20090506Application.pdf

A vista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
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Corp.
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May 5, 2009
Jean Jewell, Secretary
Idaho Public Utilities Commission
Statehouse Mail
472 W. Washington Street
Boise, il 83720-0074
RE: Case No. A VU-E-09-04
Petition of Avista Corporation for an Order Determining Ownership ofRECS and Stay
of any Requirement to Award RECS to a PUR A Developer
Dear Ms. Jewell:
Please find enclosed for filing with the Commission an original and seven (7) copies of A vista
Corporation's Petition for an order determining ownership ofRECS, as well as stay of any requirement
to award RECS to a PURA developer. In addition, ten (10) copies of the direct testimony of Clint G.
Kalich are being filed in support of this petition, with his workpapers included on the CD that
accompanied this filing. Due to their electronic nature, these workpapers are being filed in electronic
format only.
Please direct any questions pertaining to the transmittal ofthis filing to Patrck Ehrbar at 509.495.8620.
Sincerely
?' ~~ i.
Kelly Norwood
Vice President, State & Federal Regulation
Enclosures
cc: Service List
CERTIFICATE OF SERVICE
I hereby certify that on this 5th day of May 2009, tre and correct copies of the foregoing
(A VU-E-09-04) were delivered to the following persons via overnight delivery (for the
Commission) and U.S. Mail for all other participants:
Jean Jewell, Secretar
Idaho Public Commission
472 W. Washington St.
Boise, il 83702
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington St.
Boise, il 83702
Glenn Ikemoto
Idaho Windfars, LLC
672 Blair Avenue
Piedmont, CA 94611
Dean J. Miler, Esq.
McDevitt & Miler, LLP
POBox 2564
Boise, il 83701
Peter Richardson
Richardson & O'Leary
515 N. 27th St.
Boise, il 83702
John R. Hammond Jr., Esq.
Fisher Pusch & Alderman
US Bank Plaza, 5th Floor
101 South Capital Boulevard
P.O. Box 1308
Boise, il 83701
Dean Brockban
Daniel Solander
Mark Moench
Rocky Mountain Power
One Utah Center
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
Barton L. Kline
Lisa Nordstrom
Idaho Power Company
1221 W. Idaho Street
Boise, il 83707-0070
Patrck Ehrbar
Senior Regulatory Analyst
A vista Corporation
1411 East Mission Ave.
Spokane, W A 99202
CERTIFICATE OF SERVICE
DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY AN GOVERNENTAL AFFAIS
AVISTA CORPORATION
1411 EAST MISSION A VB.
SPOKAE, WA 99202
PHONE: [phone]
FAX: [phone]
RECEI
ZnU9HAY -6 AM 9= 47
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF A PETITION FILED BY
AVISTA CORPORATION FOR AN ORDER
DETERMINING THE OWNRSHIP OF THE
ENVIRONMENTAL ATTRIBUTES ("RECS")
ASSOCIATED WITH A QUALIFYING
FACILITY UPON PURCHASE BY A UTILITY
OF THE ENERGY PRODUCED BY A
QUALIFYIG FACILITY
)
) CASE NO. A VU-E-09-04
)
)
) PETITION FOR AN ORDER
) DETERMING OWNRSHIP OF
) RECSANSTAYOFAN
) REQUIRMENT TO AWAR RECS
) TO A PUR A DEVELOPER
Pursuant to IPUC Rule of Procedure 101, Avista Corporation ("Avista") hereby petitions
the Idaho Public Utilities Commission ("IPUC") to issue an order determining the ownership of
the marketable environmental attributes ("Renewable Energy Credits" or "RECs") associated
with wholesale sales of energy by a Qualifying Facility ("QF") under the Public Utility
Regulatory Policies Act of 1978 ("PUR A") to a utility within the State of Idaho ("Petition to
Determine Ownership of RECs"). Pursuant to IPUC Rule of Procedure 53, Avista further
petitions for a stay of any requirement to award RECs to any PUR A developer that has tendered
or may tender a PURA project to Avista, until such time as Avista's Petition to Determine
Ownership ofRECs is resolved.
