20110120ICL-RNP Joint Comments.pdf

Benjamin J. Otto (ISB No 8292)
Idaho Conservtion League
710 N. 6th St
Boise, Id. 83702
Ph: [phone] ext 12
Fx: [phone]
bottoC!idahoconservation .org
Mega Walseth Decker
Renewable Northwest Project
917 SW Oak Street, Suite 303
Portland, OR 97205
Ph: [phone]
Fx: [phone]
megaC!mp.org
2m 1 JÂN 19 PM 4: 51
BEFORE THE IDAHO PUBliC UTIUTS COMMISSION
IN TH MATTR OF THE JOIN
PETITION OF IDAHO POWER
COMPANY, AVISTA CORPORATION,
AND PACIFICORP DBA ROCKY
MOUNTAIN POWER TO ADDRESS
AVOIDED COST ISSUES TO ADJUST
THE PUBliSHED AVOIDED COST RATE
EliGIBIlilY CAP
)
)
)
)
)
)
)
)
Ca No. GNR-E-I0-04
JOINT REPLY COMMENTS OF
IDAHO CONSERVATION
LEAGUE AND RENEWABLE
NORTHT PROJECT
COMES NOW the Idao Conservtion League and Renewble Northwes Project with the
followig reply comments:
1. The Commision has broad authority to implement PURPA withi the Boundaies
Established by Congres aid FER C.................................. ...................................... 2
2. PURPA is Intended to Assst Smal Power Producers, and FERC Has Contiued To Protec
Market Acces for Smaler Projects...................................,..................................... 4
3. The Parties to Th Ca Recogniz tht PURPA is Intended to Promote Smal Generation
and tht the Primar Problem is Not Smal Generators........ ...... ......... ... .... ........... ... .... 6
4. The Commison Should Adopt Some Criteria To Identi Single QF Projec..................1
Attachment 1. Disusson Draf: Single Qualg Facilty Requirement
ICURNP Joint Reply Comments 1 Janua 19, 2011
Th Commision ha wide latitude to implement PURP A's policy goals - within statutory
bounds and FERC Orders. PURP A, paicularly the obligation to purcha at published rates, is
intended to asis smal developers by reducing trasaction costs. To resolve Pha I of this cas,
Commission should us this wide latitude to address some of the Petitioners immediate concern's
whie preservg the 10 a MW eligibilty cap for al single Quaifg Facilties. To serve PURP A's
primar goal -- to promote maret acces to smal power devlopers - ICL and RNP recommend:
· Maitai the eligibilty for published rates for al Smal Quag Faciities at 10 aMW.
· Requie developers to certif each new project, seekig a published rate contract. is a Single
Smal Quaifyg Facilty.
· Consider, amend and adopt criteria to identify the cumulative generation and other
facilties usd derme a Single Smal Quaifg Facilty
Ths wi alow small-sce PURP A activity to continue. with lessr impacts to utilty
portfolios, whie Pha II of this proceedig, adopting appropriate avoided costs metrics,
continues.
The Commison ha broad authority to implement PURPA with th boundaies establied
by Congress and FERC.
The Commision ha the authority to adopt a single Quaifg Facilty requiement to
distingush between tru smal generators and larer projects seegated to quaify for published
rates. PURP A, and FERC's interpretation thereof, provides broad authority to state commissions.
FERC has stated: "Our decision here simply makes clear that the State can purue its policy choices
concerning paricular generation technologies consistent with the requiements of PURP A and
our reguations, so long as such action doe not result in rates above avoided cost." SoCal Edison,
70 FERC" 61,215 at 23 (Febru 23, 1995). The Caifornia Public Utilties Commission
describe PURPA as a "cooperative venture between the federa and state reguators." Id at 5.
ICURNP Joint Reply Comments 2 Janua 19, 2011
"Since 1980, the Commission has given the states wide latitude in implementing PURP A." Id at
21; See American Ref-FUEL Company ofHemstead, 47FERC" 61,161 at 61,533 (1989). FERC
grants this discretion partly "in recognition of the important role, which Congress intended to
give the States under PURPA." Id at 21-22 (citing to PERC v. Mississipp~ 456 US 742, 750
(1982)).
Relying on this authority, FERC recently explained:
"states are alowed a wide degree of latitude in establishig an implementation plan for
. section 210 of PURP A, as long as such plans are consistent with our reguations.
