20120926IPC to Hidden Hollow 1-15,1-5.pdf

IDAHO
sErF/rr PIVER®
An IDACORP company
20I2SEP26 PM 3:55
DONOVAN E. WALKER
Lead Counsel
dwalkeridahoower.com UTILITIE S CO.MMSSiO
September 26, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-12-18
Hidden Hollow Energy 2, LLC, - Idaho Power Company's Response to
Complainant's Discovery (First Set)
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and three (3) copies of Idaho
Power Company's Response to Complainant's Discovery (First Set).
Very r yours,
Donovan E. alker
DEW:evp
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
RECEiVED
DONOVAN E. WALKER (ISB No. 5921)
JULIA A HILTON (ISB No. 7740)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker(idahopower.com
IhiItonidahopower.com
Attorneys for Idaho Power Company
0 1 ? PH 3:55
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
HIDDEN HOLLOW ENERGY 2, LLC
Complainant,
V.
IDAHO POWER COMPANY,
Respondent.
CASE NO. IPC-E-12-18
IDAHO POWER COMPANY'S
RESPONSE TO COMPLAINANT'S
DISCOVERY (FIRST SET)
COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and in
response to the Complainant's Discovery (First Set) to Idaho Power Company dated
September 5, 2012, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 1
INTERROGATORY REQUEST NO. 1: Please fully identify the name, address,
and telephone number of every person known to you or your attorney who purports to
have any knowledge of any fact pertinent to damages or liability issues in this case, and
describe generally what their knowledge is.
ANSWER TO INTERROGATORY REQUEST NO. 1: Idaho Power objects to
this question as it is overly broad and unduly burdensome. Subject to and without
waiving the foregoing objection, Idaho Power provides the following information: Idaho
Power's Energy Contracting group has the responsibility to negotiate and administer all
of Idaho Power's PURPA agreements. Randy Allphin, Idaho Power Company Energy
Contracts Leader (1221 West Idaho Street, Boise, Idaho, 83702, 208-388-2614) was
the principal Idaho Power contact for negotiations and administration of Hidden Hollow's
Firm Energy Sales Agreement ("FESA"). Assistance, input and approval is provided
from other individuals and departments within Idaho Power, some of those other
departments and individuals being legal counsel, executives, managers, risk
management, accounting, operations, transmission and delivery, etc. All Idaho Power
Public Utilities Regulatory Policies Act of 1978 ("PURPA") agreements within the state
of Idaho require Idaho Public Utilities Commission ("IPUC" or "Commission") approval,
and thus the IPUC and IPUC Staff have knowledge of this agreement. Additionally, the
employees, agents, and representatives of Hidden Hollow would have knowledge of
facts pertinent to damages or liability issues in this case.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -2
INTERROGATORY REQUEST NO. 2: Please describe each and every
statement, oral, written or otherwise, made by Complainant or any employee, agent, or
representative of the Complainant regarding liability, damages, liquidated damages,
force majeure, Dynamis Energy LLC or Ada County landfill at Hidden Hollow, including
gas volumes, air pollution and its permitting by Idaho DEQ. For the purposes of this
interrogatory, the term "statement" is not limited to the definition of that term in Idaho
Rule of Civil Procedure 26(b)(3), but includes any and all communications of any and
every kind, name or nature, including an "admission" as defined by Idaho Rule of
Evidence 80 1 (d).
ANSWER TO INTERROGATORY REQUEST NO. 2: Idaho Power objects to
this question as it asks for information that is known to Hidden Hollow, Claimant's (or its
employees, agents, or representatives) own statements that are within their own control,
custody, and knowledge. Subject to and without waiving the foregoing objection, Idaho
Power provides the following information: During 2011, Idaho Power received a number
of phone calls from Mr. Lewis Staley of Hidden Hollow Energy 2, LLC. The primary
focus of these calls was to discuss the fact that the project had encountered difficulties
regarding its air quality permit, or the air quality permit related to various operations at
the landfill. In these conversations he expressed that due to the landfill taking in more
construction waste then had been anticipated, the emissions from the existing Hidden
Hollow landfill gas plant, the new Hidden Hollow Energy 2 plant, and even the Ada
County flare were exceeding or would exceed acceptable levels and thus the air quality
permits for the entire property were in jeopardy. He advised that they were having
discussions and meetings with Ada County to resolve these air quality permit issues
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -3
and that a solution was available - it was just a matter of reaching agreement with Ada
County in regards to cost responsibility and other details. However, he stated that these
air quality issues had caused delays in the project's construction process that would
potentially delay the project from being online by the Scheduled Operation Date. During
these discussions, Mr. Staley began exploring what options the project would have if it
missed its Scheduled Operation Date and potentially by more than 90 days. Mr. Randy
Allphin, Energy Contracts Leader, discussed the contract terms with Mr. Staley which
state that if the Operation Date does not occur within 90 days of the Scheduled
Operation Date, Delay Liquidated Damages in the amount of $45 per kW nameplate
rating would be due and that Idaho Power may terminate the agreement at that time.
Mr. Staley continued to explore the option of payment of the Delay Liquidated Damages
as specified within the agreement and whether Idaho Power would or would not
terminate the agreement pursuant to the "may terminate" language from the agreement.
Mr. Staley suggested that the project was most likely responsible for payment of Delay
Liquidated Damages. Mr. Staley's focus of these discussions was what the project
could do so that Idaho Power would not exercise its right to terminate the agreement.
Mr. Allphin expressed that if the project had made substantial physical construction
progress by the 90th day after the Scheduled Operation Date, Idaho Power may be able
to consider collecting the Delay Liquidated Damages as allowed within the agreement
but may not elect to terminate the Agreement. Mr. Staley was in agreement with this
concept and requested Idaho Power continue to consider this possibility. On November
1, 2011, the project provided Idaho Power a draft letter for review; this letter was
unacceptable to Idaho Power as it was requesting an extension of the Scheduled
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -4
Operation Date which was a clear departure from the previous discussions with Mr.
Staley. On December 8, 2011, the same letter was sent to Idaho Power expecting
Idaho Power to sign this document, which Idaho Power did not accept and/or sign as it
did not reflect the previous conversation or understanding between the parties. There
was no mention of Dynamis or its impact on the fuel supply for this project in these
letters. In 2012, Mr. Staley contacted Idaho Power and began expressing concerns
about the fuel supply issues due to Ada County's contract to supply fuel to the Dynamis
project.
The response to this Request was prepared by Randy C. Aliphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -5
INTERROGATORY REQUEST NO. 3: Identify all letters, emails, facsimiles or
other communication documents between Idaho Power Company, on the one hand, and
(A) Ada County, or (B) Dynamis Energy LLC, or (C) Hidden Hollow or its affiliates
(including Fortistar Methane Group), or (D) the Commission (including Staff thereof), on
the other hand, regarding the minimum, proper or necessary volume of landfill methane
gas from the Ada County landfill in order to support Complainant's PURPA project at the
Ada County landfill which forms the basis of the FESA dated December 8, 2010
underlying Commission Order No. 32180, entered February 11,2011.
ANSWER TO INTERROGATORY REQUEST NO. 3: Although there were
specific negotiations with Hidden Hollow regarding the requirement to preserve 1100
scfm of gas supply for the first Hidden Hollow contract and unit (as indicated below),
Idaho Power has conducted a reasonable and diligent search of those files that are
reasonably expected to contain the requested information, did not find the requested
communications, and will supplement its discovery responses as necessary and if
applicable. To the extent that the Requests purport to require more, Idaho Power
objects on the grounds that compliance would impose an undue burden or expense. To
the extent that the interrogatories/requests seek proprietary and/or trade secret,
confidential or highly confidential business information, Idaho Power objects to the
requests. Subject to and without waiving the foregoing objections, Idaho Power
responds as follows:
The Hidden Hollow Energy 2, LLC landfill gas project contracted to sell energy to
Idaho Power as a Qualifying Facility ("QF") as defined by Federal Energy Regulatory
Commission ("FERC") regulations in compliance with PURPA. Implementation of
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -6
PURPA is governed by both FERC and the IPUC. PURPA requires investor owned
utilities, such as Idaho Power, to purchase the energy from all QF projects that deliver
their energy to the utility. QF projects such as the Hidden Hollow Energy 2 project are
developed by independent parties and are not required to provide the utility with any
detailed information with regard to the project specifics, as they are protected from
"utility type" regulation by federal regulations. Matters regarding fuel supply for any QF
are the sole responsibility of the QF, and do not effect Idaho Power's obligation to
contract with the QF.
Hidden Hollow's project is being located adjacent to another Hidden Hollow
landfill gas project that has some type of common ownership such as the same parent
company. Therefore, to ensure adequate fuel was provided to the original Hidden
Hollow Landfill project, in order to preserve the value of the lower power rates in that
first contract for the benefit of Idaho Power's customers, provisions were negotiated in
Hidden Hollow 2's FESA that preserved a certain amount of landfill gas (fuel) to be
utilized at the original plant (first FESA) before being utilized at the expansion, or
second plant (second FESA) which has higher rates. Within the Hidden Hollow Energy
2 agreement, 1100 scfm is committed to the first Hidden Hollow landfill project. See,
IPUC Case No IPC-E-1 0-44, Comments of the Commission Staff, (Jan.31, 2011). The
project represented that this was the required amount of fuel needed to operate the
existing Hidden Hollow landfill project at full output. Idaho Power did not review the
calculations that determined this gas commitment, relying upon Hidden Hollow's
assertions. Additionally, the Hidden Hollow Energy 2 Agreement also requires the
project to provide a copy of the fuel agreement to Idaho Power prior to the First Energy
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -7
Date. Idaho Power has not received this document. Please see the attached, Idaho
Power Company's Response to the First Production Request of the Commission Staff to
Idaho Power Company, Case No. IPC-E-1 0-44, Application for Approval of Firm Energy
Sales Agreement with Hidden Hollow Energy 2, LLC. See also the attached,
Application, Case No. IPC-E-10-44, p. 2-3.
The response to this Request was prepared by Randy C. Aliphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -8
INTERROGATORY REQUEST NO. 4: With respect to each person that you
might call to testify as an expert witness at the trial of this cause, please separately
state the following:
(a)the qualifications, education, training, experience or other credentials that you
contend qualify him or her to testify to the inferences and opinions that you intend to
elicit at trial;
(b)the subject matter as to which he or she is expected to testify and the
opinions he or she is expected to express; and
(c)the opinions or inferences as to which he or she,is expected to testify, and,for
each, all facts and data underlying each such opinion or inference.
ANSWER TO INTERROGATORY REQUEST NO. 4: The Commission has not
yet determined whether there will be a hearing in this matter, or whether an
alternative, or modified, procedure will be utilized. The Commission does not have
trials. Idaho Power has not yet determined each person that may be called to testify
as an expert witness in this matter, if it does ultimately go to a hearing in front of the
Commission.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -9
INTERROGATORY REQUEST NO. 5: Identify each and every document of
importance to this dispute, and its resolution, together with any exhibits that you may
offer or introduce into evidence at trial in this case, including the identity of the current
custodian of each such exhibit.
ANSWER TO INTERROGATORY REQUEST NO. 5: Idaho Power objects to
this question as it is vague, overly broad, and unduly burdensome. The Commission
has not yet determined whether there will be a hearing in this matter, or whether an
alternative, or modified, procedure will be utilized. The Commission does not have
trials. Idaho Power has not yet determined each exhibit that may be offered or
introduced into evidence in this matter, if it does ultimately go to a hearing in front of the
Commission. Subject to and without waiving the foregoing objection, Idaho Power
provides the following information: Without limiting in any way the potential documents
that may be submitted in this proceeding, please see the publicly available documents
from IPUC Case Nos. IPC-E-10-44, and IPC-E-05-29, which are available on the
IPUC's website, or at the Commission Secretary's office, including the contract for the
initial Hidden Hollow landfill gas QF project and the contract for the expansion, or
second QF project which is the subject of this proceeding. Additionally, please see the
letters and correspondence sent from Hidden Hollow to Idaho Power, and Idaho
Power's responses thereto, as well as Idaho Power's letters and correspondence to
Hidden Hollow, and Hidden Hollow's responses thereto, all of which are, or have been,
in the possession, custody, and/or control of Complainant, Hidden Hollow.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 10
INTERROGATORY REQUEST NO. 6: Please set forth all facts, identify persons
with knowledge, and identify all supporting documents relative to the following
affirmative defenses set forth in your Answer identified below:
(a)Paragraph 29 regardingforce majeure;
(b)Paragraph 30 regarding waiver andlor estoppel;
(c)Paragraph 31 regarding the doctrine of unclean hands;
(d)Paragraph 32 regarding the doctrine of judicial estoppel;
(e)Paragraph 33 regarding failure to mitigate damages;
(f)Paragraph 34 regarding real party in interest;
(g)Paragraph 35 regarding no damages having resulted from the
matters alleged in the Complaint;
(h)Paragraph 36 regarding comparative fault, responsibility or failure
to act; and
(i)Paragraph 37 regarding the doctrine of laches.
