20110620Vol I Oral Argument.pdf

ORIGINAL.BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
XRG-DP-7, XRG-DP-8, XRG-DP-9,
XRG-DP-10, LLCs,
Complainants,
CASE NO.
PAC-E-10-08
vs.
PACIFICORP DBA ROCKY MOUNTAIN
POWER,
ORAL ARGUMENT
HEARING BEFORE
C-c:%
Respondent.l'~--
No
;;rn()n1
;i::--..
.COMMISSIONER PAUL KJELLANDER (Presiding)
COMMISSIONER MACK A. REDFORD
COMMISSIONER MARSHA H. SMITH
.ico
PLACE:Commission Hearing Room
472 West Washington Street
Boise, Idaho
DATE:June 9, 2011
VOLUME I - Pages 1 - 63
'-I.f *
.I_..IIËIS ;--,POST OFFICE BOX 578
BOISE, IDAHO 83701
208-336-9208.HEDRICK
COURT REPORTING
teHf' th fe ~Kfíru 198
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1 APPEARANCES
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3 For the Staff:KRISTINE SASSER, Esq.
Deputy Attorney General
472 West Washington
Boise, Idaho 83702
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For XRG:RICHARDSON & 0' LEARY, PLLC
by GREGORY M. ADAMS, Esq.
and PETER J. RICHARDSON, Esq.
Post Office Box 7218
Boise, Idaho 83707
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For PacifiCorp:LOVINGER KAUFMANN, LLP
by KENNETH KAUFMANN, Esq.
825 NE Multnomah, Suite 925
Portland, Oregon 97232
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1 BOISE, IDAHO, THURSDAY, JUNE 9, 2011, 9:30 A.M.
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4 COMMISSIONER KJELLANDER: Well, good morning.
5 This is the time and place for the oral argument in Case No.
6 PAC-E-10-08 with Complainants of XRG and the Respondent being
7 PacifiCorp/Rocky Mountain Power.
8 My name's Paul Kj ellander; I'll be the chairman
9 of today' s oral argument. To my right is Commissioner
10 Mack Redford, and to my left is Commissioner Marsha Smith.
11 Collectively, we represent the Commission and will ultimately
12 render a Decision in reference to the oral argument that we'll
13 be hearing today.
14 As we move forward, let's begin with the
15 appearances of the parties. Let's start with XRG.
16 MR. ADAMS: Yes. My name is Greg Adams,
17 appearing on behalf of XRG. I have with me at the table
18 Peter Richardson and also, from XRG, Maddie Krezowski.
19 COMMISSIONER KJELLANDER: Good morning, and
20 welcome.
21 And let's move now to Rocky Mountain Power.
22 MR. KAUFMANN: Good morning. My name is
23 Ken Kaufmann. I represent PacifiCorp in this matter. And with
24 me is Bruce Griswold of PacifiCorp.
25 COMMISSIONER KJELLANDER: Ken, again, welcome,
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1 and, Mr. Griswold, welcome. Ken, it's not necessary for you to
2 stand before us today unless you need some additional exercise.
3 MR. KAUFMANN: Okay. Thank you.
4 COMMISSIONER KJELLANDER: Great. Thank you.
5 And also I recognize that we have Ms. Sasser with
6 the legal counsel for the Staff of the Public Utili ties
7 Commission. My sense is you probably won't be commenting at
8 all today, but since you're here, why don't we go ahead and
9 recognize you.
10 MS. SASSER: Thank you. Kristine Sasser for
11 Commission Staff, sitting with Rick Sterling. And that is
12 correct, Chairman: We don't intend to comment on the
13 proceedings today.
14 COMMISSIONER KJELLANDER: Okay, great. Thank you
15 very much.
16 Is there anyone else we need to recognize? If
17 not, then we'll move forward with proceedings.
18 Are there any preliminary matters that need to
19 come before the Commission before we begin this morning?
20 MR. ADAMS: Yes, we have some preliminary matters
21 that we wanted to address, even though we recognize that as the
22 moving party, Rocky Mountain Power will have the first
23 opportuni ty to present argument.
24 I just wanted to clarify to save everyone time.25 that an issue arose at the decision meeting as to whether we
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1 were arguing that the Commission lacks the authority or
2 jurisdiction to rule on a Summary Judgment Motion. That's
3 not -- that's not what we intended to argue, and if anyone has
4 read our filing in that manner, we would agree to waive that.
5 What our position was, we thought it was
6 inappropriate given the 14-day turnaround that we had to
7 respond on the unscheduled Motion, and that's the limit of our
8 argument; not that summary judgment would be inappropriate or
9 not something that the Commission has the power to use the
10 Idaho Rules of Civil Procedure.
11 And we're happy to use those Rules and, in fact,
12 filed a Motion under Rule 56 (f) of the Rules of Civil
13 Procedure, and that's a Motion requiring completion --
14 requesting that discovery be completed before the ruling on
15 summary judgment.
16 And along those lines, I contacted Counsel for
17 Rocky Mountain Power yesterday and we offered to withdraw
18 several of the pending Discovery Requests in order to -- the
19 ones that are in dispute in this matter -- in order to decrease
20 the document shuffling among the parties and reach resolution
21 of summary judgment one way or the other more quickly so that
22 we could file our own Motion for Summary Judgment. And I can
23 read those into the record now or we can file something later,
24 but we scaled it back to I believe 14 questions from what was
25 30 pending questions.
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1 COMMISSIONER KJELLANDER: Okay. I think it would
2 be my preference that perhaps we file that later just to
3 perhaps ease some of the workload that we may have on the court
4 reporter, and that way we make sure that we get it correct from
5 you. Would that be acceptable?
6 MR. ADAMS: Certainly. Absolutely.
7 COMMISSIONER KJELLANDER: Great. Thank you.
8 Anybody objection to that?
9 Okay, then that's the pathway we will move
10 forward with.
11 MR. ADAMS: Excuse me, Commissioner Kjellander.
12 I meant to say we're withdrawing those Requests at this time
13 wi thout waiving the right to assert them at a subsequent point
14 in time if we had the opportunity to.
15 COMMISSIONER KJELLANDER: Okay. Thank you.
16 Are there any other preliminary matters that need
17 to come before us? If not, then let's move forward then with
18 the first area that we have for oral argument today, and that
19 is Rocky Mountain Power's Motion for Protective Order to Stay
20 Discovery and a Motion for Summary Judgment. Specifically, as
21 we issued in our Notice for the oral argument, the Commission
22 seeks argument on whether there's a genuine issue as to any
23 material fact regarding XRG' s Complaint. And with Rocky
24 Mountain Power being the moving party we'll begin with Rocky
25 Mountain Power, and will that be you, Mr. Kaufmann?
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1 MR. KAUFMANN: Yes. Thank you, Chairman.
2 Good morning, everybody. This is Ken Kaufmann
3 for Rocky Mountain Power. Pleased to be here and pleased to
4 see Counsel for XRG.
5 As you know, the Complainant, XRG, filed this
6 Complaint in July of 2010, and since then there has been
7 significant discovery by both sides.
8 And in February of 2011, PacifiCorp filed this
9 Motion for Summary Judgment along with the Motion for
10 Protecti ve Order Staying Discovery pending ruling on this
11 Motion because it believes that the wi th the aid of
12 discovery, it's clear that there is no genuine issue of
13 material fact with respect to several essential components in
14 Complainant's case.
15 I know you're all familiar with the facts;
16 however, I think it will help to provide context to my argument
17 if I just summarize briefly what I consider the key facts at
18 issue before us today. These facts are all to be found in
19 Exhibi t A of PacifiCorp' s Motion for Summary Judgment. Exhibit
20 A is a catalog of all the written communications between XRG
21 and PacifiCorp from January 2009 when it submitted its initial
22 request for four power purchase agreements through July of 2010
23 when it filed the instant Complaint.
24 The first page of Exhibit A is an acknowledgment
25 by XRG that to the best of its knowledge, this is the complete
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1 record of the written correspondences between the parties.
2 In these facts, you'll find the following:
3 That XRG applied, requested, four standard
4 published avoided cost rate power purchase agreements from
5 PacifiCorp for its project in January of 2009 and submitted
6 information about the proj ects at that time. This was -- these
7 are off-system proj ects which it proposed to wheel the power to
8 PacifiCorp near Goshen, Idaho, via Bonneville Power
9 Administration transmission.
10 In March of 2009, PacifiCorp informed XRG of
11 likely transmission problems. PacifiCorp repeatedly and
12 consistently told XRG that it would only accept 23 megawatts at
13 the published avoided cost price.
14 In May 2009, PacifiCorp sent a draft contract for
15 one XRG proj ect to XRG, and did so again in October 2i 2009.
16 The October draft included updates recognizing, among other
17 things, that this project would commingle -- I'm sorry -- the
18 off-system -- because it was off-system, there is an addendum
19 that was added to the October 2009 draft. XRG said it would
20 review the drafts and respond; however, it never did.
21 On October 2, 2009, PacifiCorp asked XRG to
22 confirm the continuing validity of the information it had
23 provided in January 2009, nearly nine months previous.
24 On October 2, PacifiCorp also explained in detail
25 why it was only offering one PPA. In pertinent part, I quote:
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1 As I explained -- this is an e-mail from Bruce
2 Griswold to James Carkulis, who is the principal for XRG, the
3 developer of the XRG proj ect, and it may be found in Exhibit A,
4 page 209:
5 As I explained previously, the point of deli very
6 you propose -- Brady substation -- is a remote site that
7 interconnects with PacifiCorp' s system where the Company's
8 abili ty to assimilate and deliver power and move it elsewhere
9 on our system is very limited. If PacifiCorp does have an
10 obligation to accept output at Borah and Brady, PacifiCorp will
11 expect you to pay for all resulting interconnection costs,
12 including network upgrades, paren, either through an adjustment
13 to avoided cost or through payment to PacifiCorp Transmission,
14 closed paren, such that the ultimate cost toPacifiCorp' s
15 customers is not greater than the cost avoided by PacifiCorp
16 not constructing or purchasing an equivalent resource located
17 on a nonconstrained portion of its system. Again, if you
18 disagree with this principle, I urge you to explain your
19 position and basis therefore.
