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HomeMy WebLinkAbout20110120PAC Reply Comments.pdfR r: III Ken Kaufan Lovinger Kaufan. LLP 825 NE Multnomah. Suite 925 Portland. Oregon 97232 Telephone: (503) 230-7715 Fax: (503) 972-2921 kaufan~lklaw.com "'!"ll JHl 19 nv t._ 23lUi! Í'U~ r n '1' . Danel E. Solander Rocky Mountain Power 201 South Main Street. Suite 2300 Salt Lake City. Uta 84111 Telephone: (801) 220-4014 Fax: (801) 220-3299 danel.solander~pacificorp.com Attorneys for Rocky Mountan Power BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION IN TH MATTER OF THE JOINT ) PETITION OF IDAHO POWER ) Case No. GNR-E-10-04 COMPANY. AVISTA CORPORATION. ) AN PACIFICORP DBA ROCKY ) REPL Y COMMNTS OF MOUNTAIN POWER TO ADDRESS ~ ROCKY MOUNTAI POWER AVOIDED COST ISSUES AN TO ADJUST ) THE PUBLISHED AVOIDED COST RATE )ELIGIBILITY ) ) Comes now. PacifiCorp d//a Rocky Mountain Power ("Rocky Mountain Power") and pursuant to that Notice of Scheduling Order No. 32131 issued on December 3.2010. by the Idaho Public Utilties Commssion (the "Commission") hereby provides its Reply Comments in support of reducing the eligibilty cap for published avoided cost rates. REPLY COMMENTS OF ROCKY MOUNTAI POWER INTRODUCTION On December 3, 2010, the Commission issued Order No. 32131 in ths proceeding, which directed Idaho Power Company, Avista Corporation, and Rocky Mountain Power ("the Utilties") and interveners to address thee issuesl concerning the Utilties' Joint Petition to Address Avoided Cost Issues and Joint Motion to Adjust the Published Avoided Cost Rate Eligibilty Cap ("Joint Petition"). Based upon the responses of paries and intervenors, the Commission wil establish a record from which to make a decision regarding the Joint Petition's request to lower the published avoided cost rate eligibilty cap. Comments were submitted December 22,2010; reply comments are due Januar 19, 2011; and oral arguent is scheduled for Janua 27, 2011. Additionally, in Order No. 32131, the Commission established that its decision regardig an adjustment to the published avoided cost eligibilty cap would be effective as of December 14,2010. REPLY COMMENTS A, Reducing the Eligibilty Cap for published avoided cost prices would not violate PUR A. The Nortwest and Intermountan Power Producers Coalition ("NIPPC') assert that reducing the eligibilty cap would violate PURA.2 Its argument appears to be that 1 Those issues are: (1) the advisabilty of reducing the published avoided cost eligibilty cap; (2) if the eligibilty cap is reduced, the appropriateness of exempting non-wind QF projects from the reduced eligibilty cap; and (3) the consequences of dividing larger wind projects into 10 aMW projects to utilze the published rate. Order No. 3213 1 at 5. 2 Comments in Opposition by the Northwest and Intermountain Power Producers Coalition and Alternative Requestfor an Evidentiar Hearing at 6, IPUC Case No. GNR-E-IO-04 (December 22, 2010) ("NIPPC Comments"). REPLY COMMENTS OF ROCKY MOUNTAI POWER 2 the Commission recognized, in the proceeding wherein it adopted a 10 aMW eligibilty cap, that such a cap was necessar to achieve PURA's mandate that utilties purchase electricity from "nontraditional facilties...3 While it is true that one objective ofPURPA is to promote the development of non-utilty owned renewable generation, PURP A mandates that ratepayers are indifferent to the avoided cost prices and are not requied to pay more than the utilty's avoided cost or the costs the utility would have incured to purchase energy and capacity but for the QF purchase.4 If a 10 aMW eligibilty cap causes ratepayers to pay more than avoided cost for electicity purchaed from QFs, then ", maintainng the cap may violate PURP A. Commission Sta correctly noted in its Comments that PURP A does not require states to offer published rate rates for purchases from QFs with a design capacity greater th 100 kW.5 The Commission's implementation ofa 10 aM eligibilty thshold was a discretionar act that may be modified upon proper notice.6 Therefore, if the Commission determines that the 10 aMW eligibilty theshold no longer serves its policy objectives or does not maintan the ratepayer neutrality mandate, changing it does not violate PURP A. III III 3 Id. 4 PURPA § 210, 16 U.S.C. § 824a-3(b) (2010). s Comments of the Commission Staffat 3, Case No. GNR-E-lO-04 (Dec. 22, 2010) ("Staff Comments"); see also 18 C.F.R. § 292.304(c)(I). 