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RI€I'IARDSQi1Ni&'0)~lZ:OJ2 i;r~ ! S Fi; ~: 26ATTORNEYS AT LAW
Peter Richardson
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perer&Jrie h ardso 0 aodolea ry,eo O, flox 1849 99 EaSt Srare Street, Eagle, Idaho 83616
iv'!3rch 15, 2002
Ms, Jean 0, Jewell
Commission Secretary
Idaho Public Utilities Commission
POBox 83720
Boise 10 83720-0074
RE: Case No, GNR-E-O2-
Dear Ms. Jewell:
Enclosed for filing with the Commission are the original and seven (7) copies of the Comments of the J
R Simplot Company and the Independent Energy Producers of Idaho, in the above-entitled matter.
I have included an extra copy of the filing to be date-stamped and returned for our file, in the enclosedself-addressed envelope.
Mjw:pr
Enclosures
Sincerely,
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Myrna J. alters
Legal Assistant
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Peter J. Richardson
Richardson & O'Leary PLLC
99 East State Street, Suite 200
O. Box 1849
Eagle, Idaho 83616
Telephone: [phone]
Fax: [phone]
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Attorneys for J. R. Simplot Company and the
Independent Energy Producers of Idaho
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
OF THE CONTINUED REASONABLENESS
OF CURRENT SIZE LIMITATIONS FOR
PURP A QF PUBLISHED RATE ELIGIBILITY)(I.E. 1 MW) AND RESTRICTIONS ON
CONTRACT LENGTH (I.E. 5 YEARS)
CASE NO. GNR-02-
COMMENTS OF THE J. R. SIMPLOT
COMP ANY AND THE
INDEPENDENT ENERGY
PRODUCERS OF IDAHO
COMES NOW the J. R. Simplot Company and the Independent Energy Producers of
Idaho by and through their attorney of record, Peter J. Richardson, pursuant to the Notice of
Comment/Protest Deadline issued by the Commission Secretary in the above captioned mater on
February 5 2002, and herein jointly lodge the following comments and request for hearing.
FUNDAMENTAL PURPOSE OF PURP A AND THE ROLE OF THIS COMMISSION
Cogeneration is not a new technology. For instance, at the beginning of the 20th century
cogeneration and other non-utility generation accounted for over fifty percent of the power
produced in the United States. Unfortunately, because of the way utilities are regulated in the
United States, cogeneration has historically been limited to "inside the fence" projects. Prior to
PURP A, the market for sales of cogenerated power was artificially stifled. As a result, by 1970
cogeneration accounted for less than four percent of the total electricity produced in the United
States. I By way of contrast, cogeneration acwunts for over ten percent of the electric output in
the European Union.2 PURP A, the Public Utility Regulatory Policies Act of 1978, was passed in
response to the 1973-74 Arab oil embargo as well as in response to the end of a long period of
declining real prices of electricity. Between 1973 and 1982 electricity3 prices increased, on a
national basis, by sixty percent in real temis. Congress passed PURP A 4 in 1978 to encourage
industrial and commercial cogeneration by prohibiting electric utility rate discrimination against
and providing rate benefits to qualifying cogeneration and small power production facilities
QFs PURP A also provides QFs with the right to connect to the electric utility grid and
exempts them from rate regulation by FERC or financial regulation by state commissions. See
16 U.C. 796 et seq. The purpose of such "favorable" treatment is to encourage the
development of the QF industry in order to promote national energy security.
The role of the state commissions in implementing PURPA is quite broad. States are free
to establish the terms and conditions of PURP A mandated purchases by electric utilities under
their jurisdiction as long as those terms and conditions are within the general guidelines found in
PURP A as implemented by the Federal Energy Regulatory Commission. 5 States may not
1 Office of Technology Assessment, U.S. Congress, OTA-192, Industrial and Commercial
Cogeneration at 3 (1983).2 "The Success of Cogeneration in Europe " Hannes Hunschofsky, Cogeneration and
Competitive Power Journal, Summer 1998 Vol. 13, No.3 at p. 9.3 U. S. Department of Energy, DOE/S-0057, Energy Security, A Report to the President ofthe
United States at 154 (1987).4 PURPA ha been variously codified throughout 16 U.
c. The key provisions can be found at
16 U.c. ~ 824a-5 Small Power Production and Cogeneration Facilities; Regulations Implementing Section 210 of
Comments of the J .R. Simplot Company
And the Independent Energy Producers of Idaho
how\;,:',=,,-r, set the rates at which utilities purchase QF power at a level higher than the purchasing
utility s actual avoided costs. Connecticut Light Power Co. 70 F.R.C. (CCH) 61 012
031 (Jan. 11 , 1995). With that one restriction in mind, this Commission then, is charged by
Congress with encouraging the development ofthe QF industry in furtherance of a national
policy to diversify our national energy portfolio away from reliance on energy sources that are
subject to interruption and outside of the control of the United States.
