20110523Vol IV Boise.pdf

n D I ~ , ~\, lJ,.BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION'S
INVESTIGATION INTO DISAGGREGATION
AND AN APPROPRIATE PUBLISHED
AVOIDED COST RATE ELIGIBILITY CAP
STRUCTURE FOR PURPA QUALI FYING
FACILITIES.
CASE NO. GNR~E-II-0l
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 IV - Pages 579 - 608
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CSB REPORTING
Constance S. Bucy, CSRNo. 187
23876 Applewood Way * Wilder, Idaho 83676
[phone] * [phone]
Emailcsb(fheritagewifi.com
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1 APPEARANCES
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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' 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
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6 For Idaho Power Company:
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For PacifiCorp dba Rocky
Mountain Power:
For Avista Corporation:
For NIPPC:
For Cedar Creek Wind:
22 For Intermountain
Wind, LLC and Renewable
Northwest Proj ect:23
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25
CSB REPORTING
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APPEARANCES
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1 A P PEA RAN C E S (Continued)
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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
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5
6 For Idaho Conservation
League:
Benjamin J. Otto, Esq.
Attorney at Law
Idaho Conservation League
Post Office Box 844
Boise, Idaho 83701
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9 For Snake River Alliance:Mr. Ken Miller
Snake River Alliance
Post Office Box 1731
Boise, Idaho 83701
For Renewable EnergyCoalition:
(Telephonically)
John R. Lowe
12050 SW Tremont Street
Portland, Oregon 97225
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APPEARANCES
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1 EXHIBITS
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3 NUMBER DESCRIPTION
4 FOR I DAHO POWER COMPANY:
5 2.Admitted
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7 FOR AVISTA CORPORATION:
8 102.Admitted
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10 FOR ROCKY MOUNTAIN POWER:
11 201 - 206.Admitted
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13 FOR THE STAFF:
14 301.Admitted
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16 FOR NIPPC:
17 401.Admitted
19 FOR RENEWABLE NORTHWEST PROJECT:
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1901. - 1908. & 1910.Admitted
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EXHIBITS
.1 BOISE, IDAHO, WEDNESDAY, MAY 11,2011,1:30 P. M.
2
3
4 COMMISSIONER SMITH: Thank you all. We
5 are now at the close of the presentation of the witnesses
6 and their cross-examination and I understand that there
7 may be a desire to make some closing statements to the
8 Commission.
9 Mr. Walker.
10 MR. WALKER: Madam Commissioner, before we
11 get into closing statements, would it be appropriate if I
12 could take up two quick kind of housecleaning-type issues.13 with you?
14 COMMISSIONER SMITH: Yes, please.
15 MR. WALKER: With regard to RNP's Exhibit
16 1910, this would be the Order that Mr. Miller submitted
17 for judicial notice.
18 COMMISSIONER SMITH: Yes.
19 MR. WALKER: I'd just like to ask like we
20 did with the prior Order that the Commission took
21 judicial notice of to clarify that it would be the entire
22 Order that the Commission would take notice of and not
23 just the selected pages that were handed out.
24 COMMISSIONER SMITH: Yes, that's the.25 case.
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579 COLLOQUY
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1 MR. WALKER: Okay, and my last
2 clarification might -- I'll try to spit it out as briefly
3 as I can here, but it has to do with just a clarification
4 of the testimony that was stricken. My understanding
5 from Mr. Miller's clarification is that the actual
6 transcript will be blank for the portions that were
7 stricken. For purposes of an offer of proof of what was
8 stricken, I would assume that our prefiled submissions
9 will be part of the record as an offer of proof of what
10 those stricken portions --
11 COMMISSIONER SMITH: I think you're
12 probably correct in that. The portion that was stricken
13 will not be part of the transcript, but it will be, your
14 prefiled testimony will always be, part of the
15 Commission's record that is officially filed here.
16 MR. WALKER: Okay, and just as a matter of
17 the record, I guess, rather than making any specific
18 offer of proof, we'd just rely on that filing of prefiled
19 direct as an offer of proof for what was stricken.
20 COMMISSIONER SMITH: All right, thank
21 you.
22 MR. WALKER: And I spoke with Mr. Andrea,
23 I didn't have a chance to speak with Mr. Kaufmann, but
24 that would be our desire and understanding.
25 COMMISSIONER SMITH: Mr. Andrea.
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580 COLLOQUY
.1 MR. ANDREA: Yes, well said by Mr. Walker.