6 Idaho Code § 61-624 (2010) ("The commission may at any time, upon notice to the public utilty affected, and after opportnity to be hear as provided in the case of complaits, rescind, alter or amend any order or decision made by it. Any order rescinding, altering or amending a prior order or decision shall, when served upon the public utilty affected, have the same effect as is herein provided for original orders or decisions.") REPLY COMMENTS OF ROCKY MOUNTAI POWER 3 B. The Commission's Procedural Schedule DOES NOT violate the Filed Rate Doctrine or the Prohibition Against Retroactive Ratemaking, The filed rate doctrine holds that a utilty may charge only the approved rates and charges it has on fie with its regulatory body. NIPPC asserts, in its comments, that the fied rate doctrine prohibits the Commission from changing the eligibilty cap effective December 14,2010, and prohibits the Utilties from refusing to accept an offer from a QF over 100 kW to sell it power at the published rates.7 Assumng, arguendo, that the 10 aMW eligibilty theshold is a "rate" for puroses of this doctrne, Rocky Mountai Power disputes NIPPC's assertions, for the reasons provided below. Ths Commission aleady has recognized that the fied rate doctre is not without exception.8 One widely recognized exception to the filed rate doctrne is that it does not apply to cases in which the utilty counterpar has adequate notice that resolution of some specific issue may cause a later adjustment to the rate being collected at the time of service. 9 The reasons why the fied rate doctrine (and the rule against retroactivity) do not apply where the Commission has given notice of a possible rate chage were explaied by the U.S. District Cour for Arzona: The purose of the rule against retroactivity, and the closely related filed rate doctrine, is to ensure predictabilty. Therefore, the rule does not 7 NIPCC Comments, p. 9. 8 IPUC Order No. 23908, 1991 Ida. PUC LEXIS 158, *20-21 (1991). 9 Natural Gas Clearinghouse v. FERC, 965 F.2d 1066, 1075 (D.C. Cir. 1992) ("The fied rate doctrne simply does not extend to cases in which buyers are on adequate notice that resolution of some specific issue may cause a later adjustment to the rate being collected at the time of service. "); see also OXY USA, Inc. v. FERC, 64 F.3d 679, 699 (D.C. Cir. 1995) (liThe goals of equity and predictbilty are not undermined when the Commission wars all paries involved that a change in rates is only tentative and might be disallowed. "); Northwest Pipeline Corp. v. FERC, 61 F.3d 1479 (lOth Cir. 1995) (echoing Natural Gas Clearinghouse); Qwest Corp. v. Koppendrayer, 436 F.3d 859, 864 (8th Cir. 2006); Tucson Elec. Power Co. v. El Paso Elec. Co., 2009 U.S. Dist. LEXIS 82499, *25. REPLY COMMNTS OF ROCKY MOUNTAIN POWER 4 apply in situations where there is adequate notice that resolution of some specifc issue may cause a later adjustment to the rate being collected at the time of service. The goals of equity and predictabilty are not undermined when the Commission wars all paries involved tht a change in rates is only tentative and might be disallowed. Indeed, providing notice tus retroactive ratemakg into a functionally prospective process by informng the relevant individuas that the rates being promulgated are provisional only and are subject to later revision. Tucson Elec. Power Co. v. El Paso Elec. Co., 2009 U.S. Dist. LEXIS 82499, *24-25 (emphasis added; internal quotations and citations omitted). As explained, above, when a state utilty commssion gives notice that a rate may be subject to future change for a specified reason, that warng becomes, effectively, par of the existing rate such that any later revision is prospective, rather than retroactive. The Commission presumably was aware of this legal principle when it issued Order No. 3213 1. Since the Commssion acted properly when it declared that any change to the eligibilty cap would be effective December 14, 2010, it necessarly follows tht the Utilities are not obligated to offer published rates (except provisionally) to QFs above 