The courts have consistently and explicitly found that the purpose of PURP A was to
encourage the development of cogeneration and small power production facilities:
Responding to heightened fuel costs and potential fuel
shortages, Congress sought to promote conservation of oil and
natural gas by electricity utilities. See FERC v. Mississippi
456 U.S. 742, 745-46 (1982). Thus, to encourage the development
of facilities that generate electricity using renewable resources
and facilities engaged in cogeneration of electricity and useful
heat or steam that might otherwise be wasted, id. at 750, and to
overcome the reluctance of traditional utilities to buy from, and
sell to, these alternative producers, Congress granted qualifying
small power production facilities certain benefits. Under PURP A
such facilities were exempt from certain regulatory controls, and
they were assured a market by providing a right to interconnect
with the local public utility and to receive rates, as prescribed
by FERC, up to the full avoided cost of the utility. See
American Paper Inst. v. American Elec. Power Servo Corp.
461 U.S. 402, 404-06 (1983); PURPA ~~ 210, 212 16 U.c. ~~
824a-, 824i, 824k.
Southern California Edison v. FERC,195 F3d 17, 19 (D.c. Cir. 1999). This Commission is
charged by the United States Congress with implementing PURP A in such a manner as to
actually encourage the development of the cogeneration industry. Implementing rules and
the Public Utility Regulatory Policies Act of 1978 45 Fed. Reg. 12 214, 12 216 (1980).
Comments of the J .R. Simplot Company
And the Independent Energy Producers of Idaho
regulations that discourage the development of the QF industry are contrary to law, contrary to
good public policy and contrary to good utility planning.
II.PRIOR COMMENTS BY THE J. R. SIMPLOT COMPANY
The J.R. Simplot filed comments in IPC-01-, in which a compelling case was made
demonstrating that the Commission s decision to reduce entitlement to published avoided cost
rates to projects less than one megawatt in size coupled with a five year limitation on contract
length has effectively killed the QF industry in Idaho. Although the Commission referenced the
Simplot comments filed in the -37 case in its Notice of Comment/Protest Deadline initiating this
case, it did not specifically rule that those comments will be part of the record in this case.
Therefore, the Simplot comments in the -37 case are attached hereto as an exhibit to these
comments and are, by this reference, incorporated herein.
III.CONTRACT LENGTH AND QF SIZE RULES DISCOURA GE COGENERATION
As noted above, it was the goal of Congress in passing PURP A to encourage the
development of cogeneration for national security reasons. This Commission plays an important
role in implementing that national policy through its PURP A rules and regulations.
Unfortunately, despite the Commission s good intentions when it shortened the contract length
and QF size for eligibility to published rates and standard contracts, the Commission actually
erected an insurmountable roadblock to the development ofQF power projects in Idaho. For
example in the seven years since the Commission issued Order No. 25884 shortening the
contract length and reducing the QF size at which a project is eligible for standard rates, Idaho
Comments of the J .R. Simplot Company
And the Independent Energy Producers of Idaho
Power has signed only two QF contracts for a total of 2 200 KW of capacity. 6 While in the
thirl~en years before that change, Idaho Power signed an average of four contracts per year for
an average in excess of 10 000 KW of capacity per year.7 The Commission s decision to shorten
the contact length and reduce size for eligibility for the standard rates has resulted in the
frustration of the intent of congress and works to the detriment of our national policy to
encourage QF development in furtherance of important national security objectives. While this
result was surely unintended on the Commission s part, it is now time to correct that error.
Indeed an immediate reversal is necessary in light of the recent energy crisis which caught
utilities and regulators by surprise and cost ratepayers, in Idaho alone, hundreds of millions of
dollars.
