20120312Memorandum in Support of Stay.pdf

DONOVAN E. WALKER (ISB No. 5921)
JASON B. WILLIAMS (lSB No. 8718)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker(ëidahopower.com
jwilliams(ëidahopower.com
Attorneys for Idaho Power Company
RE. Ci:I\Vi=O....\ ..!it._
2U12 HF¡R 12 PM 4: 50
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE )
COMMISSION'S REVIEW OF PURPA QF )
CONTRACT PROVISIONS INCLUDING )
THE SURROGATE AVOIDED )
RESOURCE (SAR) AND INTEGRATED )
RESOURCE PLANNING (IRP) )
METHODOLOGIES FOR CALCULATING )
PUBLISHED AVOIDED COST RATES. )
)
)
)
)
)
CASE NO. GNR-E-11-03
MEMORANDUM IN SUPPORT OF
IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY
STAY OF ITS OBLIGATION TO
ENTER INTO NEW POWER
PURCHASE AGREEMENTS WITH
QUALIFYING FACILITIES
EXPEDITED REVIEW REQUESTED
Pursuant to Idaho Public Utilties Commission ("Commission") Rules of
Procedure ("RP") 56 and 256, Idaho Power Company ("Idaho Powet' or "Company")
filed a motion ("Motion") requesting that the Commission issue an order placing a
temporary stay on Idaho Powets obligation under Sections 201 and 210 of the Public
Utilty Regulatory Policies Act of 1978 ("PURPA") and various Commission Orders to
enter into fixed-price PURPA contracts with Qualifying Facilties ("QF"), other than
pursuant to Schedule 86. The Motion requests this stay take effect no later than March
15, 2012, and remain in effect for the remainder of the above-captioned general
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 1
proceeding investigating the Surrogate Avoided Resource ("SAR") and Integrated
Resource Planning ("IRP") methodologies for calculating avoided cost rates.
Idaho Power requests this temporary stay to ensure that Idaho Power is not
forced to acquire additional excessive amounts of QF output at prices that exceed Idaho
Powets avoided cost. The general proceeding has already revealed that: (1) current
SAR and IRP methodologies result in prices significantly in excess of Idaho Power's
avoided cost; (2) these inaccurate price signals have caused a surge of new QF
contract applications; (3) this surge has dramatically increased the amount of QF output
under contract and threatens to grow even more before GNR-E-11-03 can be
completed; and (4) this is very harmful to Idaho Power's customers and leads to results
contrary to PURPA. As of the date of its Motion, Idaho Power has received serious
inquiries from developers of QF projects totaling nearly 600 megawatts ("MW") of new
capacity, which the developers may seek to force Idaho Power to purchase prior to the
end of the Commission's avoided cost rate investigation. Idaho Power expects a rush by
those developers as well as new developers seeking power purchase agreements at
current rates once they become aware of Idaho Power's Motion.
Idaho Powets direct testimony in this matter establishes that it currently has 119
Commission-approved QF power purchase agreements that represent nameplate
capacity of 989 MW and with a contractual obligation of more than $3.6 bilion. Stokes,
Direct, Ex. Nos. 1 and 2. The large increase in QF projects on-line and under contract
since 2004 is expected to increase the power supply expense passed on to customers
through the Company's annual Power Cost Adjustment from approximately $40 milion
in 2004 to approximately $60 milion in 2009, and wil increase to more than $120 milion
in 2012. Stokes, Direct, p. 9-10. The 27 QF projects that are currently seeking power
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 2
purchase agreements with Idaho Power represent an additional 595 MW of generation
at a monetary obligation to customers of an additional $2.7 billon over the numbers
submitted in Idaho Powets direct testimony in this case. Affidavit of Randy C. Allphin,
Attachment Nos. 1 arid 2. A stay on Idaho Powets duty to enter into new fixed-price
PURPA contracts (or one of the alternative forms of relief sought in the Motion) is
necessary in order to protect customers and avoid further results which are contrary to
PURPA during the pendency of this case.
I. APPLICABLE LAW
Sections 201 and 210 of PURPA require electric utilties to offer to purchase
electric energy from qualifying cogeneration and small power production facilties.
1
PURPA also specifies that the purchase rates from QFs be set by state commissions
and that those rates may not exceed the incremental cost to the electric utility of
alternative electric energy.2 PURPA defines incremental cost (avoided cost) as the cost
to the electric utility of the electric energy which, but for the purchase from QFs, the
utilty would generate itself or purchase from another source.3 PURPA requires state
commissions to ensure that the avoided cost rates paid by a utilty for the purchase of
electricity from a QF be just and reasonable to utilty customers and in the public
interest.4 State commissions are prohibited from setting a rate for purchases from a QF
1 16 U.S.C. § 796 (2011) and 16 U.S.C. § 824a-3 (2011), respectively.
