20050803Vol I Hearing.pdf

ORIGINAL
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE PETITION OF
I DAHO POWER COMPANY FOR AN ORDER
TEMPORARILY SUSPENDING IDAHO
POWER'S PURPA OBLIGATION TO ENTER
INTO CONTRACTS TO PURCHASE ENERGY-
GENERATED BY WIND- POWERED SMALL
POWER PRODUCTION FACILITIES
) CASE
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BEFORE
COMMISSIONER PAUL KJELLANDER (Presiding)
COMMISSIONER MARSHA SMITH
COMMISSIONER DENNIS HANSEN
I .PLACE:Commission Hearing Room
472 West Washipgton
Boise I Idaho
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DATE:July 22 I 2005
VOLUME 1 - Pages 1 - 83
CSB REpORTING
Constance S. Bucy, CSR No. 187
17688 Allendale Road * Wilder, Idaho 83676
[phone] * [phone]
Email csb~spro.net
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For the Staff:Scot t Woodbury, Esq.
Deputy Attorney General
472 West Washington
Bo is e , Idaho 83 72 0 - 0 074
For Idaho Power:Barton L. Kline, Esq.
and Monica B. Moen, Esq.
Idaho Power Company
Post Office Box
Bo i s e , Idaho 8 3 7 0 7 - 0 0 7 0
For Windland Inc.BATT & FISHER, LLP
by William J. Batt, Esq.
and John R. Hammond, Esq.
Post Office Box 1308Boise, Idaho 83701
For Exergy Development
Group of Idaho, LLC:
RI CHARDSON & 0' LEARY , PLLC
by Peter J. Richardson, Esq.
51 7 North 27th Street
Boise , Idaho 83702
For Avista Corporation:David J. Meyer, Esq.
Avista Corporation
Post Office Box 3727
1411 East Mission Avenue
Spokane , Washington 99220
For PacifiCorp:Lisa Nordstrom, Esq.
and Dean Brockbank, Esq.
PacifiCorp
825 NE Multnomah , Suite 1800
Port 1 and, Oregon 97232
For Magic and Cassia:McDEVITT & MILLER LLP
by Dean J. Miller, Esq.
420 West BannockBoise, Idaho 83702
CSB REPORTING
Wilder , Idaho
APPEARANCES
83676
. .
A P P A R N C E S (Cont inued)
For Energy Vision LLC:
For Renewable NW proj ect
& NW Energy Coalition:
Glenn IkemotoPrincipal
Energy Vision LLC
672 Blair Avenue
Piedmont, CA 94611
William M. Eddie
Advocates for the West
Post Office Box 1612Boise, Idaho 83701
CSB REPORTING
Wilder , Idaho 83676
AP PEARANCE S
-----
I N D E X
WITNESS EXAMINATION BY PAGE
John R. Gale
Idaho Powe r )
Mr. Kline (Direct)
Prefiled Testimony
Mr. Woodbury (Cross)Mr. Richardson (Cross)
Mr. Batt (Cross)Mr. Miller
NUMBER DESCRIPTION PAGE
FOR IDAHO POWER COMPANY:
1 - Let ter from Arrow Rock Wind
Mr. Sorenson , to IPUC , dated
June 24 , 2005
Premar ked
FOR CASSIA AND MAGIC WIND LLC:
603 - IPCo' s Response to First
Production Request of Cassia
& Magic Wind LLC to IPCo
Identified
604 - Excerpt from Idaho Power'
2004 IRP
Identified
605 - IPCo, interconnection
information obtained from
their website
Identified
CSB REPORTING
Wilder, Idaho INDEX/EXHIBITS83676
BOISE, IDAHO, FRIDAY , JULY 22 , 2005, 9:30 A.
COMMISSIONER KJELLANDER:Well , good
This is the time and place for a hearing andmornlng.
oral argument in the matter of the petition of Idaho
Power Company for an order temporarily suspending Idaho
Power's PURPA obligation to enter into contracts to
purchase energy generated by wind-powered small power
production facilities.
My name is Paul Kj ellander.I'll be the
Chairman of today I s proceedings.To my right
Commissioner Dennis Hansen and to my left is Commissioner
Marsha Smi th .As we look at today's hearing, just as a
reminder , this public hearing and oral argument is on the
narrow issue of the requested temporary suspension of
Idaho Power's PURPA obligation to enter into contracts to
purchase energy generated by wind-powered small power
production facilities, the need for and appropriateness
of such relief in related procedural and jurisdictional
matters and/or the Commission's power to suspend the
PURPA avoided cost rate for wind facilities.
On that last point, I would remind
everyone that that has been briefed very well in writing
and unless there is new information that needs to be
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provided to the Commission on the final issue in
reference to our authority there, we probably don't need
to spend as much time on that specific issue.Again, I
think the written briefs have been very sufficient in
terms of making your positions very clear.They've been
articulated well already in writing.
So let's move now wi th the appearances of
the parties and let's begin with Idaho Power Company.
Thank you, Mr. Cha i rman .MR. KLINE:
name is Bart Kline.I m appearing on behalf of Idaho
With me at counsel table is Monica MoenPower Company.
who wi 11 al so be doing a port ion of the proceeding.
COMMISSIONER KJELLANDER:Good morning,
and let's move now to Commission Staff.
MR. WOODBURY:Scott Woodbury, Deputy
Attorney General , for Commission Staff.
COMMISSIONER KJELLANDER:And Avista
Corporation.
MR . MEYER:Good mornlng, David Meyer for
Avista Corporation.
COMMISSIONER KJELLANDER:Good morning.
Exergy Development Group.
MR. RI CHARD SON :Thank you, Mr. Cha i rman .
This is Peter Richardson with the firm Richardson &
0 I Leary appearing on behal f of Exergy Development Group
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of Idaho and for your information , I will also be
representing Energy Vision LLC in terms of helping
Mr. Ikemoto on the stand and during cross.
COMMISSIONER KJELLANDER:Okay, thank you.
Windland Incorporated.
MR. HAMMOND:John Hammond of Batt &
Fisher and Bill Batt of Batt & Fisher for Windland
Incorporated.
COMMISSIONER KJELLANDER:Good morning.
Cassia Wind Farm LLC and Cassia Gulch Wind
Park LLC.
MR. MILLER:Thank you, Mr. Cha i rman .
Dean J. Miller of the firm McDevitt & Miller appearing on
behal f of Cassia Wind Farm LLC and Cassia Gulch Wind Park
LLC and also on behalf of Magic Wind LLC which we'
referred to collectively as Magic and Cassia.I would
like to also introduce to the Commission Mr. Armand
Eckert seated to my right who is the principal of Magic
Wind and Mr. Jared Grover seated to his right who is the
principal of Cassia Gulch and Cassia Wind Farm.
COMMI S S lONER KJELLANDER:Thank you,
Mr. Miller , and Mr. Richardson , you've already introduced
your representation for Energy Vision , so I believe we'
ready then for PacifiCorp.
MS. NORDSTROM:Good mornlng.m Lisa
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Nordstrom and wi th me is Dean Brockbank appearing on
behalf of PacifiCorp.
COMMISSIONER KJELLANDER:Thank you.
J. R. Simplot Company.
Okay, Renewable Northwest proj ect and
Northwest Energy Coalition.
MR. EDDIE:Good mornlng, Mr. Chairman.
This is William Eddie here on behalf of Renewable
Northwest proj ect and Northwest Energy Coalition , and
seated on my left is Troy Gagliano from Renewable
Northwest proj ect
COMMISSIONER KJELLANDER:Thank you, and
good mornlng.Did we miss anyone for purposes of
intervention and cross examination today?If not, then
think we're ready to move on to the next area of interest
and that would be preliminary matters that need to come
before the Commission.Mr. Kline.
MR. KLINE:m aware of one preliminary
mat ter that I think we should take up, Mr. Chairman.
Earlier this week Idaho Power Company filed a motion to
change the schedule in this case.The mot ion was
distributed to all the parties.We filed the motion
because the Company thought that the change in schedule
that was proposed in the motion could assist in
processing this case in three ways:First, when the full
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extent of the volume and the diversity of the issues that
were contained in the prefiled testimony became known on
Monday, it certainly seemed unlikely to us that we'
going to be able to complete the oral argument, the
hearing and a schedul ing conference in one day.
I guess I'll surmise that if the
Commissioner has brought a whip with him that he can use
on the lawyers, we might be able to do that, but it seems
unlikely, and it also seemed to us that just for the
continui ty of the proceeding, of the presentation, trying
to do it in one day would be difficult and then having to
bifurcate it just would lose that continuity.
Secondly, again, considering the volume
the testimony and the diversity of the issues raised, we
thought that the filing of rebuttal testimony would be
appropriate.It would provide a more complete record for
the Commission on which to base a decision on the relief
that's been requested by the Company and third, of
course, there's never any certainty that settlement
negotiations would be successful , but Idaho Power thought
it might be worthwhile to undertake at least some limi ted
settlement negotiations or attempt settlement
negotiations before the cross-examination and oral
argument kind of got all of the parties' juices flowing.
It's always a little more difficult once you've had the
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adversarial proceeding to then go into set tlement
On Wednesday my tally was that
approximately six of the parties to this case supported
the motion.I believe three took no position and we had
one party that was opposed to the motion.Now that
everyone has prepared to proceed today, they've brought
their experts with them , they've gotten prepared to do
cross-examination , I don't know if that tally would still
would be the same.I think you re going to have to ask
the various parties how they feel about it today.
As far as Idaho Power Company
concerned, I think we still think that the short delay
that we had proposed to talk about settlement and the
filing of rebuttal testimony might be useful , but at the
same time, we are prepared to proceed today on all of the
items on the list of things to do if that's the
Commission's preference.
COMMISSIONER KJELLANDER:Thank you,
Mr. Kline.Let's check in with the other parties to the
case to get the general reaction there and see where we
go with the specific motion.
Mr. Woodbury.
