20110120PAC Griswold Direct.pdf

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BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION 'lun JÃN i 9 pt\ q: 22
IN THE MATTER OF THE JOINT )
PETITION OF IDAHO POWER ) Case No. GNR-E-IO-04
COMPANY, A VISTA CORPORATION, )
AND PACIFICORP DBA ROCKY )
MOUNTAIN POWER TO ADDRESS ~
AVOIDED COST ISSUES AND TO ADJUST )
THE PUBLISHED AVOIDED COST RATE )ELIGIBILITY )
)
DIRECT TESTIMONY OF BRUCE GRISWOLD
ROCKY MOUNTAIN POWER
JANUARY 19,2011
1 Q.Please state your name, business address and position with Rocky
2 Mountain Power (the Company).
3 A.My name is Bruce W. Griswold. My business address is 825 N. E.
4 Multnomah, Suite 600, Portland, Oregon. I am the Director, Short-term Origination and
5 QF Contracts at PacifiCorp Energy, which is responsible for the Company's electric
6 generation and energy trading fuctions.
7 Qualifications
8 Q.Please briefly describe your education and business experience.
9 A.I have a B.S. and M.S. degree in Agricultural Engineering from Montana
10 State and Oregon State, respectively. I have been employed with PacifiCorp over twenty-
11 five years in various positions of responsibility in retail energy services, engineering,
12 marketing and wholesale energy services. I have also worked in private industry and with
13 an environmental firm as a project engineer. I curently work in Commercial and Trading
14 at PacifiCorp Energy. My responsibilities include negotiation and management of
15 wholesale power supply and resource acquisition agreements as well as Qualifying
16 Facility ("QF") power purchase agreements.
17
18 Purpose of Testimony
19 Q.What is the purpose of your testimony?
20 A.The purpose of my testimony is to explain why the Idaho Commission
21 should temporarily reduce the size eligibility threshold of QFs seeking Idaho published
22 avoided cost prices from 10 aMW down to 100 kW as soon as possible.
Case No. GNR-E-10-04
01/19/2011
Griswold, B. (Di)
Rocky Mountain Power
2
1 Q.Please summarize your testimony.
2 A.Rocky Mountain Power has experienced a sharp increase in the number
3 and magnitude of QF projects seeking published rate contracts with Rocky Mountain
4 Power in Idaho recently. Most of the increased activity comes from large wind projects
5 that are disaggregating into two or more smaller projects in order to satisfy the 10 aMW
6 size eligibility threshold, although disaggregation may also occur in other resource types
7 of QF projects, as well. The current Idaho published rates are significantly higher than
8 pricing in alternative offers which Rocky Mountain Power receives, either through its
9 competitive request for proposal ("RFP") process or through the Commission-ordered
10 Integrated Resource Plan ("IRP") methodology that the Company utilizes to price QF
11 projects over 10 aMW. The 10 aMW eligibility threshold for published rates in Idaho
12 equates to a wind QF project with a nameplate capacity range of up to 30 MW. The
13 resulting costs to the Company and customers to integrate the intermittent resource are
14 significant and need to be revisited. Left unchanged, the Commission's curent rules and
15 methodologies implementing PURP A are likely to have a long-term, significant impact
16 on Rocky Mountain Power's power supply costs and its customers' rates. Rocky
17 Mountain Power, Idaho Power Company, and Avista have asked the Commission to
18 reassess the rules, in GNR-E-1O-04. However, Rocky Mountain Power remains exposed
19 to purchasing hundreds of megawatts of additional QF capacity at the published rates
20 before the Commission completes its investigation. Therefore the Commission should
21 temporarily reduce the size eligibility threshold of QFs seeking Idaho published avoided
22 cost prices from 10 aMW down to 100 kW as soon as possible.
Case No. GNR-E-10-04
01/19/2011
Griswold, B. (Di)
Rocky Mountain Power
3
1 Q:Why would a QF developer dis aggregate a large project into smaller
2 projects?
3 A:A developer would disaggregate a large project into separate smaller
4 projects under 10 aMW in order to qualify for published avoided cost prices ordered by
5 the Commission.
6 Q:Can you cite specific examples of project disaggregation?
7 A:Yes. On August 18, 2010, Rocky Mountain Power executed identical
8 power purchase agreements ("PPAs") with Power County Wind Park North, LLC, and
9 Power County Wind Park South, LLC. Both projects are owned and controlled by the
10 same entity, share interconnection facilities, engineering procurement contracts, wind
11 leases, and other common features. Each has a nameplate capacity of 21.78 MW and a
12 peak monthly average generation of just under 10 aMW. Prior to applying for the two
13 QF contracts with published avoided cost prices, the developer first bid a larger single
14 wind project into a PacifiCorp RFP, and later held discussions with PacifiCorp regarding
15 a sale of the site.
