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Home My WebLink About20121025Comments.pdfAvista Corp. AIVISTA' 1411 East Mission P.O. Box 3727 Spokane. Washington 99220-0500 Telephone 509-489-0500 F corp. Toll Free 800-727-9170 - ?Ut2OCT25 A11O: 17 pJ:.. October 24, 2012 Ms. Jean Jewell Commission Secretary Idaho Public Utilities Commission 472 W. Washington Boise, ID 83702 RE: GNR-E-11-03 - Comments of Avista Corporation in Support of Partial Settlement Stipulation Dear Ms. Jewell: Enclosed please find the Comments of Avista Corporation in Support of Partial Settlement Stipulation, submitted for filing in the above-referenced docket on behalf of Avista Corporation. Per the Commission's Rules of Procedure, we have enclosed and original (unbound and unstapled) and seven (7) copies. If you have any questions regarding this filing, please contact Michael Andrea at 509.495.2564 or me at 509.495.4584. Sincerely, Paul Kimball Regulatory Analyst Enclosures CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have served the Comments of Avista Corporation in Support of Partial Settlement Stipulation in GNR-E-11-03, by electronic mail to the following: Daniel E. Solander PacifiCorp/ dba Rocky Mountain Power 201 S., Main St., Suite 2300 Salt Lake City, UT 84111 daniel.solander@pacificorp.com Donovan E. Walker Jason B. Williams Idaho Power Company P0 Box 70 Boise, ID 83707-0070 dwalker@idahopower.com jwilliams@idahopoer.com Robert D. Kahn Executive Director Northwest and Intermountain Power Producers Coalition 117 Minor Ave., Suite 300 Seattle, WA 98101 rkahn(2inippc.org Robert A. Paul Grand View Solar II 15690 Vista Circle Desert Hot Springs, CA 92241 Robertapau108gmail.com Ronald L. Williams Williams Bradbury, P.C. 1015 W. Hays Street Boise, ID 83702 ron@williamsbradbury.com C. Thomas Arkoosh Capital Law Group, PLLC 205 N. 10th 4' Floor Boise, ID 83701 tarkoosh(capitallawgroup.corn Donald 1. Howell, II Kristine A. Sasser Deputy Attorneys General Idaho Public Utilities Commission 472 W. Washington Boise, ID 83702-0074 don.howell@puc.idaho.gov kris.sasser(puc.idaho.gov Peter J. Richardson Gregory M. Adams Richardson & O'Leary, PLLC P0 Box 7218 Boise, ID 83702 oeter(Zirichardsonandolearv.com gregrichardsonandoleary.com Don Sturtevant J.R. Simplot Company P0 Box 27 Boise, ID 83707-0027 don.sturtevant@simplot.com James Carkulis Exergy Development Group of Idaho, LLC 802 W. Bannock St., Suite 1200 Boise, ID 83702 jçarkulis@exergydevelopment .com Dr. Don Reading 6070 Hill Road Boise, ID 83703 dreading@mindspring.com Don Schoenbeck RCS 900 Washington St., Suite 780 Vancouver, WA 98660 dws@r-c-s-inc.com Page j 1 John R Lowe, Consultant R Greg Ferney Renewable Energy Coalition Mimura Law Offices, PLLC 12050 SW Tremont St 2176 E Franklin Rd, Suite 120 Portland, OR 97225 Meridan, ID 83642 jravensanmarcos@yahoo corn gregc2mimura1aw corn Bill Piske Dean J. Miller Interconnect Solar Development, LLC Chas F. McDevitt 1303 E. Carter McDevitt & Miller, LLP Boise, ID 83706 P0 Box 2564 billpiske@cableone.net Boise, WA 83701 joe@,mcdevitt-miller.com chas@mcdevitt-rniller.com Lori Thomas M.J. Humphries Capital Law Group, PLLC Blue Ribbon Energy LLC P0 Box 2598 4515 S. Ammon Road Boise, ID 83701-2598 Ammon, ID 83406 lthomas(capitallawgroup.com blueribbonenergygmail.corn Wade Thomas Arron F. Jepson General Counsel Blue Ribbon Energy LLC Dynamis Energy. LLC 10660 South 540 East 776 W. Riverside Dr., Suite 15 Sandy, UT 84070 Eagle, ID 83616 arronesgaol.com wthomasdynamisenergy.com Brian Olmstead Ted Diehl Twin Falls Canal Company North Side Canal Company P0 Box 326 921 N. Lincoln St. Twin Falls, ID 83303 Jerome, ID 83338 olmstead@tfcanal.com nscanal@cableone.net Bill Brown, Chair Ted S. Sorenson, P.E. Board of Commissioners of Birch Power Company Adams County, ID 5203 South 11 th East P0 Box 48 Idaho Falls, ID 83404 Council, ID 83612 ted@tsorenson.net bdbrownfrontiemet.net Page 12 Megan Walseth Decker Glenn Ikemoto Senior Staff Counsel Margaret Rueger Renewable Northwest Project Idaho Wrndfarms LLC 421 SW 6th Avenue, Suite 1125 672 Blair Ave. Portland, OR 97204 Piedmont, CA 94611 megan(i)mp org glenni)envisionwind corn Margaretenvisionwind corn Benjamin J Otto Liz Woodruff Idaho Conservation League Ken Miller 710 N. Sixth Street (83702) Snake River Alliance P0 Box 844 P0 Box 1731 Boise, ID 83701 Boise, ID 83701 botto@idahoconservation org lwoodruj][@snakeriveralliance.org kmiller@snakeriveralhance org Mary Lewallen Tauna Christensen Clearwater Paper Corporation Energy Integrity Project 601 W. Riverside Ave., Suite 1100 769 N 1100 E Spokane, WA 99201 Shelley, ID 83274 Marv.lewallen@clearwaterpgper.com tauna(energyintegntyproiect org Deborah E. Nelson Michael J. Uda Kelsey J Nunez Uda Law Firm, P.C. Givens Pursley LLP 7 W 6th Avenue, Suite 4E 601 W. Bannock Street (83702) Helena, MT 59601 P0 Box 2720 muda@mthelena.com Boise, ID 83701-2720 den@givenspursley.com kjn@givenspursley.com J Kahle Becker, Idaho The Alaska Center 1020 W Main St Suite 400 Boise, ID 83702 kahle(2i)kahlebeckerlaw corn By: October 24, 2012 Paul Kimball Regulatory Analyst Page 13 MICHAEL G. ANDREA (ISB No. 8308) Avista Corporation 1411 E. Mission Ave., MSC-23 Spokane, WA 99202 Telephone: (509) 495-2564 michael.andrea@avistacorp.com Attorney for Avista Corporation C C 212OCT25 AMIO:13 tJTILIIIES COMMEO, BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE COMMISSION'S REVIEW OF PURPA QF CONTRACT PROVISIONS INCLUDING THE SURROGATE AVOIDED RESOURCES (SAR) AND INTEGRATED RESOURCE PLANNING (IRP) METHODOLOGIES FOR CALCULATING AVOIDED COST RATES CASE NO. GNR-E-1 1-03 COMMENTS OF AVISTA CORPORATION IN SUPPORT OF PARTIAL SETTLEMENT STIPULATION On October 16, 2012, the Idaho Public Utilities Commission ("Commission") issued a Notice of Partial Settlement Stipulation; Request for Comment ("Notice")' in which the Commission invited comments on a partial settlement ("Partial Settlement Stipulation") addressing the issue of delay security and liquidated damages in PURPA power purchase agreements ("PPAs"). The Partial Settlement Stipulation was signed by 13 of the 25 parties in the above-captioned proceeding. Pursuant to the Notice, Avista respectfully submits these comments in support of the Partial Settlement Stipulation. 'Order No. 32665. Page -1 COMMENTS OF AVISTA CORPORATION IN SUPPORT OF PARTIAL SETTLEMENT STIPULATION Avista Corporation ("Avista") has consistently asserted that it is imperative that PURPA PPAs contain meaningful security and liquidated damages provisions.2 In direct testimony submitted by Avista in this proceeding, Mr. Kalich stated: Liquidated damages provisions, including adequate security to ensure payment of liquidated damages if necessary, are one of two key protections a utility must have with any developer who might otherwise not exercise their "put option" in the absence of an obligation on the part of the QF to perform. Once a PURPA contract is executed by the parties it becomes a firm contract in the utility's resource stack and, as such, the proposed QF resource postpones the development of other resource alternatives; in other words, the contract then allows and obligates the Company to avoid the costs associated with investing in its system to ensure reliable electricity service. To the extent the PUIRPA developer does not honor its contract commitments the utility ends up at the last moment having to procure other resources, potentially at higher cost. In the absence of meaningful liquidated damages, the QF developer has a free option to either honor its contractual commitment where the avoided cost rate under the contract (agreed to years before commercial operation) is greater than its alternatives at the time of commercial operation, break its commitment and sell to a 311 party if it can secure a higher price, or simply cease development where market conditions have changed.3 In the event that a QF fails to honor its contractual obligation, actual damages to the utility and its ratepayers may include, among other things, additional costs associated with procuring replacement energy and the lost opportunity costs associated with projects or other opportunities that were not pursued because the QF was in the utility's resource stack. To be sure, accurate determination of actual damages would be difficult or impossible. Thus, in order to ensure that a utility has some recourse in the event that a QF fails to honor its contractual obligations, Avista recommended that PURPA PPAs require, at a minimum, that QFs post security equal to $45 per kilowatt based on installed capacity.4 In the event that the QF failed to achieve commercial operation by the scheduled commercial operation date, damages would be calculated based on the difference between the market price of replacement power and the PPA 2 E.g., Direct Testimony of Clint Kalich on Behalf of Avista Corporation, GNR-E- 11-03, at 31-33 (Jan. 31, 2012) ("Kalich Direct"). Kalich Direct at 31-32. Kalich Direct at 32. Page -2 COMMENTS OF AVISTA CORPORATION IN SUPPORT OF PARTIAL SETTLEMENT STIPULATION price during a reasonable cure period (90-180 days after the scheduled commercial operation date). If the QF failed to achieve commercial operation prior to the expiration of the cure period, the QF would forfeit its security as liquidated damages and the utility could terminate the PPA. Although there are some differences between the Partial Settlement Stipulation and Avista' s recommendations, the Partial Settlement Stipulation includes many of the elements recommended by Avista, including a requirement that QF developers post security equal to $45 per kilowatt. The Partial Settlement Stipulation in the above-captioned proceeding, provides for standardization of certain terms in PURPA PPAs, including (i) standard terms with regard to the amount of security that QF developers are required to post, (ii) a standard cure period for QFs that fail to achieve commercial operation by the scheduled operation date, and (iii) a standard for calculating damages incurred by the utility during the cure period. Such standard terms should enhance the process of entering into PURPA PPAs by resolving issues between the utilities and QF developer. Also the requirement that QF developers post security equal to $45 per kilowatt based on nameplate capacity provides assurance that utilities will have at least some recourse if a QF developer fails to satisfy its contractual obligations. Accordingly, Avista supports the terms of the Partial Settlement Stipulation. Respectfully submitted this 24th day of October 2012. AVISTA CORPORATION ichael G. Andrea Senior Counsel Attorney for Avista Corporation Page -3 COMMENTS OF AVISTA CORPORATION IN SUPPORT OF PARTIAL SETTLEMENT STIPULATION