216 U.S.C. § 824a-3(b).
316 U.S.C. § 824a-3(d).
416 U.S.C. § 824a-3(b)(1) & (2).
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 3
that is above a utilty's avoided cost.5 The Commission is responsible for implementing
PURPA in Idaho and determining the avoided cost rate for Idaho utilties.6
II. PROCEDURAL HISTORY
On November 5, 2010, Idaho Power, 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. At the same time, the utilities also moved for an immediate
reduction in the published avoided cost rate eligibilty cap, from 10 average megawatts
("aMW") down to 1 00 kilowatts ("kW"). A stated purpose of the Joint Petition was to
provide interim relief (while the Commission carried out an investigation) from new
PURPA contract requests from developers that were disaggregating large projects into
10 aMW projects in order to qualify for published avoided cost rates. Joint Petition, p. 5,
Case No GNR-E-10-04.
On December 3, 2010, the Commission issued Order No. 32131, in which it
declined to reduce the eligibility cap immediately, but instead gave notice that it would
investigate issues related to avoided cost pricing, starting with the issue of
disaggregation (Phase I), and that its final decision whether to reduce the eligibilty cap
would become effective on December 14, 2010. ¡d. at 5-6, 9.
On February 17 , 2011, after soliciting comments from interested parties and
hearing oral argument, the Commission ordered a temporary reduction in the published
avoided cost rate eligibility cap, from 10 aMW down to 100 kW, for wind and solar
projects only. Order No. 32176 at 1-2. The temporary cap reduction became effective
5 18 CFR § 292.304(a)(2) (2011).
6 16 U.S.C. § 824a-3(f)(1); A.W Brown Co., Inc. v. Idaho Power Co., 121 Idaho 812,814,828
P.2d 841, 843 (1992).
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 4
as of December 14, 2010, and was to remain in place pending the outcome of Phase II
of the Commission's investigation. Shortly thereafter, on February 25, the Commission
initiated Phase II of its investigation into disaggregation and PURPA published avoided
cost rates. Order No. 32195. Phase II concluded on June 8, 2011, with the
Commission's final order maintaining the 100 kW eligibilty cap for wind and solar
projects. Order No. 32262, Case No. GNR-E-11-01.
On September 1, 2011, the Commission commenced Phase III-an investigation
of both the SAR methodology and the IRP methodology used by the utilties to calculate
avoided cost rates in order to ensure that avoided cost rates are just and reasonable.
Order No. 32352, Case No. GNR-E-11-03. On December 15, 2011, the Commission
hosted a workshop wherein the utilties presented to the Commission and other parties
how it develops avoided cost prices using its IRP methodology. On January 31, 2012,
the utilities filed direct testimony in Phase IIi. Formal proceedings in Phase II are
scheduled to adjourn August 9,2012. Order No. 32388.
II. BACKGROUND AND RELEVANT FACTS
A. Recent PURPA Acquisitions by Idaho Power Surpass Its Energy and
Capacity Needs.
PURPA requires that utilities offer to purchase output from QFs.7 Although Idaho
Power has been subject to PURPA for more than 30 years, Idaho Powets QF
purchases under long-term, fixed price, contracts have mushroomed in the last seven
years. From 2004 through January 31, 2012, Idaho Powets contracted PURPA
generation grew from 157 MW to 989 MW8, which is far more QF generation than any
7 PURPA § 210(d), 16 U.S.C. § 824a-3(d).
8 Idaho Power Co. Direct Test. M. Mark Stokes at 12 (Jan. 31, 2012) ("Direct Test. Stokes") in
IPUC Case No. GNR-E-11-03 (Idaho Power's ratio of PURPA nameplate capacity to annual average load
is 53.2 percent; PacifiCorp's is 12.9 percent, and Avista's is 9.3 percent.)