100 kW until the Commssion rules on the Joint Petition's motion to reduce the eligibilty cap. To find otherwse would render meaningless the Commission's order of a December 14, 2010 effective date. Until fuer notice from the Commssion, Rocky Mounta Power intends to give effect to Order No. 32131 by adminstering QF contrct applications from QFs greater than 100 kW as follows: If Rocky Mountain Power and the QF (under 10 aMW) both executed a power purchase agreement ("PPA") or reached agreement on all fmal terms of a PPA prior to December 14, 2010, Rocky Mounta REPLY COMMENTS OF ROCKY MOUNTAI POWER 5 Power will pay Seller the published avoided cost prices.1O If Rocky Mounta Power and the QF did not execute the final PPA or reach agreement on final terms of a PP A prior to December 14, 2010, Rocky Mountain Power will still agree to execute a PPA but, consistent with Order No. 3213 1, it wil either: (1) make the contrct price provisional, to be determned finally in accordance with the Commssion's final determination in GNR- E- 1 0-04; or (2) pay avoided cost prices prepared for the QF based on the project specific characteristics using the Commission approved IRP-methodology. For any QF contract with provisional pricing, Rocky Mountain Power will note in its application to the Commission the date that the paries reached agreement on all terms of the final power purchase agreement and ask that the Commission determine whether the QF should be eligible for published rate prices. II 10 An example is the Cedar Creek Wind LLC QF development consisting of five separate and distict facilties each sized 10 aMW or less (Coyote Hil (27.6 MW), Steep Ridge (25.2 MW), Ratlesnake Canyon (27.6 MW), Five Pine (25.2 MW) and Nort Point (27.6 MW)). Rocky Mountain Power and Cedar Creek finished negotiations of all terms prior to December 14, 2010. Subject to Commission approval, Rocky Mountain Power therefore ageed to pay the published avoided cost rates in the five power purchase agreements and fied them with the Commission on Januar 10, 2011. Direct Testimony of Bruce Griswold ("Griswold Direct Testimony.") at 4-5. ii The Commission's Order, and Rocky Mountain Power's resulting treatment of QFs described above, is consistent with the approach the California Public Utilties Commission (CPUC) used when it grted a joint request to immediately reduce the term of stadard offer QF contracts from 30 year down to 6 year. see Application of San Diego Gas & Electric Co. (U 902-E) for an Ex Parte Order Approving Modifcations to Uniform Standard O.fr NO.1 and Standard Offer No.3, 68 CPUC 2d 434, 1996 CaL. PUC LEXIS 1016, *10-11 ("SOL Order"). In that proceeding, the CPUC made the change in a final order dated October 9,1996, but ordered the change to be effective as of April 16, 1996-six months prior to its final order. The CPUC expressly rejected the assertion that utilties were required to continue executing standard offer contracts with 30-year terms until the date of the CPUC's final order, stating that the QF's reliance on the 30-year term after receiving constrctive notice of change in the form of the utilties' petition was commercially unreasonable. Id. at *46. It acknowledged that regulatoiy uncertainty is "unpleasant", but a fact of life (Id. at *37), and ordered that the utilties provide eveiy person seeking a copy of a standard offer contrct be given a copy of its decision, too, so that QFs, hencefort, would have actual notice that QF rates are subject to change at any time. Id. at *53. REPLY COMMNTS OF ROCKY MOUNTAI POWER 6 C. Conditions warrant reducing the 10 aMW Cap with no grandfathering. If the Commission decides to modify the 10 aMW cap with an effective date of December 14, 2010 (or any other effective date), there likely will be disputes regarding how to determe whether a QF that does not have an executed PPA on that date should receive grandfathered tratment. When the Commssion last ordered a temporar reduction in the 10 aMW theshold for on-system (i.e., directly connected to the utilty) wind QFs, it adopted the followig criteria for grandfathering projects that were in progress at the time of the Commission's notice: For puroses of determining eligibilty we find it reasonable to use the date of