2 We would like that to be our offer of proof as well.
3 COMMISSIONER SMITH: Mr. Kaufmann.
4 MR. KAUFMANN: No objection.
5 COMMISSIONER SMITH: Thank you. All
6 right, so Mr. Otto.
7 MR. OTTO: Just in the spirit of making
8 sure the record is complete, I believe that Idaho Power
9 offered an exhibit, a portion of a FERC Order and I would
10 expect that that entire Order would be into the record.
11 COMMISSIONER SMITH: Mr. Walker.
12 MR. WALKER: Thank you, Madam Chair. I.13 don't believe that that was -- it was neither offered nor
14 admi tted as an exhibit. It was simply used
15 COMMISSIONER SMITH: I think you're
16 correct.
17 MR. OTTO: Duly noted.
18 COMMISSIONER SMITH: All right, how many
19 people wish to make a closing statement? All right, we
20 will start with Mr. Otto, then go to Mr. Miller, Mr.
21 Richardson, Ms. Sasser, Mr. Kaufmann, Mr. Walker and then
22 Mr. Andrea, if there's no objection.23 Mr. Otto.
24 MR. OTTO: Thank you, Madam Chairwoman..25 I'm going to cover two topics in my summation here and
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581 COLLOQUY
.1 the first is one of the proposals in this case is to just
2 simply lower the cap to 100 kilowatts permanently, and
3 our position is that should not be the solution to this
4 case. I think that issue was raised and resolved in the
5 prior case that led to this, 10-04, and in Order 32176.
6 This Commission heard from all the
7 parties, had an argument and decided not to permanently
8 lower that cap, but to temporarily do so while we could
9 fully flush out the possibility of developing some rules
10 about disaggregation. I don't think anything has changed
11 since that Order on the issue of whether the cap should
12 be lowered or not. I think that was the right decision.13 and I think we should take this opportunity to fully
14 flush out the possibility of developing some criteria.
15 I think that notice of this specific case
16 also did not address whether -- actually, that was the
17 next point I was going to make. The next issue is using
18 an average nameplate capacity versus a -- well, the
19 nameplate, an average production versus the nameplate,
20 and similar to the 100 kilowatt cap, I think that issue
21 was raised, argued, and decided and I don't think
22 anything has changed since that decision, which happened
23 in Case IPC-E-04-10 and in Order 29632.
24 At that time the Commission decided to.25 stick with an average production asa fair measurement.
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582 COLLOQUY
.1 That's because the nameplate was unreasonable for
2 proj ects with parasitic load or for wind or intermittent
3 proj ects. I don't think anything has changed since that
4 decision, and you also decided that projects were paid
5 monthly and they should be looked at as a production on
6 an average month. I don't think anything has really
7 changed since that decision.
8 I think what changing from nameplate to
9 average really looks to is what size a project qualifies
10 for a rate, so I think there's other criteria that
11 actually address that issue in a way that prevents
12 disaggregation more so than changing from average to.13 nameplate, and I i d also note that notice in this case did
14 not address changing from average to nameplate would be
15 one of the issues presented.
16 The second primary I wanted to cover is I
17 believe that using some criteria will work. I think
18 there's an advantage of finding some criteria for all
19 parties and that it presents more certainty to everybody
20 about what the QF and PURPA industry is going to look
21 like in this state. If the Commission's decision is to
22 permanently lower the cap, of course, that will do
23 something, but if not, and that's an important decision
24 that you're going to have to make up front, then we have.25 to move on to some real criteria and find something
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583 COLLOQUY
.1 that's agreeable to all parties.
2 I think that we offered a strawman
3 proposal and that's just what it was, a strawman proposal
4 that we hoped the other parties would add flesh and bones
5 to and not just knock down. We're more than willing -- I
6 think RNP' s Exhibit 204 laid out a chart of the various
7 parties' positions. I think that can be a helpful place
8 to see areas of disagreement as well as areas of common
9 ground and, of course, that's not saying that each party
10 agrees to the other person's slot on the chart, but I
11 think it's a helpful point for you all to look at and see
12 that there are areas of common ground that we can build.13 from and also some significant areas of disagreements
14 that will need to be worked out.
15 Then turning to RNP' s 205 which is their
16 proposed criteria, I would agree with the position of
17 Northwest Renewable Proj ect that that is an excellent
18 starting point for this proposal. It incorporates
19 several of the parties' who decided to engage in these
20 issues suggestions. It contains an administrative
21 clause. It contains many of the criteria that Staff and
22 RNP and Rocky Mountain Power and ICL found important and
23 i believe all those criteria are important, and you also
24 heard from several parties that they're more than willing.25 to negotiate some sort of resolution to this.
