20101213Complaint.pdf

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ATTORNEYS AT LAW
Tel: [phone] Fax: [phone]
P.O. Box n18 Boise, ID 83707 - 515 N. 27th St. Boise, ID 83702
20in DEC 10 PH q: 49
December 10,2010
Avu -c- i D-Õb
Ms. Jean Jewell
Commission Secreta
Idaho Public Utilties Commission
472 W. Washington
Boise, ID 83702
RE: OremFamily Wind, LLC v. Avista Corporation dba Avista Utilties, Inc.
Dear Ms. Jewell:
We are enclosing for filing an original and thee (7) copies of the above-referenced Formal
Complaint. An additional copy is enclosed for you to stap for our records.
iiicer~e Adams
. ardson & O'Lear PLLC
encL.
Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peter~richardsonandoleary .com
greg~richardsonandolear. com
Dr.Cr-1i \'I,. t: ~.
i81ßDEC l 0 PH 4: 49"
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
Orem Famly Wind, LLC,
Complaiant,~ Case No. Avu - c-l D - Ob
)
) FORML COMPLAINT
)
)
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vs.
A vista Corporation dba A vista Utilities, Inc.,
Defendant.
1 INTRODUCTION
2 This is a formal complaint fied by Orem Family Wind, LLC ("Orem Family Wind")
3 with the Idaho Public Utilities Commission (the "Commission") pursuat to Idaho
4 Administrative Rules 3 1.01.01.054. Orem Family Wind, LLC requested that Avista
5 Corporation, dba A vista Utilities, Inc., ("A vista") execute a standard Public Utilty Regulatory
6 Policies Act of 1978 ("PURP A") power purchase agreement ("PP A") for qualifying facilities
7 ("QFs") under 10 average monthy mega-watts ("aMW") for Orem Family Wind, LLC's 10 MW
8 renewable energy project. Avista rejected Orem Family Wind~ LLC's attempt to obligate itself
9 to a PP A containing the Commission-approved terms of a standard PURP A PP A at the published
10 avoided cost rates. A vista has unjustifiably refused to negotiate reasonable terms regarding
P~e 1 - FORML COMPLAINT
1 environmental attbutes, delay default liquidated damages and securty, and wid integration
2 charges for Orem Family Wind's off-system project. Therefore, Orem Family Wind respectfully
3 requests that the Commission issue a declaratory judgment resolving those clauses and ordering
4 Avista to enter into a PPA at the rates in effect on the date of this filing (errata to Order No.
5 31025).
6 PRELIMINARY MATTERS
7 Copies of all pleadings and other correspondence in this matter should be served upon
8 counsel for Orem Family Wind, LLC at:
9 Peter J. Richardson10 Gregory M. Adams11 Richardson & O'Lear, PLLC12 515 N. 27th Street13 P.O. Box 721814 Boise, Idaho 8370215 Telephone: [phone] Fax: [phone]
peter~richardsonandoleary .com17 greg~richardsonandolear.com
18
19 In support of this Complaint, Orem Family Wind, LLC alleges as follows:
20 IDENTITY OF PARTIES
21 1.Avista Corporation, dba Avista Utilties, Inc., is a Washington Corporation with
22 its principal place of business at 1411 E. Mission Ave., Spokane, Washington 99202. Avista is
23 an electric company and a public utility subject to the jurisdiction and regulation of the Idaho
24 Public Utilities Commission pursuant to I.C. § 61-129. Avista is subject to the jurisdiction of the
25 Commission, the Washington Utilities and Transportation Commission, and the Federal Energy
26 Regulatory Commission ("FERC").
Page 2 - FORMAL COMPLAINT
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2. Orem Family Wind, LLC is an Oregon limited liabilty company. Orem Famly
Wind, LLC's address is Orem Family Wind, LLC, Blackholse Canyon Lane, Heppner, Oregon,
97836; P.O. Box 202, lone, Oregon, 97843. Orem Family Wind, LLC has the rights to develop
and dispose of the output of the Orem Family Wind, LLC wind project, which is a qualifying
facilty under the Public Utility Regulatory Policies Act of 1978.
JURISDICTION
3. This case involves PURPA's avoided cost provisions and FERC implementing
regulations thereto, which PURPA directs states to implement. See 16 U.S.C. § 824a-3 (a)-(g);
FERC v. Mississippi, 456 U.S. 742, 751 (1982). In Idaho, the Commission possesses jursdiction
over complaints regarding rates of public utilities, including PURPA rates. I.C. §§ 61-129, -501.
