parties come together because
4 they both want to be contracting with each other and the
5 point of PURPA is that utili ties are required to come to
6 the table and that is a difference between PURPA and more
7 of a bilateral contracting arrangement.
8 Q Okay. You state or page 6, lines 10 and
9 12, 10 through 12, of your direct testimony that RNP
10 recognizes that the absence of supportive policy in the
11 larger acquisition categories has prevented those methods
12 from being successful in bringing significant penetration
13 of new renewable generation to Idaho utili ties. Could
14 you explain what you mean by "absence of supportive
15 policy"?
16 A You know, what I mean there is that in
17 states that have, for instance, renewable portfolio
18 standards that motivate utilities to take control of
19 their acquisition of renewable energy proj ects and go out
20 and acquire large proj ects to meet their needs, the
21 dynamic is a little bit different than it has been here
22 in the absence of such a policy.
23 Q If we can move to your rebuttal testimony,
24 I have just a couple of questions and I will be finished.
25 On page 5, beginning at line 1 of your rebuttal
CSB REPORTING
[phone]
450 DECKER (X)
RNP
.
.
.
1 testimony, you state that your primary concern with
2 Staffl s proposal is that, taken as literally written, it
3 would permit proj ects to be combined for purposes of the
4 eligibili ty threshold upon finding only one of the
5 factors (a) - (0) was satisfied. Can we assume, then, that
6 you i ve reviewed the testimony of Mr. Sterling?
7 A Yes.
8 Q In looking at Mr. Sterling i s testimony, is
9 it your position that Staff i s proposal then can
10 reasonably be interpreted as a one-strike-you Ire-out
11 rule?
12 A The reason that I stated in my testimony
13 the phrase "taken as literally written" is because I
14 would tend not to interpret Staff i s proposal in that way,
15 particularly given Mr. Sterling i s testimony describing
16 the proposal; however, if you are going to have a written
17 standard, I think it i S appropriate for the written
18 standard to be explicit about what it means. I did
19 notice in Mr. Sterling i s testimony, you know, that he
20 said it is theoretically possible that one characteristic
21 could result in a determination of single proj ect status
22 and I would hope that in crafting eligibility cap
23 methodology which, you know, I think is a sensible thing
24 to do in order to define the universe of published rates
25 and negotiated rates before addressing what those rate
CSB REPORTING
[phone]
451 DECKER (X)
RNP
.
.
.
1 calculations should be, in doing that, I think it IS
2 important to be explicit so that both the utili ties in
3 applying the standard have a sense of what the
4 Commission i s policy judgment is and what characteristics
5 are most important and that potential proj ect developers
6 have some sense going in of which bucket they're going to
7 fall into so that it i S not completely open either for the
8 generators or the utili ties.
9 Q Would it be fair to say, then, that you
10 would prefer the Commission to have less discretion?
11 A Yes, I believe I stated that in my
12 testimony and I think that because of the concerns that
13 have been expressed in this proceeding about whether
14 purely obj ecti ve criteria can, you know, capture enough
15 of the circumstances that have led us to be talking about
16 this and that have led to the frustration, you know, on
17 the part of the utili ties of having, you know, large
18 projects qualifying for published rates, I think it i s
19 relevant I think I lost my train of thought.
20 Q You got well beyond answering my question,
21 thanks. One last question. You further assert the
22 absence of any defined parameters, and you i re referring
23 to Mr. Sterling i s testimony and proposal, the absence of
24 any defined parameters for applying the framework will
25 make it impossible for potential proj ect owners and
CSB REPORTING
[phone]
452 DECKER (X)
RNP
.
.
.
1 financing partners to make an educated assessment of
2 which proj ects are likely to be eligible for published
3 rates, so as you i ve heard the testimony today and is it
4 your experience that you can look at whatever side of or
5 whatever party you i re on, whatever side of the analysis
6 that you i re on, do you not believe that you can look at a
7 set of power purchase agreements that are submitted for
8 approval and recognize that that's a disaggregated
9 proj ect?
10 A I think you i re as king me whether you can
11 look just at a set of power purchase agreements that are
12 submi tted and tell just from that that they are a
13 disaggregated proj ect.
14 Q Do you want me to clarify?
15 A Yes.
16 Q I i II try and rephrase. There were other
17 parties that have testified that, and including Mr.
18 Sterling in his testimony , it becomes fairly obvious when
19 you look at any given proj ect whether it is a
20 dis aggregated project that is attempting to obtain
21 published rates or a true single project, single small
22 PURPA project, would you agree with that, that it i s
23 somewhat obvious under most circumstances?
24
25
A I think in the circumstances that have
presented themselves in Idaho, it seems like it is fairly
CSB REPORTING
[phone]
453 DECKER (X)
RNP
.
.
.
19
20
21
1 obvious. I don i t think that --
2 MS. SASSER: Thank you. That was the
3 answer to my question. I'm done. Thank you,
4 Madam Chair.
5 COMMISSIONER SMITH: Thank you, Ms.
6 Sasser.
7 Mr. Williams or Mr. Miller, do you have
8 questions?
9 MR. WILLIAMS: No.
10 MR. KEN MILLER: None.
11 COMMISSIONER SMITH: Mr. Kaufmann?
12 MR. KAUFMANN: Thank you, Madam Chair and
13 Commissioners. I have just a couple of questions for the
14 witness.
15
16 CROSS-EXAMINATION
17
18 BY MR. KAUFMANN:
Q Good morning, Ms. Decker.
A Good morning, Mr. Kaufmann.
Q Would you please refer to page 12 of your
22 rebuttal testimony? On line 12 is it your testimony that
23 wi th respect to the Rocky Mountain proposal, you would
24 replace nameplate capacity with expected monthly average
25 generation?
CSB REPORTING
[phone]
454 DECKER (X)
RNP
.
.
.
1 A That is what my testimony says, yes.
2 Q And what is the reason you would recommend
3 that?
4 A The reason that I recommended that is
5 because we have not proposed, nor did we think it was an
6 open issue, that the 10 average megawatt published rate
7 threshold should change, in part because I don i t think
8 that anyone i s testimony in this case has considered the
9 range of competing considerations that the Commission
10 looked at back in its 2005 Order when it considered
11 whether to use nameplate or average monthly generation.
12 Q Do you think that a nameplate-based
13 eligibili ty criteria would be unworkable?
14 A I think that there are benefits and
15 disadvantages to each. I don i t think I i m familiar with
16 all of those at this point, as I said, but I would
17 observe that a nameplate eligibility threshold exists in
18 other states that I i m familiar with, so I don i t think
1 9 it i S inherently impossible.
20 Q On page 14 of your rebuttal testimony, on
21 line 22 is it your testimony that retaining the 10
22 average megawatt published rate threshold for single
23 projects is the reason RNP could support a compromise
24 framework for preventing aggregated projects from
25 receiving the published rate?
CSB REPORTING
[phone]
455 DECKER (X)
RNP
.
.
.
1 A I see that, yes.
2 Q Why 10 megawatts? Why 10 average
3 megawatts?
4 A Because that is what Idaho has decided is
5 the right thing and I didn i t think that that issue was up
6 for debate in this proceeding. I think that there i s a
7 benefi t to leaving that where it is as we discuss how to
8 decide whether someone meets it or not.
9 Do you have an opinion I i II stop there.Q
10 One last question. If the Commission were to change from
11 10 average megawatts to 10 megawatt nameplate under any
12 of the strawman proposals, do you see any reason why the
13 cri teria would be unworkable as an administrative legal
14 matter?
15 A I think it would be pretty tricky to have
16 a different published rate threshold for wind and solar
17 proj ects, which I understand this proceeding to be
18 specifically oriented toward, and I know that there are
19 some, you know, based on the considerations that the
20 Commission looked at when it arrived at the 10 average
21 megawatt threshold, I know that there are some
22 considerations of, you know, equity between different
23 resource types that might make it difficult to
24 administer, but as I said before, I don i t think that
25 using nameplate capacity is inherently impossible.
CSB REPORTING
[phone]
456 DECKER (X)
RNP
.
.
.
19
20
1 Q So would you agree that the choice of 10
2 average megawatts as opposed to 9.9 or 9 or 10 megawatt
3 nameplate really is just about where you draw the line
4 and not about whether the -- it doesn i t affect whether
5 the rule itself would be affected?
6 A Well, I think I i ve said that 11m not
7 sufficiently familiar with the considerations that the
8 Commission considered in its Order arriving at 10 average
9 megawatts to give a definitive answer about what all
10 those considerations are and how they would be affected
11 by a move to nameplate capacity.
12 MR. KAUFMANN: Thank you for your time,
13 Ms. Decker. Madam Chair, I have no further questions.
14 COMMISSIONER SMITH: Thank you, Mr.
15 Kaufmann.
16 Mr. Walker.
17 MR. WALKER: Thank you, Madam Chair. With
18 the Commission i s indulgence, Mr. Williams will --
COMMISSIONER SMITH: Mr. Williams.
MR. JASON WILLIAMS: Good morning, Madam
21 Chair, Commissioners, thank you.
22
23
24
25
CSB REPORTING
[phone]
457 DECKER (X)
RNP
.
.
.
18
19
1 CROSS-EXAMINATION
2
3 BY MR. JASON WILLIAMS:
4 Q Good morning, Ms. Decker.
5 A Good morning, Mr. Williams.
6 Q I have a few questions. I i d like to start
7 by looking at page 4 of your direct testimony. Do you
8 have that?
9 A Yes, I do.
10 Q And you spend some time, specifically
11 beginning at the question on line 8, discussing
12 distinctions between large generators and small
13 generators and in fact, at line 9 your testimony states
14 that the purpose of published rates and standard
15 contracts is to remove transaction costs that act as a
16 market barrier for small generators. Do you see that
17 testimony?
A Yes, I do.
Q And then a little later on on page 4 down
20 at the bottom there as justification for this position
21 you cite to a FERC Order, that indented language there,
22 describing FERC i S concern with increased transaction
23 costs for small QFs. Do you see that indented
24 language?
25 A I sure do.
CSB REPORTING
[phone]
458 DECKER (X)
RNP
.
.
.
1 MR. WILLIAMS: Madam Chair, may I approach
2 the witness?
3 COMMISSIONER SMITH: You may.
4 (Mr. Jason Williams approached the
5 witness.)
6 MR. JASON WILLIAMS: For the record,
7 Madam Chair, I i ve handed the witness a page from FERC
8 Order 69, Federal Register 45, Volume 38, page 12223.
9 This is the FERC Order that the witness cited in her
10 direct testimony.
11 Q BY MR. JASON WILLIAMS: Ms. Decker, can I
12 please have you read the language that i s been highlighted
13 in yellow?
14 A It i S exactly the same as the language you
15 just read to me, but I would be happy to read it again.
16 Q If you would, please.
17 A "The Commission is aware that the supply
18 characteristics of a particular facility may vary in
19 value from the average rates set forth in the utility Is
20 standard rate required by this paragraph. If the
21 Commission were to require individualized rates, however,
22 the transaction costs associated with administration of
23 the program would likely render the program uneconomic
24 for this size of qualifying facility."
25 Q Okay, then now could you please read the
CSB REPORTING
[phone]
459 DECKER (X)
RNP
.
.
.
1 sentence, the very last sentence, of that paragraph that
2 I i ve highlighted in blue?
3 A "As a result, the Commission will require
4 that standardized tariffs be implemented for facilities
5 of 100 kilowatts or less."
6 Q You didn i t include that last sentence in
7 your testimony, did you?
8 A I did not. I did indicate that the states
9 determine the appropriate size threshold for published
10 rates and gave a citation to the authority that FERC has
11 granted to states to set the appropriate threshold for
12 published rates.
13 Q And thank you for that, Ms. Decker, but I
14 just want to be clear, in this context when FERC is
15 talking about policy directives for minimizing
16 transaction costs and eliminating market barriers to
17 entry, it i s clear they i re talking about small proj ects of
18 100 kilowatts or less, aren i t they?
19 A I regard this as stating the general
20 policy reason why we have published rates in general and
21 i think that those policies are stated elsewhere, but I
22 do agree that in this particular paragraph they Ire
23 talking about why they required all states to establish
24 published rates at 100 kilowatts.
25 Q Are you aware of any FERC policy,
CSB REPORTING
[phone]
460 DECKER (X)
RNP
.
.
.
1 directive or goal that talks about minimizing transaction
2 costs and eliminating market barriers for QFs that have
3 generation capacity of 10 average megawatts?
4 A As I said, it i S left to the states to
5 identify where the published rate threshold should be, so
6 beyond the requirement that states set published rates at
7 100 kilowatts, and this is states allover the country
8 that have very different market circumstances from those
9 here, I don i t think that FERC has said anything about the
10 10 average megawatt threshold.
11 Q Ms. Decker, you i re an attorney; is that
12 correct?
13 A I am.
14 Q And are you familiar with PURPA, the
15 statute itself and its implementing regulations?
16 A Sort of. I mean, I can i t cite them to
17 you.
18 Q Okay. Would you agree with me that PURPA,
19 and I i m talking about the statute itself, requires that
20 prices utili ties pay for QF energy be set in a manner
21 that encourages QF development?
22 A Could you repeat that?
23 Q Are you aware if PURPA, the statute
2 4 itself, has any provisions which require a state to set
25 QF prices in a way that encourages QF development?
CSB REPORTING
[phone]
461 DECKER (X)
RNP
.
.
.
1 A I believe that the statute does, but as I
2 said, I can i t cite those to you. They weren i t part of my
3 testimony.
4 Q Would you also agree with me, then, that
5 PURPA requires that the rates utilities pay for QF energy
6 must be just and reasonable for electric consumers?
7 A I am familiar with that provision that
8 says that they must be just and reasonable and reflect
9 the utility i s incremental cost of al ternati ve energy.
10
11 for this witness.
12
13 Mr. Williams.
14
15
16 Commissioners.
17
18
19
20 BY MR. ANDREA:
21
22
23
Q
A
Q
MR. JASON WILLIAMS: No further questions
COMMISSIONER SMITH: Thank you,
Mr. Andrea.
MR. ANDREA: Thank you, Madam Chair,
CROSS-EXAMINATION
Good morning, Ms. Decker.
Good morning, Mr. Andrea.
I just have hopefully a few questions for
24 you. I i d like for you to look at page 4 of your direct,
25 lines 9 through 10.
CSB REPORTING
[phone]
462 DECKER (X)
RNP
.
.
.
13
14
1 A Everyone i S favorite page.
2 Q Everyone i S favorite page. In that
3 passage, you testified that the purpose of published
4 rates is to remove transaction costs that act as market
5 barriers for small generators; is that right?
6 A Yes, we discussed that.
7 Q And if you look at your direct at page 5,
8 lines 8 through 9, would I be correcting in stating that
9 it i S your view based on that testimony that the
10 distinction between a small QF and a large QF is that
11 large QFs have sufficient revenues and access to
12 financing to overcome at least the narrow set of
transaction costs?
A I think that i s the concept of having a
15 published rate threshold that where above that threshold
16 a negotiation is expected.
17 Q Let me rephrase, then. Is it your view
18 that published rates should be available only to small
19 QFs?
20 A As I i ve said previously, I know that
21 different people have different views of where the
22 published rate threshold should be set and I know the
23 Commission has considered these things in the past. I
24 don i t have another view different from what the
25 Commission has decided.
CSB REPORTING
[phone]
463 DECKER (X)
RNP
.
.
.
1 Q Maybe it would be helpful, could you just
2 read for the record the sentence that starts at line 8 on
3 page 5?
4 A "Larger QFs differ from smaller QFs in
5 that they may have sufficient revenues and access to
6 financing to overcome at least the narrowest set of
7 transaction costs."
8 Q So you would agree that at least one
9 distinction between a small QF and a large QF is the
10 ability to overcome these transaction costs?
11 A I think that seems like what I was
12 saying.
13 Q And when you say the narrowest set of
14 transaction costs, what transaction costs are those?
15 A Well, I think we heard from Paul Martin
16 yesterday about some of the challenges that face someone
17 trying to develop a proj ect at the scale that he i s
18 looking at and 11m not a project developer, so i donlt
19 know the exact costs, but the challenges were very well
20 explained in his testimony.
21 Q So it would be fair to say that you
22 haven I t done any analysis on how much this narrow set of
23 transaction costs would be for any particular size
24 project?
25 A It would be fair to say that the purpose
CSB REPORTING
[phone]
464 DECKER (X)
RNP
.
.
.
1 of this portion of my testimony was just to establish an
2 understanding of what the policy reason for having a
3 published rate threshold is.
4 Q Okay, but you don i t have any analysis or
5 abili ty to testify today that, say, a proj ect of 100 kW
6 would not be able to overcome these transaction costs, no
7 firm analysis on that point?
8 A On that particular point, I suppose I
9 would point to the fact that FERC actually even requires
10 a proj ect of 100 kilowatts to have a published rate. I
11 see where you Ire going, though, and that is, as I I ve said
12 before, I don It -- 11m not prepared to testify and I
13 don i t think anyone I s testimony has considered the
14 competing range of considerations that the Commission
15 considered when it addressed where to set the published
16 rate threshold.