The dearth of any QF development in Idaho since the issuance of Order No. 25884 is
compelling evidence that the Commission s rules actively discourage development of
cogeneration and small power production facilities in Idaho. This is especially true since that
order is a bright line demarking the demise ofthe industry in Idaho. In addition, the Commission
should be cognizant ofthe practical impact of its order on the ability of the industry to operate
under the draconian restrictions on QF size and contract length. It is true this Commission is
prohibited from examining or regulating the financial results of operations of QFs. It is equally
true that the Commission must be instructed as to the impact of its orders on the QF industry in
order to determine whether it is fulfilling its duty under Federal law to encourage the
development of cogeneration and small power production facilities. To that end, the
6 It appears that both ofthe post Order 25884 projects were already constructed as "inside the
fence" projects prior to Order 25884 and therefore these projects were not developed after the
issuance of that order.
See Report of Cogeneration/Small Power Production for Idaho Power Company, Year to Date
Totals as of December 2000. On file at the Idaho Public Utilities Commission.
Comments of the J .R. Simplot Company
And the Independent Energy Producers of Idaho
Commission must understand that the restriction on contract length is a barrier to the
construction of QF projects. It is a practical impossibility to finance a capital intensive project
such as a cogeneration or small power production facility over just five years. While all projects
have different financial needs, it is clear that no project is viable under the five-year contract
limitation.
Similarly, QF size limitations, pose an artificial barrier to the development of the QF
industry in Idaho. While the ten megawatt size limitation that was the norm in Idaho from the
inception of PURP A until the issuance of Order No. 25884, was admittedly somewhat arbitrary,
it did encourage the development ofthe QF industry - as required by Federal law. The one-
megawatt size limitation does just the opposite. Again, although the Commission is prohibited
from examining the internal financial needs and requirements of any particular QF, it must
understand the impact of its decisions on the ability of the industry to operate under the
constraints of the Commission s implementing rules and regulations. Roughly half of the QF
contracts Idaho Power has signed are over one-megawatt and half are under one-megawatt. 8 Just
using that historical data, the one-megawatt rule would have excluded half of the Idaho Power
projects from developing. More significantly, the one half of the projects over 1-MW constitute
over 90 percent of the capacity made available to Idaho Power from all OF contracts. Therefore
the one-megawatt rule, alone, would have eliminated 90 percent of the industry. This fact is
compelling evidence that the one-megawatt rule, contrary to Federal law, actively discourages
QF development.
In addition, however, the one-megawatt rule precludes the development of many projects
that require larger sized generators in order to capture economies of scale for a particular project.
Comments of the J.R. Simplot Company
And the Independent Energy Producers of Idaho
It fosters waste by not permitting developers to capture the full potential of their project. For
example, many of the canal drop hydro projects are well over five megawatts. None of those
projects would have been viable or economic had they been limited to one megawatt. The same
is true for many of the industrial cogeneration projects - it simply makes no economic sense to
artificially undersize a cogeneration project in order to comply with an arbitrary ceiling on QF
sIze.
IV. THE COMMISSION'S ORIGINAL RATIONALE IS NO LONGER VALID
This Commission made the following findings it its order shortening the contract length
to five years:
Idaho Power contends that it has no plans to build, own or operate new generatingfacilities to meet load growth. Instead, as the competitive wholesale power marketsexpand, Idaho Power plans to supplement its existing resources as necessary with market
purchases of capacity and energy. These will be short-term purchases, the Companyargues, and consequently, Idaho Power should not be required to offer QF contracts
greater than five years during this period of transition.
Order No. 26578, in Case No. IPC-95-9 (Sept. 4, 1996)
Events have proven Idaho Power s reliance on the market for short-term purchases to be
a costly mistake. Idaho Power is re-evaluating the wisdom of such reliance as well as its entire
load resource planning criteria in light of its misplaced faith in the "competitive wholesale power
markets." The rationale for reducing contract lengths to five years is simply no longer valid -
it ever was. Indeed, contrary to its stated policy of short term market purchases, just this summer
Idaho Power constructed a significant new generating facility at Mountain Home, incurring a
long term commitment to build and own generation. Its sister company is currently in the
process of constructing a large gas fired turbine in southern Idaho. While the regulated utility is
Id.
