20100406Petition for Reconsideration.pdf

Peter J. Richardson
Gregory M. Adams
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYrichardsonandolear.com
gregaYrichardsonandoleary .com
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Attorneys for Petitioners
Windland, Inc., and AgPower Jerome, LLC
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ADJUSTMENT OF)
AVOIDED COST RATES FOR NEW PURPA ) CASE NO. GNR-E-I0-0l
CONTRACTS FOR AVISTA CORPORATION)
DBA AVISTA UTILITIES, IDAHO POWER j PETITION OF WINDLAND, INC.,
COMPANY, AND PACIFICORP ) AND AGPOWER JEROME, LLC,
DBA ROCKY MOUNTAIN POWER ) FOR RECONSIDERATION OF
) ORDER NO. 31025
INTRODUCTION
This is a petition for reconsideration fied by Windland, Inc. ("Windland") and
AgPower Jerome, LLC ("AgPower") (collectively "Petitioners") with the Idaho Public
Utilities Commission (the "Commission") pursuat to Idaho Code section 61-626 and
Idaho Administrative Rules 31.01.01.331. Prior to the March 16,2010, service date of
the Commission's Order No. 31025, Petitioners were independently engaged in
developing qualifying facilities ("QFs") under 1 0 average monthly mega-watts ("aMW")
entitled to the published avoided cost rates on fie pursuat to the Public Utility
Regulatory Policies Act of 1978 ("PURP A"). Petitioners each took steps towards
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-l
development of, and execution of power purchase agreements and interconnection
agreements for, these QFs relying upon the published avoided cost rates on file pursuant
to Order No. 30744. As set forth in detal below, the Commssion provided Petitioners
and other QFs with no notice or opportty to be heard on the avoided cost rate schedule
attched to Order No. 31025 prior to its service date. Petitioners hereby respectfuly
request that the Commission reconsider its Order No. 31025, and delay the effective date
of that order until after Petitioners and other interested paries are provided with their
statutory and constitutional rights to notice and opportunity to be heard on the new
avoided cost rates.
PRELIMINARY MATTERS
Copies of all pleadings and other correspondence in this matter should be served
upon counsel for Petitioners at:
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peterCfrichardsonandoleary.com
gregCfrichardsonandoleary. com
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-2
PETITION FOR RECONSIDERATION
Petitioners respectfully petition for reconsideration of Order No. 31025, and
in support thereof, respectfully show as follows, to wit:
BACKGROUND
A. Windland
Windland, Inc., a Californa corporation, is a developer of wind energy projects,
with its principle place of business being located at 7669 W. Riverside Drive, Suite 102,
Boise, Idaho 83714. Windland is the manager and sole member of Power County Wind
Park Nort, LLC, and Power County Wind Park South, LLC. Windlands Power County
Wind Parks Nort and South are each PUR A QFs under 10 aMW entitled to the avoided
cost rates on fie at the Commission. See 16 U.S.C. § 824a-3(a)(2); 18 C.F.R. §
292.304(c), (d); Idaho Public Utilties Commission Order No. 29069, at p. 7.
Prior to March 16, 2010, the service date of Order No. 31025, Windland was
engaged in developing these QFs, and made financial expenditures in efforts to obligate
itself to deliver energy and capacity from its QFs pursuat to stadard PURP A power
purchase agreements ( "PP As") and to enter into interconnection agreements with
PacifiCorp, dba Rocky Mountain Power, ("PacifiCorp") in Idaho. Windland incured
financial expenses in expectation that it could secure the avoided cost rates authorized in
Order No. 30744.
B. AgPower
AgPower is a Delaware limited liability company developing an anaerobic
digester at the Double A Dairy in Jerome, Idaho. AgPower's anaerobic digester converts
biomass to renewable energy and is a PURP A QF under 10 aMW entitled to the avoided
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-3
cost rates on file at the Commission. See 16 U.S.C. § 824a-3(a)(2); 18 C.F.R. §
292.304(c), (d); Idaho Public Utilities Commission Order No. 29069, at p. 7.
