20110310PAC Answer to NIPPC Reconsideration Petition.pdf

LOVINGER I KAUFMA LLP
825 NE Multnomah . Suite 925
Pordand, OR 97232-2150
offce [phone]
fax [phone]
..ni' 'cc'lIl" 10. i!lc' fl- l nttl 1 t1PiH. c Hrì J' I J Keneth KaufiKaufi(fw.com
March 7,2011
Via First Class Mail and E-mail
Jean D. Jewell, Secretar
Idaho Public Utilities Commission
472 W Washington Street
PO Box 83720
Boise, ID 83720-0074
J ean.j ewellêpuc.idaho. gov
Re: Answer of Rocky Mountain Power to Northwest and Intermountain Power
Producers Coalition (NIPPC) Petition for Reconsideration of Order No. 32176
IPUC Docket No. GNR-E-10-04s
Dear Ms. Jewell:
Please find enclosed for fiing in the above-captioned docket an original and seven (7) copies
of the Answer of Rocky Mountain Power to Northwest and Intermountain Power Producers
Coalition Petition for Reconsideration.
An extra copy of this cover letter is enclosed. Please date stamp the extra copy and retur it to
me in the envelope provided.
Thank you in advance for your assistance.
Sincerely,
¡¿
Ken Kaufm
cc: GNR-E-10-04 Service List
Enclosures
r";
Mark C. Moench
Daniel E. Solander
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
Telephone: [phone]
Fax: [phone]
mark.moench(?pacificorp.com
daniel.solander(?pacificorp.com
aU u, 20
2n.. il 'r~tA.PI' to PJl J''hl"l .lf'' .
Jeffrey S. Lovinger
Kenneth E. Kaufman
Lovinger Kaufman LLP
825 NE Multnomah, Suite 925
Portland, Oregon 97232
Telephone: [phone]
Fax: [phone]
lovinger(?lklaw.com
kaufman(?lklaw.com
Attorneys for Defendant
Rocky Mountain Power
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
)
IN THE MATTER OF THE JOINT PETITION ) CASE NO. GNR-E-1O-04
OF IDAHO POWER COMPMANY, AVISTA )
CORPORATION, AND ROCKY MOUNTAIN ) ANSWER OF ROCKY
POWER TO ADDRESS AVOIDED COST ) MOUNTAIN POWER TO
ISSUES AND TO ADJUST THE PUBLISHED ) NORTHWEST AND
AVOIDED COST RATE ELIGIBILITY CAP ) INTERMOUNTAIN POWER
) PRODUCERS COALITION
) PETITION FOR
) RECONSIDERATION
)
Pusuant to Idaho Administrative Rule ("IDAPA") 3 1.01.01.33 1.05, PacifiCorp,
dba Rocky Mountain Power ("Company"), submits this Answer to the Motion for
Reconsideration of Order No. 32176 fied by the Northwest and IntermountanPower
Producers Coalition ("NIPPC") on Februar 28,2011 ("NIPPC's Petition").
ROCKY MOUNTAIN POWER'S ANSWER
TO PETITION FOR RECONSIDERATION
1
I. BACKGROUND
On November 5, 2010, Idaho Power Company ("Idaho Power"), Avista
Corporation ("A vista") and Rocky Mountain Power (collectively "the Utilities") jointly
fied a petition and a motion with the Commission ("Joint Petition"). The petition asked
the Commission to investigate various issues regarding implementation of the mandatory
purchase provisions of the Public Utility Regulatory Policies Act of 1978 ("PURP A").
The motion asked the Commission to imediately reduce the published avoided cost
eligibility cap for qualifying facilities (IQFs"), from i 0 average monthly megawatts
("aMW") to 100 kilowatts ("kW") of nameplate capacity. The utilities requested
reduction of the eligibility cap on less than 14 days notice.
In response, the Commission solicited comments in support or opposition to
lowering the cap and held oral argument on Januar 27, 2011.1 In addition to receiving
comments on the requested reduction in the eligibility cap, the Commission asked that the
paries comment on whether such a reduction should apply to non-wind QFs and the
"consequences of dividing larger wind projects into 10 aMW projects to utilize the
published rate."i
On Februar 7, 2011 the Commission issued Order No. 32176, temporarly
reducing the eligibilty cap for wind and solar QFs to 100 kW while the Commission
investigates the facts and circumstances surounding disaggregation of large QF projects
into smaller projects eligible for published avoided cost rates.3 During the temporar cap
1 Order No. 32131, 6 (2010).
2 ¡d. at 5.
3 See Order No. 32176,11-12 (2011).
ROCKY MOUNTAIN POWER'S ANSWER
TO PETITION FOR RECONSIDERATION
2
reduction, wind and solar QF projects over 100 kW are eligible to receive avoided cost
rates calculated using the purchasing utility's Integrated Resource Plan Methodology
("IRP Methodology,,).4 On Februar 28, NIPPC petitioned the Commission for
reconsideration.
