20120402Avista to Staff 7,8.pdf

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e: Responses of Avista Corporation to Requests 7 and 8 of the First Production
Request of Commission Staff
IPUC Case No. GNR-E-11-03
Dear Ms. Jewell:
Please find enclosed Avista Corporation's responses to Requests 7 and 8 of the First
Production Request of Commission Staff to Avista Corporation in the above-referenced
proceeding. Please let me know if you have any questions regarding this filing.
Sincerely,
Michael G. Andrea
Senior Counsel
Enclosures
cc: Service List
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 3/22/2012
CASE NO: GNR-E-1 1-03 WITNESS: Clint Kalich
REQUESTER: IPUC Staff RESPONDER: Clint Kalich
TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-7 TELEPHONE: [phone]
REQUEST:
In his direct testimony beginning on page 30, line 13 and continuing to page 31, line 9, Mr. Kalich
recommends that PURPA contracts not be executed earlier than five years before commercial
operation and that rates should not be set more than two years prior to commercial operation. Does
Avista believe that these criteria can be utilized without violating PURPA, FERC rules or orders,
or case law? Please provide legal citations to support your answer.
RESPONSE:
Yes. Though I am not a legal expert and this question relates to legal precedent, states are charged
with implementing PURPA consistent with FERC's rules. See 16 U.S.C. § 824a-3(f); Cedar
Creek Wind, LLC, 137 FERC ¶ 61,006, P27 (2011). FERC recently stated: "a QF, by committing
itself to sell to an electric utility, also commits the electric utility to buy from the QF. . . ." Cedar
Creek Wind, LLC, 137 FERC at P 32. The ability of a QF to unilaterally commit an electric utility
is not unbounded. For example, in the same order, FERC made clear that a legally enforceable
obligation may be created in the absence of a fully executed contract if the electric utility refuses to
sign a contract and the QF seeks state regulatory authority assistance to enforce a PURPA-imposed
obligation. Id. at P 32. Allowing QFs to enter contracts more than five years before commercial
operation will encourage QFs to sign agreements for highly speculative projects. This is
particularly true in the absence of meaningful delay liquidated damages provisions and sufficient
security requirements. Moreover, avoided cost rates are subject to significant change (either up or
down) over a two-year period. Given the potential for substantial changes in such rates, setting the
rate that QFs will get more than two years before commercial operation will, in effect, result in a
contract that is more akin to a put option than an actual firm commitment to sell the QF's output to
an electric utility. See id. That is, if the avoided cost goes down, the QF will require the utility to
purchase its output under the contract. If, however, the rate goes up, the QF may be able to force a
utility to sign a new contract at the higier rate b, fir, example, declaring bankruptcy, renaming,
and demanding a new contract with the higher price. Again, meaningful liquidated damages
clauses supported by sufficient security mitigate some of the risk. Nevertheless, limiting the time
for entering contracts with QFs to within five years of commercial operation and setting rates no
more than two years prior to commercial operation are reasonable steps that are consistent with the
delegation to the states to implement PURPA.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
GNR-E-1 1-03
IPUC Staff
Production Request
Staff-8
DATE PREPARED:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
3/26/2012
Clint Kalich
Clint Kalich
Energy Resources
[phone]
REQUEST:
In his direct testimony at page 33, lines 15-19, Mr. Kalich suggests the following:
The best way to ensure a level playing field is to require the QF developer to post the liquidated
damages deposit at the time that the legally enforceable obligation arises—i.e., when the utility has
tendered a contract and the QF developer executes and returns the tendered contract obligating the
utility to purchase contract output.
Does Avista believe that in imposing these requirements there would be no restrictions or legal
impediments due to PURPA, FERC rules or orders, or case law? Please provide legal citations to
support your answer.
RESPONSE:
Yes. Though I am not a legal expert and this question relates to legal precedent, I do believe that
states are charged with implementing PURPA consistent with FERC's rules. See 16 U.S.C. §
824a-3(f); Cedar Creek Wind, LLC, 137 FERC 161,006, P 27 (2011). FERC recently stated: "a
QF, by committing itself to sell to an electric utility, also commits the electric utility to buy from
the QF...... Cedar Creek Wind, LLC, 137 FERC at P 32. The ability of a QF to unilaterally
commit an electric utility is not unbounded. Rather, in the same order, FERC made clear that a
legally enforceable obligation may be created in the absence of a fully executed contract if the
electric utility refuses to sign a contract and the QF seeks state regulatory authority assistance to
enforce a PURPA-imposed obligation. Id. at P 32. Avista's proposal is consistent with PURPA
and FERC' s rules and orders, including FERC' s recent order in Cedar Creek Wind, LLC. See also
response to Staff request No. 7.
CERTIFICATE OF SERVICE
I hereby certify that on this 30th day of March 2012, true and correct copies ofthe
foregoing Responses of Avista Corporation to Requests 7 and 8 of the First Production
Request of the Commission Staff to Avista Corporation were delivered to the following
persons via Email (unless otherwise indicated).
Jean Jewell
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83702
Email: [e-mail]
(via Email and Regular Mail)
Donald L. Howell, II
Kris Sassar
Deputy Attorneys General
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83702
Email: don.howellpuc.idaho.gov
[e-mail]
Dean J. Miller, Esq.
