20150423order_no_33286.pdf

Office ofthe Secretary
Service Date
April 23,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S PETITION TO MODIFY )CASE NO.IPC-E-15-O1
TERMS AND CONDITIONS OF PURPA )
PURCHASE AGREEMENTS )
______________________________________________________________________________________
)
IN THE MATTER OF AVISTA )
CORPORATION’S PETITION TO MODIFY )CASE NO.AVU-E-15-O1
TERMS AND CONDITIONS OF PURPA )
PURCHASE AGREEMENTS )
______________________________________________________________________________________
)
IN THE MATTER OF ROCKY MOUNTAIN )
POWER COMPANY’S PETITION TO )CASE NO.PAC-E-15-03
MODIFY TERMS AND CONDITIONS OF )
PURPA PURCHASE AGREEMENTS )
______________________________
)ORDER NO.33286
On February 25,2015,Clearwater Paper Corporation and J.R.Simplot Company filed
a Joint Petition to clarify the scope of interim relief granted to Idaho Power in Order No.33222,
and to limit the scope of permanent relief in the docket.The Commission received timely
answers from Renewable Energy Coalition (REC),Rocky Mountain Power Company,Idaho
Power Company,and Commission Staff.On March 26,2015,Clearwater and Simplot filed a
joint reply.With this Order,the Commission denies the Petition.
BACKGROUND
On January 30,2015,Idaho Power filed a Petition asking the Commission to reduce
the length of its PURPA contracts from 20 years to two years (Case No.IPC-E-15-01).The
Commission granted Idaho Power interim relief,reducing the term for the utility’s new PURPA
contracts to five years while the Commission investigates the matter.Order No.33222 at 6.
Shortly thereafter,Avista Corporation and Rocky Mountain each filed petitions seeking the same
or similar permanent and interim relief (Case Nos.AVU-E-15-01,PAC-E-15-03).On March 13,
2015,the Commission consolidated the three cases and granted Avista and Rocky Mountain the
same interim relief granted Idaho Power.Order No.33250.
On February 1,2015,Intermountain Energy Partners (IEP)petitioned the
Commission to clarify the scope of the consolidated proceeding.In particular,IEP asked the
Commission to clarify that the interim relief granted in Order No(s).33222 (and now 33250)
ORDER NO.33286
“applies only to the Utilities’new PURPA contracts that exceed the published rate eligibility
cap.”See Order No.33253 at 6-7.’The Commission granted IEP’s Petition and clarified that
the interim relief granted to the Utilities “applies to new PURPA contracts in excess of the
published rate eligibility cap.”Order No.33253 at 4.
THE JOINT PETITION
Clearwater and Simplot also sought to clarify the scope of the five-year interim relief
granted to the utilities.In their Joint Petition,they “recommend the Commission’s ordering
paragraph...be amended”as follows:
IT IS HEREBY ORDERED that effective February 5,2015 ...the maximum
contractual term for [the Utilities’]new intermittent (solar and wind powered)
PURPA contracts shall be five years.
Joint Petition at 4 (proposed language underlined).
Clearwater and Simplot did not oppose the Petition to Clarify by REC,which the
Commission granted.However,they argue that the scope of interim (as well as permanent)
relief should be further narrowed to only “wind and solar intermittent resources that exceed the
published rate eligibility cap of 100 kW.”Joint Petition at 2.The Joint Petition asserts this
narrowed relief is warranted by way of clarification because proceedings “will likely continue
for several months or a year,”during which Simplot’s ability to negotiate a new PURPA contract
will be unduly limited.Id.at 4.In further support,the Joint Petition notes,“None of Idaho
Power’s [underlying]arguments [supporting shorter contracts]apply to base-load facilities
utilizing waste heat,biomass,or industrial cogeneration such as”the Clearwater and Simplot
facilities.Id.at 3.
ANSWERS AND REPLY
1.REC.The Coalition supported the Joint Petition to Clarify.REC stated that
“Idaho Power has not submitted sufficient evidence that any baseload [qualifying facilities or
“QFs”]are contributing to its potential problems associated with the acquisition of large amounts
of unneeded variable wind and solar generation.”REC Response at 3.REC thus agreed with the
Joint Petition that the Commission should “limit any interim relief to only new intermittent wind
and solar QFs above the rate eligibility cap.”Id.at 3.
‘Renewable Energy Coalition (REC),AgPower DCD,and AgPower Jerome also supported IEP’s Petition to Clarif,’
Order No.33222.
ORDER NO.33286
2.Rocky Mountain.Rocky Mountain opposed the Joint Petition to Clarify.Rocky
Mountain noted that the Joint Petition was filed before Rocky Mountain’s Petition to Modify
PURPA contracts was consolidated with Idaho Power’s (and Avista’s).Rocky Mountain
Answer at 2.According to Rocky Mountain,“[t]here is nothing in [its]Petition that
differentiates between an intermittent (solar or wind)QF resource and a non-intermittent
resource.”Id.at 3.“[T]he arguments and evidence [in Rocky Mountain’s]Petition apply to all
resource types and not only to intermittent resources.”Id.Rocky Mountain thus asked the
Commission to deny the Joint Petition.
3.Idaho Power.Idaho Power also opposed the Joint Petition to Clarify.Idaho
Power stated that,contrary to the Joint Petition,the problems and risks to customers identified in
Idaho Power’s Petition are caused by “all PURPA QF projects no matter what resource type they
utilize and no matter what size they happen to be.”Idaho Power Answer at 2.However,the
utility asserted that large QF projects that exceed the published rate eligibility cap have a more
significant financial impact upon Idaho Power customers because of the 20-year contracts.Id.at
2-3.Also,“the harmful impacts identified in Idaho Power’s Petition are amplified [as opposed
to absent]for a large cogeneration QF because it will deliver unneeded energy to the utility on a
more consistent and regular basis than an intermittent wind or solar QF would be expected to
deliver,”Id.at3.
