20110901notice_of_review_order_no_32352.pdf

Office of the Secretary
Service Date
September 1,2011
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION’S )
REVIEW OF PURPA QF CONTRACT )CASE NO.GNR-E-lI-03
PROVISIONS INCLUDING THE )
SURROGATE AVOIDED RESOURCE (SAR))NOTICE OF REVIEW
AND INTEGRATED RESOURCE PLANNING )
(IRP)METHODOLOGIES FOR )NOTICE OF
CALCULATING PUBLISHED AVOIDED )INTERVENTION DEADLINE
COST RATES.)
___________________________________
)ORDER NO.32352
The Commission has authority under the Public Utility Regulatory Policies Act of
1978 (PURPA)and the implementing regulations of the Federal Energy Regulatory Commission
(FERC)to set avoided costs,to establish standard published avoided cost rates,and to order
electric utilities to enter into fixed-term obligations for the purchase of energy from qualifying
facilities (QFs).Under FERC rules,utilities are required to purchase QF generation at a rate
equal to the utility’s avoided cost.18 C.F.R.§292.304(b)(2).“Avoided costs”are the
incremental costs to the electric utility of power which,but for the purchase from the QF,such
utility would generate itself or purchase from another source.18 C.F.R.§292.1O1(b)(6).FERC
further requires that the avoided cost rates for all QF purchases be just and reasonable to utility
customers and in the public interest;and not discriminate against qualifying cogeneration and
small power production facilities.18 C.F.R.§292.304(a)(l).
Pursuant to FERC regulations,this Commission must publish avoided cost rates for
qualifying facilities (QFs)with a design capacity of 100 kW or less.The Commission has the
discretion to set the published avoided cost rate at a higher capacity amount —commonly referred
to as the “eligibility cap.”18 C.F.R.§292.304(c)(1)and (2).In establishing eligibility criteria
for a published rate,the Commission may differentiate among QFs.18 C.F.R.§292.304(c)(3).
The purpose of distinguishing between QFs is to more precisely value the energy being delivered
—not encourage or discourage particular QF resources.
The Commission initiates this proceeding to review the terms of PURPA power
purchase agreements including,but not limited to,the surrogate avoided resource (SAR)and
NOTICE OF REVIEW
NOTICE OF INTERVENTION DEADLINE
ORDER NO.32352 1
Integrated Resource Planning (IRP)methodologies for calculating published avoided cost rates.
See Order Nos.32131,32176,32195,32262.
BACKGROUND
A.Case No.GNR-E-1O-04
On November 5,2010,Idaho Power Company,Avista Corporation,and PacifiCorp
dba Rocky Mountain Power filed a Joint Petition requesting that the Commission initiate an
investigation to address various avoided cost issues related to the Commission’s implementation
of PURPA.While the Commission pursued its investigation,the utilities also moved the
Commission to “lower the published avoided cost rate eligibility cap from 10 aMW to 100 kW
[to]be effective immediately....“Id.citing Joint Petition at 7.When a QF project is larger
than the eligibility cap set for access to published avoided cost rates,the avoided cost rates for
the project must be individually negotiated by the QF and the utility using the IRP methodology.
Order No.32176.
The purpose of utilizing the IRP methodology for large QF projects is to more
precisely value the energy being delivered.Id.at 10.The IRP methodology recognizes the
individual generation characteristics of each project by assessing when the QF is capable of
delivering its resources against when the utility is most in need of such resources.The resultant
pricing is reflective of the value of QF energy to the utility.Utilization of the IRP methodology
does not negate the requirement under PURPA that the utility purchase the QF energy.
On December 3,2010,the Commission issued Order No.32131 declining the
utilities’motion to immediately reduce the published avoided cost rate eligibility cap from 10
aMW to 100 kW.Order No.32131 at 5.However,the Order did notify parties that the
Commission’s decision regarding the motion to reduce the published avoided cost eligibility cap
would become effective on December 14,2010.Id.at 5-6,9.
Based upon the record in the GNR-E-10-04 case,the Commission subsequently
found that a “convincing case has been made to temporarily reduce the eligibility cap for
published avoided cost rates from 10 aMW to 100 kW for wind and solar only while the
Commission further investigates”other avoided cost issues.Order No.32176 at 9 (emphasis
original).The Commission also announced its intent to initiate additional proceedings to
investigate and address the disaggregation of large projects.Id.at 11.
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NOTICE OF INTERVENTION DEADLINE
ORDER NO.32352
On reconsideration,the Commission affirmed its decision to temporarily reduce the
eligibility cap for published avoided cost rates from 10 aMW to 100 kW for wind and solar
projects.Order No,32212.Thus,the eligibility cap for published avoided cost rates for wind
and solar QF projects was set at 100 kW effective December 14,2010.
B.Case No.GNR-E-11-O1
On February 25,2011,consistent with its stated intent to investigate disaggregation,
the Commission issued a Notice of Inquiry,Notice of Intervention Deadline,Notice of
Scheduling and Notice of Technical Hearing.Order No.32195.We were concerned that large
QF projects were disaggregating into smaller QF projects in order to be eligible for published
avoided cost rates that may not be just and reasonable to the utility customers or in the public
interest.Order No.32195 at 3.It was on that basis that the Commission asked the parties to
provide information regarding how small wind and solar QFs could obtain a published avoided
cost rate without allowing large QFs to obtain a rate that does not accurately reflect a utility’s
avoided cost for such projects.Specifically,the Commission solicited information and
investigation of a published avoided cost rate eligibility cap structure that:(1)allows small wind
and solar QFs to avail themselves of published rates for projects producing 10 aMW or less;and
(2)prevents large wind and solar QFs from disaggregating into small projects in order to obtain
published avoided cost rates that exceed a utility’s actual avoided cost.