16 Q:Are there any other examples of project disaggregation?
17 A:Yes. On December 20, 2010, Rocky Mountain Power executed five
18 identical published avoided cost price PP As with Cedar Creek Wind, LLC. Its five QF
19 projects are owned and controlled by the same entity, share interconnection facilities,
20 engineering procurement contracts, wind leases, and other common features. Each has a
21 nameplate capacity of 25 MW or above, and a peak monthly average generation of just
22 under 10 aMW. Prior to applying for a QF contract with published prices, Cedar Creek
Case No. GNR-E-10-04
01/19/2011
Griswold, B. (Di)
Rocky Mountain Power
4
1 Wind, LLC submitted a bid into the Company's 2009R renewable RFP as a single 151
2 MW project but was unsuccessful due to price. In March 2010, the developer requested
3 QF pricing for two 78 MW projects. The projects were priced using the Commission-
4 ordered IRP-methodology for Idaho QFs over 10 aMW. RMP prepared and delivered
5 avoided cost prices which were rejected by the developer due to the price being too low.
6 In May 2010, the developer resubmitted five individual projects totaling 133 MW and
7 requested published avoided cost prices. Because Rocky Mountain Power and Cedar
8 Creek Wind LLC reached agreement on all terms of their power purchase agreements
9 including price (which was higher than the March 2010 IRP methodology) prior to
10 December 14, 2010, (the effective date of Commission Order No. 32131) Rocky
11 Mountain Power executed final power purchase agreements and, on Januar 10, 2010,
12 filed them with the Commission.
13 Q:Can you cite a non-wind example of project disaggregation?
14 A.Yes. Eastern Idaho Regional Solid Waste District (EIRSWD), a proposed
15 QF using solid waste for fuel, initially requested a PURP A contract for a project that
16 exceeded 10 aMW and then later revised its request to be a published price QF project.
17 EIRSWD's initial project was sized to accommodate the municipal solid waste from the
18 region. Rocky Mountain Power modeled the project using its IRP-methodology based on
19 the project characteristics and delivered pricing to EIRSWD in September 2010. The
20 District rejected those prices as being too low in October 2010 and resized the project to
21 meet the published rate threshold while discussing the option of constructing a second
Case No. GNR-E-10-04
01/19/2011
Griswold, B. (Di)
Rocky Mountain Power
5
1 non-QF project located adjacent to the QF to accommodate the same volume of fuel that
2 the original 17.6 MW project was designed for.
3 Q.Does the queue for published avoided cost price contracts include off-
4 system QFs?
5 A.Yes. Several of the requests pending for published price contracts are
6 from QFs that plan to wheel their output to Rocky Mountain Power via another utility's
7 system.
8 Q.Can you explain what "minimum load issues" means to you?
9 A.In cases where a generation resource delivers power to Rocky Mountain
10 Power's system that exceeds the magnitude of Rocky Mountain Power's customer load in
11 that area, Rocky Mountain Power must move the excess generation elsewhere to serve
12 the Company's network load. This is primarily expected to be the case in the off-peak
13 time period when customer loads are normally lower and cannot absorb the generation,
14 but also may occur with the addition of significant numbers of 10 aMW QF projects or a
15 small number of large QF projects. While the Company recognizes that locational
16 transmission constraints and the need for transmission upgrades should not prevent
17 project development, any incremental cost resulting from the constraint or upgrade
18 should be borne by the developer and not customers. Analysis of transmission system
19 constraints and the cost of options for dealing with those constraints should be
20 incorporated into the QF pricing and contract process so that appropriate adjustments can
21 be made. During minimum load conditions, Rocky Mountain Power must either, back
Case No. GNR-E-10-04
01/19/2011
Griswold, B. (Di)
Rocky Mountain Power
6
1 down its own resources, move the generation elsewhere (if feasible), or curtail the
2 generator.
3 Q.Does recent QF development present "minimum load issues"?
4 A.Yes. Historically the generation threshold for published avoided cost rates
5 had been much lower than the 10 aMW in Idaho, and the costs associated with capacity
6 contribution and integration for an intermittent resource had been deemed to have
7 minimal impact on the Company's electric system. With current thresholds in Idaho at
8 10aMW (which equates to a wind QF project in the nameplate capacity range of up to
9 30MW), the cost to the Company (and therefore to the customer) to integrate these large
10 projects are significant and need to be revisited in the determination of avoided costs. As
11 Rocky Mountain Power is required to purchase more QF generation in Idaho, particularly
12 in the Goshen area, the incremental cost to integrate such energy increases due to
13 minimum load issues that cause Rocky Mountain Power to curtail its own generation, or
14 to move the QF generation elsewhere on the system.
