20090504Vol I Oral Argument.pdf

ORIGli~AL
-BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION ) CASE NO.
OF IDAHO POWER COMPANY FOR ) IPC-E-08-24
AUTHORITY TO RETIRE ITS GREEN TAGS.)
) ORAL ARGUMENT
HEARING BEFORE
COMMISSIONER MARSHA H. SMITH (Presiding)
COMMISSIONER JIM D. KEMPTON
-
PLACE:Commission Hearing Room
472 West Washington Street
Boise, Idaho
DATE:April 22, 2009
VOLUME I - Pages i - 40
r-c:c:..
-0~
r:oN
e
POST OFFICE BOX 578
BOISE, IDAHO 83701
208-336-9208
COURT REPORTING
s'iW~ tk ¥ COIIit olÍ( 19
e
e
-
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1 APPEARANCES
2
3 For the Staff:KRISTINE A. SASSER, Esq.
Deputy Attorney General
472 West Washington
Boise, Idaho 83702
LISA D. NORDSTROM, Esq.
I DAHO POWER COMPANY
1221 West Idaho Street
Boise, Idaho 83702
RICHARDSON & 0 i LEARY
by PETER J. RICHARDSON, Esq.
515 North Twenty-Seventh Street
Boise, Idaho 83702
4
5
6
For Idaho Power Company:
7
8 For Industrial Customers
of Idaho Power:
9
10
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
e
e
e
1 BOISE, IDAHO, WEDNESDAY, APRIL 22, 2009, 9:31 A.M.
2
3
4 COMMISSIONER SMITH: Good morning, ladies and
5 gentlemen. This is the time and place set for an oral argument
6 before the Idaho Public Utilities Commission in Case No.
7 IPC-E-08-24, further identified as In the Matter of the
8 Application of Idaho Power Company for Authority to Retire its
9 Green Tags.
10 We would like to excuse Commissioner Redford this
11 morning due to an unfortunate event last night; he i s not able
12 to be here this morning.
13 And the Commission has scheduled this because we
14 have granted Reconsideration to a Petition of the Industrial
15 Customers of Idaho Power for Reconsideration of our Order No.
16 30720.
17 We i II begin this morning by taking the
18 appearances of the parties, and we i II start with the Applicant.
19 MS. NORDSTROM: Good morning. My name is
20 Lisa Nordstrom, representing Idaho Power Company.
21 COMMISSIONER SMITH: Okay. And for the
22 Industrial Customers of Idaho Power.
23 MR. RICHARDSON: Good morning, Madam Chairman.
24 Peter Richardson of the firm Richardson and 0 i Leary, appearing
25 on behalf of the Industrial Customers of Idaho Power.
1
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
COLLOQUY
e
e
e
1 COMMISSIONER SMITH: And for the Staff.
2 MS. SASSER: Good morning. Kristine Sasser,
3 representing Staff.
4 COMMISSIONER SMITH: And is there anyone else
5 wishing to make an appearance this morning?
6 Seeing no one, are there preliminary matters to
7 come before the Commission before we hear the parties?
8 Mr. Richardson.
9 MR. RICHARDSON: I have none.
10 MS. NORDSTROM: None.
11 MS. SASSER: None, thank you.
12 COMMISSIONER SMITH: Okay. Then our purpose in
13 scheduling the oral argument was to air the questions that we
14 had regarding the issues raised in the Petition for
15 Reconsideration, so, Mr. Richardson, we'll let you start.
16 MR. RICHARDSON: Thank you, Madam Chairman.
17 Appreciate the opportunity to present our position on
18 Reconsideration this morning.
19 Initially, Commissioners, I want to point out
20 that the Industrial Customers of Idaho Power on Idaho Power's
21 system this year are faced with an overall 25 percent increase
22 in their retail rates when one adds up the general rate case,
23 the PCA, the conservation rider; they all add up to a rate
24 increase of 25 percent. My clients are very concerned. They
25 have asked me to renew my efforts to keep rate increases to an
2
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 absolute minimum. I would hope this would cover everything we
2 do in this docket.
3 It's necessary that we do whatever we can do to
4 mi tigate the massive rate increases we are facing this year.
5 And, frankly, my motives here are not anti-green or
6 anti-renewable power. We are here because our rates are
7 skyrocketing. We are also here because of a flawed proposal by
8 Idaho Power that, in my opinion, violates fundamental
9 rate-making principles.
10 This is not a policy case. The first point of my
11 discussion is to point out that the Commission is not faced
12 wi th a policy question here. That is, you are faced with a
13 question of what is the proper regulatory treatment of a
14 surplus Utility asset that was created with ratepayer funds.
15 This is not a docket about whether or not it is State policy to
16 promote renewable energy. As pointed out in my Pleadings, I
17 think the answer to that question is ambiguous. However, we
18 don i t have to delve into that policy question, but I will
19 address it later in my opening remarks. This is a
20 nuts-and-bolts, black-letter-law issue dealing with surplus
21 Utili ty property.
22 Wi th respect to surplus assets, the Commission
23 must answer two questions: First, does the Utility have an
24 obligation to the ratepayers to return the value of surplus,
25 ratepayer-created assets to the ratepayers; and, second, does
3
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
-
1 the Utility have an obligation to preserve and maximize the
2 value of surplus, ratepayer-created assets. I believe the
3 answer to both questions is, unequivocally, yes. I f you
4 approve Idaho Power i s Application, however, you will have
5 answered both questions in the negative.
6 Let's first touch on the failure to preserve and
7 maximize the value of the surplus asset in question. When
8 Idaho Power filed its Application in November of 2008 , it
9 stated that the value of the Green Tags in question was up to
10 $ 1.9 million. In its most recent Pleading filed in April of
11 2009, it observed that the value of the Green Tags in question
12 is now $ 1.3 million . Clearly, the Company is not preserving
13 the value of its Green Tags. Had it sold those Green Tags a
14 mere six months ago, it would have received 33 percent more in
15 value than if it sells the very same Green Tags today. This is
16 because as Green Tags age, they lose their value, and you can
17 see that graphically on the exhibits attached both to our
18 Pleadings and Idaho Power i s Pleadings with the brokers' trading
19 sheets.
20 Green Tags, the vintage of 2009, are worth about
21 $6; Green Tags with a vintage of 2007 are worth about 50 cents.
22 So as they age, they decrease in value. And, in fact, neither
23 of the Industrial Customers' or Idaho Power's brokerage sheet
24 represents any value for Green Tags older than 2007, suggesting
e 25 that there may not be a market for them at all.