Based upon the record and after careful consideration of the positions presented,the
Commission found it appropriate to maintain the 100 kW eligibility cap for published avoided
cost rates for wind and solar QFs.We determined that any attempt to implement criteria in an
effort to prevent disaggregation would be met by attempts to circumvent such criteria.We
emphasized that PURPA and our published rate structure were never intended to promote large
scale wind and solar development to the detriment of utility customers.Order No.32262 at 8.
We found that allowing the current trend to continue could cause customers to pay for resources
at an inflated rate and,potentially,before the energy is actually needed by the utility to serve its
customers.The Commission stated that such a result is clearly not in the public interest.Id.In
order to ensure that we are approving just and reasonable avoided cost rates,the Commission
announced its intent to initiate this proceeding to allow the parties to investigate and analyze
both the SAR methodology and the IRP methodology.
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NOTICE OF REVIEW
YOU ARE HEREBY NOTIFIED that,at minimum,FERC regulations require that
standard or published rates be set for purchases from QFs with a design capacity of 100 kW or
less.These regulations also grant the Commission the discretion to set the published rate
eligibility cap at a higher level.18 C.F.R.§292.304(c).
YOU ARE FURTHER NOTIFIED that,whether it is a published rate or a rate for a
larger QF,FERC requires that the avoided cost rates for all QF purchases be just and reasonable
to utility customers and in the public interest;and not discriminate against qualifying
cogeneration and small power production facilities.18 C.F.R.§292.304(a)(1).
YOU ARE FURTHER NOTIFIED that the Commission remains concerned that
large projects are disaggregating into smaller QF projects in order to be eligible for published
avoided cost rates that are not just and reasonable to the utility customers or in the public
interest.
YOU ARE FURTHER NOTIFIED that the Commission seeks information regarding
the appropriateness of both the SAR and IRP-based avoided cost methodologies.Specifically,
the calculation of avoided cost rates,for both published and negotiated contracts,is being re
examined.We expect that eligibility for different methodologies will continue to be part of the
discussion.
YOU ARE FURTHER NOTIFIED that the Commission anticipates that the scope of
this inquiry will also include (but is not limited to)considerations regarding the dispatchability of
varying resources,curtailment options,integration costs,renewable energy credits,delay security
and liquidated damages,timing and schedule of negotiations,and contract milestones.
DEADLINE FOR INTERVENTION
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter
for the purpose of presenting evidence or cross-examining witnesses at hearing must file a
Petition to Intervene with the Commission pursuant to this Commission’s Rules of Procedure 72
and 73,IDAPA 31.01.01.072 and .073.Persons intending to participate at hearing must file a
Petition to Intervene no later than seven (7)days from the service date of this Order.Persons
seeking intervenor status shall also provide the Commission Secretary with their electronic mail
addresses to facilitate future communications in this matter.
NOTICE OF REVIEW
NOTICE OF INTERVENTION DEADLINE
ORDER NO.32352 4
YOU ARE FURTHER NOTIFIED that all parties to the GNR-E-1 1-01 case will be
added as parties to this case automatically.
YOU ARE FURTHER NOTIFIED that persons desiring to present their views
without parties’rights of participation and cross-examination are not required to intervene and
may present their comments without prior notification to the Commission or the parties.
YOU ARE FURTHER NOTIFIED that the Commission Secretary shall issue a
Notice of Parties after the deadline for intervention has passed.The Notice of Parties shall
assign exhibit numbers to each party in this proceeding.
YOU ARE FURTHER NOTIFIED that,following the issuance of a Notice of
Parties,the parties shall informally meet to establish a schedule and further define the issues to
be addressed during the processing of this case.
YOU ARE FURTHER NOTIFIED that testimonies and exhibits will be filed with
the Commission and available for public inspection during regular business hours at the
Commission offices.The testimonies and exhibits will also be available on the Commission’s
web site at www.puc.idaho.gov by clicking on “File Room”and then Electric Cases.”
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commissions jurisdiction under Title 61 of the Idaho Code and the Public Utility
Regulatory Policies Act of 1978 (PURPA).The Commission has authority under PURPA and
the implementing regulations of the Federal Energy Regulatory Commission (FERC)to set
avoided costs,to order electric utilities to enter into fixed-term obligations for the purchase of
energy from qualified facilities and to implement FERC rules.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 31.01.01.000 ci seq.
ORDER
IT IS HEREBY ORDERED and the Commission does hereby initiate generic Case
No.GNR-E-1 1-03.
IT IS FURTHER ORDERED that persons desiring to intervene in this case for the
purpose of presenting evidence or cross-examination at hearing shall file a Petition to Intervene
with the Commission no later than seven (7)days from the service date of this Order.
IT IS FURTHER ORDERED that all parties to the GNR-E-1 1-01 case be added as
parties to this case without the need for further intervention proceedings.
NOTICE OF REVIEW
NOTICE OF INTERVENTION [)EADLINE
ORDER NO.32352 5
IT IS FURTHER ORDERED that,following the issuance of the Notice of Parties,
the parties meet informally to establish a proposed schedule and further define the issues to be
addressed.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this P
day of September2011.
ATTEST:
D.Jewell
Commission Secretary
O:GNR-E-I 1-O3ks
NOTICE OF REVIEW
NOTICE OF INTERVENTION DEADLINE
ORDER NO.32352
MACK A.REDFORD,COMMISSIONER
ilLL
MARSHA H.SMITH,COMMISSIONER
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