17 Q But you cannot say that a QF, let I s use
18 one megawatt, cannot overcome these transaction costs?
19 A I think I I ve said that I'm not prepared to
20 discuss the range of considerations that would go into
21 setting the published rate threshold.
22 Q Fair enough. Is it RNP I s --well, let me
23 back up just a little bit. Have you done any analysis of
24 what the capital costs of a 10 average megawatt wind
25 project might be?
CSB REPORTING
[phone]
465 DECKER (X)
RNP
.
.
.24
25
1 A I personally have not.
2 Q Has your organization done any such
3 analysis?
4 A I don i t think I don i t know.
5 Q Are you aware of Mr. Kalich i s direct
6 testimony in this proceeding?
7 A I did read Mr. Kalich i s direct
8 testimony.
9 Q And you i re aware that he submitted
10 testimony that the capital costs associated with a wind
11 QF of 10 average megawatts would approximate about $60
12 million?
13 A I i m aware that Paul Martin testified that
14 that was incorrect, but I am aware that that is what Mr.
15 Kalich testified.
16 MR. RICHARDSON: Can you give us a
17 reference to where?
18 MR. ANDREA: To where Mr. Kalich testified
19 to that?
20 MR. RICHARDSON: Yes.
21 MR. ANDREA: In response to
22 Mr. Richardson i s question, the reference would be Table 2
23 on Page 36.
MR. RICHARDSON: Madam Chair, I believe
that testimony has been stricken.
CSB REPORTING
[phone]
466 DECKER (X)
RNP
.
.
.
1 MR. ANDREA: It was not part of the
2 stricken testimony.
3 COMMISSIONER SMITH: It i S in his rebuttal?
4 MR. ANDREA: No, Madam Chair, it i S in the
5 direct.
6 COMMISSIONER SMITH: I was just in the
7 wrong testimony. Could you tell me the page, please,
8 again?
9 MR. ANDREA: It1s page 36, Table 2, and it
10 also occurs on page 36, lines 18 through 19.
11 COMMISSIONER SMITH: My notes seem to
12 indicate that it was stricken, so maybe --
13 MR. ANDREA: Madam Chair, this was a
14 section that was originally stricken and then on
15 reconsideration was changed. Originally page 35, line 12
16 through 41, line 17 was stricken.
17 COMMISSIONER SMITH: Right.
18 MR. ANDREA: Upon reconsideration, the
19 Commission struck 37, 3 through 38, 18 and 39, 19 through
20 41, 3.
21 COMMISSIONER SMITH: All right, well,
22 we i re going to leave it as is. We i 11 review this. I do
23 recall we did reconsider some, so 11m going to have to
24 sort back through it and 11m sure the court reporter has
25 it accurate. If the material was actually stricken, so
CSB REPORTING
[phone]
467 DECKER (X)
RNP
.
.
.
1 will the question and answer, and if it i S not, we i 11
2 leave it in.
3 MR. RICHARDSON: Thank you, Madam Chair.
4 MR. ANDREA: Thank you.
5 Q BY MR. ANDREA: Is it RNp1s view that a
6 proj ect with capital costs of $ 60 million would be a
7 small proj ect? Just simply a yes or no would be fine.
8 A I understand that you want a yes or no. I
9 don i t think I have a view on that question in the
10 abstract.
11 Q Does RNP have a view on that question?
12 A RNP has a view that it i S a sensible idea
13 if you have a published rate threshold to figure out a
14 way to decide whether proj ects are above the threshold or
15 below the threshold. That i s really all I am prepared to
16 testify about right now. I i m sorry I can i t help you.
17 Q Okay, if I could have you take a look at
18 your direct testimony at page 5, lines 9 through 11. Are
19 you there?
20
21
A Yes.
Q Okay, you testified that the potential
22 asymmetry between the supply value of a larger QF and the
23 standard rates can have greater consequences for utility
24 portfolios and customer costs; is that right?
25 A That i S right.
CSB REPORTING
[phone]
468 DECKER (X)
RNP
.
.
.
1 Q Is what you i re saying is that the
2 difference between the published avoided cost rate and
3 the utility i s actual avoided cost is magnified when
4 larger QFs are eligible for the published rate?
5 A I think what 11m saying is that my
6 understanding of the reason why there i s a published rate
7 threshold, and that projects all the way up to 80
8 megawatts aren i t eligible for published rates, is because
9 published rates are necessarily a generalization and that
10 there is some loss of accuracy in pricing individual
11 supply characteristics and also there can be a time lag
12 and so I think it i S appropriate to have a meaningful
13
14
published rate threshold and that i s what I think a set of
rules for making that published rate threshold meaningful
15 can do.
16 Q Okay. Move to page 12, lines 6 through 8
17 of your direct. Let me know when you i re there.
18 A 11m there.
19 Q Okay, and in this portion of your
20 testimony, you testified that the most important
21 characteristics for distinguishing a single QF from a
22 dis aggregated larger QF "may be financial in nature,
23 beneficial ownership, financing, cost and revenue
24 sharing, combined purchases of generating equipment, and
25 combined construction contracts"; is that correct?
CSB REPORTING
[phone]
469 DECKER (X)
RNP
.
.
.
1 A That's correct.
2 Q But you agree that such factors will
3 themselves not prevent disaggregation; isn i t that true?
4 A I believe what I said is that those
5 factors can be more difficult to determine, easier to
6 obscure, so itls important to have some objective
7 cri teria in the mixes as well.
8 Q So it i S your testimony that these factors,
9 the most important factors, for determining whether it i s
10 a single proj ect or a dis aggregated larger proj ect could
11 be relatively easy to obscure; is that correct?
12 A That is what my testimony says, indeed.
13 Q And is it for that reason that you
14 testified that we also need a distance factor? This is
15 at your direct, page 12, lines 10 through 11. You
16 testified that a distance factor between projects may be
17 a necessary addition to the framework.
18 A I think that a distance factor is easier
19 to apply and is important to everyone i s kind of core
20 understanding of what makes a project part of a larger
21 whole.
22 Q And with regard to a distance rule at page
23 12, lines 14 through 16, it i S your testimony that the
24 distance rule can also be overcome and the quote is, "any
25 distance rule can be overcome with creative planning"; is
CSB REPORTING
[phone]
470 DECKER (X)
RNP
.1 that your testimony?
2 A That is my testimony which acknowledges
3 the experience that all of the utili ties have cited to in
4 applying Oregon's five-mile distance rule that a proj ect,
5 that most would consider a single large proj ect, was able
6 to overcome that distance rule within a policy framework
7 and a methodology that did not admit discretion, which
8 all of the proposals here would have. I i m referring to
9 the Oregon partial stipulation, but I felt it was
10 important in giving credible testimony to acknowledge
11 that such a thing had occurred with respect to another
12 distance rule, had occurred once..13 Q Okay, but your testimony doesn It cite to
14 the Oregon example for this piece of testimony. This is
15 a general statement that a distance factor -- let i s see,
16 hold on a second -- any distance rule can be overcome
17 wi th creative planning; is that your testimony?
18 A If I now have the opportunity to clarify,
19 that i s what I was thinking of and in my rebuttal
20 testimony, I did cite to the Oregon example and, again,
21 in trying to be constructive in coming up with a
22 framework that would lessen the frustration that the
23 utili ties are having with disaggregated proj ects, I
24 offered in my rebuttal testimony the concept that if.25 people are worried about setting a five-mile absolute
CSB REPORTING
[phone]
471 DECKER (X)
RNP
.
.
.
1 rule, there are ways to work around that.
2 The example that I suggested was if
3 proj ects are, you know, between five and ten miles apart
4 and they exhibit a larger than usual number of
5 characteristics of common development that the Commission
6 could retain discretion to consider those a single large
7 proj ect despite the five-mile rule, but the five-mile
8 rule would still provide important signaling about what
9 the Commission i s general thinking is.
10 Q Let i S move to your rebuttal testimony and
11 specifically your Exhibit 1907. Am I correct in
12 understanding that this exhibit
13 A Can you hold on for a second while I find
14 that?
15 Q Certainly. Just let me know when you're
16 ready.
17 A Okay, 1907.
18 Q Am I correct in understanding that what
19 your Exhibit 1907 is is basically a red line of Staff1 s
20 proposal
21 A That i S correct.
22 Q -- is that correct? And kind of at the
23 end of the list, the Staff1 s proposal had an "and" or,
24 excuse me, or an "or" and you struck that "or"; is that
25 right?
CSB REPORTING
[phone]
472 DECKER (X)
RNP
.
.
.
19
1 A I missed your line reference.
2 Q Okay, I i m sorry, let me get to that
3 reference. It i S on page 4 of 8 of the exhibit at line 3.
4 A Okay, 11m with you.
5 Q Okay, and so that is your deletion, the
6 deletion of the "or"?
7 A Yes, although I probably should have just
8 moved it up to following the section "m." I wouldn i t
9 draw too much significance from that, I guess, is what
10 11m saying.
11 Q i did draw some significance from that.
12 Further in your red line, give me a second to find it
13 here, on the same page at kind of between lines 9 and 10,
14 but let I s call it line 10, your addition is at least two
15 of (a) - (0) of the above; is that right?
16 A That I S correct.
17 Q You change it from one to two?
18 A That I S correct.
Q And the purpose of that is to say, in
20 essence, that you can have two, any two of (a) - (0) above
21 and still potentially be classified as a single proj ect;
22 is that right?
23
24
25
A And the reason for that is to prevent --
Q If i can, i 1m sorry, i hate to interrupt
you, but i would really like for you to answer the
CSB REPORTING
[phone]
473 DECKER (X)
RNP
.
.
.
1 question I asked.
2 A Yes,you have to have two from (a) - (0)
3 above is how I red lined it.
4 Q Okay, we i 11 get to the reason in a minute,
5 but I appreciate the answer, so kind of getting to the
6 reason, as it's drafted here, for example, two proj ects
7 could be owned or controlled by the same persons, that i s
8 (b); right? It IS actually a new (a) because you deleted
9 (a) .
10 A Let i s stick with (b), yeah.
11 Q So it i s (b) and could share common leases,
12 right, which is --
13 A -- (n).
14 Q Yes, thank you. For example, a QF could
15 have those two things and still be a single QF under your
16 proposal?
17 A No.
18 Q Okay, explain why not.
19 A My proposal was that a QF in order to be
20 deemed or two QFs in order to be deemed a single project
21 would have to satisfy at least two of (a) - (0) above, so
22 in your example, the QFs would satisfy two of (a) ~ (0) and
23 therefore could be deemed a single.
24
25
Q Okay; so if they satisfy one, I must have
misread your proposal, if they satisfy anyone, they
CSB REPORTING
[phone]
474 DECKER (X)
RNP
.
.
.
1 could still be a single QF?
2 A That i s correct.It might help for me to
3 explain that the reason why I, you know, suggested that
4 two factors be required is because if only one factor is
5 required, then as I outlined it, being close together in
6 distance and being close together in time alone would be
7 sufficient to deem a proj ect a single proj ect and to me,
8 those two things don i t tell you anything about whether
9 proj ects are being developed together. It iS just Farmer
10 A did something at the same time as their neighbor Farmer
11 B and you don i t have any other connection between those
12 two.
13 Q But under your proposal, let i s go back to
14 (b), they could be owned or controlled by the same person
15 and still be a single QF?
16 A They could be owned or controlled by the
17 same person and be, you know, six miles apart and have
18 none of the other characteristics in the long list that
19 exists here.
20 Q Okay. Doesn i t that gut the rule?
21 A No.
22 Q You said distance rules can be gamed,
23 financial factors can be obscured, but yet they can have
24 common ownership and still be a single QF.
25 A There are a number of other
CSB REPORTING
[phone]
475 DECKER (X)
RNP
.
.
.
1 characteristics that have been outlined in Staff IS
2 proposal that would not despite my thought generally be
3 hard to determine as I agreed with Ms. Sasser earlier.
4 Having the same owner and, you know, being five miles
5 apart really doesn i t tell you much about the underlying
6 economic power of a proj ect which I think is the most
7 important thing.
8 Q And suppose that there was a question as
9 to whether one or more of these factors was satisfied
10 such that the parties disagreed whether or not it was or
11 was not a single QF or a dis aggregated project, how would
12 that be resolved in your view?
13 A If the parties, the utility and the
14 proj ect proponent, disagreed that one of these criteria
15 was satisfied and it made a material difference to the
16 outcome of the size determination, the Commission would
17 make the decision.
18 Q And so wouldn i t that lead to additional
19 litigation and administrative burden as opposed to a more
20 clear-cut rule that clearly defined what is and is not
21 eligible for a published rate cap?
22 A I do believe that a clear-cut rule has
23 advantages and I detailed those in my testimony. The
24 advantages are that it would be easier for the utility to
25 apply. It would have fewer costs in applying those.
CSB REPORTING
[phone]
476 DECKER (X)
RNP
.
.
20
1 There have been concerns raised about clearer obj ecti ve
2 rules being more susceptible to, I i mgoing to use the
3 word, gaming without any moral significance and so in
4 trying to work constructively toward an outcome that
5 makes sense for deciding which bucket a particular
6 proj ect falls into, I think that it makes sense to have
7 some discretion in the rule and discretion and
8 subj ecti vi ty can lead to disagreement, but in these cases
9 it is not going to be frequent that it i S not obvious.
10 MR. ANDREA: Thank you, Ms. Decker. I1ll
11 leave it at that. Thank you for your time.
12 COMMISSIONER SMITH: Thank you. Do we
13 have questions from the Commissioners?
14 COMMISSIONER REDFORD: No.
15 COMMISSIONER SMITH: Commissioner
16 Kjellander.
17 COMMISSIONER KJELLANDER: Thank you.
18
19 EXAMINATION
21 BY COMMISSIONER KJELLANDER:
22 Q In your direct testimony page 6, lines 9
23 through 12, I think earlier you were asked a question
24 about that from Ms. Sasser and I know that that section.25 deals with large commercial proj ects, but you get to the
CSB REPORTING
[phone]
477 DECKER (Com)
RNP
.
.
.
1 issue of significant penetration of new renewable
2 generation in Idaho and you talked in response to your
3 answer to Ms. Sasser that a renewable portfolio standard
4 is one way in which you can help move towards that
5 significant penetration. Have you done any analysis in
6 your work of how Idaho stacks up with some of its
7 neighboring states, say, Oregon and Washington, that have
8 RPS i S as it relates to Idaho i s present penetration of new
9 renewable energy in comparison to the benchmarks that
10 have been set in those two states?
11 A I believe that Idaho i s penetration of
12 renewable energy is high; however, I believe that has
13 occurred in a way that has led to some divisiveness in
14 the sense that the penetration has come through PURPA
15 which is something that the utilities aren i t as
16 comfortable that they have control over. I was
17 responding to the frustration with that circumstance by
18 saying that different sorts of policies give utili ties
19 more control over how they choose to acquire renewable
20 energy and essentially 11m just trying to acknowledge the
21 frustration of having, you know, large proj ects come in
22 in a way that the utili ties feel they have less control
23 over.
24
25
Q Thank you; so then on page 6 in that
section there, lines 1 through 12, you talk about large
CSB REPORTING
[phone]
478 DECKER (Com)
RNP
.
.
.
1 commercial proj ects. Is it your testimony, then, that
2 you believe that the large commercial projects are
3 probably the more preferred method in terms of actually
4 seeing that significant penetration of new renewable
5 generation in any state?
6 A I don i t know. I suppose that starting
7 from zero, that might be our policy view, but I don It
8 think we i re at zero right now. I think what we think is
9 important is to have market opportunities in each of
10 these three categories that I'm talking about and the
11 likelihood is that if those three categories existed, you
12 would get more of your renewable energy from the category
13 that involves utility scale proj ects.
14 Q Earlier I know you were asked a couple of
15 questions in reference to small proj ects and
16 community-based projects and I understand your answer and
17 notice the difference, but it seems like there i s some
18 variance, wide variance, nationwide on what i s large and
19 what i s small. Large commercial proj ects, obviously, I
20 think, from your testimony suggest that you can get to a
21 larger penetration quicker and perhaps in a more reasoned
22 fashion with less controversy. Idaho seems to have
23 gotten there with small, so on the issue of small, then,
24 in the Federal Register Notice that was handed to you by
25 the legal counsel for Idaho Power, it seems as if there i s
CSB REPORTING
[phone]
479 DECKER (Com)
RNP
.
.
.
1 a reference to 100 kW as being what might be a
2 consideration for small and I i m wondering in your review
3 of some of the literature and documents and some of your
4 research as it relates to the penetration of new
5 renewable generation and how to bring that on, how common
6 is it to see 100 kW associated with the definition or a
7 relationship or description of what a small proj ect is?
8 A Very uncommon. I mean, certainly 100
9 kilowatts would be a small project, but in my experience,
10 the classification of small would go a lot higher than
11 that. You know, again, I don i t know exactly where I
12 would put that number or where anyone would put that
13 number, but I think -- well, one good example may be of
14 how these terms don i t have a fixed threshold is that I
15 know that FERC distinguishes between its small generator
16 interconnection agreements and large generator
17 interconnection agreements at 20 megawatts, so that i s
18 just an example of the words small and large. I don It
19 have a one-size-fits-all answer to what that means. I
20 hope that's enough of an answer.