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 5
other electric utilty in the Pacific Northwest. Idaho Powets 989 MW of current and
contracted QF generation nearly surpasses the total minimum loads on Idaho Power's
entire system and represents approximately 53 percent of Idaho Powets 1,859 MW
average load. This ratio is more than four times higher than that of Idaho's two other
investor-owned utilities-PacifiCorp and Avista.9 The large majority of Idaho Powets
existing QF power purchase agreements do not expire before 2026.10
Idaho Power has no projected need for new capacity until 2015 (except for peak
hours in July) and has a current annual average energy surplus of 526 aMW.11
Consequently, much of the QF output delivered to Idaho Power wil never serve Idaho
Powets native load. Idaho Powets QF contracts require it to buy QF output whether it
is needed or not. When Idaho Power cannot displace its own resources to make room
for QF generation, it must sell power to the market-often at a substantial loss. Idaho
Power estimates that it costs $18 million annually in transmission related and firming
costs to dispose of surplus QF output that is not needed to serve Idaho Powets load.12
These costs are not reflected in the avoided cost payments made to QFs under the
current SAR and IRP methodologies.
Idaho Power's recent QF purchases also conflict with published resource
acquisition goals. The IRP Advisory Council and members of the public participating in
the IRP process have agreed for some time that wind generation is not a good choice
for Idaho Power because it cannot be counted on to meet the Company's peak
9/d.
101d. at 9-10.
11 Id. at 17.
12 Id. at 19. The $18 millon represents the cost of transmission expenses necessary to resell
excess QF energy.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 6
demands, cannot be reduced during times of system surplus, and increasingly taxes the
utility's regulating resources as the total amount of wind on the system increases.
Accordingly, the preferred portolio in Idaho Powets 2011 IRP does not include any new
wind resources during the next 20 years. In spite of the general consensus that Idaho
Power does not need more wind generation at this time, wind generation accounts for
the vast majority of new QF generation coming on-line by 2014.13 Continued purchases
of wind generation, and other must-buy intermittent QF generation, may force Idaho
Power to acquire additional dispatchable resources solely to regulate QF generation.14
B. QF Development in Idaho Since the Commission's June 8. 2011. Order No.
32262 and During the Pendency of this Case Has Continued at an Alarming
Rate.
In the November 5, 2010, Joint Petition, Idaho Power informed the Commission
that its electrical system was becoming inundated with a large volume of unneeded QF
energy that was being acquired at rates that exceed the cost of other available sources
of generation available to the Company, causing operational and system reliabilty
problems, and ultimately harming customers by greatly increasing the Company's
overall power supply costs. To combat the practice of disaggregation, where large
,)
projects would configure into 10 aMW increments in order to qualify for published
avoided cost rates and to avoid application of the negotiated avoided cost rate
methodology applicable to projects larger than 10 aMW, the Commission lowered the
eligibilty cap for published avoided cost rates for wind and solar QFs from 10 aMW to
100 kW.15 It was believed that by reducing the cap for wind and solar projects that the
13 Id. at 23-24.
14 Idaho Power Co. Direct Test. Park at 8 (Jan. 31,2012) in IPUC Case No. GNR-E-11-03.
15 Order No. 32262, Case No. GNR-E-11-01.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 7
rapid proliferation and development of excess and unneeded QF generation sold to
utilties at rates above the cost at which utilties could generate or otherwise acquire that
same amount of energy while the Commission conducted its investigation of the SAR
and IRP methodologies would stop. However, this has not turned out to be the case for
Idaho Power. Between Order No. 32262 on June 8, 2011, and March 9, 2012, Idaho
Power has submitted for Commission approval four QF power purchase agreements
comprising 83.27 MW of new capacity.16 Those projects are:
. Interconnect Solar - 20 MW Solar - $94.59/megawatt-hour
("MWh"). On June 17, 2011, Idaho Power submitted a 25-
year power purchase agreement with Interconnect Solar
Development, LLC ("Interconnect Solat') on a new 20-MW
photovoltaic QF.17 The purchase price determined using
Idaho Powets IRP methodology is equivalent to a 25-year
levelized price of $94.59 per MWh.18 The Commission
approved this application October 26,2011.19
. High Mesa Wind - 40 MW Wind - $56.43/MWh. On
November 22, 2011, Idaho Power submitted a 20-year power
purchase agreement with High Mesa Energy Project, LLC
("High Mesa") on a new 40 MW wind generating facilty.20 Thepurchase price determined using Idaho Powets IRP
methodology is equivalent to a 20-year levelized price of
$56.43 per MWh.21 The Commission approved this
application February 17, 2012.22
16 Direct Test. Stokes at 13.
17 In the Matter of the Application of Idaho Power Co. for Firm Energy Sales Agreement with
Interconnect Solar Dev. LLC, IPUC Case No. IPC-E-11-10, Order No. 32384, 1 (2011) ("Interconnect
Solar Dev.").
181d, at 3.