the Commission's Notice in this case, i.e., July 1,2005. For those QF projects in the negotiation queue on that date, the criteria that we will look at to determine project eligibilty are: (l) submitt of a signed power purchase agreement to the utilty, or (2) submittal to the utilty of a completed Application for Interconnection Study and payment of fee. In addition to a finding of existence of one or both of the preceding theshold criteria, the QF must also be able to demonstrate other indicia of substatial progress and project matuity, e.g, (1) a wid stdy demonstrating a viable site for the project, (2) a signed contract for wind tubines, (3) aranged financing for the project, and/or (4) related progress on the facilty permtting and licensing path. Order No. 29839 at 10. The Commission did not explai why it felt that grandfatherig was waranted in 2005. The Commssion has discretion to determe grandfathering criteria, or to deny grandfathering, depending upon the circumstaces at the time. 12 12 See SOL Order at *45-46. The CPUC, in deciding whether to gradfather any QFs that did not have fully executed agreements prior to the chosen date, considered the following factors: a. Amount of nameplate capacity at issue b. Likelihood that all QF offers would develop and the effect on utility reserve margins c. Market rates for natural gas, and d. Consequences to ratepayer of paying too great a price REPLY COMMENTS OF ROCKY MOUNTAI POWER 7 Compared to circumstances in 2005, the theat to ratepayers if the Commission does not reduce the 10 aMW limit is greater. Idaho Power predicts that wind generation on its system may exceed 1 100 MW - more than its miimum loads - in the near futue if no action is taen. Order No. 32131 at 2. Rocky Mountain Power states that developers comprising over 358 MW of wind capacity have contacted Rocky Mountain Power requestng an Idaho power purchase agreement. Id. In 2005, Idaho Power had only 267.5 MW of contracted QF wid (Order No. 29839 at 2); Rocky Mountain Power had only 20 MW. Order No. 32131 at 2. Since 2005, the number of QF wind projects being developed in Idaho has expanded greatly. As of ths filing, Rocky Mountan Power has received Commssion approval on 43.6 MW of published rate wind QF projects and has another 133.2 MW of published rate wind QF projects pending before the Commssion for a decision.13 These projects, under the development of more sophisticated developers with additional techncal and financial resoures available, have a higher likelihood of being completed. Thus, their cumulative affect on system power costs and system reliabilties has multiplied. Given these trends above, Rocky Mountan Power urges the Commssion not to require grandfathered treatment of any QFS.I4 Both Idao Power and Rocky Mounta Power have developers seeking to sell output from complexes of wid QFs comprising In light of the above factors, the CPUC allowed limited grndfathering but noted that its decision might have been different had the factual circumstances varied. /d. 13 Griswold Direct Testimony at 8. dl4 In the SOL Order, the CPUC held that a QF and the utilty must have a meeting of the minds on the terms and conditions of a power purchase agreement, and the QF must have mailed or personally delivered documentation of that agreement to the utilty prior to the date the utilty petitioned the CPUC, in order to receive gradfathered treatment. SOL Order at *49-50. REPLY COMMENTS OF ROCKY MOUNTAI POWER 8 hundreds of megawatts at the published prices. For the reasons discussed above, those developers have no right to rely on receiving published prices, and the cost to ratepayers of the Commssion exercising discretion to grandfather such large projects is signficant. In the absence of grandfathering criteria from the Commission, developers still will be entitled to pre-December 14,2010 status if they can prove that they established a legally enforceable obligation prior to that date. D. Hearing is not required to grant the Joint Petition, In its comments, NIPPC asserts that it is improper for the Commission to modify the 10 aMW thshold without an evidentiar hearng. NIPPC Comments at 13. Such an assertion misconstres the purose of the Utilties' Joint Petition. The immediate