20 Now, the records in Exhibit A, on the very first
21 page there is a table of contents, and it shows that there were
22 no communications between the parties for months at a time
23 during the relevant period leading up to the Complaint. There
24 were no communications between May 12th and July 6th of 2009,
25 approximately 55 days; nor were there communications between
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1 July 6th and September 18, 2009, a period of 73 days; nor did
2 the parties communicate between November 9, 2009, and March 11,
3 2010, approximately 122 days.
4 On March 10, XRG' s counsel received notice of the
5 Commission's intent to revise the published avoided cost rates.
6 On March 11th, Mr. Carkulis sent an e-mail to
7 Mr. Griswold, and in it he stated, quote:
8 XRG shall take the original sent for the one
9 20-megawatt proj ect contract draft and replicate it for the
10 other three 20-megawatt proj ects in Cassia County. We shall
11 present a redline of all four projects as originally requested
12 back in January 2009 for your review and approval.
13 This is found at Exhibit A, page 289.
14 And then on March 12th, Mr. Richardson sent
15 PacifiCorp a letter on XRG' s behalf, and this may be found on
16 page 296 of Exhibit A. In that letter, he stated:
17 XRG is still prepared to enter into these
18 contracts and has been so prepared since 2009. I believe XRG
19 remains entitled to the current rates as of today. Would you
20 either, one, confirm our understanding that we are entitled to
21 the current rates and follow up with a contract containing the
22 same; or, two, please tender an execution of the agreement
23 containing the current rates by return mail.
24 On March 16th, the Commission issued Order 31025
25 establishing new lower avoided cost rates.
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1 And then on July 29th, XRG filed this Complaint.
2 In light of the above and the additional facts
3 set forth in our briefs, there is no genuine issue of fact that
4 XRG executed a power purchase agreement or filed a Complaint
5 with this Commission prior to March 16, 2010, the date of the
6 rate change. In fact, it made no attempt to do so. It waited
7 more than 135 days to bring its Complaint. And for the reasons
8 set forth in our Motion and our Reply, this fact alone
9 justifies the Commission granting summary judgment based on its
10 existing legal precedents, as well as on the doctrine of
11 laches.
12 Second, there is no genuine issue of fact that
13 XRG did not, prior to March 16th rate change, clearly manifest
14 its intent to obligate itself to deliver power to PacifiCorp.
15 In the March 11th e-mail, Mr. Carkulis said he
16 would, quote, present a redline of all four projects as
17 originally requested back in January 2009 for your review and
18 approval.
19 This statement expresses an intent to negotiate.
20 It does not express an intent to obligate XRG.
21 The March 12th letter from Mr. Richardson stated
22 that XRG was, quote, still prepared to enter into these
23 contracts and has been so prepared since 2009.
24 One problem with this statement is that XRG never
25 indicated it was prepared to enter into either of the draft
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1 contracts PacifiCorp provided it for comment in 2009. The
2 record shows that it said it would get back to PacifiCorp with
3 comments on multiple occasions, but that it never did.
4 There is no genuine issue of fact that the
5 parties never agreed to any material terms of a power purchase
6 agreement. It's clear they didn't agree to the price, at least
7 not with respect to the three proj ects PacifiCorp said it
8 didn't have existing capacity to accept; they didn't agree on
9 the point of delivery or the form of deli very to the point of
10 deli very, that is, the off-system transmission that would bring
11 the power to the point of deli very; they didn't agree on delay
12 defaul t security; they never even discussed curtailment rights
13 or insurance; and they didn't agree on a commercial on-line
14 date, and the record shows that more than one date was
15 proposed.
16 There is no genuine issue of fact that PacifiCorp
17 did not have an opportunity to perform its regular due
18 diligence of this proj ect. Each time Pacific requested that
19 XRG confirm the continuing validity of its January 2009
20 submittal -- and it did so on October 2nd of 2009 and also
21 April 13, 2010 -- it received no response.
22 And there is no genuine issue of fact that XRG
23 did not have a confirmed plan for how it would deliver net
24 output to PacifiCorp at the point of delivery.
25 In its January 2009 submittal, XRG identified
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1 only BPA as both the interconnecting and the wheeling utility
2 for its proj ects; however, during discovery, PacifiCorp learned
3 that at the time XRG asserts it obligated itself to 20-year
4 PPAs for four proj ects -- and that is -- that time would be
5 March of 2010 -- only two projects had active applications for
6 BPA interconnections. None had approved applications for
7 interconnection -- or, I'm sorry -- yeah, none had approved
8 applications for transmission.
9 And in January 2011, BPA informed XRG that it
10 could not deliver net output to Brady via BPA transmission and
11 that XRG would need to talk to Idaho Power about getting
12 service under Idaho Power's oath. That e-mail is, I believe,
13 very telling, and it may be found in Exhibit B to our Motion
14 for Summary Judgment at page 14, and it's dated January 5th,
15 2011, and it's from BPA to Collin Rudeen at XRG. And part of
16 it says, I quote:
17 XRG will need to contact Idaho Power to arrange
18 for transmission wheeling services under Idaho Power's tariff.
19 There is a pathway to get there, as you state, using Idaho
20 Power's facilities, but the availability of transmission
21 capaci ty on Idaho Power's facilities is a discussion that XRG
22 needs to have with Idaho Power as a transmission provider.
23 We also learned that one or more of the proj ects
24 will interconnect to facilities of the Raft River Electric
25 Co-op, then go to BPA transmission, and then to Idaho to -- and
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.1 finally to Brady.
2 We learned that some of the paths that power
3 would flow on BPA transmission were constrained and will need
4 rerating and possible upgrades.
5 So at the time XRG claims it obligated itself to
6 sell 70 megawatts to PacifiCorp, its transmission plans to get
7 to PacifiCorp were merely conceptual. Now, I'm sure XRG will
8 argue that these problems are surmountable, but the point is
9 that in March they had at best a concept and apparently didn't
10 even understand that BPA didn't get to Borah substation.
11 Now, the Commission has required Utilities to
12 excuse some theoretical risks of curtailment or bumping.13 inherent in QFs using off-system transmission, but the facts
14 here are stark and distinguishable. For the XRG proj ects that
15 would connect to Raft River Co-op, Raft River is not subject to
16 the open access requirements of Order 888. Raft River can say,
17 No, thank you. We don't wish to interconnect you to our
18 project, to our system.
19 And some of the pathways, as I mentioned,
20 identified across BPA transmissions are constrained. This
21 means that although in theory they can get that transmission,
22 the availability of it by a date certain is unknowable at this
23 time.
24 And as of January 11th, XRG had not demonstrated.25 the feasibility or timing or the economic viability of wheeling
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1 its power across two and possibly three utility systems to get
2 to PacifiCorp.
3 When you take all of this together, as we have
4 argued in the brief, this proj ect was immature as a matter of
5 law. And to bolster that point, I would say that this case is
6 very similar to the salient facts of Island Power versus Utah
7 Power and Light, and that was a 1994 Decision by this
8 Commission which I described in the Motion and it may be
9 found -- I'm referring to Order 25528.
10 And, briefly, that was a case about an off-system
11 QF located in Montana that proposed to wheel power to
12 PacifiCorp near Goshen, Idaho, and sell it under PURPA, and
13 PacifiCorp took the position that they would not buy it in
14 Idaho, they would buy it in Montana, because that was closer
15 and they had a substation there and the QF was located in
16 Montana.
17 And so after only two or three months of
18 negotiating, the QF filed a Complaint with this Commission and
19 said, Tell them they're wrong.
20 And PacifiCorp -- at the time, Utah Power and
21 Light -- filed a Motion to Dismiss and the Commission denied
22 it. It said, yes, we do have jurisdiction. Yes, this QF is
23 entitled to deliver this power, to sell it to you in Goshen, if
24 it can get it there..25 Well, in the mean time, there was a rate change
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1 and the rates went down before the QF was able to execute an
2 agreement with Utah Power, and they continued their Complaint
3 and sought an Order from the Commission that they were entitled
4 to the grandfathered rates, as with XRG.
5 Now, like XRG, they didn't have a signed
6 contract, and the Commission said Plaintiff must therefore
7 demonstrate that it had pursued a contract with diligence and
8 competence; that it was substantially mature and ready,
9 willing, and able to sign a contract; and that but for the
10 intransigence of PacifiCorp, it was otherwise entitled and
11 would have had a power purchase contract prior to the date of
12 the rate change.
13 The Complainant said, well, because they refused
14 to accept at the deli very point, there was nothing to
15 negotiate.
16 And this Commission says that's not true, that
17 there are many aspects of the deal that go together in
18 parallel, and that it's not enough to just cry foul and stop
19 negotiating.
20 And, in fact, that bears similarities to this
21 case. In fact, the Commission said on page 19 and 20: The
22 issues of jurisdiction and point of delivery were a valid
23 question. What occurred in this case with respect to
24 negotiation was a prolonged period of inacti vi ty, this despite
25 the Utility's filings which put QFs on notice that avoided cost
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1 rates might be changing. Prior to January 14, 1994 -- that's
2 the rate change date -- Island Power, by its statements,
3 letters, and/or actions, never committed itself or indicated a
4 willingness to obligate itself to a legally-enforceable
5 obligation to deliver firm energy over a specified term to
6 PacifiCorp.
7 And, finally, the Commission found that essential
8 elements of a power purchase contract between PacifiCorp and
9 Island Power are still unresolved. Accordingly, we are unable
10 to find that Island Power has perfected its entitlement to a
11 contract for the grandfathered rates requested.
12 The way I interpret this case is applicable in
13 our situation here is that there was a dispute. And XRG is
14 going to tell you about or attempt to tell you about how bad
15 PacifiCorp was in taking this position or how wrong it was, and
16 we disagree. But the point is, we -- PacifiCorp -- told them
17 very promptly what its concern was and what its position was,
18 and it maintained that position consistently.
