20090220Black Canyon Comments.pdf

McDevitt & Miller LLP
Lawyers
[phone]
[phone] (Fax)
RECE
420 W. Bannock Street
P.O. Box 2564-83'79 FEB 20 PH 2: 22
Boise, Idaho 83702
Chas. F. McDevitt
Dean J. (Joe) Miler
Februar 20, 2009
Via Hand Delivery
Jean Jewell, Secreta
Idaho Public Utities Commssion
472 W. Washigton St.
Boise, Idaho 83720
Re: Black Canyon, LL
GNR-E-08-02 and GNR-09-01
Dear Ms. Jewell:
Enclosed for fig in the above matter, please fid an orial and seven copies of Black Canyon
LLC's Answer to Rocky Mounta Power's Motion to Contiue Decision (GN)1-E-08-02) andLetter Comments (GNRA"09-01). R
E
Kidly retu a fie staped copy to me.
Very Truy Your,
C!r¡Dean J. Mier
DJM/hh
Enclosures
Dean J. Miler (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Banock Street
P.O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
joe(imcdevitt- miller .com
Attorney for Black Canyon LLC
ORIGINAL
r: n'4"1
2009 FEB 20 PM 2: 22
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT
PETITION TO APPROVE
STIPULATION TO ADJUST
PUBLISHED AVOIDED COST RATES.
IN THE MATTER OF THE FUEL COST
RELATED ADJUSTMENT TO
PUBLISHED IDAHO AVOIDED COST
RATES FOR IDAHO POWER
COMPANY, PACIFICORP DBA ROCKY
MOUNTAIN POWER, AND AVISTA
CORPORATION DBA AVISTA
UTILITIES.
Case No. GNR-E-08-02
ANSWER OF BLACK CANYON LLC
TO ROCKY MOUNTAIN POWER'S
MOTION TO CONTINUE DECISION
(GNE-E-08-02) AND LETTER
COMMENTS (GNR-09-01)
Case No. GNR-E-09-01
COMES NOW Black Canyon LLC ("Black Canyon") and submits the following
Answer, to wit:
As recited in its Petition to Intervene dated February 10, 2009, Black Canyon is
developing a wind generation project in Bonnevile County, Idaho, and has made
substantial progress toward completion of the project. Black Canyon has completed all
ANSWER OF BLACK CANYON LLC TO ROCKY MOUNTAIN POWER'S MOTION TO CONTINUE
DECISION (GNE-E-08-02) AND LETTER COMMENTS(GNR-09-01)-1
required interconnection studies, has executed an interconnection agreement and has paid
all required fees to Rocky Mountain Power.
Although not a formal party to the Stipulation filed in Case No. GNR-E-08-02 on
November 5, 2008, Black Canyon was informally represented by the undersigned who
also represented other formal paries. Black Canyon concured in the terms of the
Stipulation.
The Stipulation has two main components. First, it sets forth an agreement for
values of non- fuel generic varables used in the established method of avoided cost
calculations. Second, it recommends that the Commission incorporate adjustments of the
non-fuel generic variables at the same time it approves new fuel-related avoided cost
components based on the Northwest Power and Conservation Council's ("Council")
medium forecast of natural gas prices, in accordance with long-standing Commission
practice. (Stipulation, Paragraph 7).
Rocky Mountain Power was fully represented in negotiations leading to the
Stipulation and the Stipulation is executed on behalf of Rocky Mountain Power by its
Senior Vice President and General Counsel.
In Case No. GNR-E-08-02, Rocky Mountain Power has now filed a Motion to
Continue Decision Implementing Stipulation and in Case GNR-E-09-01, Rocky
Mountain Power has fied Letter Comments dated Februar 19, 2009. Both the Motion
and the Letter Comments seek the same relief-that Rocky Mountain Power be relieved
of the Stipulation and that the Commission delay implementing the ters of the
Stipulation.
ANSWER OF BLACK CANYON LLC TO ROCKY MOUNTAIN POWER'S MOTION TO CONTINUE
DECISION (GNE-E-08-02) AND LETTER COMMENTS(GNR-09-01)-2
Generally, to obtain relief from a Stipulation, the party seeking relief must show
that the Stipulation was entered into through mistake or misunderstanding of fact. See
Gross v. Moulton, 114 Idaho, 884 761 P.2d 1236 (Ct. App. 1988).