Comments of the J.R. Simplot Company
And the Independent Energy Producers of Idaho
apparently only contracting for five yearg with its sister company, the fact remains that Idaho
Power s parent company believes new generation is needed in Idaho Power s service territory
and that market purchases are no longer a valid or reasonable method of meeting native load
growth. The Commission should not further an obvious double standard, turning a blind eye to
the utility s need to construct new generation in Idaho while heeding the utility s misguided
assertions that short-term purchases on the "wholesale power markets" will meet its load
requirements for the foreseeable future.
In the same order quoted above the Commission made the following findings:
Significant changes have swept through the electric industry since
we last examined the issue of contract length.The FERC has
mandated open access to the transmission system, thermal
technologies have improved, gas prices are low, there is a
considerable surplus of energy available in this region resulting in
very low spot market prices for electricity and, finally, even the
continued existence of PURP A is being called into question.
find that as the industry as a whole continues to a more free market
model, we cannot justify obligating utilities to 20-year contacts for
PURP A power. As the utilities in this case note, such an
obligation does not reflect the manner in which they are currently
acquiring power to meet new load; through short-term (five years
or less) purchases. Consequently, it would be nothing more than
an artificial shelter to the OF industry to provide those projects
with contract terms not otherwise available in the free market.
can find no justification for insisting that Idaho s investor-owned
utilities and their ratepayers assume such an obligation simply to
foster one particular segment of an increasingly competitive
industry. We find, therefore, that Idaho s investor-owned utilities
shall not be required to offer contracts to QFs in excess of five
years until further action is taken by this Commission.
Id. At page 7, emphasis provided.
It seems the old adage is apt here
, "
the more things change the more they stay the same.
It is true that significant changes have swept through the industry, however, those changes have
not resulted in the predicted open and free competitive markets envisioned by the utilities and
Comments of the J.R. Simplot Company
And the Independent Energy Producers of Idaho
referenced by the Commission in the above passage.Indeed, Idaho seems farther away from
opening its electric utilities to true market competition than ever before.There is no longer a
considerable surplus" of electricity in the region. Indeed, utilities are scrambling to build new
capacity to meet projected deficits and insulate themselves and their ratepayers from the
volatility of the unpredictable and unforgiving marketplace. The QF industry has a role to play
in the resource acquisition portfolios of Idaho s utilities.The only artificial shelter being
provided is the one-megawatt and five year contract term shelter afforded Idaho s utilities. This
artificial shelter allows the utilities to avoid having to acquire some of their resources from the
QF industry thereby creating the self-fulfilling prophecy of resource deficit and emergency
shortages. It results in poor planning and the acquisition of unnecessarily expensive resources
such as Idaho Power s mobile diesel generator debacle.
V. BENEFITS OF QF POWER
Often ignored in the decades long debate between the QF industry and the utilities
operating in Idaho are the ancillary benefits to the utilities of a robust and healthy QF industry.
There are many non-quantified monetary and system benefits that are simply ignored. Such
benefits include the superior reliability of QF projects, transmission benefits of added generation
at or near load centers, and reliability benefits of multiple diverse generating projects utilizing a
variety of fuel mixes. There are economic benefits to the utilities when the agricultural and
industrial sectors are made more profitable and viable because those industries are able to add
value to their products through the generation of electricity as a by-product of their primary
business. As noted on the attached exhibit, the Comments of the J.Simplot Company in Case
No. IPC-01-, the QF industry has produced power for Idaho Power Company at an overall
cost LESS THAN Idaho Power has been able to acquire on its own.
Comments of the J .R. Simplot Company
And the Independent Energy Producers of Idaho
The QF industry has beell ~ valuable partner in providing cost effective capacity to
Idaho s utilities.The Commission has legal obligation to encourage its development. Only
through the replacement of the five year contract limitation with the historical 20-year contract
and the return to the ten megawatt size limitation will the industry be able to return to its
legitimate place as intended by the United States Congress when it passed PURP
WHEREFORE the J. R. Simplot Company and the Independent Energy Producers of
Idaho respectfully urge this Commission to issue its order:
Requiring utilities under its jurisdiction to offer standard rate contracts at
published avoided cost rates to all QF's up to ten megawatts in size; and
Requiring all utilities under its jurisdiction to offer standard rate contracts to QFs
of up to twenty years at the QF's option.
