20110321min.doc

IDAHO PUBLIC UTILITIES COMMISSION

MINUTES OF DECISION MEETING

MARCH 21, 2011 – 1:30 P.M.

In attendance were Commissioners Jim Kempton, Marsha Smith and Mack Redford.

Commissioner Kempton called the meeting to order. The first order of business was APPROVAL OF MINUTES FROM PREVIOUS MEETING on Monday, March 14th, 2011. The Commission voted unanimously to approve the minutes as written.

Commissioner Kempton noted that the first item on the Consent Agenda, Don Howell's March 18, 2011 Decision Memorandum re: Alpha/Bravo/Charlie/Delta/Echo Wind's Petition to Intervene in their Respective Firm Energy Sales Agreements, Case Nos. IPC-E-10-51/52/53/54/55, would be moved to MATTERS IN PROGRESS.

He also noted that Ken Kaufmann, attorney for Rocky Mountain Power, was participating in the meeting by telephone.

The second order of business was approval of the CONSENT AGENDA:
2. Kristine Sasser's March 16, 2011 Decision Memorandum re: Brian Water Corporation's Application to Increase Its Base Rates, Case No. BRN-W-11-01.3. Rick Sterling's March 17, 2011 Decision Memorandum re: Revisions to Avista's Schedule 51 - Line Extension, Conversion and Relocation Schedule, Tariff Advice No. 11-01-E.
There was no discussion and the Commission voted unanimously to approve Staff’s recommendations for items 2 and 3 on the Consent Agenda.
The next order of business was MATTERS IN PROGRESS:
4 . Don Howell's March 18, 2011 Decision Memorandum re: Alpha/Bravo/Charlie/Delta/Echo Wind's Petition to Intervene in their Respective Firm Energy Sales Agreements, Case Nos. IPC-E-10-51/52/53/54/55.
Mr. Howell reviewed his Decision Memo. Commissioner Smith stated that Alpha, Bravo, Charlie, Delta and Echo wind developers are already parties in Case Nos. IPC-E-10-51 through -55 by virtue of their being the counterparties in the firm energy sales contracts; therefore, a Petition to Intervene was unnecessary because they are already parties. She made a motion that the Commission return their Petitions to Intervene to them by letter or order from the Commission, assuring them they are already parties in these cases. There was no discussion. A vote was taken on the motion and it carried unanimously.
5. Rocky Mountain Power's Motion for Clarification and Motion to Stay Discovery, Case No. GNR-E-11-01. [Kristine Sasser, Attorney]
Ms. Sasser reviewed the procedural background for this case. Commissioner Smith stated that when the Commission outlined its staged process for resolving all of the avoided cost issues, it opted to have the hearing on the disaggregation issue happen very quickly. She said the thought was that if the Commission could arrive at a resolution that served the public interest, the Commission could immediately reconsider the eligibility cap issue (Case No. GNR-E-10-04), which it had just recently reduced from 10 MW to 100 kW. She said this was done in order not to unduly delay worthwhile projects from going forward, if the Commission could come to a quick resolution on disaggregation. She said if it turns out that the Commission cannot truly separate the disaggregation issue from other avoided cost issues and handle it quickly, then the other option is to cancel the hearing and consider everything at issue, which will prolong the process considerably. She said she would like to hear Mr. Richardson’s thoughts on these issues. She added that she had supported the reduction of the published rate cap because she thought that the Commission could quickly resolve the disaggregation issue and then in turn, all the other issues, including use of the IRP methodology in the process of setting the avoided costs, which will be more complex and lengthy than the disaggregation issue.
Commissioner Kempton asked Mr. Peter Richardson, attorney for Northwest and Intermountain Power Producers Coalition, (NIPPC) if he would like to address the Commission. Mr. Richardson stated he filed discovery in order to fully understand the implications for projects greater than 100 kW no longer being entitiled to published rates. He said it is their strong position that the IRP methodology does not produce the full avoided cost rate calculation for those types of projects and NIPPC’s discovery was aimed to more fully understand and inform their belief of that, and it fully fits into the allowance of discovery under the Commission’s rules and the Idaho Rules of Civil Procedure. He said discovery does not need to lead to admissible evidence but must be reasonably calculated to lead to the discovery of admissible evidence, and it is their position that the inability of the IRP methodology to accurately set avoided cost rates is one of the central issues in this docket. He stated that he shares and completely understands Commissioner Smith’s concern about delay, but they are not asking for a delay or a stay, and they are planning to file their testimony on Friday as required. He said they and all the other parties will have an opportunity thereafter to file rebuttal testimony if they disagree with the testimony. Mr. Richardson added that they are not lengthening the time the Commission will need to decide but they should have the opportunity to at least engage in discovery of what has typically been called the utility’s “black box” when it comes to setting avoided cost rates, and it is not onerous or burdensome on PacifiCorp to run its models.