19/d. Idaho Power provided notice to the Commission on February 23,2012, in Case No. IPC-E-
11-10 that it terminated the Firm Energy Sales Agreement with Interconnect Solar Development, LLC, for
failure to post required delay security. Interconnect Solar has since filed a complaint with the
Commission seeking reinstatement of the Agreement.
20 In the Matter of the Application of Idaho Power Co. for Firm Energy Sales Agreement with High
Mesa, LLC, IPUC Case No. IPC-E-11-26, Order No. 32462 (2012) ("High Mesa").
21 Id.
221d.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 8
. Dynamis Energy - 22 MW Landfill Waste-to-Energy -
l92.35/MWh. On November 22, 2011, Idaho Power
submitted a 20-year power purchase agreement between
Idaho Power and Dynamis Energy, LLC ("Dynamis") on a new
22 MW landfill waste-to-energy generating facilty.23 The
purchase price determined using Idaho Power's IRP
methodology is equivalent to a 20-year levelized price of
$92.35 per MWh.24 The Commission approved the Dynamis
application on February 24, 2012.25
. Riverside Investments - 1.27 MW Hydro - $73.44/MWh. On
December 6, 2011, Idaho Power submitted a 20-year power
purchase agreement with Riverside Investments, LLC
("Riverside") on a new 1.27 MW canal drop hydroelectricgenerating facility.26 The purchase price determined using
Idaho Power's SAR methodology and prices adopted on
August 30, 2011, is equivalent to a 20-year levelized price of
$73.44 per MWh.27 The Commission approved this
application February 1, 2012.
These Interconnect Solar, High Mesa, and Dynamis contracts were some of the
first contracts Idaho Power priced using the IRP methodology since the Commission
ordered the published rate cap reduction.28 In each of those cases, Commission Staff
("Staff) recommended that the Commission not approve the contracts because it
believed the application of the IRP avoided cost pricing methodology was resulting in
23 Comments Commn. Staff at 3 (Feb. 2, 2012) in In the Matter of the Application of Idaho Power
for Firm Energy Sales Agreement with Dynamis Energy, LLC, IPUC Case No. IPC-E-11-25 ("Staff
Comments in Dynamis").
24,d.
25 In the Matter of the Application of Idaho Power for Firm Energy Sales Agreement with Dynamis
Energy, LLC, IPUC Case No. IPC-E-11-25, Order No. 32470 (2012).
26 In the Matter of the Application of Idaho Power Co. for Firm Energy Sales Agreement with
Riverside Investments, LLC, IPUC Case No. IPC-E-11-27, Order No. 32451 (2012).
27 In the Matter of the Adjustment of Avoided Cost Rates for New PURPA Contracts for Avista
Corp., Idaho Power Co. and PacifCorp, IPUC Case No. GNR-E-11-04, Order No. 32337 (2011)
("Adjustment of Avoided Cost GNR-E-11-04"); Staff Comments in Dynamis at 3 (reporting the levelized
price).28 Comments Commn. Staff at 2 (Sept. 9, 2011) in In the Matter of the Application of Idaho Power
Co. for Firm Energy Sales Agreement with Interconnect Solar Dev. LLC, IPUC Case No. IPC-E-11-10
("Staff Comments in Interconnect Solar").
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 9
prices that were excessive.29 Staff identified numerous problems with the IRP
methodology used by Idaho Power to calculate the Interconnect Solar prices. Adoption
of Idaho Powets proposals in Case No. GNR-E-11-03 for modifications to the SAR and
IRP methodologies would satisfactorily address Staffs concerns, on a going-forward
basis. But this proceeding wil take approximately six more months or more to
complete.
In the meantime, many new QFs (from Idaho and elsewhere) continue to apply
for overpriced QF contracts with Idaho Power. As of March 7, 2012, Idaho Power has
open inquiries from 27 potential new QF projects.30 These requests represent an
additional 595 MW of generation for a potential total on Idaho Powets system of 1584
MW. Seventeen of these additional QF projects are proposed for the Company's Idaho
jurisdiction and represent an additional $2.5 billon dollars worth of additional
contractual commitments on behalf of Idaho Powets customers over the next 20
years.31 When QF developers receive notice of Idaho Power's Motion, it is expected
that many more QFs wil attempt to obtain power purchase agreements before the
Commission grants interim relief. Each extra day the Commission takes to grant interim
relief increases the risk of harm (in the form of overpriced 20-year power purchase
agreements) to Idaho Powets customers.
IV. ARGUMENT
If Idaho Power must continue to negotiate and enter into power purchase
agreements during the pendency of this case without the relief requested herein, the
29 Staff Comments in Interconnect Solar, at 10; Comments Commn. Staff at 10 (Jan. 26, 2012) in
In the Matter of the Application of Idaho Power Co. for Firm Energy Sales Agreement with High Mesa,
LLC, IPUC Case No. IPC-E-11-26; Staff Comments in Dynamis at 10.