21 COMMISSIONER KJELLANDER: That i s fine.
22 Thank you very much.
23 COMMISSIONER SMITH: Do you have any
24 redirect, Mr. Miller?
25 MR. MILLER: I do, Madam Chairman, and I1m
CSB REPORTING
[phone]
480 DECKER (Com)
RNP
.
.
.
1 going to preface it with a request for your indulgence, a
2 couple of my questions will admittedly be beyond the
3 scope of the cross-examination, in part because I thought
4 these questions would have been covered in
5 cross-examination and in part because I forgot to ask
6 them when I put Ms. Decker on the stand, so if I do go
7 beyond, I ask your indulgence and if it creates the
8 necessity for any party to ask further questions, I i d
9 have no obj ection.
10 COMMISSIONER SMITH: Okay.
11
12 REDIRECT EXAMINATION
13
14 BY MR. MILLER:
15 Q Ms. Decker, just a couple of questions.
16 In questioning by Mr. Andrea with respect to your red
17 lines of the Staff proposal, he characterized your red
18 lines as your proposal. Were your additions or
19 modifications to the Staff proposal intended to be your
20 proposal or intended to be useful for suggestions for
21 improvement of the Staff proposal?
22 A The purpose as I stated in my rebuttal
23 testimony of my red lines to Staff proposal was to just
24 illustrate the comments that I was making in my testimony
25 in a way that would be easier for people to understand
CSB REPORTING
[phone]
481 DECKER (Di)
RNP
.
.
.
1 what I was getting at. I wouldn i t necessarily choose
2 this as my own proposal.
3 Q Thank you. Do you have with you
4 PacifiCorp iS Exhibit 205?
5 A I do.
6 Q As your thinking has evolved during the
7 course of testimony, what is RNP i S assessment of the
8 proposal contained in Exhibit 205?
9 A I believe that RNP iS position is that
10 Rocky Mountain Power i s proposal represents a good mix of
11 subjective and objective factors thatls written in a
12 pretty succinct way that could be, you know, easy to
13
14
apply and give the Commission the discretion and the
parties the more certainty that they need. I had a
15 couple of suggestions that I would offer for improving
16 Rocky Mountain Power i S proposal in order to further the
17 dual purposes that the Commission directed us to balance,
18 you know, preventing large proj ects from disaggregating,
19 while supporting the ability of projects less than 10
20 average megawatts to be eligible for published rates.
21 Q So in the evolution of your thinking, have
22 you sort of moved away from the initial proposals
23 contained in your testimony to endorsing the Exhibit 205
24 proposal as a good foundation for getting to a
25 conclusion?
CSB REPORTING
[phone]
482 DECKER (Di)
RNP
.
.
.
1 A Yes, that i s what I stated in my
2 testimony.
3 Q And yesterday I asked Mr. Griswold about
4 discussions that you and he had had in which you had
5 offered oral suggestions for improvements and at the time
6 Mr. Griswold was unable to recall a couple of the
7 suggestions that you had made. Could you summarize for
8 the Commission the suggestions that you made to Mr.
9 Griswold for improving Exhibit 205?
10 A I i d be happy to do that. I don i t want to
11 represent anything other than a discussion with Mr.
12 Griswold in doing that. I appreciate the productive
13 discussion, but I don i t want to in detailing these
14 represent that he necessarily would offer the exact same
15 changes, but the few suggestions that I offered to their
16 proposal was, again, maintaining the expected monthly
17 average generation; two, to measuring the five-mile
18 distance proximity from the generating equipment of the
19 project as FERC does. I also suggested that in order to
20 further the underlying point that there are certain
21 characteristics that are so important to the viability of
22 smaller proj ects that they shouldn i t be relied upon alone
23 as determinants of whether a project should be combined
24 with other projects.
25 I indicated that relying solely on shared
CSB REPORTING
[phone]
483 DECKER (Di)
RNP
.
.
.
1 interconnection points, unrelated arrangements with the
2 same O&M entity, operations and maintenance entity, and
3 unrelated arrangements with the same financing entity,
4 which can include financing that obtains a proj ect equity
5 stake in exchange for tax credits, each of those is so
6 significant to small proj ects and so likely to have the
7 same entity providing those services that those were not
8 predictive of whether two proj ects were being developed
9 in common as distinct from using the same financing
10 entity of which there are few nationwide.
11 One final concern, I guess, I had about
12 Exhibi t 205 was the very final statement (d) (2) that
13 requires the seller to warrant that it will remain in
14 compliance with the size eligibility criteria for the
15 term of the power purchase agreement. I felt that having
16 a seller warrant that it continued to comply with what is
17 a sort of subj ecti ve discretionary determination could be
18 difficult to do and I suggested that we clarify that we
19 meant the size eligibility criteria as applied in the
20 final written size determination.
21 MR. MILLER: All right. That i s all I had,
22 Madam Chairman.
23 COMMISSIONER SMITH: Thank you,
24 Mr. Miller. We appreciate your help. Thank you very
25 much for being here.
CSB REPORTING
(208) 890~5198
484 DECKER (Di)
RNP
.
.
.
1 THE WITNESS: Thank you.
2 (The witness left the stand.)
3 COMMISSIONER SMITH: I want to assure all
4 the attendees that regardless of the noises you may hear
5 from the building remodel, we have been assured that
6 nei ther the roof nor the ceiling will fall in on our
7 heads.
8 COMMISSIONER REDFORD: Are you sure?
9 COMMISSIONER SMITH: I got an e-mail, it
10 said that. You know, if it was in an e-mail, it must be
11 true.
12 Mr. Richardson.
13 MR. MILLER: Madam Chairman?
14 COMMISSIONER SMITH: Mr. Miller.
15 MR. MILLER: As part of our presentation,
16 I have one additional thing and that is a motion for the
17 Commission to take official notice under the Commission i s
18 Rule 263 of a prior Commission Order, Order 29632 which
19 is known as the U. S. Geothermal Order, and as seems to be
20 required by the rule, I have made copies of the relevant
21 portions of that Order and am prepared to introduce them
22 as an exhibit.
23
24 it be an exhibit?
COMMISSIONER SMITH: Well, does it require
25 MR. MILLER: Say again?
CSB REPORTING
[phone]
485 COLLOQUY
.
.
.
18
1 COMMISSIONER SMITH: Does it require that
2 they actually be an exhibit? I think we could just take
3 notice of any of our Orders, but I think there is a
4 requirement that you give opportunity for the other
5 parties to --
6 MR. MILLER: Well, the rule provides the
7 party requesting the Commission to take official notice
8 must submit those documents to the Commission in a manner
9 prescribed by Rule 262 and Rule 262 is the rule relating
10 to exhibits. Ilm happy to do it however you want.
11 COMMISSIONER SMITH: Could you refer to
12 oh, there it is. Oh, yeah, I think we ran into this
13 before in that there i s a difference in what the
14 Commission itself and on its own just takes notice of and
15 how we have to handle it when a party requests notice.
16 MR. MILLER: I'm completely at your
17 disposal. I just wanted to do it the right way.
COMMISSIONER SMITH: All right, I think it
19 would be best to make it an exhibit and then it will be
20 in the record and that might be helpful, so do you have
21 your next exhibit number?
22
23 Exhibit 1910.
MR. MILLER: Yes, we i ve numbered this as
24
25
COMMISSIONER SMITH: All right.
(Mr. Miller distributing documents.)
CSB REPORTING
[phone]
486 COLLOQUY
.
.
.
1 COMMISSIONER SMITH: Is there any
2 objection to Exhibit 1910? Mr. Walker.
3 MR. WALKER: No objection from Idaho
4 Power.
5 COMMISSIONER SMITH: I think this was
6 brought up in yesterday i s hearing anyway, so it would
7 probably be good to have it in the record. Thank you,
8 Mr. Miller.
9 (Renewable Northwest Proj ect Exhibit
10 No. 1910 was marked for identification.)
11 COMMISSIONER SMITH: Now, Mr.
12 Richardson.
13 MR. RICHARDSON: Thank you,
14 Madam Chairman. The Northwest and Intermountain Power
15 Producers Coalition calls Dr. Reading to the stand.
16 COMMISSIONER SMITH: I guess just for
17 planning purposes, I would let you know that lunch today
18 will commence at 11: 50 and end at 1: 30 if we i re still
19 going then.
20
21
22
23
24
25
CSB REPORTING
[phone]
487 COLLOQUY
.
.
.
18
19
1 DR. DON READING,
2 produced as a witness at the instance of the Northwest
3 and Intermountain Power Producers Coalition, having been
4 first duly sworn, was examined and testified as follows:
5
6 DIRECT EXAMINATION
7
8 BY MR. RICHARDSON:
9 Q Are you the same Dr. Reading who caused
10 prefiled rebuttal testimony consisting of nine pages to
11 be filed in this matter?
12 A Yes.
13 Q And did you also prepare Exhibit No. 401
14 that was filed with your testimony?
15 A Yes.
16 Q If I were to ask you the questions -- oh,
17 did you file direct testimony?
A No, I didnlt, rebuttal only.
Q And if I were to ask you the same
20 questions that you were asked in your prefiled rebuttal
21 testimony today, would your answers be the same?
22
23
A Yes, they would.
MR. RICHARDSON: Madam Chair, I move that
24 the prefiled rebuttal testimony of Dr. Reading be spread
25 upon the record as if it were read in full and that
CSB REPORTING
[phone]
488 READING (Di)
NIPPC
.
.
.
1 Exhibi t 401 be marked for identification purposes.
4 (The following prefiled rebuttal testimony
17
18
19
20
21
22
23
24
25
2 COMMISSIONER SMITH: If there is no
3 obj ection, it is so ordered.
5 of Dr. Don Reading is spread upon the record.)
6
7
8
9
10
11
12
13
14
15
16
CSB REPORTING
[phone]
489 READING (Di)
NIPPC
.
.
.
1 Q Please state your name, address, and
2 affiliation.
3 A My name is Don Reading. I am Vice
4 President and Consulting Economist for Ben Johnson
5 Associates, 6070 Hill Road, Boise Idaho. My resume is
6 attached as Exhibit 401.
7 Q On whose behalf are you testifying?
8 A I am testifying on behalf of the
9 Northwest and Intermountain Power Producers Coalition
10 (NIPPC) which is a party to this proceeding. NIPPC is an
11 association of independent power producers established to
12 actively pursue informal and formal (i. e., laws,
13 policies, rules and regulations) avenues and forums to
14 promote competi ti ve electric power supply markets in the
15 Pacific Northwest and Intermountain West. NIPPC supports
16 a fully competitive electric power supply marketplace.
17 Among NIPPC is 15 members and 11 associate members are
18 some of the major independent energy producers in the
19 county. The member companies i energy projects that are
20 currently on-line have a capacity of more than 4,000 MW
21 in the Northwest.
22 Q What is the purpose of your rebuttal
23 testimony?
24
25
A I point out that some of the
recommendations made by several parties go beyond the
490 Reading, Reb 2
NIPPC
.
.
16 /
17
18
19
20
21
22
23
24.25
1 scope of this proceeding. In addition, I address
2 implementation and real world problems associated with
3 the recommendations of other parties.
4 Q Why did NIPPC not file direct
5 testimony?
6 A NIPPC did not file direct testimony
7 because NIPPC does not believe that the current
8 methodology used by the Commission needs to be changed.
9 Therefore, it would not have been productive for NIPPC to
10 file testimony on how it should be changed.
11 Q Why do you believe the current system
12 for eligibility for the published rates does not need to
13 be changed?
14 /
15 /
491 Reading, Reb 2a
NIPPC
.
.
.
1 A The "problems" identified by the
2 three investor-owned utili ties is that proj ects are
3 actually employing the methodology set up by the
4 Commission for determining eligibility for published
5 avoided cost rates. It is not a bad thing to comply with
6 this Commission i s orders and standards. The result is
7 that a large number of projects have been able to utilize
8 the current system to successfully build wind proj ects.
9 Q Would you agree that the use of
10 disaggregation is a problem?
11 A Not necessarily. Utili ties and their
12 ratepayers should be indifferent to a proj ect that is
13 dis aggregated or one that is aggregated - as long as the
14 avoided cost rates are accurately set. So I believe this
15 entire case is focused on the wrong "problem."
16 Q What is your understanding of the
17 proper scope of this proceeding?
18 A Staff witness Sterling has done a
19 good job in his description the proper scope of this
20 proceeding. On page 5 of his direct testimony he quotes
21 from Order No. 32195 and concludes that his testimony
22 would be narrowly focused on the two questions raised by
23 the Commission. He also properly concluded on page 6
24 that "Issues related to the appropriateness or accuracy
25 of either the Surrogate Avoided Cost Resource methodology
492 Reading, Reb 3
NIPPC
.
.
.
14
15
16
17
18
19
20
21
22
23
24
25
1 (SAR methodology) or the Integrated Resources Plan
2 Methodology (IRP methodology) will be addressed in
3 subsequent proceedings." I do not necessarily agree with
4 the premise that the question of disaggregation and the
5 validi ty of the avoided cost methodology are distinct
6 such that they can be addressed separately.
7 Nevertheless, the Commission has, for purposes of this
8 phase of its ongoing investigation, strictly limited the
9 parties to just the two questions of how to devise a
10 methodology that II (1) allows small wind and solar QFs to
11 avail themselves of published rates for projects 10
12 /
13 /
/
493 Reading, Reb 3a
NIPPC
.
.
.
1
.
aMW or less; and (2) prevents large QFs from
2 disaggregating in order to obtain a published avoided
3 cost rate that exceeds a utility i s avoided cost."
4 Q Have you reviewed the testimonies
5 filed by the three investor-owned utili ties, Rocky
6 Mountain Power, Idaho Power and Avista?
7 A Yes. All three recommend that the
8 Commission adopt a permanent 100 kW size threshold for
9 wind and solar proj ects for entitlement to the published
10 avoided cost rates. See Mr. Griswold i s testimony at page
11 2, Mr. Kalich i s testimony at page 4 and Mr. Stokes i
12 testimony at page 3.
13
14
Q What is your opinion with respect to
the recommendation by the three investor-owned utili ties
15 that the Commission restrict the availability of
16 published avoided cost rates to proj ects no larger than
17 100 kW.
18 A Those recommendations simply ignore
19 the Commission i s directive in Order No. 32195 which
20 clearly states that the parties are to provide testimony
21 and propose a methodology that "allows small wind and
22 solar QFs to avail themselves of published rates for
23 projects producing 10 aMW or less." Ignoring the
24 Commission i s clear instructions, the investor-owned
25 utili ties all recommend that small solar and wind QFs be
494 Reading, Reb 4
NIPPC
.
.
.
11 /
12 /
13
14
15
16
17
18
19
20
21
22
23
24
25
1 restricted to only access published avoided cost rates
2 for proj ects 100 kW or less. They have disregarded the
3 Commission i s instructions with respect to recommending a
4 methodology that "allows" small wind and solar to have
5 access to published rates up to 10 aMW.
6 Q What is your response to the
7 assertions by the investor-owned utili ties that it is not
8 possible to devise a system that both allows access to
9 avoided cost rates of up to 10 aMW and prevents
10 disaggregation?
/
495 Reading, Reb 4 a
NIPPC
.
.
.
1 A I do not believe the investor-owned
2 utili ties are motivated to offer such a system for the
3 Commission i s review. Certainly the other parties to this
4 case were able to offer ideas on how the Commission could
5 accomplish its goals. I see no justification for why the
6 investor-owned utili ties failed to do so by simply
7 recommending a 100 kw eligibility cap.
8 Q Have you reviewed Staff Witness
9 Sterling's direct testimony in this docket?
10 A Yes, and I have some concerns about
11 his recommendations.
12 Q Wha t are your concerns?
13 A His Single Proj ect Criteria in Staff
14 Exhibit 301 are overly broad and vague.
15 Q In what way are Staff i s Single
16 Project Criteria vague?
17 A Staff is Exhibit lists fifteen
18 separate indicia of what makes for a Single Proj ect.
19 That list is prefaced with the statement that the
20 Commission will consider "all relevant factors, including
21 but not limited to" the fifteen listed on Exhibit 301.
22 Therefore, a developer cannot know, going forward what
23 other "relevant factors" may be used to determine whether
24 or not his or her proj ect will be aggregated for purposes
25 of entitlement to published avoided cost rates. That
496 Reading, Reb 5
NIPPC
.
.
.
1 uncertainty is surely not going to engender a posi ti ve
2 climate for developers investing capital in QF proj ects.
3 In addition, some of the specific items on the list are
4 too vague to provide clarity.
5 Q Why did Mr. Sterling include as one
6 of his criteria the phrase, "all relevant factors,
7 including but not limited toll and leave it to the
8 Commission to settle disputes over non-listed factors?
9 A On page 9 of his direct testimony he
10 states that "If a rigid set of criteria were to be
11 adopted, I believe that some project developers might
12 devise ways to meet the criteria, yet
13
14
15 /
16
17
18
19
20
21
22
23
24
25
/
/
497 Reading, Reb 5a
NIPPC
.
.
.