19 And in the case of Island Power, they filed a
20 Complaint with the Commission three months after they heard
21 that PacifiCorp was not going to accept the power, but in this
22 case, XRG waited 18 months and it waited until after the rates
23 changed, and it waited 148 -- or, -45 days more and then it
24 filed its Complaint. And in the meantime, it didn't negotiate
25 the agreement, the other aspects of the agreement, such that
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1 you could tell what it might have thought it was obligating
2 itself to in March when it says, I want an agreement.
3 I think that's unfortunate for XRG, but it was
4 incumbent upon them to bring this dispute to the Commission and
5 not to wait 18 months and then bring it. In doing so, they
6 have done what the Island Power case says they should not have
7 done.
8 And so in conclusion, we feel that there is no
9 genuine issue of fact that this project was neither mature, nor
10 did it clearly manifest an obligation to be bound prior to the
11 date of the rate change, nor did it file a timely Complaint.
12 And on any of those three bases, the Commission has proper
13 authority to declare that Complainant is not entitled to the
14 relief it seeks as a matter of law.
15 Thank you.
16 COMMISSIONER KJELLANDER: Thank you,
17 Mr. Kaufmann.
18 Are there any questions from members of the
19 Commission?
20 COMMISSIONER SMITH: Not me.
21 COMMISSIONER REDFORD: No.
22 COMMISSIONER KJELLANDER: Thank you.
23 Let's move then to Mr. Adams.
24 MR. ADAMS: Thank you, Chairman. I'm going to
25 provide the Commission with some additional factual background,
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1 our version of the facts and the issues that were not addressed
2 by Mr. Kaufmann that we think are relevant. Then I'm going to
3 go into the material facts that we think are still in dispute
4 and that we are entitled to additional discovery on our
5 remaining Requests that we have not agreed to withdraw.
6 COMMISSIONER KJELLANDER: On the latter part,
7 we've actually teed up the question for the Motion to Complete
8 Discovery as a second topic, so if you could separate those,
9 that would be good.
10 MR. ADAMS: Excuse me?
11 COMMISSIONER KJELLANDER: In the original Order
12 that we issued for oral argument, we teed up two separate
13 issues for the oral argument. The first one is the one that
14 we've launched; the second one deals specifically with the
15 Motion to Complete Discovery. So if we could just keep those
16 separate--
17 MR. ADAMS: So you would like me to address their
18 Motion for Summary Judgment first.
19 COMMISSIONER KJELLANDER: Yes.
20 MR. ADAMS: Well, it's going to be hard. I can
21 try, but it's going to be hard, because under the Rules of
22 Summary Judgment, the issue is whether there's a material and
23 factual dispute.
24 COMMISSIONER KJELLANDER: Do your best if you
could so that we can follow the format that we've laid out
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1 according to our Order that issued the request here for oral
2 argument.
3 MR. ADAMS: Okay, I'll try.
4 COMMISSIONER KJELLANDER: Thank you.
5 MR. ADAMS: Well, to provide the context to
6 understand the issues in this case, I think it's important
7 first to go through the two different types of transmission
8 service that are at issue in this case. Obviously, the dispute
9 is involving transmission XRG'S transmission to deliver to
10 Rocky Mountain Power, and also Rocky Mountain Power's
11 investigation of its own transmission system and its ability to
12 integrate the deli very and deliver that to its load center.
13 So the first type of transmission service, the
14 type that XRG is going to have to secure with Bonneville Power
15 Administration, is governed by part two of the Open Access
16 Transmission Tariff, and BPA does have an Open Access
17 Transmission Tariff. XRG will wheel the output under a
18 long-term, point-to-point transmission wheeling agreement to
19 the Brady substation in Southeastern Idaho. BPA' s oath allows
20 XRG to work directly with the transmission personnel at
21 Bonneville Power Administration to determine availability of
22 capaci ty and secure that agreement. That's an expensive
23 process to proceed through; but more importantly, it requires
24 XRG to enter into an irrevocable, point-to-point wheeling
25 agreement.
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1 Once XRG enters into that agreement, it can't get
2 out of it without -- unless it can reassign those rights to
3 somebody else. So if XRG is unable to secure a PPA after the
4 time it enters into that wheeling agreement and the PPA doesn't
5 have a rate in it sufficient to finance and build the proj ects,
6 XRG will not be able to use that transmission wheeling
7 agreement, but it will be obligated to pay for the transmission
8 for the 20-year term. XRG would need to find someone who is
9 using the exact same amount of deli very from the exact same
10 point of interconnection to the exact same point of delivery to
11 Rocky Mountain Power at the Brady substation in order to get
12 out of paying for that 20-year agreement.
13 So that's the type of wheeling agreement that
14 Rocky Mountain Power is arguing in its Motion for Summary
15 Judgment that the Commission should make a prerequisite prior
16 to execution of a PPA.
17 The second type of transmission service is under
18 part three of the oath; it's called network transmission
19 service. That requires Rocky Mountain Power to designate all
20 network resources, generating resources, to account for the
21 transmission that it will use on its own system to deliver that
22 to its network loads. Rocky Mountain Power Commercial and
23 Trading must make that request to Rocky Mountain Power
24 Transmission personnel. Those are two functionally separate
25 enti ties under FERC' s Open Access Transmission Tariff and
19
HEDRICK COURT REPORTING
P.O. BOX 578, BO IS E , I D 83701 ARGUMENT
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.
1 functional separation rules.
2 The goal for its rules is to prevent Rocky
3 Mountain Power from reserving capacity on its own system to its
4 own benefit and for its own future use to the exclusion of
5 other users such as XRG so that two units of the Company must
6 be separate. The availability of transmission and the
7 potential cost of upgrades must be considered by specialized
8 Rocky Mountain Power Transmission personnel, and the Commercial
9 and Trading personnel, including Mr. Griswold who negotiates
10 the PURPA agreements, cannot have access to that transmission
11 system information.
12 The important distinguishing factor from this
13 other type of transmission service also is that a network
14 transmission service customer -- that the network transmission
15 request can be undone, and even once it's been designated it
16 can be undone. The oath allows Rocky Mountain Power to make a
17 request for network transmission service contingent upon the
18 execution of a PPA. That allows them to designate a network
19 resource and secure the transmission and fully investigate it
20 prior to having a binding PPA going forward. It allows them to
21 negotiate during that process and figure out if the
22 transmission is there while they're doing the contract
23 negotiations.
24 But if that request is never lodged to the Rocky
25 Mountain Power Transmission personnel by the Commercial and
20
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
.1 Trading personnel, then you're never going to get an
2 authori tati ve answer on the transmission availability, because
3 under FERC standards of conduct, the Commercial and Trading
4 personnel such as Mr. Griswold are not allowed to possess
5 specialized information to fully analyze the transmission
6 system question. XRG has no power itself to initiate that
7 request process because it is not the network transmission
8 customer, Rocky Mountain Power is; and it has no way to ensure
9 that the specialized Rocky Mountain Power Transmission
10 personnel review Rocky Mountain Power's ability to integrate
11 its output.
12 The issue raised in our Complaint is whether.13 Rocky Mountain Power's negligent or intentional failure to
14 properly implement this network transmission resource
15 designation process frustrated XRG' s good-faith attempts to
16 enter into four PPAs for these wind QFs.
17 I'm going to review now some of the facts of the
18 communications between the parties and XRG' s development
19 efforts.
20 XRG has been developing these projects since
21 2006, including commencing interconnection processes with BPA
22 in 2006, beginning wind studies in 2006, and securing land
23 leases in 2007.
24 XRG first contacted Rocky Mountain Power in 2009,.25 requesting four standard power purchase agreements with
21
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 published rates and two large QF PPAs with IRP methodology
2 rates, and included very detailed information about the
3 projects. That's included in Rocky Mountain Power's Exhibit A.
4 Prior to doing so, XRG had received feasibility studies for
5 interconnecting each proj ect with Bonneville Power
6 Administration and was actively engaged in that interconnection
7 process. However, from February 25, 2009, until September 21,
8 2010, Rocky Mountain Power stated that there was no network
9 transmission access across the necessary path from the Brady
10 substation to its Utah load center -- that's called Path C --
11 for more than 23 megawatts. XRG had no power to initiate an
12 investigation on the transmission side as to whether that would
13 be available by the time the projects were proposed to come
14 on-line initially in December of 2010.
15 XRG allowed -- well, subsequently what. happened,
16 shortly after Rocky Mountain Power first communicated that
17 problem to XRG in March of 2009, XRG was attempting to delay
18 the interconnection process with BPA because BPA wanted an
19 additional $80,000 to conduct environmental studies on the
20 interconnections at a time when Rocky Mountain Power was
21 refusing to negotiate with all four of the contracts. XRG
22 allowed for its then-existing interconnection requests with BPA
23 to expire, and it was required to then restart the entire
24 process and forfeit what it had spent on those initial
25 requests.
22
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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,
1 Notably, in -- there was sporadic communications,
2 as Mr. Kaufmann mentioned, between the parties disputing
3 whether there would be enough access for the four proj ects; but
4 most notably in November 2010, XRG insisted transmission could
5 be available by an on-line date in December of 2010 on a
6 telephone conversation and even proposed an al ternati ve date of
7 June 2011 because it -- because of publicly-known upgrades to
8 the transmission system that were ongoing. Those upgrades were
9 the Populus to Terminal line which we'll discuss later. And
10 this communication in November was after the October e-mail
11 that Mr. Kaufmann read at length on page 209 of Exhibit A
12 asking for XRG' s position on why they should be entitled to
13 four contracts.
14 Subsequently in March, as everyone knows, the
15 rates dropped from those that had existed at the time that XRG
16 was trying to negotiate the agreement with the four power
17 purchase agreements with Rocky Mountain Power, and XRG at that
18 time asserted its right to Rocky Mountain Power to the prior
19 rates because it had been trying to secure PPAs for the four
20 contracts.