ANSWER TO INTERROGATORY REQUEST NO. 6: Idaho Power objects to
this question as it is overly broad and unduly burdensome. Subject to and without
waiving the foregoing objection, Idaho Power provides the following information:
Without limiting the ability to supplement, or present additional and/or different
documents, facts, or witnesses at the appropriate time and pursuant to the appropriate
procedure, please see the documents filed in IPUC Case Nos. IPC-E-10-44, and IPC-E-
05-29, which are available on the IPUC's website, or at the Commission Secretary's
office. Relevant facts are set forth in the Complaint, Answer, both FESAs, Comments,
Applications, Commission Orders, as well as the various letters and correspondence
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 11
sent from Hidden Hollow to Idaho Power, and Idaho Power's responses thereto, as well
as Idaho Power's letters and correspondence to Hidden Hollow, and Hidden Hollow's
responses thereto, all of which are, or have been, in the possession, custody, and/or
control of Complainant, Hidden Hollow.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 12
INTERROGATORY REQUEST NO. 7: In the first full paragraph of your Answer
at page 3, you state:
"[1] Force majeure is intended to address unforeseeable
events or events that are outside of the control of the parties.
[2] Hidden Hollow's failure to adequately plan for potential
disruptions in its fuel supply, specifically excluded as
grounds for a claim of force majeure in the FESA, does not
constitute a valid event of force majeure pursuant to the
FESA. [3] Hidden Hollows failure to maintain the proper
permits necessary to construct and operate its facility are not
valid events of force majeure pursuant to the FESA. [4]
Idaho Power's contract with Dynamis Energy, LLC, does not
constitute a valid event of force majeure pursuant to the
FESA."
For each statement contained in each sentence, numbered I - 4 above, please
set forth all facts and legal and Commission precedents in support thereof, and identify
an documents which support your statements.
ANSWER TO INTERROGATORY REQUEST NO. 7: Idaho Power objects to
this discovery request on the grounds that it seeks to obtain Idaho Power's legal
conclusions, legal research, and information protected by the attorney client privilege or
work product doctrine. Subject to and without waiving the foregoing objection, Idaho
Power provides the following information: Sentence I refers to a standard, Black's Law
Dictionary definition of force majeure. See, Black's Law Dictionary 520 (Abridged 7th
ed. 2000). Sentences 2-4 restate the application of the terms of the FESA, to which
Hidden Hollow agreed to be bound, to the facts in this case. Please see Idaho Power's
Answer for more detail on these legal arguments.
Idaho Power also objects to this discovery request on the grounds that it requires
Idaho Power to provide Hidden Hollow with information that is within Hidden Hollow's
own knowledge and control: information regarding its failure to plan for disruptions in its
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 13
fuel supply and its failure to maintain the necessary permits. Please see Response to
Interrogatory Nos. 5 and 6.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 14
INTERROGATORY REQUEST NO. 8: With regard to Idaho Power Company's
contract with Dynamis Energy, LLC, please identify the individuals who negotiated that
contract or worked on its preparation on behalf of Idaho Power Company.
ANSWER TO INTERROGATORY REQUEST NO. 8: Randy Allphin, Donovan
Walker, Mark Stokes and Tom Noll were the primary Idaho Power employees who
negotiated or worked on the preparation of Idaho Power's FESA with Dynamis Energy.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 15
INTERROGATORY REQUEST NO. 9: With regard to your contract(s) with
Cogeneration, Inc. which were the subject of litigation in Idaho state courts including two
Idaho Supreme Court opinions (129 Idaho 46 (1996) [Cogeneration 1] and 134 Idaho
738 (2000) [Cogeneration 11]) please identify the Idaho Power Company people or
representatives who negotiated or worked on those contracts with the PURPA qualified
facility owner(s) involved in those two lawsuits.
ANSWER TO INTERROGATORY REQUEST NO. 9: The Idaho Power
personnel that were administering the PURPA agreements at the time of this case are
no longer employed by Idaho Power. In reviewing the summary of this case it appears
Bruce Jones represented Idaho Power for the appellate portion(s) of these matters.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 16
INTERROGATORY REQUEST NO. 10: (A) Please identify all Idaho Power
Company employees or agents who, as the result of the Idaho Power Company
litigation with Cogeneration, Inc., adapted or otherwise changed Idaho Power
Company's contract documents (including forms and templates), business models or
expectations due to the decisions in (1) Congeneration I, and (2) Con generation II. (B)
Please identify each and every change in your aforesaid contract documents relative to
force majeure.
ANSWER TO INTERROGATORY REQUEST NO. 10: As stated in response to
request 9, the Idaho Power employees who administered the PURPA agreements at the
time of the case identified in this request are no longer employed by Idaho Power
Company and the current employees are not aware of changes to Idaho Power's
PURPA contracting process as a direct result of this case. The terms and conditions of
PURPA QF FESA5 are approved and authorized by the IPUC. Any material change
thereto must also be approved and authorized by the IPUC. Hidden Hollow has access
to all of these contracts as publicly available documents at the IPUC. The documents
speak for themselves as to whether there are any changes.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 17
INTERROGATORY REQUEST NO. 11: (A) For the past ten (10) years, please
list all PURPA qualified facilities which have had operation deadlines deferred or
delayed due to force majeure incidents, and for each such delayed or deferred facility,
identify the nature of the force majeure event, and Idaho Power Company's response
thereto. (B) Please identify documents which articulate your position and that of the
qualified facility owner relative to said force majeure incident. (C) Please state the
outcome of any dispute between Idaho Power Company and a qualified facility owner in
which force majeure was a primary defense raised for delay by the qualified facility
owner, and if a court or IPUC proceeding was involved, please call out its docket
number (for any Commission proceedings) and produce the complaint, answer and all
substantive Orders (for any court proceeding).
ANSWER TO INTERROGATORY REQUEST NO. 11:
A)None
B)Not applicable
C)Over the past 10 years (from 2001 to date) Idaho Power has signed 66 PURPA
QF contacts. Of those 66 contracts, 15 have been terminated, and 7 are not yet online.
The following chart is a list of the 15 PURPA QF contracts, along with the IPUC Case
numbers, that have been terminated in the past ten years:
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 18
Project Name IPUC Case
Yellowstone Power IPC-E-10-22
Hidden Hollow Energy 2 LLC IPC-E-1 0-22
Lava Beds Wind Farm IPC-E-12-22 and IPC-E-12-23
Notch Butte Wind Farm IPC-E-12-22 and IPC-E-12-23
Renewable Energy IPC-E-04-05
Salmon Creek Wind Farm IPC-E-12-20
Cotton Wood Wind Farm IPC-E-12-20
Deep Creek Wind Farm IPC-E-12-20
Rogerson Flats Wind Farm IPC-E-12-20
Interconnect Solar IPC-E-11-10 and IPC-E-12-10
Arrowrock Wind Farm IPC-E-05-24
Alkali Flats Wind Farm IPC-E-09-25
Grand View Solar One IPC-E-10-19
Magic Wind Park IPC-E-06-26 and IPC-E-1 1-20
Treasure Valley Digester IPC-E-06-15
A claim of force majeure was at least raised, either by pleading, letter, or otherwise in
Yellowstone, Hidden Hollow, Lava Beds, Notch Butte, Salmon Creek, Cotton Wood,
Deep Creek, Rogerson Flats, and Interconnect Solar. Force Majeure may have been
brought up in the additional cases, but was not a primary part of the matter. None of the
matters were determined to have valid claims of force majeure. Any pleadings,
complaint, answer, or substantive order may be obtained from the IPUC, or court if
relevant.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) - 19
The response to this Request was prepared by Randy C. Aliphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -20
INTERROGATORY REQUEST NO. 12: For the past ten (10) years, please (A)
set forth all PURPA Qualified Facility owners and projects for which Idaho Power
Company has had a delay liquidated damages clause in the power purchase agreement
or FESA, which clause was invoked by Idaho Power Company, and (B) for each such
case identified above in Interrogatory 12(A), please state the amount of money or other
value called out in said clause, and (C) whether or not the clause has been enforced
literally by Idaho Power Company such that the value posted as security for delay
liquidated damages has been retained by Idaho Power Company in whole or substantial
part.
ANSWER TO INTERROGATORY REQUEST NO. 12: A) In 2006, the IPUC
approved inclusion of Delay Liquidated Damages provisions within the Idaho Power
PURPA agreements. One of the initial agreements containing this provision was the
agreement with the Bennett Creek Wind Farm. This agreement was approved by IPUC
Order No. 30245, dated February 20, 2007. In 2009, the IPUC approved Delay Security
provisions within Idaho Power PURPA agreements of $20 per M. In addition, Delay
Liquidated Damages of $20 per kW was approved if the project failed to be online within
90 days of the Scheduled Operation Date. One of the initial agreements containing
these provisions was the Tuana Springs Expansion and the Cassia Gulch Wind Park
agreement which was approved by IPUC Order No. 30917, dated October 5, 2009. In
2010, the IPUC approved increases in Delay Security provisions within Idaho Power
PURPA agreements to $45 per M. In addition, Delay Liquidated Damages increased
to $45 per KW. One of the initial agreements containing these provisions was the
Bettencourt Dry Creek Biofactory agreement which was approved by IPUC Order No.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -21
31034, dated April 1, 2010. As indicated in Response to No. II, in the last ten years
there have been 15 contract terminations, and according to the provisions of the
contract, the delay security and liquidated damages provisions become applicable, or
may be "invoked" when a project fails to achieve its Operation Date within 90 days of its
Scheduled Operation Date.
All Idaho Power PURPA agreements executed since late 2006 include some
elements of delay liquidated damages and/or delay security requirements based upon
the Commission approvals referenced above. A list of those PURPA agreements
include: Bennett Creek Wind Farm, Hot Springs Wind Farm, Tasco Twin Falls, Big Sky
West Dairy Digester, Camp Reed Wind Park, Payne's Ferry Wind Park, Yahoo Creek
Wind Park, Tuana Springs Expansion, Sawtooth Wind Park, Bettencourt Dry Creek
Biofactory, Arena Drop, 86 Anaerobic Digester, Rock Creek Dairy, Rockland Wind
Farm, Double A Digester, Sahko Hydro, Cold Springs Wind Farm, Desert Meadows
Wind Farm, Hammett Hill Wind Farm, Mainline Wind Farm, Ryegrass Wind Farm, Two
Ponds Wind Farm, Hazelton A, Lime Wind Energy, Mill Creek Hydro, Yellowstone
Power, Salmon Creek Wind Farm, Cotton Wood Wind Farm, Deep Creek Wind Farm,
Rogerson Flats Wind Farm, Interconnect Solar, GrandView Solar One, Hidden Hollow
Energy 2, Double B Dairy, Dynamis, Swager Farms, Clark Canyon Hydro, Fargo Drop
Hydro and High Mesa Wind Farm.
B) Please see Response to Interrogatory No 12 (A) above, as well as
Response to Interrogatory No 13. The amount of Delay Security is either $20 or $45
per kW depending upon the contract. All of the referenced agreements are filed with
the IPUC during the process of obtaining IPUC approval of each of these agreements
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -22
and those copies can be viewed on the IPUC website or obtained from the Commission
Secretary.
C) To the extent that the interrogatories/requests seek proprietary and/or
trade secret, confidential or highly confidential business information, Idaho Power
objects to the requests. Subject to and without waiving the foregoing objections, Idaho
Power responds as follows: Idaho Power enforces each of these individual agreements
as written and approved by the IPUC. Any deviation from approved contract provisions
or a settlement agreement or compromise requires IPUC approval. In the event that a
confidential settlement agreement is negotiated, that too requires IPUC approval and
only non-confidential information is filed publically on the IPUC website.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -23
INTERROGATORY REQUEST NO. 13: With regard to your formula in FESA
paragraph 5.3.1 defining "delay Liquidated Damages," please set forth the history and
justification of that formula as being a reasonable, accurate and enforceable measure of
damages for delay of the sort at issue in this case.
