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Home My WebLink About20070727Comments.pdf, ~ SCOTT WOODBURY DEPUTY ATTORNEY GENERAL IDAHO PUBLIC UTILITIES COMMISSION PO BOX 83720 BOISE, IDAHO 83720-0074 (208) 334-0320 ISB NO. 1895 ~ " LDUJ JUL. 27 iUj 9: 2Lj iLJl'.iU PUdUC . ... UTiUrlt~8 COr~;!f.;HSS!u, Street Address for Express Mail: 472 W. WASHINGTON BOISE, IDAHO 83702-5983 Attorney for the Commission Staff BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE PETITION OF VISTA CORPORATION FOR AN ORDER REVISING A VISTA CORPORATION' OBLIGATIONS TO ENTER INTO CONTRACTS) TO PURCHASE ENERGY GENERATED BY WIND-POWERED SMALL POWER GENERATION FACILITIES. CASE NO. A VU-O7- COMMENTS OF THE COMMISSION STAFF COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of Modified Procedure and Notice of Comment /Protest Deadline issued on June 28, 2007, in Case No. A VU-07-, submits the following comments. BACKGROUND On April 2, 2007, Avista Corporation (Avista; Company) filed an Application with the Idaho Public Utilities Commission (Commission) requesting a change in the Company s PURPA obligations for wind QFs. Avista proposes raising of the cap on entitlement to published avoided cost rates for wind-powered small power generation facilities that are qualifying facilities (QFs) under Sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978 (PURP A) from STAFF COMMENTS JULY 27, 2007 the current level of 100 kW to 10 average megawatts per month (10 aMW), subject to the following condition, among others: Clarifying the rules governing the entitlement to published rates to prevent all QFs, whether wind or non-wind, capable of delivering more than 10 aMW per month from structuring or restructuring into smaller proj ects solely for the purpose to qualify for the published avoided cost rates. Published Rate Eligibility - Disaggregation Idaho Power and PacifiCorp have recommended adoption of a rule nearly the same as that adopted by the Oregon Public Utility Commission preventing multiple projects owned by the same person from receiving the published avoided cost rates, if located at the same site. A vista recommends that the approach recommended by Idaho Power in Case No. IPC-07-4 be applied to Avista s purchases as well. Avista contends that wind projects are uniquely able to reconfigure themselves into various legal ownerships solely for economic reasons, without disturbing or affecting in any way site or structural design. In some circumstances, other generating technologies, it notes, may have a similar capability. Projects that are under common ownership, Avista contends, should not be able to reconfigure themselves legally, for the sole purpose of qualifying for published avoided costs in Idaho. Additionally, Avista contends that a uniform approach as between Idaho jurisdictional utilities is particularly useful, in order to avoid unneeded incentives for favoring one utility over another, not because of the fundamental economic differences reflected in the avoided costs and wind integration costs, but because of different QF rules that might apply to different utilities. STAFF ANALYSIS The disaggregation issue was first raised by Idaho Power in Case No. IPC-07- Because the issue and proposed resolution in this case are identical, Staff s comments in the Idaho Power case are repeated below: Wind projects are unique from other generation technologies because they normally consist of multiple turbines, each with its own generator, often scattered over large areas. Because of this characteristic, wind projects capable of generating more than 10 aMW per month can choose to create multiple legal entities to reconfigure themselves into multiple smaller projects in order to qualify for the historically higher published avoided cost rates. To address this concern Idaho Power proposes to clarify its rules for published rate eligibility to preclude STAFF COMMENTS JULY 27 2007 disaggregation. Idaho Power states that the disaggregation issue was recently addressed in the PURP A avoided cost rate proceedings before the Public Utility Commission of Oregon (Docket No. UM-1129). The parties to that proceeding, the Company states, settled the disaggregation issue by negotiating a stipulation which was approved by the parties and by the Oregon PUC. Idaho Power submits a proposed rule set forth in Petition Attachment 2 proposing language similar to that approved in Oregon. The proposed rule effectively would limit QFs with common ownership from being located closer than five miles of each other Staff agrees in principle with the disaggregation rule proposed by Idaho Power for published rate eligibility. Large projects should, Staff believes, have project specific rates that recognize the generation characteristics of each project individually. However, Staff is concerned that projects will simply find even more creative ownership arrangements in the future that will render the proposed rule ineffective. In a production request, Staff inquired about the likely effect on existing projects if the definition had been in place, since many wind projects are clustered in the same area. The Company responded that it " .. . cannot not say for certain that some existing wind developments might have been precluded from obtaining contracts under the proposed definition." Idaho Power also went on to say Of course, if the definition had been in place before the 18 wind FESAs (Firm Energy Sales Agreements) were signed, Idaho Power expects that the wind QFs could have been restructured to avoid any problem with the definition. Because the effectiveness of the proposed rule is so much in question, Staff recommends that it not be approved. Staff believes it would be bad policy to adopt a new rule if there are serious doubts from the beginning about whether it will actually achieve its intended objective. u.S. Geothermal, the developer of several geothermal projects in Idaho, also submitted extensive comments in the Idaho Power case. U. S. Geothermal contended that Idaho Power proposal is