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584 COLLOQUY
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1 Mr. Reading testified so on the stand.
2 I'm saying that to you now as to our position. Mr.
3 Sterling's testimony said that and I think it's clear
4 from RNP' s testimony that they're willing to negotiate
5 some sort of resolution, so I think there is a
6 possibili ty here to find an answer.
7 Turning to criteria, I think there's two
8 issues that really need to be resolved and that's
9 crafting the correct criteria and addressing the
10 administrati ve burden. Despi te many of the questions, no
11 one is suggesting that the Commission would not have
12 final say on any of these decisions. Of course, that's
13 your duty and that will be incorporated into any final
14 rule that comes out. Turning to criteria, we have to
15 balance the need for discretion, to call it when you see
16 it, with the need for certainty so that QF developers can
17 know what kind of proj ect to design as and so that
18 utilities when reviewing applications know what criteria
19 matter and what are going to be used to judge that final
20 decision.
21 i think you've heard from several parties
22 that they believe that there can be criteria worked out
23 that will work. Staff stated so in their testimony,
24 Rocky Mountain Power stated so in their testimony and
25 Renewable Northwest and, of course, both ICL said so, so
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585 COLLOQUY
.1 I think that is definitely achievable to find that
2 balance if parties are willing to sit down and work
3 through the issues.
4 The second part is eliminating the
5 administrative burden and agreed, this is incredibly
6 important, but it's also very achievable. All the
7 proposals on the table have essentially the exact same
8 process that happens now. The QF approaches the utility.
9 They make initial size determination to decide what
10 category of rates they fall into. If the parties
11 disagree, they, of course, have their right to go to the
12 Commission and make the decision. All the proposals on.13 the table wouldn't change that process. It would just
14 add some more criteria, add some more certainty and give
15 everybody a little more clarity on what we're actually
16 doing here in dividing between published and negotiated
17 rates.
18 You heard Rocky Mountain Power testify,
19 Mr. Griswold, that currently they collect basically all
20 the information in this criteria already doing their due
21 diligence in order to make sure that the project is
22 actually there for ratepayers to deliver electricity. I
23 would hope that Avista and Idaho Power do the same thing,
24 so I think there isn't a huge extra burden that is added.25 on. I believe a lot of this information is already
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586 COLLOQUY
.1 collected and all we're asking for is to put it together
2 in a slightly different way and look at it in a different
3 light.
4 I know in our proposal we said a 15-day
5 turnaround for this and I agree, that's extremely tight.
6 I think Rocky Mountain 's proposal was a 30-day turnaround
7 and if they're the ones making that decision and the
8 utili ty thinks that's sufficient, that's more than fine
9 wi th me, so, of course, there's some specific things in
10 each of the criteria I could address, but I think what
11 the take-away is that this forum might not be the very
12 best way to define each criteria, I think the take-away.13 is that it's achievable, it's the right policy decision
14 for this Commission to make based on your prior orders,
15 current circumstances, and I would encourage you in order
16 to make that happen to issue an order reaffirming, as you
17 have done in the past, that the 10 average megawatt limit
18 is the limit for published rates and that parties need to
19 sit down and come to some sort of negotiated settlement
20 of what proper criteria will be.
21 That can be an informal negotiation here
22 through the Commission or we could also use the
23 negotiated rulemaking processes available under the
24 Administrative Procedure Act which this Commission has.25 adopted, so in closing, i would encourage you to maintain
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587 COLLOQUY
.1 what has been a successful independent power sector in
2 this state, created good things for us. It's given us a
3 very different way to promote renewable industry than
4 other states and I think it's something that's
5 interesting and creative and good on the long term as Mr.
6 Reading testified for balancing the power needs of our
7 state.
8 i think you have seen that there is common
9 ground that we can work from and I would encourage you to
10 prod the parties to reach that common ground. Thank you.
11 COMMISSIONER SMITH: Thank you, Mr. Otto.
12 Mr. Miller. Oh, I guess I forgot to ask,.13 if any of the Commissioners have questions, please let me
14 know at any time.
15 MS. DAVIS: Chairwoman Smith, I saw that
16 Commissioner Redford was concerned that I hadn't chosen
17 to make closing statements and I think based on the
18 Commission's strong affirmation that hydropower won't be
19 affected by the outcome of this proceeding that a comment
20 from the canal companies is unnecessary.