ANSWER TO INTERROGATORY REQUEST NO. 13: Please see Response
No. 12 for an outline of IPUC approval of the delay damage provisions in PURPA
FESAs. In 2006, delay damages were first introduced and approved in the Bennett
Creek Wind Farm agreement (IPUC order 30245), since that time Idaho Power has
executed and the IPUC has approved approximately 40 PURPA agreements with delay
damage calculations.
Delay liquidated damages provisions have been included in PURPA FESA
contracts approved by the Commission since about 2006. See, Case No. IPC-E-06-36.
In addition, one of the first Commission approved FESAs to contain terms requiring the
project to post liquid security was the FESA for Cassia Gulch Wind Park and Tuana
Springs Energy, Case No. IPC-E-09-24. In that case the Commission approved
provisions requiring the posting of liquid security in the amount of $20 per kW of project
capacity.
The Commission considered and approved provisions providing for the posting of
liquid security in the amount of $20 per kW of project capacity in at least four other
PURPA FESAs. See, Case No(s). IPC-E-09-1 8, IPC-E-09-1 9, IPC-E-09-20, and IPC-E-
09-25. The Commission has since analyzed and approved provisions requiring the
posting of liquid security in the amount of $45 per kW of nameplate capacity in at least
twenty-seven different PURPA FESAs. See, Case No(s). IPC-E-1 0-02, IPC-E-1 0-05,
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -24
IPC-E-1 0-15, IPC-E-1 0-16, IPC-E-1 0-17, IPC-E-1 0-18, IPC-E-1 0-19, IPC-E-1 0-22, IPC-
E-1 0-26, IPC-E-1 0-37, IPC-E-1 0-38, IPC-E-1 0-39, IPC-E-1 0-40, IPC-E-1 0-41, IPC-E-
10-42, IPC-E-10-43, IPC-E-10-44, IPC-E-10-45, IPC-E-10-47, IPC-E-10-48, IPC-E-10-
49, IPC-E-1 0-50, IPC-E-1 1-09, IPC-E-1 1-10, IPC-E-1 1-25, IPC-E-1 1-26, and IPC-E-1 1-
27. In approving the change in the amount of delay damage security that is acceptable
for such contracts from $20 to $45 per kW of nameplate capacity, the Commission
specifically found such delay security to be reasonable, necessary, and not to be
punitive. Order No. 31034, p. 3-4, Case No. IPC-E-10-02 (2010).
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -25
INTERROGATORY REQUEST NO. 14: A) With regard to your FESA article 14
entitled force majoure, please set forth Idaho Power Company's experience with
"disruptions or curtailment of the Facility's fuel supply" among sellers of power to you
under PURPA which, in Idaho Power Company's view, are "short term" disruptions or
curtailment. (B) For each alleged incident of curtailment or disruption, list the names of
the PURPA Qualified Facility owner, the dates and number of days of disruption or
curtailment, and the reasons for said disruptions or curtailment over the past ten (10)
years.
ANSWER TO INTERROGATORY REQUEST NO. 14: A) Idaho Power has not
yet had to make such determination pursuant to the force majeure provisions in a
FESA.
B) N/A
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -26
INTERROGATORY REQUEST NO. 15: With regard to your FESA article 14
entitled force majeure, regarding alleged "disruptions or curtailment of the Facility's fuel
supply" among sellers of power to you under PURPA which, in Idaho Power Company's
view, are 'short term,' please state the maximum number of days that, in your opinion,
qualify as 'short term' and then set for all reasons, variables, factors and calculations
necessary to explain your answer.
ANSWER TO INTERROGATORY REQUEST NO. 15: Please see the answer
provided in Response to Interrogatory No. 14. Idaho Power has not yet had to make
such determination pursuant to the force majeure provisions in a FESA, but the duration
would be something short of the full term of the contract.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -27
PRODUCTION REQUEST NO. 1: Please produce all reports, final or draft,
issued by your experts witnesses relative to the above-captioned case.
RESPONSE TO PRODUCTION REQUEST NO. 1: Please see the Response to
Interrogatory No. 4.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -28
PRODUCTION REQUEST NO. 2: Please produce all documents referenced in
your responses to the foregoing interrogatories.
RESPONSE TO PRODUCTION REQUEST NO. 2: Idaho Power objects to the
extent the Request seeks information that is already in the public record before the
Commission, and publicly available, or which is already in the possession, custody, or
control of the Complainant. Subject to and without waiving the foregoing objection,
Idaho Power provides the attached documents.
The response to this Request was prepared by Randy C. Allphin, Senior Energy
Contracts Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -29
PRODUCTION REQUEST NO. 3: Please produce all documents identified, or
requested to be identified, in one or more of the foregoing interrogatories.
RESPONSE TO PRODUCTION REQUEST NO. 3: Idaho Power objects to the
extent the Request seeks information that is already in the public record before the
Commission, and publicly available, or which is already in the possession, custody, or
control of the Complainant.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -30
PRODUCTION REQUEST NO. 4: Please produce all documents constituting or
reflecting Idaho Power Company's negotiations with, or analysis of, the actual or
potential impact on landfill methane quantities at the Ada County landfill if Idaho Power
Company does enter or has entered into a purchase power agreement or FESA with
Dynamis Energy, LLC, on or about November 16, 2011.
RESPONSE TO PRODUCTION REQUEST NO. 4: Idaho Power entered into a
PURPA QF FESA with Dynamis on November 16, 2011, which was filed with the IPUC
in Case No. IPC-E-1 1-25. The FESA was approved by the IPUC in Order No. 32470
issued February 24, 2012. Regarding the requested documents reflecting alleged
negotiations and analysis, please see the Response to Interrogatory No. 3.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -31
PRODUCTION REQUEST NO. 5: Please produce all documents identified, or
requested to be identified, in Interrogatory No.3, above.
RESPONSE TO PRODUCTION REQUEST NO. 5: Please see the Response to
Interrogatory No. 3.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
Respectfully submitted this 26th day of September 2012.
ONOVAN E. WALKER X---
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -32
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 26th day of September 2012, I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S
DISCOVERY (FIRST SET) upon the following named parties by the method indicated
below, and addressed to the following:
Commission Staff
Donald L. Howell, II
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Hidden Hollow Energy 2, LLC
Stephen R. Thomas
MOFFATT, THOMAS, BARRETT
ROCK & FIELDS, CHARTERED
101 South Capitol Blvd., 10th Floor
P0 Box 829
Boise, Idaho 83701
X Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email don. howeII(puc.idaho.pov
Hand Delivered
X U.S.MaiI
Overnight Mail
FAX
X Email srt(ämoffatt.com
ElizabtF Paynter,'eegal Secretary
IDAHO POWER COMPANY'S RESPONSE TO COMPLAINANT'S DISCOVERY (FIRST SET) -33
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-12-18
IDAHO POWER COMPANY
RESPONSE TO COMPLAINANT'S DISCOVERY
(FIRST SET) REQUEST FOR INTERROGATORY NO. 3
DONOVAN E. WALKER (188 No. 5921)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalkercidahopower.com
lnordstrom idahopower.com
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF A FIRM ENERGY SALES
AGREEMENT WITH HIDDEN HOLLOW
ENERGY 2, LLC FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY.
CASE NO. IPC-E-10-44
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE
COMMISSION STAFF TO IDAHO
POWER COMPANY
COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and in
response to the First Production Request of the Commission Staff to Idaho Power
Company dated January 12, 2011, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -1
REQUEST NO. 1: The attached Form 556 (in pertinent part), Certification of
Qualifying Facility (QF) Status for a Small Power Production or Cogeneration Facility,
was filed with FERC on January 5, 2011 in Docket No. QFII-97 to obtain self-
certification as a QF of the Hidden Hollow Energy 2 LLC facility. Question 8a of the
attached Form 556 requires the applicant to identify any facilities with electrical
generating equipment located within I mile of the electrical generating equipment of the
instant facility, and for which any of the entities identified in lines 5a or 5b, or their
affiliates, holds at least a 5 percent equity interest. Hidden Hollow has identified the
existing Ada County Hidden Hollow generating facility as located within I mile and with
common ownership by Fortistar LLC. ¶ 3.2 of the Firm Energy Sales Agreement
between Idaho Power and Hidden Hollow Energy 2 LLC requires the facility to maintain
QF status throughout the term of the Agreement.
a. Does Idaho Power believe that the self-certification application filed with
FERC for the Hidden Hollow Energy 2 facility complies with FERC's one-mile separation
rule as contained in 18 C.F.R. 292,204(a)(2)?
b If not, is Idaho Power aware as to whether Hidden Hollow Energy 2 has
requested a waiver pursuant to 18 C.F.R. 292.204(a)(3)?
C. If not, does Idaho Power intend to contest Hidden Hollow 2's QF status?
RESPONSE TO REQUEST NO. 1:
a. No. Idaho Power does not believe that the one-mile separation rule would
be met for the facilities to be certified as two separate entities by the Federal Energy
Regulatory Commission ("FERC").
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY .2
b. Idaho Power is currently not aware of whether Hidden Hollow Energy has
or will request a waiver, or if it will seek certification of both projects as one PURPA QF.
C. Idaho Power does not intend to contest Hidden Hollow 2's QF status.
Idaho Power was aware, as Staff has noted, that Fortistar LLC has an ownership
interest in both the existing Hidden Hollow landfill gas project and this new facility,
Hidden Hollow Energy 2. It is also Idaho Power's understanding that these two
generation facilities will basically be side-by-side units in essentially the same facility.
Consequently, there is no debate as to the fact that they are within one mile of each
other. Idaho Power has thus far not been involved with the project's self-certification
process and prior to Staff raising this issue was unaware of this potential problem.
Idaho Power has since contacted the project and given them contact information for the
Idaho Public Utilities Commission Staff. The project indicates that it will work with both
Staff and the Company to resolve this potential issue with its FERC certification. Two
possible options are to include the new project in the same QF certificate as the existing
facility, or get either a waiver, or express acceptance by FERC of the QF status of each.
Staff is correct in that the contract requires the project to maintain its status as a
certified QF and, ultimately, if the project is unable to attain QF status for this project,
the Firm Energy Sales Agreement ("FESA") can be terminated.
At the time the developer proposed adding the additional 3.2 megawatt ("MW")
facility at this location, both parties recognized the fact that, in essence, this new project
was a 3.2 MW expansion of the existing 3.2 MW generation facility that was already
constructed, operating, and under contract to sell energy to Idaho Power. The
combination of the two projects is still under the published rate eligibility cap of 10
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -3
average megawatts. A key element of the interaction between the existing FESA and
this additional FESA was to preserve the value of the existing FESA for the original 3.2
MW facility for Idaho Power's customers.
The FESA submitted for approval contains provisions that require landfill gas up
to the quantity required to operate the original generation units to be allocated first to
those units under the original contract. Only after this required volume of gas is
supplied to the original units, may fuel then be supplied to the new generation units that
are under the new contract and new rates. This ensures that the value of the original
FESA is not jeopardized by the addition of these additional new generation units.
Other contracting options were considered in the contract discussions one of
those options being to amend the existing contract to include the new 3.2 MW
expansion. Again, a key element, however, was that it would be necessary to preserve
the value of the original FESA for the first 3.2 MW facility. After much discussion and
consideration, it became apparent that the amendment of the existing FESA to retain
the value, establish different pricing for different levels of generation, create a blended
price, accommodate different ownership structures, etc., was going to create a very
complex and cumbersome amended FESA. The parties agreed a better course of
action was to create a second contract for the additional generation with the provisions
that limited the fuel supply for this additional generation to only fuel that exceeded the
fuel requirements of the original generation units.
The project informs Idaho Power that it has other facilities at different locations
that are within one mile of each other that have not had any QF certification problems
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -4
with FERC. Idaho Power does not expect there to be any OF certification problems with
these facilities.
The response to this Request was prepared by Randy C Aliphin, Senior Energy
Contract Coordinator, Idaho Power Company, in consultation with Donovan E. Walker,
Senior Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 21st day of January 2011.
DONOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -5
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 21st day of January 20111 served a true and
correct copy of the within and foregoing IDAHO POWER COMPANY'S RESPONSE TO
THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO
POWER COMPANY upon the following named parties by the method indicated below,
and addressed to the following:
Commission Staff
Kristine Sasser
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
X Hand Delivered
U.S. Mail
____Overnight Mall
FAX
X Email kris.sasserpuc.idaho.qov
no van E. Walker
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -6
DONOVAN E. WALKER (ISB No. 5921)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwaIkeridah000wer.com
Inordstromtäidahopower.com
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
RE CF \E r
20 !Y1TC 10 PM 43I,
-
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF A FIRM ENERGY SALES
AGREEMENT FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY
BETWEEN IDAHO POWER COMPANY
AND HIDDEN HOLLOW ENERGY 2 LLC.