Prior to March 16, 2010, the service date of Order No. 31025, AgPower was
engaged in developing this QF, and made financial expenditues in efforts to obligate
itself to deliver energy and capacity from its QF pursuant to a stadard PURPA PPA and
to enter into interconnection agreements with Idaho Power Company in Idaho. AgPower
incured financial expenses in expectation that it could secure the avoided cost rates
authorized in Order No. 30744.
c. Order No. 31025
On March 15, 2010, without prior notice whatsoever to the public or to QFs
engaged in developing renewable energy projects, the Commission signed Order No.
31025, declaring that significantly lower avoided cost rates would apply to all PURP A
PPAs executed after the order's service date of March 16,2010. Order No. 31025 states
that it follows the methodology approved in Order No. 29124, whereby the Comiission
uses the Northwest Power and Conservation Planng Council's (the "Council's")
medium natural gas price forecast as the basis for computing avoided cost rates. See
Order No. 31025, at p. 1. According to Order No. 31025, "(i)n Order No. 29124, the
Commission also found that the release of a new fuel price forecast by the Council or the
Council's general advisory committees automatically triggers a recalculation of the
published avoided cost rates." Id
The Council approved a new natural gas price forecast "in conjunction" with its
release of its Sixth Power Plan and posted it on its website on March 8,2010. Id at p. 2.
Staff provided Idaho Power Company, Avista Utilities, and PacifiCorp with "worksheets
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-4
on March 9, 2010, for review and comment showing the computation of the revised
avoided cost rates." Id at p. 2. The Commssion did not post Staffs March 9 letter on
the Commssion's website until after issuing Order No. 31025. Windland received this
March 9 letter with new proposed rates on March 10 only because PacifiCorp attched it
to a letter rejecting Windlands ongoing attempts to obligate itself to deliver the energy
and capacity from its two Power County wind QFs pursuant to stadard PURP A
contracts. PacifiCorp's March 10 letter asserted that the proposed rates in Staffs letter
"may be adopted. . . sometime in the next 30 days," and insinuated there was no way
Windland could complete "negotiations" to obtan fully executed PP As by that time.
AgPower received no prior notice of the avoided cost rate schedules attched to Order
No. 31025.
On March 10, 12, and 15, Idaho Power Company, PacifiCorp and Avista provided
responses to the Commission concurng in Staffs avoided cost computations. Then, on
March 15, 2010, the Commission stated in Order No. 31025: "We find it reasonable to
issue an Order implementing new published avoided cost rates without fuher notice or
procedure." Id at p. 2. The order fuher provides ''the Commission hereby approves the
revised published avoided costs . . . for new PURP A contracts executed on and afer ths
date." Id Windland, AgPower, and other QFs had no notice and hence no opportty to
comment or otherwse be heard regarding the new avoided cost rate schedule attached to
Order No. 31025.
As predicted by PacifiCorp in its March 10 letter, Windland was unsuccessfu in
its efforts to receive fully executed PPAs with the avoided cost rates in Order No. 30744
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-5
for its QFs prior March 16, 2010. AgPower was likewise unsuccessfu in its efforts to
receive a fully executed PPA from Idaho Power Company prior to March 16.
ARGUMENT
A. Petitioners are interested parties entitled to reconsideration, and if granted
wil present evidence and argument as requested by the Commission.
Within 21 days of the service date of any final Commission Order, any person
interested in the order or any issue decided therein may petition for reconsideration. I.C.
§ 61-626; IDAPA 31.01.01.331.01. The petition should set fort specifically the grounds
why the order or issue decided is uneasonable, unlawfl, erroneous, or not in conformity
with the law, and a statement of the nature and quatity of evidence or argument the
petitioner will offer if the Commission grants reconsideration. Id
Because Order No. 31025 significantly decreases the avoided cost rate applicable
to Windlands and AgPower's QFs, Windland and AgPower are interested in Order No.