21 COMMISSIONER SMITH: Now Mr. Miller.
22 MR. MILLER: Thank you, Madam Chairman.
23 I'm only going to touch briefly on a few points. The
24 first is to express our appreciation for the Commission's.25 thoughtful consideration of our motions to strike. I
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588 COLLOQUY
.1 know we created extra work for you and while we didn't
2 prevail on every point, it's apparent that the Commission
3 gave the motions thoughtful consideration and that's, of
4 course, all we can ask for.
5 Second, I wanted to make an observation
6 that notwithstanding the excellent testimony of
7 Ms. Decker, I thought the most interesting witness in
8 this case was Paul Martin and I thought that for two
9 reasons: First, in the cases that come before the
10 Commission, there are always large corporate interests.
11 There are always large ratepayer groups represented by
12 experts, but Mr. Martin's presence and testimony.13 illustrates the point that the Commission's decision
14 affect real people, affect whether or not a real person
15 in Idaho is going to be able to save the family farm, to
16 develop a business that's profitable and worthwhile for
17 his family, and the second thing that I think we can take
18 from Mr. Martin's testimony is that the availability of a
19 published avoided cost framework is critical for the
20 development of proj ects this size.
21 That leads to my third point which is our
22 strong feeling that the question of whether to move from
23 10 average megawatts to some other measurement metric is
24 not within the scope of this case. As Mr. Sterling.25 testified this morning, Staff did not think it was in the
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589 COLLOQUY
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1 scope of this case and accordingly, you do not have the
2 benefi t of Staff thinking on that issue and in our
3 opinion, you should wait until you do.
4 The U. S. Geothermal Order that we admitted
5 in evidence, when you read it and certainly you should
6 read the whole thing, makes it clear that the Commission
7 at that time had several options before it. They were
8 thoroughly briefed, thoroughly argued by all the parties,
9 and when you read the Order, you can see that the
10 Commission engaged in a very careful consideration of the
11 alternatives that were before it and came to a reasoned
12 decision. There is in the record in this case no
13 compelling evidence that would change your mind based on
14 the state of this record.
15 Third, I'd like to focus your attention
16 again on PacifiCorp Exhibit 205, the PacifiCorp effort at
17 developing criteria and to express our appreciation to
18 PacifiCorp for its willingness to engage in the task at
19 hand, which was try to develop criteria and also to say
20 that both Mr. Kaufmann and Mr. Griswold were very
21 gracious with their time in discussing the proposal with
22 us.
23 In his testimony, Mr. Griswold
24 characterized some of the criteria as subj ecti ve. I
25 think I would prefer the word judgmental, because they do
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590 COLLOQUY
.1 allow for the exercise of judgment in their application
2 and, of course, provide for Commission oversight and
3 intervention in the event of disagreement. I think
4 Ms. Decker in her testimony today identified some
5 possible changes to those of a very minor nature. If the
6 Commission is interested in seeing those changes in
7 wri ting, we would be happy to provide a late-filed
8 exhibi t that reduces her testimony to a red line
9 suggestion, and I think it's important that this is a
10 proposal that was developed by a utility based on the
11 utility's real world experience and its conclusion that
12 the criteria and their application are capable of being.13 implemented and administered by the utility without undue
14 burden.
15 The next one, and almost finally, touch on
16 the suggestion that the Commission direct the parties to
17 again negotiate toward an agreed set of rules. We're
18 really not too keen about that. I thought that's what we
19 have done up until now and some parties are obviously
20 unwilling to negotiate toward an agreed resolution. The
21 Commission has before it after a day-and-a-half of
22 hearings I think all the information you need to make a
23 decision. If the Commission directs us to do it, we'll
24 do it, but my suggestion is you have enough information.25 to decide and you should decide.
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.1 Then my final point is that there has been
2 in this case between the lawyers some unfortunate rancor
3 and discord, but I think I speak for all the lawyers when
4 I express gratitude for the Commission precluding
5 non- lawyers from engaging in cross-examination. All of
6 us went through a lot of effort to obtain our licenses
7 and we appreciate protecting the integrity of the license
8 to practice law, so that's what I have.
9 COMMISSIONER SMITH: Thank you,
10 Mr. Miller.
11 Mr. Richardson.
12 MR. RICHARDSON: Thank you, Madam Chair..13 First, I want to thank the Commissioners for putting up
14 with us over these two days and I want to thank the other
15 parties for their input and cooperation. We
16 fundamentally think that it is unfortunate that the three
17 utili ties initiated this docket at all. We believe that
18 this docket has been an unnecessary exercise and that is
19 because the system is not broken and hence, it does not
20 need to be fixed. The SAR methodology coupled with a
21 published avoided cost rate have worked remarkably well
22 for Idaho, that is inclusive of the ratepayers and
23 shareholders, but also not just for those two
24 stakeholders. For instance, there's a lumber mill in.25 north central Idaho that's probably still in business
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592 COLLOQUY
because it has a cogen facility located allowing it to.1
2 add value to its millage. In short, the current system
3 has been a win-win-win.