-502, -503, -612; see also Afton Energy Inc. v. Idaho Power Co., 111 Idaho 925, 929, 729 P. 2d
400, 404 (1986). The Commission has jurisdiction to issue declaratory judgments regarding
utilty contracts pursuant Idaho's Declaratory Judgment Act, I.C. § 10-1203. See Utah Power
and Light v. Idaho Pub. Utilties Commission, 112 Idaho 10, 12, 730 P.2d 930,932 (1986).
APPLICABLE LAWS AND REGULATIONS
4. Section 210 ofPURA requires electric utilities to purchase power produced by
small power producers that obtain QF status under section 201. 16 U.S.C. § 824a-3(a)(2). The
PURPA avoided cost rates must compensate the QF for the full costs the utility avoids by
purchasing its energy, capacity, and, if transferred, the QF's environmenta attbutes. See
California Public Utilties Commission, 133 FERC ~ 61,059 (Oct. 21, 2010) (order denying
rehearing) (approving of a PURP A implementation whereby certain QFs receive a higher
avoided cost rate for providing environmenta attbutes in addition to their energy and capacity);
Page 3 - FORML COMPLAINT
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see also American Ref-Fuel Co., et aI., 105 FERC ~ 61,004 (2003), order aff'd on reh 'g, 107
FERC ~ 61,016 (2004).
5. FERC rules provide QFs with the option of selling electricity and capacity to a
utilty based on the utilty's "avoided costs" at the time the QF incurs a legally enforceable
obligation to deliver energy or capacity over a specified term. See 18 C.F.R. § 292.304( d)(2)(ii).
Thus, "a QF, by committing itself to sell to an electric utility, also commits the electric utilty to
buy from the QF; these commitments result either in contracts or in non-contractual, but binding,
legally enforceable obligations." JD Wind 1, LLC, "Notice of Intent Not to Act and Declaratory
Order," 129 FERC ~ 61,148, at p. 10-11 (November 19,2009).
FACTUAL BACKGROUND
6. Orem Family Wind, or its agents and predecessors, have been actively engaged in
the development of the Orem Famly Wind, LLC wid project since 2005. The project will have
a nameplate capacity rating of 10 MW, and will be located on ranch land in Morrow County,
Oregon.
7. Orem Family Wind's project has been developed in tandem with a 1O-MWwind
project located on neighboring land, and that neighboring project is owned and operated by
Marah Wind, LLC.
8. Orem Family Wind, or its agents and predecessors, have made substantial
investments in development of the Orem Famly Wind project. Development activities have
included conducting wind studies, environmenta studies, acoustic studies, and archeological
studies.
Page 4 - FORMAL COMPLAINT
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9. Orem Family Wind and Mariah Wind, LLC,are in the process of securng shared
interconnection and transmission through Columbia Basin Electric Co-operative and Bonnevile
Power Administration to Avista's Lewiston Substation.
10. Orem Family Wind has been in contact with Avista regarding the sale of its
output through a PURP A PP A containing published avoided cost rates.
11. On November 22,2010, Orem Family Wind obligated itself to a 20-year PPA, by
sending to A vista a PP A containing the Commssion-approved terms of a stadard PURP A PP A
at the published avoided cost rates, executed by Orem Family Wind.
12. Orem Family Wind's November 22nd PPA contaned identical terms to those in a
draf PPA provided by Avista to Marah Wind, LLC, except that Orem Family Wind's PPA
contaned, modified terms regarding ownership of environmental attributes, delay liquidated
damages and security, the mechanical availabilty guarantee, insurance, as well as applicable
rates and the wind integration charge. The submitted PP A also contained an accompanying letter
describind the basis for the modified terms.
13. Avista rejected Orem Family Wind's signed PPA.
14. Subsequently, Orem Family Wind expressed willngness to agree to Avista's
terms regarding the mechancal availability guantee and insurance.
15. But Avista has refused to agree to Orem Family Wind's terms regarding
ownership of environmental attibutes, delay liquidated damages and security, and the wind
integration charge.
16. A vista refused to agree to a term similar to those in Idaho Power Company and
Rocky Mountan Power PUR A PP As whereby the utilty waives ownership of environmental
Page 5 - FORMAL COMPLAINT
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attributes in contracts contaning the published avoided cost rates calculated to compensate the
QF only for the energy and capacity delivered.
17. Additionally, Avista stated it would not agree to delay liquidated damages and
securty clauses contang daages and securty amounts less than $45/k, in response to Orem
Family Wind's statements that it would obligate itself only to an amount reasonably calculated to
offset Avista's actual damages, as determined by the Commission.
18. Finally, Avista insisted on charging Orem Family Wind 50% of its standard wid
integration charge of $6.50/MWh, despite that Orem Family Wind will pay Bonnevile Power
Administration for wind integration services and will therefore provide a firmed energy delivery
to Avista's system entitling it to Avista's ful, published, avoided cost rates.
