20110422Kalich Reb.pdf

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Corp.
April 21, 2011
c Utilities Commission
ashington Street
D 93702
Email: jean.jewell(fpuc.idaho.gov
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Rebuttal Testimony of Clint Kalich on Behalf of Avista Corporation
IPUC Docket No. GNR-E-ll-Ol
Dear Ms. Jewell:
Please find enclosed for filing an original and nine copies of the Rebuttal Testimony of
Clint Kalich on behalf of A vista Corporation for fiing in the above-referenced docket on April
22,201 L Also enclosed is a CD with an electronic copy of Mr. Kalich's rebuttal testimony in
Word. The first enclosed copy is hereby designated as the reporters copy. Please let me know if
you have any questions regarding this filing.
Sincerely,
rz cD
Michael G. Andrea
Senior Counsel
Enclosures
cc: Service List
BEFORE TH IDAHO PUBliC UTIT COMMSION
IN TH MATIR OF TH COMMISSION'S )INSTIGATION INO ) CASE NO. GNR-E-II-Ol
DISAGGREGATION AN AN )
APPROPRITE PUBLISHED AVOIDED )COST RATE ELIGffILIT CAP )
STRUCTU FOR PURA QUALIFING )FACILITIE )
)
REBUTTAL TETIONY OF CLIN KALICH
A VITA CORPRATION
APRI22, 2011
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Pleae state your name, the name of your employer, and your busines
addre.
My name is Clint Kach. I am employed by Avista Corpration ("Avista") at
1411 Eat Mission Avenue, Spokane, Washington.
Did you provide dire testimony in this proeeding?
Yes. I submitted the Direct Testiony of Clint Kalch that was filed in ths
proceeding on behal of A vista Corporation on March 25, 2011.
Do you have any corrtions to your dire tetimony that was previously
riled in th proeeng?
Yes. On pages 24 and 25 of my diect testiony, I testified that, at a published
rate of approximately $77 per MW plus the value of RECs, the 20-yea
additional profit to the PURA developer, as compared to a fai market for wind
projects near $60 per MW with RECs, is around $56 millon. I fuer noted that
it is customers who would bear the burden of that additional profit; however, I
inadvertently testified that such burden was $47 millon instea of the $56 millon
previously stated. Accordingly, the "$47 millon" that appear on page 25, line 10
of my diect testimony should be "$56 millon"
Renewable Northwest Prject ("RNP") submitted tetimony in thi
proceeing regardng certn factors to consider in determnig eligibilty for
published avoided cost rate. H the Commission adopts a publihed avoided
cost rate eligibilty cap structre that alows QFs as large as 10 aM to tae
advantage of published avoided cost rate, wi consideration of thes factrs
prevent disaggregation?
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No. As I testified in my dict testiony, it wil be extremely difficult or
impossible to prevent disaggregation if the published avoided cost rate is
available to QFs as large as 10 aM. RN presents a laundr list of no fewer
than 14 factors that may nee to be considered in determning whether a QF is a
single project or a piece of a disaggregated project. The number of factors for
consideration on RN's list itself ilustrates the high level of complexity and
burden that wil be required in any effort to prevent disaggrgation if a published
avoided rate eligibilty cap strctue that provides published rates to QFs as large
as 10 aM is adopted.
Do RN in its tetimony provide any inights that you wih to highght
here?
Yes. RN makes thee statements that wart fuer discussion. The fit
begins at line 4 of page 12 of Ms. Decker's diect testimony. Ms. Deker states:
"for enforcing the PUR A published rate theshold, where the
rationale for published rates is drven by the QF's level of
economic and bargaining power, the most importt characteristics
may be financial in natue: beneficial ownership, financing, cost
and revenue sharng, combined purchases of generating equipment,
and combined constrction contracts. However, because each of
those factors could be relatively easy to obscure with extra
paperwork and possibly diffcult to determne at the tie of initial
contrting, a distace factor between projects may be a necessar
addition to the frework." (Emphasis added.)