Similarly, with regad to revew and enforcement of avoided cost determinations under
such implementation plans, we have sad that our role is generay liited to ensurg
that the plans are consistent with section 210 ofPURPA...." Order Granting
Clarifition and Dismissing Rehearing ("CPUC Order"), 133 FERC ,. 61,509 at 11
(October 21,2010).
Ths Commission's wide latitude to implement PURPA mus ensure that all Quaifyg
Facilties ca enter into contracts at rates that do "not exceed the established avoide cos of the
purchasing utilty." CPUC Order, 133 FERC ,. 61,509 at 2-3. The Commission may consider the
size of quaifyg facilities and create multi-tier avoided cost rates. FERC has consisently found
that "a multi-tier aVòided costs rate structure is consistent with th~ avoided cost requiments set
forth'in section 210 ofPURPA and in the Commission's reguation." CPUC Order, 133 FERC"
61,509 at 9,12; See SoCal Edison, 70 FERC" 61,215.
Idao curently has a good multi-tier structure with standad rates for prjects up to 10
aMW and IRP basd rates for projects up to 80 MW. The utilties are now askig the
Commission. to effectively eliminate its tiered structure without demonstrating that al smaler
QFs have ~he level of market access that PURP A is intended to faciltate. As desn'bd more fully
ICURNP Joint Reply Comments 3 Janua 19, 2011
below, a priar purse of PURP A is to reduce maret barers for smal QFs. The Commision
should not eliminate the maret acce that PURP A publihed rates are intended to provide to
smaler QFs. And as explaied by Idao Power, the key point of this incentive is the utilty's
obligation to purchas from the QF. IPC Comments at 4-5. GNR-E-IO-04 (December 22,2010).
The Commison ca retai maret access for smaler projects and promote PURP A' s
goals by adopting clea rues to limit published rate avaabilty to tru community scale projects.
Such rues are within the Commission's broad authority to implement PURP A.
PURPA is Intende to As Smal Power Producers. and FERC Has Contiued To Protect
Market Access for Smaler Projec
PURP A was enacted when there "wa very little non-utilty generation" and "because
utilties refused to purchae from non-utilty producers." SoCal Edison, 70 FERC" 61,215 at
61,676; FERC Order No. 671 at 48, 114 FERC 61,102, (Febru 2,2006); See also FERC v.
Mississipp~ 456 U.S. at 750. One of the primar reasns Congress enacted PURP A was because
"there wa no market for electric energ produced by non-utilty generators." Jd at 20-21; Id at 48.
Since then, times have chaged Tody there is a robust market for some independent power
producers in some areas. Even so, there remais an important distinction between the market
access avaable to lare and smal PURP A projects.
FERC ha consistent preferred smal Quaifyg Facilties in establishig exemptions and
interconnection standads under PURP A. Faced with relatively robust markets in the Eas and
California, in 2006 Congress enacted, and FERC implemented, new exemptions from utiHty
ipurcha obligations under PURP A for QFs with open access to real-time wholesae markets.
Importantly, even in those highy developed markets, FERC retaied the purchase obligation for
smal QFs becaus all paries agreed "that smal size could affect a QF's abiltyto access markets."
ICURNP Joint Reply Comments 4 Janua 19,2011
FERC Order No. 688 at 47, RM06-10-o00,_New PURPA Section 210(m) Regutio Applicble to
Small Power Production and Cogeneratio Facilities, (October 20,2006)"
When chalenged, FERC explaied that it retained the small QF preption to
((distingush between small and large facilties to reflect the abilty of paricular QFs to access
markets." PERC Order No. 688-A at 55-56, 119 FERC" 61,305 (June 22, 2007). The smal QF
presumption ((serves a fundaentaly different purse. The Commission is distingushig
between small and lare facilties to reflect the abilty of paicular QFs to access marets." Id at
55-56. In setting this eligibilty cap level FERC stated they "believe that it is reasnable to
conclude that some, perhaps most, small QFs at or below the 20 MW level ca be diinguhed
from larger QFs by the type of delivery facilties to which they typicaly interconnec " Id at 54.