Thank you, Mr. Cha i rman .MR. WOODBURY:
think the Staff is prepared to move forward today.We do
believe that opportunity should be provided to parties
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they desire to file rebuttal testimony or reply briefs.
The settlement negotiations or workshop format proposed
by Idaho Power I think might be helpful to establish
grandfathering criteria if we get to that stage,
certainly not to determine the amount of the adj ustment,
if any, is necessary for the published avoided cost rate
for intermittent wind, but I believe everybody is here
and I would like to see the record established , provide
the Commission the opportunity to deal with Idaho Power'
mot ion to suspend.
Staff has an al ternate proposal set out in
its testimony and I think that also today if we could
probably or perhaps move to the workshop the opportuni
for parties to engage in discovery if the proceedings are
further down the road , so again, I don't think I have any
further comment.Staff is prepared to move forward.
COMMISSIONER KJELLANDER:
Commissioner Hansen , do you have a question?
COMMISSIONER HANSEN:I just had one
question.Mr. Woodbury, do you, outside of all the
parties prepared and ready to go today, do you see any
advantages from the Staff's point of view in delaying
this and trying to work things out?
MR. WOODBURY:I think there are a number
of parties that come into the Hearing Room , the wind
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industry which is certainly well represented, the
utilities that are concerned with integration costs of
wind on their systems, but I think that a third party
that I guess Staff will try to represent is the customer
who is footing the bill for PURPA costs as this
Commission allows utilities to recover all of their PURPA
contract costs through regulatory proceedings and so
that cost is not reflective of the Company's avoided
cost, the Company is incurring additional costs that are
not being recovered, then I believe that the customer
perhaps disadvantaged in staying proceedings or not
acting expeditiously.
COMMISSIONER KJELLANDER:Thank you
Mr. Woodbury.
Let's move to Avista.
Thank you.MR . MEYER:Avista continues
to support the motion of Idaho Power, al though we are
prepared and at your pleasure to proceed today.The key,
of course, is that this process be efficient and
meaningful and perhaps as you tally the room and take a
sense for the group that a picture will emerge, but we'
prepared to go ahead today.
COMMI S S lONER KJELLANDER:Thank you.
Let's move to Mr. Ri chardson
MR. RI CHARD SON :Thank you, Mr. Chairman
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Exergy and Energy Vision LLC.m concerned,
Mr. Chairman, that Idaho Power has de facto already
suspended execution of PURPA contracts without any order
or direction from this Commission.That said, assuming
you allow them to continue in that posture, it makes the
purpose of this hearing almost moot therefore, I believe
that settlement negotiations would be fruitful if they
were expeditiously embarked upon and Exergy and Energy
Vision LLC are willing to participate in those settlement
negotiations and are nevertheless prepared to go forward
today wi th cross - examina t ion.
COMMISSIONER KJELLANDER:Thank you, Mr.
Richardson.
Let's move to Windland.
MR . HAMMOND:In the interest of time,
Windland is resting on its document it filed yesterday
obj ecting to the suspension or the modification of the
schedule.Windland is in agreement wi th some of the
reasons that Staff , Mr. Woodbury, just stated and we are
prepared to go forward today.
COMMI S S lONER KJELLANDER:Thank you, Mr.
Hammond.
Let's move to Magic and Cassia.
MR. MI LLER :Thank you , Mr. Cha i rman .
Magic and Cassia, as previously indicated , are always
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willing to participate in any fruitful possibility of
settlement discussions.That said , in my experience with
these types of proceedings, the number of times where you
actually get to what you might call a cri tical mass
point , that is, where you have all of the people and all
of the issues together before the Commission sort of
ready or perhaps ready for a decision , is difficul t to
predict.If we don't try and make some decisions based
on the record now , it's di f icul t to predict when the
next time might be that all the parties might be
available, the Commission might be available, the issues
could be reexamined.
We believe that the record as it will be
developed today would be sufficient for the Commission to
make a determination as to what you might call the
grandfathering issue of who any suspension the Commission
might authorize will apply to and who it will not apply
to.As our pleadings indicate, this is more than an
academic matter for Cassia and Wind.Their proj ects hang
in the balance, are at stake.We believe that we could
leave here today with an answer to the question of will
any suspension that the Commission might order apply to
Cassia and Wind or will it not.
COMMISSIONER KJELLANDER:Mr. Miller , just
a quick follow-up question.Would the settlement not be,
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the settlement discussion process if that's the direction
that the Commission went , would that not be the
appropriate place to actually deal with the issue of
grandfathering and any interim , whether it be from the
time in which the Commission might take to deliberate,
assuming that we move forward with any type of further
hearings today on some type of order related to a
suspension , there would be a gap of time there which
everyone seems to believe that presently we have a
de facto moratorium that that grandfathering issue might
well be the major focus of some settlement discussions?
MR. MILLER:Certainly it could,
Mr. Cha i rman .I guess I would say two things to point
perhaps in the other direction:The first is that Magic
and Cassia have proposed on the record a qui te simple
grandfathering proposal that we believe would work
adequately at this stage of the proceeding.Now , if the
Commission goes on and , say, six months from now adopts
new policies and rules, at that point in time a new or
different or phase two-type suspension or exemption could
be considered, and to in effect rei terate, hopefully not
in agonizing detail, the other point is that we don'
really know with certainty how long it will take for a
settlement process to unwind, for a settlement to either
be not reached or reached , for it to be brought back
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before the Commission.From Magic and Cassia's point of
view , frankly, every day is significant in the question
of whether their projects will or will not be developed.
COMMISSIONER KJELLANDER:Thank you
Mr. Miller.
Let's move now to PacifiCorp.
MS. NORDSTROM:PacifiCorp supports Idaho
Power's motion and any settlement negotiations that may
occur.We are prepared to proceed today if that is what
the Commission desires.
COMMISSIONER KJELLANDER:Thank you, and
let's go to Mr. Eddie.
MR. EDDIE:Thank you.We did not oppose
Idaho Power's motion; however , we do recognize that for
several developers in the room now time is of the essence
and that there's a risk if we move into settlement that
that will simply bog down and continue what Mr.
Richardson referred to as the de facto suspension
PURPA avoided cost rates availability that's happened
right now.We'We are prepared to go ahead today.
prepared to go into settlement negotiations as well.
Thank you.
COMMISSIONER KJELLANDER:Thank you, Mr.
Eddi e .
Let's go back now to Idaho Power.Do you
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have any response from what you've heard?
MR. KLINE:I really don't, Mr. Chairman.
I think the parties have laid out their positions pretty
effectively.
COMMISSIONER KJELLANDER:Thank you.
Commissioner Hansen.
COMMISSIONER HANSEN:Mr. Kl ine , I may
have missed it in your first proposal there, but did I
fail to get the time limit you wanted?Did you give us
a time limit for a delay, like 30 days or two weeks or
three years or what?
MR. KLINE:We really didn't , Commissioner
Hansen.We thought perhaps if the Commission was
inclined to go the route of adjusting the schedule, then
the part ies could meet, could talk about when we could
get together and at least get started on the process, but
I didn t try and prej udge how long it would take.
COMMISSIONER HANSEN:If this was delayed
what type of time frame are you looking at to either make
this a successful negotiation or failure and then go
back?
MR. KLINE:I believe that we would
probably know pretty quickly whether or not we were going
to be able to come to any kind of a settlement.I don'
think it would be a protracted discussion.As far as
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we I re concerned , we're really just talking about settling
the issue of the temporary suspension.Probably the
first step that a lot of people are going to ask in doing
that is well , am I going to be affected by it, so as far
as we're concerned , that would be the only thing that we
would be talking about settling.
Now , all of the other issues that would go
forward from this , do we need to look at ancillary
serVlces again , do we need to look at whether the CCCT
would be the appropriate resource, those would be things
that would be done in subsequent proceedings, so I don I
want to leave the impression that we're talking about
settling everything in this settlement that we're talking
abou t .
COMMISSIONER HANSEN:Thank you.
COMMISSIONER KJELLANDER:Commissioner
Smi th.
COMMISSIONER SMITH:So how about 30 to 45
minutes right now?
MR. KLINE:We're willing to give it a
try, don't know whether that would work or not.
COMMISSIONER SMITH:Thanks.
COMMI S S lONER KJELLANDER:Does anyone have
an obj ection if we take a break for about 30 to 45
minutes, go off the record and then we'll come back and
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just perhaps ask where we might be before we move forward
wi th anything further today?Does that sound like a
reasonable approach?Does anyone disagree with that
approach?Seeing no one disagree, we will go ahead and
move forward and we will take a brake for approximately
40 to 45 minutes and we are off the record.
(Recess.
COMMISSIONER KJELLANDER:Okay, we'll go
back on the record and before we broke, we had asked the
parties to have some discussions in relationship to
possible settlement and if we could get an update on that
at this time.
MR. KLINE:Let me attempt to do that and
obviously, there's an awful lot of people that
participated and if I misstate what was discussed in
presenting this to the Commissioners, please, I know
you III assist.A little background, I think the tension
that we re having in trying to get this thing settled and
at this point it doesn't look like we're going to be able
to that, the tension is between the desire to have a
meaningful request for proposal.As you know , we've got
one out there, it's for 200 megawatts.That's a number
that comes directly from our integrated resource plan.
We think that's the right number to bring on at this
point in time.
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The tension is to the extent that we
grandfather a large number of QF proj ects, it makes
more di f f i cuI t for us to have a meaningful RFP.
reduces the amount that we can take in the RFP and still
be able to keep within the 200 megawatt goal that we have
set and this Commission has acknowledged as a part of the
IRP , so that's the tension.Tha ti s the probl em, and when
we look at each of the potential bright lines, as Joe
Miller described them , they each have a ramification for
different proj ects.