30 Affidavit of Randy C. Allphin ("Allphin Affidavit", ,r 3.
31 Id.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 10
contract prices derived under current SAR and IRP methodologies wil exceed Idaho
Powets avoided cost. The resulting contracts wil cause substantial harm to customers,
wil be contrary to the public interest, and wil violate PURPA.
A. The Rates Generated by Idaho Power's Current IRP Methodology Are Not
Accurate.
The evidence set forth in GNR-E-11-03 (including this Memorandum)
demonstrates to a high probabilty that Idaho Power's rates under both its SAR and IRP
methodologies exceed the cost at which it would procure such energy from another
source and that the high rates have caused an overabundance of new QF projects
sellng to Idaho Power resulting in direct and substantial harm to Idaho Power's
customers.
1. Idaho Power Does Not Need New QF Output to Serve Load.
As of June 2011, Idaho Power had an annual energy surplus of 526 aMW and
projected it would not need any capacity until 2015, except during peak hours in July.
Since June 2011, and during the pendency of this case, Idaho Power has executed
contracts with four different QF projects for an additional 83.27 MW of QF generation,
further increasing this generation surplus.32 The fact that Idaho Power has been
required to enter into long-term, fixed-price contracts for quantities of QF output well in
excess of what Idaho Power can use is a strong indication, in and of itself, that Idaho
Power's avoided cost rates are too high and need to be reformed.33
32 Supra nn. 12-17 and accompanying text (discussing recently executed contracts).
33 Idaho Power Co. Direct Test. William H. Hieronymus at 13 (Jan. 31, 2012) in IPUC Case No.
GNR-E-11-03.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 11
2. S&lff Found Numerous Defects in the Idaho Power IRP Methodology..,
Staff has identified numerous issues causing upward bias in prices calculated
using Idaho Power's IRP methodology. Staff's objections to Idaho Power's current IRP
methodology include the following:
. Imputed Capacity Value. Staff believes that Idaho Powets hourly
energy prices generated from its AURORA simulation model have an
imputed capacity component, meaning that the AURORA energy
prices exceed the true value of energy.34 Staff reasons that the
marginal energy prices generated by AURORA permit resources to
recover at least some fixed costs whenever they are not operating on
the margin and, therefore, the difference between the marginal
energy prices and the incremental production costs may
appropriately be classified as capacity costS.35 Staff concludes,
however, that it does not know at this time how to accurately
determine the magnitude of the capacity component imputed to the
AURURA energy values.36
. Timing of Capacity Payments. Idaho Power credits a new QF
resource with capacity benefits during the entire term of the power
purchase agreement. Staff believes that Idaho Power should not pay
for capacity until it is capacity deficient, as shown in its IRP. If the
2011 IRP applied, for example, Staff recommends zero payment for
capacity until 2015-the first year the IRP projects a capacity deficit.
. Weighted Cost of CapitaL. When computing rates in the above
agreements, Idaho Power used a seven percent weighted cost of
capital-the same number it used in preparing its 2009 IRP. Staff
believes it would be more appropriate to use the weighted cost of
capital from Idaho Powets last rate case-7.86 percent. Staffs
proposed change would cause a slight decrease in calculated
avoided cost rates.
. Type of Avoided Resource. Idaho Power assumes that the avoided
resource used to calculate capacity value is a combined cycle
combustion turbine (CCCT). Staff believes that, in the case of solar
photovoltaic QFs, a simple cycle combustion turbine (SCCT) is a
34 Staff Comments in Dynamis at 6.
35 Staff Comments in Interconnect Solar at 6.
36 Staff Comments in Dynamis at 6.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 12
more appropriate choice of avoided resource.37 Staff estimates that
changing the avoided resource from a CCCT to an SCCT would
reduce the levelized price for solar projects by more than $20/MWh.38
. Exceedence Value for Peak Capacity Credit. Idaho Power
determines the capacity value of an energy resource based upon its
expected generation during its annual peak load hour. Idaho Power
uses a 90 percent exceedence factor-meaning that it credits as
added capacity the amount of generation from a resource that wil be
available at least 90 percent of the time during its peak load hour.
This is the same method Idaho Power uses to calculate capacity in
its IRP. Staff questions whether the 90 percent exceedance criterion
used in the IRP for planning purposes is appropriate for use in QF
rate determinations.39 A higher exceedence criterion would reduce
the calculated capacity value of QF output.
