20111202IPC 1-5 to Magic Wind.pdf

DONOVAN E. WALKER (ISB No. 5921)
JASON B. WILLIAMS (ISB No. 8718)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalkercæidahopower.com
jwilliamscæidahopower.com
RECE n
2UIl DEC -2 PM ll: 0 I
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MAnER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )
TERMINATION OF ITS FIRM ENERGY )
SALES AGREEMENT WITH MAGIC )WIND, LLC. )
)
)
)
)
CASE NO. IPC-E-11-20
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
MAGIC WIND, LLC, TO IDAHO
POWER COMPANY
COMES NOW, Idaho Power Company ("Idaho Powet' or "Company"), and in
response to the First Production Request of Magic Wind, LLC, to Idaho Power
Company dated November 18, 2011, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY - 1
REQUEST NO.1: At Page 8-9, Paragraph 16 (a), of the Application on file
herein, the Company proposes to deduct from the Magic Wind deposit of $562,536 the
sum of $76,569.33, which the Company considers non-refundable. Please explain in
full the rationale and legal authority for considering that sum non-refundable.
RESPONSE TO REQUEST NO.1: The rationale and authority for considering a
sum paid by Magic Wind, LLC ("Magic Wind") as non-refundable is discussed and set
forth in length in Case No. IPC-E-06-21, and more particularly in the Joint Motion to
Approve Stipulation, the Stipulation, and Order No. 30414 from that case. The terms of
the cost sharing arrangements set forth in the above-referenced Stipulation are
applicable to all projects contained in the Twin Falls interconnection queue "Cluster
Group" referenced in those proceedings.The provisions of the Generator
Interconnection Agreement ("GIA") between Idaho Power and Magic Wind references
and incorporates this rationale and authority into the terms of the GIA for those parties.
Additionally, the same cost sharing rationale and principles were applied to three other
projects outside of the Twin Falls Cluster Group (Hot Springs - Case No. IPC-E-06-34,
Bennett Creek - Case No. IPC-E-06-35, and Sawtooth Wind - Case No. IPC-E-09-25),
and approved by the Idaho Public Utilties Commission ("Commission") in Order No.
30453 for Hot Springs and Bennett Creek and Order No. 32136 for Sawtooth Wind.
The cost sharing for network transmission upgrades approved by the
Commission for Magic Wind, as well as for all members of the Cluster Group, is divided
into three categories: (i) 25 percent of the costs paid by the project as a non.
refundable contribution in aid of construction ("CIAC"); (ii) 25 percent of the costs paid
by Idaho Powets customers, included in rate base; and (iii) the remaining 50 percent of
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY - 2
the costs paid by project as an advance in aid of construction ("AIAC") and refunded
back to the project over a 10-year period contingent upon the project's power purchase
agreement(s) remaining in good standing. As stated, this is the same for Magic Wind
as it was for the various other members of the Cluster Group.
Arguably, Magic Wind is not entitled to a refund of any amounts that it has paid
since 25 percent of the costs paid by Magic Wind are non-refundable and the other 50
percent is only refundable over a 10-year period contingent upon maintaining its power
purchase agreement in good standing, which is now terminated. However, because
Magic Wind defaulted on its power purchase agreement, and the same was terminated
prior to the completion of the interconnection or the remaining network upgrades, the
Company has proposed refunding all of the network upgrade deposit - minus the actual
amounts spent. Additionally, even if it is assumed that the 50 percent portion of costs is
automatically refundable, the entire 25 percent portion is, and always has been,
deemed non-refundable. The actual amounts spent (the $76,569.33 referenced above)
are only a portion of the 25 percent non-refundable allocation. The total network
upgrade cost allocation to Magic Wind is $853,791. Twenty-five percent of this amount
is approximately $213,000.
As mentioned above, the rationale and authority for considering a sum paid by
Magic Wind as non-refundable is discussed and set forth at length in Case No. IPC-E-
06-21, and more particularly in the Joint Motion to Approve Stipulation, the Stipulation,
and Order No. 30414 from that case. Please see page 2 of 4 of Attachment 6 to the
GIA between Idaho Power and Magic Wind. Item No.6 in the above-mentioned
Attachment 6 sets forth the same 25 percent/25 percent/50 percent cost sharing for
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY - 3
network upgrades referenced above. In every instance where this cost sharing
breakdown has been referenced, approved, and/or discussed by the Commission, the
25 percent apportioned to the project is referenced as "non-refundable." Please see the
Commission Findings on pages 9-11 of Order No. 30414 for a discussion of the
rationale for this arrangement. More particularly, the Commission states:
The cost sharing approach reflected in the Stipulation (Le.,
25% non-refundable QF contribution in aid of construction
(CIAC)) creates an incentive for QFs to consider economic
efficiencies in the siting of their generating facilities and
reduces the potential for the shifting of costs from QFs to the
Company and its customers that might occur if no
transmission upgrade costs were assessed against the QF.