21 On April 13, 2010, Rocky Mountain Power, in a
22 letter from Mr. Kaufmann, again insisted that the network
23 transmission problem across Path C precluded negotiation of the
24 four contracts.
25 So XRG filed a Complaint which raised the
23
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 transmission access issue in July of 2010, alleging it was
2 entitled to the rates prior to March 2010 or any other relief
3 the Commission deems appropriate.
4 XRG filed Discovery Requests inquiring into Rocky
5 Mountain Power's investigation into its transmission system;
6 and then, just before those Requests were due, Rocky Mountain
7 Power sent a letter to XRG on September 21, 2010, for the first
8 time stating that network transmission was actually available
9 for the entire output to accept at Brady and integrated with no
10 upgrade costs. That's included in the record as XRG' s Exhibit
11 No. 3 and it was not submitted into the record by Rocky
12 Mountain Power. So it took one year and eight months for Rocky
13 Mountain Power to commence its due diligence on the four
14 proj ects.
15 That letter is the first time also that we
16 received a standard matrix of missing -- of the information
17 regarding the proj ects that Rocky Mountain Power believed to be
18 missing. So that's the way the first thing you get usually
19 from Rocky Mountain Power when you commence PURPA negotiations
20 is a matrix of things that they believe are missing that they
21 need to know about your proj ect to conduct their due diligence.
22 That letter after we filed the Complaint was the first time
23 that we received that matrix for all four of the proj ects.
24 Shortly thereafter, after receiving the letter,
25 XRG initiated settlement negotiations in an attempt to secure
24
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 PPAs, and XRG agreed to Rocky Mountain Power's Request to Stay
2 Discovery on October 18, 2010. We maintained that we attempted
3 to settle in good faith, but Rocky Mountain Power has obj ected
4 to admissibility of settlement negotiations. We believe that
5 the Commission could look into that if it wished to and we
6 ci ted authority in our filing for that proposition, but I'm not
7 going to discuss it unless asked to by the Commission.
8 So shortly after that discovery was stayed, Rocky
9 Mountain Power, Idaho Power, and Avista filed a Joint Petition
10 to drop the eligibility cap on November 5, 2010, yet XRG
11 continued to attempt to secure contracts and provided a
12 detailed response to Rocky Mountain Power's due diligence
13 inquiry in its September 21st letter by a letter to Rocky
14 Mountain Power on December 13, 2010, including a revised
15 on-line date of January 2013 now that it would obviously be
16 impossible to hit the -- achieve a commercial operation date of
17 December 2010 or even June 2011 as initially proposed.
18 Around that time, the Commission ruled that any
19 reduction in the eligibility cap for wind QFs would be
20 effective December 14, 2010.
21 And on December 16, 2010, Rocky Mountain Power
22 lifted the discovery freeze and recommenced litigation. The
23 parties filed additional Discovery Requests and XRG requested
24 detailed questions on how it was that Rocky Mountain Power
25 failed to notice earlier that network transmission would have
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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i been available by the time it proposed its on-line date
2 initially back in January of 2009.
3 Rocky Mountain Power also filed additional
4 Discovery Requests, which XRG responded to without requesting
5 any time delay. Those are Requests No. 26 to 50, and they were
6 provided to Rocky Mountain Power on January 12, 2011. XRG even
7 supplemented its past discovery with additional correspondence
8 that had occurred with BPA during the discovery freeze, and
9 much of that is contained in Rocky Mountain Power's Exhibit B
10 to their Motion for Summary Judgment.
11 On January 20, 2011, XRG granted Rocky Mountain
12 Power's request for a 14-day extension of time to respond to
13 discovery to XRG' s Request No. 24 to 63. They did not mention
14 to us at that time that they planned to file a Motion for
15 Summary Judgment, yet less than two weeks later they contacted
16 us -- on February 2, 2011 -- and requested that XRG agree to
17 stay Rocky Mountain Power's responses to XRG' s Discovery
18 Requests so that it could file a Motion for Summary Judgment.
19 We did not agree to that.
20 They did not request an additional amount of time
21 and they did not ask that we withdraw certain questions or pare
22 it back or work with us in any other manner. They wanted to
23 file a Motion for Summary Judgment, and they did so two days
24 later, on February 4, 2011, and they filed the instant -- and
25 they used our new discovery provided to them to file their
26
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 instant Motion for Summary Judgment and Motion for a Protective
2 Order, arguing that there are no material facts in this case.
3 On a Motion for Summary Judgment, the Commission
4 must determine whether the evidence, when construed in the
5 light most favorable to the nonmoving party -- which here is
6 XRG -- presents a genuine issue of material fact or shows that
7 the moving party is not entitled to judgment as a matter of
8 law. The Commission must grant all reasonable inferences in
9 favor of XRG, the nonmoving party.
10 Under Rule 56 (f), if it appears that the party
11 opposing the Motion cannot, for the reasons stated, present by
12 facts essential to justify the party' s position, the Commission
13 should refuse the Application for Judgment, or may order a
14 continuance to permit additional discovery to be had prior to a
15 ruling at the summary judgment stage. That allows for the
16 nonmoving party to supplement its summary judgment filing and
17 perhaps file its own Motion for Summary Judgment with the
18 discovery that it's requested.
19 And the case that's directly on point that we
20 cited in our answer is Doe versus the Sisters of the Holy
21 Cross, which is a Court of Appeals case where the Court of
22 Appeals reversed a trial court's refusal to allow someone to
23 investigate into additional matters on discovery prior to the
24 time it granted summary judgment for the moving party.
25 So, the material facts that we believe are in
27
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 dispute: ,
2 First, the details regarding XRG' s plans to
3 interconnect and wheel to the Brady substation. Mr. Kaufmann
4 today and in his Motions argues that XRG is interconnecting to
5 the Raft River Rural Electric Cooperative, and he listed that
6 in his Summary Judgment Motion on page 8 under the heading
7 Undisputed Material Facts.
8 That is not an undisputed material fact. XRG is
9 not interconnecting with Raft River and never has been. What
10 Rocky Mountain Power relies upon for assertion that that's an
11 undisputed material fact is a request from Mr. Rudeen of XRG to
12 BPA, just an inquiry on one of the interconnections for one of
13 these proj ects into what would happen if we tried to
14 interconnect at a different point on the line with the existing
15 interconnection queue number. And BPA told Mr. Rudeen that
16 would mean you would have to refile your entire interconnection
17 request, and XRG didn't do that.
18 Rocky Mountain Power is aware that we are
19 interconnecting directly to BPA' s system. The very string of
20 e-mails I think evidences the fact that that was merely an
21 inquiry and not an indication that we were going to refile our
22 interconnection request with Raft River Rural Electric
23 Cooperative.
24 The part of the record that shows that we're
25 interconnecting to all four proj ects the BPA is in Exhibit 1 to
28
HEDRICK COURT REPORTING
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ARGUMENT
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1 our Motion at pages 49 to 50 where XRG describes its
2 interconnection. In our opinion, this is an attempt to make
3 our proj ects look more infeasible with the specter of a triple
4 wheel over a three-utility system prior to delivery to Rocky
5 Mountain Power, which we're not planning to do and it's
6 unsupported by the record. XRG is interconnecting directly to
7 BPA and believes it can wheel the output to Brady. That is
8 material because a triple wheel and interconnection appear far
9 less feasible.
10 The next factual question that's in dispute is
11 whether Rocky Mountain Power knew well before the rate change
12 in March 2010 that it could easily integrate XRG's capacity at
13 Brady with no cost for transmission upgrades, or whether it
14 refused to negotiate without even checking on availability with
15 its transmission personnel.
16 As far as we can tell from the existing record,
17 Mr. Griswold did not offer to negotiate the PPAs and make
18 execution contingent upon availability of transmission or even
19 inquire into the transmission with the Company's transmission
20 personnel, and that's what our Discovery Requests get into.
21 That's the heart of this matter for us. We can't tell for sure
22 right now, so it's hard for us to file a Motion for Summary
23 Judgment, and it's material because it delayed the
24 negotiations.
25 And as I mentioned earlier, it caused XRG to
29
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
.
.
1 allow its interconnection requests to lapse in March of 2009.
2 XRG had four BPA interconnection requests at that time, each
3 wi th feasibility studies, but to keep them alive it would have
4 had to incur an additional $80,000 expense when Rocky Mountain
5 Power stated it would not accept the output. We did not submit
6 all of the correspondence between BPA and XRG back in March and
7 from January to March 2009 on that matter, but it is in the
8 Commission's files. It was our response -- it was our response
9 to Rocky Mountain Power's Production Request No. 37 at pages 1
10 to 90. However, there is something that's in the summary
11 judgment filings to that issue, and that is XRG' s response to a
12 production -- another Production Request in this case in
13 Exhibi t A of Rocky Mountain Power's filing at page 49.
14 Granting all reasonable inferences in favor of
15 XRG, a reading of that Production Request, if you go look at
16 it, is -- the only reasonable inference is that Rocky Mountain
17 Power's refusal to negotiate at that point in time was a maj or
18 contributing factor to XRG not being able to fund $80,000 for
19 an additional interconnection study for all four projects. And
20 that is the critical issue in the case, because Rocky Mountain
21 Power now argues that XRG's projects were immature when the
22 rates changed because they got bumped out of that queue. They
23 also argue that we don't today have viable interconnection
24 agreements or requests, and we probably would if they had.25 agreed to negotiate. We were proceeding through that path
30
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 beginning in 2006.
2 The third material facts that also exist is
3 there's material facts that exist regarding whether XRG is
4 enti tled to grandfathered rates prior to March 2010.
5 We submit that the Commission should apply the
6 grandfathering test of whether the QF attempted to obligate
7 itself but was unable to do so because of, quote, either
8 knowingly or through negligence or ineptitude the Utility acted
9 so as to prevent the QF from obtaining a contract.
10 And that quote is from the Earth Power Resources
11 case that we cited in our answer.