We looked at, for example, those folks who
have signed contracts, developers that have signed
contracts, and given them to us, even though we haven'
signed them , but they've signed them and they said
they're ready, willing and able to go ahead and slgn a
That's one bright line we looked at.Anothercontract.
bright line we looked at is those folks who have made a
request for interconnection , made an application for
interconnect ion wi th Idaho Power's del i very group.
They've paid a deposi t to allow the Company to go forward
with doing a feasibility study, to look at their
particular interconnection and I think those were the two
primary bright ines
When you
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you have winners and losers
each one of those.Some folks have done both, a very few
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folks have done both.Larger groups of people have done
one or the other and frankly, if you do all of it, in
other words , if you did both the interconnection
application and those folks who have signed contracts,
you reach a number in addition to the contracts we
already have that's very close to the 200 megawatts and
the question is, is there a way, then , to have a
meaningful RFP.I think most of the folks that expressed
oplnlons during the course of our discussions indicated
that you couldn't do a meaningful RFP for less than 50 to
100 megawatts, so there's our dilemma, Commissioners.
I don't think that we're going to be able
to reach any kind of a settlement this morning.I don't
know if we went to another settlement session with more
time and with more people or with more information we'd
do any better.Okay,t ha t 'my report.I f anybody has
got any other things to add to it,why,please do so.
MR.I KEMOTO :I'd ike to say something.
COMMI S S lONER KJELLANDER:No,you have
legal counsel , so let's keep this orderly.Is there any
party to the case who would like to add any comment at
this point?I do have one quick question for Mr. Kline
and that would be in relationship to the bright lines
that you referenced, is there any indication of what the
signed contracts amount to in terms of total megawatts?
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MR. KLINE:Yes , there is, and Ric took
the notes and I can't read his notes , so I'll let him
do you remember which one it was?
MR. WOODBURY:Mr. Chairman , if I might
say something.
COMMISSIONER KJELLANDER:Mr. Woodbury.
MR. WOODBURY:Mr. Glenn Ikemoto is a
party to this case.He's the one that just tried to say
something.
COMMI S S lONER KJELLANDER:Mr. Woodbury,
that's fine.To the extent that he needs to speak to us
at this point, though , since he's not been sworn in
slnce we don't have any testimony on the record for him,
it would probably be most appropriate if his legal
counsel would like to talk to us at this point assuming
he has something and will certainly give him that
opportunity.
MR. RICHARDSON:Mr. Chairman , the numbers
that Mr. Kline is going to be reading to you are also not
on the record and he's not under oath either.
COMMISSIONER KJELLANDER:Fair enough.
still asked the question , Mr. Richardson.
MR. KLINE:Yes, the answer to the
question is if you just take the contracts that have been
signed and not signed by both Idaho Power and the
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developer, but just by the developer, that would be an
additional 100 -- additional 80 megawatts.Again, that I s
nameplate capaci ty.Now , of course, to that you need to
add the fact that we already have 80 megawatts of wind
under contract signed and submitted and we have the Arrow
Rock contract which we believe clearly ought to be
included.
COMMISSIONER KJELLANDER:Okay.
MR. KLINE:So the total of all of that
approximately 180, 190.
COMM IS S lONER KJELLANDER:Thank you, and
Mr. Richardson , as further clarification , your point
about it not being verified yet and subj ect to cross is
an appropriate one and when the time comes , assumlng that
that lssue becomes one of discussion, certainly, there
will be an opportunity for that to be followed up on.
MR. RI CHARDSON :Thank you,
Mr. Cha i rman .
COMMI S S lONER KJELLANDER:You bet.Okay,
is there anything else that needs to come before us in
reference to that?If not , I appreciate the efforts that
were made and for the report and I believe that now takes
us to the next steps, which I believe would be to go
ahead and proceed with the case as it relates to
witnesses on the specific issues that we're here for,
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oral argument and for hearing today and see where that
takes us and so I believe at this point, then , we are
ready for Idaho Power to call its first witness.
MR. KLINE:Do you want to do wi tnesses
first or do you want to do oral argument first?I just
wasn't sure.
COMMISSIONER KJELLANDER:Let's see, does
anyone have a preference?We have received some wri t ten
comments which in large part seem to be, unless I'
mischaracterizing those comments that are in, would in
part be the equivalent of the oral argument.Unless I'
mistaken, that's what I thought I read through there.
What would we be hearing in an oral argument at this
point, I guess, is my question?
MR. KLINE:The notice that you gave to us
on July 1st indicated that you wanted first, to have
briefs submitted to address No., does the Commission
have the legal authori ty to grant the suspension and
, should it do so.Your notice also indicated that you
would want to take oral argument on those questions as
well and that's the reason that I posed the question as
to which one
- -
do you want to go with oral argument,
does that kind of set the stage for what you're going to
hear in the testimony?Do you want to do the testimony
first and then use the oral argument to clean up?
CSB REPORTING
Wilder , ID 83676
COLLOQUY
COMM IS S lONER KJELLANDER:Okay, why don'
you glve me a moment or two to just kind of figure out
which path we'd like to take this morning and we'll just
get back with you in a moment and we'll go off the
record.
(Pause in proceedings.
COMMISSIONER KJELLANDER:We'll go back on
the record.Wi th regard to the oral argument as
relates to the legal authority, I think the Commission
has seen the written briefs and feels comfortable enough
that as we get to that point as it relates to our legal
authori ty that we've been fully apprised of the parties'
positions on that and feel capable of making a
determination at a time and point that that's necessary,
so I think that we would like to begin with testimony and
push forward in that direction and so with that,
Mr. Kline, if you'd like to call your first witness.
MR. KLINE:Thank you very much,
Mr. Cha i rman .I'll call Ric Gale to the stand, please.
CSB REPORTING
Wilder , ID 83676
COLLOQUY
JOHN R. GALE
produced as a wi tness at the instance of the Idaho Power
Company, having been first duly sworn, was examined and
testified as follows:
DIRECT EXAMINATION
BY MR. KLINE:
Would you please state your name for the
record?
My name is John R. Gale and I'm usually
known as Ric Gale.
And by whom are you employed and in what
capaci ty?
I am employed by Idaho Power and I'm the
vlce president for regulatory affairs.
Mr. Gale, have you previously pref iled
direct testimony in this case?
Yes.
And have you also prefiled one exhibit to
your testimony?
Yes.
Mr. Gale, do you have any additions or
corrections that you need to make to either your
testimony or your exhibi
CSB REPORTING
Wilder , ID 83676 GALE (Di)
Idaho Power Company
Well , I do before some math maJ or corrects
me.On page 7, on ine 14 , I talk about the percent
difference and on that line it says "which is 25 percent
less.I kind of went the wrong way wi th the
calculation , it's 20 percent less.It would have been
percent more , so the correction is 20 percent instead of
25 percent.
Any other addi t ions or correct ions that
you would like to make to your testimony?
No.
Mr. Gale, wi th the correct ions that you
have just made to your testimony, if I were to ask you
the same questions that are contained in your prefiled
direct testimony today, would your answers be the same?
Yes, they would.
MR. KLINE:Mr. Chairman , based on that, I
would request that Mr. Gale's testimony be spread on the
record as if read in its entirety and that Mr. Gale I s
Exhibit 1 be marked for identification.
COMMI S S lONER KJELLANDER:And without
obj ection , we'll spread the testimony of Mr. Gale across
the record as if read and mark the exhibi t and that would
be Exhibi t is that correct?Okay.
(The following prefiled testimony of
Mr. John R. Gale is spread upon the record.
CSB REPORTINGWilder, ID 83676
GALE (Di)
Idaho Power Company
Please state your name and business
address.
My name is John R. Gale and my
business address is 1221 West Idaho Street, Boise, Idaho.
By whom are you employed and in what
capaci ty?
I am employed by Idaho Power Company
as the Vice President of Regulatory Affairs.
Please describe your educational
background.
I hold a Bachelors of Business
Administration and a Masters of Business Administration
from Boise State University.I serve as an advisor to
the Uni versi ty' s College of Business and Economics.
Addi tionally, I have completed the Edison Electric
Insti tute 's Advanced Ratemaking School and the Uni versi ty
of Idaho's Public Utility Executive Course.
Please describe your work experience
wi th Idaho Power Company.
In October 1983, I accepted a
posi tion as Rate Analyst wi th Idaho Power Company.
March 1990 , I was assigned to the Company's Meridian
District Office for one year where I held the position of
Meridian Manager.In March 1991 , I was promoted to
Manager of Rates.In July 1997 , I was named General
GALE , DI
I daho Power Company
Manager of Pricing and Regulatory Services.In March of
2001 , I was promoted to Vice President of Regulatory
Affairs.As Vice President of Regulatory Affairs, I am
responsible for the overall coordination and direction
the
CSB REPORTING
Wilder , ID 83676 GALE , DI
Idaho Powe r Company
Pricing & Regulatory Department, including development of
jurisdictional revenue requirements and class
cost -of - service studies, preparation of rate design
analyses , and administration of tariffs and customer
contracts.In my current position , I am also responsible
for policy matters related to the economic regulation of
Idaho Power Company ("Idaho Power" or "Company"
Q .What topics will you discuss in your
testimony in this proceeding?
I will discuss the role of the
Integrated Resource Plan (" IRP") at Idaho Power Company,
the Company's act ions to implement the IRP
recommendations , the complications encountered in
acquiring the wind resources described in the 2004 IRP
portfolio , the resul ting request for a temporary
suspenslon in wind purchases under the Public Utility
Regulatory Policies Act of 1978 ("PURPA"), and a
recommendation on handling transitional PURPA agreements.
What is the Integrated Resource Plan.
The Integrated Resource Plan is a
comprehensi ve look at Idaho Power's present and future
demands for electricity, as well as a plan for meeting
those demands.The plan addre sse s how Idaho Powe
expects to meet its Idaho and Oregon customers' growing
electrical demand over a 10-year planning horizon.