Li .14tIiJi[,Z
APPLICATION
Idaho Power Company ("Idaho Power" or "Company"), in accordance with RP 52
and the applicable provisions of the Public Utility Regulatory Policies Act of 1978
("PURPA"), hereby respectfully applies to the Idaho Public Utilities Commission ('IPUC"
or "Commission") for an Order approving the Firm Energy Sales Agreement ("FESA")
between Idaho Power and Hidden Hollow Energy 2 LLC ("Hidden Hollow" or "Seller")
under which Hidden Hollow would sell and Idaho Power would purchase electric energy
generated by the Hidden Hollow Landfill Gas Project ("Facility") located near Boise,
Idaho.
APPLICATION -1
In support of this Application Idaho Power represents as follows:
I. BACKGROUND
1.Sections 201 and 210 of PURPA, and pertinent regulations of the Federal
Energy Regulatory Commission ("FERC"), require that regulated electric utilities
purchase power produced by cogenerators or small power producers that obtain
qualifying facility ("QF") status. The rate a OF receives for the sale of its power is
generally referred to as the "avoided cost" rate and is to reflect the incremental cost to
an electric utility of electric energy or capacity or both, which, but for the purchase from
the QF, such utility would generate itself or purchase from another source. The
Commission has authority under PURPA Sections 201 and 210 and the implementing
regulations of the FERC, 18 C.F.R. § 292, to set avoided costs, to order electric utilities
to enter into fixed-term obligations for the purchase of energy from QFs, and to
implement FERC rules.
2.Hidden Hollow proposes to design, construct, install, own, operate, and
maintain a 3.2 megawatt ("MW") (Maximum Capacity Amount) landfill gas generating
facility to be located at Ada County's Hidden Hollow Landfill near Boise, Idaho. The
Facility will be a OF under the applicable provisions of PURPA.
3.This Facility is proposed as a second generation unit to be installed at the
Ada County Hidden Hollow Landfill using landfill gas as its fuel source. G2 Energy
Hidden Hollow, LLC ("G2") has a Commission approved FESA for an existing 3.2 MW
landfill gas powered generating unit located at the Hidden Hollow Landfill. See Order
No. 29928, Case No. IPC-E-05-28. This Facility is proposed by a separate affiliate
company; however, it utilizes the same landfill gas reserves as a fuel source. Idaho
APPLICATION -2
Power has been engaged with Hidden Hollow over the course of the last year and a
half, and because this Facility utilizes the same landfill gas fuel source as the previously
approved PURPA QF project located at the landfill, the Company has negotiated
provisions of this FESA intended to preserve the value of the previously approved
contract while enabling additional generation to be developed at this location. The
FESA contains provisions that provide that the first 1100 scfm of fuel is dedicated to the
generation units under the previously approved agreement. The 1100 scfm is an
engineering calculated value of the quantity of the average fuel quality required to
operate the first generation units at their nameplate capacity. The FESA provides Idaho
Power the right to audit the fuel distribution to the various generation units. In this
manner, the parties propose to preserve the value represented by the lower rates
applicable to the power provided pursuant to the (32 FESA in order to prevent the
Facility in this case from providing power at a higher cost to the Company and its
customers in its stead.
II. THE FIRM ENERGY SALES AGREEMENT
4. On December 8, 2010, Idaho Power and Hidden Hollow entered into a
FESA pursuant to the terms and conditions of the various Commission Orders
applicable to this PURPA agreement. See Order Nos. 30415 and 31025. A copy of the
FESA is attached to this Application as Attachment No. 1. Under the terms of this
FESA, Hidden Hollow elected to contract with Idaho Power for a 20-year term using the
non-levehzed published avoided cost rates as currently established by the Commission
for energy deliveries of less than 10 average megawatts (aMW").
APPLICATION -3
5. The nameplate rating of this Facility is 3.2 MW. As defined in paragraph
1.17 and paragraph 4.1.3 of the FESA, Hidden Hollow will be required to provide data
on the Facility that Idaho Power will use to confirm that under normal and/or average
conditions, the Facility will not exceed 10 aMW on a monthly basis. Furthermore, as
described In paragraph 7.5 of the FESA, should the Facility exceed 10 aMW on a
monthly basis, Idaho Power will accept the energy (Inadvertent Energy) that does not
exceed the Maximum Capacity Amount, but will not purchase or pay for this Inadvertent
Energy.
6.Hidden Hollow has elected February 28, 2012, as the Scheduled First
Energy Date and February 28, 2012, as the Scheduled Operation Date for this Facility.
See Appendix B. Various requirements have been placed upon Hidden Hollow in order
for Idaho Power to accept energy deliveries from this Facility. Idaho Power will monitor
compliance with these initial requirements. In addition, Idaho Power will monitor the
ongoing requirements through the full term of this FESA. Should the Commission
approve this FESA, Idaho Power intends to consider the Effective Date of the FESA to
be December 8, 2010.
7.Hidden Hollow and Idaho Power have agreed to Delay Liquidated
Damages and associated Delay Security provisions of $45 per kW of nameplate
capacity within this FESA that have previously been approved as reasonable by the
Commission in several PURPA FESAs. See Case Nos. IPC-E-10-02, IPC-E-10-05,
[PC-E-10-15, IPC-E-1 0-16, IPC-E-1 0-17, IPC-E-1 0-18, IPC-E-1 0-19, and IPC-E-1 0-22.
8.The FESA, as signed and submitted by the parties thereto, contains non-
Ievelized published avoided cost rates in conformity with applicable IPUC Orders. All
APPLICATION -4
applicable interconnection charges and monthly operation and maintenance charges
under Schedule 72 will be assessed to Hidden Hollow.
9.The FESA provides that all applicable interconnection charges and
monthly operational or maintenance charges under Schedule 72 will be assessed to
Seller. The Facility is currently in good standing with the generator interconnection
process. Idaho Power - Power Supply submitted Transmission Service Requests on
behalf of the Facility to Idaho Power Delivery. Delivery responded that Transmission
capacity is available for this Facility and network resource designation will be granted
upon the completion of the GIA and this FESA.
10.Section 21 of the FESA provides that the FESA will not become effective
until the Commission has approved all of the FESA's terms and conditions and declared
that all payments Idaho Power makes to Hidden Hollow for purchases of energy will be
allowed as prudently incurred expenses for ratemaking purposes.
III. MODIFIED PROCEDURE
11.Idaho Power believes that a hearing is not necessary to consider the
issues presented herein and respectfully requests that this Application be processed
under Modified Procedure, i.e., by written submissions rather than by hearing. RP 201
et seq. If, however, the Commission determines that a technical heating is required, the
Company stands ready to present Its testimony and support the Application in such
hearing.
APPLICATION -5
IV. COMMUNICATIONS AND SERVICE OF PLEADINGS
12.Communications and service of pleadings, exhibits, orders and other
documents relating to this proceeding should be sent to the following:
Donovan E. Walker, Senior Counsel
Lisa Nordstrom, Lead Counsel
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
dwalker(idahopower.com
lnordstromiidahopower.com
Randy C. Aliphin
Energy Contract Administrator
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
raIlphintkJahopower.com
V. REQUEST FOR RELIEF
13.Idaho Power Company respectfully requests that the Commission issue
an Order: (1) authorizing that this matter may be processed by Modified Procedure; (2)
approving the Firm Energy Sales Agreement between Idaho Power Company and
Hidden Hollow Energy 2 LLC without change or condition; and (3) declaring that all
payments for purchases of energy under the Firm Energy Sales Agreement between
Idaho Power Company and Hidden Hollow Energy 2 LLC be allowed as prudently
incurred expenses for raternaking purposes.
Respectfully submitted this 10' day of December 2010.
wa-
OVAN E.ViALKER
Attorney for Idaho Power Company
APPLICATION -6
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 10th day of December 2010 I served a true and
correct copy of the within and foregoing APPLICATION upon the following named
parties by the method indicated below, and addressed to the following:
Hidden Hollow Energy 2 LLC
Thomas J. Gesicki, President
Fortistar Methane Group
5087 Junction Road
Lockport, New York 14094
Hand Delivered
X U.S.MaII
Overnight Mail
FAX
X Email tgesicki(fortistar.com
novan E. Walker
APPLICATION -7
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-12-18
IDAHO POWER COMPANY
RESPONSE TO COMPLAINANT'S DISCOVERY
(FIRST SET) REQUEST FOR PRODUCTION NO. 2
Aliphin, Randy
Now
From: Lewis Staley [lstaleyfortistar.com ]
Sent: Tuesday, October 25, 2011 9:02 AM
To: Allphin, Randy
Subject: RE: Project Schedule
Good Morning Randy: I am working on the "delayed commercial operation date" letter option for Hidden Hollow #2. My
question is if we go with this letter in place of a Force Majuere would we need to amend the contract or simply do a letter
agreement with a new CO date. Again we would still have to comply with sections 5.3 Operations Date Delay and the
resulting Delay Liquidated Damages schedule. Thanks again for the meeting last week. Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstaleyfortistar.com
From: Allphin, Randy 1maitto:RAllotdn0dahopower.com]
To: 'Lewis Staley' Imailto: lstaleytfortistar.com
Sent: Wed, 12 Oct 2011 15:57:30 -0400
Subject: RE: Project Schedule
20th does not work for me and only Friday morning the 21g is open on my schedule. I could meet anytime between 9
am and noon on Friday
Randy
From: Lewis Staley [mailto:lstaleyfortistar.comJ
Sent: Wednesday, October 12, 2011 1:46 PM
To: Allphin, Randy
Subject: RE: Project Schedule
Randy: Looks like we would be able to meet Thursday afternoon (Oct.20th) or anytime Friday (October 21st). Regards,
Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstalevfortistar.com
From: Allphin, Randy [mailto:RAlJohinidahopower.com]
To: 'Lewis Staley [mailto:lstalevfortistar.com]
Sent: Tue, 11 Oct 201109:02:40 -0400
Subject: RE: Project Schedule
No problem, e-mail or call me when you have the new time and we can arrange a meeting
Randy
From: Lewis Staley [malito:Istalevfortistar.com]
Sent: Tuesday, October 11, 20117:00 AM
To: Aliphin, Randy
Subject: RE: Project Schedule
Randy: I just learned that we canceled the ADA County meeting and it will now be held next Wednesday or Thursday.
Therefore, we need to postpone our meeting until next week. If it is okay with you. I will know sometime today when
specifically the County meeting will be held and send you an email. I apologize for the inconvenience. Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstaleyfortIstar.com
From: Allphin, Randy [mailto:[e-mail]]
To: 'Lewis Staley' [mailto: lstaleyfortistar.comj
Cc: tgesickkfortistar.com [mailto:tgesickifortistar.com]
Sent: Fri, 07 Oct 201112:46:34 -0400
Subject: RE: Project Schedule
See you then
Randy
From: Lewis Staley [mailto: IstaIeycfortistar.com ]
Sent: Friday, October 07, 2011 10:46 AM
To: Aliphin, Randy
CC: tgesickifortistar.com
Subject: Project Schedule
Randy: This confirms our meeting in your office on October 12, 2011 at 1:30 PM. Looking forward to seeing you.
Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstalevfortistar.com
This transmission may contain information that is privileged, confidential and/or exempt from disclosure under applicable law. If you are not the intended
recipient, you are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is
STRICTLY PROHIBITED. If you received this transmission in en -or, please immediately contact the sender and destroy the material in its entirety, whether in
electronic or hard copy format. Thank you.
Aliphin, Randy
From: Lewis Staley [IstaIeyfortistar.com ]
Sent: Tuesday, November 01, 2011 10:25 AM
To: Allphin, Randy
Subject: Letter Agreement for Delay
Attachments: Letter to Idaho Power Company 110111 .docx
Randy: Please review the draft Letter Agreement for the extension and add any comments for our review. I believe it
keeps the PPA intact except for the change in the CO date. Thank you. Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstaleycfortistar.com
HIDDEN HOLLOW ENERGY 2 LLC
do Fortistar Methane Group
One North Lexington Avenue • White Plains, New York 10601
Tel. [phone] • Fax. [phone]
November 1, 2011
Senior Vice President, Power Supply
Idaho Power Company
P.O. Box 70
Boise, Idaho
83707
Re: Firm Energy Sales Agreement
Dear Sir or Madame:
We refer to the Firm Energy Sales Agreement between Idaho Power Company ("IPC")
and Hidden Hollow Energy 2 LLC ("Seller"), dated December 8, 2010 (as amended,
supplemented or otherwise modified, the "PPA"). Capitalized terms used in this letter without
definition have the meanings set forth in the PPA.