4
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
1 The other way Idaho Power is failing to preserve
2 the value of its Green Tags is that it concedes that the Green
3 Tags at issue may already have been used in the sense that
4 Idaho Power has consumed them by advertising its green
5 attributes. And you can see that at Idaho Power i s Brief at
6 page 14.
7 The question of how Idaho Power i s Green Tags are
8 surplus property hinges on whether Idaho Power has to retire
9 its Green Tags in order to provide utility service to its
10 ratepayers. The answer is no. Idaho Power has no current use
11 for its Green Tags. In order to maximize the value to the
12 ratepayers, it would sell the Green Tags on the open market and
13 return those dollars to the ratepayers. The consequence to the
14 Company of doing so is that it will be prevented from marketing
15 to the general public that it is providing electricity from
16 wind or geothermal resources. They can still describe its
17 generating resource mix for providing electricity to its
18 consumers, which would still be identified as a blend of
19 resources from its hydro, wind, geothermal, coal, and gas
20 plants, but it would have to put a footnote on the wind and
21 geothermal disclaiming the provision of green attributes from
22 those resources to its ratepayers.
23 Finally, on the policy, the State policy on Green
24 Tags. Frankly, I struggled with this question. Idaho Power
e 25 cites the 25 x '25 program and the State energy plan as
5
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
-
e
1 documenting the State's policy to encourage renewable energy
2 development, and that's definitely true enough. But this is a
3 more nuanced question than just whether the State wants to
4 encourage renewable energy development. This is a question of
5 who owns the Green Tags and to what use they are put. Comments
6 by the executive branch to the contrary reference
7 Mr. Kj ellander' s 3N speech that the State's policy is nuclear,
8 natural gas, or nothing.
9 Idaho does support renewable energy development,
10 but as a matter of policy, this Commission has already ruled
11 that Green Tags belong to the generator of the power to dispose
12 of as they see fit.
13 And, Madam Chairman, may I approach the Bench?
14 COMMISSIONER SMITH: Yes, you may.
15 MR. RICHARDSON: This Commission addressed who
16 owns the Green Tags as a matter of State policy. In reference
17 to a FERC Order declaring that avoided cost rates do not
18 include Green Tags, FERC declared that it's who owns the
19 Green Tags is a matter of State policy for the states to
20 determine on their own. This Commission addressed the issue of
21 whether or not the generator or the power Company owns the
22 Green Tags.
23 For the record, let me just note that I've handed
24 out a copy of an Order issued by FERC on October 1, 2003, in
25 Docket EL03-133-00, entitled American Ref-fuel Company,
6
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
-
e
e
1 et cetera, and I've handed out a copy of Order --
2 this Commission's Order No. 29577. And in Order No. 29577,
3 Idaho Power asked the Commission to issue a Declaratory Ruling
4 as to who owns the Green Tags when it enters into a PURPA
5 contract with a QF, a qualifying facility.
6 COMMISSIONER SMITH: And I will note that
7 pursuant to our Rules of Procedure, the Commission may take
8 official notice of these Orders.
9 MR. RICHARDSON: Thank you, Madam Chairman.
10 And if you would reference page 5 of your Order
11 29577, I've highlighted relevant language for your reference.
12 The Commission stated that the Commission has reviewed its
13 prior Order in which it declined to issue a Declaratory Ruling
14 on this question regarding environmental attributes. The
15 Commission said:
16 The regulatory landscape has not changed. The
17 State of Idaho still has not created a Green Tag program, has
18 not established a trading market for Green Tags, nor does it
19 require a renewable resource portfolio standard. We note, as
20 we did earlier, that the Utility and QFs are free to
21 voluntarily contract and negotiate the sale and purchase of
22 such Green Tags should environmental attributes be perceived by
23 the contracting parties to have value.
24 In this case, the generator of the power and the
25 creator of the Green Tags is , collectively, the ratepayers.
7
HEDRICK COURT REPORTING
P. o. BOX 578, BOISE, ID 83701
ARGUMENT
-
e
e
1 They have no current need, as they did not when you issued
2 Order No. 29577, for the Green Tags, and, therefore, the value
3 of the Green Tags belong to the ratepayers. Had Idaho Power
4 buil t the two Green Tag-generating resources off the books, if
5 you will, Idaho Power would own the green attributes and could
6 do with them as it chooses. As it is, the ratepayers own these
7 Green Tags.
8 Now, as to Idaho Power's contention that the
9 ratepayers collectively want Idaho Power to retire the Green
10 Tags in order to promote its green renewable portfolio, I think
11 the answer to that is found not in polls that ask people if
12 they generically like renewable energy. The answer to that can
13 be found in Idaho Power's ratepayers' collective response to
14 Idaho Power's voluntary Green Tag program. With over 450,000
15 or approximately 450,000 ratepayers, only 3,000 have signed up
16 for that program. I think that is what is telling in terms of
17 what the ratepayers want.
18 In addition, I would like to go back to how I
19 started, and that is with faced with the 25-percent rate
20 increase. It seems to me that this is definitely not the year
21 for Idaho Power to be retiring an asset when it could return
22 the value of that asset to the ratepayers.
23 And I'd be happy to stand for any questions,
24 Madam Chairman.
25 COMMISSIONER SMITH: Do you have any questions
8
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
-
e
e
1 now or would you like to wait until we hear from Ms. Nordstrom?
2 COMMISSIONER KEMPTON: Madam Chairman, I have a
3 couple questions.
4 COMMISSIONER SMITH: Commissioner Kempton, or I
5 should say, "President Kempton."
6 COMMISSIONER KEMPTON: Mr. Richardson, I'm not
7 sure how some of these things fit together in terms of the
8 issues as you presented them. In the -- in the documents that
9 you have provided us, you make a point of the fact that FERC
10 has said that the issue of the ownership and transfer of Green
11 Tags is a State issue, which means that FERC is out of the mix.
12 So when I look at the Order No. 29577 that you referred to and
13 then go back to the highlighted section, the Commission, as I
14 understand it in this, not having seen the document in the past
15 and only reviewing it in the few minutes I've had, indicates
16 that Staff and the Commission have stated that the Green Tags
17 are not a part of PURPA costs, that they are contractual in
18 nature, and that that is not something that is recoverable by
19 the Company, those costs associated with the Green Tags. It's
20 my understanding, however, that in the case of wind PURPA
21 proj ects, that the developers do not transfer Green Tags;
22 whereas, in the case of the Elkhorn proj ect and the Raft River
23 proj ect, there are Green Tags that are transferred under those
24 contracts to Idaho Power.