IRP describes the Company I s proj ected The
GALE, DI
Idaho Power Company
need for additional electricity and the resources
necessary to meet that need while maintaining reliability
and efficiency.Both the Idaho and Oregon public utility
commissions require state electric utilities to file an
IRP every two years.The current plan was filed with the
commissions in August 2004.
What purpose does the IRP serve at
Idaho Power?
The IRP is the Company I s principal
resource planning document and the foundation for making
resource acquisition decisions.The near-term action
items described in the plan serve as a blueprint for
Company action.Obviously, circumstances change over
time and these circumstances are considered along wi
the IRP as part of resource acquisition decisions.
Nevertheless, the IRP is our starting point.
Please generally describe the resul
of the most recent IRP.
The 2004 IRP is the Company's most
recently completed plan.The plan examined 12 different
resource portfolios and ultimately selected a diversified
portfolio with nearly equal amounts of renewable
generation and traditional thermal generation as the
preferred resource portfolio.The 2004 IRP has been
accepted for filing by the Idaho Public Utilities
GALE , DI
I daho Power Company
Commission (" IPUC" or "Commission") and acknowledged by
the Public Utility Commission of Oregon.
GALE , DI
Idaho Power Company
What were the near-team actions
identified by the 2004 IRP?
For Fall 2004 , the following actions
were identified:(1) issue an RFP for 200 MW wind
(2) issue an RFP for a peaking resource,(3 )resource,
proceed wi th the Borah-West transmission upgrade,(4 )
file a supplement to the 2004 IRP presenting the results
of the ongoing demand-side management studies, and (5)
file for an energy efficiency tariff rider with the
Oregon Public Utilities Commission.For 2005 these
additional actions were identified:(1) design
demand- side measures in coordination wi th the Energy
Efficiency Advisory Group and the Public Utility
Commissions,(2) issue an RFP for 12 MW CHP , and (3)
issue an RFP for 100 MW geothermal resource.
What specifically did the 2004 IRP
call for in the way of wind resources?
The 2004 IRP called for 200 MW of
wind resources to be implemented via Requests for
Proposals ("RFPs") issued in 2005 and an additional 150
MW of wind resources to be implemented via RFPs issued in
The total amount of wind resources called for2008.
during the planning period was 350 MW.
Wha t has the Company done to procure
the wind resources identified in the 2004 IRP?
GALE , DI
Idaho Power Company
Idaho Power initiated an RFP process
to procure 200 MW of wind resource on January 13, 2005.
The Company received offers in response to the RFP on
March 10, 2005.
Has the Company encountered any
circumstances that impact the implementation of the 2004
IRP near-term actions, including the procurement of wind
resources?
Yes.As Idaho Power attempted to
execute its RFP for wind resources, it became evident
that the prices and contracts available to wind resources
under PURPA were influencing the RFP process.
Significant amounts of wind generation began to
materialize under PURPA at prices above the levels
contemplated in the IRP.Bids in the RFP process were
much closer to the PURPA price than the IRP price.
Additionally, it was evident that unsuccessful RFP
bidders could repackage their proj ect s to fit PURPA.
Once these influences became apparent , Idaho Power
realized that it had to act to address the potential of
much more wind coming on-line sooner and more expensively
than contemplated in the IRP.The concern wi th wind
resources was the possibility of receiving quantities
that were too much , too soon , and too expensive.
Under what authority is Idaho Power
GALE, DI
Idaho Power Company
obligated to purchase electric energy produced by
cogeneration and small production facilities?
GALE , DI
I daho Power Company
Sections 201 and 210 of PURPA requlre
electric utilities to offer to purchase electric energy
generated by qualifying cogeneration and small power
production facilities.PURPA requires that state
commissions set the rates for purchases of power from
Qualifying Facilities ("QFs") at levels that are just and
reasonable to the utility's customers , in the public
interest and that do not discriminate against QFs.PURPA
specifies that the purchase rates set by state
commissions for electric utility purchases of energy
generated by QFs may not exceed the incremental cost to
the electric utili ty of the electric energy which, but
for the purchase from such QFs, the utility would
genera te or purchase from another source.
Has the Commission established
avoided cost purchase rates or "published rates" which
Idaho Power is legally obligated to offer QFs?
Yes.In Order No. 29646, issued by
the IPUC on December 1 , 2004 in Case No. IPC-04-25, the
Commission established the published rates that Idaho
Power is obligated to offer to QFs that generate less
than 10 average MW per month.
What is the current average levelized
published rate for 20-year contracts as established by
the IPUC?
GALE , DI
Idaho Power Company
The current average levelized
published rate for a 20-year contract that is scheduled
to be online in 2006 is $60.99 per MWh.
Before the issuance of Order No.
29646, how many megawatts of QF wind-powered generation
did Idaho Power have on contract?
Prior to the issuance of Order no.
29646 , Idaho Power had less than 1 MW of QF wind-powered
generation under PURPA contracts.
What was the published rate for 2003
QF contracts?
The published rate for 2003 QF
contracts set in IPUC Order No.2 9124 was approximately
$48.61 per MWh for a proj ect scheduled to come online in
2003 which is 20% less than today's levelized published
purchase rates.
How many megawatts of PURPA resources
have been approved by the Commission within the Idaho
Power service terri tory since the issuance of Commission
Order No.2 964 6?
Since the issuance of Order No.
29646 , 71.5 MW of nameplate capacity have been approved
by the Commission.
Are there any pending applications
before the IPUC for approval of additional wind-powered
QF contracts?
GALE , DI
I daho Power Company
Yes.Idaho Power presently has
applications before the Commission for 21 MW of
addi tional wind-powered QF contracts.
Has the Company received inquiries
from other wind-powered QF developers?
Yes.Idaho Power has received
numerous inquiries from potential developers of new wind
proj ects.Based on information presented by the
developers to Idaho Power on issues including, but not
limited to , site control , equipment supply and wind
studies, Idaho Power estimates these inquiries represent
an additional 193 MW of wind-powered generation that has
the potential of developing into actual QF proj ects.
In the Company's opinion, are there
other factors besides the 2004 published avoided cost
rate that has stimulated this sudden increase in
wind-powered QF development in Idaho?
Yes.Certain tax incentives adopted
at the state and federal levels have stimulated
wind-powered QF development.Just prior to the issuance
of IPUC Order No. 29646, the federal government
reinstated the Production Tax Credit ("PTC") for wind
generation.The reinstated PTC provides proj ect owners a
tax credit of approximately $19 per MWh for the first
years of the proj ect 's operation.That
GALE , DI
I daho Power Company
production tax credit , together with accelerated
depreciation rules and other tax incentives at the
federal level , has stimulated the development of wind
genera t ion.At the state level , the Idaho legislature
recently enacted sales tax exemptions (Idaho Code,
~ 63-3622QQ) to encourage the development of alternative
generating resources, including wind.In addition
recent IPUC Orders that have increased the term of QF
contracts to 20 years (IPUC Order No. 29124) and have
made proj ects producing less than 10 average MW per month
eligible to recel ve the published rates (IPUC Order No.
29632) have created a fertile environment for wind
deve 1 opmen t .
The combination of federal and state tax
incentives, the increase in energy purchase rates
established in Order No. 29646, and the favorable
contract terms and conditions described above, plus the
fact that QF developers retain the right to any green
tags associated with QF development, have all played a
role in the rapid increase in the number of QFs
including wind-powered QFs, seeking contracts to sell
their generation to Idaho Power.
Has the increased QF acti vi ty
impacted the responses to a Request for Proposals issued
by the Company?
GALE, DI
Idaho Power Company
I believe so.As previously stated,
the 2004 IRP called for 350 MW of wind-powered resources
to be acquired in the near term , 200 MW in 2005, and an
additional 150 MW in
GALE , DI
Idaho Power Company
2008.In deciding to move forward wi th an RFP program to
competi ti vely acquire wind resources , Idaho Power was
hopeful that a bidding process would allow the Company to
take advantage of competi tion and the economies of scale
associated with large-sized wind generation projects.
Idaho Power anticipated that this strategy would moderate
the total cost of wind energy acquired by averaging the
higher cost of smaller QF wind proj ects acquired at the
avoided cost rate wi th the presumably lower cost of wind
acquired by competitive RFPs.
Have these expectations been met?
No, these expectations have not been
met.The bids received in response to the 2005 RFP are,
on average , higher than the levelized prices contemplated
in the 2004 IRP.
Is it possible that the published
rates for QFs influenced the bidding?
Yes, I bel ieve so.
On what basis is Idaho Power
establishing this belief?
To begin with , Idaho Power I S 2004 IRP
modeled costs to acquire wind resources was $42.94 per
MWh based upon information obtained from public sources
and wind developers.The Company al so was aware of
recent announcements made by other regional utilities
concerning power purchase agreements
GALE , DI
I daho Power Company
they had entered into wi th wind resource developers wi
substantially lower pricing structures.In the state of
Montana, for example, NorthWestern Energy recently
received approval from the Public Service Commission of
Montana (Final Order No. 6633b, issued on March 31 , 2005)
for an agreement with Judith Gap LLC under which
NorthWestern will purchase 135-150 MW of wind resource at
a price of $31.71 per MWh.
What impact has the accelerated level
of QF wind development had on Idaho Power's recently
issued Request for Proposals for 200 MW of wind-powered
resources?
In 1 ight of the large number of MWs
of QF wind resources already acquired , approved and
proposed , and the high bid prices received in the 2005
RFP , it is almost certain that Idaho Power will reduce
the amount of wind generation it will obtain through the
2005 RFP.At the same time, it is likely that the 2008
RFP will need to be either reduced or eliminated
al together.
If Idaho Power reduces or eliminates
the amount of wind required in the 2005 and 2008 RFPs,
does the possibility exist that wind developers who
ei ther responded to or intend to respond to future RFPs
will submit applications for QF developments?
GALE , DI
Idaho Power Company
Yes.That is a real concern to the
Company.With only minor modifications, it would not be
difficult for a
GALE , DI 11a
Idaho Power Company
larger wind proj ect to be reconfigured into several
smaller proj ects each of which would qualify for the
published rates.