On June 22, 2011, Ada County, Idaho (the "County") advised the Idaho Department of
Environmental Quality ("IDEQ") that the levels of certain contaminants in the landfill gas being
supplied by the County from the Ada County Landfill (the "Landfill") to Seller under an existing
landfill gas supply agreement had increased to a level such that the County was no longer in
compliance with its existing air quality permit. Specifically, the County confirmed that samples
tested at the Landfill indicated that the landfill gas being collected by the County contained
hydrogen sulfide ("H2S") at concentration levels almost twenty times the concentration levels
allowed by the County's existing permit.
Since the County's June 22 advice to IDEQ, Seller and the County have worked together
to design and implement a remediation plan with respect to the excess H2S problem, and Seller
has modified its Facility construction schedule in light of this ongoing issue. As a result of
Seller's recent meeting with the Ada County Commissioners, the Ada County Solid Waste staff
and IDEQ, a remediation plan has been accepted and a modified air quality permit is expected to
be issued on or about November 15, 2011.
Because of these third-party delays and the resulting uncertainty as to final design,
procurement and construction requirements for Seller's Facility, Seller requests that the
Scheduled Operation Date under the PPA be extended from February 28, 2012 to December 31,
2012. Please indicate your acceptance of the foregoing by signing a counterpart of this letter
below. Except as amended in this paragraph, all of the terms and conditions set forth in the PPA
remain in full force and effect, and each of the parties reserves all of its rights thereunder.
Please note that despite the anticipated delay in permitting, construction and ultimate
commercial operation, Seller is confident that, given appropriate and timely assistance and
cooperation from the County, the Facility will be built and will operate in accordance with the
PPA. In fact, Seller continues to work diligently with IDEQ and the County to resolve the
aforementioned issues and to commence construction and operation of the Facility as soon as is
legally permitted, and Seller undertakes to provide JPC with regular updates on the status of the
party's resolution of this matter. Seller remains committed to completing the Facility in a
commercially reasonable manner as quickly as is practicable.
Very truly yours,
HIDDEN HOLLOW ENERGY 2 LLC
By:
Name: David Wentworth
Title: Senior Vice President
Cc: Idaho Power Company,
Cogeneration and Small Power Production
Thomas Gesicki
Lewis Staley
ACCEPTED AND AGREED:
IDAHO POWER COMPANY
By:_
Name:
Title:
Aliphin, Randy
From: Lewis Staley [[e-mail] ]
Sent: Tuesday, December 13, 2011 1:00 PM
To: Aliphin, Randy
Subject: Fw: RE: Letter Agreement
Attachments: Letter to Idaho Power Company 120811 .docx
Hello Randy: Just checking in to see if you have any comments and the status of the Letter Agreement. Thanks, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstaleyfortisthr.com
From: Lewis Staley Imailto: lstaIeyfortistar.com ]
To Aliphun, Randy Fmaio RAllphlnidahoper corn]
Sent: Fri, 09 Dec 201109:32:17 -0500
Subject: RE: Letter Agreement
Good Morning Randy: Attached is our executed letter agreement which I believe concurs with our last discussion
concerning the delay of HH2. Please note that we have only requested that Section 5.4 not be enforced until after the
new date of commercial operation is missed, which is now February 28, 2013. All other provisions of the PPA are in full
force. I believe this
should do it. If there are any changes to the letter or simply an IP confirming letter instead of the attached one, please
let me know. Please call if there are any other concerns or comments. Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstalevfortistar.com
From: Allphin, Randy [mailto:RAllphin©idah000wer.com ]
To: 'Lewis Staley' [mailto:lstaleyfortistar.com]
Sent: Tue, 29 Nov 201110:37:20 -0500
Subject: RE: Letter Agreement
Sounds good, 1 pm mountain time on Thursday
From: Lewis Staley [mailto:[e-mail]]
Sent: Tuesday, November 29, 20118:21 AM
To: Allphin, Randy
Cc: claflerfortistar.com
Subject: RE: Letter Agreement
Randy: How about 1 PM Mountain Time (3 PM EST) for my call? Thanks, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstaleyfortistar.com
From: Allphin, Randy [mailto:RAllDhinidahopower.com]
To: 'Lewis Staley' [mailto:lstalevfortistar.com]
Sent: Tue, 29 Nov 201108:55:17 -0500
Subject: RE: Letter Agreement
Lew, I am traveling today on in meetings all day tomorrow (Wednesday). Thursday is the earliest I could talk this over
with you, any time between 10 am and 2 pm mountain time is open right now for me on Thursday.
Randy
From: Lewis Staley [mailto:lstaleyfortistar.com]
Sent: Tuesday, November 29, 20116:32 AM
To: Aliphin, Randy
Subject: Fw: Letter Agreement
Good Morning Randy: I got back to work early. If today is a good for you to discuss our draft letter, what time is good
to call you? Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstalevfortistar.com
From: Lewis Staley [mailto: [e-mail]]
To: [e-mail]
Cc: lstaleyfortistar.com
Sent: Tue, 22 Nov 201109:00:42 -0500
Subject: Letter Agreement
Good Morning Randy: Attached is the revised letter agreement that we would like you to consider regarding the delay of
Hidden Hollow 2. I believe the letter covers what we have discussed and the items that Idaho Power Corporation would
like to be included. Fortistar's only request is that IP consider giving us relief on Section 5.3.2. and Sections 5.4 because
of our large financial outlay for purchases for the project as of today and our commitment to finish by February 28,
2013. I will be out of the office until November 28, 2011. I will plan on calling you in the afternoon on November 30th to
discuss this letter and an revisions. I am sending it to you in WORD so that you can make that changes that you wish us
to consider. Have a Happy Thanksgiving. Regards, Lew
Lewis L. Staley
HIDDEN HOLLOW ENERGY 2 LLC
do Fortistar Methane Group
One North Lexington Avenue • White Plains, New York 10601
Tel. [phone] • Fax. [phone]
December 8, 2011
Senior Vice President, Power Supply
Idaho Power Company
P.O. Box 70
Boise, Idaho
83707
Re: Firm Energy Sales Agreement
Dear Sir or Madame:
We refer to the Firm Energy Sales Agreement between Idaho Power Company ("IPC")
and Hidden Hollow Energy 2 LLC ("Seller"), dated December 8, 2010 (as amended,
supplemented or otherwise modified, the "PPA"). Capitalized terms used in this letter without
definition have the meanings set forth in the PPA.
On June 22, 2011, Ada County, Idaho (the "County") advised the Idaho Department of
Environmental Quality ("IDEQ") that the levels of certain contaminants in the landfill gas being
supplied by the County from the Ada County Landfill (the "Landfill") to Seller under an existing
landfill gas supply agreement had increased to a level such that the County was no longer in
compliance with its existing air quality permit. Specifically, the County confirmed that samples
tested at the Landfill indicated that the landfill gas being collected by the County contained
hydrogen sulfide ("112S") at concentration levels almost twenty times the concentration levels
allowed by the County's existing permit.
Since the County's June 22 advice to IDEQ, Seller and the County have worked together
to design and implement a remediation plan with respect to the excess H2S problem, and Seller
has modified its Facility construction schedule in light of this ongoing issue. As a result of
Seller's recent discussions with the Ada County Commissioners, the Ada County Solid Waste
staff and IDEQ, a remediation plan has been accepted and a modified air quality permit is
expected to be issued in early January of 2012.
Because of these third-party delays and the resulting uncertainty as to final design,
procurement and construction requirements for Seller's Facility, Seller does not believe the
Scheduled Operation Date will occur by February 28, 2012, as contemplated in the PPA. Seller
acknowledges that under the PPA, certain Delay Liquidated Damages will accrue during a delay
beyond the Scheduled Operation Date. However, Seller requests that IPC's right to terminate the
PPA pursuant to Section 5.4 of the PPA, not arise unless the Operation Date does not occur by
February 28, 2013. Except as amended in this paragraph, all of the terms and conditions set forth
G:\80100\1 lcorr\Letter to Idaho Power Company 120811
in the PPA remain in full force and effect, and each of the parties reserves all of its rights
thereunder.
Please note that despite the anticipated delay in permitting, construction and ultimate
commercial operation, Seller is confident that, given appropriate and timely assistance and
cooperation from the County, the Facility will be built and will operate in accordance with the
PPA. In fact, Seller continues to work diligently with IDEQ and the County to resolve the
aforementioned issues and to commence construction and operation of the Facility as soon as is
legally permitted, and Seller undertakes to provide IPC with regular updates on the status of the
party's resolution of this matter. As Seller has recently advised IPC, Seller has already incurred
substantial costs in the purchase of a landfill gas blower skid, two Caterpillar 3520 reciprocating
engines, and other equipment for the Facility. Seller remains committed to completing the
Facility in a commercially reasonable manner as quickly as is practicable.
Please indicate your acceptance of, and agreement to, the foregoing by signing a
counterpart of this letter below or a separate confirmation letter.
Very truly yours,
HIDDEN HOLLOW ENERGY 2 LLC
By: <4;
Name: David Wentworth
Title: Senior Vice President
Cc: Idaho Power Company,
Cogeneration and Small Power Production
Thomas Gesicki
Lewis Staley
ACCEPTED AND AGREED:
IDAHO POWER COMPANY
By:
Name:
Title:
G:\80100\i lcorr\Letter to Idaho Power Company 120811
Aliphin, Randy
From: Lewis Staley [[e-mail] ]
Sent: Wednesday, December 14, 20119:35 AM
To: Aliphin, Randy
Subject: RE: RE: Letter Agreement
OK. This week would help me out if you can get to it. Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lst&evfortistar.com
From: AHphin, Randy [mailto: [e-mail]]
To: 'Lewis Staley' [mailto: [e-mail]]
Sent: Tue, 13 Dec 201115:02:18 -0500
Subject: RE: RE: Letter Agreement
Lew, I have received your document, have not had time to review and develop comments or a response. Will be later
this week or next week before I can get to it.
Randy
From: Lewis Staley [mailto:lstaleyfortistar.com]
Sent: Tuesday, December 13, 2011 1:00 PM
To: Allphin, Randy
Subject: Fw: RE: Letter Agreement
Hello Randy: Just checking in to see if you have any comments and the status of the Letter Agreement. Thanks, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lsthlevfortistar.com
From: Lewis Staley [mailto: Istaleyfortistar.com ]
To Aliphin, Randy tmallto RAllp1ilnIdah000wer cn]
Sent: Fri, 09 Dec 201109:32:17 -0500
Subject: RE: Letter Agreement
Good Morning Randy: Attached is our executed letter agreement which I believe concurs with our last discussion
concerning the delay of HH2. Please note that we have only requested that Section 5.4 not be enforced until after the
new date of commercial operation is missed, which is now February 28, 2013. All other provisions of the PPA are in full
force. I believe this
should do it. If there are any changes to the letter or simply an IP confirming letter instead of the attached one, please
let me know. Please call if there are any other concerns or comments. Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstaleyfortistar.com
From: Aliphin, Randy [mailto:RAllphinidahopower.com]
To: 'Lewis Staley' [mailto:lstalevfortisthr.com]
Sent: Tue, 29 Nov 2011 10:37:20 -0500
Subject: RE: Letter Agreement
Sounds good, 1 pm mountain time on Thursday
From: Lewis Staley fmailto:lstaleyfortistar.com]
Sent: Tuesday, November 29, 20118:21 AM
To: Allphin, Randy
Cc: [e-mail]
Subject: RE: Letter Agreement
Randy: How about 1 PM Mountain Time (3 PM EST) for my call? Thanks, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstaleyfortistar.com
From: Aliphin, Randy [mailto:RAllphinidahopower.com]
To: 'Lewis Staley' [mailto:lstalevfortistar.com]
Sent: Tue, 29 Nov 201108:55:17 -0500
Subject: RE: Letter Agreement
Lew, I am traveling today on in meetings all day tomorrow (Wednesday). Thursday is the earliest I could talk this over
with you, any time between 10 am and 2 pm mountain time is open right now for me on Thursday.