II. OVERVIEW
NIPPC's Petition requests that the Commission: (1) take official notice of certain
documents ("First Request"); (2) hold an evidentiar hearng on the issues addressed in
Order No. 32176 ("Second Request"); (3) order the investor-owned utilities in Idaho to
immediately implement changes to the IRP Methodology ("Third Request"); and (4)
reinstate the 10 aMW published avoided cost rate eligibility cap for wind and solar
projects ("Four Request,,).5 Rocky Mountain Power does not take any position with
regard to NIPPC's First Request. Rocky Mountain Power believes that NIPPC's
remaining requests should be denied.
A. NIPPC's Second Request should be denied because the Commission was not
required to hold an evidentiary hearing prior to reducing the eligibilty cap
for solar and wind resources.
NIPPC's Petition argues that, by refusing to hold evidentiar hearings, the
Commission denied NIPPC due process.6 NIPPC cites to the Idaho Supreme Cour's
holding, in Intermountain Gas v. Id Pub. Uti!. Comm 'n/ a case in which the cour held
that due process prevented the Commission from ordering Intermountain Gas to divest its
gas appliance sales business before affording Intermountain Gas a full opportity to
4 ¡d. at 8-9.
5 NIPPC's Petition at 1-2.
6 ¡d. at 8.
7 ¡d.
ROCKY MOUNTAI POWER'S ANSWER
TO PETITION FOR RECONSIDERATION
3
address why its appliance business was in the public interest. 8 NIPPC's reliance on
Intermountain Gas is misplaced because the QFs it represents, unike Intermountain Gas,
do not have the requisite propert interest necessar to trigger due process protection.
The Idaho Supreme Court has held that a QF developer's due process rights do not attach
to a particular avoided cost rate until the developer has established a legally enforceable
obligation to sell its output to a utility at the rate in question. Rosebud Enterprises, Inc. v.
Idaho Pub. Uti!s. Comm'n, 131 Idaho 1, 12 (1997) ("Rosebud Il').9 NIPPC's
constituents' propert interest in paricular avoided cost rates is not perfected unless and
until a legally enforceable obligation exists. Accordingly, NIPPC's argument must faiL.
In its Reply Comments to Order No. 32131,10 Rocky Mountain Power addressed furher
why a hearing is not required to adjust the size cap for published rates. Rocky Mountain
Power's Reply Comments also noted that the Californa Public Utilties Commission
found that no evidentiar hearing is required to suspend the availabilty of standard offer
contracts
i 1 and that the Public Utilty Commission of Oregon has held that no hearng is
8 Intermountain Gas Co. v. Idaho Pub. Uti!. Comm 'n, 97 Idaho 113, 129,540 P2d 775, 791 (1975).
9 In most relevant par, the Rosebud II Court stated:
Rosebud contends that IPUC's 1994 orders gave it a propert interest in the form of a
legally enforceable obligation it was required to have to be entitled to the 1994 rates.
Because Rosebud never made a legally enforceable obligation, as discussed above, it
never had a reasonable expectation that IPUC could not change the methodology for
determining avoided cost rates. Cf Smith v. Meridian Joint Sch. Dist. No.2, 128 Idaho
714, 722-723, 918 P.2d 583, 591-92 (1996) (requiring more than a mere hope or
expectation of continued employment to constitute a propert interest). Therefore, it
never had a propert interest in the 1994 rates, and due process never attached to IPUC's
consideration of the change of the 1994 rates.
Rosebud II, 131 Idaho at 12.
10 Reply Comments of Rocky Mountain Power at 9-10, GNR-E-10-04 (Januar 19,2011).
1 I See Application of San Diego Gas & Electric Co. (U 902-E) for an Ex Parte Order Approving
Modifcations to Uniform Standard Offer NO.1 and Standard Offer No.3, 68 CPUC 2d 434, 1996 CaL. PUC
ROCKY MOUNTAIN POWER'S ANSWER
TO PETITION FOR RECONSIDERA nON
4
required to determine the reasonableness of QF rates.12 The Commission's process was
legal and therefore NIPPC's Second Request should be denied.
B. NIPPC's Third Request should be denied because the IRP Methodology was
beyond the scope of GNR E-I0-04 and the Commission has already
committed to reviewing the IRP Methodology in a separate proceeding.