31025, and are adversely affected thereby. Windland and AgPower are therefore entitled
to petition for reconsideration. See I.C. § 61-626. Windland and AgPower stad ready to
provide the Commission affidavits, testimony, and exhibits supporting the factual
assertions herein. Windland and AgPower will also provide arguent and additional
comments or briefing supporting its arguents, as directed by the Commission.
B. The lack of notice in issuing Order No. 31025 violated i.C. § 61-307.
Idaho Code section 61-307 states "(u)nless the commission otherwse orders, no
change shall be made by any public utility in any rate. . . except after thirt (30) days'
notice to the commission and to the public as herein provided. Such notice shall be given
by filing with the commission and keeping open for public inspection new schedules
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-6
stating plainly the change or changes to be made in the schedule or schedules then in
force, and the time when the change or changes wil go into effect." This section applies
to changes in the avoided cost rates. See A. W Brown Co. v. Idaho Power Co., 121 Idaho
812,819,828 P.2d 841, 848 (1992). There is only a limited exception to the rule. "The
commission, for good cause shown, may allow changes without requiring the thirty (30)
days' notice herein provided for, by an order specifying the changes so to be made and
the time when they shall tae effect, and the manner in which they shall be fied and
published." I.C. § 61-307.
Here, the Commission's Order No. 31025 states that "(i)n Order No. 29124, the
Commission also found that the release of a new fuel price forecast by the Councilor the
Council's general advisory committees automatically triggers a recalculation of the
published avoided cost rates." But Order No. 29124 contains no express finding that any
new gas forecast from the Council "automatically triggers" new avoided cost rates by a
procedure whereby the Commission Staff and the utilties recalculate the rates to the
exclusion of all others. Rather, it stated that "(n)atual gas prices can be updated when a
new NWPPC forecast becomes available." Order No. 29124, at p. 10 (emphasis added).
That order also stated that it established a "platform" going forward, but provided no
detal as to the procedures the Commission will follow to incorporate a new gas forecast.
See id at p. 13. Order No. 29124 put QFs on notice that the Commission may open an
investigation into revising the avoided cost when the Council changes its gas forecast, but
nothing in the order states so conclusively. And Order No. 29124 certainly does not
constitute an "an order specifying the changes so to be made and the time when they shall
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-7
take effect, and the manner in which they shall be filed and published." I.C. § 61-307
(emphasis added).
In the years since Order No. 29124, predicting when and how a new gas forecast
will impact the avoided cost rate has not been easy. In the last change in the avoided cost
rates approved in Order No. 30744, the Council released a gas forecast on December 29,
2008, and the gas prices, standing alone, called for a significant avoided cost rate
increase. Order No. 30744, at p. 1. But the Commission Staff waited until afer the
conclusion of Idaho Power's general rate case to mail the utilities its new avoided cost
rate calculations on Februar 9, 2009. Id In response to Staffs letter, PacifiCorp
objected to instituting the new, higher rates until afer the Council's draft fuel prices
became final, or not continuing to use the medium gas forecast. See Order No. 30744 at
p. 2. The Commission opened a docket to investigate and accepted comments from all
interested paries, including QFs. Thus, the effective date of that rate change was March
16,2009 -- long after the new gas forecast became available on December 29,2008. Id
atp.5.
Likewise, when Idaho Power questioned the validity of using the Council's
forecast released on July 31, 2007, the utility proposed to change the methodology
altogether. See Order No. 30480 at p. 2. The Commission ultimately altered the "three-
year calculation methodology" for gas prices approved in Order No. 29124. Id at p. 10-
11. There too, multiple QFs had the opportty to be heard on the rate change. The new
rates with the Council's July 2007 gas forecast did not go into effect until Januar 1,
2008. Id at p. 12.
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-8
Furhermore, when the Commission incorporated a new gas forecast in 2004, it
issued a notice of proposed rate change and accepted comments from all paries prior to
making the new proposed rates effective. See Order No. 29646, at pp. 2-3. There, the
Council released its forecast on September 24, 2004, and the paries were given until
November 23,2004 to comment. The new rates did not go into effect until December 1,
2004. Id.
That Staff feels it necessar to send its draft calculations to the utilties for their
review confirms that the methodology is not so simple that notice to interested paries is
unecessary. Furhermore, providing only the utilties with the opportity to challenge
the rate calculations and their implementation is patently unfair and results in a procedure
where whenever the gas forecast, standing alone, requires an avoided cost rate increase,
the utilities can protect their interests by challenging the entire methodology prior to the
rates tang effect. See Order No. 30480, at pp. 2, 10-12; Order No. 30744, at pp. 2, 4-5.