impermissible under federal law because it conflicts with PURP A rules that restrict QFs within a one-mile radius. In its reply to comments, Idaho Power contends that U. S. Geothermal's assumption that the Company s proposal is impermissible under federal law is incorrect. Idaho Power stated that it is not proposing to change the test for QF status. PURPA' one-mile radius standard would still apply for the determination of QF status. However, under PURP A, it is the Idaho Commission, not FERC, Idaho Power contends, that determines which projects are entitled to the published rates. The five-mile radius test Idaho Power proposes, the Company contends, deals solely with entitlement to published rates and is in no way, it states contrary to federal law. I Compare FERC "same site" approach l8CFR ~ 292.204 (a)(2)...within one mile STAFF COMMENTS JULY 27 2007 In addressing Staffs argument that the five-mile radius approach proposed by the Company is desirable in principle but should be rejected because QF project developers will always find ways to circumvent Commission-imposed rules, Idaho Power stated in its reply that Staff s reasoning in part misinterprets Idaho Power s response to a Staff production request. In the production request, Staff inquired about the likely effect on existing projects if Idaho Power proposed five-mile radius definition had been in place earlier. The Company responded that because it is not privy to ownership information concerning QF projects, it "cannot say for certain that some existing wind developments might have been precluded from obtaining contracts under the proposed definition." The Company went on to say however of course, if the definition had been in place before the 18 wind Firm Energy Sales Agreements were signed, Idaho Power expects that the wind QFs could have been restructured to avoid any problem with the definition. Obviously, Idaho Power states it should have been clearer in its response. Idaho Power response, it states, was only intended to indicate that if QF developers know what the rules are ahead of time, they could comply with them. Idaho Power further states in its reply that it is not its intent that the proposed five-mile radius rule place undue burdens on the development of new QF generation projects. At the same time, the Company believes that it is important for the Commission to honor its longstanding policy that it is in the public interest for small QFs to receive the published rates and large QFs to have their avoided costs determined using the IRP methodology. Idaho Power believes that its proposed five-mile radius rule is consistent with the Commission s policy by requiring each small QF to demonstrate a separation of ownership and control. Idaho Power does not believe that the current policy of setting avoided cost rates based on the size of the QF proj ect is inequitable or inappropriate. S. Geothermal also cites in its comments three instances where pairs of relatively large QF hydroelectric projects are located in close proximity to each other. U.S. Geothermal contends that application of Idaho Power s proposed five-mile radius rule may require the application of the IRP methodology to set their avoided cost for a contract renewal. Idaho Power replied that the public good is served by having the avoided cost rates for these large QF projects determined using the more sophisticated and precise IRP methodology. Idaho Power anticipates that when these contracts expire, regardless of what methodology is used to compute avoided costs, the owners ofthe projects will shop the generation from the projects to the highest bidder. STAFF COMMENTS JULY 27, 2007 Speculation as to what will happen with these contracts far in the future, Idaho Power contends is not particularly productive. Idaho Power maintains that its proposal is prospective and potential QF developers will have ample notice and opportunity to develop their projects in a way that complies with the rule. Staff has reviewed all of the disaggregation comments submitted in the Idaho Power case including Idaho Power s response to the filed comments. Staff is still not convinced that adoption of the proposed disaggregation rule will have its intended effect. Staff still believes that proj ect developers will find ways to circumvent the proposed rule through creative ownership arrangements. A vista, in this case, is proposing the same disaggregation rule that Idaho Power proposed in its case. The Company has not provided any additional support for the proposed rule than was proposed in the Idaho Power case; therefore, Staff continues to oppose adoption of the proposed disaggregation rule. RECOMMENDATIONS Staff recommends disapproval of Avista s Petition to revise its rules for published rate eligibility to preclude disaggregation. Staff believes that the proposed rules will be ineffective in accomplishing their intended objective. Respectfully submitted this 1Aday of July 2007. oJ~Scott Woodbury Deputy Attorney General Technical Staff: Rick Sterling i :umisc :commen ts/avueO7 .2swrps ST AFF COMMENTS JULY 27 2007 CERTIFICATE OF SERVICE HEREBY CERTIFY THAT I HAVE THIS 27TH DAY OF JULY 2007 SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN CASE NO. AVU-07-, BY MAILING A COpy THEREOF, POSTAGE PREPAID , TO THE FOLLOWING: R BLAIR STRONG JERRYKBOYD PAINE HAMBLEN LLP 717 W SPRAGUE AVE SUITE 1200 SPOKANE WA 99201-3505 MAIL: rbrtrong~painehamblen.com PETER J RICHARDSON RICHARDSON & O'LEARY PLLC PO BOX 7218 BOISE ID 83702 MAIL: peter~richardsonandoleary.com WILLIAM MEDDlE ADVOCATES FOR THE WEST 610 SW ALDER ST SUITE 910 PORTLAND OR 97205 MAIL: beddie~advocateswest.org GLENN IKEMOTO IDAHO WINDF ARMS LLC 672 BLAIR AVENUE PIEDMONT CA 94611 MAIL: glenni~pacbell.net CLINT KALICH MANAGER OF RESOURCE PLANNING A VISTA CORPORATION PO BOX 3727 SPOKANE W A 99220-3727 DR DON READING 6070 HILL ROAD BOISE ID 83702 MAIL: dreading~mindspring.com KEN DRAGOON RENEWABLE NORTHWEST PROJECT 917 SW OAK ST SUITE 303 PORTLAND OR 97205 MAIL: ken~rnp.org CERTIFICATE OF SERVICE