12 I want to distinguish the Island Power case that
13 Mr. Kaufmann relies upon in this case. In that case, the
14 Commission found that Utility did not repeat refuse repeated
15 attempts to negotiate the PPA -- excuse me. The Utility did
16 not refuse repeated attempts to negotiate the PPA. That is
17 quoted in our Answer on page 24.
18 Also, unlike that case, in this case, the issues
19 of transmission on PacifiCorp' s system were not valid, in our
20 opinion, and were entitled to further discovery on the validity
21 of those issues that they raised. XRG's theory of the case is
22 that Rocky Mountain Power abused its role as PURPA negotiator
23 and network transmission service provider to stall PURPA
24 negotiations from March 2009 until September of 2010 by failing
25 to acknowledge the availability of the Populus to Terminal
31
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 upgrades for XRG' s proj ect.
2 Our pending Production Requests discussed in our
3 answer at page 13 cite extensively the publicly-available
4 documents going back to 2005 which indicate that this Populus
5 to Terminal line enabling XRG' s use of that path was always
6 planned to be on-line in 2010. Most notably, in the 2009
7 request for proposals from independent bidders, Pacific
8 Transmission personnel told bidders that once the Populus to
9 Terminal line was complete , it would cost zero dollars in
10 upgrades for deliveries to the Brady substation. That's in our
11 Production Request No. 44 which is included by -- in the record
12 by Rocky Mountain Power as an Attachment to their Motion for
13 Protecti ve Order.
14 In May 2010, just one month after Rocky Mountain
15 Power's attorney last told XRG that there was no capacity to
16 deliver 70 megawatts for XRG's projects from Brady to Utah,
17 Rocky Mountain Power filed its testimony in its general rate
18 case, asking the Commission to rate base the Populus to
19 Terminal line because it was currently used and useful. That's
20 also cited in our Production Requests.
21 And just last week, Rocky Mountain Power filed a
22 Notice of Appeal to the Idaho Supreme Court to argue that the
23 Commission incorrectly determined in that rate case that the
24 entirety of the 1,400 megawatt transfer capability of that line
25 was not currently used and useful -- the Commission found that
32
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 1,000 megawatts of it was used and useful, so there's no
2 dispute about that and that clearly 1,000 megawatts of that
3 line would have been enough to integrate the 70 megawatts from
4 XRG' s proj ects.
5 Under Rule 56, the Commission must construe the
6 existing record in a light most favorable to XRG. In that
7 regard, the only way to grant their Motion is to conclude and
8 assume that Rocky Mountain Power effectively shut off its
9 transmission system to this PURPA negotiator, and must also
10 assume that in doing so they violated their oath and their
11 standards of conduct and everything, yet it just doesn't matter
12 because we didn't secure an interconnection.
13 Rocky Mountain Power's reliance on the prefiled
14 Complaint case prefiled Complaint test is misplaced and we
15 addressed that in our briefing and I won't go into detail on
16 it, but we believe that's the wrong test to apply here and it
17 was not applied after that rate change in March of 2010 in
18 other cases.
19 And Rocky Mountain Power's argument of laches or
20 prejudice is also misplaced because we don't understand what
21 the prejudice is by us waiting four months after the last
22 letter we got from Mr. Kaufmann to file the Complaint. It was
23 reasonable for us to wait and see if they would agree that the
24 Populus to Terminal line was on-line and that they were going
25 to offer us four contracts. And they only acknowledged that
33
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 the transmission was there after we filed the Complaint. To
2 require us to file a Complaint immediately after the rate
3 changes would -- to impose a rule like that or a prefiled
4 Complaint rule -- would impose a burden on the Commission of
5 addi tional cases that aren't necessary when the parties might
6 be able to resolve their disputes without proceeding to the
7 Commission.
8 We're also in disagreement with Rocky Mountain
9 Power about whether material -- whether it's really a maj or
10 issue at this juncture in the case as to whether material terms
11 are in dispute in the PPA. On page 5 of Rocky Mountain Power's
12 Motion, it admits that it rej ected XRG' s request to process all
13 four PPAs and review the availability of transmission on
14 separate tracks. That is what stopped negotiations, not XRG' s
15 conduct. Rocky Mountain Power's refusal to provide a draft for
16 three of the four requested PPAs and as much as a due diligence
17 inquiry for any of the four PPAs hardly allowed us to do much
18 of anything except insist that we were entitled to four PPAs
19 because there was going to be available transmission.
20 We also believe that there's little to negotiate
21 in a standard PURPA contract in any regard and the process is
22 really one more of a due diligence inquiry by the Utility.
23 These contracts, the main terms of these contracts, are the
24 same among the Utili ties because they are established by
25 Commission Orders, so there's really not a whole lot to
34
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
.1 negotiate, in our view. And XRG is an entity that is very well
2 aware of all of those terms because it's entered into many of
3 these standard contracts with Idaho Power, and we reference
4 many of those in our discovery which we cited in our briefing.
5 XRG' s attempted to negotiate since the time Rocky
6 Mountain Power agreed to negotiate four PPAs in September of
7 2010, and there is -- although the settlement negotiations are
8 not currently in the record, we do have a letter that we
9 redacted reference to settlement negotiations that we sent in
10 December where we agreed -- it's stated that we had agreed to
11 the security provisions. And XRG is very well aware of the
12 $45-per-kW delay default security provision, because it's.13 entered into several contracts with Idaho Power containing that
14 provision.
15 Perhaps one of the most important issues in this
16 case is we believe that the Commission would have to create a
17 whole new role of law in the state of Idaho to grant Rocky
18 Mountain Power's Motion because interconnection and
19 transmission agreements are not a requirement for execution of
20 a PURPA PA in Idaho. Idaho Power and Rocky Mountain Power's
21 PURPA PPAs require completion of this step prior to commercial
22 operation, not prior to execution of the PPAs. We cited many,
23 many such cases, including some that Rocky Mountain Power has
24 recently entered into, in our answer at page 24. In fact,.25 that's how the draft PPAs that Rocky Mountain Power provided to
35
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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.
1 XRG in this very case in October 2009 addressed the
2 transmission and interconnection. They only required
3 submission of interconnection and transmission agreements prior
4 to commercial operation. And that's in the record at Exhibit
5 A, page 222.
6 And on page 229 in another section in the
7 contract, it contains a blank space in it for a requirement for
8 when the QF is going to have to have their interconnection
9 agreement and their wheeling agreement signed. Why would you
10 have a blank space in the executed contract for a future date
11 as to when that agreement is going to have to be executed if
12 executing that agreement is a precondition to the power
13 purchase agreement?
14 In addition to all of that, XRG has diligently
15 proceeded with interconnections under its revised on-line date
16 that it's proposed subsequently to Rocky Mountain Power. We've
17 been in communication with Rocky Mountain Power, and we have
18 provided them with information regarding the queue numbers for
19 those interconnection studies and we're proceeding. We've
20 recei ved -- progressed even further in two of those studies
21 since the filings in this case. XRG is continuing to proceed
22 through that interconnection process. We're not able, we don't
23 believe, to provide the actual studies to Rocky Mountain Power
24 because they are protected ínformation that BPA dealing with
25 BPA's transmission system, and when they give that to us, it
36
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 says "For official use only." So we have not provided those
2 studies to Rocky Mountain Power but we have given them the
3 queue numbers, which are technically confidential.
4 We don't believe the Commission should create a
5 special rule for off-system QFs requiring an executed
6 transmission agreement, which Mr. Kaufmann suggests would be a
7 good rule for the Commission to adopt.
8 On page 14 of their rely, they state, quote:
9 Off-system QFs are distinct from on-system QFs and therefore
10 meri t distinct legal treatment.
11 We disagree with that and believe it's incorrect
12 as a matter of law, because FERC itself rej ected similar
13 arguments when it implemented the PURPA regulations back in
14 1980. FERC stated that Utili ties must purchase the output of
15 off-system QFs delivering to the Utility the same as they
16 purchased from on-system QFs. That's still codified today at
17 18 CFR Section 292.303 (d) (2) and Section (d) also. The QF has
18 the choice of which Utility it will sell to, and the Utility
19 may not discriminate against classes of QFs such as off-system
20 QFs.
21 No prior case law in Idaho requires a
22 fully-executed interconnection or wheeling agreement prior to
23 executing the power purchase agreement. XRG is not able to
24 commit itself to a 20-year wheeling agreement prior to the time
25 that it has some assurance from Rocky Mountain Power that it's
37
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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.
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1 going to receive a published rate contract.
2 And XRG is willing to enter into the standard
3 delay security provision requiring it to post $3.1 million as
4 assurance against a delay default. That would ensure that
5 Rocky Mountain Power and its ratepayers will be more than
6 financially protected against any damage they may incur by
7 XRG' s failure to secure a finalized wheeling arrangement
8 necessary to perform on the contract.
9 So in conclusion, we would request that the
10 Commission deny Rocky Mountain Power's Motions, order Rocky
11 Mountain Power to respond to our revised pending Discovery
12 Requests, and allow for us to supplement our filing and perhaps
13 file our Motion for Summary Judgment based on the information
14 that we obtain before the Commission rules whether an
15 evidentiary hearing is necessary in this matter.
16 Thank you. And I'm willing to take any
17 questions, of course.
18 COMMISSIONER KJELLANDER: Are there any questions
19 from members of the Commission?
20 COMMISSIONER REDFORD: I have a couple of
21 questions.
22 COMMISSIONER KJELLANDER: Commissioner Redford.
23 COMMISSIONER REDFORD: It seems, to me, that what
24 you're saying is that the totality of the actions by Rocky
25 Mountain Power when taken in a whole come up to your statement
38
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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1 that they refuse to negotiate. Is there anything you could
2 point to me in the record or in your filings that -- where
3 Rocky Mountain Power ever stated to you that they refused to
4 negotiate, or is it simply the totality of the actions by Rocky
5 Mountain Power?
6 MR. ADAMS: No, you don't even need to get to the
7 record, Commissioner Redford. You would go to page 5 of their
8 Summary Judgment Motion, which says: XRG indicated on multiple
9 occasions that it thought the parties should proceed to
10 negotiate all four PPAs and to resolve any issue involving
11 transmission constraints on a separate negotiating path. The
12 Company did not yield to this request.
13 They did not agree to negotiate the four power
14 purchase agreements or investigate the due diligence of the
15 four power purchase agreements like they need to.