. Integration Costs. In Order No. 30488, the Commission authorized
Idaho Power to deduct $6.50 from the calculated avoided cost rate
for wind projects to account for regulation and other integration costs.
Idaho Power does not assess integration costs to non-wind QFs.
Staff asserts that the true integration costs associated with solar QFs
are closer to $6.50/MWh than zero, and believes that the wind
integration charge should be applied to solar QF rate calculations.4o
. Frequency of Input Updates. For all IRP inputs derived from the
IRP, Idaho Power used the IRP most recently acknowledged by the
Commission. Staff, noting that Idaho Power had relied on the 2009
IRP to calculate prices in the above agreements, recommended that
the 2011 IRP values be used because they are undeniablr more
current and could significantly affect prices in the Agreement.4
In all three recent QF applications containing IRP-based pricing, Staff has
recommended disapproval because the resulting prices appear to be excessive.42
37 Interconnect Solar Dev., Order No. 32384 at 4-5.
38 Staff Comments in Interconnect Solar at 4.
39/d. at 5.
40 Id. at 8-9.
41 Id. at 8.
42 Interconnect Solar Dev., Order No. 32384; Staff Comments in Dynamis; High Mesa, Order No.
32462.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 13
Idaho Power generally agrees that there are a number of assumptions in the current
IRP methodology that result in calculated rates that are a poor approximation of Idaho
Powets avoided cost.
3. Idaho Power's IRP-Generated Prices Are High Relative to
PacifiCorp's.
Idaho Powets IRP-derived rates are significantly above the corresponding rates
offered by the next largest investor owned utilty ("IOU") in Idaho-PacifiCorp. On
December 15, 2011, Idaho Power and PacifiCorp gave a workshop presentation to the
Commission demonstrating how they apply the IRP methodology to QF requests in
Idaho, and the resulting prices calculated for four hypothetical QFs using four different
motive forces.43 Table 1, below, summarizes the utilities' calculated rates.
44
Table 1. Comparison of 20-year prices using current IRP methodologies.
IRP Price (20-yr, levelized) $/MWh
Resource Type45 PacifiCorp46 Idaho Power47 Difference %48
Baseload $55.23 $65.00 $9.77 18%
Canal-drop hydro $72.75 $80.31 $7.56 10%
Fixed PV $55.99 $75.60 $19.61 35%
Wind $33.17 $43.08 $9.91 30%
43 Direct Test. Stokes at 32 (discussing presentation). Idaho Power's "Workshop Presentation,
Avoided Cost - IRP Methodology" is reproduced as Exhibit NO.3 to Direct Testimony of Stokes.
44 Avista did not provide examples of IRP-derived avoided costs in its December 15, 2011,
presentation.
45 The characteristics of each Resource Type are described at pages 18-47 of Exhibit 3 to Direct
Testimony of Stokes.
46 Idaho Power Co. Direct Test. Kelcey Brown at 7 (Jan. 31, 2012) in IPUC Case No. GNR-E-11-
03.47 Direct Test. Stokes at 32.
48 Calculated by dividing the Difference by the PacifiCorp price.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES -14
The December 15 presentations, which provide the most current snapshot of IRP-
generated prices from Idaho Power and PacifiCorp, ilustrate that Idaho Power's prices
are between 10 percent and 35 percent higher than those offered by PacifiCorp.
4. Idaho Power's IRP-Generated Prices Are High Relative to Prices
Generated After Making Idaho Powets Recommended Modifications.
Idaho Power's current IRP prices also are well above the rates it would offer if
the Commission approves the modified methodology it recommends in the Company's
testimony in this proceeding. In its direct testimony filed January 31, Idaho Power
repeated the simulation of IRP-calculated rates for four different QFs, using the modified
approach it is asking the Commission to approve in this proceeding. Table 2, below,
summarizes rates for typical resource types using Idaho Power's proposed modified
approach.
Table 2. Comparison of Idaho Power IRP prices using current
and proposed methodologies.
IRP Price (20-yr, levelized) $/MWh
Resource Type Current IRP Modified49 Difference %50
Baseload $65.00 $47.40 -$17.60 -27%
Canal-drop hydro $80.31 $59.34 -$20.97 -26%
Fixed PV $75.60 $51.24 -$24.36 -32%
Wind $43.08 $32.18 -$10.90 -25%
The January 31, 2012, testimony ilustrates the differences in Idaho Powets IRP-
calculated rates using the inputs it believes it is constrained to use today and using the
inputs it believes most accurately reflect its true avoided cost. They show that Idaho
Powets current IRP-derived rates are between 25 percent and 32 percent greater than
rates calculated using Idaho Power's current IRP methodology and current inputs.