1 violate their clear intent." I understand his concern. He
2 also advocates the utili ties make the initial
3 determination and go before the Commission only when
4 there may be uncertainty or disagreement between the
5 proj ect developer and the utility. My concern is that it
6 can also be the utility that can take advantage of the
7 overly broad and vague criteria in order to stall or
8 discourage proj ects.
9 Q Do you have any examples of items on
10 the list that are vague?
11 A Yes. Let i s start with a real world
12 example of how Staff i s proposal will play out. Assume
13 there are two landowners with adj acent properties and
14 they each build a wind project on their land. Assume
15 further that each project is owned, conceived, built,
16 financed and managed completely independently of the
17 other. Under Staff's proposal these two independent
18 proj ects would be subj ect to aggregation because they use
19 the same motive force and they are in close proximity to
20 each other.
21 Q Do you have other examples of the
22 vagueness of Staff i s list?
23 A Yes. An indicia of a Single Project
24 for Staff is if two wind proj ects use the same general
25 contractor. That fact alone would be sufficient to
498 Reading, Reb 6
NIPPC
.
.
.
1 classify them as a single proj ect regardless of how
2 distant and how unrelated the two proj ects really are.
3 Gi ven the relative small universe of contractors in the
4 specialized business of designing and constructing wind
5 and solar proj ects, the chances that a single contractor
6 would work on more than one proj ect in the state are
7 qui te high.
8 Q Do you have specific concerns with
9 Staff iS Criteria?
10 A Yes. Only the terms "person" and
11 "affiliated person" are defined, leaving us to speculate
12 as to the meaning and applicability of the other terms in
13
14
15 /
16 /
17
18
19
20
21
22
23
24
25
the list of Criteria. In Criteria
/
499 Reading, Reb 6a
NIPPC
.
.
.
14
1 "a" it is an indicia of common ownership if two proj ects
2 use the " same motive force." That could be interpreted
3 to be as broad as just "wind." It would make no sense to
4 define it that broadly as there could be two wind
5 proj ects hundreds of miles apart that are aggregated
6 because they both use wind to generate power. The same
7 argument could be made for use of the "same fuel source."
8 Two hydro proj ects on different streams both use hydro
9 power as the fuel source. Surely Staff doesn i t mean to
10 be so broad in the application of its criteria, but
11 without specifically defining each term as to how it is
12 to be used there is simply too much room for mischief in
13 Staff i S proposal. The same criticism is applicable to
the criteria on sharing common control, communications
15 and operations facilities - how granular one gets or how
16 broad a view one takes of sharing common communications
17 and operations facilities can be subj ect to great
18 variability. Criteria "g"provides that two facilities
19 are a single proj ect if they have a contract executed
20 within twelvemonths of each other and are located "in
21 the same general vicinity." It is impossible to know
22 what that means with any degree of certainty. The same
23 criteria calls out a "similar facility" that is in the
24 same general vicinity. Exactly what a similar facility
25 would be is surely in the eye of the beholder. Are wind
500 Reading, Reb 7
NIPPC
.
.
16
17
18
19
20
21
22
23
24.25
1 turbines of different sizes similar enough to be ensnared
2 in this definition / or are wind turbines manufactured by
3 different companies similar enough to be ensnared?
4 Criteria "0" is particularly troubling. It provides for
5 different proj ects to be considered a Single Proj ect if
6 they are merely in close proximity to other similar
7 facilities. Staff i s proposal, as written is simply
8 unworkable.
9 Q Do you have any comments on the
10 Cri teria on interconnections and transmission?
11 /
12 /
13 /
14
15
501 Reading, Reb 7 a
NIPPC
.
.
.
1 A Yes. I believe that the Commission
2 should be careful with recommendations that allow
3 investor-owned utili ties to inquire as to the status of
4 interconnection facility agreements and transmission
5 interconnection agreements as suggested by Staff IS
6 Cri teria lid II and II f . II It is my understanding that
7 utili ties may be precluded from making such inquiries by
8 FERC i s Standards of Conduct. But someone with a better
9 understanding of that issue than I have should probably
10 be consulted on that topic.
11 Q Do you have any comments on the
12 Cri teria relative to financing and revenue arrangements
13 of QF developers?
14 A Again, the Commission should be
15 careful with recommendations that allow investor-owned
16 utili ties to inquire into the financial arrangements of
17 QFs as I understand they are exempt from those types of
18 inquiries under PURPA. But, again someone with a better
19 understanding of that issue than I have probably should
20 be consulted on this topic as well.
21 Q Do you have any comments on the
22 applicabili ty of Staff iS Criteria to non-wind and
23 non-solar proj ect?
24 A Yes. I was surprised to see that
25 Staff recommends that its Criteria apply to all proj ects
502 Reading, Reb 8
NIPPC
.
.
.
10
11
12 /
13
14
15
16
17
18
19
20
21
22
23
24
25
1 not just wind and solar.
2 Q Why were you surprised?
3 A Because the Commission i s order
4 opening this docket was explicit in stating that it only
5 wanted testimony and comments on wind and solar. I was
6 also surprise to read that Staff wanted to extend the
7 reach of its Criteria beyond wind and solar because in
8 the opening pages of his testimony Staff Witness Sterling
9 cited to the Commission i s order, stating that his
lltestimony will be very narrowly focused."(Sterling
Direct at p. 5.)One, I believe, unintended
/
/
503 Reading, Reb 8a
NIPPC
.
.
.
1 consequence of expanding the coverage to all QFs and
2 using Staff is Criteria would be that a strong argument
3 could be made that all dairy digesters in the Twin Falls
4 area should be aggregated as a Single Proj ect. In
5 addi tion, I think that non-wind and non-solar developers
6 would be surprised to see an order come out of this phase
7 of the Commission i s investigation that subj ects their
8 proj ects to aggregation - given that the order opening
9 this docket was limited to just wind and solar.
10 Q Do you have any comments on ownership
11 restrictions?
12 A I believe that such restrictions, if
13 deemed appropriate by the Commission at the time the
14 power purchase agreement is in place, should be lifted at
15 some point well before the end of the contract term.
16 This is important because such restrictions are nothing
17 more than a restraint on the owner is ability to sell his
18 proj ect should the need arise. Investors may want to
19 consolidate a number of smaller proj ects for the benefit
20 of the landowners, financers or even for ease of
21 administration for the power purchase agreements.
22
23
24
25
Q Does this conclude your testimony?
A Yes it does.
504 Reading ,Reb 9
NIPPC
.
.
.
1
2 open hearing..)
(The following proceedings were had in
MR. RICHARDSON: Thank you, Madam Chair.
4 I have no preliminary matters, so Dr. Reading is
3
5 available for cross-examination.
6
7
8
9
10
11 Ms. Davis.
12
13
14
15
16
17 Thanks.
18
19
20
21 BY MS. SASSER:
22
23
24
25
Q
A
Q
COMMISSIONER SMITH: Mr. Miller.
MR. MILLER: No questions.
COMMISSIONER SMITH: Mr. Otto.
MR. OTTO: No questions.
COMMISSIONER SMITH: Thank you.
MS. DAVIS: No questions. Thank you.
COMMISSIONER SMITH: Anybody in the back?
MR. WILLIAMS: No questions.
COMMISSIONER SMITH: Ms. Sasser.
MS. SASSER: I have a couple, Madam Chair.
CROSS-EXAMINATION
Good morning, Mr. Reading.
Good morning.
You state on page 4 of your rebuttal
testimony that the utilities ignored the Commission iS
CSB REPORTING
[phone]
505 READING (X)
NIPPC
.
.
1 instructions from Order 32195 by proposing a permanent
2 100 kilowatt published rate cap for wind proj ects; is
3 that correct?
4 A Subj ect to check, yes, I will agree with
5 you.
6 Q Did you provide testimony, as I quote the
7 Commission i s notice, on the matter "prevents large QFs
8 from disaggregating in order to obtain a published
9 avoided cost rate that exceeds a utility i s avoided
10 cost"?
11 A Would you repeat that, please?
12 Q Did you in your testimony, did you provide
13 any testimony that prevents large QFs from
14 disaggregation?
15 A No, I didn It. I didn i t set down any rules
16 that other parties here proposed. As I stated in my
17 testimony, my preferred route would be to get avoided
18 costs correct and by that, Ilm saying that if avoided
19 costs are set correctly and by "correctly," I mean also
20 taking into account dispatch costs and wind integration
21 costs, et cetera, that the problem of disaggregation
22 would go away because the incentive to go one route or
23 another route wouldn i t be advantageous to a large or
24 small or any kind of a proj ect..25 Q Okay, thank you, so despite the
CSB REPORTING
[phone]
506 READING (X)
NIPPC
.
.
1 Commission i s findings and their directives in Order
2 32176, which was their final Order in the GNR-E-10-04
3 case, the prior case, despite their findings and
4 directives, it i S your testimony that there i s not a
5 disaggregation problem and no changes to the existing
6 methodology are needed as far as the 10 average megawatt
7 cap?
8 A Okay, I would qualify it as saying that if
9 avoided costs are set correctly, there wouldn i t need to
10 be, and one of the things I find curious is that the
11 utilities are coming in and advocating a permanent 100 kW
12 solution, which to me is, you know, using a steam roller
13 to crack a peanut or a sledgehammer or whatever when they
14 have available, of course, if they think the published
15 rates are inordinately too high and don i t match their IRP
16 methodologies, the utili ties are certainly free to come
17 in and advocate that avoided cost rates, the published
18 rates, get fixed. If they donlt like the SAR method,
19 fine, they i re perfectly free to come in and file for
20 another method.
21 Q For clarification, as is any party,
22 correct, not simply the utilities to come in and ask for
23 modification or for the Commission to review those
24 matters?.25 A Absolutely, everybody.
CSB REPORTING
[phone]
507 READING (X)
NIPPC
.
.
.
1 Q So you i ve criticized Staff i s proposal as
2 being unworkable, vague and overly broad. Did you make
3 any attempts in your rebuttal testimony to make it
4 workable, less vague or less broad?
5 A No, I didn i t and let me preface that. I
6 guess I sort of, for want of a better word, picked on
7 Staff rather than somebody else and I want to, as I
8 thought I said in my testimony, compliment Mr. Sterling,
9 you know, for his efforts. The context of what I was
10 trying to say is that from my point of view that the
11 proposal put forward by Staff given the vague, unworkable
12 and I think that if the Commission, as I understand what
13 this hearing is about, if the Commission decides the
14 route to go is to put into place those kinds of rules to
15 prevent disaggregation, I think that this forum that
16 we i re in now, and I think the cross-examination of
17 Ms. Decker indicated, it i S a poor way to try to write
18 rules, and by that, I mean anybody can nitpick anybody
19 and we could go and on. It would be good for my billable
20 hours I guess, but other than that, I think this isnlt
21 the proper forum. Parties have offered up what happened
22 in Oregon and what happened in Oregon was parties all sat
23 down and hammered this out and negotiated it __
24
25
Q I don i t mean to interrupt, but I think
we i re well beyond the question if I Can ask you to stop
CSB REPORTING
[phone]
508 READING (X)
NIPPC
.
.
.
-
1 and continue with --
2 MR. RICHARDSON: Madam Chair, I think
3 Dr. Reading deserves the opportunity to explain his
4 answer.
5 COMMISSIONER SMITH: Well, every witness
6 deserves the opportunity to explain their answer, but
7 Dr. Reading does tend to pontificate, so could you just
8 be more succinct?
9 THE WITNESS: Thank you. Once you come up
10 through academics, you i re on a 50-minute clock and you
11 just canlt sit down and shut up.
12 COMMISSIONER SMITH: We don i t go by the
13 word here.
14 Q BY MS. SASSER: So if I can continue with
15 my next question, so would it be fair to say that you
16 don i t believe that changes could be made in order to make
17 Staff's proposal workable from what you were saying about
18 Ms. Decker i s testimony?
19 A Oh, absolutely, I think changes could be
20 made to make it workable and the criticisms or
21 observations that I made go toward what the path one
22 would go down to make them workable.
23 Q In complimenting Mr. Sterling, then, on
24 how he drafted that, do you believe that the intent of
25 Staff i S proposal is clear?
CSB REPORTING
[phone]
509 READING (X)
NIPPC
.
.
.
1 A Oh, the intent, yes.
2 Q And do you believe that the Commission
3 possesses the knowledge and background in order to be
4 able to utilize the discretion given by that proposal to
5 properly decide which proj ects are single and multiple
6 projects?
7 A Absolutely, I believe that and all the
8 proposals, the Commission being the ultimate arbitrator
9 is where it should be and that i s proper and yes, I
10 believe the Commission, all those words you used, yes,
11 they have the ability, the insight, et cetera. Without
12 running on and on again, I would add, as I said in my
13 testimony, Mr. Sterling is, one of his concerns is that
14 the development industry would use whatever rules to game
15 the system, and as I said in my testimony, one of the
16 reasons -- and I agree with that. I also think that the
17 utili ties could use them to "game the system" and without
18 the Commission as the ultimate back up, then they would
19 not be workable.
20 Q So then would it be fair to say that
21 giving the Commission more latitude or discretion
22 actually prevents gaming in a better way than a rigid set
23 of criteria?
24
25
A I think I know where you i re going and if
I i m not answering you directly, let me know and that is
CSB REPORTING
[phone]
510 READING (X)
NIPPC
.
.
.
1 in my opinion, the more specificity those rules have,
2 then both the developers and the utilities know the rules
3 of the game and so the arguments, to use Ms. Decker iS,
4 the transition costs for both parties could be ultimately
5 higher. The tighter you can make those rules, then the
6 less the Commission would have less work to do, let i s
7 say, because there is potential for fewer conflicts to be
8 brought to them. I guess that i s the best way I can put
9 it.
10 MS. SASSER: Thank you, Dr. Reading.
11 That i s all I have.
12 COMMISSIONER SMITH: Mr. Kaufmann, do you
13 have questions?
14 MR. KAUFMANN: I have several, Madam
15 Chair.
16 COMMISSIONER SMITH: So then this would be
17 a good time to take a break. Let i s take a break for
18 about 17 minutes, by that clock, and come back at 20
19 till.20 (Recess.)
21 COMMISSIONER SMITH: All right, we i re all
22 back and refreshed and ready to go again.
23 Mr. Kaufmann.
24
25
MR. KAUFMANN: Thank you, Madam Chair and
Commissioners.
CSB REPORTING
[phone]
511 READING (X)
NIPPC
.
.
.
1
2
3 BY MR. KAUFMANN:
4 Q
CROSS-EXAMINATION
Good morning, Mr. Reading.
Good morning.
Do you have a copy on the stand with you
7 of the direct testimony offered by Mr. Griswold?
5 A
I have selected pages I took out, so the
9 whole testimony I do not have before me, no.
6 Q
MR. KAUFMANN: Madam Chair, may I approach
COMMISSIONER SMITH: You may approach the
(Mr. Kaufmann approached the witness.)
BY MR. KAUFMANN: Could you please tell
16 the Commission what it is I i ve just handed you?
8 A
It is Exhibit 203 from Bruce Griswold Is
18 testimony, direct, filed in this case.
19
10
11 the witness?
12
13 witness.
14
15 Q
And could you please read the title of the
20 page, at the top of the page?
21
17 A
"Proposed Criteria for Published Avoided
22 Cost Eligibility."
23
Q
A
Q
24 to be to you?
25 A
Could you describe what that page appears
It is a list of, as the title states,
CSB REPORTING
[phone]
512 READING (X)
NIPPC
.
.
.
1 cri teria for determining whether or not a QF is eligible
2 for published rates.
3 Q Now, I i d like to refer you to your
4 rebuttal testimony, line 12 on page 4, please.
5 A I can i t find page 12.
6 Q Sorry, line 12 on page 4.
7 A Oh, page 4. I i m sorry, I i m slightly
8 dyslexic.
9 Q The question is, "What is your opinion
10 with respect to the recommendation by the three
11 investor-owned utilities that the Commission restrict the
12 availabili ty of published avoided cost rates to proj ects
13 no larger than 100 kilowatts."
14 A Yes.
15 Q Could you read your answer, please?
16 A "Those recommendations simply ignore the
17 Commissionls directive in Order No. 32195 which clearly
18 states that the parties are to provide testimony and
19 propose a methodology that i allows small wind and solar
20 QFs to avail themselves of published rates for proj ects
21 producing 10 average megawatts or less. i Ignoring the
22 Commission i s clear instructions, the investor-owned
23 utilities all recommend that small solar and wind QFs be
24 restricted to only access published avoided cost rates
25 for proj ects 100 kW or less. They have disregarded the
CSB REPORTING
[phone]
513 READING (X)
NIPPC
.
.
.
1 Commission i s instructions with respect to recommending a
2 methodology that i allows i ," and I think I probably should
3 have put on the end underline is mine, "small wind and
4 solar to have access to published rates up to 10 average
5 megawatts. "
6 Q Did you write testimony?
7 A Yes, I did.
8 Q And had you read Mr. Griswold i s direct
9 testimony when you wrote that?
10 A The direct testimony, yes, I did.
11 Q Do you think it i S a true statement in
12 light of Exhibit 203 that you just described that
13 PacifiCorp ignored the Commission i s instructions about
14 recommending a methodology?