25 Can you tell me what the distinction is between
9
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
-
1 when you i re talking about an Order that talks about the costs
2 which seem to have no applicability here because costs haven It
3 been assigned anywhere that I know of -- well, let i s just start
4 with that.
5 Why are you giving us something here that has to
6 do with a cost of a Green Tag when, in fact, the Green Tags are
7 transferred by contract and so far I haven i t seen any cost
8 specificity?
9 MR. RICHARDSON: The Green Tags actually have
10 Madam Chairman, Commissioner President Kempton, you asked a
11 multipart question and I i II try to get to all of it.
12 First of all, the Elkhorn and Raft River proj ects
13 transferred the Green Tags to Idaho Power because they
14 negotiated a rate that included the sale of the Green Tags from
15 their proj ects to Idaho Power. So, Raft River and Elkhorn
16 developers are not able to go out and sell those Green Tags
17 because Idaho Power owns them. So that was a value to
18 Idaho Power that it calculated when it negotiated the rate it
19 was paying to those two developers, and it included the value
20 of the Green Tags as well as the value of the electricity.
21 COMMISSIONER KEMPTON: Was the value of the Green
22 Tag a line item issue?
23 MR. RICHARDSON: I wasn i t involved with those
24 negotiations. They were confidential negotiations between
25 Idaho Power and Elkhorn, but I'm sure the developers assigned a
10
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 value to those Green Tags when they were negotiating the
2 overall bundle price.
3 Now, this Order No. 29577 I believe is relevant
4 to our discussion, because in it, you state that the developer
5 of a proj ect -- a renewable energy proj ect -- owns the Green
6 Tags, regardless of whether or not they sell the electricity to
7 Idaho Power in the PURPA context.
8 What that tells me is that this Commission's
9 policy is that whoever develops the proj ect owns the Green
10 Tags. And so my logical next step is who developed these
11 projects, who paid.
12 COMMISSIONER KEMPTON: That i s an assumption on
13 your part though. You don i t have it as a Commission policy.
14 MR. RICHARDSON: Well, the Commission i s policy is
15 the developer in the PURPA context, the developer owns the
16 Green Tags unless they contract to sell those Green Tags as
17 part of the price. And that i s what these two developers did.
18 They contracted to sell their Green Tags to Idaho Power. They
19 could have sold their proj ects to Idaho Power as a PURPA
20 proj ect and kept the Green Tags, but for whatever reason they
21 chose not to; therefore, Idaho Power -- aka the ratepayers --
22 paid for and own these Green Tags.
23 The question is is it State policy for Idaho
24 Power then to retire those Green Tags, or is it State policy
25 for the value of those Green Tags to flow through to the
11
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 ratepayer, and my view is that this Commission has said the
2 developer owns the Green Tags. My view is the ratepayers are
3 the developer here because Idaho Power didn i t build this off
4 the books; they i re paying for this with ratepayer dollars.
5 And then you ask yourself, well, what is the need
6 for Idaho Power to retire Green Tags, and you look at the
7 voluntary Green Tag program which has a minuscule percentage of
8 Idaho Power i s ratepayers signed up for it, which tells me that
9 Idaho Power i s ratepayers do not want to pay extra for green
10 attributes.
11 COMMISSIONER KEMPTON: Okay, Madam Chairman,
12 Mr. Richardson, then the way that we would identify the
13 ratepayers i portion of the cost for the Green Tags would be for
14 there to be a line item in the contract; otherwise, there would
15 be nothing that the ratepayers could claim as a particular line
16 item that could be tracked back to -- to what you i re stating,
17 and that is that the ratepayers have a monetary interest that
18 is definable?
19 MR. RICHARDSON: Well, Madam Chairman,
20 President Kempton, I'm not sure that itemizing the cost or
21 segregating the cost or the value that Idaho Power assigned to
22 the Green Tags versus the electrons from Elkhorn and Raft River
23 is relevant here because the ratepayers pay for the whole
24 bundle, and now ancillary to that -- this is very similar to
25 the S02 credit sales. Ancillary, there has been created a
12
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 market for the green attribute, if you will, that the
2 ratepayers own. So the cost to the ratepayers is some cost,
3 it i S water under the bridge, it i S irrelevant to the question of
4 what is the value to the ratepayers of selling those Green Tags
5 on the market, as opposed to allowing them to be retired or
6 allowing them to sit on a shelf and become worthless.
7 And our view is that if you sell them
8 contemporaneously with their creation, you i re maximizing value
9 to the ratepayer; and if you retire them, you're allowing Idaho
10 Power not to run afoul of the policeman in the market, if you
11 will, Green-e and WREGIS, the entities that certify and verify
12 the green attributes of the Green Tags. Those people will come
13 in and say if Idaho Power is advertising that it as Elkhorn and
14 US Geothermal after they sell the Green Tags, they would say
15 you can't do that. But for informational purposes, Idaho Power
16 is still permitted to say it's buying electrons from Elkhorn
17 and it i s buying electrons from US Geothermal, but it can i t say
18 it's buying the green attributes from those two resources.
19 COMMISSIONER KEMPTON: Okay. In the comparison
20 of whether the Green Tags have held value or not, I believe in
21 the Idaho Power Application, that they spoke of a range of
22 probably $5 to $ 6, and on the basis of that, it was about 1.6
23 to $1.9 million, I believe, is what that was. In the refiling,
24 on the rebuttal filing, Idaho Power used an average, and I
25 don i t understand why using an average necessarily constitutes a
13
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 reasonable discussion on value when in one case, maximum values
2 are used and a range is established, and in the second case an
3 average is used which brings it to a lower numerical value and
4 may have nothing to do with value, recognizing, Mr. Richardson,
5 that these Green Tags do lose value with time. I accept that.
6 I don't know that I accept your argument that the demonstration
7 of the loss in value is the 1.3 to 1.6/1.9 range.
8 MR. RICHARDSON: Madam Chairman, President
9 Kempton, one can quibble about whether it's 1.9 or i. 3. The
10 fundamental point is that these Green Tags dramatically drop in
11 value with each half of a year that passes. If you look at
12 Idaho Power's exhibit Attachment No. 2 in their Brief, you can
13 see that WECC -- that's where we live -- Green-e certifiable
14 wind green tag in the second half of 2009 is worth between
15 five and $ 9. In the first half of 2007, it's worth between
16 70 cents and $1.50. So every half year -- that's how the
17 traders value the Green Tags: Back half, first half of a
18 particular year -- every half year that goes by creates a
19 dramatic reduction in the value of those Green Tags.