16 COMMISSIONER REDFORD: Well, that's according to
17 you. You believe they should have negotiated them. Is it your
18 statement that they should have negotiated them all at once?
19 MR. ADAMS: Yes, that was our position. They
20 offered up, they sent, one power purchase agreement on the
21 asserted basis that they were not obligated to negotiate the
22 other three because there was no transmission.
23 COMMISSIONER REDFORD: Well, they didn't actually
24 say that.
25 MR. ADAMS: They did.
39
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID 83701
ARGUMENT
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23
1 COMMISSIONER REDFORD: Read that again.
2 MR. ADAMS: It says they disagreed to process the
3 power purchase agreements and the transmission on separate
4 tracks. They refused to negotiate four power purchase
5 agreements. They argued that they only had the duty to
6 negotiate one agreement.
7 COMMISSIONER REDFORD: Okay. Well--
8 MR. ADAMS: And it's also, Commissioner, it's in
9 the letter that was sent on April --
10 COMMISSIONER REDFORD: Well that still doesn't
11 satisfy me that they refused to negotiate power purchase -- a
12 power purchase agreement that included all of the proj ects or
13 four separate power purchase agreements. I'm looking for some
14 statement where they said, No, we're not going to -- excuse me.
15 Let me back up a little bit.
16 It seemed, to me, that every time that Rocky
17 Mountain Power responded to you, it was setting forth various
18 items that had to be cleared up before they could process these
19 agreements that is, the transmission and interconnection
20 agreements and they never did once say, No, we're not going
21 to negotiate any agreement with you, whether it's four or one
22 or any other number.
MR. ADAMS: Can I have just a minute to look
24 through something?.25 COMMISSIONER REDFORD: Sure.
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1 MR. ADAMS: Thanks.
2 Okay, it would be in -- perhaps the best example
3 is in Exhibit A, page 209. It's actually the e-mail that
4 Mr. Kaufmann read into the record. It's from Bruce Griswold to
5 James Carkulis of XRG. It says near the bottom of that page:
6 We have not provided draft PPAs for the remaining
7 five proj ects since it will require substantial time and
8 effort, and given the challenges identified above, PacifiCorp
9 does not want to undertake this proj ect if your proj ects have
10 fatal flaws such as the available transmission issue
11 identified.
12 And that available transmission issue identified
13 is the ability for Rocky Mountain Power to integrate the output
14 at Brady using Path C, then the Populus to Terminal line that
15 is now on-line and it's been planned since 2005. That was the
16 stumbling block and why they refused to provide the additional
17 contracts other than the one they believed they could integrate
18 the output for.
19 COMMISSIONER REDFORD: Okay. Well, thank you
20 very much.
21 I don't have anything, nothing further.
22 COMMISSIONER KJELLANDER: Thank you.
23 Thank you, Mr. Adams.
24 Any other questions from the Commission?
25 Mr. Adams, before I move to allow Rocky Mountain
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1 Power to respond, in your response to the first Motion that
2 Rocky Mountain Power brought, it sounds as if you also then
3 included your comments as it related to XRG' s Motion to Compel
4 for Additional Discovery. Is that correct?
5 MR. ADAMS: Well, yes, I did, because they're
6 under the same Rule. Summary Judgment Rule 56 includes both
7 and they're intertwined intricately.
8 COMMISSIONER KJELLANDER: The reason I ask is
9 that as I then go to Rocky Mountain Power, they will get the
10 last word as it relates to their initial Motion. I'll also
11 allow them to comment on the second Motion and give you the
12 last word on that.
13 MR. ADAMS: That's what I was going to ask, if I
14 could have one. I may have some additional comments if he
15 raises a new issue regarding discovery rules or something.
16 COMMISSIONER KJELLANDER: That's great. That's
17 what I was looking for. Thank you.
18 All right, let's move back to Rocky Mountain
19 Power. And, Mr. Kaufmann, you get the final word on your
20 initial Motion, and then you can also comment on the Motion
21 from XRG in relationship to additional discovery.
22 MR. KAUFMANN: Thank you, Mr. Chair.
23 First, I'd like to address Commissioner Redford's
24 question to Mr. Adams and the answer Mr. Adams gave. He cited
25 Bruce Griswold's October 2 e-mail for the proposition that
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ARGUMENT
.1 PacifiCorp refused to negotiate, and that e-mail is not -- I
2 think he's taken a bit of it out of context and really created
3 a different flavor for what that letter, I believe, conveys.
4 The one, two, three, fourth paragraph, PacifiCorp says:
5 If PacifiCorp does have an obligation to accept
6 output at Borah and Brady, PacifiCorp will expect you to pay
7 for all resulting interconnection costs such that the ultimate
8 cost is not greater than the cost avoided by PacifiCorp. If
9 you disagree with this, I urge you to explain your position and
10 basis therefore.
11 Later on, we say that -- we ask them to clarify
12 that, yes, they want four agreements, because previously, they.13 had said, Okay, we will work on one. And then that never came
14 to fruition.
15 And, finally, Bruce said in the last paragraph:
16 I would be happy to meet with your team to discuss your
17 remaining five proj ects and determine a plan for addressing
18 each of these in a timely manner.
19 I think we're getting into semantics here, but it
20 seems like the main difference is PacifiCorp offered one draft
21 and now XRG is taking a position that it's a refusal to offer
22 three drafts. Well, PacifiCorp doesn't negotiate four drafts
23 simul taneously. If we had told them, "Yeah, you can have four
24 contracts," the negotiation would have looked just the same :.25 Here's the draft PPA and let's get it right, and then we'll,
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ARGUMENT
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1 when it's final, we'll duplicate it four times.
2 So it certainly is not a correct deduction to say
3 that one draft only precluded XRG from negotiating the terms
4 other than price for the other three XRG proj ects.
5 I have a few other observations regarding
6 Mr. Adams' testimony:
7 First, he called into question PacifiCorp' s
8 assertion in its brief that there was going to -- that XRG
9 planned to interconnect to Raft River.
10 Well, the exhibits that PacifiCorp relied on
11 that -- are cited and they're provided in Exhibit B to the
12 Motion. Mr. Adams' allegations in his brief and before you
13 today are not evidence. And, furthermore, even if they were
14 evidence of what is happening today, I offer that -- those
15 facts to show that in the relevant period of March 2010, they
16 had, at best, a concept of how they were going to deliver power
17 to the point of delivery.
18 Generally, I'd like to point out that Mr. Adams
19 asked the Commission to consider evidence which was provided to
20 Staff in discovery but it has not been put before the
21 Commission. I don't believe that's proper.
22 Mr. Adams says that Earth Power is a more apt
23 precedent for this situation than Island Power because there
24 were, in Island Power, repeated attempts to negotiate the PPA
25 and he believes that's distinguishable.
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ARGUMENT
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1 The Commission will have to decide this, but
2 certainly we have, in Exhibit A, the entire written record of
3 the correspondences between the parties. I don't want to
4 belabor it, but I suggest that PacifiCorp was actively engaged,
5 and when Mr. Adams says there was refusal to negotiate, I think
6 we have definitional differences.
7 I heard Mr. Adams say that XRG is very
8 experienced in QF negotiations in Idaho and it has many QF
9 projects.
10 Well, if that's the case, I think it's
11 significant that on March 10th and March 11th and March 12th
12 when XRG knew that published avoided cost rates were about to
13 change, it did not say, I am ready, willing, and able to
14 obligate myself to deliver 20 megawatts for 20 years to
15 PacifiCorp at the published avoided costs at $43 a megawatt
16 with the standard and just provision.
17 I've certainly seen letters like that, and I know
18 that Counsel for XRG certainly knows how to write those. I
19 suggest that that was not an accident, but that that was
20 indicative of all the facts here which, to me, paint a clear
21 picture that this was a developer that was looking for an
22 option and not looking to obligate itself.
23 Mr. Adams was indignant at the idea that
24 off-system QF interconnection and transmission arrangements
25 should be treated differently.
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1 Well, clearly they are different. When a QF is
2 in PacifiCorp' s system and it's interconnecting pursuant to
3 PacifiCorp' s oath, there's little uncertainty about how that
4 process will move forward. However, when a QF is located in
5 the service terri tory of a cooperative served by BPA,
6 interconnected to PacifiCorp' s system via transmission lines
7 owned by Idaho Power, it's not just that a blanket rule is the
8 only reason it's a good idea for PacifiCorp to kick the tires.
9 There -- that very arrangement raises questions about the
10 viability of this wheel. If somebody from Honolulu called up
11 PacifiCorp and wanted to sell to them in Idaho via a QF
12 contract, I don't think anybody would suggest that we have to
13 take that on faith; I think we need to trust and verify. And I
14 think that here there was ample notice upon discovery that
15 their interconnection status was highly uncertain as of March.
16 Now, finally, I'll go to the most important point
17 of my argument. I think I understand XRG' s theory. I think
18 Mr. Adams stated it very succinctly that PacifiCorp wrongfully
19 refused to accept power at three for three small QFs at its
20 system in Goshen and that that's the reason that it didn't
21 perfect its entitlement prior to the date of the rate change.
22 Well, PacifiCorp has explained in its briefs and
23 I've explained before you today what its concern was, that four
24 XRG projects combined with another two XRG projects that
25 Mr. Carkulis had also discussed with PacifiCorp together
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ARGUMENT
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1 comprise 235 megawatts of power they propose and this is
2 wind power, nonfirm mind you -- they propose to deliver to
3 PacifiCorp' s system at Goshen where the Company has relatively
4 minor load.