The soundness of the IRP Methodology is not one of the thee issues the
Commission set forth for consideration in GNR-E-1O-04. Consequently, Rocky
Mountain Power did not address this issue in its comments to the Commission or at the
Januar 27 hearing.13 If NIPPC wishes to challenge the adequacy of the IRP
Methodology, the proper avenue for doing so is to fie a separate petition with the
Commission. Such action is not necessar here, however, because the Commission has
already stated that it will address concerns over the IRP Methodology after the
Commission has an opportity to investigate and make a determnation regarding
disaggregation.14 NIP PC will have an opportunity to resolve its concerns at this later date
LEXIS 1016, *44-45 (stating that the CPUC has suspended the availability of standard offer contracts
without evidentiary hearings).
12 In the matter of Public Uli. Comm'n 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 118, *12
(concluding that the OPUC implementation ofPURPA is not subject to filing and suspension requirements
applicable to retail electric tariffs, and that the Oregon PUC may determine the reasonableness of QF rates
without a hearing).
13 The only remark Rocky Mountain Power made regarding its IRP Methodology was during the hearing,
when Rocky Mountain Power rebutted NIPPC's assertion that its IRP Methodology does not include a
capacity component and therefore understates the Company's tre avoided cost. See In the Matter of the
Application of Idaho Power Company, Avista Corporation and PacifCorp, dba Rocky Mountain Power to
Address Avoided Cost Issues and to Adjust the Published Avoided Cost Eligibilty Cap, Case No. GNR-E-
10-04, Transcript of Oral Argument at 101 (Januar 27,2011).
14 Order 32176, 9 n. 4. ("Other avoided cost issues identified in the Joint Petition, including utilzation
and/or modification of the IRP Methodology, wil be considered after a determination regarding
disaggregation").
ROCKY MOUNTAIN POWER'S ANSWER
TO PETITION FOR RECONSIDERATION
5
when all paries wil be able to present full evidence over the adequacy of the IRP
Methodology. Therefore NIPPC's Third Request should be denied.
C. The Commission should not reinstate the 10 aMW eligibilty cap for solar
and wind QFs, nor stay enforcement of Order No. 32176.
In its Reply Comments, Rocky Mountan Power noted that, in 2010, it executed
seven PPAs comprising over 178 MW nameplate capacity with QFs that disaggregated
into 10aMW projects in order to qualify for published rates.15 Rocky Mountain Power
fuher noted that developers with 358 MW total nameplate capacity of planed new
wind have told Rocky Mountain Power they wish to disaggregate into 10aMW projects to
be eligible for published avoided cost rates in 2011. 16 This allegation, alone, warants
reduction of the 10aMW cap on wind QFs under the legal standard recommended by
Commission staff in IPC-E-05-022 (the last time the Commission temporarily reduced
the eligibility cap for wind QFs). In that proceeding, Commission Staff Engineer Rick
Sterling offered the following testimony regarding how the Commission should
determine whether a temporar change in published rate eligibility should be granted:
Question: What standard do you believe should be applied by the
Commission in determining whether a temporary change in published rate
eligibility should be granted?
Answer: At this initial stage of the proceeding, I believe the Commission
only needs to decide whether to temporarly limit the obligation to
purchase the output from intermittent generating resources such as wind.
Consequently, I believe that the proper standard is to determine whether
there may be a problem developing and whether that problem is serious
enough to justif immediately limiting published rate avai!abilty. I do not
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
15 Reply Comments at 8.
16 Id.
ROCKY MOUNTAIN POWER'S ANSWER
TO PETITION FOR RECONSIDERATION
6
to Idaho Power or its ratepayers. The purose 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 wind
generation, but instead as a "timeout" while we evaluate our position and
determine a future direction that is in the best interests of Idaho's
ratepayers.
IPUC Case No. IPC-E-05-22, Testimony of Rick Sterling at 5 (July 15, 2005) (italics
added). In the curent proceeding the Commission heard ample comment that there may
be a problem serious enough to justify immediately lowering the eligibilty cap for wind
and solar QFs, and therefore did just that. It also set a date for a hearng for the purose
of developing rules that prevent large wind and solar projects from disaggregating into
lOaMW projects. NIPPC's Fourh Request should be denied.
iv. CONCLUSION
For the reasons above, NIPPC's requests for (i) an evidentiary hearng, (ii) an
order requiring the investor-owned utilities in Idaho to immediately implement changes
to the IRP Methodology for calculating avoided cost rates, and (iii) the Commission to
reinstate the 10 aMW eligibilty cap for avoided cost rates, should be denied.