20 COMMISSIONER KEMPTON: Do Green-e and WREGIS
21 decrease at the same rate?
22 MR. RICHARDSON: I believe Green-e and WREGIS
23 have different values in the market because several of the
24 states in the WECC require utili ties that are subj ect to a
25 renewable portfolio standard to -- allows them to meet their
14
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 RPS by either building and owning renewables or buying Green
2 Tags. But in those states like California, Oregon, Washington,
3 they require if they're utili ties buying Green Tags to meet
4 their RPS that they be WREGIS certified; therefore, those Green
5 Tags have a potentially higher value in the market than
6 Green-e, which certifies for the voluntary market as well as
7 the compliance market.
8 COMMISSIONER KEMPTON: When you are discussing
9 Mr. Kj ellander' s comments on renewable resources, I believe the
10 comment that went with that was something like the statement
11 indicated that the State of Idaho really doesn't have an
12 interest in renewable resources. If I've phrased that
13 incorrectly, correct me, please.
14 MR. RICHARDSON: Madam Chairman, President
15 Kempton, no, I believe the State of Idaho has a policy to
16 encourage renewable resources, but I think it's an ambiguous
17 policy partly because this Commission's ruling that Green Tags
18 do not go to the Utility, and that has some policy
19 implications.
20 COMMISSIONER KEMPTON: Which are?
21 MR. RICHARDSON: Which are that this Utility
22 cannot advertise that it is buying green power from any of the
23 PURPA projects it has, and many of which are green.
24 COMMISSIONER KEMPTON: Would you, in your
25 In your discussion that you provide but you did
15
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 not iterate here this morning, you indicate that a retired
2 Green Tag is a lost-forever Green Tag; but Idaho Power
3 qualifies the term "retired" when it comes to WREGIS and when
4 it comes to Green-e, and that banking begins to enter the
5 picture and the value, the shelf life, if you will, of the
6 Green Tag during the time that it may be in a WREGIS
7 certification or it may be in a Green-e certification. Would
8 you care to expand on your position?
9 MR. RICHARDSON: Madam Chairman, President
10 Kempton, yes, I would be happy to. It's interesting that in
11 Idaho Power's Application, their Prayer for Relief was to be
12 allowed to retire the Green Tags, and in their Brief, they
13 changed their Prayer for Relief from retire to retire and/or
14 bank; changing, I think, fundamentally what their Application
15 is about.
16 You know, banking the Green Tags from Idaho
17 Power's perspective is speculative at best because what it does
18 is it's presuming that there will be either a market for those
19 Green Tags down the road or that itself will -- it will,
20 itself, have to comply with a RSP.
21 Banking the Green Tags has the same effect from
22 the Utility standpoint as retiring them in terms of advertising
23 that they're a green company, because that's -- the consumption
24 of the Green Tag is that the Utility is telling its customers
25 that it's providing them with green energy. If they're banking
16
HEDRICK COURT REPORTING
P. o. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 the Green Tag for future use, they still can't make that claim
2 because the future use is unknown: It may be sold to another
3 Utility; it may be consumed by Idaho Power and retired. But
4 banking the Utility (sic) just puts it on ice, if you will, and
5 still does not allow the Utility to claim those green
6 attributes in its promotional materials.
7 COMMISSIONER KEMPTON: In the Commission's Order,
8 one of the issues you specifically address is that the
9 Commission identified a concern for a possible national RPS
10 standard, and the fact that it might be wise to go ahead and
11 hold Green Tags to supplement or to fill in where it may be
12 applicable to the national RPS standard voluntary Green Tags as
13 a credit that the State could put on its side of the marker.
14 Regardless of whether Idaho Power has now brought
15 into the issue the possibility of banking in terms of the
16 WREGIS concept where the value still stays with the product as
17 long as it's banked and if the Commission is not certain about
18 what the national RPS standards are or whether Green Tags may
19 be brought in to that process, the legislative process of
20 considering whether Green Tags that you have stored up, that
21 you have banked, that you've kept, say, that you've not
22 retired, if those can or cannot be used in a national RPS
23 standard, the fact of the matter is, as you've said, we haven't
24 addressed that yet, we don't know where that is.
25 So is there not an element of policy that ties to
17
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 a consideration of what we don't know about the national RPS
2 standard that may come in?
3 MR. RICHARDSON: Madam Chairman, President
4 Kempton, no one at this point knows what or whether we will
5 have a national RPS. We're speculating that we may, we're
6 speculating that it's going to happen, but it hasn't happened.
7 We don't know what it will look like. And the problem with
8 banking Green Tags in anticipation of a national RPS is that
9 fact that I've just described, is that they so dramatically
10 drop in value as time goes on and we don't know if a national
11 RPS is going to allow the utility to meet that standard with
12 vintaged, older Green Tags, with voluntary Green Tags. Or keep
13 in mind that the whole purpose for the Green Tag program to be
14 created in the first place was to encourage the development of
15 new, renewable resources.
16 So, the policy makers on a national level and on
17 state levels where they have examined this issue are concerned
18 that Green Tags be used for the purpose for which they were
19 created, which is to encourage the development of new,
20 renewable resources, and not necessarily to reward speculators
21 in Green Tags who are buying and accumulating and buying
22 forward. There's a robust speculative market out there where
23 people are buying strips of Green Tags five and 10 years into
24 the future, paying a premium for them so that they can
25 speculate in that market.
18
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 So, yeah, it's possible that banking Green Tags
2 will help Idaho Power meet a potential future national RPS. We
3 don't know the answer to that. We don't know if it's yes or
4 no. In the mean time, my clients are sitting here, facing a
5 25-percent rate increase, while the Utility is taking this
6 surplus resource and destroying its value.
7 COMMISSIONER KEMPTON: In the testimony on both
8 sides, the -- and we started on this earlier, this devaluing of
9 a Green Tag based on the time that it's been held, about a
10 three-year average, someplace in there, of a realistic time
11 period in which the Green Tag remains viable after which it's
12 considered to be retired. But, apparently, that isn't true in
13 indi vidual states that have RPS standards that are willing to
14 go out and buy Green Tags regardless of what Green-e may be
15 saying as far as their retirement date. Is that correct or
16 incorrect?
