20180628Idahydro, Shorock, REC to Staff 1-4.pdf

RICEIVED
BEF'RE rHE rDAHo puB,,rc urrlrrrEs coMfiilSJild#s PH 2: l+0
l'::.
r, :i rt,SIOFIiIN THE MATTER OF PETITION OF
IDAHYDRO, SHOROCK HYDRO, [NC.,
J.R. SIMPLOT COMPANY, AND
RENEWABLE ENERGY COALITION FOR
MODIFICATION OF THE 9OlI IO
PERFORMANCE BAND AND
CALCULATION OF OPERATION AND
MAINTENANCE CHARGES FOR PURPA
QUALIFYING FACILITIES
Case No. IPC-E-18-07
IDAHYDRO, SHOROCK HYDRO,
INC., AND RENEWABLE ENERGY
COALITION'S RESPONSES TO
FIRST PRODUCTION REQUEST OF
THE COMMISSION STAFF TO
IDAHYDRO, SHOROCK HYDRO,
INC.O AI\D RENEWABLE ENERGY
COALITION
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COMES NOW IdaHydro and Shorock Hydro, Inc., by and through their counsel of record,
C. Tom Arkoosh of Arkoosh Law Offices and David H. Arkoosh of Law Office of David Arkoosh,
and the Renewable Energy Coalition, by and through their counsel of record J. Kahle Becker and
Irion A. Sanger, and in answer and response to the First Production Request of the Commission
Staff to ldaHydro, First Production Request of the Commission Staff to Shorock Hydro, Inc., and
First Production Request of the Commission Staff to Renewable Energt Coalition (collectively
"responding parties") dated June 7,2018, herewith submits the following information:
C. Tom Arkoosh, ISB No. 2253
ARKOOSH LAW OFFICES
802 W. Bannock Street, Suite 900
P.O. Box 2900
Boise, ID 83701
Telephone: [phone]
Facsimile: [phone]
Email : [e-mail]
David H. Arkoosh, ISB No. 8742
Law Office of David Arkoosh
PO Box 2817
Boise, ID 83701
Telephone: [phone]
Facsimile: [phone]
Eura i I : day id(rDarkoosh larv.com
Attorneys for Petitioners, Idahydro and Shorock Hydro, Inc
J. Kahle Becker, ISB No. 7408
Attorney at Law
223 North 6th Street, # 325
Boise, lD 83702
Telephone: [phone] I 83
Facsimile: [phone]
Emai I : [e-mail]
lrion Sanger, Pro Hac Vice Pending
SANGER LAW, P.C.
1 I 17 SE 53rd Avenue
Portland, OR 97215
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
Attorneys for Petitioner, Renewable Energy Coalition
REQUEST NO. 1: The footnote on Page 5 of the Petition lists five circumstances under
which the 90/l l0 rule was adopted. Does the Petitioner agree with any or all of these statements?
Please explain.
RESPONSE TO REQUEST NO. l: In answering this request as a courtesy to the
Commission Staff ("Staff'), the responding parties do not waive the following objection:
Pursuant to IDAPA 3 I .01 .01 .221, the scope of discovery allowed before the Idaho Public
Utilities Commission ("PUC") coincides with that allowed pursuant to Idaho Rule of Civil
Procedure 26. The scope of discovery allowable in I.R.C.P. 26has limits, those being discovery
limited to non-privileged matter that is relevant to the proceeding. The purpose of citing the five
changes of circumstances cited by Idaho Power Company in its record in Order No. 69632 to
support its reasons to require estimates within a90/l l0 performance band was to emphasize those
changes of circumstances, whether real or not, and of whatever magnitude, did not provide a
relevant reason or basis for requiring estimates within a 90lll0 performance band or suffer
punitive prices for the failure to accurately do so.
Respondent answers each of the footnote I contentions as follows:
Footnote 1 (1) Wholesale markets have standardized the terms and conditions of wholesale
firm energy transactions. As a result, wholesale firm energy purchases from creditworthy
counterparties are now generally accepted as a prudent and cost-effective way of meeting a portion
of a utility's resource needs.