RESPECTFULLY SUMITTED THIS 15TH day of March, 2002.
Richardson & O'Leary P.LLC.
By ff.1QUt L r-G~
Peter Ric ar'd son
Attorneys for J. R. Simplot Company and
the Independent Energy Producers of Idaho
Comments of the J .R. Simplot Company
And the Independent Energy Producers of Idaho
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Peter Richardson
Richardson & O'Leary PLLC
99 East State Street, Suite 200
O. Box 1849
Eagle, Idaho 83616
Telephone: [phone]
Fax: [phone]
peter0)ri chardsonando eary. com
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Attorneys for J. R. Simplot Company
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR A DECLARATORY
ORDER CONCERNING
ENTITLEMENT TO PUBLISHED
RATES FOR NON-FUELED SMALLPOWER PRODUCTION PROJECTS
CASE NO. IPC-01-
COMMENTS OF THE J.R.SIMPLOT COMPANY AND
REQUEST FOR FURTHER
CONSIDERA TION OF ISSUES
DECIDED OR IMPLICATED IN
ORDER NO. 25884
Comes now, the J. R. Simplot Company ("Simplot") by and through its
attorney of record and pursuant to that Notice of Petition and Notice of
Comment/Protest Deadline issued by the Secretary of the Idaho Public Utilities
Commission ("Commission" or "PUC") in the above captioned matter on
November 8 , 2001 , and hereby lodges its comments.
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Idaho Power Company (Idaho Power) petitioned for clarification of this
Commission s intent in Order No. 25884 when it created separate pricing
methodologies for "fueled" and "non-fueled" QF projects. The 1. R. Simplot
Company does not believe that additional clarification is necessary as the intent
that Order is clear as to the availability of the non-fueled option. However, the 1.R.
Simplot Company now petitions this Commission to review related issues decided
in or implicated by Order No. 25884. Those two additional issues
, contract length
and the size at QF projects entitled to published avoided cost rates
, should be
revisited by this Commission for the compelling reasons set forth below:
Fueled vs. Non-Fueled Decision Should Remain in the Hands of the
QF Developer
The Commission accurately observed in its Notice of Petition that:
The methodologies (fueled and non-fueled), althoughstructured differently, are presumed to be equivalent
each representing the purchasing utility s avoided costse. the "incremental costs to an electric utility of electric
energy or capacity or both which, but for the purchasefrom the qualifying facility or qualifying facilities, suchutility would generate itself or purchase from another
source. ",
Because the two methodologies are "equivalent " the purchasing utility (and
ultimately its ratepayers) are indifferent as to which method is used. Furthennore
Order No. 25884 is clear that non-fueled rates are available to any project that does
not use a fossil fuel as is evident from the foIIowing passage from that Order:
Comments of JR Simplot Company
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Siaffproposes, for non-fueled projects, e.g. wind solarhydro, to (;:;calate the variable costs by a fixed amount fortwenty years and then levelize both the fixed and variable
cost for projects less than 1 MW. We find: It was the
original intent of PURP A to promote the development of
non-fossil fueled resources. Consist nt with this intent
we hereby adopt Staffs non-fueled proposal for projects
smaller than 1 MW. This meets the goal of encouraging
alternative energy technologies without placing the
utilities at undue risk of default by a developer receiving
a levelized rate.
Order No. 25884 at pages 10-, emphasis provided.
It is clear from the above directive that the non-fueled rate is to be made
available to all non-fossil fueled projects in keeping with the original intent of
PURPA. Idaho Power s concern that non-fossil fuels such as biomass may be
considered "fuel" for purposes of the Commission s order is unwarranted.
However, in order to remove any doubt, the J. R. Simplot Company is supportive
of the Commission issuing its order clarifying that all projects, regardless of
motive source are entitled to their choice of fueled or non-fueled rates.
QF Size
The Commission not only created the fueled and non-fueled classifications
in Order No. 25884, but it made a dramatic change in the size at which QF projects
are entitled to contracts utilizing those published avoided cost rates. In that Order
the Commission ruled that only QF projects smaller than 1 MW are entitled to
1 Web site copy, pagination in original orders may vary.
Comments of JR Simplot Company
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published !'9tes set using the SAR methodology. The basis for the change was the
Commission s finding that:
There is a widely held expectation that there will be
increasing competition within the electric utility industry.