49 Idaho Power Co. Direct Test. Karl Bokenkamp, Exh. 8 (Jan. 31, 2012) in IPUC Case No. GNR-
E-11-03.
50 Calculated by dividing the difference by the current IRP price.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 15
5. All of the Reasons Above Make a Prima Facie Showing that Idaho
Power's Current Avoided Cost Rates Are Not Just and Reasonable.
A great deal of evidence regarding Idaho Power's avoided costs has already
been presented in this preceding-much of which cannot reasonably be disputed. While
further investigation may be needed to fashion the best long-term fix, no further
investigation is needed to conclude that Idaho Powets current avoided cost rates are
excessive. Even if the evidence is viewed in the light least favorable to Idaho Power,
there can be little room for doubt that Idaho Powets current application of avoided cost
methodologies is inaccurate and generates prices that are above actual avoided costs
and are resulting in continuing and substantial harm to customers.
B. The Likelihood of Harm to Idaho Power's Customers Justifies a Stay on
New PURPA Contracts Pending Resolution of GNR-E-11-03.
If the Commission does not take action prior to final resolution of this proceeding,
the substantial harm already demonstrated to Idaho Power's customers is likely to
increase and continue into the future for possibly the next 20 years. The current
situation-where it is widely believed that Idaho Power's avoided cost rates are above
market and stand to potentially be reduced substantially when the Commission
completes its investigation-has created a rush of new projects seeking long-term,
fixed-price power purchase agreements from Idaho Power before the Commission
changes its rate. The Commission has stated previously that such a rush of new QF
applications is not in the public interest. 51 Idaho Power believes a stay on purchases by
Idaho Power of new QF generation is necessary to prevent this likely, imminent, and
substantial harm to customers.
51 Infra n. 61 and accompanying text.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 16
1. A Stay Is a Proper Exercise of the Commission's Authority.
State commissions, including this Commission, have imposed temporary
suspensions, moratoriums, or stays on the PURPA purchase obligation in order to
prevent the likelihood of harm to customers while the commissions investigate rates and
prescribe solutions. In Colorado, the Public Service Commission imposed a two-month
moratorium on purchases from QFs in order to give the Public Service Company of
Colorado time to complete a comprehensive study of its future capacity needs and
propose revised avoided costs.
52 The Colorado Commission found that it had legal
authority under PURPA and Colorado law to impose a short-term moratorium if
evidence showed it was necessary in order to ensure that rates for purchases are just
and reasonable.53 The Colorado Commission then found that the evidence established
that 795 MW of new QF capacity might come on-line in the next five years and that this
would cause excess capacity with resulting additional, unnecessary ratepayer expense
approaching $200 milion.54 The Colorado Commission concluded that such a result
would be unjust and unreasonable to the ratepayers of the Public Service Company of
Colorado and therefore the moratorium was warranted. Further, it noted that even
viewing the evidence in the light least favorable to granting a moratorium, the high
probability that additional costs would be imposed on ratepayers of the Public Service
Company of Colorado warranted the moratorium.55
52 Application of the Pub. Servo Co. of Colo. for a Moratorium Regarding Indep. Power Prod.
Facilities, Colo. PUC Dec. No. C87-1690 (Dec. 16, 1987).
53 Id. at 11 (Note that the Colorado Commission acted under statute, but that Idaho Commission
had used its inherent authority to order a moratorium in the past.).
54 Id. at 11.
55/d.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 17
The California Public Utilities Commission ("California PUC") approved a
temporary moratorium on purchases from new QFs while it decided how to fit QF
purchases into utilty procurement plans on a long-term basis.
56 The California PUC
found that the utilities' planning reserve margins for 2004 are significantly above the
prescribed amount. 57 After noting evidence on the record that the avoided cost energy
pricing methodology exceeded the spot market and the utilties' avoided cost, the
California PUC concluded that "there is a pressing need to revisit the (avoided cost)
pricing system, which wil accurately and fairly set utilty avoided cost prices both under
current and expected future market conditions,,58 To provide breathing room to
reevaluate QF procurement, the California PUC directed utilities not to enter into any
new contracts during the "short interim" before it issued a long-term decision.59
In 1987, the Idaho Commission suspended the obligation to execute new PURPA
contracts for approximately six months while it investigated the reasonableness of the
avoided cost methodology in Idaho. Order No. 2124960 at 5, Case No. U-150U-1500-
170 (1987) (Because of doubts about assumptions made regarding the surrogate
resource in computing avoided cost rates, the Commission was unconvinced that the
approved methodology produced rates that were accurate and in the public interest.).