15 A When I wrote that -- I i II put it in
16 context and then I i II answer your question directly -- it
17 was on rebuttal; therefore, it was filed simultaneously
18 to Mr. Griswold i s rebuttal testimony. When you read his
19 direct only, he offered this, as I remember, this is
20 essentially what happened in Minnesota. He states
21 several times in there that he doesn i t believe that any
22 of these things are workable and I could go through
23 several places, so I was a little bit confused by his
24 direct testimony and I took this statement as the context
25 for which this was offered. I would add candidly when
CSB REPORTING
[phone]
514 READING (X)
NIPPC
.
.
.
1 reading his direct ~- pardon me, his rebuttal testimony,
2 if I had written my rebuttal after his rebuttal, I think
3 I would have phrased that differently.
4 Q Would you please turn to page 5 of your
5 rebuttal testimony?
6 A Yes.
7 Q Could you please read lines 1 through 4 of
8 your testimony on page 5?
9 A "I do not believe the investor-owned
10 utilities are motivated to offer such a system for the
11 Commission i s review." Keep reading?
12 Q Yes, please.
13 A "Certainly the other parties to this case
14 were able to offer ideas on how the Commission could
15 accomplish its goals. I see no justification for why the
16 investor-owned utili ties failed to do so by simply
17 recommending a 100 kW eligibility cap."
18 Q So who were you referring to when you said
19 the other parties were able to offer ideas?
20
21
22
23
24
25
A The Staff and RNP and ICL, pardon me, ICL.
Q Are you referring to NIPPC?
A ICL, RNP and Staff.
Q But not NIPPC?
A No.
Q Now, am I correct that NIPPC represents,
CSB REPORTING
[phone]
515 READING (X)
NIPPC
.
.
.
17
1 its members include large QF wind developers who have a
2 substantial stake in the outcome of this proceeding?
3 A There are some large QF developers that
4 are members of NIPPC, so the viability of being able to
5 develop a project in Idaho, yes, I would agree with
6 that.
7 Q And would you agree that in fact at least
8 one investor-owned utility did provide, offer ideas on
9 how the Commission could accomplish its goals?
10 A As I stated a few minutes ago, if I would
11 have had the opportunity to read Mr. Griswold i s rebuttal
12 testimony, I would have phrased that differently.
13 Q In light of your testimony on lines 3 and
14 4, you see no justification for why the IOUs failed to
15 offer criteria, do you have any justification why NIPPC
16 failed to offer any criteria?
A Yes, as I stated, I think, at the
18 beginning of my testimony explaining why I didn i t file
19 direct testimony and that is because, as I answered
20 Staff i s attorney, the best approach, I think, is to get
21 avoided costs in line. If avoided costs are in line,
22 then the incentive of accepting published or
23 non-published rates goes away and that would be the best
24 approach, so given that, in my mind there was no need to
25 offer.
CSB REPORTING
[phone]
516 READING (X)
NIPPC
.
.
.
1 Q Did NIPPC offer any rebuttal comments on
2 the proposed criteria submitted by PacifiCorp?
3 A No, and that i s the page that you handed
MR. KAUFMANN: I have no further
6 questions, Commission, thank you. May I retrieve my
4 me.
5
7 exhibit, please?
8
9 Kaufmann.
COMMISSIONER SMITH: Yes, you may, Mr.
10 (Mr. Kaufmann approached the witness.)
18
19
11
12 Mr. Williams.
13
14
15
16 Williams.
17
20 BY MR. WALKER:
21
22
23
Q
A
Q
COMMISSIONER SMITH: Mr. Walker or
MR. WILLIAMS: No questions.
MR. WALKER: Thank you, Madam Chair.
COMMISSIONER SMITH: Ah, other Mr.
CROSS-EXAMINATION
Good morning, Mr. Reading.
Good morning.
As is more usually the case, I must
24 apologize, Ilm a bit confused. Now, in your testimony,
25 doesn i t your testimony state that you and NIPPC believe
CSB REPORTING
[phone]
517 READING (X)
NIPPC
.
.
.
20
21
1 that there i s nothing wrong with the current system?
2 A Yes, with the proviso that I think there
3 would be justification to argue that the published rates
4 may well need to be revisited.
5 Q And isn i t that the same basic argument
6 that the three utili ties put forth of which was obj ected
7 to and stricken by this Commission?
8 A Now I think I'm confused. That was not __
9 would you restate that? 11m unclear where we i re going.
10 Q Yes. You stated that you believed that
11 the best approach for the Commission would be to get at,
12 to get the avoided costs in line, that if in line, the
13 incenti ve to disaggregate would go away and that you
14 believe that the SAR may very well be justified in taking
15 another look at it; isnlt that what you just said?
16 A I did not say that in my testimony. I was
17 responding to try to answer your query.
18 Q But you did just say that here today under
19 oath?
A Yes, I did, sure.
Q And then my question was, isn i t that the
22 same basic position taken by the three utilities in this
23 case of which was objected to and stricken from the
24 record?
25 A As I understand the position of the
CSB REPORTING
[phone]
518 READING (X)
NIPPC
.
.
.
1 utili ties is that they want permanent for both wind and
2 solar a 100 kW cap. That in my mind is the major thrust
3 and what the utili ties in reading the testimony are
4 really after in this case.
5 Q But rather than your testimony that
6 nothing is broke and we don i t need to do anything, your
7 testimony here today is that you feel the proper way to
8 proceed would be get the avoided costs in line?
9 A Well, you say nothing broke, nothing broke
10 with having published rates for QFs 10 average megawatts
11 and less, that is, to my mind, that is not broken. Now,
12 as you stated, then why are things happening and I
13 responded to that and that i s get avoided costs in line.
14 If it was the utili ties i position that avoided costs need
15 to be line, then I would think they would have filed
16 cases trying to adjust SAR rates rather than coming in as
17 I said a little while ago with a sledgehammer and saying
18 100 kW and that i s it, which in my mind would kill the QF
19 industry in Idaho for wind and solar.
20 Q If i could direct your attention to page 3
21 of your rebuttal testimony, starting, looking at lines 1
22 through 5
23
24
25
A Yes.
Q -- you say that the "problems" identified
by the three investor-owned utili ties is that proj ects
CSB REPORTING
[phone]
519 READING (X)
NIPPC
.
.
.
1 are actually employing the methodology set up by the
2 Commission for determining eligibility for published
3 avoided cost rates. It is not a bad thing to comply with
4 this Commission i s orders and standards.
5 A Right.
6 Q Do you see that part?
7 A Certainly.
8 Q So I assume that you are aware that part
9 of the Commission's orders and standards actually
10 authorize two valid methodologies for determining a
11 utilityls avoided cost; isnlt that true?
12 A If you i re referring to the SAR methodology
13 for one and the IRP methodology that I can't remember how
14 many years ago was established, then yes, there would be
15 two.
16 Q If I could ask you to look at page 9 of
17 your testimony, please, at the very end of your
18 testimony, and this is page 9, lines 7 through 13.
19
20
A Yes.
Q Now, you i re talking there about an
21 ownership restriction and you make a statement in that
22 answer, in that paragraph, that -- let me get it right
23 here -- investors may want to consolidate a number of
24 smaller projects for the benefit of the landowners,
25 financers or even for ease of administration for the
CSB REPORTING
[phone]
520 READING (X)
NIPPC
.
.
.
14
1 power purchase agreements, so you i re basically saying
2 that look, there may be some beneficial aspect to having
3 a group of smaller proj ects, say, 10 average megawatt
4 proj ects, consolidated, there may be some benefits there
5 somewhere?
6 A Yes.
7 Q Now, if it i S beneficial for these smaller
8 proj ects to combine where it makes sense, why would they
9 disaggregate into 10 average megawatt increments in the
10 first place? Do you know why a project may do that?
11 A There would be a variety of reasons and
12 one obviously that is at the heart of this case in that
13 the current published rates given the two methodologies,
the published rates may well be higher than the IRP
15 methodology rates, and I would like to add if we went
16 back to 2005 or 2008 when gas prices were very, very
17 high, I would be willing to bet that that situation would
18 be reversed, that the IRP methodology rates may well be
19 higher than the avoided cost rates and I didn i t see the
20 utili ties coming in when those gas rates were very high,
21 coming in and offering to raise QF rates.
22 Q Mr. Reading, you i ve appeared before this
23 Commission on numerous occasions. You i re a regular
24 fixture around here; is that fair to say?
25 A Since 19 -- I hate to say this, I i m sorry,
CSB REPORTING
[phone]
521 READING (X)
NIPPC
.
.
1 for 30 years, yes, I i ve been appearing before this
2 Commission in various capacities.
3 Q And you i ve offered testimony and
4 consulting on behalf of the interests of the Industrial
5 Customers of Idaho Power, or ICIP, and its members on
6 numerous occasions in several Idaho Power proceedings; is
7 that fair to say?
8 A That i S more than fair to say.
9 Q Would it also be fair to say that most of
10 your testimony of record on behalf of the Industrial
11 Customers of Idaho Power
12 MR. RICHARDSON: Madam Chair?
13 COMMISSIONER SMITH: Mr. Richardson.
14 MR. RICHARDSON: I question the relevancy
15 of this line.
16 COMMISSIONER SMITH: Mr. Walker.
17 MR. WALKER: Thank you, Madam Chair. I
18 have just a few questions on this line and they go
19 directly to this expert witness i credibility and his
20 credibili ty as a witness and --
21 COMMISSIONER SMITH: We i II allow these
22 questions.
23 Q BY MR. WALKER: Mr. Reading, would it be
24 fair to say that most of your testimony of record on.25 behalf of the Industrial Customers of Idaho Power opposes
CSB REPORTING
[phone]
522 READING (X)
NIPPC
.
.
.
1 or tries to minimize any rate increase or impact on that
2 class of customers, the Industrial Customers?
3 A Within the confines of accepted regulatory
4 methods and sound public policy, yes, I try to minimize
5 rates for the Schedule 19 customers when I testify for
6 ICIP.
7 Q But you appear here today and your
8 testimony in this proceeding is on behalf of the
9 Northwest and Intermountain Independent Power Producers
10 Coali tion, or NIPPC; is that correct?
11 A Yeah --
12 Q Did you discuss or consult with ICIP or
13 any of its members regarding the potential increase in
14 rates?
15 MR. RICHARDSON: Madam Chair, Illl object
16 to that question. Dr. Reading i s internal discussions
17 wi th the ICIP, Industrial Customers of Idaho Power, has
18 no bearing on his testimony here as a NIPPC witness.
19 COMMISSIONER SMITH: Well, I think that i s
20 the nature of the question, Mr. Richardson. Ilm going to
21 allow it.
22
23
MR. WALKER: Thank you, Madam Chair.
Q BY MR. WALKER: Mr. Reading, did you
24 discuss or consult with the Industrial Customers of Idaho
25 Power or any of its members regarding the potential
CSB REPORTING
[phone]
523 READING (X)
NIPPC
.
.
.
16
18
1 increase in rates that will be allocated to their
2 customer class as a result of the addition of PURPA QF
3 proj ects to Idaho Power i s system or as a result of this
4 docket?
5 MR. RICHARDSON: Madam Chair?
6 COMMISSIONER SMITH: Mr. Richardson.
7 MR. RICHARDSON: The question assumes a
8 fact not in evidence, which is that the development of
9 PURPA proj ects increase rates.
10 COMMISSIONER SMITH: I think that i s true,
11 Mr. Walker. Would you like to restructure your question
12 or go back to your first question?
13 MR. WALKER: I believe I referenced a
14 potential increase in rates and I believe that the
15 Commission could take administrative notice --
COMMISSIONER SMITH: You could turn it
17 into a little hypothetical.
Q BY MR. WALKER: Well, hypothetically,
19 then, Dr. Reading, should it be the case that the costs
20 borne by the utilities to pay for and incorporate
21 well, to pay for the energy produced by a QF,
22 hypothetically, should that increase rates for the
23 industrial class of customers?
24
25
A I will answer that in two ways. Did I
have any direct discussions? No. I would note that
CSB REPORTING
[phone]
524 READING (X)
NIPPC
.
.
.
1 several of the members of ICIP also have QF projects. I
2 would add the context of your question, of your
3 hypothetical, I couldn i t disagree more and that is the
4 assumption that by having a viable QF PURPA industry in
5 Idaho will raise rates for customers. There is certainly
6 incidents in the short run when you could find that, but
7 I firmly believe, and go back to your comment that I i ve
8 been doing this for 30 years, it was the same thing that
9 the original PURPA wars were going on when I started here
10 at the Commission that in the long run, a viable
11 independent power producing industry imposes or sets up a
12 competi ti ve check to the utili ties, so in the long run,
13 utili ty rates will be lower with a viable functioning
14 PURPA industry; therefore, I have no conflict with ICIP
15 members and their rates.
16 MR. WALKER: Madam Chairman, if you may
17 indulge me for a moment, I i d like to go back to the prior
18 obj ection about there being no evidence in the record
19 about cost or price and I would like to point out for the
20 record to clarify that that Exhibit No. 2 of Mr. Stokes i
21 testimony is part of the record and it contains cost and
22 price information for potential QF proj ects.
23
24 Walker.
COMMISSIONER SMITH: It i s so noted, Mr.
25 MR. WALKER: No further questions.
CSB REPORTING
[phone]
525 READING (X)
NIPPC
.
.
.
1 COMMISSIONER SMITH: Thank you.
2 Mr. Andrea.
3 MR. ANDREA: Yes, thank you, Madam Chair.
4 I will keep this very brief.
5
6 CROSS-EXAMINATION
7
8 BY MR. ANDREA:
9 Q Good afternoon -- good morning still, Mr.
10 Reading.
11 A Good morning.
12 Q Do you recall when Ms. Sasser was asking
13 you questions a little while earlier this morning, you
14 said, and it i S not a quote, Ilm just going to paraphrase
15 because I couldn i t write fast enough, something along the
16 lines of anyone can nitpick a rule, do you recall
17 something like that?
18 A Ilm 70, I have short-term memory problems
19 sometimes. I think I said that, yes, I will accept
20 that.
21 Q And do you recall that you were referring
22 to the proposed criteria for determining a single QF, the
23 proposal by Staff, I believe?
24
25
A I will accept in that context, yes.
Q Okay, and you said something along the
CSB REPORTING
[phone]
526 READING (X)
NIPPC
.
.
.
1 lines of it would be good for your billable hours. Do
2 you recall saying that?
3 A That was a throw-away, yes. If we do
4 this, if we do this dance and keep dancing and dancing
5 and dancing, i will have more billable hours than if the
6 parties sat down and negotiated something to present to
7 the Commission.
8 Q Okay, I took your statements to mean that
9 with a rule such as what was proposed, that would lead to
10 more litigation and administrative burden, would that be
11 a fair characterization?
12 A That would be a completely unfair
13 characterization. My comments went to let i s get the
14 rules as good as we can, get as many sideboards on them
15 as we can and that will minimize all parties i costs and
16 also, there would be fewer disputes that the Commission
17 would have to negotiate.
18 Q But you, I believe, testified something
19 along the lines, and, again, not a quote, but without
20 obj ecti ve criteria, transaction costs could be ultimately
21 higher. Do you recall saying something like that?
22 A Yes, yes, and given what I just answered,
23 I think that i s perfectly consistent.
24
25
MR. ANDREA: Okay. Thank you, Mr.
Reading. Nothing further.
CSB REPORTING
[phone]
527 READING (X)
NIPPC
.
.
.
1 COMMISSIONER SMITH: Do we have questions
2 from the Commissioners?
3 COMMISSIONER REDFORD: No.
4 COMMISSIONER KJELLANDER: No.
5
6 EXAMINATION
7
8 BY COMMISSIONER SMITH:
9 Q I promised you one and here it is, so
10 looking at page 3 of your rebuttal testimony,
11 Dr. Reading, you have two questions and answers that for
12 me kind of epitomize the whole case and the one is
13 whether disaggregation is the problem and you point out
14 that really the problem is that avoided cost rates in
15 your view and I think in many others are not accurately
16 set.
17
18
A Correct.
Q So then I go to your next answer which
19 basically tells me that I was wrong and that i s okay, 11m
20 wrong on occasion, when I thought that disaggregation as
21 an issue could be separated out from the issue of setting
22 avoided cost rates accurately and handle expeditiously in
23 advance of going after what the big problem is which is
24 how the rates are set.
25 A I would agree with you and given your
CSB REPORTING
[phone]
528 READING (Com)
NIPPC
.
.
.
1 earlier admonition about going on and on, I will try to
2 keep my answer succinct.
3 Q You know, it i S enough that you agree with
4 me. That doesn i t happen every time, so if you want to
5 quit
6 A Way back when we were on Staff the same
7 thing. I i m trying to think of a way to put this. I
8 haven i t seen -- given what I see going on in this case,
9 gi ven the audience in this case, which I don i t see any
10 legislators here, I see one lobbyist, given the ads,
11 given the letters written to the Commission for the first
12 time that I know about in my 30 years that legislators or
l3 elected officials have sent official letterhead letters
14 to the Commission, I think something is going to happen.