What would be the consequences to
Idaho Power and its customers if previous RFP bidders
reconfigured their facilities to comport with PURPA
requirements and Idaho Power were required to acqulre a
disproportionate quantity of wind powered generation
through PURPA?
That scenario would lock the Company
and its customers into long-term contracts at prices that
the Company asserts are not appropriate for an
intermi t tent energy resource such as wind-powered
generation.These circumstances could potentially create
an unmanageable influx of intermittent generation on the
Company I s system.
Could the addition of large amounts
of QF wind generation adversely affect the reliability of
Idaho Power's system?
Yes, the addition of large amounts of
QF wind generation could adversely affect system
reI iabi 1 i ty Wind generation is an intermittent resource
subject to the natural variability in the wind.Thus,
the energy output from this resource may fluctuate
tremendously from hour-to-hour or even minute-to-minute
GALE , DI
I daho Power Company
independent of Idaho Power's system needs.For example,
a 10 MW wind facility may be at full output at one moment
and minutes later be at a very low to no output.
GALE , DI 12a
Idaho Power Company
As a result of these wind generation fluctuations and to
assure system reliability, wind-powered generation must
be "firmed" by ancillary services.
By what means can intermittent wind
resources be firmed?
Firming of a wind resource can be
provided by the purchase of load-following services and
reserves from a third party if the ancillary services and
transmission are available on a firm , long-term basis.
Alternatively, firming can be self-provided by the
utility primarily through other resources in the
utility's power supply portfolio , such as excess hydro
capacity or gas-fired combustion turbines, that the
utili ty can dispatch as necessary.
Does the combined cycle combustion
turbine, adopted by the Commission as the surrogate
avoided cost resource for setting avoided costs,
adequately establish the costs of integrating
intermi t tent wind resources into Idaho Power's system?
No, it does not.That surrogate
avoided cost methodology does not consider the costs
associated wi th the ancillary services, described in my
earlier testimony, that are required to reliably
integrate intermittent wind resources onto the Company'
system.Neither the Company nor the
GALE , DI
Idaho Power Company
Commission foresaw these consequences when the current
process for setting QF rates was established.
Is it fair to say that there are
costs associated with integrating intermittent wind
resources onto Idaho Power's system that are not
reflected in the published rates approved by the
Commission?
Yes, that is a fair statement.
What does the Company propose in
response to these circumstances?
In order to assess if wind resources
are impacting Idaho Power's system in a manner that
too much , too soon , and too expensive, Idaho Power
proposes to seek a temporary suspension on new PURPA wind
proj ects until the impacts of integrating these resources
onto the Company's system can be more thoroughly
evaluated from a cost and reliability standpoint.The
Company anticipates that there are a number of activities
that will facilitate this evaluation.
What acti vi ties does Idaho Power
anticipate will need to be taken during a suspension
period if the Commission would approve such request?
Idaho Power proposes to undertake the
following acti vi ties during a Commission-approved
suspension period: (1) the Company would retain an
independent third party
GALE , DI
Idaho Power Company
consul tant to assist Idaho Power in preparing an analysis
which would assess the total amount of addi tional wind
resources the Company's system can absorb wi thout
adversely affecting the Company's overall power supply
costs and system reliability;(2) Idaho Power would
prepare and file with the Commission a proposal for
computing avoided costs specifically tailored to the
attributes of intermittent wind-powered resources,
including the additional costs attributable to peaking
resources required to integrate significant amounts of
wind generation into Idaho Power's resource portfolio;
and (3) Idaho Power would prepare and present to the
Commission a report describing possible steps that could
be taken to increase the likelihood that future RFPs for
wind resources reflect actual resource costs and market
prices for wind resources rather than published avoided
cost rates for all types of smaller QF proj ects.This
analysis would also include a review of the benefits and
detriments to Idaho Power of an ownership option for wind
resources as a way to provide pricing discipline with the
RFP process.
Historically, avoided cost rates
specifically targeted to individual QF generating
technologies have not been developed.Why should the
Commission consider this practice now?
GALE, DI
Idaho Power Company
Only recently has the Company become
aware of the unlque set of challenges that intermittent
wind resources present to Idaho Power's system.As I'
already testified, neither the Commission nor the Company
foresaw the impact of intermi t tent wind resources on a
utility's system when the present surrogate avoided cost
methodology was established.The Commission should
consider a specific wind technology avoided cost rate
because of the unique intermittent nature of wind
resources and the large number of actual and potential QF
wind resources that are seeking PURPA contracts wi
Idaho Power.A reassessment of how the avoided costs
should be computed for wind generating resources should
be undertaken.That analysis, for the first time, would
consider the costs of firming and reliably integrating QF
wind resources into the Company's system.
In the Company's estimation , should
the Commission conduct a review of system reliability
issues and wind-specific avoided costs without
insti tuting a temporary suspension of mandatory PURPA
purchases for new wind QF proj ects?
In my view , that approach is neither
possible nor prudent.Prior history has shown that when
a utility asks the Commission to consider changing
avoided cost rates, potential developers inundate the
GALE, DI
Idaho Power Company
utility with contract and interconnection requests in an
effort to obtain the rates in effect prior to the
potential rescission of those rates and adoption of
newer , likely lower rates.A temporary suspension of
mandatory purchases of wind QF resources is imperative to
effectively address this unique issue and to avoid the
adverse impacts anticipated should the Company I s system
become deluged wi th wind resources.
Has the Commission authorized
temporary suspensions of the PURPA contract obligation in
the past?
Yes, my legal counsel has advised me
that such a suspension is not without precedent.In IPUC
Order No. 19348 issued in Case No. U-1500-156, the
Commission, on its own motion , imposed a one-year
moratorium on purchases from QFs located within the
service area of non-investor-owned utilities that
purchase energy supplies from Bonneville Power
Administration.That moratorium was eventually lifted
and Idaho Power is the purchaser of energy from QF
proj ects located in the service area of Idaho
municipali ties and electric co-operatives.
Does the Company recommend that the
suspension apply to all wind agreements being negotiated
between wind developers and Idaho Power prior to the
filing of Idaho Power I s Petition in this proceeding?
GALE , DI
I daho Power Company
Idaho Power is aware that, should the
Commission grant the requested temporary suspension , one
of the decisions that must be made is how to apply the
suspension to those entities interested in the process of
having QF contracts negotiated and reviewed.To that
end, the Company does not intend to sign any addi tional
agreements until the IPUC provides some guidance on the
Company's request.The Company calls to the Commission'
attention that a very limited number of QF wind projects
were in the final stages of negotiations with Idaho Power
immediately prlor to the filing of the Idaho Power
Petition.One proj ect in particular Arrow Rock Wind,
("Arrow Rock") executed an agreement with theInc.
Company prior to the date that Idaho Power filed its
Peti tion wi th the Commission.On June 24 , 2005, the
Company received copy of correspondence from Arrow Rock
to the IPUC that details the series of events leading to
the execution of the agreement.A copy of the agreement
is provided as Exhibi t No.
Idaho Power concurs with the statements
made by Arrow Rock contained in Exhibi t No.As noted
in that let ter, energy del i veries from the Arrow Rock
would not be the typical type of intermittent energy
generally associated wi th a wind proj ect Instead, Arrow
Rock has secured a firming agreement with another
GALE , DI
Idaho Power Company
utility.Accordingly, the energy delivered from the
proj ect to Idaho power will be a flat , firm, monthly
schedule of energy.
Due to the fact that negotiation of this
agreement was completed prior to the filing of the
Peti tion in this proceeding and the fact that the actual
energy delivered to Idaho Power will not be of the
intermittent nature at issue in this proceeding, the
Company respectfully recommends that the Commission
consider Idaho Power's agreement with the Arrow Rock
Wind , Inc. proj ect as appropriate for exempting from the
temporary suspension request sought in this proceeding.
How long a suspension does Idaho
Power anticipate is needed to complete the
above-referenced activities and analyses?
It is my understanding that it will
take approximately six to nine months to conduct the
necessary act i vi ties and analyses.
How do you recommend that the
Commission proceed in this matter?
The Company respectfully requests that the
Commission issue its Order temporarily suspending for a
period of nine months Idaho Power I s obligation under
201 and 210 of PURPA to enter into new contracts to
purchase energy generated by wind-powered QFs in order
GALE, DI
Idaho Power Company
permit the Company and the Commission the opportunity to
undertake the acti vi ties
GALE, DI 19a
Idaho Power Company
and analyses described in this testimony.Should the
studies be completed sooner, Idaho Power would be
supportive of an earlier end to the suspension period.
Does that conclude your testimony?
Yes, it does.
GALE , D 2 0
Idaho Power Company
(The following proceedings were had in
open hearing.
MR. KLINE:Wi th that, Mr. Gale would be
available for cross-examination.
COMMISSIONER KJELLANDER:Thank you,
Mr. Kline.Since we have a number of parties and I don'
want to miss anyone on this, I'm just going to go down
the list in the same order that we'gone through this
morning Just that you sort of have that in mlnd as we
move forward.I'll try not stray from that that
there won't be any surprises, so let's begin wi
Commission Staff , Mr. Woodbury.
MR. WOODBURY:Thank you, Mr. Cha i rman .
CROS S - EXAMINA T I ON
BY MR. WOODBURY:
Good mornlng, Ric.
Good morning.
Looking at your testimony and the scope of
your testimony as you describe on page 2 , you talk about
the role of the integrated resource plan , your intention
the Company's actions to implement IRP recommendations
and complications encountered in acquiring wind resources
through your RFP , and then you state, "the resul ting
CSB REPORTING
Wilder , ID 83676 GALE (X)
Idaho Power Company
request for a temporary suspension " but there are other
factors that went into the Company's filing and if I read
through your testimony, those factors are also ancillary,
the requirement of ancillary backup service for
intermittent wind and system reliability concerns; is
that correct?