17 MR. RICHARDSON: Madam Chairman, President
18 Kempton, that's absolutely correct. The strange thing about a
19 Green Tag is that it doesn't exist. It's a construct. It's a
20 fiction. So several years -- about four years ago, I was
21 representing a client who was buying Green Tags and their
22 lawyer wanted me to document the existence of the Green Tag
23 this was before WREGIS. And I said, you can't put it in a box,
24 you can't put it in an envelope. It's somebody buying the
25 personal satisfaction of knowing that they have encouraged a
19
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
-
-
e
1 renewable energy proj ect to be developed.
2 And that voluntary market, there is no -- i could
3 pay somebody today for their green attributes for a project
4 they built 10 years ago.
5 I have some small hydro clients who are saying,
6 We want to get in on the game. We want to sell our Green Tags
7 going back.
8 And some states i their RPS permits some
9 vintaging; some states don't address it.
10 In the voluntary, bilateral market, I could shake
11 hands with you and sell Green Tags that were created 15 years
12 ago in a small, green hydro proj ect.
13 That's -- the mystery here is that we have a
14 product that is just blue sky, if you will, but it has a value.
15 COMMISSIONER KEMPTON: Doesn't that affect, to
16 some degree, your argument on the Green-e termination of the
17 retirement, if you will, of the Green Tags?
18 MR. RICHARDSON: Madam Chairman, President
19 Kempton, not at all, because the market is basically the
20 Green-e and WREGIS market, the brokers, you know, on Wall
21 Street are buying and selling, they're publishing price sheets,
22 so if I want to go and actually trade these Green Tags, I'm
23 going to do so pursuant to the existing market. But that
24 doesn't mean that there can't be other markets that aren't
25 regulated, that aren't transparent, that aren't readily
20
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
-
e
1 available, that are just two people entering into an agreement
2 to trade money for a feel-good Green Tag. But the market is
3 established, it is transparent, and we do know that Green Tags
4 sell, and we do know that the older they get, the less value
5 they have, and we don't know that Idaho Power needs them. And
6 we also know that the ratepayers need some relief here.
7 COMMISSIONER KEMPTON: The last question: Would
8 you be a little more explicit on your definition of image
9 advertising as it relates to your challenge on Idaho Power that
10 ratepayers shouldn't be responsible for image advertising by
11 Idaho Power?
12 MR. RICHARDSON: Madam Chairman, President
13 Kempton, Idaho Power is correct: This Commission has no rules
14 on image advertising, and the cases I've looked at in the past
15 suggest that this Commission allows advertising in rates for
16 purposes such as ratepayer education and that sort of thing --
17 safety and that sort of issue -- and not -- but I haven't found
18 any case specific that said image advertising is disallowed.
19 But I was using the term more to describe the concerns that
20 Green-e and WREGIS have with image advertising relative to the
21 Company being green and providing green electrons to its
22 customers. And as a former consumer protection attorney, I do
23 know that representations that are false and misleading are
24 subj ect to actions by state attorneys general or
25 counterparties, and potentially even a ratepayer who says the
21
HEDRICK COURT REPORTING
P. o. BOX 578, BOISE, ID 83701
ARGUMENT
-
-
e
1 claimed Idaho Power's image advertising that they're green, if
2 they haven't kept and retired the Green Tags, is false and
3 misleading, and that's the sense I was discussing it.
4 COMMISSIONER KEMPTON: All right. I take it
5 back, Madam Chairman. I have one other question.
6 Would you give me some idea of the impact of
7 this, recognizing that one question is a policy question and
8 the other question is an impact question. The policy question
9 you brought up is whether it's a breach of rate-making policy,
10 and the other question is how much of an impact is it in terms
11 of the cost to the -- to residential customers, to Industrial
12 Customers, or however you want to phrase it.
13 I think you used the term a modicum, that you
14 would like to have -- that it has a modicum of impact I believe
15 is the term. I would like for you to discuss the term
16 "modicum" in terms of the cents per kilowatt hour or whatever
17 of this particular issue.
18 MR. RICHARDSON: Madam Chairman, President
19 Kempton, I'd be happy to. A modicum in terms of the Industrial
20 Customers of Idaho Power Schedule 19 and I calculated the
21 numbers, I didn't ask Dr. Reading to do it. Trying to keep our
22 billable hours low -- looks to me like it's about $200,000 a
23 year for the Schedule 19 customers at Idaho Power's $1.3
24 million value, and that's just a one-year time. If this goes
25 on next year, it would probably be significantly more if we're
22
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
-
-
1 selling them contemporaneously with their creation rather than
2 selling 2007/2008 vintage Green Tags.
3 COMMISSIONER SMITH: So, Mr. Richardson, if Idaho
4 Power, as you pointed out, you know, said on page 14 of their
5 Reply Brief on Reconsideration that its customer communications
6 in 2007 and 2008 may have impaired the Company's ability to
7 certify its Green Tags from those years, are they worth
8 anything?
9 MR. RICHARDSON: Madam Chairman, potentially not.
10 COMMISSIONER SMITH: Okay, so --
11 MR. RICHARDSON: It depends --
12 COMMISSIONER SMITH: They could be zero right
13 now?
14 MR. RICHARDSON: Pardon me?
15 COMMISSIONER SMITH: They could be worth zero
16 right now.
17 MR. RICHARDSON: The 2007/2008 vintage Green
18 Tags, because Idaho Power has been advertising as a green
19 company, potentially are valueless. The 2009 green tags are
20 worth between five and $9, which is significantly higher than
21 the $1.3 million number.
22 COMMISSIONER SMITH: Is it your understanding
23 that we are deciding the past Green Tags or the future Green
24 Tags?
e 25 MR. RICHARDSON: It's my hope, Madam Chairman,
23
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
-
e
e
1 that you are deciding both.
2 COMMISSIONER SMITH: Okay. Thank you.
3 Ms. Nordstrom.
4 MS. NORDSTROM: Thank you. Good morning,
5 Chairman Smith and President Kempton. Whether the scheduling
6 of the Oral Argument today was coincidence or not , it seems
7 particularly fi tting given that today is Earth Day.
8 Idaho Power requests that it be authorized to
9 hold on to or bank its Green Tags rather than sell them in the
10 voluntary market. While this means foregoing some short-term
11 revenue, the Company believes that banking Green Tags will
12 satisfy the obligations that are very likely to be placed on
13 the Company in the near future and have the potential to
14 provide greater benefits to customers.