Randy
From: Lewis Staley [mailto :lstaleyfortistar. corn]
Sent: Tuesday, November 29, 20116:32 AM
To: Allphin, Randy
Subject: Fw: Letter Agreement
Good Morning Randy: I got back to work early. If today is a good for you to discuss our draft letter, what time is good
to call you? Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
[e-mail]
From: Lewis Staley [maiIto:lstaleyfo,tistar.com ]
To: rallphinldahoDower.com
Cc: lstalevfortistar.com
Sent: Tue, 22 Nov 201109:00:42 -0500
Subject: Letter Agreement
Good Morning Randy: Attached is the revised letter agreement that we would like you to consider regarding the delay of
Hidden Hollow 2. I believe the letter covers what we have discussed and the items that Idaho Power Corporation would
like to be included. Fortistar's only request is that IP consider giving us relief on Section 5.3.2. and Sections 5.4 because
of our large financial outlay for purchases for the project as of today and our commitment to finish by February 28,
2013. I will be out of the office until November 28, 2011. 1 will plan on calling you in the afternoon on November 30th to
discuss this letter and an revisions. I am sending it to you in WORD so that you can make that changes that you wish us
to consider. Have a Happy Thanksgiving. Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
[e-mail]
This transmission may contain information that is privileged, confidential and/or exempt from disclosure under applicable law. If you are not the intended
recipient, you are hereby notified that any disdosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is
STRICTLY PROHIBITED. If you received this transmission in error, please immediately contact the sender and destroy the material in its entirety, whether in
electronic or hard copy format. Thank you.
Aliphin, Randy MMUM
From: Lewis Staley [[e-mail] ]
Sent: Wednesday, January 04, 2012 1:03 PM
To: Aliphin, Randy
Subject: Re: Letter status
Hello Randy: I did pad the schedule with the February 28, 2013 date. I would expect site preparation and concrete
foundations to begin in April 2012.
We can accept a December 31, 2012 date for COD. Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstaleyfoftistar.com
From: Aliphin, Randy [mailto:RAIlphinidahopower.com]
To: 'Lewis Staley' [mailto:lstaIeycfortistar.com]
Sent: Wed, 04 Jan 2012 08:41:30 -0500
Subject: Letter status
Lew - sorry I missed your calls, been very hectic around here over the holiday season.
I have been working your letter through various levels of management and not getting a very warm reception but no
definitive answers. I am going to push things hard over the next week or so to get you an answer. Based on the
feedback I am getting Idaho Power will not be able to sign the exact letter you have provided. One of the troubling
issues being the full year delay you have requested. Is the full year truly the expected delay? When would actual steel
and concrete start going in at the site?
Randy
This transmission may contain information that is privileged, confidential and/or exempt from disclosure under applicable law. If you are not the intended
recipient, you are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is
STRICTLY PROHIBITED. If you received this transmission in error, please immediately contact the sender and destroy the material in its entirety, whether in
electronic or hard copy format. Thank you.
Mae
An IDACORP Conipany
January 5, 2012
Randy C. Aliphin
Senior Energy Contracts Coordinator
Hidden Hollow Energy 2 LLC
do Fortistar Methane Group
One North Lexington Avenue
White Plains, New York 10601
Original: U.S. Mail
E-mail Copy: Lew Staley [e-mail]
RE: Scheduled Operational Date Delay
Project Name: Hidden Hollow Energy 2 LLC Landfill Gas Project
Project Number— 21615102
Idaho Power has received and reviewed your letter dated December 8tb, 2011, in which you
have advised that this project will most likely not be online by the Scheduled Operation Date
(February 28th, 2012) specified in the Firm Energy Sales Agreement ("FESA"). While Idaho
Power does not agree to a formal extension of the Scheduled Operation Date that was agreed upon
in the FESA, there are provisions of the FESA that address what happens should the Operation
Date occur after the Scheduled Operation Date.
As you acknowledge in your letter the FESA specifies various Delay Damages that will be
calculated and payable to Idaho Power if the project does not achieve its Operation Date by the
Scheduled Operation Date of February 28th, 2012.
If the Operation Date occurs after the Scheduled Operation Date but on or prior to 90 days
following the Scheduled Operation Date then Delay Liquidated Damages are calculated based upon
a Mid-Columbia Market Energy Cost, as calculated in paragraph 5.3.1 of the FESA. Additionally,
if the Operation Date occurs beyond 90 days following the Scheduled Operation Date, additional
Delay Liquidated Damages in the amount of $45.00 per kilowatt of Maximum Capacity become
Page 1 of
due, the project will be in Material Breach of the FESA, and Idaho Power may terminate the FESA.
Additionally, should the project fail to pay any calculated Delay Damages or Delay Liquidated
Damages within seven days of presentation, that failure to pay becomes its own Material Breach of
the FESA.
A Material Breach "must be cured as expeditiously as possible" pursuant to paragraph 19.2.2
of the FESA. If in Material Breach, the project will be required to provide Idaho Power with
acceptable evidence that the project is curing the Material Breach as expeditiously as possible to
avoid Idaho Power exercising its rights within the FESA to terminate the FESA.
Thank you for your letter advising of your progress to bring your project online and
operational. Idaho Power does not want to terminate the FESA, but must abide by the provisions
of the Idaho Public Utilities Commission-approved agreement. Please keep us advised of your
progress, and feel free to contact me with any questions you may have.
Sincerely,
Randy C Aliphin
Idaho Power Company
Cc: Donovan Walker (IPCo)
Fortistar Methane Group
5087 Junction Road
Lockport, NY 14094
Page 2 of 2
HiDDEN HoLLow ENERGY 2 LLC
do Fortistar Methane Group
One North Lexington Avenue • White Plains, New York 10601
Tel. [phone] • Fax. [phone]
February 7, 2012
Senior Vice President, Power Supply
Idaho Power Company
P.O. Box 70
Boise, Idaho
83707
Re: Firm Energy Sales Agreement
Dear Sir or Madame:
We refer to the Firm Energy Sales Agreement between Idaho Power Company ("IPC')
and Hidden Hollow Energy 2 LLC ("Seller"), dated December 8, 2010 (as amended,
supplemented or otherwise modified, the 'TPA"). Capitalized terms used in this letter without
definition have the meanings set forth in the PPA.
Seller is advising IPC that an event of Force Majeure commenced on June 22, 2011 and
continues to date with respect to the sole fuel supply source of the Facility. As you are aware,
and as further described below, this event has occurred through no fault of Seller, and despite its
exercise of due diligence, Seller is unable to remedy the situation at this time.
On June 22, 2011, Ada County, Idaho (the "County") advised the Idaho Department of
Environmental Quality ("IDEQ") that the levels of certain contaminants in the landfill gas being
supplied by the County from the Ada County Landfill (the "Landfill") to Seller under an existing
landfill gas supply agreement had increased to a level such that the County was no longer in
compliance with its existing air quality permit. Specifically, the County confirmed that samples
tested at the Landfill indicated that the landfill gas being collected by the County contained
hydrogen sulfide ("H2S") at concentration levels almost twenty times the concentration levels
allowed by the County's existing permit.
Since the County's June 22 advice to IDEQ, Seller has actively and continually sought
information and guidance from both the County and IDEQ regarding the County's proposed H2S
remediation plan and Seller has since that date continually modified its Facility construction
schedule in light of this ongoing issue. Seller's representatives have met with the County at least
six times (as recently as Wednesday, January 25, 2012), in order to address this matter. In an
attempt to expedite a polution for all parties involved, Seller proposed to the County on
December 8, 2011 a plan to finance, design, construct, own and operate an }12S remediation
system at the Landfill, which plan was rejected by the County in writing on January 12, 2012.
Unfortunately, despite Seller's good faith efforts to move forward as expeditiously as possible,
the County has not yet finalized its remediation plan, has rejected Seller's offer to provide
financing and installation assistance for a proven H2S remediation system, and, as we understand
it, is now in the process of designing itself an MS remediation system. We do not know at this
time when such plan will be ready for our review.
In addition. Seller does not know at this time what additional remediation equipment may
be needed, what changes to the Facility's footprint may be required, and what additional
requirements or conditions may be contained in the County's or Seller's modified permits.
These questions can only be answered after (1) IDEQ has completed whatever investigation of
the Landfill's emissions it deems appropriate (after receipt of all data required of the County),
(ii). modified air permits are issued by IDEQ to the County and Seller, and (iii) the County has
finalized its remediation plan consistent with its revised air permit. Only then can Seller
properly complete its design, engineering and construction of the Facility.
Due to the foregoing, (i) Seller will be unable to cause the Facility to achieve the
Operation Date on or before the Scheduled Operation Date of February 28, 2012, as required by
Section 5.3 of the PPA, and (ii) pursuant to Section 14.1 of the PPA, hereby notifies you that
Seller is rendered unable to perform such obligation because of an event of Force Majeure that
commenced on June 22, 2011 and continues today. The events described above regarding the
quality of the landfill gas at the Landfill have occurred through no fault of Seller, were
impossible to have been expected by Seller and, as of this date, are impossible for Seller to
overcome.
Despite the foregoing declaration and anticipated delay in permitting, construction and
ultimate commercial operation, Seller remains confident that, given appropriate and timely
assistance and cooperation from the County, the Facility will be built and will operate in
accordance with the PPA. In fact, Seller continues to work diligently with 1T)EQ and the County
to resolve the aforementioned issues and to commence construction and operation of the Facility
as soon as is legally permitted, and Seller undertakes to provide IPC with regular updates on the
status of the party's resolution of this matter. Seller remains committed to completing the
Facility in a commercially reasonable manner as quickly as is practicable.
Very truly yours,
HIDDEN HOLLOW ENERGY 2 LLC
Nne:th
Title: President
Cc: Idaho Power Company,
Cogeneration and Small Power Production
PHO
PONER®
An IDACORP Company
May 3, 2012
Thomas J. Gesicki
Hidden Hollow Energy 2 LLC
One North Lexington Avenue
White Plains, NY 10601
Original: Via Certified Mail, Return Receipt Requested
E-mail Copy: Lew Staley - lstaley®fortistar.coni
Re: Hidden Hollow, Firm Energy Sales Agreement
February 7, 2012 Claim of an Event of Force Majeure
Notice of failure to meet Scheduled Operation Date
Dear Mr. Gesicki
Idaho Power has received your letter dated February 7, 2012, in which you have claimed an event of Force
Majeure has occurred pursuant to the Firm Energy Sales Agreement (FESA) dated December 8, 2010.
Force Majeure is defined in the FESA as, "any cause beyond the control of the Seller or of Idaho Power
which, despite the exercise of due diligence, such Party is unable to prevent or overcome." FESA, Article
14.1. Force Majeure contemplates such things that were unforeseeable and outside of either parties control
such as "acts of God, fire, flood, storms, wars, hostilities, civil strife, strikes and other labor disturbances,
earthquakes, fires, lightning, epidemics, sabotage, or changes in law or regulation occurring after the
Operation Date, which, by the exercise of reasonable foresight such party could not reasonably have been
expected to avoid and by exercise of due diligence, it shall be unable to overcome. Force Majeure does not
include short-term disruptions or curtailment of the Facility's fuel supply." The event of Force Majeure
must be an event which, "by the exercise of reasonable foresight such party could not reasonably have been
expected to avoid and by the exercise of due diligence, it shall be unable to overcome."
The events described are disruptions in your fuel supply which do not constitute an event of Force Majeure
as defined in the FESA. Your letter states that landfill gas collected by the County contained hydrogen
sulfide at concentration levels higher than allowed by its existing permit, which led to loss of a permit and is
in the process of being rectified. The existence of the proper permitting and varying levels of hydrogen
sulfide are known, foreseeable, and anticipated issues in the operation of a landfill gas supplied generation
facility. An event of Force Majeure occurs when there is an event of effect that can neither be anticipated
nor controlled. Because your fuel supplier's air quality permit concerns are a foreseeable, anticipated
occurrence with this type of project and constitute a short-term disruption or curtailment of the fuel supply,
Idaho Power does not agree that an event of Force Majeure has occurred.
Furthermore, please be advised that you have passed your Scheduled Operation Date of February 28, 2012,
without bringing the project online and operational. Please let this letter service as notice that if you fail to
achieve the Operation Date by June 1, 2012, pursuant to Article 5.4 of the FESA, such failure is a Material
Breach and Idaho Power may terminate the PESA at that time. Additionally, please be advised that if you
fail to achieve the Operation Date by June 1, 2012, Delay Liquidated Damages in the amount of $144,000
will be due and payable to Idaho Power pursuant to Article 5.3.2. If these Delay Damages are not paid
within seven days of Idaho Power's presentation of a billing for such amount, then pursuant to Article 5.5,
Idaho Power will draw funds from the Delay Security that you have provided
If you have any additional questions, please feel free to contact me.