McDevitt, & Miller, LLP
P0 Box 2564
Boise, ID 83701-2564
joemcdevitt-miller.com
Daniel E. Solander
Senior Counsel
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
Email: [e-mail]
Donovan E. Walker
Lisa Nordstrom
Idaho Power Company
P0 Box 70
Boise, ID 83707-0070
Email: [e-mail]
[e-mail]
Peter Richardson
Gregory M. Adams
Richardson & O'Leary
515 N. 27th St.
P0 Box 721813oise, ID 83702
Email: [e-mail]
gregrichardsonandoleary.com
Magan Walseth Decker
Senior Staff Counsel
Renewable Northwest Project
917 SW Oak St., Suite 303
Portland, OR 97205
Email: meganrnp.org
R. Greg Ferney
Mimura Law Offices, PLLC
2176 E. Franklin Rd., Suite 120
Meridian, ID 83642
Email: gregmimuralaw.com
Page 1—CERTIFICATE OF SERVICE
Ted S. Sorenson, P.E.
Sorenson Engineering, Inc.
5203 South 11th East
Idaho Falls, ID 83404
Email: [e-mail]
Glenn Ikemoto
Margaret Ruger
Idaho Windfarms, LLC
672 Blair Ave.
Piedmont, CA 94611
E-mail: glennienvisionwind.com
Margaretenvisionwind.com
Shelley M. Davis
Barker Rosholt & Simpson, LLP
1010 W. Jefferson St., Ste. 102
P.O. Box 2139
Boise, ID 83701-2139
Email: [e-mail]
Ronald L. Williams
Williams Bradbury, P.C.
1015 W. Hays St.
Boise ID, 83702
Email: ronwilliamsbradbury.com
Dana Zentz
VP, Summit Power Group, Inc.
2006 E. Westminster
Spokane, WA 99223
Email: [e-mail]
Robert D Kahn
Executive Director
Northwest and Intermountain Power
Producers Coalition
1117 Minor Ave., Suite 300
Seattle, WA 9810
Email: rkahnnippc.org
Thomas H. Nelson
Attorney for Renewable Energy Coalition
P0 Box 1211
Weiches, OR 97067-1211
Email: [e-mail]
Bill Piske, Manager
Interconnect Solar Development, LLC
1303 E. Carter
Boise, ID 83706
Email: [e-mail]
Bill Brown, Chair
Board of Commissioners of Adams County,
Idaho
P0 Box 48
Council, ID 83612
Email: [e-mail]
Scott Montgomery
President, Cedar Creek Wind, LLC
668 Rockwood Drive
North Salt Lake, Uta 84054
Email: scottwesternenergy.us
Wade Thomas
General Counsel, Dynamis Energy
776 E. Riverside Drive, Suite 15
Eagle, ID 83616
Email: wthomasdynamisenerg.com
Page 2—CERTIFICATE OF SERVICE
James Carkulis
Managing Member
EXERGY DEVELOPMENT GROUP OF
IDAHO, LLC
802 West Banock Street, Ste. 1200
Boise, Idaho 83702
Emai1:jcarkulisexergydevelopment.com
Robert A. Paul
Grand View Solar II
15960 Vista Circle
Desert Hot Springs, CA
Email: robertapaul08gmail.com
John R. Lowe
Consultant to Renewable Energy
Coalition
12050 SW Tremont Street
Portland, OR 97225
Email: [e-mail]
Twin Falls Canal Company
do Brian Olmstead, General Manager
P.O. Box 326
Twin Falls, Idaho 83303-0326
Email: [e-mail]
C. Thomas Arkoosh
Capitol Law Group, PLLC
205 North 10th St., 4th Floor
P0 Box 2598
Boise, ID 83701-2598
Email: tarkooshcapitollawgroup.com
ArronF. Jepson
Blue ribbon Energy LLC
10660 South 540 East
Sandy, UT 84070
Email: [e-mail]
Don Sturtevant
Energy Director
J. R. Simplot Company
ONE CAPITAL CENTER
999 Main Street, P.O. Box 27
Boise, Idaho 83707-0027
Email: [e-mail]
North Side Canal Company
do Ted Diehl, General Manager
921 N. Lincoln St.
Jerome, Idaho 83338
Email: [e-mail]
MJ Humphries
Blue Ribbon Energy LLC
4515 S. Ammon Road
Ammon, II) 83406
Email: blueribbonenergygmail.com
Mars' Lewallen
Clearwater Paper Corporation
601 W. Riverside Ave., Suite 1100
Spokane, WA 99201
Email: marv.lewallenclearwaterpaper.com
Page 3—CERTIFICATE OF SERVICE
Benjamin J. Otto
Idaho Conservation League
710N. 6th St.
P.O. Box 844
Boise, Idaho 83702
Ph: [phone] x 12
Fax: [phone]
Email: [e-mail]
Ken Miller
Clean Energy Program Director
Snake River Allance
Box 1731
Boise, 10 83701
Email: kmi11erstakeriveralliance.org
Energy Integrity Project
do Tauna Christensen
769 North 1100 East
Shelley, ID 83274
Email: [e-mail]
Michael G. Andrea
Page 4—CERTIFICATE OF SERVICE