In ths testiony, RN itself acknowledges that, absent a distace requirement,
QF developers could circumvent limitations on factors such as beneficial
ownership, financing, cost and revenue sharng, combined purchases of
generating equipment, and combined constrction contracts that the Commssion
Case No. GNR-E-11-0l
April 22, 2011
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Kalch, C. (Di-Reb)
A vista Corpration
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may adopt to prevent disaggregation. RN, as discussed below, goes fuer and
acknowledges that even distace limits can also be circumvented.
Explain what you mea when you state that RN acknowledges that even
distace limitations ca be circumvented.
At line 14 of page 12 of Ms. Decker's testimony, she states that:
"...any distace rule can be overcome with creative planng, (but)
a larger distace requirement is more liely to deter a project from
organzing into smaller pieces to obtan published rates."
At a minimum, ths acknowledgement by RN ilustrtes that even enhanced
physical separation requirements may not prevent disaggregation. Ths
acknowledgment is also instrctive in that it explais that "creative planng" can
be used to circumvent the intent of disaggrgation rules. The currnt published
avoided cost rates are attacting a signficant level of wind development, and
A vista is concerned that developers wil use such creative planning to enable their
large projects to qualfy for the published avoided cost rates.
Doe RN's testimony rase any additional concerns regarding the abilty of
ownership retrictions to prevent disaggregation?
Yes. At line 6 of page 13 of Ms. Deker's testimony, RN rases questions
regarding the benefits of using ownership as a measure for preventing
disaggregation by stating that "the presence of separte LLCs should not
determne whether ownership is separate, because separte LLCs are relatively
simple to create." RN's acknowledgements of the potential litations in
imposing ownership limitations and other factors to prevent disaggregation is
consistent with Avista's position that PURA developers wil find creative ways
Case No. GNR-E-11-0l
April 22, 2011
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Kach, C. (Di-Reb)
A vista Corporation
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to get around any such rules to tae advantage of the published avoided cost rates
if such rates provide an economic incentive to do so.
As long as the published avoided cost rates are available to large QFs, and those
rates provide an economic advantage to developers, A vista is concerned that
developers wil find ways to disaggregate to take advantage of the favorable
published rates.
RNP cite Oregon disagggation rules as a template for preventing
disaggregation. Doe A vista have any concerns with the Oregon rules?
Yes. As outlned in my direct testimony and the dit testimony of Bruce
Griswold that was also submitted in ths proceeng, the Oregon disaggregation
rules were circumvented to enable nine disaggregated projects to qualify in that
State. The Orgon example does not support the use of distace and ownership
requirements to prevent disaggregation; rather, the experience with Oregon's rules
ilustrtes Avista's concern that eliminating the 100 kW eligibilty cap in favor of
an eligibilty cap strcture that retus the cap to 10 aM wil not prevent
disaggregation.
In its Exhibit 1901 to Ms. Decker's tetimony, RN preents a proposal for
determning whether a project is a single QF or a disaggrgate project.
Do A vita have any concern with that propol?
Yes. RN's Exhibit 1901 sets out four criteria for determning whether a project
with multiple generation soures qualfies as a single QF or is par of a larger
disaggregated project. Under that proposal, if the PURA project does not meet
all of four criteria, it would be considered to be a single QF and not par of a
Case No. GNR-E-ll-Ol
April 22, 2011
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Kalch, C. (Di-Reb)
A vista Corporation
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larger disaggregated project. Such a rule could be cirumvented eaily. For
example, a five-investor development company could develop a single large 150
MW project and simply separate the project into five 30-MW project companes
before requesting published rate contrcts. In that example, ownership would be
separate, but the five investors could share in all other development costs and
risks and benefit from economies of scale as if they built the project as one. By
not violating ths one aspet of the rules set fort in Exhbit 1901, the developers
could circumvent the intent of the disaggregation rule and the utility would find
itself offering five published rate contracts.
Doe Idaho Conservation League ("ICL") provide any insights that you wish
to highght here?
Yes. On page one of its statements of position and strwman proposal submitted
in ths proceedng, ICL makes the following statement:
"Of course, a complete resolution of ths dispute requis
addrssing two elements: which QFs ar eligible to receive
published rates, and how to set an appropriate rate upon which
published rates are based."