4 Now, I have practiced before this
5 Commission since 1984, pushing 30 years, and I have also
6 participated in every generic and Idaho Power specific
7 case that this Commission has held to determine avoided
8 cost rates and contract terms during those years. Based
9 on my participation in those cases, I can safely say that
10 if you change the dates and some of the faces, this could
11 be the 1980s, this could be the 1990s, this could be the
12 2000s allover again. For example, the utility ruse of.13 using current market data to prove that avoided cost
14 rates are too high is a ruse that is as old as PURPA
15 itself.
16 When the SAR was a coal plant, the
17 utilities made the same tired arguments they are making
18 today in order to kill the industry, unsuccessfully I
19 might add due to the fortitude of this Commission. As a
20 resul t, southern Idaho has scores of canal drop hydro
21 projects producing PURPA power at rates that are
22 dramatically below today' s rates, keeping our retail
23 rates low and providing some of the most reliable power
24 available..25 PURPA has been a success in Idaho
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.1 precisely because we have published rates for proj ects
2 that are sized large enough to be something more than a
3 hobby proj ect in my back yard. It is clear the utili ties
4 believe the avoided cost rates are too high, not because
5 they don't reflect the reality that they are constructing
6 massively expensive and large gas plants, but because QFs
7 are actually able to successfully build proj ects at a
8 cost less than the utili ties. If the avoided cost rates
9 are too high, the remedy is simple, just revisit the
10 rates, but don't dismantle a proven, workable system that
11 this Commission has painstakingly and sometimes painfully
12 put in place over the last 30 years..13 One just needs to look to history to see
14 that the Commission has the power and the ability to turn
15 the PURPA spigot on or turn the PURPA spigot off by
16 simply lowering or raising the avoided cost rates. That
17 said, I hope our participation and input have been
18 helpful to instruct you in your decision which will have
19 real world and potentially far-reaching consequences.
20 In closing, I just want to observe that I
21 have practiced before every PUC commission in the six
22 states surrounding Idaho and that allows me to conclude
23 that I am proud to be before this Commission and I'm also
24 proud to be a member of the Bar that practices before.25 you. Thank you.
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1 COMMISSIONER SMITH: Thank you, Mr.
2 Richardson.
3 Ms. Sasser.
4 MS. SASSER: Thank you, Madam Chair. Mine
5 will epitomize brief. It would seem to me that the one
6 thing the parties can all agree on is that proj ects are
7 in fact dis aggregating . Whether that is good, bad,
8 right ,wrong or indifferent is a matter of position.
9 It's Staff's position that a set of criteria that allows
10 the Commission to utilize its discretion and expertise in
11 deciding whether a project is attempting to disaggregate
12 would best continue to promote renewable energy
13 development in Idaho while ensuring that utility
14 customers are not paying more for QF energy than the
15 utili ty' s avoided cost, and that is all I have.
16 COMMISSIONER SMITH: Thank you, Ms.
17 Sasser.
18 Mr. Kaufmann.
19 MR. KAUFMANN: Thank you, Madam Chair and
20 Commissioners Redford and Kjellander. Before I start,
21 I'd like to say I appreciated the opportunity to be
22 before you the last two days and I thank my colleagues in
23 the room as well. During the last two days, the
24 Commission has received testimony regarding the
25 eligibili ty cap structure that allows small wind and
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.1 solar QFs to avail themselves of published rates for
2 proj ects producing 10 average megawatts and at the same
3 time prevents large QFs from disaggregating in order to
4 obtain a published avoided cost rate that exceeds the
5 utili ty' s cost and was intended for small QFs.
6 While Rocky Mountain Power's position has
7 been and remains that a 100 kW eligibility cap is
8 preferable to a 10 average megawatt cap, Rocky Mountain
9 Power has provided proposed criteria as well as an
10 administrative framework for enforcement of these
11 criteria. Rocky Mountain Power also provided testimony
12 that based upon experience, any set of fixed obj ecti ve.13 cri teria may be susceptible to circumvention by large QF
14 developers seeking to avail themselves of the published
15 avoided cost rate.