In light of that, we believe it is especially important that
the QF industry be able to demonstrate that the energy
resources it offered are as cost effective as those that a
utility could construct. Ratepayers should be indifferent
to whether a resource serving them was constructed by a
utility or an independent developer. The cost and qualityof service provided by either should be the same.
Id. at pp 3-
Regardless of one s view as to the desirability of competition in the electric
utility industry, it has decidedly not come to Idaho and is very unlikely to do so in
the foreseeable future. That rationale for limiting the size of QFs entitled to the
published SAR avoided cost rate is no longer compelling or an eventuality.
Furthermore, the Commission s admonition that the ratepayer be indifferent
as to cost has not come to fruition. Indeed, just the opposite has proven true. The
following table identifies Idaho Power s resources, and their respective cost, that
have come on line since PURP A was first implemented in Idaho:
Comments of JR Simplot Company
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Cascade (1984 hydro rebuild)
12 MW facility
Norlli Valmy
260 MW facility
Milner (I 992 hydro retrofit)
59 MW facility
Swan Falls (I994 hydro rebund)
25 MW facility
Mt. Home Generators (2002 new gas) 77 mills per kWh690 MW facility
Mobile Generators (2002 diesel)
90.00 mills per kwh2
(coal new 1985)62.50 mills per kWh3
62.74 mills per kWh4
73.05 mills per kWh5
124 mills per kWh7
When compared to the PURP A projects over the same time period, it is abundantly
clear that PURP A projects cost the ratepayers less than Idaho Power
s own
resources. Idaho Power has over sixty contracts with PURP A developers. The
sum of those projects are shown below:
All Idaho PURr A Projects
166 MW of capacity 61.00 mills per kwh8
The cost information for Idaho Power s projects is taken directly from this
Commission s orders in which those projects were approved for ratemaking
purposes. Subsequent operational changes may have made those projects more or
less expensive to operate. Nevertheless, the cost figure approved by the
2 See IPUC Order No. 20610 issued in Case No. 1006-
2653 See IPUC Order No. 20610 issued in Case No. 1006-
2654 See IPUC Order No. 23529 issued in Case No. IPC-
90-5 See IPUC Order No. 23520 issued in Case No. IPC-
90-2. The 73 mill figure was only made possible byamortizing the plant over fifty years.6 See IPUC Order No. 28773 issued in Case No.IPC-
01-12. The 77 mill figure is only achieved if the units arerun at their maximum capacity. Approval still pending.7 See IPUC Order No. 28773 issued in Case No. IPC-
Ol-12.8 See Report of Cogeneration and Small Power Production for Idaho Power Company year end 2000
, on file at the
Comments of JR Simplot Company
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Commission for Idaho Power built and owned projects is significantly higher than
lhe rates offered to the QF industry.
Quite simply, Idaho Power s projects have been treated with special favor to
the detriment of its ratepayers and at the expense of the QF industry. The best way
to cure this inequity is to allow QF developers up to 10 MW in size access to
published SAR based avoided cost rates.
The Commission further supported its decision to reduce the size at which a
QF is entitled to the published SAR rate with the follow finding:
By lowering the threshold to I MW, we are striking areasonable balance between encouraging the
development of independent, alternative energy
technologies with the need to protect ratepayers from
paying for resources which have not proven their cost
effectiveness.
Id. at p. 4.
Unfortunately, the Commission s decision had the opposite effect than it
intended. Instead of "encouraging the development of independent alternative
technologies" it has essentially discouraged the development of any QF industry in
Idaho. Idaho Power s most recent end of year QF report on file with the
Commission identifies all QFs it has contracted with and that are actually on line
and producing power. According to that report, the power company signed an
Idaho Public Utilities Commission s offices.
Comments of JR Simplot Company
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average of slightly more that four QF contacts a year from
1981 through 1994. In
the seven years since Order No. 25884, Idaho Power has signed only two QF
vmtracts. Thus, far from "encouraging the development of the independent
alternative SO1.lfCeS of energy," as it intended, the Commission has actually
discouraged suc~ development to the extent that there is essentially no QF industry
left in Idaho.