15 It might not be what I want to happen or
16 what I think should happen, but something is going to
17 happen and that i s what that second part goes to and that
18 is putting in place a set of criteria to avoid -- to deal
19 with the problem of disaggregation and so given that
20 context, I think that sitting down and working out a set
21 would be the most expeditious way, certainly much better
22 than a one megawatt limit that would, as I mentioned a
23 few minutes ago, kill the QF industry that would have a
24 lot of bad things.
25 Idaho imports most of its -- not most of
CSB REPORTING
[phone]
529 READING (Com)
NIPPC
.
.
.
1 it, imports a lot of energy. We wouldn i t have local
2 production. I could go through a whole list of why I
3 think and 30 years ago I had the same list and we were
4 arguing the same things.
5 Q Well, I just want to note because you
6 brought them up that these ads are not evidence and that
7 the Commission i s decision will be based on the evidence
8 presented on the record in this case and that everyone Is
9 letters are important, whether they come on letterhead or
10 whether it i s through an e-mail from a person wherever
11 theyl re located.
12 A Yes, I understand and Ilm sure some
13 letters aren i t more important than other letters.
14 COMMISSIONER SMITH: So I appreciate your
15 comments.
16 Do you have any redirect?
17 MR. RICHARDSON: Just a couple,
18 Madam Chair.
19
20
21
REDIRECT EXAMINATION
22 BY MR. RICHARDSON:
23 Q Dr. Reading, when you were questioned by
24 Staff counsel on discretion, don i t developers need to
25 know in advance what rules they have to follow?
CSB REPORTING
[phone]
530 READING (Di)
NIPPC
.
.
.
1 A Yes. That would lower transaction costs,
2 yes.
3 Q And the more latitude and discretion,
4 whether that latitude and discretion resides with the
5 Commission or the utili ties developers are dealing with,
6 the more latitude and discretion the less desirable that
7 is; correct?
8 A Yes.
9 Q Also, do you know whether NIPPC would be
10 willing to actively participate in a settlement
11 conference to solve the issues before the Commission in
12 this case?
13 A Mr. Richardson, you counseled me that if
14 asked, I was to say NIPPC would be more than happy to sit
15 down with all of the parties and work out rules, the way
16 it happened in Oregun.
17 Q And counsel for Rocky Mountain asked you
18 about your failure to address their alternative, their
19 proposed rules, I guess, and it i S your understanding that
20 Rocky Moutain Power i s primary position is the 100 kW cap;
21 correct?
22
23
A Yeah, that is correct.
Q And counsel for Idaho Power tried to
24 impugn your credibility by posing a potential conflict of
25 interest. Do you see a conflict between setting accurate
CSB REPORTING
[phone]
531 READING (Di)
NIPPC
.
.
.
1 avoided cost rates and also at the same time setting
2 fair, just and reasonable retail rates?
3 A No.
And you've noted that there are members of
5 the Industrial Customers of Idaho Power who are also
4 Q
6 PURPA developers; correct?
7 A That is correct.
And finally, do you know whether or not
9 Idaho Power is a PURPA developer?
8 Q
I guess
COMMISSIONER SMITH: Now you i re straining
MR. RICHARDSON: 11m going back to your
14 admoni tion yesterday that the toughest questions always
16
17 know.
Q
19 Dr. Reading.
10 A
11
12 his memory.
13
15 come from your own lawyer.
18
20 A
THE WITNESS: Yes. I guess I don i t
BY MR. RICHARDSON: Okay, that i s fine,
I might add that it i S always puzzled me
21 why the utili ties who rail against these rates don It
22 j oint partner.
23 COMMISSIONER SMITH: That i s beyond the
24 scope of this hearing.
25 THE WITNESS: Yes.
CSB REPORTING
[phone]
532 READING (Di)
NIPPC
.
.
.
1 Q BY MR. RICHARDSON: Dr. Reading, you
2 mentioned and you used a very strong word, you said that
3 the 100 kW cap would actually kill the industry. Have
4 you analyzed that question and prepared an exhibit to
5 demonstrate your conclusion?
6 A Testifying in a PURPA case in Oregon, I
7 developed an exhibit about the changing rules in Idaho
8 and the PURPA acti vi ties those rules changed and I think
9 it was one megawatt which 100 kW is even more severe, so
10 I did that.
11 MR. RICHARDSON: Madam Chair, may I
12 approach the witness?
13 COMMISSIONER SMITH: You may, Mr.
14 Richardson.
15 (Mr. Richardson distributing documents.)
16 MS. SASSER: Madam Chair?
17 COMMISSIONER SMITH: Ms. Sasser.
18 MS. SASSER: I'm going to make an initial
19 objection that the questions being asked by
20 Mr. Richardson are outside the scope of redirect.
21
22 obj ection, Mr. Richardson.
COMMISSIONER SMITH: It seems to be a fair
23
24 Madam Chair.
MR. RICHARDSON: I i II concede the point,
25 COMMISSIONER SMITH: All right. Do you
CSB REPORTING
[phone]
533 READING (Di)
NIPPC
.
.
.
1 have any 'other questions?
2
3 Dr. Reading be excused?
MR. RICHARDSON: No, Madam Chair. May
4
5
6
7
COMMISSIONER SMITH: He may.
THE WITNESS: Thank you.
(The witness left the stand.)
8 Ms. Sasser i s witness.
COMMISSIONER SMITH: Which brings us to
9 MS. SASSER: Thank you, Madam Chair.
10 Staff calls Rick Sterling to the stand.
17
18
11
12
13
RICK STERLING,
produced as a witness at the instance of the Staff,
14 having been first duly sworn, was examined and testified
15 as follows:
16
19 BY MS. SASSER:
20
21
22
Q
A
Q
DIRECT EXAMINATION
Nice to see you, Mr. Sterling.
Good morning.
Would you please state your first and last
23 name and spell your last name for the record?
24
25
A
S-t-e-r-l-i-n-g.
My name is Rick Sterling,
CSB REPORTING
[phone]
534 STERLING (Di)
Staff
.
.
.
1 Q And for whom are you employed and in what
2 capacity?
3 A 11m employed by the Idaho Public Utilities
4 Commission as the engineering supervisor.
5 Q In that capacity, did you have occasion to
6 prepare in this case direct testimony consisting of 12
7 pages and one four-page attachmént marked as Exhibit
8 301?
9 A Yes.
10 Q And have you had an opportunity to review
11 that testimony and exhibit prior to this hearing?
12 A Yes, I have.
13 Q Is it necessary to make any changes or
14 corrections to that testimony?
15 A No, it isnlt.
16 Q If I were to ask you the questions set
17 forth in the testimony, would your answers be the same?
18
19
A Yes, they would.
MS. SASSER: Madam Chair, Ild ask that the
20 testimony be spread on the record, that the exhibit be
21 identified and I will present Mr. Sterling for cross.
22 COMMISSIONER SMITH: Thank you, Ms.
23 Sasser. Seeing no obj ection, the prefiled testimony of
24 Mr. Sterling will be spread upon the record as if read
25 and Exhibit 301 is identified.
CSB REPORTING
[phone]
535 STERLING (Di)
Staff
.
.
.
1
2 of Mr.Rick
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
(The following prefiled direct testimony
Sterling is spread upon the record.)
CSB REPORTING
[phone]
536 STERLING (Di)Staff
.
.
.
10
1 Q Please state your name and business
2 address for the record.
3 A My name is Rick Sterling. My
4 business address is 472 West Washington Street, Boise,
5 Idaho.
6 Q By whom are you employed and in what
7 capacity?
8 A I am employed by the Idaho Public
9 Utilities Commission as the Engineering Supervisor.
Q What is your educational and
11 professional background?
12
13
14
A I received a Bachelor of Science
degree in Civil Engineering from the Uni versi ty of Idaho
in 1981 and a Master of Science degree in Civil
15 Engineering from the Uni versi ty of Idaho in 1983. I
16 worked as an energy specialist and an energy section
17 manager for the Idaho Department of Water Resources from
18 1983 to 1994. In 1988, I received my Idaho license as a
19 registered professional Civil Engineer. I began working
20 at the Idaho Public Utilities Commission in 1994. My
21 duties at the Commission include analysis of a wide
22 variety of electric and water utility applications, in
23 addi tion to my duties as Engineering Supervisor. Since
24 1994, I have been the lead Staff member on issues related
25 to the Public Utili ties Regulatory Policies Act of 1978
CASE NO. GNR--E-ll-0l
03/25/11 537 STERLING, R (Di) 1
STAFF
1 (PURPA) ,.2 including determination of avoided cost rates,
3 review of PURPA contracts,and development of policies
4 for
5 /
6 /
7 /
8
9
10
11
12
13.14
15
16
17
18
19
20
21
22
23
24.25
CASE NO.GNR--E-11-01 538 STERLING,R (Di)la03/25/11 STAFF
.
.
.
1 implementation of PURP.
2 Q What is the purpose of your testimony
3 in this proceeding?
4 The purpose of my testimony is to present criteria
5 to distinguish a single Qualifying Facility for purposes
6 of determining eligibility for published avoided cost
7 rates for projects up to 10 average Megawatts (aMW) in
8 size, specifically in response to Commission directives
9 in Order No. 32195.
10 Q Please summarize the background of
11 this case, including Case No. GNR-E-l0-04 in which
12 relevant issues leading up to the current case were first
13 addressed.
14 A On November 5, 2010, Idaho Power
15 Company, Avista Corporation, and PacifiCorp dba Rocky
16 Mountain Power (Utilities) filed a Joint Peti tion1
17 requesting that the Commission initiate an investigation
18 to address various avoided cost issues related to PURPA.
19 While the investigation is underway, the Petitioners also
20 requested that the Commission "lower the published
21 avoided cost rate eligibility cap from 10 aMW to 100 kW
22 (to) be effective immediately. . . ." Petition at 7. On
23
24
25
1 In the Matter of the Joint Peti tion of Idaho Power
Company, Avista Corporation, and Rocky Moutain Power to
Address Avoided Cost Issues and to Adjust the Published
Avoided Cost Rate Eligibility Cap, Case No. GNR-E-10-04,
Novemer 5, 2010.
CASE NO. GNR--E-ll-0l
03/25/11 539 STERLING, R (Di) 2
STAFF
.
.
.
1 December 3, 2010, the Commission issued Order No. 321312
2 in which it declined to immediately reduce the published
3 avoided cost rate eligibility cap, but did establish a
4 schedule for processing the Utili ties i request to reduce
5 the eligibility cap via Modified Procedure and to
6 schedule an oral argument. In particular, the Commission
7 stated its desire to receive comments regarding:(1) the
8 advisabili ty of reducing the published avoided cost
9 eligibili ty cap; (2) if the eligibility cap is reduced,
10 the appropriateness of exempting non-wind QF proj ects
11 from the reduced eligibility cap; and (3) the
12 consequences of dividing larger wind proj ects into 10 aMW
13 proj ects to utilize the published rate. The Commission
14 also determined that its decision regarding the Joint
15 Peti tioners i Motion to reduce the published avoided
i 6 cost eligibility cap would become effective on
17 December 14, 2010. The Commission noted that it would
18 consider the additional avoided cost issues identified by
19 the Petitioners and other interested parties in
20 subsequent proceedings. Reference Order No. 32131 at 5-6.
21 On February 7, 2011, following the submission
22 of comments, reply comments, and oral argument, the
23 Commission issued Order No. 32176 temporarily reducing
24
25
2 Notice of Joint Petition, Notice of Intervention
Deadline, Notice of Oral Argument
CASE NO. GNR--E-ll-0l
03/25/11 540 STERLING, R (Di) 3
STAFF
.
.
.
1 the eligibility cap for published avoided cost rates from
2 10 aMW to 100 kW for wind and solar only while the
3 Commission further investigates the implications of
4 disaggregated QF projects. The Commission explained that
5 wind and solar resources present unique characteristics
6 that differentiate them from other PURPA QFs. Wind and
7 solar generation, integration, capacity and ability to
8 disaggregate, the Commission stated, provide a basis for
9 distinguishing the eligibility cap for wind and solar
10 from other resources. Order No. 32176 also called for a
11 hearing the week of May 9, 2011, to investigate and
12 determine requirements by which wind and solar QFs can
13 obtain a published avoided cost rate without allowing
14 large QFs to obtain a rate that is not an accurate
15 reflection of a utility i s avoided cost for such proj ects.
16 The Commission stated the following:
17 This Commission is supportive of all small power
producers contemplated by PURPA, including wind and
18 solar, and it is not the Commission i s intent to push
small wind and solar QF proj ects out of the market.19 Wi th this goal in mind, the Commission is initiating
addi tional proceedings to investigate and determine
20 in a finite timeframe requirements by which wind and
solar QFs can obtain a published avoided cost rate21 wi thout allowing large QFs to obtain a rate that is
not an accurate reflection of a utility i s avoided22 cost for such proj ects.
23 Reference Order No. 32176 at 11.
24 On February 25, 2011, the Commission opened a
25 new docket, Case No. GNR-E~11-01, and issued Order
CASE NO. GNR--E-ll-01
03/25/11 541 STERLING, R (Di) 4
STAFF
.
.
.
1 No. 321953 further clarifying the purpose of the initial
2 phase of the case. In its notice, the Commission stated
3 that it is concerned that large proj ects are
4 dis aggregating into smaller QF proj ects in order to be
5 eligible for published avoided cost rates that may not be
6 just and reasonable to the utility customers or in the
7 public interest. Consequently, the Order states that the
8 Commission seeks information regarding criteria wi thin
9 which small wind and solar QFs can obtain a published
10 avoided cost rate without allowing large QFs to obtain a
11 rate that is not an accurate reflection of a utility Is
12 avoided cost for such proj ects. Reference Order No.
13 32195 at 3.
14 Q Please describe the scope of your
15 testimony.
16 A My testimony will be very narrowly
17 focused. Specifically, Order No. 32195 states, II (T) he
18 Commission solicits information and investigation of a
19 published avoided cost rate eligibility cap structure
20 that:(1) allows small wind and solar QFs to avail
21 themselves of published rates for projects producing 10
22 aMW or less; and (2) prevents large QFs from
23 disaggregating in order to obtain a published avoided
24 cost rate that exceeds a utility i s avoided cost."
25 Reference Order No. 32195 at 3.
CASE NO. GNR--E-ll-0l
03/25/11 542 STERLING, R (Di) 5
STAFF
.
.
.
15
16
17
18
19
20
21
1 /
2 /
22 3 Notice of Inquiry, Notice 09f Intervention Deadline,
Notice of Scheduling, Notice of Technical Hearing
23
24
25
3 /
4
5
6
7
8
9
10
11
12
13
14
CASE NO. GNR--E-11-01
03/25/11 543 STERLING, R (Di) 5a
STAFF
.
.
.
1 Therefore, my intent is to address only these two
2 identified issues. Issues related to the appropriateness
3 or accuracy of either the Surrogate Avoided Resource
4 methodology (SAR methodology) or the Integrated Resource
5 Plan methodology (IRP Methodology) will be addressed in
6 subsequent proceedings.
7 Q Please explain, in general, your
8 proposal for a published avoided cost rate eligibility
9 cap structure that allows small wind and solar QFs to
10 avail themselves of published rates for proj ects
11 producing 10 aMW or less while preventing large QFs from
12 disaggregating in order to obtain a published avoided
13 cost rate.
14 A I propose that the Commission
15 identify a set of criteria to be considered in
16 determining whether a proposed proj ect represents a
17 "Single Proj ect. " Under my proposal, a Single Proj ect
18 producing more than 10 aMW would not be eligible for
19 published rates, and instead would only be eligible for
20 avoided cost rates based on the IRP methodology.
21 Disaggregated projects meeting one or more of the
22 cri teria may be deemed a Single Proj ect.
23
24
25
Q How did you develop your proposal?
A I developed my proposal by starting
wi th a proposal made by the Idaho Conservation League
CASE NO. GNR--E-11-01
03/25/11 544 STERLING, R (Di) 6
STAFF
.
.
.
16
17
18
19
20
21
22
23
24
25
1 (ICL) and
2 the Renewable Northwest Project (RNP) in their reply
3 comments in Case No. GNR-E-l0-04. I modified
4 the ICL/RNP
5 /
6 /
7 /
8
9
10
11
12
13
14
15
CASE NO. GNR--E-ll-0l
03/25/11 545 STERLING, R (Di) 6a
STAFF
.
.
.
1 proposal, and added numerous additional criteria.
2 Q Why did you believe it was necessary
3 to modify the ICL/RNP proposal?
4 A I believed that the ICL/RNP proposal
5 was a good start, but I thought that additional criteria
6 needed to be added in order to effectively accomplish the
7 Commission i s stated goals in Order Nos. 32176 and 32195.
8 Wi thout my additions and modifications, I believe that
9 large wind and solar proj ect developers could soon devise
10 ways to configure projects that satisfy the ICL/RNP
11 cri teria, yet are contrary to their intent. I believe my
12 addi tional criteria will more effectively prevent large
13 QFs from disaggregating in order to obtain a published
14 avoided cost rate that exceeds a utility i s avoided cost.
15 Wi th my additions and modifications, I believe that
16 projects that are truly 10 aMW or smaller can be clearly
17 identified and distinguished from large proj ects that
18 have been disaggregated solely for the purpose of trying
19 to qualify for published rates.