15 Q.Are minimum load issues unique to QF resources?
16 A.No. However in the case of other purchases, minimum load issues affect
17 the price Rocky Mountain Power pays for energy. In the case of QFs under 10 aMW,
18 curently Rocky Mountain Power must pay the published price even if Seller's generation
19 exceeds load in the area and must be delivered to a place on Rocky Mountain Power's
20 system.
21 Q.Are minimum load issues unique to dis aggregated QF projects?
Case No. GNR-E-10-04
01/19/2011
Griswold, B. (Di)
Rocky Mountain Power
7
1 A.No. However the minimum load issues tend to be greater with
2 disaggregated QF projects because of their combined size. When the Commission
3 adopted published prices for QFs under 10aMW, nobody assumed that the majority of
4 resulting development (in terms of total installed capacity) would come from projects
5 much larger than 10aMW, disaggregated into 10aMW sub-projects.
6 Q.Who prepared Exhibit RMP-l to Rocky Mountain Power's
7 Comments fied December 22, 2010 in GNR-E-I0-04?
8 A.I did, and I hereby adopt it and sponsor it.
9 Q.How many MW of QF published avoided cost contract request does
10 Rocky Mountain Power currently have pending?
11 A.As of December 22, 2010, I counted 11 wind proj ects totaling 234 MW of
12 published avoided cost Idaho QF PPAs that are in various stages including contract
13 preparation and due diligence but have not been executed by the Company. Five
14 published rate contracts totaling 133 MW have been submitted to the Commission for
15 review and a decision on their published avoided cost contracts. I should also note that
16 there is also one project of 78 MW that has requested pricing under the IRP-
17 methodology. Of the total 446 MW shown in Exhibit RMP-l, 234 MW are stil in the
18 Company's QF queue for published avoided cost PPAs.
19 Q.Would purchase of all 234 MW of pending requests at the published
20 Idaho QF price tend to increase Rocky Mountain Power's system power purchase
21 costs?
Case No. GNR-E-10-04
01/19/2011
Griswold, B. (Di)
Rocky Mountain Power
8
1 A.Yes. The majority of these pending requests are large wind projects that
2 have been disaggregated into smaller wind QF projects ofless than 10 aMW. I compared
3 their contract volume (assuming typical capacity factors) multiplied by avoided cost
4 prices to an equivalent volume of new QF capacity multiplied by the prices Rocky
5 Mountain Power would have paid under its IRP-methodology for QFs over 10 aMW. I
6 estimate that the additional cost of 234 MW of published price QF contracts would
7 exceed a cost to customers of$12 Milion anually.
8 Q.Do you believe that lowering the eligibilty threshold for published
9 prices from 10 aMW down to 100 kW would stop developers from disaggregating
10 their large projects into smaller ones?
11 A.Yes. Lowering the cap to 100 kW would, I believe, eliminate
12 disaggregation by large wind project developers.
13 Q.Do you believe that lowering the eligibilty threshold for published
14 prices from 10 aMW down to 5 aMW would stop developers from dis aggregating
15 their large projects?
16 A.I'm not sure that would stop wind developers from dividing their 10 aMW
17 projects into two 5 aMW projects.
18 Q.Do you expect that one or more developers with a pending request for
19 published prices wil complete the PP A negotiation process before the Commission
20 issues a final order on whether the 10 aMW cap should be adjusted?
Case No. GNR-E-10-04
01/19/2011
Griswold, B. (Di)
Rocky Mountain Power
9
1 A.I am uncertain when the Commission wil issue a final order, but I wil say
2 that there are several developers with proposed projects with a combined capacity greater
3 than 100 MW that do not have executed agreements with Rocky Mountain Power that
4 have asked Rocky Mountain Power for published avoided cost price PP As based upon
5 their status in Rocky Mountain Power's application queue as of December 14,2010.