15 When the Company filed its Application last
16 November, Federal Renewable Portfolio Standard legislation was
17 not yet a twinkle in the eye of the 111 th Congress. As
18 proposed in February, there are two separate Federal bills that
19 require utilities to produce at least 25 percent of its
20 generation from renewable resources by the year 2025. Neither
21 bill discusses whether currently-existing Green Tags will
22 satisfy the escalating annual requirement which would begin at
23 six percent in the year 2012.
24 Idaho Power does not know if either of the two
25 bills that were introduced in February will become law or what
24
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 the implementing rules will look like, but given the prominence
2 of energy issues at present it seems likely that a Federal RPS
3 will be passed in the next several years. The Company believes
4 that banking the tags is the most prudent course of action
5 until such time as the Green Tags can be applied to State or
6 Federal RPS standards and be permanently retired, and the
7 Company believes that this is true for several reasons:
8 First, if Federal rules allow currently-existing
9 Green Tags to be applied to the Federal RPS in 2012, banked
10 Green Tags will ease the cost of complying with the Renewable
11 Portfolio Standards. It is likely that the market price of
12 Green Tags will increase once Federal RPS rules are in place.
13 Stockpiling less expensive tags now in anticipation of future
14 requirements has the potential to save customers money in the
15 longer term.
16 Second, if Idaho Power were allowed to bank the
17 Green Tags rather than sell them, it could provide customers a
18 more detailed description of its generation resources.
19 Customers have been inquiring with greater frequency about the
20 Company's renewable generation portfolio and its carbon
21 footprint. Federal Trade Commission truth in advertising rules
22 and Green-e standards prevent Idaho Power from describing its
23 renewable generation if the Company intends to sell its Green
24 Tags. While the logic may seem a little circuitous, the buyer
25 is paying for the energy's green attributes. Idaho Power
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 cannot consume them by describing its generation from being
2 from wind or geothermal in its customer communications and
3 still have attributes left to sell to a buyer. If it is
4 required to sell the Green Tags, Idaho Power is concerned that
5 it will not be able to explain to customer satisfaction where
6 their power comes from when it is stripped of its environmental
7 attributes.
8 This is really not about building Idaho Power's
9 image as a green company or a renewable-friendly company; this
10 is about educating customers about where their power comes from
11 and meeting their customer service expectations. Moreover,
12 publishing this kind of information is in keeping with State
13 requirements in both Idaho and Oregon that Utili ties report
14 their fuel mixes to customers on at least an annual basis.
15 Third, Idaho Power's stakeholders expect Idaho
16 Power to inquire increasing amounts of renewable generation.
17 This includes customers, shareholders, and the State
18 government. Idaho Power believes that banking the Green Tags
19 is an important step toward complying with the 25 percent by
20 2025 goals set forth in the 2007 Idaho Energy Plan. Selling
21 the tags does not permit Idaho Power's renewable generation to
22 qualify towards meeting those goals.
23 It is fair to say that the rules surrounding
24 Green Tags are evolving and little uniformity exists between
25 the states. Because Idaho and the Federal government have yet
26
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 to set their own rules, the best that Idaho Power can do right
2 now is make an educated recommendation about how to maximize
3 the value of Green Tags for customers. Idaho Power recommends
4 the Commission authorize the Company to bank the Green Tags for
5 future use and retirement, rather than requiring them to be
6 sold as they are generated.
7 If a Federal RPS is enacted that allows
8 presently-existing banked Green Tags to be used to satisfy its
9 requirements, Idaho Power customers will benefit from reduced
10 compliance costs in the future and will have the ability to
11 know exactly how their power is generated. On the other hand,
12 if a Federal RPS is not enacted in the near future or does not
13 allow the use of Green Tags generated prior to the program's
14 start date, customers will still receive the benefit of
15 contributing to the State i s renewable energy goals and have the
16 ability to know exactly where their power is generated.
17 I disagree with Mr. Richardson with respect to
18 the fact of whether or not this is a policy decision. I think
19 it is a policy decision, and it's a policy decision about how
20 to maximize these particular assets for customers. Obviously,
21 the Industrial Customers and Idaho Power disagree on how best
22 to benefit customers, but we believe that these Green Tags have
23 the potential to have greater benefits for customers in the
24 future than they would have now.
25 Idaho Power does not contest that the value of
27
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 the Green Tags in question should accrue to ratepayers. That
2 is precisely why we filed this Application seeking guidance on
3 how to deal with these particular assets.
4 Wi th that, Idaho Power rests upon the Arguments
5 and its Briefs, and is ready to answer questions you may have.
6 COMMISSIONER SMITH: Do you have any questions?
7 COMMISSIONER KEMPTON: I do, Madam Chair.
8 Ms. Nordstrom, I would like to go back to the
9 section in your Rebuttal Arguments having to do with WREGIS and
10 the conflicting positions that have to do with Green-e
11 certification, retirement under Green-e standards, WREGIS,
12 retirement under the WREGIS provisions; and if WREGIS was
13 created under WECC -- the W-E-C-C -- for essentially the
14 western region, the northwestern -- well, the western region
15 why would sales through Green-e be the preferred mechanism
16 rather than through using WREGIS certification which allows
17 banking then to go to states that permit sales with longer
18 periods of termination? In other words, California being one,
19 Colorado being up to five years. I mean, is there a practical
20 application to selling directly to the states, or does it
21 always have to be marketed through Green-e which would require
22 retirement in three years or WREGIS that would allow banking
23 for some longer period?
24 I can take those individually if you would
25 like.
28
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 MS. NORDSTROM: There's a whole sort of
2 questions. Let me take a stab and see how close I get.
3 I think there's a fundamental difference between
4 WREGIS and Green-e. WREGIS acts as a bank and it does not
5 verify that the Green Tags that are banked there will meet any
6 particular standard. But it acts as a bank that tracks how
7 they're generated and where they're going to so that there's no
8 double-counting. Green-e, on the other hand, is -- they're
9 they have set standards in the voluntary market which a
10 maj ori ty of participants have adopted, and it doesn't act as a
11 bank or tracking mechanism. So they work cooperatively
12 together, but they have two very different functions.
13 So some states are requiring that Utilities bank
14 their Green Tags with WREGIS so that they can track them, and
15 so that they can also go in and verify that the tags that are
16 banked in those accounts meet the state standards that are set
17 forth in each state's RPS but the regulators are in charge of
18 verifying that they do, in fact, meet the RPS standards.