Contract Length
The other deadly blow dealt to the QF industry was the reduction of the
maximum contract term from twenty years to five years. This was accomplished
in two steps. First, Order No. 26576 issued in the summer of 1996, reduced
contract terms for QFs larger than one MW to five years. The contract term for
smaller QF was actually reduced through modified procedure in Order No. 27111
issued in August 1997. The rationale in both orders was identical. First, the
Commission concluded that competition is coming to the electric utility industry
making QFs less important. Second, the Commission found that Idaho Power was
only acquiring power to meet its load through "short-term (five years or less)
purchases." Like the rationale for reducing QF size, the rationale for reducing
contract length is no longer valid in Idaho.
Comments of JR Simplot Company
~.
The Commission was apparently convinced by Idaho Power s assertion
that:
(It J has no plans to build, own or operate new generating
facilities to meet new load growth. Instead, as thecompetitive wholesale power markets expand, IdahoPower plans to supplement its existing resources as
necessary with market purchases of capacity and energy.
These will be short-term purchases, the company arguesand consequently, Idaho Power should not be required to
offer QF contracts greater than five years. . .
Order No. 26576 at p. 3.
Again, as in the past, times have changed and this rationale appears to be no
longer valid. Only with the reinstatement of the standard 20 year contract will the
QF industry will be able to fulfill its Congressionally mandated role in assisting
Idaho Power, A vista and PacifiCorp to provide the capacity and energy they need.
As the Commission noted in Order No. 21630 (reducing the standard contract
length from thirty-five years to twenty years), a twenty year contract term is the
appropriate length of time to balance risk with the requirement that the
Commission support the QF industry as required by Congress and the national
interest" Order No. 21630 at page 3 , Case No. U-1500-l70 issued in January
1988.
Reducing the standard contract term to twenty years did not have any
appreciable impact on the ability of the QF industry to perform as Congress
Comments of JR Simplot Company
/98
intended. Reducing the stam,12rd contract length to five years had a crippling
impact on the industry and does not fulfill the requirement observed by this
Commission that it "support the QF industry as requir~d by Congress and the
national interest."
PRA YERS FOR RELIEF
Now therefore, the J. R. Simplot Company asks the Commission to issue its
order on modified procedure without need for hearing as follows:
1. Clarify that all non-fossil fueled QF projects are entitled to choose whether
they wish to sell their output to Idaho Power as either fueled or non-
fueled; and
Furthermore, the J. R. Simplot Company urges this Commission to, via
modified procedure, proceed to make the following changes in its policy
implementing PURP A. It is appropriate to use modified procedure because this is
a policy determination on the Commission s part and because modified procedure
was used to implement part of the contract term reduction in the first instance:
1. Increase the entitlement to the Commission s published SAR -based avoidedcost rates to all QFs that are ten megawatts or less in capacity.
2. Increase the standard contract term for all QFs ten megawatts or less in
capacity from five years to twenty years with the developer retaining the right to
choose the term up to twenty years.
DATED this day of November, 2001.
Comments of JR Simplot Company
Richardson & O'Leary P.L.L.C.
By
Peter Richardson
Attorneys for 1. R. Simplot
Company
CERTIFICATE OF SERVICE
I hereby certify that I have this 29th day of November 2001 , served theforegoing COMMENTS OF THE l.R. SIMP LOT COMPANY, in Case No. IPC-01-, by personal service on:
Barton L. Kline
Senior Attorney
Idaho Power Company
Boise, Idaho
-()~
Comments of lR Simplot Company
~/o
CERTIFICATE OF SERVICE
I hereby certify that I did this date mail the attached Comments of the J. R. Simplot
Company and The Independent Energy Producers of Idaho, to the following:
A VISTA CORPORATION
Robert J. Lafferty
Blair Strong
POBox 3727
Spokane W A 99220
ACIFICORP
Gregory N. Duvall
Jim Fell
Pacificorp
424 Public Service Bldg.
920 SW 6th Ave
Portland, OR 97204
John M. Eriksson
Utah Power & Light Company
1407 West North Temple
Salt Lake City, UT 84140
IDAHO POWER COMPANY
Barton L. Kline
Senior Attorney
Idaho Power Company
POBox 70
Boise ID 83707-0070
DATED at Eagle, Idaho, this 15th day of March, 2002.
~~
O$~
Myrna J. ters
Legal Assistant
Comments ofthe J.R. Simplot Company
And the Independent Energy Producers of Idaho