ANSWER: These responding parties have no information as to the time period over which
the wholesale market has been said to improve, making impossible a judgment of whether the
change of circumstance was material, or occurred at all. Assuming the change in wholesale
markets referred to occurred since the inception of PURPA in 1978 and the date of Order No.
29632, 2004, 26 years, these responding parties would concede wholesale markets may have
changed, but again, cannot measure the materiality.
More importantly, however, the market changes were offered by Idaho Power Company in
case nos. IPC-E-04-8 and IPC-E-04-10, and adopted in Order No. 29632, as araison d'etre for
punitive pricing for energy delivered outside the 90/l l0 performance band estimate because:
PURPA, Idaho Power contends, provided that avoided costs are based on the
cost the utility can avoid by purchasing from the QF rather than building a
resource itself or purchasing additional resources on the wholesale market.
Reference 16 U.S.C. $ 82a(a)(3)(d); TR. at 334. By including the firming
provisions in QF contracts, the Company states that it is attempting to more
closely align the firmness of energy purchases under the QF contracts with firm
energy purchases it makes every day in the wholesale market. TR. at334-336.
The surrogate avoided resource method of avoided cost pricing already annually adjusts to
energy market rates, thus making the above reason cited for imposing a 90/ll0 performance
penalty a redundancy and a non-sequitur.
Footnote I (2) Idaho Power has changed from an energy-constrained company to a
capacity-constrained company. Seasonal peaks require the Company to have a high degree of
confidence that energy purchases will be delivered in the amounts and at the times specified to
match seasonal peak energy demands.
ANSWER: These responding parties agree that Idaho Power Company has, during some
unspecified period of time, changed from an energy-constrained company to a capacity-
constrained company. The need for a "high degree of confidence that energy purchases will be
delivered in the amounts and at the times specified to match seasonal peak energy demands" is not
a change of circumstances, however, and is also irrelevant to the determination of avoided cost
pnclng.
Footnote 1 (3) Transmission constraints require that Idaho Power more precisely anticipate
its needs for firm energy imports.
ANSWER: These responding parties agree Idaho Power Company must accurately
anticipate its needs for firm energy imports. These responding parties do not agree this is a change
of circumstances or that this circumstance is relevant to avoided cost pricing. These responding
parties would point out that by its consistent nature, small hydro is firm energy.
Footnote I (4) The growing prominence of intermittent generating technologies, such as
wind and solar, require a new approach in the Company's PURPA contracting procedures.
ANSWER: These responding parties do not have sufficient information to agree or
disagree with this statement. Whether Idaho Power Company has adopted available technology
to accommodate the variability of wind and solar, or must instead accommodate the variability via
contract provisions, is not, however, relevant to firm hydropower avoided cost pricing.
Footnote 1 (5) The Company's increased use of firm market purchases as hedges to manage
risk escalates the importance of predictable resource availability.
ANSWER: These responding parties disagree with this statement. The more available
firm market purchases become, the less necessary and relevant the predictability of other resource
availability becomes.
REQUEST NO. 2: Please provide any data and evidence that supports the three
circumstances listed on page 6,paragraph number 13, of the Petition.
RESPONSE TO REQUEST NO. 2: The PURPA electricity purchased by Idaho Power
Company from generation using water, biomass, landfill gas, or natural gas constitute a small, but
very consistent component of Idaho Power Company's overall supply. See attached chart from
Idaho Power Company's website:
https://wwrv.idahopower.com/enerq),/delivering-power/generation-and-demand/
where these purchases are shown as a nearly straight line constituting a very minor portion of Idaho
Power Company's supply.
REQUEST NO. 3: Please categorize the root causes that prevent QF projects from
meeting the 90/l l0 requirement and provide project examples that fall under each category.
RESPONSE TO REQUEST NO.3: Although overall, as a group, small hydro PURPA
provides Idaho Power Company a consistent amount of electricity, each individual operator is
asked, under the 90/l l0 regime, to guess the effect of weather and their neighbor's water demands.