Sincerely,
/4 e. atept
Randy C. Ailphin
Idaho Power Company
Aliphin, Randy
From: Art Hayes [ahayes©fortistar.com ]
Sent: Wednesday, May 16, 2012 3:49 PM
To: Grow, Lisa; Aliphin, Randy
Subject: Hidden Hollow 2 LLC
Attachments: Letter to Idaho Power Company.pdf
Originals of the attached letter were sent today by U.S. mail.
Arthur Hull Hayes Ill, Esq.
General Counsel - Renewables
FORTISTAR LLC
One North Lexington Avenue
White Plains, New York 10601
Tel. [phone]
Mobile: [phone]
Fax: [phone]
[e-mail]
HIDDEN HOLLOW ENERGY 2 LLC
do Fortistar Methane Group LLC
One North Lexington Avenue • White Plains, New York 10601
Tel. [phone] • Fax. [phone]
May 16, 2012
Senior Vice President, Power Supply
Idaho Power Company
P.O. Box 70
Boise, Idaho
83707
Re: Finn Energy Sales Agreement
Dear Sir or Madame:
We refer to the Finn Energy Sales Agreement between Idaho Power Company ("JPC")
and Hidden Hollow Energy 2 LLC ("Seller"), dated December 8, 2010 (as amended,
supplemented or otherwise modified, the "PPA"). Capitalized terms used in this letter without
definition have the meanings set forth in the PPA.
Seller hereby advises IPC that an event of Force Majeure has occurred under the PPA
with respect to the sole fuel supply source of the Seller's Facility. This event has occurred
through no fault of Seller, and despite its exercise of due diligence, Seller is unable to remedy the
situation at this time.
On February 7, 2012 Seller sent a letter to IPC advising of the occurrence of an event of
Force Majeure involving the inability of Seller to comply with its existing air quality permit, due
to increased concentration of hydrogen sulfide contained in the Landfill Gas from the Landfill
supplied by Ada County, Idaho (the "County") to Seller. That event of Force Majeure'continues
today. However, the event of Force Majeure described herein is separate and distinct from the
event of Force Majeure described in that February 7th letter.
Section 3.1 of the Landfill Gas Franchise Agreement (Agreement No. 9261) between
Seller and the County, dated February 22, 2011 (as amended, supplemented or otherwise
modified, the "Gas Agreement") states, in part:
"On and after the Commercial Operations Date, subject to the
terms and conditions of this Agreement,, County shall sell to [Seller] and
deliver to the Delivery Point, and [Seller] shall purchase and take at the
Delivery Point 100% of [Seller's] requirements of County's Landfill Gas
as needed by [Seller] to operate [Seller's] Facilities, but in no event more
than 1,250 scfm."
G:\8O100\I2corr\letter to Idaho power company 051512
Section 2.6 of the Gas Agreement specifically contemplates that Seller's Facility will
initially include an electric power plant including two Caterpillar low emission engine-generator
sets (3520's). These Caterpillar engine-generator sets each require at least 600 scthi of landfill
gas to operate. It is, therefore, impossible to nm both of these engine-generator sets continuously
at full output if the landfill gas from the Landfill to Seller's Facility falls below 1,200 scfln.
Seller has been made aware, through media reports, press releases issued by the County
and subsequent discussions with the County, that while the County and Seller were actively
negotiating the terms of the Gas Agreement in 2011, the County separately negotiated and
entered into certain contractual arrangements with Dynamis Energy, LLC ("Dynamis"), whereby
Dynamis was given the right to divert from the Landfill a minimum of 408 tons of municipal
solid waste per day and up to 572 tons of municipal solid waste per day, and to use such waste as
fuel for a separate waste to energy facility generating electricity to be sold to IPC (the "Dynarnis
Project"). Seller has learned that Dynatnis has also executed a power purchase agreement with
IPC, whereby IPC would purchase 100% of the electricity generated by the Dynamis Project.
In addition, Seller has been advised by the County that the municipal solid waste to be
diverted to the Dynamis Project will consist primarily of high levels of organic materials, while
the remaining waste being deposited into the Landfill (and ultimately decomposing into Landfill
Gas available to Seller's Facility) will contain a lower concentration of organic materials, thus
generating significantly less Landfill Gas upon its anaerobic decomposition.
After learning of the Dynanils Project and the contractual rights to this municipal solid
waste granted to Dynamis by the County, Seller commenced an internal investigation to
determine the potential effects of the Dynamis Project on the Seller's Facility. This internal
investigation shows that the Dynamis Project (even at its minimum size of 408 tons of municipal
solid waste per day) will have the effect of permanently reducing Landfill Gas from the Landfill
to levels significantly below the 100% (or 1,250 scfin) requirements needed by the Seller's
Facility and that are required by the Gas Agreement. This result would be unaffected despite
additional gas collection wells contemplated by the County.
Because of the significant uncertainty created by County's and JPC's contractual
arrangements with Dynamis and the potential permanent reduction in the quantity of Landfill
Gas to be delivered to Seller's Facility due to the Dynamis Project, Seller (1) is unable at this
time to commence construction of Seller's Facility, (ii) cannot obtain the debt or equity financing
otherwise available to it to pay for the construction of Seller's Facility, and (iii) hereby notifies
you that Seller is rendered unable to perform its obligation to construct Seller's Facility at this
time because of the occurrence of a continuing event of Force Majeure.
In addition, Seller hereby notifies IPC that because of this continuing event of Force
Majeure, Delay Liquidated Damages under the PPA shall not be due and owing with respect to
Seller's failure to cause the Facility to achieve the Operation Date on or before the Scheduled
Operation Date.
The events described above regarding the impending insufficiency and inadequacy of
Landfill Gas at the Landfill due to the Dynantis Project have occurred through no fault of Seller,
G:\801 00\l2conMetter to Idaho power company 051512
were created solely by the actions of others, including the County, were impossible to have been
expected by Seller and, as of this date, are impossible for Seller to overcome.
We remind JPC that, during the negotiation of the PPA between Seller and IPC, 1PC
requested that Seller demonstrate an adequate supply and quality of Landfill Gas at the Facility
so as to ensure a viable generation project for the life of the PPA. Seller complied with that
requirement by negotiating a Gas Agreement that provided for the supply of 100% of Seller's
fuel requirements (subject to a maximum amount). We note, however, that the adequate supply
and quality requirement specifically requested by IPC will now be violated solely because of the
existence of the Dynamis Project, which is now contractually obligated to sell all of its generated
electricity to IPC.
Nothing contained in this letter shall be deemed to (I) be a waiver by Seller of any of its
rights or remedies under the PPA, or (ii) constitute a release or waiver by Seller of any present or
future claims against IPC, the County or any other third party.
Very truly yours,
HDD :Y7
Name: David Wentworth
Title: Senior Vice President
Cc: Idaho Power Company,
Cogeneration and Small Power Production
G;80100\12cori1efter to Idaho power company 051512
Aliphin, Randy
WOMMOONNO
From: Lewis Staley [lstaleyfortistar.com ]
Sent: Tuesday, May 22, 2012 7:52 AM
To: Aliphin, Randy
Subject: IPlHidden Hollow #2 PPA
Attachments: Letter%2Oto%2oldaho%2OPower%20Company2ndForceMajuereLetter.pdf
Good Morning Randy: The attached Force Majuere letter went out last Thursday May 16, 2012 to Idaho Power. As you
know this is the second Force Majuere letter. I will plan on calling you later today to discuss the situation which is certain
interesting to say the least. If there is good time to chat, please let me know. Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
lstaleyfortistar.com
HIDDEN HOLLOW ENERGY 2 LLC
do Fortistar Methane Group LLC
One North Lexington Avenue White Plains, New York 10601
Tel. [phone] • Fax. [phone]
May 16,2012
Senior Vice President, Power Supply
Idaho Power Company
P.O. Box 70
Boise, Idaho
83707
Re: Finn Energy Sales Agreement
Dear Sir or Madame:
We refer to the Firm Energy Sales Agreement between Idaho Power Company ("IPC")
and Hidden Hollow Energy 2 LLC ("Seller"), dated December 8, 2010 (as amended,
supplemented or otherwise modified, the "PPA'). Capitalized terms used in this letter without
definition have the meanings set forth in the PPA.
Seller hereby advises IPC that an event of Force Maj cure has occurred under the PPA
with respect to the sole fuel supply source of the Seller's Facility. This event has occurred
through no fault of Seller, and despite its exercise of due diligence, Seller is unable to remedy the
situation at this time.
On February 7, 2012 Seller sent a letter to IPC advising of the occurrence of an event of
Force Majeure involving the inability of Seller to comply with its existing air quality permit, due
to increased concentration of hydrogen sulfide contained in the Landfill Gas from the Landfill
supplied by Ada County, Idaho (the "County") to Seller. That event of Force Majeure continues
today. However, the event of Force Maj cure described herein is separate and distinct from the
event of Force Majeure described in that February 7th letter.
Section 3.1 of the Landfill Gas Franchise Agreement (Agreement No. 9261) between
Seller and the County, dated February 22, 2011 (as amended, supplemented or otherwise
modified, the "Gas Agreement") states, in part:
"On and after the Commercial Operations Date, subject to the
terms and conditions of this Agreement, County shall sell to [Seller] and
deliver to the Delivery Point, and [Seller] shall purchase and take at the
Delivery Point 100% of [Seller's] requirements of County's Landfill Gas
as needed by [Seller] to operate [Seller's] Facilities, but in no event more
than 1,250 scfin."
G:\8O100\t2corr\letterto Idaho power company 051512
Section 2.6 of the Gas Agreement specifically contemplates that Seller's Facility will
initially include an electric power plant including two Caterpillar low emission engine-generator
sets (3520's). These Caterpillar engine-generator sets each require at least 600 scfin of landfill
gas to operate. It is, therefore, impossible to run both of these engine-generator sets continuously
at full output if the landfill gas from the Landfill to Seller's Facility falls below 1,200 sefim
Seller has been made aware, through media reports, press releases issued by the County
and subsequent discussions with the County, that while the County and Seller were actively
negotiating the terms of the Gas Agreement in 2011, the County separately negotiated and
entered into certain contractual arrangements with Dynaniis Energy, LLC ("Dynamis"), whereby
Dynamis was given the right to divert from the Landfill a minimum of 408 tons of municipal
solid waste per day and up to 572 tons of municipal solid waste per day, and to use such waste as
fuel for a separate waste to energy facility generating electricity to be sold to IPC (the "Dynamis
Project"). Seller has learned that Dynamis has also executed a power purchase agreement with
IPC, whereby IPC would purchase 100% of the electricity generated by the Dynamis Project.
In addition, Seller has been advised by the County that the municipal solid waste to be
diverted to the Dynamis Project will consist primarily of high levels of organic materials, while
the remaining waste being deposited into the Landfill (and ultimately decomposing into Landfill
Gas available to Seller's Facility) will contain a lower concentration of organic materials, thus
generating significantly less Landfill Gas upon its anaerobic decomposition.
After learning of the Dynamis Project and the contractual rights to this municipal solid
waste granted to Dynamis by the County, Seller commenced an internal investigation to
determine the potential effects of the Dynamis Project on the Seller's Facility. This internal
investigation shows that the Dynamis Project (even at its minimum size of 408 tons of municipal
solid waste per clay) will have the effect of permanently reducing Landfill Gas from the Landfill
to levels significantly below the 100% (or 1,250 sefhi) requirements needed by the Seller's
Facility and that are required by the Gas Agreement. This result would be unaffected despite
additional gas collection wells contemplated by the County.
Because of the significant uncertainty created by County's and IPC's contractual
arrangements with Dynamis and the potential permanent reduction in the quantity of Landfill
Gas to be delivered to Seller's Facility due to the Dynaniis Project, Seller (i) is unable at this
time to commence construction of Seller's Facility, (II) cannot obtain the debt or equity financing
otherwise available to it to pay for the construction of Seller's Facility, and (iii) hereby notifies
you that Seller is rendered unable to perform its obligation to construct Seller's Facility at this
time because of the occurrence of a continuing event of Force Majeure.
In addition, Seller hereby notifies !PC that because of this continuing event of Force
Maj cure, Delay Liquidated Damages under the PPA shall not be due and owing with respect to
Seller's failure to cause the Facility to achieve the Operation Date on or before the Scheduled
Operation Date.
The events described above regarding the impending insufficiency and inadequacy of
Landfill Gas at the Landfill due to the Dynainis Project have occurred through no fault of Seller,
G:\80 1 0O\l2corr\Ietter to Idaho power company 051512
were created solely by the actions of others, including the County, were impossible to have been
expected by Seller and, as of this date, are impossible for Seller to overcome.