5 Unlike a directly-connected QF where the law is
6 clear that the QF must bear the costs of system upgrades to the
7 extent they are in excess of what the Utility resource, what
8 the avoided cost resource would provide, there is no such clear
9 law on what the QF's obligations are when it's an off-system QF
10 deli vering to PacifiCorp and there is no interconnection
11 agreement. We looked for the law in that and it was not clear.
12 And what is clear is that PURPA says that a
13 Utili ty is not required to pay above avoided cost for QF power.
14 Now, this is an inherent tension in published avoided cost
15 rates and sometimes it's de minimis, but here it had the
16 potential to be very large. That was our position. But today
17 is not the day for the hearing on this issue, although XRG has
18 certainly given us a hearing on that issue.
19 But none of what it said has any bearing on, one,
20 whether XRG timely filed the Complaint; none of it has any
21 bearing on whether XRG manifested a clear intent to obligate
22 itself to deliver power prior to the date the rates changed;
23 nor does it have a relevance to whether the material facts of
24 this alleged agreement are ascertainable; or whether PacifiCorp
25 had an opportunity to do reasonable due diligence prior to the
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ARGUMENT
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1 formation of this alleged agreement; nor whether XRG could
2 establish a viable plan to give power to PacifiCorp's system.
3 With that, I think I'll segue into my response
4 argument in support of our Motion to Stay Discovery, if that's
5 in accordance with your instructions.
6 COMMISSIONER KJELLANDER: That would be fine.
7 Before you move on though, are there any questions from the
8 Commission?
9 COMMISSIONER SMITH: Yeah, let me try.
10 COMMISSIONER KJELLANDER: Commissioner Smith.
11 COMMISSIONER SMITH: So, Mr. Kaufmann, I guess
12 I'm trying to sort through this. Regardless of what XRG did or
13 didn't do, which will stand on the record and the Commission
14 will decide was it adequate or not, what was the game
15 PacifiCorp was playing with regard to the Populus line and the
16 fact that you claimed you only had room for one when at least
17 some people knew or should have known that the Company was
18 planning this large upgrade that had every intention of being
19 on-line in 2010?
20 MR. KAUFMANN: I'll attempt to answer that,
21 Commissioner Smith.
22 COMMISSIONER SMITH: Thank you.
23 MR. KAUFMANN: The process on the C & T side,
24 which is the function of the Company that enters into these
25 power purchase agreements with QFs
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1 COMMISSIONER SMITH: And I understand perfectly
2 well the standards of conduct and the fact that the generation
3 side of the Company doesn't have inappropriate contact with the
4 transmission side of the Company.
5 MR. KAUFMANN: That's right.
6 COMMISSIONER SMITH: But I'm not in the Company
7 and I still had general knowledge that something was happening.
8 MR. KAUFMANN: The OASIS board is the
9 publicly-available location for information about transmission.
10 COMMISSIONER SMITH: Right.
11 MR. KAUFMANN: PacifiCorp' s back office in -- I'm
12 sorry, front office -- when a request is made for a QF sale, it
13 looks at the publicly-available information on OASIS and it
14 looks at the information, its existing contractual obligations
15 on that path. That was done promptly upon this request, and
16 the report was that there was between 20 and 25 megawatts of
17 unsubscribed capacity available at that location. This was
18 conveyed back to XRG.
19 There are, I understand -- there are upgrades in
20 that area that are underway as we speak that had dates that at
21 the time this was proposed were in the future. They were not
22 specified, ever, by XRG. They are not in the places where
23 PacifiCorp' s front office looks on OASIS to find information
24 about available transmission capacity.
25 COMMISSIONER SMITH: So the Company doesn't use
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ARGUMENT
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1 any information except what it sees on OASIS.
2 MR. KAUFMANN: If I may confer?
3 I am told that that is correct.
4 COMMISSIONER SMITH: Okay. So on the day before
5 the Populus line was energized, there still wouldn't have been
6 more than 25 megawatts or whatever it was?
7 MR. KAUFMANN: There were a couple of things. To
8 answer your question, would PacifiCorp ignore something it knew
9 was going to happen the next day, I don't think that would
10 necessarily be reasonable. I don't think that's the case here.
11 COMMISSIONER SMITH: Okay. So how about ten days
12 before?
13 MR. KAUFMANN: I think if you knew that that was
14 going to happen --
15 COMMISSIONER SMITH: Thirty days before? Ninety
16 days?
17 MR. KAUFMANN: There are a couple of things that
18 happened here. First of all, there was a request made in
19 January.
20 COMMISSIONER SMITH: Which year? You know,
21 you've got to say the year. 2009?
22 MR. KAUFMANN: January 2009, the initial request
23 is made. That prompts a snapshot of the system. That snapshot
24 does not automatically refresh.
25 COMMISSIONER SMITH: Okay.
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ARGUMENT
.1 MR. KAUFMANN: So that snapshot appears to be
2 valid at the time. We lived with that snapshot until XRG filed
3 the Complaint.
4 When XRG filed the Complaint, it submitted
5 Discovery Requests to PacifiCorp. PacifiCorp, in answering
6 those Requests, went back and pulled OASIS again and the
7 available transmission transfer capacity had changed. That
8 particular change was not due to a physical change in the
9 system; it was due to a remapping done by PacifiCorp
10 Transmission. It was not something that was pushed out to
11 customers. It's something that was done and if you looked for
12 it, it was there. As soon as PacifiCorp saw that it was.13 available, that very week it sent a letter to XRG and said:
14 Our studies show that we can accommodate your transmission.
15 But that --
16 COMMISSIONER SMITH: So did it refresh on
17 March 11th or yeah, I guess in March of 2010? Did you
18 refresh in March of 2010?
19 MR. KAUFMANN: I don't know, Commissioner. I
20 understand the change in the system happened approximately July
21 of 2010, which would have been after the March window you asked
22 about.
23 COMMISSIONER SMITH: So the actual OASIS changed
24 maybe in July?.25 MR. KAUFMANN: Yes.
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1 COMMISSIONER SMITH: So what we'd be talking
2 about was what -- how much prior to that time would it have
3 been reasonable for people to say, gosh, there's a big change
4 coming?
5 MR. KAUFMANN: Well, I think the Company's
6 position is that it Pac Trans determines what capacity is
7 available, and that is done in the form of a network
8 transmission service request. And when the Company has four
9 off-system applications , it, under the PacifiCorp oath, can't
10 just go ask PacifiCorp Transmission to study this. It needs to
11 tell PacifiCorp Transmission that we have entered into an
12 agreement to buy this power, or we have entered into an
13 agreement contingent upon your finding the availability of
14 network transmission.
15 COMMISSIONER SMITH: And so just let me pause you
16 for a moment. So at that time in March of 2010, did you think
17 you had four agreements or were you still saying we're only
18 talking about one?
19 MR. KAUFMANN: Oh, we didn't think we had any
20 agreement.
21 COMMISSIONER SMITH: You weren't negotiating?
22 MR. KAUFMANN: They -- the last time the parties
23 talked was in November of 2009. Then the rate change hit the
24 streets, the Notice of a pending rate change, and the next day
25 XRG contacts PacifiCorp and says, We want you to guarantee us
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ARGUMENT
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1 the old rates.
2 COMMISSIONER SMITH: So you didn't think you were
3 negotiating or you weren't negotiating. That's what you just
4 said?
5 MR. KAUFMANN: Seems like a leading question.
6 I'm not sure if I
7 COMMISSIONER SMITH: Commissioners get to ask
8 those.
9 MR. KAUFMANN: Yes, I know, but the facts were we
10 talked in October, we talked in November, there was no
11 communication between November and March, so if that's
12 negotiation
13 COMMISSIONER SMITH: So when Mr. Carkulis
14 contacted you in March, did you think you were still
15 negotiating or were you not negotiating?
16 MR. KAUFMANN: Well, PacifiCorp responded with
17 a letter in April to his March inquiry and said, you know, a
18 lot of things. It's in the record. It's the last page of
19 Exhibit A.
20 We said, you know, that rates have changed. We
21 don't know if you still want to do the proj ect. If you do, let
22 us know.
23 COMMISSIONER SMITH: Thank you, Mr. Chairman.
24 COMMISSIONER KJELLANDER: Thank you.
25 Mr. Kaufmann, I believe that you had concluded
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ARGUMENT
.1 your response to your initial Motion and were ready now I think
2 to provide your comments in reference to XRG' s Motion for
3 Addi tional Discovery.
4 MR. KAUFMANN: Yes, thank you. If I may have
5 just about 30 seconds, I need to get the right document in
6 front of me.
7 COMMISSIONER KJELLANDER: How about if we take
8 about a five-minute break, give everybody an opportunity to
9 stretch, and then we'll resume.10 (Recess. )
11 COMMISSIONER KJELLANDER: And we'll go back on
12 the record. Before we broke, we were about to hear from.13 Mr. Kaufmann in reference to his response to the Motion moved
14 by XRG in relationship to additional discovery.
15 MR. KAUFMANN: Thank you, Mr. Chair. I'll begin
16 by restating the theories by which PacifiCorp has alleged in
17 its Motion for Summary Judgment that this -- that there are
18 no -- why summary judgment is appropriate.
19 First is that it did not -- that XRG did not
20 negotiate; that is, that it did not express intent to obligate
21 itself to deliver power to PacifiCorp.
22 Well, we have the entire written record on that
23 issue, so I question what good would be served on that issue by
24 conducting further discovery? I don't believe there's any.25 discovery left. An expression of an intent to be bound to
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ARGUMENT
.1 obligate oneself is a verbal act, and we've already agreed that
2 we have the record complete before you in Exhibit A to
3 PacifiCorp' s Motion for Summary Judgment.
4 PacifiCorp' s second theory was that XRG' s plans
5 to deliver output to the Company's system were inadequate to
6 establish entitlement to grandfathered rates.