The underlying assumption for all small hydro in Idaho is that each is affected by weather and
irrigation water demand and supply, and reliable interconnection service from their utility.
Idaho manages its water rights conjunctively, i.e., by recognizing that groundwater and
surface water are one water source. Thus, by law, the consumptive use of water by irrigators and
others has an effect upon water available to connect and conjunctively manage small hydro water
rights, which effects often or not known 30 days in advance. Further, water supply is obviously
affected by weather, both concerning water accumulation in the winter and heat, or lack thereof,
causing irrigation demand in the summer.
Numerous variables play upon available water supply, beginning with stored water
accumulating in the winter. Bureau of Reclamation manages most of the larger storage facilities
in Idaho and Wyoming that affect overall water supply in the responding parties' projects. The
interplay between Bureau of Reclamation's flood control management and the demands upon
storage and natural flow by irrigators, particularly canal companies and irrigation districts,
determines what water becomes available to small hydro water rights. Thus, the supply of water
available to a small hydro water right is constrained by weather and irrigation (stored precipitation
in the winter and heat and water demand in the summer).
There are other non-motive force reasons why QF projects are prevented from meeting the
90/ll0 requirement. Interconnection and/or transmission outages can prevent a QF from
delivering their full net output to the utility, which are often caused by the utility and not the
generator. There can also be unexpected weather conditions that limit generation, like icing
conditions for projects that run in the winter or wind strongs that cause debris to build up.
REQUEST NO. 4: Please list the projects that are or should be able to consistently comply
with the 90/1 l0 contract provisions. For each project, please provide a detailed explanation why
these projects are more predictable and more able to comply with the 90/l l0 requirements.
RESPONSE TO REQUEST NO. 4: These responding parties are not aware of any
projects that are or should be able to consistently comply with the 90/l l0 contract provisions.
All projects holding non-consumptive water rights remain subject to weather and
conjunctively managed consumptive water rights. See above.
Some projects are obviously less susceptible than others. For instance, the project that
exists at the "end of the ditch" or is reliant upon only waste water will suffer more uncertainty than
a project located on a main canal. But even the most secure projects will estimate conservatively
in order not to breach the 90%o threshold and be paid a punitive price on all electricity delivered in
a month.
Further, all projects suffer uncertainty on the "shoulders" ofthe irrigation season; that is,
generally the months of Apriland September, when irrigation commences and ceases via fits and
starts. During this time, Idaho Power's load from irrigation pumping is reduced and does not need
the power.
While there is no list of projects that has confidence to consistently meet the 90/l l0
estimate requirements without artificially low estimates, the small hydros as a whole conglomerate
does produce consistently.
DATED this 28th day of June, 2018.
ARKOOSH LAW OFFICES
C. Tom Arkoosh
Attorney for Idahydro & Shorock Hydro, Inc.
SANGER LAW, PC
Irion A. Sanger
Attorney for Renewable Energy Coalition
bL*
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 28th day of June 2018, I served a true and correct copy
of the foregoing document(s) upon the following person(s), in the manner indicated:
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W . Washington
Boise, ID 83702
Donovan Walker
Idaho Power Company
PO Box 70
Boise, lD 83707
Irion Sanger
Sanger Law, P.C.
I I l7 SE 53'd Avenue
Portland, OR 97215
J. Kahle Becker
Attorney at Law
223 North 6th Street, #325
Boise, lD 83702
Peter J. Richardson
Gregory M. Adams
Richardson Adams, PLLC
515 N.27th Street
Boise, lD 83702
Edith Pacillo
Idaho Public Utilities Commission
472 W . Washington
Boise, lD 83702
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David H. Arkoosh
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Boise, ID 83701
Tamarack Energy Partnership
c/o Michael C. Creamer and Preston N.
Carter
601 W. Bannock
Boise, lD 83702
Michael G. Andrea
Senior Counsel
Avista Corporation
l4l I East Mission, MSC-33
Spokane, WA99202
Clint Kalich
Manager, Resource Planning and
Analysis
Avista Corporation
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Spokane, WA99202
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/s/ J. Kahle Becker
J. Kahle Becker
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