DATED this 7th day of March 2011.;e
Mark C. Moen USB 2284
Daniel E. Solander USB 11467
Rocky Mountain Power
Jeffrey S. Lovinger, OSB 960147
Kenneth E. Kaufman, OSB 982672
Lovinger Kaufman LLP
Attorneys for Rocky Mountain Power
ROCKY MOUNTAIN POWER'S ANSWER
TO PETITION FOR RECONSIDERATION
7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that, on the 7th day of March, 2011, I served a tre and correct
copy of the foregoing ANSWER OF ROCKY MOUNTAIN POWER TO NORTHWEST
INTERMOUNTAIN POWER PRODUCERS COALITION PETITION FOR
RECONSIDERATION in Case No. GNR-E-lO-04 on the following named
persons/entities by First Class U.S. Mail (and e-mail, where available):
Jean Jewell, Commission Secretar
Idaho Public Utilities Commission
472 West Washington Street
Boise, ID 83702-5918
jean. jewellrgpuc.idaho. gov
(Hand Delivered)
Daniel Solander
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
daniel.solanderrgpacificorp.com
Ronald L. Wiliams
Wiliams Bradbur PC
1015 West Hays Street
Boise,ID 83702
ronrgwillamsbradbury.com
Dana Zentz, Vice President
Sumit Power Group, Inc
2006 East Westminster
Spokane, VV A 99223
dzentzrgsumitpower.com
Robert A. Paul
Grand View Solar II
15690 Vista Circle
Desert Hot Springs, CA 92241
robertapaul08rggmail.com
R. Greg Ferney
Mimura Law Offices PLLC
2176 East Franlin Road, Suite 120
Meridian,ID 83642
gregrgmimuralaw.com
Thomas H. Nelson, Attorney
PO Box 1211
Welches, OR 97067-1211
nelsonrgthnelson.com
Robert D. Kah, Executive Director
Northwest and Intermountain Power
Producers Coalition
1117 Minor Avenue, Suite 300
Seattle, VVi\ 98101
rkahrgnippc.org
Michael G. Andrea
A vista Corporation
1411 East Mission Ave
Spokane, VVi\ 99202
michael.andreargavistacorp.com
Dean J. Miler
McDevitt & Miler LLP
PO Box 2564
Boise,ID 83701
joergmcdevitt -miler .com
Don Sturevant, Energy Director
J. R. Simplot Company
PO Box 27
Boise,ID 83707-0027
don.sturevantrgsimplot.coin
Scott Montgomery, President
Cedar Creek Wind LLC
668 Rockwood Drive
North Salt Lake, UT 84054
scottrgwesternenergy. us
James Carkulis, Managing Member
Exergy Development Group of Idaho LLC
802 West Banock Street, Suite 1200
Boise,ID 83702
jcarkulisrgexergydevelopment.com
M.J. Humphries
Blue Ribbon Energy LLC
4515 S. Amon Road
Ammon, ID83406
blueribbonenergy(Øgmail.com
Bil Piske, Manager Aron F. Jepsen
Interconnect Solar Development LLC Blue Ribbon Energy LLC
1303 East Carer 10660 South 540 East
Boise,ID 83706 Sandy, UT 84070
bil piske(icableone.net aronesq(?aol.com
Brian Olmstead, General Manager Wade Thomas, General Counsel
Twin Falls Canal Company Dynamis Energy LLC
POBox 326 776 West Riverside Drive, Suite 15
Twin Falls, ID 83303 Eagle, ID 83616
olmstead(itfcanal.com wtomas(idynamisenergy.com
John R. Lowe Paul Marin
Consultant to Renewable Energy Coalition Intermountain Wind LLC
12050 SW Tremont Street PO Box 353
Portland, OR 97225 Boulder, CO
jravensanmarcos(iyahoo.com paulmartin(iintermountainwind.com
Bil Brown, Chair Ted Diehl, General Manager
Board of Commissioners North Side Canal Company
of Adams County, ID 921 Nort Lincoln Street
PO Box 48 Jerome, ID 83338
Council,ID 83612 nscanal(icableone.net
bdbrown(ifrontiernet.net Shelley M. Davis
Donovan E. Walker Barker Rosholt & Simpson LLP
Lisa D. Nordstrom 1010 West Jefferson Street (83702)
Idaho Power Company PO Box 2139
POBox 70 Boise,ID 83701
Boise, ID 83707-0070 smd(iidahowaters.com
dwalker(iidahopower .com Glenn Ikemotolnordstrom(iidahopower.com 11argaret Itueger
Kristine A. Sasser Idaho Windfars LLC
Deputy Attorneys General 672 Blair Avenue
Idaho Public Utilities Commission Piedmont, CA 94611
472 West Washington Street glenni(ienvisionwind.com
Boise, ID 83702 margaret(ienvisionwind.com
don.howell(iipuc.idaho.gov Peter J. Richardsonkrs.sasserwuc.idaho.gov Gregory M. Adams
Ted Sorenson PE Richardson & O'Lear PLLC
Birch Power Company PO Box 7218
5203 South 11 th East Boise,ID 83702
Idaho Falls, ID 83404 peter(irichardsonandolear.com
tediltsorenson.net QreQ(árichardsonandolear .com
DATED this 7th day of March, 2011.A¥Kenneth E. Kaufman, OSB 982672