Commissioner Smith stated she understands Mr. Richardson’s argument with regard to rates, but she was missing the link to the issue of disaggregation and the consideration of the list of criteria that was presented by one of the parties in the oral argument, and whether something like that might assist the Commission in going back to the 10 MW size fairly quickly.
Mr. Richardson stated that the link is that if the IRP methodology accurately sets avoided cost rates, it solves the disaggregation issue because there is then no more motivation to disaggregate if the avoided cost rates are set accurately. He stated they are inexorably linked because if the IRP methodology is accurate then it will be setting avoided cost rates that will not motivate developers to undersize their project.
Commissioner Smith said the Commission’s concern is that developers are disaggregating in order to have multiple contracts instead of participating in requests for proposals for larger projects, so she was still missing the link.
Mr. Richardson asked if she meant disaggregating for smaller projects through contracts rather than bidding into the IRP or if she was she talking about RFPs.
Commissioner Smith stated she was referring to requests for proposals to purchase generation, as some utilities have been seeking wind. She said it seems developers are more likely to space what could and should be one project into smaller projects in order to take advantage of PURPA’s published avoided cost rates.
Mr. Richardson stated the IRP methodology of setting rates is distinct from an RFP for new resources, and this Commission has never used an RFP as a surrogate for setting avoided cost rates. He said that a QF of up to 80 MW is entitled to the utility’s full avoided cost rate and it is NIPPC’s position that the Aurora and PacifiCorp modeling does not produce the full avoided cost rates. He said that reducing the eligibility cap to 100 kW doesn’t solve the problem of disaggregation because as long as the Integrated Resource Planning methodology fails to produce the full avoided cost rates, you haven’t eliminated the motivation to disaggregate.
Commissioner Kempton stated there is a distinction between cause and effect with disaggregation in that there is the effect the disaggregation has in terms of a consideration between small generating companies and the larger companies that are disaggregating, and then there is the cause addressed in Mr. Richardson’s request that has to do with his position that it is the IRP methodology that is at fault. He said it therefore necessitates the larger companies who have the larger wind farms to disaggregate—the cause of the disaggregation—whereas the disaggregation itself has an effect and the effect relates to the use of the published avoided costs and the comparison against the avoided costs that would be computed by the IRP. He said that’s why he sees in some sense that NIPPC’s argument is a collateral attack because it seems that argument is valid in terms of a process that could go on after the Commission discusses the two questions that were identified in the Commission’s (GNR-E-11-01) order. He stated that after disaggregation has been addressed, the Commission can then address the IRP cause, which Mr. Richardson has clearly articulated. He said he didn’t see what the distinction was in those two processes in terms of timing and by dividing them he didn’t see where a decision in one area prejudices a decision against the second. He said in terms of the timing Commissioner Smith was talking about, a separate filing to address the separate IRP issue is a better path.
Mr. Richardson said that this may or may not lead to something that appears in their testimony but he thought it was important for them to fully understand it in order to write informed testimony, so they would like to see the answers to their discovery questions. He added that he thought the link was inexorable.
Commissioner Redford stated that he tended to agree with Mr. Richardson that whether or not the discovery produces evidence that is admissible, they have a right to have their discovery answered.
Mr. Richardson also stated it was worth noting that none of the other investor-owned utilities has objected.