19. Through Orem Family Wind's PPA submitted November 22,2010, and
subsequent communications, Orem Family Wind has agreed to all material terms of the draft
PPA distributed by Avista except for clauses discussed in paragraphs 15-18.
20. Orem Family Wind stil intends to obligate itself to all terms of the draft PPA
distributed by Avista with the exception of the modified terms regarding Orem Family Wind's
ownership of environmental attributes, reasonable delay liquidated damages and securty as
determined by the Commission, and the curent, published, avoided cost rates without a
$3.25/MWh reduction for wind integration.
Page 6 - FORMAL COMPLAINT
1 LEGAL CLAIM
2 Complainant's Claim for Relief
3 Avista is in violation ofPURPA, FERC's regulations and orders, and the Commission's
4 orders by refusing to enter into a power purchase agreement containing the published
5 avoided cost rates in Order No. 31025 and reasonable and legal terms regarding ownership
6 of environmental attributes, delay damages and security, and wind integration.
7 21. Orem Family Wind, LLC re-alleges and incorporates all preceding paragraphs.
8 22. Orem Family Wind, LLC has attempted in good faith to engage in negotiations to
9 obtain a fuly executed power purchase agreement to deliver energy and capacity to A vista from
10 the Orem Family Wind, LLC wind project and provided A vista with an executed PPA for the
11 project.
12 23. Avista has unjustifiably refused to disclaim ownership of environmental attributes
13 in a PP A that will contain published avoided cost rates calculated to only compensate the QF for
14 sale of energy and capacity in the State of Idaho, where the law does not assign ownership of
15 envionmenta attributes to the utilty for a wholesale energy transaction.
16 24. A vista unjustifiably insisted on a punitive delay liquidated damages and delay
17 securty amount of $45/kw nameplate capacity without regard to any reasonable approximation
18 of its likely damages in the event of a delay default. See Magic Valley Truck Brokers, Inc. v.
19 Meyer, 133 Idaho 110, 117,982 P.2d 945,952 (Ct. App. 1999).
20 25. Avista unjustifiably insisted on charging Orem Family Wind $3.50IMWh for
21 wind integration when Orem Family Wind will pay for wind integration with Bonnevile Power
22 Administration prior to delivery to A vista.
Page 7 - FORMAL COMPLAINT
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26. Orem Family Wind, LLC committed itself to sell energy and cåpacity from its QF
to Avista at a time when the rates in Order No. 31025 are applicable to its QF and, consequently,
Orem Family Wind, LLC committed Avista to buy from the QF at those rates.
27. These commitments result in non-contractual, but binding, legally enforceable
obligations. 18 C.F.R. § 292.304(d)(2)(ii); JD Wind 1, LLC, 129 FERC ~ 61,148, at pp. 10-11.
28. By negotiating in bad faith and by failing to execute a PP A contaning reasonable
terms, Avista is in violation ofPURPA, FERC's implementing regulations, and the
Commission's orders. See 16 U.S.C. § 824a-3(a)(2); 18 C.F.R. § 292.304(d)(2)(ii); Blind
Canyon Aquaranch v. Idaho Power Company, Case No. IPC-E-94-1, Order No. 25802
(November 1994).
PRAYER FOR RELIEF
WHEREFORE, Orem Family Wind, LLC respectfully requests that the Commission
issue an Order:
1. Declaring that A vista is in violation of PURP A, FERC' s implementing
regulations, and the Commission's orders.
2. Requiring A vista to execute a stadard PURP A power purchase agreement with
Orem Family Wind, LLC contaning Avista's avoided cost rates on fie for QFs under 10 aMW
in Order No. 31025, and the terms deemed reasonable by the Commission for the disputed
clauses described in this Complaint.
3. Granting any other relief that the Commission deems necessar.
Page 8 - FORMAL COMPLAINT
~
Respectfly submitted this L day of December, 2010.
RICHASON AND O'LEARY, PLLC£~Peter J. Richardson (ISB No: 3195)
Gregory M. Adams (ISB No. 7454)
Attorneys for Complainant
P~e 9 - FORML COMPLAINT
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 10th day of December, 2010, a tre and correct copy of
the within and foregoing FORMAL COMPLAINT BY OREM F AMIL Y WIND, LLC was
served by HAND DELIVERY, to:
Jean Jewell
Commission Secreta
Idaho Public Utilties Commssion
472 West Washington
Boise, Idaho 83702
Jean. jewell(fpuc.idaho. gov
By iO~daS
Page 10 - FORMAL COMPLAINT