ICL also acknowledges that a resolution requires eligibilty criteria and an
appropriate published rate and that settng an eligibilty criterion is "an importt
first step." These statements are consistent with Avista's position that published
rates should not be made available to QFs as large as 10 aM without, at a
minimum, firt ensurng that the published avoided cost rate reflects the utilities'
actual avoided costs.
Do you have any comments on ICL's strawmn propos?
Case No. GNR-E-ll-Ol
April 22, 2011
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Kalich, C. (Di-Reb)
A vista Corporation
1 A.Yes. ICL presents a litay of rules that wil nee to be fleshed out greatly to
2 provide any chance of preventing disaggregation. In addition to many criteria,
3 ICL aleady envisions litigation around eligibilty that A vista believes would be
4 burdensome on the utilities, the developers, and the Commssion. ICL sets out a
5 process whereby the QF developer would make a determnation of eligibilty with
6 its application. The utility would then nee to expend resources to makes its own
7 determnation. Where the pares disagree on eligibilty, the Commssion would
8 be called upon to make the final determnation.
9 Q.Do A vista have any summary thoughts at thi juncture?
10 A.Yes. Developers in Idaho have demonstrated their abilty to find means to
11 disaggregate larger projects to qualify for published avoided cost rates when such
12 rates are provided to projects as large as 10 aM. Simlarly in Oregon, even with
13 restrctive rules such as distace and ownership, QF developers have managed to
14 disaggregate. Even the testiony of RN and ICL ilustrate the risk of makng
15 published avoided cost rates available to large QFs. These proponents of
16 retung the published rate eligibilty cap to 10 aM themselves acknowledge
17 that ownership and distance rules can be easily circumvented.
18 A vista is concerned that so long as published avoided cost rates provide
19 developers an economic advantage (i.e., where rates excee the tre avoided cost
20 of the utility), developers wil find ways to circumvent even the best-intended
21 rules. Ultimately Avista's customers end up with retal rates that ar higher than
22 they otherwise would be.
23 Q.Doe this conclude your rebutt tetimony?
Case No. GNR-E-11-0l
April 22, 2011
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Kalch, C. (Di-Reb)
A vista Corpration
1 A. Yes.
Case No. GNR-E-11-0l
April 22, 2011
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Kalch, C. (Di-Reb)
A vista Corpration
CERTIFICATE OF SERVICE
I hereby certify that on this 21st day of April 2011, true and correct copies of
the foregoing Rebuttal Testimony of Clint Kalich were delivered to the following persons
via Email (unless otherwise indicated).
Jean Jewell
Idaho Public Utilties Commission
472 W. Washington St.
Boise, ID 83702
Email: jean.jewell~puc.idaho.gov
(via Email and Overnight Mail)
Dean 1. Miler, Esq.
McDevitt, & Miler, LLP
PO Box 2564
Boise, ID 83701-2564
j oe~mcdevitt -miler .com
Daniel E. Solander
Senior Counsel
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
Email: DanieLsolander~pacificorp.com
Donovan E. Walker
Lisa Nordstrom
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
Email: dwalker~idahopower.com
lnordstrom~idahopower.com
Page I-CERTIFICATE OF SERVICE
Donald L. Howell, II
Kris Sassar
Deputy Attorneys General
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83702
Email: don.howell~puc.idaho.gov
kris. sassar~pucjdaho. gov
Peter Richardson
Gregory M. Adams
Richardson & O'Leary
515 N. 27th St.
PO Box 7218Boise, ID 83702
Email: peter~richardsonandolear.com
greg~richardsonandolear. com
Magan Walseth Decker
Senior Staff Counsel
Renewable Northwest Project
917 SW Oak St., Suite 303
Portland, OR 97205
Email: megan~rnp.org
R. Greg Ferney
Mimura Law Offices, PLLC
2176 E. Franklin Rd., Suite 120
Meridian, ID 83642
Email: greg~mimuralaw.com
Ted S. Sorenson, P.E.
Sorenson Engineering, Inc.