Rocky Mountain Power in its Motion and Letter Comments does not allege the
existence of mistake or misunderstanding. Rather, it alleges only that it now disagrees
with the Council's gas forecast and that the forecast produces rates that are, in its opinion,
"too high." On their face, these allegations are insuffcient grounds to relieve Rocky
Mountain Power from the Stipulation it entered into, free from mistake or
misunderstanding.
It is also appropriate to view the Motion and Letter Comments in the larger setting
of the history of avoided cost rates in Idaho. Attached as Exhibit A, is the text of a
memorandum prepared by the undersigned for the wind task force of the Idaho Energy
Office. As demonstrated by the Exhibit, since the year 2002 there has been only a brief
period of a few months when avoided cost rates in Idaho were not subject to some form
of regulatory uncerainty. The long period of uncertainty has impeded the development
of renewable energy in Idaho.
The Commission is now poised to end the uncertainty and establish avoided cost
rates that can be relied upon by those considering project development. It would be a
manifest injustice to those who have labored in good faith to end the regulatory
uncèrtainty to again delay establishing predictable rates based on one party's opinion that
the rates are too high.
For the reasons set forth above, the Commission, in Case No. GNR-E-08-02,
should enter its Order approving the agreed upon non-fuel generic variables and in Case
ANSWER OF BLACK CANYON LLC TO ROCKY MOUNTAIN POWER'S MOTION TO CONTINUE
DECISION (GNE-E-08-02) AND LETTER COMMENTS(GNR-09-01)-3
No. GNR-E-09-0l, should enter its Order approving calculations based on the Council's
medium gas forecast.
DATED this Z,V day of Februar, 2009.
BLACK CANYON LLC
BY:(\ ~ lW~iler
Attorney for Black Canyon LLC
ANSWER OF BLACK CANYON LLC TO ROCKY MOUNTAIN POWER'S MOTION TO CONTINUE
DECISION (GNE-E-08-02) AND LETTER COMMENTS(GNR-09-01)-4
CERTIFICATE OF SERVICE
I hereby certify that on the aJ day of February, 2009, I caused to be served, via
the method(s) indicated below, tre and correct copies of the foregoing document, upon:
Jean Jewell, Secretar
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, ID 83720-0074
j j ewell~puc.state.id. us
Scott Woodbur
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise,ID 83720-0074
scott. woodbury(ipuc.idaho. gov
David J. Meyer, Vice President
Clint Kalich
Michael Andrea
A visita Utilities
P.O. Box 3727
1411 E. Mission Ave
Spokane, WA 99220-3727
clint.kalich(favistacorp. com
david.meyer~avistacorp.com
Mark Moench
Daniel Solander
Rocky Mountain Power
One Utah Center
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
daniel.solander~acificorp.com
mark.moench(ipacificorp.com
Peter J. Richardson, Esq.
Richardson & O'Lear PLLC
515 N. 27th Street (83702)
P.O. Box 7218
Boise, ID 83707-1218
peter(irichardsonandoleary.com
Hand Delivered ~
U.S. Mail ..u
Fax ..u
Fed. Express ..u
Email ..u
Hand Delivered :A
U.S. Mail ..u
Fax ..u
Fed. Express ..u
Email ..u
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
w
..u
..u
x
..u
..u
..u
..u
~
..u
..u
..u
..u
)(
ANSWER OF BLACK CANYON LLC TO ROCKY MOUNTAIN POWER'S MOTION TO CONTINUE
DECISION (GNE-E-08-02) AND LETTER COMMENTS(GNR-09-01)-5
Donovan E. Walker Hand Delivered ..u
Baron L. Kline U.S. Mail ..u
Randy Allphin Fax ..u
Idaho Power Company Fed. Express ..u
P.O. Box 70 Email ;(1221 W. Idaho Street (83702)
Boise, ID 83707-0070
dwalker(fidahopower.com
bkline(fidahopower.com
Idaho Wind Fars LLC Hand Delivered ..u
Glen Ikemoto U.S. Mail ..u
672 Blair Ave.Fax ..u
Piedmont, CA 94611 Fed. Express ..u
glenni(fpacbell.net Email ~
John R. Hamond Jr., Esq.Hand Delivered ..u
Fisher Pusch & Alderan U.S. Mail ..u
US Ban Plaza, 5th Floor Fax ..u
101 South Capital Boulevard Fed. Express ..u
P.O. Box 1308 Email ~Boise, ID 83701
jrh(ifpa-law.com.com
Greg Duvall Hand Delivered ..u
Laren Hale U.S. Mail XTed Watson Fax u
Pacificorp d/b/a Rocky Mountain Power Fed. Express ..u
One Utah Center Email ..u
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
BY:
'~.