purose of modifying the 10 aMW theshold is to pause the status quo while the Commission taes the time it needs to investigate the issues raised by the pares. Without such a pause, the risk that the utilties will be inundated with large blocks of new wind capacity at prices disadvantageous to the ratepayer is self-evident. In 2005, Commission Sta Engineer Rick Sterling offered the following testimony regardig how the Commission should determine whether a temporar change in published rate eligibilty should be granted: Question: What stadad do you believe should be applied by the Commission in determg whether a tempora change in published rate eligibilty should be granted? Answer: At ths initial stage of the proceeding, I believe the Commission only needs to decide. whether to temporaly limit the obligation to purhase the output from intermttent generatig resoures such as wind. Consequently, I believe that the proper standard is to determine whether there mi be a problem developing and whether that problem is serious enough to justif immediately limiting published rate availabilty. I do not REPLY COMMNTS OF ROCKY MOUNTAI POWER 9 believe that Idaho Power at this stage needs to make a convincing case that a problem has already occurred or that harm has already been done to Idaho Power or its ratepayers. The purse of restricting published rates is to pause long enough to gather information and to assess whether Idaho is headed in the right direction before proceeding fuer on the curent path. If the Commission agrees, I would not view that as a judgment on the price, the quantity, or the prudence of acquiring wid generation, but instead as a "timeout" while we evaluate our position and determine a futue direction that is in the best interests of Idaho's ratepayers. Testimony of Rick Sterling, 5 (July 15,2005) IPC-E-05-22 (itaics added). Mr. Sterling's testimony in IPC-E-05-22 rings tre in this proceeding as well. If the Commission believes there is ample evidence to suggest tht a timeout is necessar to protect the ratepayers, it may call a timeout without resort to an evidentiar hearing. IS E. If the Commission modifies the 10 aMW threshold for wind only, it should apply to off-system wind projects, For the reasons stated in the Joint Petition and in its Comments, Rocky Mountain Power favors reducing the eligibilty cap for all resource tyes of QF generation.I6 In the alternative, Rocky Mountain Power asks that the Commssion modify the eligibilty cap for on- and off-system wind projectsP Rocky Mountain Power is negotiating with several QF wid projects located outside of its servce terrtory that plan to wheel their IS See so I Order at 44-45 (stating that the CPUC has suspended the availabilty of standard offer contrcts without evidentiar heaings); see also In the matter of Public Ulil. Comm. of Oregon Investigation into Interconnection of PURP A Qualifing Facilties with Nameplate Capacity Larger than 20 Megawatts to a Public Utilty's Transmission or Distribution System, OPUC Order No. 10-132,5.2010 Ore. PUC LEXIS U8, *12 (concluding that the OPUC implementation of PURA is not subject to filing and suspension requirements applicable to retail electric tariffs, and that the Oregon PUC may determine the reasonableness ofQF rates without a hearing). 16 See Griswold Direct Testimony at 3-4. 17 In IPC-E-05-22. the Commission's temporar reduction of the eligibilty cap did not apply to off-system wind project delivered via a firm schedule. REPLY COMMENTS OF ROCKY MOUNTAI POWER 10 output to Rocky Mountan Power and be paid the published rate prices. is Although off- system wind projects deliver firm scheduled power, they still present a risk of inflating the Utilties' average system costs and aggravating minum load conditions on PacifiCorp's system. Therefore, the Commssion's order should make no distiction between wid projects that are off-system and delivered via a firm schedule and wid projects that are interconnected directly to the utilty buying their output. 