20 Q Please describe your proposed
21 criteria?
22 A My proposed criteria are attached as
23 Exhibi t 301. There are four main parts to the proposal:
24 Single Project Criteria, Eligibility for Published Rates,
25 Defini tions, and Proj ect Responsibilities. The Single
Proj ect Criteria section is a list of criteria that I
CASE NO. GNR--E-11-01
03/25/11 546 STERLING, R (Di) 7
STAFF
.
.
.
1 propose that the Utili ties, and if necessary the
2 Commission, consider in determining whether a proj ect is
3 a Single Proj ect for purposes of determining eligibility
4 for published avoided cost rates. The Eligibility for
5 Published Rates section states that a proj ect consisting
6 of multiple generation sources that satisfies at least
7 one of the listed criteria may be aggregated for purposes
8 of determining eligibility for published rates and for
9 purposes of calculating avoided cost rates. The
10 Definitions section defines "person" and "affiliated
11 person (s) . " The Proj ect Responsibilities section lists
12 condi tions that Staff proposes be included in power sales
13 agreements containing published rates.
14 Q Under your proposal, would a proj ect
15 have to satisfy all of the criteria in order to be
16 considered a Single Proj ect?
17 A No. Under my proposal, a proj ect
18 consisting of multiple generation sources that satisfies
19 at least one of the specified criteria and delivers more
20 than 10 aMW per month may be aggregated for purposes of
21 determining eligibility for published rates and for
22 purposes of calculating avoided cost rates. Therefore, a
23 project could conceivably be deemed a Single Project if
24 it satisfies just one of the criteria. More likely,
25 however, a proj ect would meet multiple criteria and be
CASE NO. GNR--E-ll-01
03/25/11 547 STERLING, R (Di) 8
STAFF
.
.
.
1 deemed a Single Proj ect. Some proj ects could meet most
2 or all of the criteria for a Single Proj ect.
3 Q Do you believe it would be necessary
4 for the Commission to examine each proposed proj ect and
5 make a determination of whether it qualifies as a Single
6 Project?
7 A No, I do not. I propose that the
8 utili ty make an initial determination and that the
9 Commission only be asked to make a determination in
10 instances where there is uncertainty or disagreement
11 between the proj ect developer and the utility. In the
12 maj ori ty of cases, I think it will be fairly obvious as
13 to whether a proj ect is a Single Proj ect.
14 Q What is the reason for including the
15 language "the Commission will consider all relevant
16 factors, including, but not limited to the factors listed
17 below" on lines 13-15 on page 1 of Exhibit 301?
18 A I believe that it is important for
19 the Commission to be able to exercise judgment in
20 individual cases so that the intent of the criteria can
21 be properly maintained. If a rigid set of criteria were
22 to be adopted, I believe that some project developers
23 might devise ways to meet the criteria, yet violate their
24 clear intent. It is difficult, in advance, to envision
25 every possible proj ect configuration that might be
proposed.
CASE NO. GNR--E-11-01
03/25/11 548 STERLING, R (Di) 9
STAFF
.
.
.
1 However, to a large degree, I believe that distinguishing
2 whether a proj ect constitutes a Single Proj ect is a case
3 of "knowing it when you see it." By allowing the
4 Commission some discretion, I believe that the intent of
5 the criteria will be more fairly and consistently upheld
6 than if rigid enforcement of the criteria were required.
7 Q Do you propose that the criteria be
8 applied to only wind and solar resources, or to all
9 resource types?
10 A I propose that the criteria be used
11 for all resource types, not just wind and solar.
12 Although wind and solar projects are most likely to be
13 disaggregated due to their characteristic of being
14 composed of multiple small generators, other resources
15 might also have the ability to disaggregate. Having a
16 single set of criteria for all resource types will help
17 ensure consistency.
18 Q If other parties in this case propose
19 similar but different criteria, would you be willing to
20 attempt to reach settlement on suitable eligibility
21 criteria?
22 A Yes, of course. I am confident that
23 there are criteria that can be proposed that may be
24 different than those I have proposed that can still
25 successfully meet the same intent.
CASE NO. GNR--E-ll-0l
03/25/11 549 STERLING, R (Di) 10
STAFF
.
.
.
16
17
18
19
20
21
22
23
24
25
1 Q If criteria to prevent disaggregation
2 are not adopted by the Commission, can you suggest
3 another option that the Commission should consider?
4 /
5 /
6 /
7
8
9
10
11
12
13
14
15
CASE NO. GNR--E-ll-0l
03/25/11 550 STERLING, R (Di) lOa
STAFF
.
.
.
1 A Yes, another option would be to make
2 permanent the Commission i s prior Order to temporarily
3 lower the eligibility cap for published rates to 100 kW
4 for wind and solar resources. Wind and solar QFs larger
5 than 100 kW would still be entitled to contracts under
6 PURPA, but the avoided cost rates in those contracts
7 would be based on the IRP methodology.
8 Q Do you believe that this option would
9 be feasible?
10 A Yes, I do. The IRP methodology can
11 be used for projects of any size and is well suited for
12 wind and solar resources because it can take into account
13 generation characteristics that are unique to wind and
14 solar, in addition to the utility i s need for new
15 resources. However, I am not opposed to further
16 discussions between the Staff, Utilities, and interested
17 parties to investigate, refine, and reach agreement on
18 specific analysis assumptions and techniques for applying
19 the IRP methodology to wind and solar proj ects if that
20 methodology is expected to be frequently used. In my
21 opinion, that investigation should take place in
22 subsequent phases of this case or in another docket
23 opened specifically for that purpose, not in the present
24 case.
25 Q Does this conclude your direct
CASE NO. GNR--E-l1-01
03/25/11 551 STERLING, R (Di) 11
STAFF
1 testimony in this proceeding?.2 A Yes,it does.
3
4
5
6
7
8
9
10
11
12
13.14
15
16
17
18
19
20
21
22
23
24.25
CASE NO.GNR--E~11-01 552 STERLING,R (Di)1203/25/11 STAFF
.
.
.
1 .
(The following proceedings were had in
2 open hearing.)
3 COMMISSIONER SMITH: Let i s start with the
4 back row. Mr. Williams?
5 MR. WILLIAMS: No.
6 COMMISSIONER SMITH: Ms. Davis.
7 MS. DAVIS: Thank you.
8
9 CROSS- EXAMINAT ION
10
11 BY MS. DAVIS:
12 Q Mr. Sterling, at page 6, lines 1 and 2 of
13 your testimony, your prepared testimony, you stated that
14 your intent was to address the two narrow issues
15 presented to the parties in this general case. Could you
16 tell me in your own words what those two general areas
17 are in this case?
18 A If you i II turn to page 5, I believe I
19 answered that very directly beginning on line 15.
20 Q Okay; so lines 19 through 23 on page 5 you
21 stated that the intent of this proceeding was to allow
22 small wind and solar QFs to avail themselves of published
23 rates for projects producing 10 megawatts or less, and
24 prevents large QFs from disaggregating in order to obtain
25 a published avoided cost rate that exceeds a utility IS
CSB REPORTING
[phone]
553 STERLING (X)
Staff
.
.
.
16
1 avoided cost; is that correct?
2 A Yes.
3 Q And in turning to Exhibit 301, you
4 proposed a list of criteria that you represented with a
5 slight modification to the criteria that PaCifiCorp and
6 Renewable Northwest Project and ICL had proposed earlier;
7 is that correct?
8 A Well, it was Renewable Northwest Proj ect
9 and ICL. I don i t believe PacifiCorp was involved in this
10 initial draft that we worked from.
11 Q Okay, but these criteria are intended,
12 then, to apply only to solar and wind generation?
13 A No, I believe it was very clear in my
14 testimony that Staff proposed that these criteria apply
15 to all resource types.
Q And based on the narrow focus of this
17 case, do you think that i s appropriate as a proposal at
18 this stage in the proceeding?
19 A Well, the purpose of proposing that it
20 apply to all resource types was simply to help ensure
21 consistency in the treatment of all proj ects. As a
22 practical matter, however, I think that very, very few
23 non-wind and non-solar projects would be affected by
24 these criteria and as a result, I wouldn i t have any
25 obj ection if the Commission chose to apply these only to
CSB REPORTING
[phone]
554 STERLING (X)
Staff
.
.
.
18
1 solar and wind proj ects.
2 MS. SASSER: Madam Chair, Staff is willing
3 to concede at this point the discussion had earlier on
4 the record regarding the scope and keeping it to wind and
5 solar only based on the notice.
6 COMMISSIONER SMITH: Well, Mr. Sterling is
7 not. a lawyer, so we wouldn i t expect him to have a legal
8 opinion. We appreciate your comments, Ms. Sasser.
9 MS. DAVIS: Thank you, Madam Chairwoman.
10 With that representation, yesterday I did move to strike
11 Exhibit 205 to the PacifiCorp testimony. Rather than
12 move to strike anything here, I will just object to the
13 use of this potential criteria for anything other than
14 application to simply solar and wind renewable
15 proj ects.
16 COMMISSIONER SMITH: Well, I think we
17 covered that yesterday, Ms. Davis.
MS. DAVIS: Could I ask a few more
19 questions of Mr. Sterling?
20
21
22
COMMISSIONER SMITH: Certainly.
MS. DAVIS: Thank you.
Q BY MS. DAVIS: Mr. Sterling, do you know,
23 is the Idaho Public Utili ties Commission subj ect to the
24 Idaho Administrative Procedure Act?
25 A Ilm not an attorney. I~-
CSB REPORTING
[phone]
555 STERLING (X)Staff
.
.
.
18
19
20
21
22
1 MS. SASSER: Objection.
2 COMMISSIONER SMITH: Sustained.
3 MS. DAVIS: Thank you. I have no further
4 questions.
5 COMMISSIONER SMITH: Mr. Otto.
6 MR. OTTO: Yes, I have a few questions.
7
8 CROS S - EXAMINAT I ON
9
10 BY MR. OTTO:
11 Q Hello, Mr. Sterling. I want to have you
12 turn to page 10 of your direct testimony and on lines 16
13 through 22, you i re asked about whether you would be
14 willing to attempt to reach a settlement on sui table
15 eligibili ty criteria and you answered yes. Does that
16 remain your position?
17 A Yes,that i s clear from my testimony.
Q And that i s good to hear.Now,on page
well,did you review RNP,Ms.Decker Is testimony of RNP
prior to this hearing?
A Yes, I have.
Q And I think she characterized the Staff
23 proposal as a one strike and you i re out type-set-up. Do
24 you recall that?
25 A Yes, she did and I strongly obj ect to that
CSB REPORTING
[phone]
556 STERLING (X)Staff
.
.
.
16
17
1 characterization. I think it i S very clear that that is
2 not what Staff is proposing.
3 Q Okay, could you turn to page 8 of your
4 testimony? Could you read for me beginning on line 4
5 starting with "The Eligibility" and continuing to the end
6 of that sentence which ends on line 9?
7 A "The Eligibility for Published Rates
8 section states that a proj ect consisting of multiple
9 generation sources that satisfies at least one of the
10 listed criteria may be aggregated for purposes of
11 determining eligibility for published rates and for
12 purposes of calculating avoided cost rates."
13 Q Thank you, and continuing on that page at
14 lines 18 through 20, you state essentially the same
15 thing; is that true?
A That i S true.
Q And then I i d like you to read the sentence
18 beginning on 22 through 24 that starts with llTherefore. II
19 A "Therefore, a project could conceivably be
20 deemed a Single Project if it satisfies just one of the
21 criteria. More likely, however, a project would meet
22 multiple criteria and be deemed a single proj ect. Some
23 proj ects could meet most or all of the criteria for a
24 Single Project."
25 Q And actually, thank you for continuing on
CSB REPORTING
[phone]
557 STERLING (X)Staff
.
.
.
19
20
1 wi th the rest of that . Given the statements that you i ve
2 read, do you continue to think that it i S unfair to
3 characterize the proposal as a one strike, you i re out?
4 A Absolutely. I think that i S very clear
5 from the testimony I just read that it i S not a
6 one-strike-you' re-out policy.
7 Q So your proposal is more looking at a
8 variety of factors rather than just one to make a
9 determination?
10 A Yes.
11 Q Okay, thank you. I want to turn to page
12 9 -- Ilm sorry, just one second. Actually, strike that.
13 That i s the end of my questions. Thank you
14 very much.
15 COMMISSIONER SMITH: Mr. Miller, do you
16 have questions?
17 MR. MILLER: Just two.
18
CROSS-EXAMINATION
21 BY MR. MILLER:
22 Q Mr. Sterling, as I reviewed your direct
23 testimony, I did not see any discussion of the question
24 of whether the 10 average megawatt eligibility cap should
25 be changed and I i m wondering, is that because in Staff IS
CSB REPORTING
[phone]
558 STERLING (X)
Staff
.
.
.
1 review of Order 32195, Staff did not believe that was an
2 issue identified by the Commission for consideration?
3 A That i S correct.
4 Q On page 10 of your testimony, you i re asked
5 a question, then, on line 19 and answer, "I am confident
6 that there are other criteria that can be proposed that
7 may be different than those I have proposed that can
8 still successfully meet the same intent. II In that
9 regard, has Ms. Decker engaged with the Staff in
10 discussing various criteria?
11 A Staff i s proposal began with a draft from
12 Ms. Decker. Prior to our -- prior to the hearing, we did
13 consul t with Ms. Decker, but she became even more
14 entrenched in her own position and really wouldn't budge
15 at all on any attempt to reach some collaborative
16 proposal.
17 MR. MILLER: Madam Chairman, I apologize
18 for the delay here, Ilm just completely perplexed by the
19 answer and I i m not sure how to address it, other than to
20 say that I participated in the meeting or the conference
21 that Mr. Sterling is alluding to and had a completely
22 opposi te impression of Ms. Decker and RNP and my
23 approach.
24
25
MS. SASSER: Obj ection, Madam Chair. It i s
not an opportuni ty for Mr. Miller to testify. Mr.
CSB REPORTING
[phone]
559 STERLING (X)Staff
.
.
.
1 Sterling was asked a question and answered it on the
2 stand under oath.
3 COMMISSIONER SMITH: And I will sustain
4 the obj ection, Mr. Miller, and I have personally
5 experienced the same thing of sitting in a room with
6 people and having a meeting and coming away with a
7 totally different idea of what happened than the other
8 people in the room and everybody knows that happens.
9 MR. MILLER: All right. Well, I just
10 wanted to say that it i S been our approach to attempt to
11 be--
12 COMMISSIONER SMITH: Well, I know that you
13 think that i s your approach, but if you have any more
14 questions for Mr. Sterling, he can explain his view of
15 it, but thatls what welre here to do.
16 MR. MILLER: I don i t think that would be
17 productive.
18
19 really.
COMMISSIONER SMITH: I don It either,
20
21
22
23
24
25
MR. MILLER: That i s all I have.
COMMISSIONER SMITH: Mr. Richardson.
MR. RICHARDSON: Thank you, Madam Chair.
CSB REPORTING
[phone]
560 STERLING (X)
Staff
.
.
.
1
2
CROSS-EXAMINATION
3 BY MR. RICHARDSON:
4 Q Good morning, Mr. Sterling.
Good morning.
11m referring to your Exhibit 301, the
7 single proj ect requirement criteria beginning on page 1,
5 A
8 going over to page 2. You have, I believe I counted
6 Q
9 correctly, 15 different criteria?
10 A That i S correct.
Are these in order of importance?
No, there was no attempt to do that.
13 Q Do you have a sense of a hierarchy of
19 importance?
21 and answered.
11 Q
12 A
14 importance of these?
CSB REPORTING
[phone]
I i ve never made an attempt to try to do
So these are -- in your mind, are they all
18 equally important or is there some that have more
15 A
20
22
16 that, no.
17 Q
MS. SASSER: Madam Chair, I object, asked
COMMISSIONER SMITH: 11m going to allow
23 him to explore and the witness can say his answer one
24 more time if he wants.
25 MR. RICHARDSON: Madam Chair, the question
561 STERLING (X)Staff
.
.
.
1 that I just asked him was if he had developed a
2 hierarchy.
3 COMMISSIONER SMITH: 11m allowing you to
4 ask your question.
5 MR. RICHARDSON: Thank you.
6 Q BY MR. RICHARDSON: In your mind, are any
7 of these more important than others of these?
8 A No.
9 Q So they i re all equally important in your
10 mind?
11 A I didn i t say that. I said I don i t believe
12 any are more important than any others.
13 Q So some are less important than others?
14 A Perhaps. I think it depends on the
15 particular proj ect. I think some will be indicative in
16 the cases of some proj ects, others will be indicative in
17 the cases of other proj ects, so I think the level of
18 importance really depends on the circumstance.
19 Q And did you have in mind any real world
20 circumstances when you developed this list?
21
22
A No.
Q You didn i t explore any real world proj ects
23 that you believe have been aggregated and said that
24 instructs me in how I i m developing this list?
25 A Not specific proj ects, no.
CSB REPORTING
[phone]
562 STERLING (X)
Staff
.
.
.
16
17
1 Q Were you here yesterday when Mr. Martin
2 testified?