ANSWER OF BLACK CANYON LLC TO ROCKY MOUNTAIN POWER'S MOTION TO CONTINUE
DECISION (GNE-E-08-02) AND LETTER COMMENTS(GNR-09-01)-6
EXHIBIT A
A BRIEF HISTORY OF PURPA IMPLEMENTATION IN IDAHO
The modem era ofPURP A implementation commenced in the year 2002. Prior to then,
and since 1995, PURPA development had been moribund, following the Commission's
decision to reduce eligibility for published avoided cost rates to projects of 1MW or less
and to shorten contract length to five (5) years. i
In Februar of 2002, at the request of the J.R. Simplot Company and others, the
Commission opened a docket to assess the continued reasonableness of the restrctions
established by Order No. 25884.2 In its initial decision the Commission determined to
increase the eligibility limitation to 5 MW and increased the contract length to 20 years.
3
On Reconsideration, the Commission increased the eligibility limit to 10 MW and
convened a hearng to examine the input values for avoided cost calculations. It also
granted requests by the utilities to stay the effectiveness of any changes until
reconsideration was completed.4
Following an evidentiary hearng on input values the Commission established new
avoided cost rates.5 Subsequently, these rates were updated to reflect changes in natual
gas prices pursuant to the methodology established by Order No. 29124.6
Commencing sometime in 2003, Idaho Power Company, in negotiations with developers,
sought to include in its standard form Firm Energy Sales Agreement (FESA) a provision
creating a performance band that would penalize energy deliveries above or below a
project's projected production.
Two developers, Lewandowski and Schroeder, fied a Complaint at the Commission
challenging IPCo's proposed performance band.? This case was consolidated with
another pending case raising a similar issue and a related issue for measurement of
capacity and energy.8 Other utilities and several parties intervened or filed informal
pleadings.
i Application of Idaho Power Company for Approval of Prices for Electricity from Cogenerators and Small Power
Producers, Order No. 25884, Case No. IPC-E-93-28 (1995).2 In the Matter of the Investigation of the Continued Reasonableness of Current Size Limitation for PURP A
QF Published Rate Eligibilty Case No. GNR-E-02-01.3 Order No. 29029 (2002).
4 Order No. 29069 (2002).
5 Order No. 29124 (2002).
6 In the Matter of the Revision and Update of Avoided Cost Rates, Case No. IPC-E-03- 1 5, Order No. 29391
(2004); In the Matter of the Revision and Update of Avoided Cost Rates, Case No. IPC-E-04-25, Order No.
29646 (2004) See Also
In the Matter of the Revision and Updated Calculation of the Adjustable Portion of the Avoided Cost Rate
for Existing PURPA Contracts, Case No. GNR-E-08-01, Order No. 30564 (2008).7 Lewandowski and Schroeder v. Idaho Power Company, Case No. IPC-E-04- 1 O.
8 u.s. Geothermal v. Idaho Power Company, Case No. IPC-E-04-08
ANSWER OF BLACK CANYON LLC TO ROCKY MOUNTAIN POWER'S MOTION TO CONTINUE
DECISION (GNE-E-08-02) AND LETTER COMMENTS(GNR-09-01)-7
In the end, the Commission adopted its own version of a performance band, which
became known as the "90-110 performance band".9 The Commission also established a
monthly 1 0 aMW test, rather than name plate capacity, as the criteria for standard form
contract eligibility. The Commission rejected IPCO's requested "regulatory out" contract
language.
Although PURP A developers disliked the "90-110 performance band", a number of
contracts were signed containing some variant of the concept. 10
Six months after the final order in LewandousldlU.S. Geothermal, Idaho Power Company
fied a new Petition asserting that the rates established in Case No. IPC-E-04-24 had
over-stimulated wind-powered QF development.11 The Petition sought a moratorium on
QF purchases to allow time for study of wind integration costs. After a contested
hearing, the Commission reduced the project size eligible for published avoided costs to
100 kW, in effect creating a moratorium on PURP A development.12 The Commission
also established criteria by which projects already under development could seek an
exemption from the new eligibility cap, or be "grandfathered."