19 COMMISSIONER KEMPTON: Does that mean that you
20 would interface both with Green-e and WREGIS in a banking
21 proposition?
22 MS. NORDSTROM: Well, with the banking
23 proposi tion, we, you know -- we are members of WREGIS, we have
24 an account there, and we do, you know, have tags that are
25 banked there. That's where they currently are.
29
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 If you're not -- if your RPS does not require the
2 tags be Green-e certified and you're not selling your Green
3 Tags in the voluntary market, Green-e doesn't really have, you
4 know, much of an influence over the utility involved.
5 COMMISSIONER KEMPTON: Isn i t that the point
6 you're making in your rebuttal testimony and listing the states
7 that have two- to five-year provisions, and California that has
8 no restrictions on time?
9 MS. NORDSTROM: Ilm not sure that I understand
10 your question, but, you know, the states are setting their own
11 shelf lives for how long they think that tags can be used to
12 satisfy their state RPS.
13 COMMISSIONER KEMPTON: Let me read directly from
14 your rebuttal testimony and then ask the question. In this,
15 Idaho Power states --
16 MS. NORDSTROM: What page?
17 COMMISSIONER KEMPTON: Idaho Power states that
18 many states allow banked Green Tags to be used for compliance
19 with their Renewable Portfolio Standards. The shelf life of a
20 Green Tag can be as short as three months -- New England -- or
21 as long as five years -- Colorado. Oregon, California, Utah,
22 and Arizona currently allow Green Tags to be banked for an
23 indefini te period for RPS compliance.
24 My question is: Does Green-e compliance have any
25 effect on sales that you might make given -- to the states that
30
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 are specifically referenced here in terms of their purchasing
2 Green Tags from Idaho Power to meet RPS standards?
3 MS. NORDSTROM: I'm sorry, I'm not understanding
4 the question.
5 COMMISSIONER KEMPTON: Does Green-e -- is there
6 any issue related to Green-e that would require retirement?
7 Green-e has about are those -- let's see.
8 The Green Tags that you have, you're banked with
9 WREGIS. Are they Green-e certified? Do they have to be
10 Green-e certified?
11 MS. NORDSTROM: They do not have to be Green-e
12 certified to be banked.
13 COMMISSIONER KEMPTON: So in that case, there is
14 no requirement to have those retired in three years, so for
15 that point in time, they haven't lost any value. Is that
16 correct?
17 MS. NORDSTROM: If they were to be sold on the
18 voluntary market, you know, they would have lost value. If
19 they were to be used to satisfy a State or Federal RPS, you
20 know, it doesn i t really have a market value, it's not really an
21 issue.
22 COMMISSIONER KEMPTON: The sentence I just read
23 had only to do with RPS standards, because you finish up that
24 sentence with saying that those states have an indefinite
25 period for RPS compliance.
31
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 MS. NORDSTROM: Correct.
2 COMMISSIONER KEMPTON: So we're not talking about
3 a voluntary.
4 MS. NORDSTROM: Correct.
5 COMMISSIONER KEMPTON: So you can sell those and
6 they would not lose value, and that situation could exist for
7 an indefinite period of time for the states that you
8 specifically identify?
9 MS. NORDSTROM: If you were selling to another
10 party for them to use to satisfy their RPS standards. The
11 shelf life issue is so long as -- I mean, you can -- two
12 parties can contract with whatever terms that they like.
13 COMMISSIONER KEMPTON: So, in summary, there are
14 times when the shelf life is applicable in terms of short
15 periods, like three years for retirement. There are other
16 situations where you may be selling to a state to meet RPS
17 standards where the shelf life could be considerably longer, if
18 not indefinite?
19 MS. NORDSTROM: Correct.
20 COMMISSIONER KEMPTON: Thank you.
21 You -- Idaho Power makes a point of separating
22 image advertising from other types of advertising.. Would you
23 clarify that, please?
24 And image advertising now was taken -- the
25 Protestant in this instance specified this in terms of that you
32
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
1 shouldn i t be allowed to use the Green Tags and hold those in a
2 retired status for advertising purposes. I believe that i s the
3 point.
4 MS. NORDSTROM: And that is not Idaho Power IS
5 intent. What we want to be able to do is to communicate in a
6 forthright manner with our customers, and even Mr. Richardson,
7 you know, admitted that you have to put a footnote in your
8 documents that describe your renewable resources if they are
9 included in your resource mix, that you have to put a footnote
10 down at the bottom that says, you know, Idaho Power does not
11 keep the environmental attributes associated with these Green
12 Tags and sells them. And that would have to be a part of every
13 conversation that Idaho Power would have with its customers
14 that, yes, we generate these megawatt hours from different
15 generation facilities, but we couldn't describe them as being
16 wind or geothermal unless we made it very clear that we weren't
17 keeping those environmental attributes. And that's a little
18 confusing for customers -- for some customers -- and
19 frustrating. And that's a struggle that we can try to balance.
20 We Want to maximize the value of these Green Tags, but we also
21 want to be able to answer questions that customers are asking.
22 Renewable energy is a hot topic right now and we
23 get a lot of inquiries, and when we go to Earth Day events and
24 other things in the community, it's really difficult to answer
e 25 questions when you're tippy toeing around, you know, these rules
33
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 that really prohibit claiming any environmental attributes, and
2 those attributes are pretty widely gone. Even just a generic
3 description of wind or geothermal implies that they are
4 renewable, and that's where the Company was really struggling
5 with how we just educate our customers and respond to their
6 questions on just a basic level. It's not that we're out, you
7 know, advertising what a wonderful green company we are. You
8 know, we i ve had hydro for a number of years and, you know, we
9 think that's a renewable resource. It's not that, you know,
10 we're trying to toot our own horn. But we do need to be able
11 to, in our documents and our communications and our
12 publications, explain what generation the Company owns and how
13 people get their power, and that's the struggle that we have.
14 COMMISSIONER KEMPTON: Would this issue have
15 surfaced in any way in a Wall Street credit rating as far as
16 the individual institutions -- financial institutions -- asking
17 Idaho Power questions that they would include in the portfolio
18 that they i re developing on those credit ratings?
19 MS. NORDSTROM: I know that our resource
20 portfolio is disclosed as part of our filings that we make at
21 the SEC, but I'm not aware of what impact that that might
22 otherwise have on Wall Street or already has.
23 COMMISSIONER KEMPTON: That i s all I have.
24 COMMISSIONER SMITH: Ms. Nordstrom, you asked
25 that the Commission authorize the Company to retire, rather
34
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 than sell as they're generated, these Green Tags. Is that
2 correct?