3 A Yes, I was.
4 Q And let i s assume Mr. Martin overcomes all
5 the hurdles he identified and actually builds a 10
6 average monthly megawatt wind project on his farm. Do
7 you have that in mind?
8 A Overcomes which hurdles? These criteria
9 or other hurdles?
10 Q His development hurdles he identified
11 yesterday.
12 A Okay.
13 Q And let i s assume that right next door, the
14 farm next door to Mr. Martin i s farm, the owner of that
15 farm does the same thing in the same year.
A Yes.
Q Since they both live in the same
18 communi ty, they both happen to get a loan to build their
19 proj ects from the same bank, then only one more
20 assumption. Let i s assume that they both default on that
21 loan and the bank forecloses. How many of your common
22 criteria are in that scenario? Common ownership, same
23 motive force, same proximity, come on line within 12
24 months. Perhaps the utility when these two independent
25 projects asked for interconnection, the transmission
CSB REPORTING
[phone]
563 STERLING (X)Staff
.
.
.
1 business side of Idaho Power or PacifiCorp or whoever,
2 that they make the decision on how the interconnect is
3 configured and designed, perhaps there i s a common point
4 of interconnection because it was convenient for the
5 utility, would that be a single project, then, in your
6 mind?
7 A It wasn i t clear to me in your example
8 whether the projects later become owned by the same
9 entity.
10 Q Right, the bank foreclosed, so the bank
11 now owns both proj ects.
12 A I think the situation that you i ve
13 presented is a perfect example of why I believe the
14 Commission needs to have a great degree of discretion. I
15 think there i s some judgment that needs to be made for
16 every circumstance and I think that i s one of many
17 possible circumstances that could occur and that i s
18 exactly the reason why I proposed my criteria in the way
19 that I did.
20 Q But do you know, in your opinion based on
21 your criteria, would that be a single project once the
22 bank took ownership?
23 A Initially I would say clearly not. It
24 would be two separate projects initially.
25 Q Ini tially when they -- I understand that,
CSB REPORTING
[phone]
564 STERLING (X)Staff
.
.
.
1 but the question was --
2 A But you didn i t let me finish my answer.
3 Q Oh, I'm sorry, I thought you had.
4 A After the foreclosure, I think that would
5 be a circumstance that might be a prime candidate for the
6 Commission making a judgment call.
7 Q And in your mind, would it be reasonable
8 for the Commission to decide either, that it i S a single
9 proj ect or that it i s still two separate proj ects?
10 A I guess I don i t follow that question. Can
11 you repeat that , please?
12 Q Yes. You said in the circumstances we i ve
13 painted, you said it would be up to the Commission to
14 make the decision as to whether or not this heretofore
15 two separate proj ects that is now owned by one bank is a
16 single proj ect or still two separate proj ects. The
17 question was do you think it would be reasonable for the
18 Commission to make either determination, that it is one
19 project or it is two projects?
20 A Well, obviously, if it i S not one proj ect,
21 it i s two proj ects. It i S one or the other and I don i t see
22 any other alternative.
23 Q Which way do you think a reasonable
24 commission would go with that question?
25 MS. SASSER: Madam Chair, I i m going to
CSB REPORTING
[phone]
565 STERLING (X)Staff
.
.
.
1 object.
2 COMMISSIONER SMITH: I i m going to overrule
3 because he hasn i t answered whether he thinks either
4 outcome is reasonable, which I think is the real question
5 Mr. Richardson is asking.
6 THE WITNESS: I don i t think that was the
7 question he asked. I don i t think he asked if it was
8 reasonable. He asked which way would the Commission
9 decide.
10 COMMISSIONER SMITH: No, he asked if you
11 thought it would be reasonable for the Commission to make
12 ei ther determination.
13 THE WITNESS: The answer to that question,
14 yes, I think it would be reasonable for the Commission to
15 make a decision.
16 Q BY MR. RICHARDSON: Make either
17 decision?
18 A It i S one decision. It i S one proj ect or
19 itls two. Itls one decision, two alternatives.
20 Q Would it be unreasonable for the
21 Commission to rule that it i S one proj ect?
22 A No, I don i t think that would be
23 unreasonable, nor do I think it would be unreasonable if
24 they decided that it was two proj ects.
25 Q So with that in mind, what rational banker
CSB REPORTING
[phone]
566 STERLING (X)Staff
.
.
.
19
1 would ever make a loan under those circumstances to
2 develop either of those proj ects?
3 A I i m not a banker, I can i t answer that
4 question.
5 Q So when you prepared this criteria, did
6 you consider lenders i requirements of certainty in terms
7 of knowing that over the life of a loan that proj ect is
8 not going to go into default because of some subsequent
9 anticipated but heretofore unoccurred event?
10 A No, we didn i t consider every conceivable
11 circumstance. Therels just no way we could have.
12 MR. RICHARDSON: Thatls all I have,
13 Madam Chair.
14 COMMISSIONER SMITH: Thank you, Mr.
15 Richardson.
16 Mr. Andrea.
17 MR. ANDREA: Thank you, Madam Chair. I
18 don i t have any questions for this witness.
COMMISSIONER SMITH: Mr. Walker or
20 Mr. Williams.
21
22
23
24
25
MR. WALKER: Thank you, Madam Chair.
CSB REPORTING
[phone]
567 STERLING (X)Staff
.
.
.
11
1 CROSS-EXAMINATION
2
3 BY MR. WALKER:
4 Q Good morning, Mr. Sterling.
5 A Good morning.
6 Q You were present and heard Dr. Reading i s
7 testimony today that the best approach may be to get the
8 avoided costs in line and if in line the incentive to
9 disaggregate goes away, you heard that?
10 A Yes, I was here.
Q Now, even if, say, hypothetically if
12 there i s a legitimate question as to the price, if the
13
14
price is a proper reflection of a utility i s avoided cost,
would it make sense to you in your experience to figure
15 out a set of rules that would entitle parties to obtain a
16 price before you actually settle the issue of whether
17 that price would be a proper price?
18 A Ilm not sure I totally followed the
19 question. Could you maybe repeat some of that?
20 Q Yeah, I know that wasn i t very artfully
21 stated. I guess it i s kind of a cart before the horse
22 type of a question. Does it make sense that you would
23 figure out a set of rules, a set of eligibility
24 requirements of rules, that would entitle parties to
25 recei ve a certain price prior to the time in which you
CSB REPORTING
[phone]
568 STERLING (X)
Staff
.
.
.
20
1 determine whether that price would be proper?
2 A Yeah, I don i t have any problem with that.
3 I think those two things are independent of each other.
4 Q Do you think it could be the situation
5 where as Dr. Reading stated and as the utili ties have
6 attempted to argue that possibly having an appropriate
7 price would, could eliminate the problem without having a
8 need to create additional procedures or criteria, is that
9 possible?
10 A I think it i S very unlikely, put it that
11 way. Is it possible? Yes, but I think it i S very
12 unlikely because prices change frequently and as long as
13 we have separate methods for determining rates, it i s
14 highly unlikely that those two sets of rates will ever be
15 the same. One or the other will typically always be
16 higher or lower, and because of that, I think there i s an
17 inherent incentive for developers to seek the highest
18 price, whatever it is at the time, even if those prices
19 are set appropriately.
Q So hypothetically if two different prices
21 didnlt exist, do you think there would be any incentive
22 or any disaggregation problem?
23
24
25
A No, I don i t believe there would be.
Q And I just wanted one clarification from a
question I don i t recall exactly who asked you on cross,
CSB REPORTING
[phone]
569 STERLING (X)Staff
.
.
.
1 but in your testimony, your testimony does not make
2 reference only and simply to criteria; isn i t that
3 correct?
4 A That i S true.
5 Q Do you reference any other possible
6 workable solutions to disaggregation?
7 A Yes, I believe in my testimony I said one
8 other possible solution if the Commission doesn i t choose
9 to go the path of adopting criteria would simply be to
10 leave the eligibility cap at 100 kilowatts where it is
11 now.
12
13
14
MR. WALKER: No further questions,
Madam Chair.
COMMISSIONER SMITH: Thank you.
15 Mr. Kaufmann.
16 MR. KAUFMANN: Thank you, Madam Chair.
17
18 CROSS-EXAINATION
19
20 BY MR. KAUFMANN:
21 Q Good morning, Mr. Sterling.
22 A Good morning.
23 Q I have a few questions about your direct
24 testimony where you testified that the proposed rule
25 might apply to all QFs and not just solar and wind
CSB REPORTING
[phone]
570 STERLING (X)Staff
.
.
.
1 proj ects. Did you propose that because you wanted the
2 Commission to have the benefit of your best advice as to
3 what would be a workable rule that you could
4 administer?
5 A Well, I think it i S one of the things that
6 just kind of goes along with being a regulator is we're
7 always striving for consistency and to the extent we can
8 achieve that, we always try to do that and that was the
9 primary reason why I proposed that it apply to all
10 project types.
11 Q I i m going to read part of Ms. Decker Is
12 rebuttal testimony, Exhibit 1907, page 5. This is her
13 proposed markup of a single proj ect requirement and I i II
14 just read a few lines and then ask you a question.
15 Exhibit 1907 states, "Multiple generation sources are
16 located in i close proximity to each other i if any of
17 their electrical generating equipment is separated by
18 fewer than five miles. For hydropower proj ects only,
19 mul tiple generation sources are in i close proximity i only
20 if they use the same impoundment within a natural
21 watercourse or are located at the same location where the
22 water level changes within a non-natural watercourse
23 (i~ e., canal drop)."
24 Now, without asking for your specific
25 feedback on whether the wording here is optimal, do you
CSB REPORTING
[phone]
571 STERLING (X)
Staff
.
.
.
1 think the approach in Ms. Decker i s testimony where the
2 defini tion of close proximity is different when applied
3 to hydro is an approach that the Commission Staff could
4 administer?
5 A Well, I think we could certainly
6 administer it if we had to. I tried not to and did not
7 specify a specific separation distance for hydro or any
8 other type of proj ect. Instead, I think those are the
9 kind of things where discretion, I think, is appropriate.
10 We have instances where hydro proj ects may in fact be
11 located within five miles. We do in fact have QFs
12 located within five miles, but theyl re clearly separate
13 projects. There are other instances where there are
14 places in Idaho, the Idaho desert, where five miles is
15 not very far between proj ects, but five miles on a ridge
16 top of a mountain range may be quite a distance, so
17 that i s why I think discretion is appropriate whether itl s
18 for hydro proj ects or anything else and we didn i t include
19 a section like this in Staff i s proposal because we
20 thought that that would be captured by the Commission iS
21 ability to exercise judgment.
22 Q I understand. Are you familiar that
23 FERC i S regulations pertaining to QF eligibility use a
24 one-mile rule generally and they have an adaptation of
25 that rule as it is applied to small hydro?
CSB REPORTING
[phone]
572 STERLING (X)Staff
.
.
.
1 A Yes, I am aware of that.
2 Q Okay. In your opinion as somebody who
3 would be applying any disaggregation criteria adopted by
4 the Commission, do you have an opinion whether it would
5 be better to exclude hydro -- well, non-wind and
6 non-solar QFs from it entirely or to include them and
7 make an allowance such the one proposed by Ms. Decker so
8 that hydro is not discriminated against?
9 A Well, again, I think for the sake of
10 consistency, we would prefer that it apply to all
11 projects, but as I explained earlier, practically, I
12 think there are I don i t know if I could conceive of
13 situations just sitting here on the witness stand of when
14 these particular criteria would impact anything other
15 than wind and solar. I think it would be a pretty
16 unusual set of circumstances where these criteria would
17 have to be applied to a hydro proj ect, I believe.
18 Q Other than Ms. Davis i obj ection on behalf
19 of her clients who operate or wish to operate hydro
20 electric QFs, has anybody else -- has anybody, a
21 developer of any other resource other than hydro, told
22 you they thought the distance rules were unworkable?
23 A Not that I can recall and I would point
24 out that the reason that hydro and wind are the primary
25 resource types that would be affected by these criteria
CSB REPORTING
( 2 0 8 ) 8 90 - 5 1 98
573 STERLING (X)Staff
.
.
.
1 is simply the nature of hydro and wind or, I mean, wind
2 and solar proj ects, the nature of those proj ects is that
3 there are multiple individual generators either at each
4 wind turbine, at each solar collector which is not at all
5 a characteristic of any other resource type.
6 MR. KAUFMANN: Madam Chair, since Ms.
7 Davis i client has not provided a witness, I don i t know if
8 there is an opportunity for me ask Ms. Davis a question
9 whether they would, her client would obj ect to a distance
10 rule that had an allowance for whether they obj ected
11 to Ms. Decker i s proposal. If you think that would be
12 appropriate to get that on the record, I i d like to ask
13 that question.
14 COMMISSIONER SMITH: I do not and I
15 thought my ruling yesterday was very clear that the
16 Commission i s notice is explicitly related to solar and
17 wind and I think we would be in deep trouble with regard
18 to notice for the content of this case if we tried to
19 extend it to hydro or geothermal or any other thing that
20 wasn i t noticed because those developers aren i there.
21 MR. KAUFMANN: Thank you, Madam Chair. I
22 have no further questions.
23
24 have -- oh, questions from the Commission.
COMMISSIONER SMITH: Thank you. Do you
25 COMMISSIONER REDFORD: No.
CSB REPORTING
( 2 08) 8 90 - 5 1 98
574 STERLING (X)Staff
.
.
1 COMMISSIONER SMITH: Ms. Sasser, do you
2 have redirect?
3 MS. SASSER: I do, Madam Chair. Thank
4 you.
5
6 REDIRECT EXAMINATION
7
8 BY MS. SASSER:
9 Q Mr. Sterling, in regards to Mr.
10 Richardson i s request that you pontificate as to whether a
11 QF could get a loan under any given circumstances, was it
12 your understanding that this was a proceeding to
13 determine whether a QF would be able to get a loan and
14 have a viable proj ect?
15 A No.
16 Q In your opinion, is PURPA or any of the
17 FERC regulations, are they concerned with QF finances or
18 are they concerned with avoided cost rate?
19 MR. RICHARDSON: Madam Chair, I'LL object
20 to that as calling for a legal opinion as to what PURPA
21 and the implementing regulations call for.
22
23
24.25
COMMISSIONER SMITH: Sustained.
MS. SASSER: I i II move on.
Q BY MS. SASSER: For purposes of
clarification, Mr. Otto had made a reference to
CSB REPORTING
( 2 0 8 ) 8 90 - 5 1 98
575 STERLING (Di)
Staff
.
.
24.25
1 Ms. Decker IS testimony regarding a one-strike-you Ire-out
2 rule which was actually a term that I utilized when I was
3 cross-examining her. Was it your understanding that
4 Ms. Decker in her testimony in fact admitted that it was
5 a very literal reading of your testimony and that as
6 practically applied did not work that way?
7 A I think she did admit it, but I think she
8 continued to represent it as such which is what I
9 obj ected to.
10 Q Fair enough. Would you agree that the
11 bookends in this case to eliminate -- one moment. In
12 regards to Mr. Walker i s cross-examination, would you
13 agree that the bookends in this case to eliminate
14 disaggregation -- give me one second. The extremes of
15 this case in eliminating disaggregation would either be a
16 permanent 100 kilowatt threshold or do nothing and leave
17 everything as is which is NIPPC i S proposal?
18 MR. RICHARDSON: Madam Chair, IIll object
19 to the characterization of NIPPC i S testimony.
20 COMMISSIONER SMITH: Once again we have
21 sunk into the morass of the witness i hardest question.
22 Ms. Sasser, why don i t you reconsider if you really need
23 to ask that.
MS. SASSER: Illl move on. Thanks for the
advice, Madam Chair.
CSB REPORTING
[phone]
576 STERLING (Di)Staff
.
.
.
1 COMMISSIONER SMITH: There i s more?
2 Q BY MS. SASSER: Isn i t the purpose of your
3 disaggregation criteria to ultimately allow the
4 Commission to assess whether a proj ect meets the
5 Commission i s intent regarding small proj ects?
6 A Absolutely I think that is the purpose.
7 MS. SASSER: That i s all I have,
8 Madam Chair.
9 COMMISSIONER SMITH: Thank you, Ms.
10 Sasser. It's now time -- I don i t want to let my luncheon
11 conflict impede anyone i s desire to make any closing
12 statements or any further process, so my question is now
13
14
15
do you want to come back at 1: 30 or are we finished?
Mr. Miller.
MR. MILLER: Madam Chairman, I don i t think
16 that posthearing briefs are necessary in this case, but I
17 do think the opportunity for a brief closing summation
18 would be helpful to the Commission and appreciated at
19 least by me, so I would prefer to come back at 1: 30 with
20 an option to make a closing statement.
21 COMMISSIONER SMITH: That was kind of
22 my inclination, also. Is there anyone who obj ects to
23 that process? All right, we i II see you all at 1: 30 and
24 I think, Mr. Richardson, your witness wants to be
25 excused.
CSB REPORTING
[phone]
577 STERLING (Di)Staff
1 (The witness left the stand.).2 (Lunch recess.)
3
4
5
6
7
8
9
10
11
12.13
14
15
16
17
18
19
20
21
22
23
24.25
CSB REPORTING 578 COLLOQUY
(208 )890-5198