7 Well, perhaps there's more to discover on that
8 issue, but as XRG is in sale possession of the information
9 about how prepared it was, only PacifiCorp would benefit from
10 more discovery on that item. And while we certainly intend to
11 do more discovery on that item if and when this discovery
12 continues, we felt we had enough information as it was to file.13 this Motion for Summary Judgment.
14 PacifiCorp' s third theory was that XRG waited too
15 long to file its Complaint, and therefore it is not entitled to
16 grandfathered rates.
17 I am not aware of any dispute to the facts that
18 XRG neither had an executed agreement nor a filed Complaint
19 prior to the date the rates changed; and that they didn't file
20 the Complaint until approximately 140 days after the rates
21 changed, which is also about 18 months after PacifiCorp
22 articulated its position that it could not accommodate four
23 projects at the published avoided cost rate near Goshen. So,
24 again, it's -- I am having a hard time seeing where additional.25 discovery would be fruitful on this matter.
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ARGUMENT
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.
1 If anyone of these theories is successful, then
2 all of the discovery that XRG seeks in aid of its theory is
3 completely irrelevant and an unnecessary expenditure of the
4 time of all of the parties involved. I appreciate that
5 Mr. Adams has voluntarily pared down his Discovery Request
6 from -- see if 1 wrote it -- 30 down to 14 questions, but those
7 14 questions are still very significant. And if the Commission
8 is inclined to grant the Motion for Summary Judgment, then one
9 question is significant, because none of them are necessary in
10 order for the Commission to make its Decision.
11 I'd just like to close by reiterating that this
12 is a case seeking grandfathered treatment, that XRG is seeking
13 rates available prior to the publication of Order 31025.
14 PacifiCorp has, in its Motion, articulated multiple theories
15 why XRG is not entitled to the relief it seeks -- that is, the
16 pre-31025 rates for four BPA projects delivering to Borah or
17 Brady, and -- I'm sorry, I've lost my train of thought. If any
18 one of PacifiCorp' s theories are correct, then it's incumbent
19 upon XRG to demonstrate an issue of material fact, not to
20 demonstrate the need for a hearing on another important but
21 collateral issue.
22 And, finally, I fail to see the harm that XRG
23 would suffer if this Motion to Stay or Motion for Protective
24 Order remains in place pending the Commission's resolution.
25 XRG has had the ability to file Motions anytime prior to this
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ARGUMENT
.1 hearing asking for relief and it seeks to do so now, and we're
2 already so far into this that I would suggest that the
3 expedient and reasonable thing to do would be to decide the two
4 Motions before us and then move on to further discovery if and
5 when necessary.
6 I have no further comments at this time. Thank
7 you.
8 COMMISSIONER KJELLANDER: Thank you,
9 Mr. Kaufmann.
10 Any questions from members of the Commission?
11 COMMISSIONER REDFORD: No.
12 COMMISSIONER KJELLANDER: If not, then let's move.13 to Mr. Adams for the final word on XRG' s Motion for Additional
14 Discovery.
15 MR. ADAMS: Thank you, Chairman.
16 Again, the standard here is Rule 56 (f), which
17 requires that if it appears that the party opposing the Motion
18 for Summary Judgment cannot, for the reasons stated, present by
19 facts essential to justify the parties' opposition, the
20 Commission should refuse the Application for Summary Judgment
21 or may order a continuance or permit additional discovery to be
22 had.
23 And the standard under Rule 26 (c) for protective
24 order that Rocky Mountain Power has filed is that the tribunal.25 may issue a protective order for a variety of reasons -- the
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ARGUMENT
.1 one being applicable here is undue burden -- but only for good
2 cause shown.
3 Those need to be read together to state that they
4 need to prove that no matter what we might find in that
5 discovery that we've requested, there's no way that we can
6 overcome their Motion for Summary Judgment or perhaps even make
7 our case with our own Motion for Summary Judgment.
8 As to Mr. Kaufmann's last comment that we haven't
9 filed our Motion for Summary Judgment pending the time between
10 when this briefing on theirs has come through and today, we
11 don't have the discovery. That's what Rule 56 (f) exists for.
12 It's not fair to allow them to use all the discovery that we.13 provided after settlement negotiations broke down in early
14 January to file their Motion for Summary Judgment and then turn
15 around and refuse to answer our relevant questions at the same
16 time frame.
17 And, really, the heart of the matter I think is
18 what Commissioner Smith was inquiring into regarding the
19 Populus line and Mr. Jim Partouw, who it appears is a
20 commercial in trading marketing energy trader at PacifiCorp,
21 that's who PacifiCorp went to to inquire into this transmission
22 question from what we can tell, and that's what all of our
23 Discovery Requests inquired into. Mr. Kaufmann today just
24 provided his take on what happened and what the issue is, but.25 we haven't gotten our completed actual discovery. We haven't
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ARGUMENT
.1 had evidence on that matter. It's not appropriate for him to
2 be able to opine on that matter if it's relevant to the Motion.
3 Specifically, on page 12 and 13 of our Answer, we
4 detailed what we're asking for, what's pending right now. We
5 asked in No. 31 (b): Please explain why Rocky Mountain Power
6 did not offer the option to XRG to make their request
7 contingent upon receiving network resource status so that they
8 could have negotiated the four contracts and then gone to the
9 transmission people.
10 We also asked them to explain the legitimate use
11 under their oath for which they held a 250 megawatt
12 point-to-point capacity on that path, which was explained in.13 the internal communications between Mr. Partouw and
14 Mr. Griswold, and the reason why they did not offer that
15 capaci ty for the XRG proj ects, which was an option that
16 Mr. Partouw expressed in the internal communication to
17 Mr. Griswold. But that's the limit of all we have is that
18 internal -- that one e-mail saying that that's a possibility
19 for the XRG proj ects. We have no explanation or reason why
20 that was not offered to XRG.
21 We also requested explanation for Rocky Mountain
22 Power's failure to recognize the publicly-available information
23 regarding plans to upgrade Path C such that it would have,
24 according to some of those documents, 1,600 megawatts of.25 transfer capability by the end of 2010 and require no system
59
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ARGUMENT
.
.
.
1 upgrades. That's in numbers 42, 44.
2 We further inquired into Rocky Mountain Power's
3 commi tment to the Idaho Commission during the MidAmerican
4 Holdings acquisition in 2005 to upgrade this path, and to its
5 unsuccessful request for preferential transmission rate-making
6 treatment for the upgrades at FERC in 2008 where it stated that
7 Southwestern Idaho would be a, quote, hub from which its,
8 quote, power would be collected and delivered in different
9 directions. That's numbers 48 and 52.
10 We requested explanation into Rocky Mountain
11 Power's request to rate base the upgrades in its 2010 rate case
12 before the Idaho Commission in 47, 49, and 50.
13 And we asked whether anyone at Rocky Mountain
14 Power Commercial and Trading processing these PURPA
15 negotiations requests knew of the proposed upgrades.
16 Those are the issue, that's the heart of the
17 matter to us. In order to grant their Motion, you need to
18 assume that they committed a violation of their standards of
19 conduct and their oath and discriminated against this PURPA
20 developer by sticking their heads in the sand and ignoring that
21 they were upgrading this line and that the path was going to be
22 available. We don't think that that's a fair application of
23 the Commission's prior precedent or FERC' s PURPA rules, and we
24 would respectfully request the opportunity to have the
25 responses to the remaining pared-back Discovery Requests which
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.1 shouldn't take too much effort for Rocky Mountain Power to
2 provide to us, and then a reasonable amount of time -- maybe 21
3 days -- for us to file our own Motion.
4 And I'm willing to accept any questions.
5 Otherwise, thank you.
6 COMMISSIONER KJELLANDER: Thank you.
7 Are there any questions from the Commission?
8 Commissioner Smith.
9 COMMISSIONER SMITH: Just one question,
10 Mr. Adams:
11 I understand your argument that the Company --
12 excuse me -- should have made available an agreement contingent.13 on network availability, but did XRG ask for that? Did XRG
14 suggest a contract be prepared that was contingent upon that
15 availability?
16 MR. ADAMS: Yes. We did not use that precise
17 word, "contingent." That is a term of art from there and I
18 don't know that Mr. Carkulis took the time to look at the oath
19 and do that. But he suggested that the two separate processes
20 that had to occur here -- the PPA negotiation and the
21 transmission investigation on PacifiCorp' s system occur on
22 separate tracks. And that goes back to the language that I
23 quoted on page 5 from Rocky Mountain Power's Motion for Summary
24 Judgment. Rocky Mountain Power did not yield to that request..25 They did not agree to process transmission separately.
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1 COMMISSIONER SMITH: That's when they said, We're
2 only going to talk about one?
3 MR. ADAMS: Exactly.
4 COMMISSIONER SMITH: Thank you.
5 COMMISSIONER KJELLANDER: Are there any other
6 questions from members of the Commission?
7 COMMISSIONER REDFORD: No.
8 COMMISSIONER KJELLANDER: Thank you very much.
9 Are there any other matters that need to come
10 before us today?
11 If not, then I want to thank all of you for your
12 participation today and for addressing your issues very
13 succinctly, and, again, appreciate that. The Commission will
14 take your arguments under advisement and we will look forward
15 to rendering a timely Decision on the Motions that are before
16 us today.
17 So, with that, we are adjourned.
18 (The hearing adjourned at 11:21 a.m.)
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1 AUTHENTICATION
2
3
4 This is to certify that the foregoing is a
5 true and correct transcript to the best of my ability of the
6 proceedings held in the matter of XRG-DP-7, XRG-DP-8, XRG-DP-9,
7 XRG-DP-10, LLCs, Complainants, versus PacifiCorp dba Rocky
8 Mountain Power, Respondent, Case No. PAC-E-10-08, commencing on
9 Thursday, June 9, 2011, at the Commission Hearing Room, 472
10 West Washington, Boise, Idaho, and the original thereof for the
11 file of the Commission.
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16
WENDY J. Y Publi
in and for the t e of Idaho,
residing at Meridian, Idaho.
My Commission expires 2-8-2014.
Idaho CSR No. 475
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