Ths is the same threshold for other PURP A exemptions and "the interconnection rues . . . which
recognize that small generators i.e., 20 MW or below, should be subject to different standads
than large generators." FERC Order No. 688 at 48-49; PERC Order No. 2006, (May 12, 2005).
FERC created a sepate standad generator interconnection procedure for smal QFs
because they ((believe the higher threshold wi remove barers to the development of a grater
number of Small Generating Facilties and promote the development of innovativ smal
generation technologies." PERC Order No. 2006 at 26. Creating special procedures for smal
generators would ((( 1) limit opportunities for trasmitting utilties to favor their own generation,
(and) (2) remove unfair impedients to market entry for small generators by reducing
interconnection costs and time. .." Id at 8.
i FERC continued: "In addition to a presumption in favor of small QFs, the rule also reize that some
QFs, irrespective of size, may not have the abilty to sell in cerain markets beuse of operational chacterstics or
other constrnts." Id at 2. With the small QF presumption, where market acces suffers, "QF development will
continue to be stimulated as it is today though the mandatory purchase obligation." Id at 5. "To rebut this
presumption a utilty the filing electrc utilty wil be reuired in its application to demonstrte, with regad to each
small QF that it, in fact, has nondiscriminatory access to the market." Id at 46 - 47.2 Meaning 20 MW net capacity, or gross capacity minus auxilar power, as identified on FERC Form 556.
FERC Order No. 688 at 11 72 n. 4 i.
ICURNP Joint Reply Comments 5 Janua 19, 2011
To fulril PURPA, FERC treats smaler generators diferently, as should this Commission.
The Parties to Th Cas Recogniz tht PURPA is Intende to Promote Smal Generation and
tht the Primary Problem is Not Smal Power Producers.
The three utilties in thi cas decribe the level and timing of recent PURP A QF requests
as well as their puruit of renewable generation thrug the RFP process. See A vita at 5 - 6,
GNR-E-10-04 (December 22, 2010); IPC at 7, RMP at 5, 10-11 GNR-E-10-04 (December 22,
2010). But thi mature and open market is not avaable for all QFs. Whe today's market for
QFs is more robus than the 1970's, small developers stil face market access barers- chief
among them negotiating power purcha ageements.
In thi presnt cae. Staff recognizes the fundaental pur of PURP A is to encourge
smal QFs who are unliely to have realic maret access. "One of the priar jusifications for
limiting eligibilty for publied rates to 10 aMW ha been to recognize that developers of smal
QFs are les likely to be lare, weii-rmanced orgizations, capable of sophisticated contract
negotiations. By making published rates available for small projects, rate negotiations can be
eliminated and cotracting cots can be minimized." Staffat 4 (emphais added).
Both Idao Power and Avista acknowledge that curent avoided cost rates may not be
perfect, but the process ha been "accepted and/or tolerated in order to accommodate smal QF
developers because historicay (1) smal QF developers generaly had fewer resources to dedicate to
complex contract negotiations and (2) the rmancial impact to the utilty's customers for a
relatively low volume of smal QF projects was likewise smalL." IPC at 9, 19-20; Avista at 2-3,8-9.
RMP asks this Commission to, in par, "acknowledge the rationale for standad rates is to
minimize trasaction costs for smal projects." RMP at 8.
All paies to thi ca appe to agre that PURP A is intended to incentivie smal QFs.
Idao Power explais the incentive is not the published rate, rather the utilties' obligation to
ICURNP Joint Reply Comments 6 Janua 19, 2011
purchase. IPC at 4 - 5. Moreover, the three utilties also explai that many of their asrted
problems result from large wid projects that have been structured to quaify for published rates.
See IPC at 9, 13 - 14,23; RMP at 10 - 12; Avita at 4 - 5. According to Staff:
((Becaus wid projects have been, by far, collectively the larest and most plentiful
projects in recent years, they represent the greatest immediate concern for the utilties.
Consequently, Staff recommends that if the Commission grt the Petition to lower the
eligibilty cap, it apply its decision only to wid projects." Staff at 7.
To meet the dear purse of PURP A - to protect smaller generators - whie addesing the
priar problems leadig to this docket, the Commission should maitain acces to published
rates for individua 10 aMW QFs. Going forwd, the Commission should adopt criteria to
identify single QFs - like those proposed below - with the goal of limiting incentives to larr
projects, which have arificialy divided themselves in an effort to capitalize on the PURP A rates.