5203 South 11 th East
Idaho Falls, ID 83404
Email: ted(0sorenson.net
Glenn Ikemoto
Margaret Ruger
Idaho Windfarms, LLC
672 Blair Ave.
Piedmont, CA 94611
E-mail: glenni(0envisionwind.com
Margaret(0envisionwind.com
Shelley M. Davis
Barker Rosholt & Simpson, LLP
1010 W. Jefferson St., Ste. 102
P.O. Box 2139
Boise, ID 83701-2139
Email: smd(0idahowaters.com
Paul Martin
Intermountain Wind, LLC
PO Box 353
Boulder, CO
Email:
paulmartin(0intermountainwind.com
Ronald L. Willams
Wiliams Bradbur, P.C.
1015 W. Hays St.
Boise ID, 83702
Email: ron(0wiliamsbradbur.com
Dana Zentz
VP, Summit Power Group, Inc.
2006 E. Westminster
Spokane, W A 99223
Email: dzentz(0summitpower.com
Page 2-CERTIFICATE OF SERVICE
Robert D. Kahn
Executive Director
Northwest and Intermountain Power
Producers Coalition
1117 Minor Ave., Suite 300
Seattle, W A 9810
Email: rkahn(0nippc.org
Thomas H. Nelson
Attorney for Renewable Energy Coalition
PO Box 1211
Welches, OR 97067-1211
Email: nelson(0thnelson.com
Bil Piske, Manager
Interconnect Solar Development, LLC
1303 E. Carter
Boise, ID 83706
Email: bilpiske(0cableone.net
Bil Brown, Chair
Board of Commissioners of Adams County,
Idaho
PO Box 48
Council, ID 83612
Email: dbbrown(0frontiernet.net
Scott Montgomery
President, Cedar Creek Wind, LLC
668 Rockwood Drive
North Salt Lake, Uta 84054
Email: scott(0westernenergy.us
Wade Thomas
General Counsel, Dynamis Energy
776 E. Riverside Drive, Suite 15
Eagle, ID 83616
Email: wthomas(0dynamisenerg.com
James Carkulis
Managing Member
EXERGY DEVELOPMENT GROUP OF
IDAHO,LLC
802 West Banock Street, Ste. 1200
Boise, Idaho 83702
Email:j carkulisêexergydevelopmentcom
JohnR. Lowe
Consultant to Renewable Energy
Coalition
12050 SW Tremont Street
Portland, OR 97225
Email: jravenesanmarcosêyahoo.com
Twin Falls Canal Company
c/o Brian Olmstead, General Manager
P.O. Box 326
Twin Falls, Idaho 83303-0326
Email: olmsteadêtfcanaLcom
Ken Kaufmann
Lovinger Kaufman, LLP
825 NE Multnomah, Suite 925
Portland, OR 97232
Email: Kaufmanêlklaw.com
Arron F. Jepson
Blue ribbon Energy LLC
10660 South 540 East
Sandy, UT 84070
Email: arronesqêaoLcom
Page 3-CERTIFICATE OF SERVICE
Robert A. Paul
Grand View Solar II
15960 Vista Circle
Desert Hot Springs, CA
Email: robertapaulêgmaiLcom
Don Sturtevant
Energy Director
1. R. Simp lot Company
ONE CAPITAL CENTER
999 Main Street, P.O. Box 27
Boise, Idaho 83707-0027
Email: don.sturtevantêsimplotcom
North Side Canal Company
c/o Ted Diehl, General Manager
921 N. Lincoln St
Jerome, Idaho 83338
Email: nscanalêcableone.net
MJ Humphries
Blue Ribbon Energy LLC
4515 S. Ammon Road
Ammon, ID 83406
Email: blueribbonenergyêgmaiLcom
Greg Seifert
Kurt Meyers
Idaho National Laboratory
Conventional Renewable Energy Group
2525 Fremont Ave.
Idaho Falls, ID 83415-3810
Email: gary.seifertêinLgov
Kur.myersêinLgov
Benjamin 1. Otto
Idaho Conservation League
710 N. 6th St.
P.O. Box 844
Boise, Idaho 83702
Ph: [phone] x 12
Fax: [phone]
Email: bottO(fidahoconservation.org
Page 4~CERTIFICATE OF SERVICE
Ken Miler
Clean Energy Program Director
Snake River Allance
Box 1731
Boise, 1083701
Email: kmiler(fstakeriveralliance.org
~.
Michael G. Andrea