16 Rocky Mountain Power testified that in
17 order to give maximum likelihood that any criteria will
18 not be circumvented, it is imperative that the Commission
19 retain ultimate discretion to deny eligibility
20 notwithstanding the established criteria in the event it
21 determines a QF has disaggregated a large proj ect in
22 order to seek published avoided cost rates. Rocky
23 Mountain Power believes that the legal basis for the
24 Commission's authority to do this is clear, but we would.25 be happy to brief the legality of this option if the
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.1 Commission so requests.
2 Rocky Mountain Power testified further
3 that reducing the eligibility cap to 100 kW is the only
4 way to eliminate the risk of abuse of the Commission's
5 standard avoided cost rates through disaggregation.
6 Now, stepping back from the narrow issues
7 of the present hearing, I submit that what is at issue
8 ultimately in this proceeding is how to strike the right
9 balance between the competing policy obj ecti ves of
10 encouraging renewable energy development by non-utility
11 generators and preserving the low rates for the utility
12 customers of Idaho. If the Commission' s criteria for QF.13 contracting are too restrictive, the pace of building of
14 non-utili ty renewable proj ects may be unacceptably slow,
15 but if the Commission's rules are too lenient and large
16 QF developers receive rates well above the market price
17 at the expense of Idaho' s utility customers, Idaho's
18 greater economy may be impaired.
19 Not only will Idaho's economy be impaired,
20 but the public trust for all of us in this room may also
21 be impaired, as will public support for renewable energy
22 development in general; therefore, we can't get this
23 wrong. Today more than ever the total budget available
24 in the state to pay for utility rates is finite and if.25 they squander this limited resource, the limited resource
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.1 we have on power purchase agreements that provide
2 windfall profits to large QF developers, our ability to
3 solve every other problem that requires money to solve
4 will be unnecessarily constrained.
5 At the start of this hearing the
6 Commission indicated its intent to move on after
7 addressing disaggregation to the questions of the
8 adequacy of the SAR and the IRP methodology. RMP looks
9 forward to this next phase. We think there is a problem
10 to be solved and we believe that all of us in this room
11 can find a solution. Thank you, Madam Chair.
12 COMMISSIONER SMITH: Thank you,.13 Mr. Kaufmann.
14 Will it be Mr. Walker or Mr. Williams?
15 Mr. Walker.
16 MR. WALKER: Thank you, Madam Chairman.
17 Madam Chair and Commissioners, parties, counsel,
18 yesterday Commissioner Smith directed us all to go home
19 and think and I did and thinking about the day, I have to
20 admit that I was not smiling. I didn't have my smiley
21 face on; however, I certainly meant no disrespect to this
22 Commission, to any of the counsel, nor to any of the
23 parties, and if it came across as such, I sincerely
24 apologize to everybody..25 COMMISSIONER SMITH: Mr. Walker, your face
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.1 wasn't the only one not smiling out there and certainly
2 no one here took it personally and so please don't you
3 take it personally.
4 MR. WALKER: Thank you. In thinking about
5 that, I think it is really hard to put a smile on because
6 of the seriousness and gravity of the situation that the
7 Company feels that it's in as well as the situation that
8 it feels its customers are in presently. With all the
9 discussion and briefing and rulings regarding the scope
10 of this proceeding, I think it's very important for
11 everyone to remember how we got here in this proceeding
12 in the first place, and I think that's not only evidenced.13 in the record in this case, GNR-E-II-0l, but as well as
14 the parent case of GNR-E-I0-04.
15 Now, the Commission took what I dare say
16 was a courageous step and reduced the eligibility cap to
17 essentially effectuate a pause in the world of PURPA
18 without abrogating the obligation to continue to
19 contract; nevertheless, a pause for, I believe, all of us
20 to take a look and evaluate PURPA issues. Idaho Power is
21 asking here that you don't undo that courageous step now
22 and we ask that you leave the 100 kilowatt cap In place
23 while we continue to move forward and while we continue
24 to examine the important issues, many of which we've.25 touched upon and talked about and some of which we
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1 haven't.
2 We've heard some various statements,
3 testimony and argument that suggest the Commission has
4 this duty, has a duty to promote renewable resources, has
5 a duty to promote QF generation and that they have this
6 duty to promote development through the rates that it
7 authorizes and that it sets with PURPA. Well, I
8 respectfully submit that this idea is not only wrong, but
9 it's illegal. The Commission's duty to promote QF
10 generation development through PURPA is not by incenting
11 development through the rate that it sets.