The Commission recognizes the systemwide benefits that
accrue to all customers on an integrated transmission grid.
The assignment of costs in this case balances the benefits
accruing to customers of the grid with the cost responsibility
of the QF necessitating the timing and construction of the
upgrade.
Order No. 30414 at p. 10.
While this answer is not an exhaustive explanation of every reference and every
rationale, justification, and authority for why a portion of Magic Wind's deposit is non-
refundable, it is deemed sufficient to establish that, at the very least, the portion of the
deposit that has been actually spent and committed towards the network upgrades is
non-refundable as proposed by Idaho Power. Additionally, the applicable legal
documents and authorities establish that the actual non-refundable portion is the full 25
percent of the projects allocated total network upgrade allocation, which in the case of
Magic Wind is approximately $213,000.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY - 4
REQUEST NO.2: At Page 8-9, Paragraph 16 (b), of the Application on file
herein, the Company proposes to make a refund without interest. Please explain in full
the rationale and legal authority for refunding the prepayment without interest.
RESPONSE TO REQUEST NO.2: As referenced in the Company's response to
Magic Wind's Production Request No.1 above, please see Case No. IPC-E-06-21, and
more particularly the Joint Motion to Approve Stipulation, the Stipulation, and Order No.
30414 from that case for a discussion of the rationale and authority requested.
Additional rationale and authority is found in the GIA between Magic Wind and Idaho
Power. Page 3 of 4 of Attachment 6 to Magic Wind's GIA, item No.8, addresses
interest on refunds. This provision provides that interest wil be paid on the monthly
refund payments for the 50 percent advance in AIAC amounts in accordance with 18
C.F.R. 35.19a(a)(2)(iii). There is no provision for paying interest upon the proposed
refund of the unspent deposit amounts upon the project's default and termination of
their power purchase agreement and removal from the interconnection queue.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY - 5
REQUEST NO.3: Please admit that if interest is due upon the amount to be
refunded, interest should be calculated in accordance with the methodology contained
at 18 C.F.R. 35.19a.
RESPONSE TO REQUEST NO.3: If interest were to be calculated, the
methodology contained in 18 C.F.R. 35.19a is one possibilty. This is the methodology
referenced in the GIA for the 50 percent advance in AIAC monthly refunds over the 10-
year refund period. Please see the Company's response to Magic Wind's Production
Request NO.2 above.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY - 6
REQUEST NO.4: If you have denied the proceeding request please state the
rational and legal authority for your deniaL.
RESPONSE TO REQUEST NO.4: Not Applicable.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY - 7
REQUEST NO.5: Please produce all documents that support or pertain to your
answers to Request Nos. 1 through 4.
RESPONSE TO REQUEST NO.5: Please see the Company's response to
Magic Wind's Production Request No. 1 above. While not exhaustive of every
document that supports or pertains to the Company's responses to Magic Wind's
Production Request Nos. 1 through 4, Idaho Power primarily relies upon: Case No.
IPC-E-06-21, Joint Motion to Approve Stipulation, Stipulation, and Order No. 30414;
Order No. 30453, Case Nos. IPC-E-06-34 and IPC-E-06-35; Order No. 32136, Case
No. IPC-E-09-25; and the GIA between Idaho Power and Magic Wind. All orders and
pleadings referenced are publicly available through the Commission's website via the
following link: http://ww.puc.state.id.us.MagicWind.sGIA has previously been
provided to Magic Wind. Additionally, a copy of this GIA was provided in the
Company's response to Staffs Production Request NO.4 in this matter.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 2nd day of December 2011.
~N7w~~
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY - 8
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 2nd day of December 2011 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY
upon the following named parties by the method indicated below, and addressed to the
following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
Idaho Public Utilties Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Magic Wind, LLC
Dean J. Miler
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, Idaho 83701
Armand Eckert
716-B East 4900 North
Buhl, Idaho 83316
-- Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email Kris.Sassercæpuc.idaho.gov
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email joecæmcdevitt-miler.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email armandcæsafelink.net
bL~
Donovan E. Walker
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF MAGIC WIND, LLC, TO IDAHO POWER COMPANY - 9