Yes.
Wi th respect to the IRP , can you explain
how the IRP treats PURPA resource acquisitions?
Well , the PURPA has, there's a section in
the IRP that does discuss PURPA , but there's no explicit
inclusion of PURPA wind proj ects in the wind portfolio.
So the Company does not proj ect a level of
QF purchases in its planning?
Well , it incorporates what's in there.
can't tell you whether it proj ects additional ones or
not.
But you don I t proj ect
- -
it incorporates
signed contracts as part of your
incorporates signed contracts.
Okay.Does the Company reVl se its
resource acquisi tion planning based on
Commission-approved contracts in the interim period
between the time you submit your IRPs?
The Company considers those.That's kind
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
of what started this whole process.
So the Company, then , I guess, engages in
continuing assessment of QF status of proj ects that
you're negotiating with and the probability that those
will resul t in a signed contract?
Well, in this instance the genesis of this
whole issue was that the Company was trying to progress
through its action items in the IRP , one of which was the
wind RFP, and as we tried to accomplish the wind RFP , it
was apparent that we had an increased acti vi ty in PURPA
wind which we hadn't anticipated to the degree and when
the prices came in for the RFP , they were higher than
what we had expected, so that's how the whole issue
developed.
Well , all right, let's talk about the RFP
prices being higher than you expected.In gauging
whether or not they were higher , you were using the
$42.94 prlce that you had in your 2004 IRP?
That's the price that was used for
planning purposes.
And can you - - how was that price
derived?
My belief is that it was prepared by our
IRP analysts and those developing the IRP after
consultation with industry experts and industry
CSB REPORTING
Wilder , ID 83676
GALE (X)
I daho Power Company
associations.
I think you state on page 10 that it was
based on information obtained from public sources and
wind developers.
Public sources, certainly.
And those public sources would be what?
Regional contracts?
I can't tell you.
Do you know whether the $42.94 reflects
required ancillary services associated with wind?
I can't tell you whether it includes that
or not.
I f the Company were to have acquired 200
megawatts of wind in its RFP , do I understand that you in
addition to that would have felt obliged to provide
another 120 megawatts of backup ancillary service?
The thought of the initial 200 is that we
could acquire 200 megawatts of wind , nameplate capacity,
and work through those first 200 integration issues and
the Company could absorb that or if we hadn't anticipated
correctly, we were able to put 200 into the system
comfortably, we thought comfortably.To go beyond that,
then we thought that cost of integration became much more
important, so the first 200 was kind of a try-out period
an experience -gaining period.
CSB REPORTINGWilder, ID 83676
GALE (X)
Idaho Power Company
Is the cost of integration a factor in the
RFP pricing?
I am not familiar specifically with the
RFP for wind itself.m not on that team.
Could you indicate - - it's my
understanding that the RFP bids were submitted in March
what is the status of that RFP process?Is it open ended
as far as the time that the Company is required to accept
bids?
MR. KLINE:Mr. Chairman, I'm going to
obj ect I think Mr. Gale just testified that he's not a
member of that team.If he knows, I guess he can answer
it, but my problem is it's going to be tough to get
through all of this today anyway and Mr. Gale is
certainly able to answer the policy-type questions, but
if we're going to get into the real detailed analysis,
it's going to be a hard one.
BY MR. WOODBURY:My question is if you
know.
Would you ask again , please?
I was inquiring as to the status of the
RFP process and whether it's open ended as far as the
Company accept ing bids.Is there a sunset in that beyond
which bidders no longer are - - they basically can walk
away?
CSB REPORTING
Wilder , ID 83676 GALE (X)
Idaho Power Company
I don't know the specifics, but in an
attempt to be responsive, it's my understanding that we
can go ahead and complete the RFP process still.It'
not a done deal.It's on hold and that we can complete
it as started.
Your identification on page 8 of an
additional 193 megawatts of wind-powered generation that
has the potential of developing into actual QF proj ects,
do you have any additional information with respect to
the numbers and size of those proj ects and whether
they're in state or out of state?
We've provided some of that information in
data responses and I would need to look at those to tell
you the details.
Has the Company reexamined its IRP wind
cost assumptions that are set forth in your 2004 IRP?
I think the Company is evaluating whether
that needs to be done because of the disconnect between
the RFP and what was used in the planning process.
You speak on page 13 wi th respect to wind
resources and the intermittent nature , that firming can
be self-provided by the utility with excess hydro
capacity and gas-fired combustion turbines.My question
is does Idaho Power have the capability of providing that
firming in-house?
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
I believe the Company felt that the first
200 we could accommodate and if we were to expand past
the 200, then it would have to be given more careful
consideration.
Did you review Mr. Gagliano's testimony
with respect to integration studies performed by the
Utility Wind Interest Group?
I have read Mr. Gagliano's testimony.
And he indicates that Idaho Power is a
member of that group.
Yes, and I know we are.
Okay, and is this one of the sources that
the Company utilized in determining the wind figure in
the 2004 IRP?
I bel ieve it's one of the sources used by
the IRP team.
And has Idaho Power attempted
- -
have you
calculated what you believe is an integration cost?
Well , no.Again , I believe that the
Company thought for the first 200 we could accommodate
the integration and it's when we expanded past that that
we had to get a finer pencil out.
Wi thin the RFP , did the Company have a
self -build option in that?
I don't believe
- -
well, I don't believe
CSB REPORTINGWilder, ID 83676
GALE (X)
Idaho Power Company
at all that the Company had a self-build in the RFP.
MR. WOODBURY:Mr. Chairman , Staff has no
further quest ions of Mr. Gale.
COMMISSIONER KJELLANDER:Thank you,
Mr. Woodbury.
Let's move now to Avista Corporation.
MR. MEYER:Avista has no questions.
Thank you.
COMMISSIONER KJELLANDER:Let's go to
Mr. Richardson with Exergy and Energy Vision LLC.
MR. RICHARDSON:Mr. Chairman, I just want
to clarify I'm going to be
- -
as a courtesy, I offered to
help Mr. Ikemoto spread his testimony on the record and
I m not going to represent him in terms of his abili ty to
cross-examlne other parties and if you would like me to
defer from that, I understand it's tradi tional for the
Staff attorney to do that for parties who don't have an
attorney here with them, but I was just going to get him
on the record and get his testimony spread and that was
the only service I was going to provide for him.
COMMISSIONER KJELLANDER:Okay, then I
misunderstood.
MR. RICHARDSON:I apologize for that, Mr.
Chairman.
COMMISSIONER KJELLANDER:Okay, well , then
CSB REPORTING
Wilder , ID 83676 GALE (X)
Idaho Powe r Company
you certainly did have a right to speak earlier and
appreciate that clarification.
MR. RICHARDSON:So I will be
cross-examining Mr. Gale on behalf of Exergy only.
COMMISSIONER KJELLANDER:Exergy only,
okay, thank you.
MR. RICHARDSON:You're welcome.
CROSS - EXAMINATION
BY MR. RI CHARDSON :
Mr. Gal e , do you recall when the pet it ion
that initiated this docket was filed?
Abou t three weeks ago seems to me.
Would you accept was June 17?
certainly would.
And did you reVlew the notice issued by
this Commission on July
m sure I did.
And do you recall that the Commission
stated in that notice that the peti tion alone provided
insufficient basis to grant the temporary suspension?
I'll accept that.
And the notice required Idaho Power to
file testimony in support of the petition , but the notice
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
was issued on July 1st and your testimony was filed on
July 1st , how did it come about that the testimony was
filed on the same day that the notice was issued?
Well , we filed our testimony on a Friday,
I believe it was July 1st, and that was the day that we
understood it was required to be filed and in remembering
the procedure , I bel ieve that was the day it was
incumbent upon the Company to file its testimony.
Right, do you recall that the Commission
made that requirement known at a decision meeting it held
earlier in the week?
I was at that decision meeting, so that'
my recollection.It was a scramble week.
It was a scramble week because you had to
wri te your testimony after that decision meeting?
Correct.
In our request for production of
documents, request No., the Company was asked to
provide documentation to support the statement that was
made in the peti tion that ini tiated this case to the
effect that the bids the Company has received in the
2005 RFP are not reflective of the market price for wind
generation " and in response, you prepared the response,
In response, you referred Exergy to Idaho Power I s reply
to Windland' s Interrogatory No.Do you recall that?
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
It would be helpful if I could see
something.
Do you want your counsel to provide you
with coples of your responses?
MR. KLINE:Of what?
MR. RI CHARD SON :Our discovery to Idaho
Power or I can provide it to you if you'd like.
MR. KLINE:Do you want your responses or
do you want the Windland?
MR. RI CHARDSON :Actually, both.
(Mr. Kline approached the witness.
THE WITNESS:I think I'm ready, Mr.
Ri chardson
BY MR. RI CHARDSON :Thank you; so in our
request No., we asked you to provide documentation
supporting the statement that the bids the Company has
received in the 2005 RFP are not reflective of the market
price for wind generation, and your response referred us
to your reply to Windland' s Interrogatory No.Do you
recall that?
I see that, yes.
So when I read your answer to Windland' s
second Interrogatory, it in turn referred me to your
testimony at pages 10 and 11.
I don't know if I'm tracking.I have an
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
at tachment to a contract is what I I m looking at, so maybe
we have a disconnect.
MR. KLINE:I have one more here.
(Mr. Kline approached the witness.
THE WITNESS:Okay.
BY MR. RI CHARDSON :So do you see that
where your response to our Interrogatory was really a
reference to your testimony at pages 10 and 11
correct?
And the Judi th Gap contract.
And the Judi th Gap contract so don't you
think that I s a bi t circular , Mr. Gale?I mean , when
asked you about what studies and documentation the
Company relied upon when it filed its petition , you
responded that it relied on your testimony that wasn't
even prepared at the time.
MR. KLINE:Obj ection , argumentative.