19 CONCLUSION For the reasons set fort above, Rocky Mounta Power requests that the Commission grant the request in the Joint Petition to temporarly reduce the eligibilty theshold for published prices from 10 aMW down to 100 kW. Respectfly submitted this 19t day of Januar 2011. Loviger Kaufan LLP KORMNIK HALAM & SNEED, LLP lsi John R. Kormank John R. Korman, ISB #5850 KORMNIK HALLAM & SNEED LLP 1099 S. Wells Street, Ste. 120 Meridian, ID 83642 Telephone: (208) 288- 1888 Fax: (866) 821-9543 jrk~khidaholaw.com K!enneth Ka an, OSB #982672 825 N.E. Multnomah, Suite 925 Portland, Oregon 97232 (503) 230-7715 kaufan~1kaw.com Danel Solander, Utah Bar 11467 Attorneys for PacifCorp 18 Griswold Direct Testimony at 6. 19 If the Commission excluded off-system wind QFs from a reduction of the 10 aMW eligibilty threshold, it would create a perverse incentive for wind QFs to wheel their output to an Idaho utility in order to circumvent the cap reduction. REPLY COMMENTS OF ROCKY MOUNTAIN POWER 11 CERTIFICATE OF SERVICE I HEREBY CERTIFY that, on the 19th day of Januar, 201 i, I served a tre and correct copy of the foregoing ROCKY MOUNTAIN POWER'S REPLY COMMENTS in Case No. GNR-E-lO-04 on the following named personslentities by Hand Delivery (Commission Secretar only) and electronic mail: Jean Jewell, Commission Secretar Robert D. Kah, Executive Director Idaho Public Utilties Commission Nortwest and Intermountan Power 472 West Washigton Street Producers Coalition Boise, ID 83702-5918 1 1 17 Minor A venue, Suite 300 jean.jeweiicæpuc.daho.gov Seattle, WA 98101 (Hand Delivered)rkah~Itc.org Danel Solander Michael G. Andrea Rocky Mounta Power A vista Corporation 201 South Main Street, Suite 2300 1411 East Mission Ave Salt Lake City, UT 841 1 1 Spokane, W i\ 99202 dael.solander~acificorp.com michael.andreacæavistacorp.com Ronald 1. Wiliams Dean J. Miler Wiliams Bradbur PC McDevitt & Miller LLP i 0 i 5 West Hays Street PO Box 2564 Boise, ID 83702 Boise,ID 83701 roncæwiliambradbur.com joe~cdevitt-miiier.com Dana Zentz, Vice President Don Stuevant, Energy Director Sumt Power Group, Inc J. R. Simplot Company 2006 East Westinster PO Box 27 Spokane, WA 99223 Boise,ID 83707-0027 dzntz~sumtpower.com don.stuevantcæsimplot.com Robert A. Paul Scott Montgomery, President Grad View Solar II Cedar Creek Wind LLC 15690 Vista Circle 668 Rockwood Drive Desert Hot Springs, CA 92241 Nort Salt Lake, UT 84054 robertpaul08cægmail.com scottcæwesternenergy.us R. Greg Ferney James Carkulis, Managing Member Mimura Law Offces PLLC Exergy Development Group ofIdaho LLC 2176 Eat Franin Road, Suite 120 802 West Banock Street, Suite 1200 Meridian,lD 83642 Boise,lD 83702 greg(turaw.com j carkuiscæexergydevelopment. com Thomas H. Nelson, Attorney POBox 1211 Welches, OR 97067-1211 nelsonúùthelson.com Bil Piske, Manager Wade Thomas, General Counsel Interconnect Solar Development LLC Dynamis Energy LLC 1303 East Carer 776 West Riverside Drive, Suite 15 Boise,ID 83706 Eagle,ID 83616 bilpiske(ßcableone.net wthomas(ßdynamisenergy.com Brian Olmstead, General Manager Paul Marin Twin Falls Canal Company Intermountain Wind LLC PO Box 326 POBox 353 Twin Falls, ID 83303 Boulder, CO olmstead(ßtfcanal.com paulmarin(ßintermountainwind.com JohnR. Lowe Ted Diehl, General Manager Consultant to Renewable Energy Coalition Nort Side Canal Company 12050 SW Tremont Street 921 North Lincoln Street Portland, OR 97225 Jerome, ID 83338 jravensanarcosCWahoo.com nscanal(ßcableone.net Bil Brown, Chair Shelley M. Davis Board of Commssioners Barker Rosholt & Simpson LLP of Adams County, ID 1010 West Jefferson Street (83702) PO Box 48 PO Box 2139 Council,ID 83612 Boise,ID 83701 bdbrown~frontiernet.net smd~idahowaters.com Donovan E. Waler Glenn Ikemoto Lisa D. Nordstrom Margaret Rueger Idaho Power Company Idaho Windfars LLC PO Box 70 672 Blair Avenue Boise, ID 83707-0070 Piedmont, CA 94611 dwalker~idahopower.com glenn(ßenvisionwind,com lnordstrom(ßidahopower.com margaret(ßenvisionwind.com Donald 1. Howell II Peter J. Richardson Krstie A. Sasser Gregory M. Adams Deputy Attorneys General Richardson & O'Lear PLLC Idaho Public Utilties Commssion POBox 7218 472 West Washigton Street Boise,lD 83702 Boise,ID 83702 peter~richadsonandoleai.com don.howell~ipuc.daho.gov greg~ichardsonandoleai.comkrs.sasser~uc.idao.gov Ted Sorenson PE Blich Power Company 5203 South 11 th East Idaho Falls, ID 83404 ted1atsorenson.net l' DATED ths l! day of Janua, 2011. KORMNIK HALA & SNED LLP lsI John R. Korman John R. Korm, of the Fir, ISB #5850