When the gas forecast calls for a drop in the rates, QFs have no opportunty to review
Staffs calculations or renew arguents QFs often make regarding the methodology
which may mitigate the effect on the QF market of a drastic rate decrease.
To add to this confusion, the Commission stil has an open generic docket
questioning whether continued use of a Combined Cycle Combustion Turbine as the
surogate avoidable resource is appropriate for intermittent resources such as wind. See
GNR-E-09-03. Because of this open docket, wind QFs had no idea whether the
Council's Sixth Power Plan would even apply to them or whether the Commission would
issue an order in the open generic docket for wind projects, specifically excluding them
from the impact of the new gas forecast. The effect on the avoided cost rates applicable
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-9
to contracts sought by those in the position of Windland was completely unown until
the Commission issued Order No. 31025.
In past avoided cost rate change proceedings, interested QFs have had the
opportunity to comment. See, e.g., Order No. 29646, at p. 2; Order No. 30480, at pp. 4-8;
Order No. 30744, at pp. 2-3. Had the Commission provided Windland and AgPower
with the opportity to be heard on the new rate changes, they may have advocated for
additional changes to the methodology in light of the new gas price forecast that resulted
in a signficant drop in the avoided cost rate.. These would include alterations to car
forth PURPA's objective to promote renewable development, including increasing the
avoided cost rate for renewables that have no gas price volatilty. The curent
methodology decreases the avoided cost rate for the cost to integrate wind, but provides
no benefit for the lack fuel price varabilty for wind projects or for other renewable
resources without fuel price variability, such as AgPower's digester. Windland and
AgPower should be given the opportty to raise their arguents just as the utilities
have been allowed in the past to challenge wholesale adoption of the increased gas prices
into the avoided cost rates.
In sum, Order No. 31025 is simply incorrect to the extent it implies that QFs were
on notice from Order No. 29124 as to "the time when the (new re-calculated) rate shall
tae effect, and the maner in which they shall be fied and published." I.C. § 61-307.
Order No. 31025 violated section 61-307. Thus, the Petitioners respectfully request that
the Commission reconsider the order, and declare the rates curently in effect to be the
rates in Order No. 30744, which went into effect only after all interested paries had an
opportity to review and comment on the then-proposed rates.
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-I0
B. The lack of notice in issuing Order No. 31025 violated the Procedural Due
Process Clauses of the Idaho and United States Constitutions.
"The right to procedural due process is secured by Article 1, Section 13, of the
Idaho Constitution and by the Foureenth Amendment to the United States Constitution."
Gay v. County Comm'rs of Bonnevile County, 103 Idaho 626, 628, 651 P.2d 560, 562
(Ct. App. 1982). "Procedural due process requires that there must be some process to
ensure that the individual is not arbitrarily deprived of his rights in violation of the state
or federal constitutions." Cowan v. Board of Comm 'rs of Fremont County, 143 Idaho
501, 510, 148 P.3d 1247, 1256 (2006) (internal quotation omitted). "(A)n individual
must be provided with notice and an opportty to be heard." Spencer v. Kootenai
County, 145 Idaho 448, 454, 180 P .3d 487, 493 (2008). "The opportty to be heard
must occur at a meanngfu time and in a meaningful maner in order to satisfy the due
process requirement." Aberdeen-Springfeld Canal Co. v. Peiper, 133 Idaho 82, 91, 982
P.2d 917,926 (1999) (internal quotation omitted).