Orginally predicted to last about nine (9) months the de facto moratorium stretched into
2008. Durng that period IPCo conducted four (4) workshops relating to quantification of
wind integration costs.
Eventually, most paries entered into a settlement agreement in which integration costs
were agreed upon and which included additional features, including elimination of the
"90-110 performance band" to be replaced by a mechanical availability guarantee. The
settlement agreement was approved by the Commission in Februar 2008.13
PacifiCorp had previously proposed use of a mechanical availability guarantee as a
substitute for the "90-110 performance band", but the Commission rejected it.14 In
response, PacifiCorp proposed a "Modified 90-110" performance band, which the
Commission accepted.
IS The Schwindeman agreement also introduced liquidated
damages for failure to achieve contract milestones. Liquidated damages have now,
apparently, become a standard contract featue.16
9 Order No. 29632, Order No. 29682 on Reconsideration (2005).
10 See e.g. Application of Idaho Power Company for Approval of a Firm Energy Sales Agreement with
Fossil Gulch WindPark LLC, Case No. IPC-E-04-19, Order No. 29630.11 Petition of Idaho Power Company for an Order Temporarily Suspending Idaho Power's PURP A
Obligation, Case No. IPC-E-05-22.12 Order No. 29839, Reconsideration Order No. 29872.
13 Petition of Idaho Power to Increase Published Rate Eligibility Cap for Wind Powered Small Power
Production Facilities_Case No. IPC-E-07-03, Order No. 30488 (2008).14 Application of PacifCorp for Approval of a Power Purchase Agreement Between PacifCorp and
Schwindeman Wind LLC, Case No. PAC-05-09, Order No. 29880 (2005).15 Order No. 30000 (2006).
16 Application of Idaho Power Company for Approval of a Firm Energy Sales Agreement with Bennett
Creek WindFarm LLC Case No. IPC-E-06-35, Order No. 30453 (2007).
ANSWER OF BLACK CANYON LLC TO ROCKY MOUNTAIN POWER'S MOTION TO CONTINUE
DECISION (GNE-E-08-02) AND LETTER COMMENTS(GNR-09-01)-8
Durng the moratorium period a few projects were able to meet the "grandfathering"
criteria.17 Several projects sponsored by a single developer also obtained "grandfathered
status.,,18 Only the Cassia and Bennett projects are under constrction, however.
Also during the moratorium period the Commission addressed a problem of transmission
constraint in the Twin Falls area. In 2006, Cassia Wind filed a Complaint, arguing that
responsibility for upgrades should be borne by IPCo's ratepayers.
19 After a hearng the
Commission informally indicated it believed PURP A projects should bear some
responsibility and the Commission encouraged settlement discussions. After extended
discussions, a settlement establishing a cost sharng formula and defining protocols for
management of the interconnection queue was reached. The Commission approved the
settlement in 2007.20
In September of 2007, Idaho Power filed a new case, callng into question the
methodology by which natual gas prices are escalated in the avoided cost computation.21
Several paries objected, contending it was inappropriate to examine just a single element
of avoided costs. Those arguents were rejected and the Commission adopted a middle
ground approach recommended by Staff, Avista and PacifiCorp.22 Order No. 30480
contains Idaho's curent avoided cost rates. However, in that Order the Commission
encouraged workshops to examine other variables. Those workshops have been
completed and parties have reached agreement on the non-fuel varables. A Stipulation is
pending before the Commission for consideration.
17 Petition of Cassia Wind to Determine Exemption Status, Case No. IPC-E-05-35, Order No. 29954
(2006); Petition of Magic Wind to Determine Exemption Status, Case No. IPC-E-05-34 (2006); Bennett
Creek, supra.18 See e.g. Application of Idaho Power Company for Approval of a Firm Energy Sales Agreement with
Milner Dam WindParkLLC, Case No. IPC-E-05-30, Order No. 29948 (2006).19 Cassia Gulch Wind Park LLC and Cassia Windfarm LLC v. Idaho Power Company, Case No. IPC-E-06-
21.
20 Order No. 30414.21 Petition to Modif Methodology for Determining Fuel Costs Used to Establish Published Rates for
PURPA Qualifing Facilities, Case No. IPC-E-07-15.22 Order No. 30480; Reconsideration Order No 30503.
ANSWER OF BLACK CANYON LLC TO ROCKY MOUNTAIN POWER'S MOTION TO CONTINUE
DECISION (GNE-E-08-02) AND LETTER COMMENTS(GNR-09-01)-9