We remind IPC that, during the negotiation of the PPA between Seller and 1PC, LPC
requested that Seller demonstrate an adequate supply and quality of Landfill Gas at the Facility
so as to ensure a viable generation project for the life of the PPA. Seller complied with that
requirement by negotiating a Gas Agreement that provided for the supply of 100% of Seller's
fuel requirements (subject to a maximum amount). We note, however, that the adequate supply
and quality requirement specifically requested by IPC will now be violated solely because of the
existence of the Dynamis Project, which is now contractually obligated to sell all of its generated
electricity to IPC.
Nothing contained in this letter shall be deemed to (i) be a waiver by Seller of any of its
rights or remedies under the PPA, or (ii) constitute a release or waiver by Seller of any present or
future claims against IPC, the County or any other third party.
Very truly yours,
By:_
Name: David Wentworth
Title: Senior Vice President
Cc: Idaho Power Company,
Cogeneration and Small Power Production
(i:\80100\12corrJetter to Idaho power company 051512
Aliphin, Randy
From: Lewis Staley [lstaley©fortistar.com ]
Sent: Tuesday, June 12, 2012 7:51 AM
To: Aliphin, Randy
Subject: Idaho PUC Letter
Attachments: MX-M503N_201 20611_i 42237.pdf
Good Morning Randy. This is a letter to the IPUC that went out yesterday by regular mail. The Dynamis situation
particularly makes the project difficult to complete. Call me if you have any questions. Regards, Lew
Lewis L Staley
Director
FORTISTAR
5087 )unction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
[e-mail]
IILDDEN HOLLOW ENERGY 2 LLC
c/o Fortistar Methane Group LLC
One North Lexington Avenue • White Plains, New York 10601
Tel. [phone] • Fax. [phone]
June 11, 2012
Idaho Public Utilities Commission
472 W. Washington Street
Boise, Idaho 83702-5918
Attention: Commission Secretary
Re: Firm Energy Sales Agreement - Case No. IPC E-1 0-44
Dear Sirs and Madames:
We refer to the Firm Energy Sales Agreement between Idaho Power Company ("IPC")
and Hidden Hollow Energy 2 LLC ("Seller"), dated December 8, 2010 (as amended,
supplemented or otherwise modified, the "PPA'. Capitalized terms used in this letter without
definition have the meanings set forth in the PPA. The PPA was approved by the Idaho Public
Utilities Commission (the "Cornniission") on February 11, 2011 in Case No. IPC-E-10-44.
Several disputes between Seller and IPC have arisen under the PPA in connection with
the occurrence of two separate events of Force Majeure, each of which has prevented Seller from
performing under the PPA. These events involve (i) the inability to date of Seller to obtain an air
permit from the Idaho Department of Environmental Quality due to actions taken solely by Ada
County (the "County"), and (ii) the execution of certain contracts by the County, IPC and *
Dynamis Energy, LLC, which Seller believes make it impossible for Seller to receive the
quantity and quality of fuel necessary to operate its electric generating facility at the Ada County
Landfill, as required by the Landfill Gas Franchise Agreement between Seller and the County.
IPC (i) has notified Seller that IPC rejects Seller's position that events of Force Majeure
exist, and (ii) has threatened to terminate the PPA and assess significant monetary delay
liquidated damages against Seller.
Section 19.1 of the PPA providàs that "All disputes related to or arising under this
Agreement, including, but not limited to, the interpretation of the terms and conditions of this
Agreement, will be submitted to the Commission for resolution". Thus, pursuant to Section 19.1
of the PPA, Seller hereby submits the aforementioned disputes to the Commission, and
respectfully requests the Commission's resolution of the same.
Under separate cover, Seller will supply the Commission with relevant documentation
relating to the disputes described above. Seller also requests from the Commission guidance as
to the Commission's evidentiary requirements, procedures and schedule for resolving the issues
outlined above.
G:\80100\12cori\Ietter to Idaho PUC 0601112
If you have any questions regarding the foregoing, please contact either Arthur Hayes,
General Counsel of Seller (914-421-4910 and ahayes(fortistar.com ), or Stephen Thomas of
Moffatt Thomas Barrett Rock& Fields, Chtd, (208-345-2000 or srt(ämoffattcom).
Very truly yours,
HIDDEN HOLLOW ENERGY 2 LLC
By: I L4
Name: Arthur Hull Hayes III -
Title: General Counsel
Cc: Idaho Power Company
Stephen Thomas, Esq.
1-
G:\80100\l2corr\letter to Idaho PUC 0601112
IDAHO
All IDACORP Company
June 14, 2012
Hidden Hollow Energy 2 LLC
C/o Fortistar Methane Group LLC
Attn: David Wentworth
One North Lexington Avenue
White Plains, NY 10601
Original: Via Certified Mail, Return Receipt Requested
E-mail Copy: Lew Staley [e-mail]
Thomas Gesicki tgesicki®foristar.com
Re: Hidden Hollow Energy 2 LLC Firm Energy Sales Agreement
Notice of:
Termination of Firm Energy Sales Agreement
Collection of Delay Liquidated Damages
Dear Mr. Wentworth:
As Idaho Power advised in our letter dated May 3, 2012 to Mr. Gesicki, as of June 1, 2012 Hidden
Hollow Energy 2, LLC is in Material Breach of the Firm Energy Sales Agreement between Idaho Power and
Hidden Hollow Energy 2 LLC dated December 8hl, 2010 ("FESA").
This Material Breach is a result of the project failing to achieve its Operation Date within 90 days of
the Scheduled Operation Date of February 2012 and Article 5.4 of the FESA states that Idaho Power
may terminate this FESA at any time as result of this Material Breach. Therefore as of the date of this letter
this FESA has been terminated.
In addition as a result of the project failing to achieve its Operation Date Idaho Power is issuing this
request for payment of Delay Liquated Damages calculated pursuant to within Article 5.3 of the FESA to be
$144,000. As specified in Article 5.5 of the FESA the Seller must pay these Delay Liquidated Damages
within 7 days of when Idaho Power presents this billing to the Seller. Thus this payment in the amount of
$144,000 is due and payable to Idaho Power no later than 5:00 PM, Mountain Standard Time, June 21",
2012. Failure to make this payment by that time will result in Idaho Power exercising it rights to draw funds
from the Delay Security provided by the project.
As you are aware, Hidden Hollow Energy 2 LLC has provided various documents to Idaho Power claiming
that a Force Majeure had occurred that prevented the project from achieving its Operation Date. Idaho
Power has denied all of these claims as these claims do not meet the criteria to be an event of Force Majeure
and/or they are specifically excluded from being a Force Majeure (i.e. - Article 14.1 "...Force Majeure 4ç
j include short-term disruptions or curtailment of the Facility's fuel supply")
If you have any additional questions, please feel free to contact me.
Sincerely,
/ezee1 %'
Randy C. Allphin
Idaho Power Company
Cc: Donovan Walker (IPCo)
Jason Williams (IPC0)
Hidden Hollow Energy 2 LLC
C/o Fortistar Methane Group LLC
Attn: Thomas J. Gesicki
One North Lexington Avenue
White Plains, NY 10601
Wme
An IDACORP Company
June 22, 2012
Hidden Hollow Energy 2 LLC
C/o Fortistar Methane Group LLC
Attn: David Wentworth
One North Lexington Avenue
White Plains, NY 10601
Original: Via Certified Mail, Return Receipt Requested
E-mail Copy: Lew Staley staleyJforthtar.com
Thomas Gesicki [e-mail]
Re: Hidden Hollow Energy 2 LLC Firm Energy Sales Agreement
Unpaid Delay Liquidated Damages and subsequent collection of those damages
Dear Mr. Wentworth:
As specified in our letter to you dated June 14, 2812, Hidden Hollow Energy 2, LLC was required to
pay Delay Liquated Damages to Idaho Power in the amount of $144,000 no later than 5:00 PM, Mountain
Standard Time, June 2 t, 2012.
As of the date of this letter Idaho Power has no record of receiving this payment, thus Idaho Power is
exercising it rights as specified in the Firm Energy Sales Agreement to draw this payment from the Delay
Security previously provided by the project.
If you have any additional questions, please feel free to contact me.
Sincerely,
14~
,
444-
Randy C. Aliphin
Idaho Power Company
Cc: Donovan Walker (IPC0)
Jason Williams (IPCo)
Aubrae Sloan (IPC0)
Hidden Hollow Energy 2 LLC
C/o Fortistar Methane Group LLC
Attn: Thomas J. Gesicki
One North Lexington Avenue
White Plains, NY 10601
Walker, Donovan
From: Allphin, Randy
Sent: Wednesday, January 19, 20119:39 AM
To: 'Lewis Staley'
Cc: 'Rick Sterling'; 'randy.lobb©puc.idaho.gov'; 'kris.sasserpuc.idaho.gov'; Walker, Donovan
Subject: Hidden Hollow Energy 2 QF certification
Mr. Staley,
The Idaho Public Utility Commission staff has raised some questions in regards to your proposed project's OF status due
to its proximity to another OF generation project that is owned by the same parent company.
As you know the purchase power agreement requires that the project be a OF project.
Would you please contact Rick Sterling at the Idaho Public Utility Commission directly to discuss these questions. His
phone number is 208-334-0351.
Please contact me with any questions you may have.
Thanks
Randy Aliphin
Idaho Power Company
Walker, Donovan
To: Allphin, Randy
Subject: RE: IP/Hidden Hollow #2 PPA
From: Allphin, Randy
Sent: Tuesday, May 22, 2012 11:42 AM
To: 'Lewis Staley'
Subject: RE: IP/Hidden Hollow #2 PPA
Lew,
We have received and reviewed your letter dated May 16, 2012. Idaho Power does not accept your described situation
as a Force Majeure event for numerous reasons. A couple of those reasons being:
Fuel supply risk is not an unforeseeable risk of developing this type of project.
In addition, Article 14.1 of the Firm Energy Sales Agreement states "Force Majeure does not include short-term
disruptions or curtailment of the Facility's fuel supply."
As your letter to Idaho Power was from David Wentworth, Senior Vice President, we assume you will be forwarding this
information onto him and any others in your organization that are involved with this issue.
Please contact me with any questions you may have.
Randy Allphin
Idaho Power Company
From: Lewis Staley [maifto:lstalevcfortistar.comJ
Sent: Tuesday, May 22, 2012 7:52 AM
To: AlIphin, Randy
Subject: IP/Hidden Hollow #2 PPA
Good Morning Randy: The attached Force Majuere letter went out last Thursday May 16, 2012 to Idaho Power. As you
know this is the second Force Majuere letter. I will plan on calling you later today to discuss the situation which is certain
interesting to say the least. If there is good time to chat, please let me know. Regards, Lew
Lewis L. Staley
Director
FORTISTAR
5087 Junction Road
Lockport, New York 14094
Phone: [phone]
Cell: 716-432-4802
[e-mail]
IHO
An IDACORP Company
July 3, 2012
VIA email & Certified Mail #70111150000201962394
Mr. David Wentworth
Fortistar
One North Lexington Avenue
White Plains, NY 10601
Subject: Hidden Hollow Expansion Project # 291 - FINAL/DEFICIENCY NOTICE
Dear Mr. Wentworth:
By letter dated May 23, 2012, Idaho Power provided you with a Final Generator Interconnection
Agreement ("GIA") for interconnection of the proposed Hidden Hollow Expansion Project to be
interconnected in Ada County, Idaho.
Fortistar was to execute and return the Agreement with the required deposit by June 25, 2012.
That time period has expired, and as of today's date neither the executed GIA nor the required
deposit payment has been received by Idaho Power. Without waiving any claims or rights
pursuant to the GIA, Firm Energy Sales Agreement, or otherwise, Idaho Power acknowledges
receipt of your previous claim of force majeure related to this project. Idaho Power does not
agree with your claim of force majeure and has separately responded to you regarding the same.
Because you have failed to execute the GIA and failed to make the required deposit payment, the
application for Generation Interconnection has now been deemed withdrawn, and this project has
been removed from Idaho Power's Generation Interconnection queue.
Sincerely,
Josh Harris
Operations Analyst
Ph 208.388.2658
[e-mail]
cc (via email):
Tess Park/IPC
Orlando Cimglio/IPC
Lisa Loomis/IPC
Aubrae SloanIIPC
Donovan Walker/IPC
P.O Box 10 (83707)
1221W. Idaho St.
Boise. ID 83702