20030425Answer to Vulcan by Idaho Power.pdf

BARTON L. KLINE ISB #1526
Idaho Power Company
O. Box 70
Boise, Idaho 83707
Phone: [phone]
FAX: [phone]
~~VED ~
2003 APR 24 PM~:
'" I'i 1 ':1 ;"
" j.
-,; I
" '~"
--IUULI
U filII IES COMr11SSION
Attorneys for Idaho Power Company
Express Mail Address
1221 West Idaho Street
Boise , Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION
OF THE INDEPENDENT ENERGY
PRODUCERS OF IDAHO FOR AN
ORDER INCREASING THE SIZE AT
WHICH A OF IS ENTITLED TO
PUBLISHED AVOIDED COST RATES.
CASE NO. GNR-03-
ANSWER TO PETITION FOR
RECONSIDERATION OF
VULCAN POWER COMPANY
Idaho Power Company, hereinafter referred to as "Idaho Power" or "the
Company" herein, pursuant to RP 331.05 and Idaho Code 9 61-626, hereby answers the
petition for reconsideration filed by Vulcan Power Company ("Vulcan
As provided in RP 331., an Answer to a petition for reconsideration is
used to express disagreement with the petition for reconsideration without asking for
affirmative relief from the Commission s orders. Idaho Power s disagreement with
Vulcan s petition arises out of Vulcan s failure to apprise the Commission that Vulcan has
had no discussions with Idaho Power for several years.
ANSWER TO PETITION FOR RECONSIDERATION OF VULCAN POWER COMPANY, Page 1
BACKGROUND
From the beginning of its implementation of PURPA in the state of Idaho
the Commission has drawn a logical distinction between small and large OF projects.
The Commission has established posted rates for small OF projects on the assumption
that the developers of small OF projects may not have the economic resources to
negotiate a project-specific power purchase contract with the utility. The Commission has
stated that the posted rates would be the starting point for negotiations with large OFs but
the individual characteristics of large OF projects necessitate negotiations to address
reasonable variations in the rates, terms and conditions available to large OFs.
VULCAN IS NOT PRESENTING ALL THE FACTS
Vulcan s basic premise in its petition is that the Commission must increase
the size threshold of OF projects which are entitled to the posted rates without negotiation
because Vulcan and other independent energy producers have been unable to conduct
good faith contract negotiations with electric utilities in Idaho. Vulcan states "The results
of such negotiations have been disappointing and nonproductive." (Vulcan Petition, p. 2)
While Idaho Power cannot speak for the other utilities in Idaho that may have had
discussions with Vulcan , Idaho Power can represent to the Commission that it has been
several years since Vulcan talked to Idaho Power. Idaho Power believes that it is
disingenuous for Vulcan to contend that the Commission s prior order raising the dividing
line between small and large OF projects to 10 MW has not been successful when
Vulcan has not discussed a OF project of size with Idaho Power for several years.
ANSWER TO PETITION FOR RECONSIDERATION OF VULCAN POWER COMPANY, Page 2
Vulcan asks the Commission to prejudge the negotiation process and
assume that utilities will act in bad faith. Idaho Power believes it's important to keep in
mind that in every negotiation each party believes that its position is fair and that it is
acting in good faith. The fact that negotiating parties do not ultimately agree is not
evidence that one side has presented positions that are all fair and reasonable and the
other side has only presented positions that are unfair and unreasonable. Even OFs can
take unreasonable positions in negotiations. Large OF projects are more likely to have
unique characteristics that require that a purchase arrangement be specifically tailored to
their situation. Accommodating those unique characteristics requires that both the utility
and the OF acknowledge those characteristics and tailor the agreement to ensure that the
utility's customers are not disadvantaged by the OF purchase.
CONCLUSION
On page 5 of its Petition Vulcan states "The passage of time has illuminated
the reality that the order of the Commission to raise the OF size to 10 MW was the correct
decision for Idaho, that it wasn t of sufficient magnitude to achieve the desired effects of
the Commission." Idaho Power believes it is unreasonable for Vulcan to claim that the
Commission s longstanding policy of requiring the developers of large OF projects to
negotiate project specific contracts is a failure when Vulcan has made no credible effort to
comply with the policy expressed by the Commission. Negotiations between utilities and
OFs may not ultimately lead to contracts. But that doesn t necessarily indicate a failure of
the policy of requiring negotiations. A OF developer that claims to have the management
capability and creditworthiness to raise the millions of dollars of capital needed to build a
generating facility larger than 10 MW is certainly capable of negotiating on an equal basis
ANSWER TO PETITION FOR RECONSIDERATION OF VULCAN POWER COMPANY, Page 3
with an electric utility. This is particularly true when the electric utility is required by
Commission order to negotiate in good faith based on purchase prices that are equivalent
to the utility's avoided cost as determined by the Commission.
Respectfully submitted this 24th day of April , 2003.
GJ~~
BARTON L. KLINE
Attorney for Idaho Power Company
ANSWER TO PETITION FOR RECONSIDERATION OF VULCAN POWER COMPANY , Page 4
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 24th day of April , 2003, I mailed a true
and correct copy of the above and foregoing ANSWER TO PETITION FOR
RECONSIDERATION OF U.S. GEOTHERMAL INC. to the following at the addresses
listed below:
Scott Woodbury, Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, Idaho 83720-0074
Peter J. Richardson
Richardson & O'Leary PLLC
O. Box 1849
Eagle, Idaho 83716
Doug Glaspey, CEO
S. Geothermal Inc.
1509 Tyrell Lane, Suite B
Boise, Idaho 83706
Steve Munson, CEO
Vulcan Power Company
1183 NW Wall Street, Suite G
Bend , Oregon 97701
cJ~
BARTON L. KLINE
CERTIFICATE OF MAILING