The Commision Should Adopt Some Criteria To Identi Single OF Projects
The curent one-mile separation rue is ineffective at limiting the practice of dividig lare,
sophisticated projects with a greater degree of market access into smaler projects to take advtage
of higher published avoided cost rates. See A vita at 5; IPC at 22; RMP at 10 - 12. With thi in
mind, the Commission's statement made when the utilties previously opposed the curnt
eligibilty cap remais relevat - "if the rates are no longer fai and accurte, the appropriate
response is to adjust the rates, not to limit the size of the QFs eligible for the rates." Order No.
29069 at 7, GNR-E-02-Q1 (July 2,2002). However, pendig Phas II - addssing the appropriate
avoided cost model - the Commission may address the separte matter of esablihig which QFs
are eligible for these rates.
The Commission ha wide latitude to enact criteria to prevnt project segregation. When
ICURNP Joint Reply Comments 7 Janua 19, 2011
FERC affirmed the presuption that smal QFs face maret acces barers they stated:
"The Commission wi not alow for gaming of this 20 MW rebuttable presumption.
. . . In any such proceeding, we will consider all relevant factors, including, but not
limited to, ownership, proximity of facilities, and whether facilities share a point of
interconnection. Por purposes of evaluating proximity of facilities with regard to alleged
gaming of this rebuttable presumption, we will not be bound by the one-mile standard
set forth in 18 C.P.R. § 292.204 (a)(2). " PERC Order No. 688 at 49.
FERC has demonstrated that multiple factors, beyond just the one-mile rule, are
appropriate to determine the true size of a QF.
To implement PURP A in Idao, and incentivie smal producers whie protecting
ratepayers the Commision should adopt rues ensurg that published rates are not avaiable to
larer QF or utilty-sce development.3 A priar goal for these criteria should be to exclude from
eligibilty projects that, basd on ownership and operational control, are realy quite lare, projects
that are developed at the sae time, in the same area, by the sae developer, that share the same
operation and control facilties, and that are owned by the sae or similar interests.. Meanwhie
the criteria should alow projects that, whie proposed by the sae developer, are in fact truy
separte facilties. Ths distinction maintais PURP A's public policy goals of incentiviing small-
scale alternative energ whie protecting ratepayers.
Previously, Idao Power offered, and this Commision declined adopting a five mile
buffer rue to limit project segegation in IPC-07 -04. IPC at 21 - 22. The Staff agreed in
priciple with thi notion but in 2007 quesioned its potential effectiveness. Staff at 10. Today
Staff is concerned about "lare wid projects, specificay those that choose to reconfigure
3 Projec up to 80 MW may be Qualifying Facilties. For example the Rockland Wind Project.
ICURNP Joint Reply Comments 8 Janua 19, 2011
themselves into multiple legal entities in order to qualif for published avoided costs rates." Id at 9.
One concern is this practice may "essntialy render the Commission's 10aMW eligibilty cap
meaningless." Id at 9-10. And after reviewig the situation in Oregon, Staff is "surrised" their
five mile rue seems to be "preventing dissgregation" and is "wiing to furher explore similar
. " Ldoptions. .. .
Idao Power ares that reducing the eligibilty cap for al projects is "a somewhat different
and better approach" than restricting common ownership. IPC at 23. Whe diferent, it is
unlikely to be better for the smal power producers since the utilties wat al QFs to us the IRP-
based methodology. Id at 24. Staff has identifed four concerns for requiring smal developers to
use the IRP method Staff at 8. QFs could be suspicious because the model is proprietar, and
complicated. Running the model for each project would be complicated Different reults for
different projects could lead to clais of discriination. And, "requirig smal projects to
negotiate contracts would defeat a longsandig objective of the Commission to minimize
negotiation costs and complexity for small projects." Id. To addrss the inherent maret barer
of the IRP based method for small developers, the Commission should retai the eligibilty cap for
true smal power producers.