12 PURPA tells us that the price must be set
13 at what the utility's avoided cost is and no more. It
also tells us that customers, the utility customers, must
15 remain neutral to these transactions, should not be
16 harmed, should not pay any more for the PURPA generation
17 than what the utility could otherwise acquire those
18 resources for without it.
19 The promotion of QF development doesn't
20 come from an incentive price. The promotion comes from
21 the obligation of the utilities to purchase through their
22 obligation to contract with those facilities, and that's
23 really very important to keep that in mind because I know
24 that it was suggested otherwise by several witnesses.
25 Please don't forget the interests of Idaho Power or any
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.1 of the utili ties' customers when you're considering these
2 issues. We're talking about interests beyond just those
3 that would promote renewable development or small PURPA
4 projects.
5 We also have a very large body of other
6 interested parties here and that's all of our customers
7 that struggle just as much as a PURPA developer to come
8 up with financing. It may be a different kind, it may be
9 at a lower scale, but nevertheless, real money to those
10 people as well. As stated several times before, you
11 know, we don't expect the Commission to be able to solve
12 all these issues or even some of them right now at this.13 moment, and I think regardless of what solution the
14 Commission ultimately decides to implement, if any,
15 regarding disaggregation, you know, everyone expects that
16 proceedings and investigation are going to continue
17 beyond this point.
18 Idaho Power urges the Commission to please
19 maintain the 100 kilowatt cap and to continue its
20 investigation and inquiry. Please do not address the
21 rules by which a QF can obtain a price prior to that time
22 in which you determine whether that price is proper for
23 them to have in the first place. That i s essentially what
24 we're asking here and I believe we heard from more.25 parties thån just the utili ties that that would be a
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.1 proper avenue to take, that it would be logical and make
2 sense, at least the utilities and NIPPC, to some extent
3 possibly Staff, that could at least agree that one of the
4 best approaches would be to get the avoided costs
5 straight. By doing so, you know, we submit that some
6 other new or possibly complicated solutions may not even
7 be necessary.
8 We've had a long pause before of a similar
9 nature and I think as evidenced by the amount of PURPA QF
10 contracts that were executed and filed not only in the
11 last couple of years, in the last couple of months, I
12 think there's some evidence that that didn't kill the.13 industry, didn't stop development. We've had this long
14 pause before. This time let's maintain the current cap
15 and continue to look at these issues before taking,
16 before undoing that courageous step, before undoing that
17 cap prematurely, before we look at some of these more
18 important issues, so by doing so, I think maybe this time
19 we could hopefully get it right and not be here again as
20 Mr. Richardson said, or alluded to, talking about the
21 same thing in a couple of years.
22 COMMISSIONER SMITH: Thank you,
23 Mr. Walker. I appreciate your comments and I do have a
24 question for you. I think earlier we heard testimony.25 that the utility's avoided cost is something that
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.1 changes. I don't know if it changes daily, monthly, on
2 an annual basis, so I hope you're not suggesting we could
3 just do the cost one time and know that it's going to be
4 correct in perpetuity.
5 MR. WALKER: I was not suggesting that.
6 COMMISSIONER SMITH: Okay; so it seems to
7 me that something needs to be addressed and maybe we need
8 a better process than this Commission being in a reactive
9 mode of waiting for somebody out there to say whoa, I
10 don't think that's the right rate anymore. Just a
11 thought.
12 MR. WALKER: Thank you..13 COMMISSIONER SMITH: Mr. Andrea.
14 MR. ANDREA: Thank you, Madam Chair. I,
15 too, would like to thank this Commission and the
16 participants in the room and those that have left for
17 their participation and the Commission especially for
18 your consideration and thoughtfulness and patience during
19 the past two days. I, too, left last night and thought
20 as instructed and I, too, meant no disrespect. I do have
21 some passion on this issue, but I hope that that's not
22 misconstrued as disrespectful.
23 I'm going to keep it brief as I'm last and
24 I'm sure all would like to adj ourn for the day. The way.25 that this proceeding has narrowed seems to focus on an
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.1 idea of reestablishing a 10 average megawatt cap with
2 some criteria on it. I'd like to be able to say that I
3 think that would work. Unfortunately, I can't do that.
4 I think that the testimony is very clear in this regard.
5 We spent a lot of time trying to come up
6 with criteria that we felt could reliably prevent
7 disaggregation with a 10 average megawatt cap and it took
8 very little time for holes to be quickly poked into those
9 ideas and we have no economic incentive to make those
10 holes, so when you add that economic incentive on top, it
11 takes very, very little time to see that the criteria
12 start to fall apart..13 The record, as I said, I think is clear.