BY MR. RI CHARDSON :Can we as sume ,
Mr. Gale, that there were no studies or documentation
prepared by the Company in support of that statement?
There were two things in support of that
statement:One was the basis for the prices in the IRP
and the second was the knowledge of the Judi th Gap
contract.Those are the two things.
That's the extent of any examination you
CSB REPORTING
Wilder , ID 83676
GALE (X)
I daho Power Company
did of the markets for wind?
That'the extent anything can
disclose publicly because run into complication after
complication on revealing prices contracts.
In our request for production of documents
No.5, the Company was asked to provide documentation to
support the statement that was made in the peti tion that
initiated this case to the effect that "the bids the
Company has received are being unduly influenced by the
current avoided cost rates," and we received the same
answer; that is, you referred us to Windland request
No.2 which referred us to your testimony which was not
prepared until after the petition was filed; correct?
Well , what I believe is that Windland' s
came after the testimony was filed which is why they got
that response.We answered yours after that and hence,
the referral.It wasn't intended to frustrate you.
Can we also assume there were no studies
or documentation of the assertion that the Company's bids
were being unduly influenced by the current avoided cost
rates?
The Company has no study.
And in our request for production of
documents No.6, the Company was asked to provide
documentation to support the statement made in the
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
petition that "recent announcements by other regional
utilities of power purchase agreements with wind resource
developers wi th substantially lower pricing structures
and once again , we were referred to your answer to
Windland No.2 which provided the Judith Gap contract.
Is that the only documentation you relied on to support
that statement?
The Judith Gap contract is a public
contract that we can point to.Other utilities are
reluctant to provide confidential information to us.
thought at the time we prepared the petition we might be
able to navigate that, but we haven't, so I don't have
any other public demonstration to show you.
So the extent of your research was the
Judi th Gap proj ect
, that wasn't the extent of my research
but the extent of the evidence I can show you is the
Judith Gap contract.
Did you visi t wi th anyone involved wi
the Judith Gap agreement regarding why its price was so
low?
No, I d i dn ' t .
Did anyone at Idaho Power do so?
That I don't know.
Would you refer to your response to our
CSB REPORTING
Wilder , ID 83676 GALE (X)
I daho Power Company
request for production of documents No.
Okay, apparently no one else was
consul ted.
outside
agreement?
And doesn't your integrated resource plan
So no one at Idaho Power consulted anyone
Idaho Power Company regarding the Judith Gap
Correct.
state that the Company plans to acquire 350 megawatts of
wind resources?
Well , it says two things about wind
resources.The 350 is over the whole time period and
it's preceded by 200 first and then another 150, so there
lS a staging of the resource.
And you testify on page 16 that only
recently has the Company become aware of the unique set
of challenges that intermittent wind resources present to
the Company.Do you see that?
Yes.
Then in the next answer you conclude based
on this recent awareness that a temporary suspension of
mandatory purchases of wind QF resources is imperative to
effectively address this unique issue and to avoid the
adverse impacts anticipated should the Company's system
become deluged wi th wind resources.How recently is only
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
recently?
t h i nk
round 0 bids came In,the team looked at bids that were
as the RFP was issued, the first
coming in, they started expressing a concern to those
us involved in management and in regulation.I believe
they reviewed those bids wi th the Commission Staff as
we 11 .I believe Staff also thought there might be a
concern , so it evolved this spring and reached the point
that we thought we should do something and that was the
first of summer.
Could you help me understand more fully
your interaction with Staff on that issue?You said
Staff expressed a concern.
Well , typically, as we work through an RFP
process, there is some level of interaction with Staff.
I believe on these RFPs it's more of an information
basis, but I'd stand to have Mr. Sterling correct me
later and so periodically during an RFP process we will
update Staff on the progress.It's my understanding from
the team members coming back and reporting that not only
the Company was surprised at the prices in the bids, but
that Staff was as well , but again , I leave that to Staff
to conf i rm or deny.
So when you say that only recently the
Company has become aware of the unique set of challenges,
CSB REPORTINGWilder, ID 83676 GALE (X)
Idaho Power Company
that awareness was this spring, then?
I think it became a focus of our attention
this sprlng.
And when you talk about, refer to the
Company I s system being deluged wi th wind resources, how
do you def ine "deluged"?
Well , in this instance I would define
this way:We through a very thoughtful and broad-based
process came up wi th a plan for acquiring wind resources
and it looked like a very real possibility we could end
up with much more wind earlier than we anticipated.
thought there was at least a price concern.Wha tI
deluged, if ultimately you could get 200 via PURPA and
another 200 vi a the RFP , you've doubl ed up what was
planned for in the integrated resource plan , so that'
the context of that comment.
So 290 megawatts would not be a deluge?
MR. KLINE:m going to obj ect That'
just argumentative.
MR . RI CHARDSON :Mr. Chairman , the witness
was just defining what he thought the Company
- -
what the
line is for when the Company becomes deluged with wind
resources and I think the witness just said doubling up
2 0 0 and 3 5 0 .I was just trying to clarify what his
testimony is.m not being argumentative.
CSB REPORTING
Wilder , ID 83676 GALE (X)
Idaho Power Company
COMMISSIONER KJELLANDER:Can we go ahead
and proceed forward with the remainder of your questions?
MR. RICHARDSON:Thank you,
Mr. Cha i rman .
By MR. RI CHARDSON :There were 350
megawatts of intermittent wind resources contemplated in
your RFP , why is the Company only now becoming aware of
unlque challenges of integrating those resources?
Well , I think the Company anticipated that
we would go through this staged addition of wind
resources, first 200 and then 150 , and I think in the IRP
it's explicit.If not , I can represent that we felt we
could accommodate the first 200 and that we would gain
experlence in that first traunch and adj ust for the
second.
In your testimony you reference 193
megawatts of potential resources.Do you recall that?
Yes.
Did you generate that number?
Information was prepared by Mr. Alphin.
So you reI ied on the work product of
Mr. Alphin for that number?
I always rely on that information from
Mr. Alphin.
And is he still employed by Idaho Power?
CSB REPORTING
Wilder , ID 83676 GALE (X)
I daho Power Company
Yes, he is.
Is there a physical reason that prevents
him from testifying before this Commission about his work
CSB REPORTING
Wilder , ID 83676
Well , depending on where this hearing
might go, there may be that opportuni ty.He is on
vaca t ion thi s week.
Would you agree that a lot of professional
judgment had to be used to generate that number?
I would agree that professional judgment,
the degree I m not sure, had to be utilized and
Mr. Alphin is the right professional to make that
And would you agree that an individual who
generated that number would have to have experience in
this industry to accurately do so?
Mr. Alphin is very experienced with QF
I s there
- -
are there any obj ect i ve
Mr. Alphin applies when he generates that
I can't tell you which standards he
So if I called Mr. Alphin on the phone
today and told him I was going to build a 10 megawatt
product?
judgment.
contracts.
standards that
number?
uses.
GALE (X)
I daho Power Company
wind proj ect, would that number then become 203?
I don't know.
MR. RICHARDSON:Thank you, Mr. Gale.
That's all I have, Mr. Chairman.
COMMISSIONER KJELLANDER:Thank you , Mr.
Ri chardson .
Let's move to Windland Incorporated.
MR. BATT:Thank you, Mr. Cha i rman .
CROS S - EXAMINATION
BY MR. BATT:
Good morning.m Bill Batt representing
Windland.
Good mornlng, Mr. Batt.
Just a couple of questions for you.You
noted in your testimony, I believe , that PURPA requlres
Idaho Power to purchase at avoided cost rates; correct?
Yes.
And does it also say that the just and
reasonable rate for a state commission to set at the
avoided cost rate should not exceed the incremental cost
of al ternati ve energy sources?
Is that a PURPA quote that you just gave
me?
CSB REPORTING
Wilder , ID 83676 GALE (X)
Idaho Power Company
Do you know that?
I don't know if that language is
MR. KLINE:I'll pose , I guess, a
temporary obj ect ion or a imi ted obj ect ion.Obviously,
Mr. Gale is not an attorney and to the extent that he
knows the answers, I guess he can give them to you , but
if it strays too far into legal issues, hopefully, I'll
ralse my obj ection again.
THE WITNESS:m not trying to be
difficult.m jus t not sure.
BY MR. BATT:Well, do you believe that
the power that's bid into the RFP is a source of
information about what the price of al ternati ve electric
energy is?
Well , I very much believe that that is a
source of information about the price of that energy.
MR. RI CHARDSON :Mr. Chairman , we'
having a hard time hearing Mr. Batt.
MR. BATT:Okay, I'll get a little closer
here.Sorry.
BY MR. BATT:Do you believe that the
currently published avoided contract rate for wind energy
is too high?
I believe that it deserves to be
questioned and reexamined.
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
And what do you base that belief on?
Well , to recount some of the things, it I s
the same reason we thought that the RFP prices might be a
it tIe high coming in.We thought in our RFP that we
could acquire it closer to $43. 00.Again, we have a one
contract reference , but it is substantially less , and
then there are some of the integration issues that we
raised which might make you view the product a little
differently than other products at that price , so those
elements.
If the currently published avoided cost
rate is too high for wind energy, why would Idaho Power
be agreeing to enter into contracts for it at that
price?
Well , first of all , we don't know that
lS.We I re raising that possibility and secondly, we have
a PURPA requirement.
Do you believe the Commission has the
power under PURPA to approve contracts that contain rates
that are higher than the true avoided cost rate?
m going to obj ect MR. KLINE:
believe that calls for a legal conclusion.
BY MR. BATT:Do you have an opinion on
that?
I guess my only opinion is that the PURPA
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
contract I believe is a device of the Commission , so
since it is a device of the Commission , they probably
have a little authority over it.
Well, is Idaho Power advocating that the
Commission revisit the avoided cost rate for wind
energy?
That is part of the items we'd like to
have investigated.