Attachment 1 is a Discusion Drat outlining a poible Single Quaifyg Facilty Rule this
Commission could adopt. The proposed criteria attempt to identify true small power producers
whie avoidig the geogrphic distance requiement that Staff questions. Staff at page 10. The
proposed criteria focus on the inherent operational or physica charcteriics that ca diingush
between a lare sophisticated developer and a small power producer. The common ownership
factor looks to prevent lar entities from creating smaler lega subdivisions to hold projects. The
coordinated interconnection, control and operations factor looks towards whether the aggegted
projects are in fact one energ delivery project. The interconnection factor looks towads one of
ICURNP Joint Reply Comments 9 Janua 19, 2011
the priar impacts to syem reliabilty - diggted projects using a sigle interconnection.
The one-year timing factor looks to developers who deign projects to meet the 10aMW limit but
realy intend to develop larr projecs. Combined these factors provide a more precise
identifcation of larer projects whie remaiing adminisratively feasible.
To administer and enforce the single QF requiement the diusion drt relies on
contract languge and diuson between the utilty and the QF, with the Commision resolvig
disputes. Likig complice with the single QF requirement to a contract default incentivies
project investors to self reguate with minimal reguatory involvement.
The single QF requiement proposed for discion could accomplish PURP A' s objective -
protecting market access for smal QFs. It would prevent lare-sce sytem additions durg
Pha II of this proceedig, without stifing development of small PURP A projects durg what is
likely to be a lengthy process. We encourge the Commission to consider this proposa.
ICL and RNP submit thi reply not as offcial paries, rather as public comments. We
stand ready to answer questions or asist the Commision in any manner.
Respectfully submitted this 19th day of Jan ua 2011,
ackaBenjamin J. Otto
Energ Assciate
Idao Conservtion Legue
lsI Mega Decker
Mega Walseth Decker
Senior Staff Counsel
Renewable Northwest Project
ICURNP Joint Reply Comments 10 Janua 19,2011
Attachent 1: Dissson Draf January 19, 2011
Single Qualg Faty Requirement
A single Quaifg Facilty (QF) is eligible to receive published rates for delivery up to 10
average MW monthly.
Single OF Criteria
In setting rates and approvig contracts, the Commission wi consider the followig
criteria in determining whether a project with multiple generation sources quaifies as a single
Quaifyg Facilty. Whether each generation source withi the applicable QF:
(i) uss the sae motive force as the QF;
(li) is owned or controlled by the sae person(s) or afrilated pel'n(s);
(ii) is placed in servce withi 12 months of the QF's in-servce date; and
(iv) shares common interconnection or control, communications, and operation facilties.
Eligibilty for Published Rates
Multiple Facilties that satisfy al of (i)-(iv), above, and deliver more than 10 a MW per
month shal be aggegated for puroses of calculating eligibilty for a Single Smal Quaifg
Facilty published rates.
Definitions
As used above, the term "person(s)" means one or more natur persons or leg entities.
"Affiiated person(s)" means a natur persn or persns or lega entity or entities sharg
common ownership, management or acting jointly or in concert with or exercising influence over
the policies or actions of another person or entity. "Afriliated person(s)" does not include pasive
investors whose sole ownership benefit is using production tax credits, green tag vaues, or
depreciation, or a combination of these.
OF Responsibilties
Upon request, the QF wi veri to the utilty the ownership, management and rmancial
structure of the QF in reasnably sufficient detai to allow the utilty to make an initial
determination of compliance with the ownership requiement. Any dispute concerning a QF's
entitlement to published rates shall be presented to the Commission for reslution.
In each contract for payment of published rates, the seller sha
(i) wart the project satisfies the sigle Quaifg Facilty requiment;
(ii) wart and represent that the seller wil not make any chage in its ownership,
control or management durg the term of the contract that would caus it not to be in
compliance with the single Quaifng Facilty requiement;
(ii) agree to provide buyer with documentation of compliance with the sepate ownership
requiement upon buyer's request, made no more frequently than every 3 year, subject to
the buyer maitaiing the confidentiality of the documentation provided and
(iv) acknowledge that, upon a Commission rindig that the Single Quaifyg Facilty
requiement is no longer met, the seller wi be in default under the contract.