Finally,Idaho Power noted that the Joint Petition “attempt[s]to make new
substantive arguments,which may be relevant to their substantive positions in the case as a
whole but have little to do with a clar/ication of the Commission’s initial interlocutory order.”
Id.at 5 (emphasis added).“The only relevant question should be:What did the Commission
intend to do/say in its Order No.33222 wherein it limited the maximum contract for all new
PURPA QF contracts to five years.”Id.Idaho Power therefore asked that the Joint Petition be
denied.
4.Commission Staff.Staff filed an answer opposing the Joint Petition.Staff noted
that Clearwater and Simplot did not have the benefit of knowing the agreed case schedule at the
time they submitted their Joint Petition.Staff Answer at 4.The case schedule,to which the joint
petitioners agreed,sets a technical hearing to commence on June 29,2015.Order No.33253 at
5.Staff believed that,under this expedited schedule,the case “will be completed in sufficient
ORDER NO.33286 3
time so that the five-year term for interim relief will not be an issue”if either Clearwater or
Simplot seek a new PURPA contract.Staff Answer at 4.
Citing expert testimonies presented with the Utilities’Petitions,Staff next asserted
there is sufficient evidence to support the Orders granting interim relief.Id.at 4-6.Staff argued
that both Idaho Power and Rocky Mountain provided prefiled testimony that supported granting
interim relief.“[L]ong-term PURPA contracts transfer the risk of not accurately forecasting
long-term avoided cost rates to ratepayers.”Id.at 5.Finally,Staff asserted that “the better place
to address the joint petitioners’argument regarding the scope of relief and whether to shorten
contracts for cogen projects is in the technical phase of this case,”rather than in a Petition to
Clarify which might prematurely limit the scope of the evidentiary hearing.Id.at 4,6.Staff
recommended that the Commission deny the Joint Petition.Id.at 6.
5.Clearwater and Simplot’s Joint Reply.In their reply,the joint petitioners renewed
their initial request that existing cogen facilities should be exempt from the proposed five-year
contracts.Reply at 3.They urged the Commission to limit the interim relief to “new PURPA
projects and not existing projects”that seek a new (or renewed)contract.Reply at 2-3.They
asserted that “Simplot and Clearwater are the only existing (on-line)projects in the State of
Idaho that are affected by the Commission’s interim order.”Id.at 3 (emphasis original).They
contend that,unless exempted from the application of the interim relief,they are effectively
singled out for “unfair treatment.”Id.
They also requested that new baseload generation be exempt from the proposed
shorter contracts (five,three,or two years).Reply at 3.The joint petitioners reiterated that,
although conditions may warrant a reduction in contract term for wind and solar QF projects,the
same “cannot be said of [new]base-load cogeneration QFs.”Id.at 5.“Reducing the possible
contract term from twenty years to five years or three years or two years will certainly limit the
financing potential for Simplot’s [proposed]cogeneration project (or any new projects coming on
line for that matter)....“Id.at 3.Finally,Clearwater and Simplot argued that the proposed
clarification —narrowing the interim and permanent relief to apply to only intermittent solar and
wind QFs —is warranted because “[d]iscouraging cogeneration is simply not in the public
interest.”Id.at 4.
ORDER NO.33286 4
DISCUSSION AND FINDINGS
The Commission has reviewed the Joint Petition,answers,and reply,and our Orders.
This case presents the question of appropriate contract length for an IRP-based PURPA project.
We recently clarified that we intend for interim relief —the five-year term limit —to apply only to
new PURPA projects with resource-generation that exceeds the published rate eligibility cap.
Order No.33253 at 4.Given the evidence before us at this stage in proceedings,we find no
basis to further restrict the Utilities’interim relief to “only wind and solar intermittent”resource
projects,as requested by Clearwater and Simplot.Joint Petition at 2.
The joint petitioners’first concern —that the consolidated process “will likely
continue for several months or a year”—is unfounded given our recent Notice setting the
technical hearing for June 29 to July 1,2015.Order No.33253 at 7.We find that the established
schedule is expeditious enough so that the interim relief granted is unlikely to affect Simplot’s
new contracts.Whatever final conclusions are reached will control.Moreover,Clearwater and
Simplot agreed to the expedited schedule.Id.at 5.
As to the joint petitioners’second argument,that “[njone of Idaho Power’s arguments
[supporting shorter contractsj apply to base-load facilities utilizing waste heat,biomass,or
industrial cogeneration,”we disagree.Without exception,all three utilities sought shorter
contracts for all new IRP-based projects.We find that substantial evidence was presented to
support interim relief for all new QF projects above the published rate eligibility cap while the
Commission investigates the issue of contract length in greater detail.
Finally,we deny Clearwater and Simplot’s request to “exempt [new baseload
projectsJ from the reach of this docket.”Reply at 3.This argument is a substantive matter best
resolved by this Commission upon consideration of all the evidence presented by all parties at
the hearing on the merits.We find that this request is not appropriate relief to grant by way of
“clarification.”Accordingly,we deny the Joint Petition.
ORDER NO.33286 5
ORDER
IT IS HEREBY ORDERED that Simplot and Clearwater’s Joint Petition for
Clarification is DENIED.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 3
day of April 2015
MACK A.REDFORD,COMMISSIONER
ATTEST:
Jn D.JewellV
6mmission Secretary
O:IPC-E-1 5-O1_AVU-E-1 5-OIPAC-E-1 5-03_djh3
IaQJ\
K fNE RAPER,COMMISSIONER
ORDER NO.33286 6