Assuming that you're correct and the
currently published rate is too high for wind energy, why
shouldn t Idaho Power refrain from entering into further
contracts , PURPA contracts, until a new rate is set?
You re at the delicate juncture where we
are.What we've suggested is that it should be suspended
and we've taken the posi tion that we would not sign any
more contracts wi thout direction from the Commission.
MR. BATT:That's all I have.
COMMISSIONER KJELLANDER:Thank you, Mr.
Batt.
Let's move to Mr. Miller wi th Magic and
Cassia.
MR. MILLER:Thank you, Mr. Cha i rman .
wonder if I could ask your indulgence to be permi t ted to
make one brief statement which I believe could be made in
one or two sentences as a statement rather than 15 or 20
CSB REPORTING
Wilder , ID 83676
GALE (X)
Idaho Power Company
questions to the witness.
COMMISSIONER KJELLANDER:And would it be
your anticipation there would be a question mark at the
end of that statement with an opportunity for a response
from the witness?
MR. MILLER:I think I can make it as an
assertion that the Commission could just note and
would be this:I di sagreed somewhat wi th Mr. Kl ine '
characterization of the tension that binds or makes
progress difficult , because it seemed to imply that the
prlmary or most important value was meeting the Company I
desires with respect to the 200 megawatts in the RFP and
the secondary desire was accommodation of mature
proj ects
It may well be that the more important
value or goal is the legal and fair treatment of mature
proj ects and if that resul ts in some compromise to the
200 megawatt goal , that compromise is a necessary resul
to achieve the more important goal.That would be the
statement that I wanted to make and if not permitted to
make it , I would spend a lot of time cross-examining
Mr. Gale.
COMMI S S lONER KJELLANDER:Without
obj ection , I guess we would allow you to make that
statement.
CSB REPORTING
Wilder , ID 83676 GALE (X)
Idaho Power Company
MR.MILLER:Thank you , Mr. Cha i rman .
The other thing before I commence, Magic and Cassia in
their pleadings and papers quite clearly viewed their
belief that the Company has not made a legal or factual
case for continuation of its self -imposed suspension of
its obligations.In the interest of time, I don't intend
to ask Mr. Gale any questions that bear on that point,
but the absence of questions should not be taken as a
concession that Magic and Cassia have abandoned that
position , and I do have a couple of additional exhibits
would like to use for the cross-examination of Mr. Gale
if I could distribute those.
COMMI S S lONER KJELLANDER:Certainly, and
does Mr. Gale have a copy yet?
MR. MILLER:He's about to.
COMMISSIONER KJELLANDER:Okay.Gi ve him
a copy first.
(Mr. Miller distributing documents.
(Magic and Cassia Exhibit Nos. 603 - 605
were marked for identification.
CSB REPORTINGWilder, ID 83676 GALE (X)
Idaho Power Company
CROSS - EXAMINATION
BY MR. MI LLER :
Mr. Gale, if it's convenient for you, I'd
CSB REPORTINGWilder, ID 83676
like to start my questions with what has been marked as
Which one is that , Joe?
They're labeled at the
Sorry.
COMMISSIONER KJELLANDER:We do not have a
My assistant here is.
COMMISSIONER KJELLANDER:We have a 604
We need a 603.
(Pause in proceedings.
A thousand apologies to
Mr. Gale, Exhibit 603
consists of four pages and I wonder if we could start
Two of four?
Two of four.
Okay.
Do you recogni ze that
Exhibit 603.
MR. KLINE:
MR. MILLER:
bot tom.
MR. KLINE:
603 that I m aware of.
MR. MILLER:
and 605 at the Bench.
MR. MILLER:
everyone.
BY MR. MILLER:
wi th page
MR. KLINE:
MR. MILLER:
MR. KLINE:
BY MR. MILLER:
GALE (X)
Idaho Power Company
plece of paper?
Well , I'm not sure that I've actually seen
it before, but I recognize what it represents.
Is it your understanding that this is a
photocopy of a web page from the Idaho Power website that
lists in summary form the applications the Company has
received for small generator interconnections?
Yes.
And the Company in the ordinary course of
business publishes this list on its website as
understand it.
I believe that's correct.
And do you know why the Company publishes
this list to the public?
I think that's a requirement of our open
access information.
And let I s look briefly at Exhibi t 605.
m there.
Can you identify that exhibit for us?
Well , it looks like interconnection
information.
If I represented to you that this also
information contained on the Idaho Power Company website
which is part of , as you indicate, information for
interconnectors?
CSB REPORTING
Wilder , ID 83676 GALE (X)
Idaho Power Company
That would be a fair representation.
Let me direct your attention down to the
third full paragraph and would you read the first
sentence of that paragraph for us?
"Receipt of this completed application and
the associated fee will be considered the official
notification to Idaho Power Company of your intention to
interconnect. Continue?
No, that's fine, thank you very much
it would be fair to say that the receipt of the
interconnection application is considered by the Company
as an official notice that a potential generator actually
desires to interconnect?
That's exactly what it says.
Exactly what it says, and then let's go
back to Exhibit 603 and as we look at again page 2 of 4
it becomes obvious that no distinction is made in this
list between wind proj ects and non-wind proj ects is that
right?
I don't see a technology distinction.
Let I s look at page 1 of 4 of Exhibit 603.
Okay.
And do you recognize this as a page from
Idaho Power Company's response to discovery requests
submitted by Magic and Cassia?
CSB REPORTING
Wilder , ID 83676
GALE (X)
I daho Power Company
Yes.
And if we look at response to
Interrogatory No.2 - - well, let me back up.
Interrogatory No.2 itself asked to provide in a form
identical to Exhibit A but eliminate all projects that
are powered by a fuel or motive source other than wind;
that is, it asked to eliminate the non-wind projects from
the list.
Okay.
And the
wasn'exactly
response indicated that that
possible to do, but then indicated that
Idaho Power can disclose out of the 18 proj ects
identified on Exhibit A, nine of them are wind with an
aggregate capacity of 79.07 megawatts.
Okay.
So can we infer from that that as things
stand approximately now , there are approximately 79.
megawatts of projects that have submitted interconnection
applications in accordance with the Company'
procedures?
MR. KLINE:Mr. Chairman , I'm going to
ralse a limi ted obj ection here because there's also a
separate section, if you see on the bottom of , on the
bottom of page 1 of Exhibit 605 , there's a little trailer
there at the bottom, for generators larger than
CSB REPORTING
Wilder , ID 83676 GALE (X)
Idaho Power Company
megawatts , there's another list.It also says the same
thing on the Exhibit 603, page 2 of 4 , large generators
greater than 20 megawatts.There may be some wind
generation that they aggregate their request for
interconnection so that it hits the 20 megawatt threshold
even though it might be broken up into smaller pieces and
there's no way Ric is going to know that.
MR. MILLER:That I S a fair point and I can
sort of , I think , rephrase the question to be more
preclse.
BY MR. MI LLER :Taking together pages
and 2 of Exhibi t 603 , we can conc ude , can we not, that
as things stand today, there are 79.07 megawatts of
capaci ty represented by proj ects smaller than 20
megawatts that have submitted interconnection
applications?
Yes.
And 20 megawatts is , in rough terms, the
PURPA dividing ine?
For interconnect?
Right.That's the way you Vlew it or am
incorrect on that?
Well , for qualifying or interconnect?
sorry.
Let me just withdraw that question.
CSB REPORTING
Wilder , ID 83676 GALE (X)I daho Power Company
Okay.
I think we can cover that in a different
way.Let me direct your attention now to Exhibit 604 --
Yes , sir.
- -
which consists of two pages and
wonder if you could identify those two pages.
This looks like copies of a couple of the
front end pages of our 2004 IRP.
What I simply want to do is review a few
numbers that are disclosed here to put the preVlOUS
number , that is , the 79 megawatt s , in some sort of
context.Al though it's not disclosed on these two pages
am I correct that the nameplate capaci ty of generation
owned by Idaho Power Company is approximately 3,000
megawatts?
Well , our nameplate capacity is probably
larger than that, but for context , our peak load is very
close to 3,000 megawatts which it may hit today.
I t may hi t today?
Yeah , but capacity would be, therefore,
potentially larger than that , but the load I can testify
to directly.
And I think that's an adequate number for
the context here.Now , according to the plan summary,
the Company intends to add over the planning hori zon
CSB REPORTING
Wilder , ID 83676 GALE (X)
I daho Power Company
period 940 megawatts of additional generation?
Yes, over the 10 -year period.
And I haven't done it and unless you can
do it in your head, I think it would be semi-obvious to
say that the 79 megawatts of applied for or indicated
wind generation that has filed interconnection
applications is a relatively small figure compared to the
total desired addition of 940?
79 is a small number compared to 940.
And it's a small number compared to
3, OOO?
Yes.
And, of course, when we discuss wind
capaci ty on a nameplate basis, there is , is there not,
the industry recognition that the annual capacity factor
of wind projects is less than its nameplate capacity?
Substantially less , yes.
There are a lot of people a lot smarter
than me on this topic, but I've heard the figure
percent is a rule of thumb nameplate capaci ty or capaci
factor , annual capaci ty factor?
Yeah , I think 30 to 35 percent is what we
typically talk about.
So when we're talking about nameplate
capaci ty of wind, we should keep in mind that the actual
CSB REPORTING
Wilder , ID 83676 GALE (X)
Idaho Power Company
realized capacity is perhaps only 35 percent of that
figure.
The energy we can expect is substantially
less than the nameplate capacity.
MR. MILLER:All right , thanks very much
for your time.
THE WITNESS:Okay.
COMMISSIONER KJELLANDER:Thank you,
Mr. Miller , and looking at the clock , I think what we'll
go ahead and do is use this as a natural breaking point
for a quick lunch.I will break for lunch with the
anticipation that we come back and move forward as
expeditiously as possible and we will resume at 1: 00
clock.
(Noon recess.
CSB REPORTING
Wilder , ID 83676 GALE (X)
I daho Power Company