Attachment 1ICL and RNP Reply Comments Januar 19, 2011
GNR-E-I0-04
1
CERTIFICATE OF SERVICE
I hereby certify that on this 19th day of Januar, 2011 tre and correct copies of
the foregoing REPLY COMMENTS OF IDAHO CONSERVATION LEAGUE AND
RENEWABLE NORTHWEST PROJECT were delivered to the following persons via the
method of servce noted:
Hand delivery
Jean Jewell
Commission Secretar (Origial and seen copies provided)
Idao Public Utilties Commission
427 W. Washigton St.
Boise, ID 83702-5983
Electronic Mai only:
Donald L Howell, II
Kristine Saser
Deputy Attorneys Genera
Idao Public Utilties Commission
472 W. Washigton
Boise ID 83702
Don.howell~puc.idao.gov
Kris.sa~puc.idao.gov
Boise, ID 83702
pete~richarnandolear.com
gre~richardsonandolear.com
Lisa D. Nordsrom
Donova E. Waler
Idao Power Company
1221 West Idao Street
Boise, Idao 83707-0070
lnordstrom~idaopower.com
dwale~idaopower.com
Robert D. Kah, Executiv Dirctor
Northwest and Intermountai Power
Producers Coalition
117 Minor Ave., Suite 300
Seattle, WA 98101
rkah~nippc.org
Don Sturevt, Energ Director
J.R Simplot Company
Boise, ID 83707
Don.stureva tC!simplot.eom
Michael G. Andrea
A vista Corpration
1411 E. Mission Ave.
Spokane, WA 99202
Robert A. Paul
Gradview Solar II
1590 Visa Circle
Desert Hot Sprigs CA
robertapa~gmai.com
Daniel Solander
PadfiCorp/dba Rocky Mountai Power
201 S. Mai St., Suite 2300
Salt Lae City, UT 84111
Daniei.Solande~pacifcorp.com
James Carkulis, Managg Member
Exerg Development Group of Idao
802 W. Bannock St., Suite 1200
Boise, ID 83702
jcarkul~exergdevelopment.com
Peter J. Richarn
Gregory M. Adas
Richardsn & O'lear, PLLC
515 N. 27th Street
Ronald Wiliams
Wiliams and Bradbur, P.C.
1015 W, Hays St.
Boise, ID 83702
ICURNP Joint Reply Comments 11 Janua 19, 2011
ron~iamsbradbur.com
Scott Montgomery, President
Ceda Creek Wind, LLC
668 Rockwood Dr.
North Salt Lae City. UT 84054
scotttPesternenerg. us
Dana Zentz, Vice President
Summit Power Group, Inc.
2006 E. Westminster
Spokae, WA 99223
dzentzePsummitpower.com
Thomas H. Nelson
Attorney
P.O. Box 1211
Welches, OR 97067
nelson ePthn elsn. com
John R Lowe. Consultant
Renewable Energ Coalition
12050 SWTremont St.
Portland, OR 97225
jraven sa marcostoo. com
R Greg Ferney
Mimur Law Offce. PLL
2176 E. Fraklin Rd, Suite 120
Meridian, ID 83642
gregtmimuraw.com
Bil Piske. Manager
Interconnect Solar Development, LLC
1303 E. Carer
Boise, ID 83706
bilpisketcableone.net
Dean J. Miler
McDevitt & Miler, LL
P.O. Box 2564
Boise, ID 83701
joeC!mcdevitt -miler. com
Paul Marin
Intermountai Wind, LLC
P.O. Box 353
Boulder, CO 80306
paulmarinePintermountaiwidcom
ICURNP Joint Reply Comments
Wad Thmas Genera Counsel
Dynamis Energ. LLC
776 W. Riverside Dr., Suite 15
Eage, ID 83616
wthomasdynamisenergcom
Shelley M. Davis
Barker Rosholt & Simpson. LL
1010 W. Jeffersn St.
Boise, ID 83701
smdC!idaowaters.com
Brian Olmstead, Genera Manager
Twi Falls Canal Company
P.O. Box 326
Twi Fals. ID 83303
olmsteadC!tfcaal.com
Ted Diehl, Genera Manager
North Side Canal Company
921 N. Licoln St.
Jerome, ID 83338
nscanalePcableone.net
Bil Brown, Cha
Board of Commissoners of Adas
County
P.O. Box 48
Council. ID 83612
dbbrownePfrontiernet.net
Ted Sorenson, P .E.
Birch Power Company
5203 South 11th Eas
Idao Fals, ID 83404
tedC!soreson.net
~ &~
Benj~in J. Otto
Idao Conservation League
12 Janua 19, 2011