6 Q.Does this conclude your direct testimony in this Proceeding?
7 A.Yes.
Case No. GNR-E-10-04
01/19/2011
Griswold, B. (Di)
Rocky Mountain Power
10
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that, on the 19th day of January, 2011, I served a true and
correct copy of the foregoing ROCKY MOUNTAIN POWER'S DIRECT TESTIMONY
OF BRUCE GRISWOLD in Case No. GNR-E-lO-04 on the following named
persons/entities by Hand Delivery (Commission Secretary only) and electronic mail:
Jean Jewell, Commission Secretar Robert D. Kah, Executive Director
Idaho Public Utilities Commission Northwest and Intermountain Power
472 West Washington Street Producers Coalition
Boise, ID 83702-5918 1117 Minor A venue, Suite 300
jean. j eweii(ßpuc.idaho. gov Seattle, W A 98101
(Hand Delivered)rkah(ßnippc.org
Daniel Solander Michael G. Andrea
Rocky Mountain Power A vista Corporation
201 South Main Street, Suite 2300 1411 East Mission Ave
Salt Lake City, UT 84111 Spokane, W A 99202
daniel.solander(ßpacificorp.com michael.andrea(ßavistacorp.com
Ronald L. Wiliams Dean J. Miler
Willams Bradbury PC McDevitt & Miler LLP
1015 West Hays Street PO Box 2564
Boise,ID 83702 Boise, ID 83701
ron(ßwiliamsbradbury.com joe(ßmcdevitt -miler .com
Dana Zentz, Vice President Don Sturevant, Energy Director
Sumit Power Group, Inc J. R. Simplot Company
2006 East Westminster PO Box 27
Spokane, WA 99223 Boise,ID 83707-0027
dzentz(ßsummitpower.com don. sturtevant(ßsimplot.com
Robert A. Paul Scott Montgomery, President
Grand View Solar II Cedar Creek Wind LLC
15690 Vista Circle 668 Rockwood Drive
Desert Hot Springs, CA 92241 North Salt Lake, UT 84054
robertapaul08(ßgmail.com scott(ßwesternenergy. us
R. Greg Ferney James Carkulis, Managing Member
Mimura Law Offices PLLC Exergy Development Group of Idaho LLC
2176 East Franlin Road, Suite 120 802 West Banock Street, Suite 1200
Meridian, ID 83642 Boise, ID 83702
greg(ßmimuralaw.com j carkulis(ßexergydevelopment.com
Thomas H. Nelson, Attorney
PO Box 1211
Welches, OR 97067-1211
nelsonúùthnelson.com
Bil Piske, Manager
Interconnect Solar Development LLC
1303 East Carer
Boise, ID 83706
bilpiske(ßcableone.net
Brian Olmstead, General Manager
Twin Falls Canal Company
PO Box 326
Twin Falls, ID 83303
olmstead(ßtfcanal.com
JohnR. Lowe
Consultant to Renewable Energy Coalition
12050 SW Tremont Street
Portland, OR 97225
jravensanmarcos(ßyahoo .com
Bil Brown, Chair
Board of Commissioners
of Adams County, ID
PO Box 48
Council,ID 83612
bdbrown(ßfrontiernet.net
Donovan E. Walker
Lisa D. Nordstrom
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
dwalker(ßidahopower.com
Inordstrom(ßidahopower .com
Donald L. Howell II
Kristine A. Sasser
Deputy Attorneys General
Idaho Public Utilities Commission
472 West Washington Street
Boise, ID 83702
don.howell(ßipuc.idaho. gov
krs.sasser(ßpuc.idaho. gov
Ted Sorenson PE
Birch Power Company
5203 South 11 th East
Idaho Falls, ID 83404
tedúV.tsorenson.net
Wade Thomas, General Counsel
Dynamis Energy LLC
776 West Riverside Drive, Suite 15
Eagle,ID 83616
wthomas(ßdynamisenergy.com
Paul Marin
Intermountain Wind LLC
PO Box 353
Boulder, CO
paulmartin(ßintermountainwind.com
Ted Diehl, General Manager
North Side Canal Company
921 North Lincoln Street
Jerome, ID 83338
nscanal(ßcableone.net
Shelley M. Davis
Barker Rosholt & Simpson LLP
1010 West Jefferson Street (83702)
PO Box 2139
Boise,ID 83701
smd(ßidahowaters.com
Glenn Ikemoto
Margaret Rueger
Idaho Windfars LLC
672 Blair Avenue
Piedmont, CA 94611
glenni(ßenvisionwind.com
margaret(ßenvisionwind.com
Peter J. Richardson
Gregory M. Adams
Richardson & O'Lear PLLC
PO Box 7218
Boise,ID 83702
peter(ßrichardsonandolear.com
greg(ßrichardsonandoleary .com
DATED this L.ay of January, 2011.
KORMANIK HALLAM & SNEED LLP
R. Kormanik, of the Firm, ISB #5850