14 Ms. Decker's testimony says the most important factors,
15 the financial ones, can easily be obscured. The distance
16 requirements can be creatively planned around. Mr.
17 Reading notes that we're not focused on the right issue,
18 that it really is more the rate. Mr. Sterling tried to
19 put together a set of criteria and I appreciate that, but
20 even Mr. Sterling had to admit on cross-examination due
21 to Mr. Richardson's questioning that the criteria, if
22 applied, the Commission could come to two diametrically
23 opposed conclusions, both of which would be reasonable.
24 When you throw in the dollars that are at.25 issue here and the fact that reasonable minds could
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1 easily differ, to me, that sounds like a recipe for more
2 litigation and a lot more administrative burden for this
3 Commission, for the utilities and for the developers.
4 Even RNP acknowledges that it's not clear that criteria
5 will work.
6 Another premise in this case I just want
7 to touch on briefly is that somehow a 10 average megawatt
8 proj ect is small. $ 60 million is not small to me. Even
9 a 25 or $35 million proj ect such as Mr. Martin's doesn't
10 strike me as small. Mr. Martin holds himself out as a
11 true PURPA and I understand, but Mr. Martin has made it
12 his profession to develop wind proj ects, both in this
13 state and, as we heard yesterday, in various other
14 states. Unfortunately, Mr. Martin seems to believe that
15 he's entitled to a rate that exceeds the avoided cost and
16 that he needs that higher rate in order for his project
17 to go forward. There is no such entitlement, and to the
18 extent that our customers must subsidize an otherwise
19 non-economic project, I take exception to that.
20 Finally, while there's ample evidence in
21 the record that the criteria that have been presented to
22 date along with the 10 average megawatt cap provide at
23 best significant problems, there has been no evidence
24 submitted, no one has suggested that the 100 kilowatt cap
25 will not work. In fact, with the 100 kilowatt cap, we
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.1 believe that solves not just the problems at issue today,
2 but more problems. It eases the administrative burden.
3 It provides the certainty that everybody is looking for
4 and, most importantly, it provides PURPA developers the
5 rate that they're entitled to, an actual avoided cost
6 rate.
7 Again, I appreciate this Commission's
8 consideration. I urge the Commission as Idaho Power did
9 to maintain the 100 kilowatt cap, at least until a
10 published rate can be examined. Again, thank you very
11 much for your time and consideration .
12 COMMISSIONER SMITH: Thank you. Any.13 questions or comments? I guess that leaves me with the
14 last word which, of course, I always like to be in that
15 position and maybe I need to apologize if anyone had the
16 impression that I don't understand the seriousness or the
17 gravi ty of the issues that are before us, because I
18 clearly do. I have a bizarre sense of humor, well, I i II
19 be kind to myself, quirky, and so if anyone took offense
20 at that, I apologize and no one should have taken my
21 comments personally; however, I did sense a deterioration
22 in the usual conduct of the parties before us and it's my
23 personal opinion unrelated to utility work that a lack of
24 ci vili ty, courtesy and respect for each other regardless.25 of our disagreements isa serious problem in our society
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.1 generally, so in any sphere where I might have any
2 influence whatsoever, I will always try and maintain that
3 atti tude and conduct of ci vili ty, courtesy and respect
4 for each other, and I appreciate all of you thinking
5 about that and coming back today with your smiley faces
6 and with that, I don't see the need for posthearing
7 briefs.
8 Does anyone strongly disagree with that?
9 All right, then I believe the hearing is concluded. We
10 appreciate all of the witnesses' efforts and all of your
11 efforts and the Commission will issue its Order as
12 quickly as possible. Thank you for your participation..13 (All exhibits previously marked for
14 identification were admitted into evidence.)
15 (The Hearing concluded at 2: 20 p.m.)
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.1 AUTHENTICATION
2
3
4 This is to certify that the foregoing
5 proceedings held in the matter of the Commission's
6 investigation into disaggregation and an appropriate
7 published avoided cost rate eligibility cap structure for
8 PURPA qualifying facilities, commencing at 9: 30 a. m. on
9 Tuesday, May 10, and continuing through Wednesday, May
10 11, 2011, at the Commission Hearing Room, 472 West
11 Washington Street, Boise, Idaho, is a true and correct
12 transcript of said proceedings and the original thereof.13 for the file of the Commission.
14 Accuracy of all prefiled testimony as
15 originally submitted to the Reporter and incorporated
16 herein at the direction of the Commission is the sole
17 responsibili ty of the submitting parties.
18
19
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