Mr. Ken Kaufmann, attorney for PacifiCorp dba Rocky Mountain Power, was participating by telephone and reiterated several points in PacifiCorp’s motion. He stated that as Mr. Richardson had just confirmed, NIPPC does wish to challenge the IRP methodology for setting rates and that is the intent behind NIPPC’s first data request. He said the validity of the IRP process, which it sounds like something the Commission is interested in getting into, is not in their view reasonably calculated to lead to relevant evidence regarding the issues set for May 10th. He said the issues noticed for May 10th were limited to the viability of a10 MW average eligibility cap and PacifiCorp is not prepared at this time to defend the IRP methodology. He said PacifiCorp is confident the IRP methodology does model full avoided costs and looks forward to answering these questions later; however, none of the parties or persons who might be parties to this proceeding, if they knew it would be about IRP methodology, has had a chance to prepare, so therefore it is their position that it would be more proper to have the first data request stayed until the Commission sets a schedule for hearing and inquiry into the IRP methodology itself.
Commissioner Smith stated that she agreed with Commissioner Redford and Mr. Richardson that the discovery is appropriate, but her question is when does the response have to come. She said it doesn’t pertain to the disaggregation issues the Commission wants to address in the May 10th hearing, so she wouldn’t set the due date for the answers to NIPPC’s discovery until we have the schedule for the next phase. She said it is probably legitimate discovery, and it is just discovery, but she questions whether it is necessary that the discovery is answered in time for people to prepare for May 10th. She stated this is an issue that the Commission has clearly said it will address, but the Commission won’t get to it on May 10th.
Commissioner Kempton stated that he agreed, and NIPPC’s IRP discovery should definitely be allowed, but the question is on the timing of it for the May 10th meeting. He asked for a motion based on their discussion.
With no motion forthcoming, Commissioner Kempton made a suggestion that the Commission take about a five to ten minute recess.
Following the recess, Commissioner Kempton called the meeting back to order. He stated that a recess is not something the Commission typical does in the Matters in Progress area but the Commission had a procedural matter to discuss and during the recess there was no additional information or consideration of anything other than what the Commission had spoken to before in its entirety, and so the issues still remained. He said he would like to turn it over to Commissioner Smith to make a motion and explain the motion itself and then the Commission would consider it.
Commissioner Smith said she would like to restate what she had previously expressed—that she didn’t believe the validity of the IRP methodology is an issue the Commission designated for hearing on May 10th. She said it is her hope that the reduction in the size of the eligibility cap for the avoided cost rates would be an extremely short-lived or temporary state and adding issues to the May 10th hearing will cause delay of the hearing, making it a much longer process. She said the NIPPC discovery is warranted when the Commission sets it schedule for the subsequent consideration of all the issues it has outlined, but she would not compel the response in time for preparation of testimony, which is due Friday, for the May 10th hearing. She made a motion to stay the response date for discovery to the next phase of the case which will actually consider the validity of using the IRP methodology in setting of avoided costs. Commissioner Redford seconded the motion.
Commissioner Kempton stated he would like to explain his vote in terms of what he had mentioned before—that the next phase seems to involve the cause issue he brought up earlier and the specific language that Mr. Richardson mentioned in his filings that if we didn’t have a problem with the Integrated Resource Plan we wouldn’t have the companies filing in a disaggregated form. He said there is a phase one and a phase two significance to this and he will let his previous explanation stand. There was no further discussion. A vote was then taken on the motion and it passed unanimously.
FULLY SUBMITTED MATTERS:
6. Deliberation re: Northwest and Intermountain Power Producers Coalition Petition for Reconsideration, Case No. GNR-E-10-04. [Kristine Sasser, Attorney]
Commissioner Kempton stated that item 6 would be deliberated privately on the following day at 1:30 p.m. along with the Executive Session matter.
EXECUTIVE SESSION MATTERS:
7. Discussion with Counsel Concerning the Proposed Settlement of the Five BPA Appeals in the 9th Circuit, Pursuant to Idaho Code 67-2345(1)(f). Requires a motion to move into Executive Session and a recorded vote. [Don Howell, Attorney]
Commissioner Redford made a motion to move into Executive Session to discuss with counsel the proposed settlement of the five BPA appeals. A vote was taken on the motion and it carried unanimously.
There was no further business before the Commission and Commissioner Kempton adjourned the meeting.

___________________________________ ______________________________ COMMISSION SECRETARY DATE OF APPROVAL

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