Cours have recognized "specific findings and notice of meetings . . . as
fudamental elements of procedural due process in a variety of contexts." Gay, 103
Idaho at 629, 651 P.2d at 563. Except in "extraordinar situations" where some valid
governenta interest justifies the postponement of notice and hearng, due process
requires an adversar proceeding before a person can be deprived of his property interest
or a statutory entitlement. Fuentes v. Shevin, 407 U.S. 67, 86, 90, 92 S.Ct. 1983, 1997,
1999 (1972); see also Southern California Edison Co. v. Lynch, 307 F.3d 794, 808 (9th
Cir. 2002) (holding that a cour's "expedited notice" did not violate due process rights of
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-ll
ratepayer advocacy group because notice allowed time for detailed briefing of rate issue
before ruing). "(I)t is no answer to say that, in his paricular case, due process of law
would have led to the same result because he had no adequate defense on the merits."
Fuentes, 407 U.S. at 87, 92 S.Ct. at 1991 (internal quotation omitted).
PURPA's published avoided cost rates are a governent-created, statutory
entitlement. "Section 210 of PURP A sets forth the benefit to which QFs are entitled. It
creates a market for their energy by requiring that the FERC establish reguations that
obligate public utilties to sell electric energy to and purchase electric energy from QFs."
Freehold Cogeneration Associates, L.P. v. Board of Regulatory Comm'rs of the State of
New Jersey, 44 F.3d 1178, 1191 (3rd Cir. 1995) (citing 16 U.S.C. § 824a-3(a)) (emphasis
added). FERC "regulations address the purchase of energy by utilities, and the cost to be
paid to the QF supplying the energy and guidelines for calculating such costs." Id; see
also 18 C.F.R. § 292.304(c), (d) (entitling individual QFs to published rates if QF is
below size threshold); Order No. 29069, at p. 6 (setting 10 aMW as size threshold in
Idaho). QFs pursuing the published rates have an entitlement to those rates protected by
the due process clause. .
Here, Windland and AgPower each relied on the published rates in Order No.
30744 when they incured financial expenses in perfecting eligibilty for contracts at the
published rates and interconnection for their respective QFs. Absent the rates
purortedly available in Order No. 30744, the economic viability of Petitioners' projects
would be substantially diminished. The Commission's complete lack of notice to QFs
prior to setting the new rates in Order No. 31025 deprived Petitioners of procedural due
process. See Cowan, 143 Idaho at 510, 148 P.3d at 1256.
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-12
CONCLUSION
Windland and AgPower respectfully request the Commission issue an order that it
will reconsider Order No. 31025, declare that order null and void for violating I.C.§ 61-
307 and the Procedural Due Process Clauses of the Idaho and United States
Constitutions, and declare the rates curently in effect to be the rates in Order No. 30744,
until all interested paries have an opportunity to review and be heard on the rate schedule
contaned in Order No. 31025. If the Commission grants reconsideration, Windland and
AgPower will provide evidence and arguent supporting the contents of this petition in
whatever form requested by the Commission.
Respectfuly submitted this 6th day of April 2010,P.a~
Peter Richardson
Attorney for Petitioners
ISB No: 3195
PETITION FOR RECONSIDERATION OF ORDER NO. 31025
PAGE-13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 6th day of April, 2010, a tre and correct copy of the
within and foregoing PETITION OF WINLAN, INC., AN AGPOWER JEROME, LLC,
FOR RECONSIDERATION OF ORDER NO. 31025 was served in the maner shown to:
Jean Jewell
Commission Secreta
Idaho Public Utilties Commission
472 W Washington
Boise ID 83702
-. Hand Delivery
_U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Baron L Kline
IDAHO POWER COMPANY
POBox 70
Boise ID 83707
_ Hand Delivery
lLU.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Jeffrey K Larsen
PacifiCorp
201 South Main Ste 2300
Salt Lake City UT 841 11
_ Hand Delivery
lLU.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Clint Kalich
A VISTA Corporation
PO Box 3727
Spokane W A 99220
_ Hand Delivery
iU.S. Mail, postage pre-paid
Facsimile
Electronic Mail
0i1J . ÚA.fu
Nina Curis
1