3 MS. NORDSTROM: Initially, I think that was true.
4 You know, in light of the proposed Federal legislation, the
5 Company really believes that the ability to hold on and bank
6 those tags is really the best course of action. At some point,
7 you know, they would be retired to satisfy those requirements
8 when they come about, but it's not
9 COMMISSIONER SMITH: Now I have a bunch more
10 questions. So, my first question was going to be it appears if
11 we're dealing with Green Tags from 2007 and 2008, that the
12 Company has not been selling, as they i re generated, those Green
13 Tags.
14 MS. NORDSTROM: Right. We have been holding
15 them.
16 COMMISSIONER SMITH: So, you're asking us to do
17 something you've already been doing?
18 MS. NORDSTROM: We were uncertain as to the best
19 course of action, and reasonable minds disagree on this issue
20 and rather than assume that we knew the answer that the
21 Commission would want us to proceed with, we felt like we
22 needed to come in and ask.
23 COMMISSIONER SMITH: But now you're not asking to
24 retire?
25 MS. NORDSTROM: At some point when they would be
35
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
1 used for standard Federal RPS compliance, we would retire
2 them
3 COMMISSIONER SMITH: I'm asking about today.
4 MS. NORDSTROM: Today, no.
5 COMMISSIONER SMITH: What are you asking for
6 today?
7 MS. NORDSTROM: We are asking to be able to hold
8 them in the WREGIS account, banked for future use.
9 COMMISSIONER SMITH: Okay.
10 MS. NORDSTROM: And they may be retired at some
11 point, but we wouldn't be retiring them now.
12 COMMISSIONER SMITH: Okay. Now, you also said
13 that the banked Green Tags will ease the cost of compliance,
14 but it seems to me that that's true only if the shelf life
15 issue doesn't crop up along the way and render them
16 valueless.
17 MS. NORDSTROM: Shelf life will be, I think, a
18 big issue in the implementing rules.
19 COMMISSIONER SMITH: And the shelf life issue
20 will be determined by whom?
21 MS. NORDSTROM: I would assume that would be part
22 of a rule making by the agency designated to oversee the RPS
23 program at the Federal level.
24
e 25
COMMISSIONER SMITH: And not the State level?
MS. NORDSTROM: Well, for the Federal RPS. I
36
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
e
e
1 assume a Federal agency would administer it. I haven't seen
2 anywhere that they would delegate that authority to the States,
3 given the fact that each State has their own, separate program.
4 COMMISSIONER SMITH: But we don't know when the
5 Feds might act on this: This year, next year. We don't know
6 what date they might say. They might just have it be
7 forward-looking.
8 Is there any rule at all where the States come
9 in, like -- I thought somehow that individual States could make
10 their own shelf life.
11 MS. NORDSTROM: They can for their own State
12 programs.
13 COMMISSIONER SMITH: Okay.
14 MS. NORDSTROM: And the legislation I think has
15 tried to make clear that the Secretary of Energy is to try and
16 work with the States, and to the extent that State standards
17 are more rigorous than the Federal standards, that those State
18 standards would be allowed to stand.
19 COMMISSIONER SMITH: And until we have a Federal
20 legislation, all we have is what the States are doing?
21 MS. NORDSTROM: Correct.
22 COMMISSIONER SMITH: And we don't know how long
23 that's going to last?
24 MS. NORDSTROM: Correct.
25 COMMISSIONER SMITH: All right. Thank you very
37
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
-
e
1 much.
2 Do you have any further comments, Mr. Richardson?
3 MR. RICHARDSON: I do, Madam Chairman. I think
4 there's a maj or inconsistency here.
5 COMMISSIONER SMITH: I didn i t mean to exclude
6 Ms. Sasser. It's my understanding you don't want to enter the
7 fray.
8 MS. SASSER: Staff has no dog in the fight.
9 COMMISSIONER SMITH: Thank you.
10 Mr. Richardson.
11 MR. RICHARDSON: Thank you, Madam Chairman. I
12 think there's a very maj or inconsistency in Idaho Power's
13 presentation. Idaho Power is telling you that they want to
14 bank the Green Tags in order for them to continue communicating
15 the green attributes of their resource portfolio, and as you
16 pointed out on page 14 in Ms. Nordstrom's Brief, that action
17 threatens to retire in other words, destroy -- the Green
18 Tags. So if Idaho Power truly wants to bank the Green Tags,
19 they're not going to be able to communicate with their
20 customers like they have been doing. So, I think that's a very
21 important point.
22 Banking them -- if they think they're banking
23 them while they're advertising that they have wind and
24 geothermal, they're not banking them; theyl re using them,
e 25 retiring them, destroying their value. So I think that's an
38
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
e
-
1 issue that you should keep in mind as you hear
2 Idaho Power say they went to bank them for the purpose of using
3 them. It i S internally inconsistent and it's illogical.
4 That's all I have, Madam Chairman.
5 COMMISSIONER SMITH: Thank you, Mr. Richardson.
6 It appearing that there is nothing further to
7 come before the Commission, I would just ask the parties to
8 acknowledge whether they believe the Commission information is
9 sufficient for us to conduct our Reconsideration.
10 MR. RICHARDSON: The Industrial Customers believe
11 that the matter is fully submitted, Madam Chairman.
12 MS. NORDSTROM: As does Idaho Power.
13 COMMISSIONER SMITH: Thank you for that. The
14 Commission will then close this case and deliberate as speedily
15 as possible, and issue an Order wi thin the time allotted us by
16 the Statute.
17 Thank you all for coming. Thank you for your
18 help.
19 (The hearing adjourned at 10:35 a.m.)
20
21
22
23
24
~ 25
39
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
COLLOQUY
-
e
18
19
20
21
22
23
24
e 25
1 AUTHENTICATION
2
3
4 This is to certify that the foregoing is a
5 true and correct transcript to the best of my ability of the
6 proceedings held in the matter of the Application of Idaho
7 Power Company for authority to retire its Green Tags, Case No.
8 IPC-E-08-24, commencing on Wednesday, April 22, 2009, at the
9 Commission Hearing Room, 472 West Washington, Boise, Idaho, and
10 the original thereof for the file of the Commission.
11
12
13
14
WENDY J. MU ub .
in and for t State of Ida
residing at Meridian, Idaho.
My Commission expires 2-5-2014.
Idaho CSR No. 475
15
16
17
40
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
AUTHENTICATION