Avista's Petition to Determine Ownership ofRECs and request for stay are supported by
the direct testimony of Clint Kalich, which A vista is filing with this petition.
PETITION FOR AN ORDER DETERMING OWNRSHIP OF RECS - 1
BACKGROUND
In response to a petition for declaratory order seeking an interpretation of section 210 of
PUR A, the Federal Energy Regulatory Commission ("FERC") has determined that the
ownership of environmental attributes (sometimes referred to as "RECs") is not controlled by
PURA. American Ref-Fuel Co., et al., 105 FERC ir 61,004, P 23 (2003), order on reh 'g, 107
FERC 61,016, P 12 (2004). FERC fuher held that "States, in creating RECs, have the power to
determine who owns the REC in the initial instance, and how they may be sold or traded(.)" ¡d.
Accordingly, the IPUC has the authority to determine the ownership of environmental attrbutes
associated with a wholesale sale of energy by a QF to a utility under PUR A.
In 2004, Idaho Power Company filed a petition for declaratory order from the IPUC
"determining ownership of the marketable environmental attributes associated with a PUR A
Qualifyng Facility when the (utilityJ enters into a long-term, fixed rate contract for the purchase
of the energy produced by that QF." Idaho Power Company's Petition for A Declaratory Order
filed Februar 5, 2004 in Case No. IPC-E-04-02. The IPUC denied Idaho Power Company's
petition for a declaratory order because, at that time, the IPUC found that the predicates
necessary for a declaratory ruling were not present and, therefore "the issue presented by Idaho
Power in its Petition d(idJ not present an actual or justiciable controversy in Idaho and (wasJ not
ripe for a declaratory judgment by this Commission." IPUC Order No. 29480 at 16 (issued April
27,2004).
As explained in the accompanying testimony of Mr. Kalich, circumstances have
substantially changed since Idaho Power Company's request that the IPUC address the
ownership ofRECs. Specifically:
1) PUR A rates have increased substantially;
2) Interest in PUR A contracts has increased;
PETITION FOR AN ORDER DETERMING OWNERSHIP OF RECS - 2
3) States have adopted renewable portfolio standards ("RPS");
4) A robust market for RECs has emerged; and
5) The value ofRECs has increased dramatically.
As a result of the increase in PUR A rates and other changes, the rates that Avista's customers
are required to pay for energy from wind QF resources are substantially higher than the avoided
costs associated with a similar project that is developed, owned, and operated by A vista or the
contract price that Avista would expect to pay for renewable energy acquired though a
competitive process. Transferrng the environmental attributes associated with a QF to the utility
purchasing the energy produced by that QF would reduce this disparty. Accordingly, IPUC
action is now necessary to ensure that "(t)he rates for (purchases of electric energy) from QFs
(are) just and reasonable to the ratepayers of the utility, in the public interest, and (do) not
discriminate against cogenerators or small power producers (and do) not exceed the incremental
cost to the electric utility of alternative electric energy. . .." New PURPA Section 210(m)
Regulations Applicable to Small Power Production and Cogeneration Facilities, 117 FERC ir
61,078, P 23 (2006) ("Order No. 688"), order on reh 'g, 119 FERC ir 61,305 (2007 ("Order No.
688-A"); Southwest Power Pool, Inc., 125 FERC ir 61,314, P 37 (2008).
AVISTA'S INTEREST AND FACTS IN SUPPORT OF AVISTA'S PETITION FOR AN
ORDER DETERMINING OWNERSHIP OF RECS AND REQUEST FOR STAY
A vista is a utility engaged in, among other things, the business of generating,
transmitting, and distributing electrc power to wholesale and retail customers in the State of
Idaho and in the State of Washington. Some states have adopted requirements that utilities serve
a percentage of their customers' load from renewable energy resources or purchase equivalent
RECs. For example, the State of Washington has adopted renewable portfolio standards ("RPS")
that require utilties, including Avista, to meet certain targets by 2012,2016 and 2020. See RCW
PETITION FOR AN ORDER DETERMING OWNRSHIP OF RECS - 3
19.285.010 et. seq. Utilities can meet such targets either by using eligible renewable resources
or by acquiring equivalent renewable energy credits. RCW 19.285.040.
Over the next 10 years, the majority of resources Avista expects to acquire are renewable
and conservation resources. Avista has already begun implementing this strategy. Specifically,
in 2008, Avista acquired the development rights for a 50 MW wind project in its service terrtory
near Reardan, Washington. A vista is also pursuing the rights to develop other renewable energy
projects.
The Northwest Power and Conservation Council estimates for wind generation project
development, constrction and operation result in an avoided cost of $64 per MW when
levelized over 20 years. These costs are similar to those used by A vista in its long-term planing
documents. In contrast, the current avoided cost rate in the State of Idaho that A vista is required
to pay for energy generated by PUR A wind projects is $84.30. i If the environmental attrbutes
generated by a PUR A project are not transferred to the utility with the energy, the disparty
between the costs is further increased.
For the reasons stated herein, and in the accompanying testimony of Mr. Kalich, Avista
submits that a there is a justiciable issue in the State of Idaho regarding the ownership of
environmental attrbutes associated with PURA projects. Avista respectfully requests that the
IPUC grant Avista's Petition to Determine Ownership ofRECs and issue an order declaring that,
in the State of Idaho, ownership of the RECs associated with PURA projects wil be assigned to
the utilities that purchase the energy from such projects. A vista further requests that such
declaration apply to all PUR A contracts executed on or after the date of this petition.
Avista is currently negotiating new PURA contracts for five proposed projects. If each
of these contracts are executed at the present rates, and the RECs associated with such projects
i The 2010 levelized rate is $90.64 which is reduced by 7% for wind integration.
PETITION FOR AN ORDER DETERMINING OWNRSHIP OF RECS - 4
are not transferred to Avista with the sale of energy, Avista's customers wil overpay by
approximately $310 milion over the expected 20-year lives of these contracts.2 Allowing
PUR A developers to retain and market separately the environmental attributes associated with
their projects may also negatively impact Avista's ability to acquire cost-effective renewable
resources in a competitive acquisition process, as explained by Mr. Kalich. As a result, a stay of
any requirement to award RECs to a developer that has tendered or that may tender a PUR A
project to A vista until such time as a final order is issued that fully resolves the issues raised in
Avista's Petition to Determine Ownership of RECs is necessar to protect Avista's customers
from substantial overpayment for PURA resources. Avista respectfully requests that the IPUC
grant expedited treatment of Avista's request for a stay given the existing interest expressed by
PUR A developers in tendering proj ects to A vista.
SERVICE AND COMMUNICATIONS
The following persons should be included on the offcial service list in this proceeding,
and should be served with all communications concerning this proceeding:
David 1. Meyer
Vice President and Chief Counsel of
Regulatory and Governental Affairs
A vista Corporation
1411 East Mission Ave.-MSC-13
Spokane, W A 99202
Phone: [phone]
Fax: [phone]
Steve Silkworth
Manager, Power Supply
A vista Corporation
1411 East Mission Ave.-MSC-7
Spokane, W A 99202
Phone: [phone]
Fax: [phone]
CONCLUSION
WHEREFORE, based on the foregoing, A vista hereby respectfully requests that the
IPUC grant Avista's Petition to Determine Ownership ofRECs and issue an order declaring that
2 Assuming each project generates 10 average megawatts of power.
PETITION FOR AN ORDER DETERMINING OWNERSHIP OF RECS - 5
the ownership of environmental attributes associated with PUR A projects wil be assigned to
the utilities that purchase the energy from such projects.
Avista further requests that the IPUC grant Avista's request for expedited treatment of
Avista's request for a stay and issue an order staying any requirement to award RECs to PUR A
developers until a final order resolving the issues raised in Avista's Petition to Determine
Ownership ofRECs is issued.
A vista does not believe that an evidentiary hearng is necessary to consider the issues
presented by this petition and requests that the matter be processed under modified procedure.r~:-
Respectfully submitted this ç day of May 2009.
id eyer
Atto ey for A vista Corporation
PETITION FOR AN ORDER DETERMINING OWNRSHIP OF RECS - 6