56 Order Instituting Rulemaking to Establish Policies and Cost Recovery Mechanisms for
Generation Procurement and Renewable Resource Dev., CaL. PUC Rulemaking 01-10-024, Decision 03-
12-062, 2001 CaL. PUC LEXIS 1276, *77-78 (2003) (initiating moratorium effective December 18, 2003);
see CaL. PUC Rulemaking 01-10-024, Decision 04-01-050, 2004 CaL. PUC LEXIS 28, *201 (2004)
(ending moratorium effective January 22, 2004, and noting that "(Decision) 03-12-062 did not allow for
any new PURPA contracts with new QFs during the short interim period between the issuance of that
decision and the issuance of this decision.")
57 Id. at *111, finding of fact 2-3.
58 Id. at *79.
59 Id. at *116, finding of fact 32.
60 Order No. 21249 is available in the Commission's database of its prior Orders accessible
through its website.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 18
The Commission found that interim relief from the approved avoided cost methodology
was in the public interest due to the anticipated rush of new QF applications seeking the
current avoided cost rates:
Prior experience of the Commission teaches us that
whenever potential qualifying facilties sense a pending
change in the Commission's policy with respect to prices,
there is a flood of applications seeking to obtain contracts at
the existing rates. * * * Accordingly, during the period of this
investigation, we find it to be in the public interest to suspend
the compelled execution of new contracts and approval of
contracts not executed before the service date of this Order
so that we may approach these serious issues in a
deliberate manner, free from litigation and disputes with
respect to proposed contracts.
Id. at 4 (internal footnotes omitted).61
On February 14, 2012, the Public Utility Commission of Oregon ordered a
temporary suspension of Idaho Powets obligation to enter into standard rate QF
contracts in its Oregon jurisdiction until such time as the Commission placed updated
avoided cost into effect pursuant to the Company's update of avoided cost rates post
IRP acknowledgment. This temporary stay is currently stil in place. The stay was put
in place as a result of Idaho Power receiving 9 requests from QFs for standard rate
(SAR methodology) contracts over the course of three days (January 26, 26, and 27,
2012) representing approximately 73 MW of new QF generation in the Company's
Oregon jurisdiction. The Company currently has a total of 27.89 MW of QF generation
in Oregon.
61 Initially, Order No. 21249 applied to all QFs, but the Commission later exempted some QFs
that made a strong case for grandfathered treatment. In the Matter of the Review of the Idaho Pub. Util.
Commn. 's Policies Establishing Avoided Costs under PURPA, IPUC Case No. U-1500-170, Order No.
21332, 1 (1987). The Commission's stay did not apply to energy-only tariff rates, nor did it bar the utility
from voluntarily entering into long-term purchase contracts. Id.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES -19
Each of the moratoria approved by state Commissions discussed above are
distinguishable from a Federal Energy Regulatory Commission ("FERC")-authorized
suspension of PURPA purchase obligations under FERC's rules.62 Suspensions under
the FERC rules are indefinite and must be authorized by FERC. A FERC-ordered
suspension is a terminal event, effectively ending the utilty's PURPA obligation. A
moratorium of the type used by the Commissions of Colorado, California, Idaho, and
Oregon is a temporary event that does not end the PURPA obligation but rather puts it
on hold while the Commission determines how that obligation should be fulfilled.
FERC grants states wide latitude in implementing the regulation of sales and
purchases between QFs and electric utilities.63 A temporary stay of a utilty's obligation
to contract under PUPRA, undertaken to give the Commission time to complete its
investigation of avoided cost prices, is a proper exercise of the Commission's authority
to preserve the status quo, manage its docket, and most importantly to protect
customers from harm. The Federal Power Act gives FERC authority to suspend any
proposed tariff or tariff change for up to five months while it investigates whether the
proposal is just and reasonable.64 This statute recognizes that a stay may be an
appropriate device to aid the regulator in its investigation. Idaho Code § 61-623 gives
the Commission authority to suspend rates up to six months while it investigates
proposed rate changes. It would be counter-intuitive to conclude that PURPA prohibits '
the Commission from using a tool that both Congress and the state legislature have
determined a Commission should have. Done carefully, a stay does not trample the
62 See 18 CFR §§ 292.309, 292.402 (2011).
63 See Federal Energy Regulatory Commission v. Mississippi, 456 U.S. 742,102 S.Ct. 2126,72
L.Ed.2d 532 (1982).
6416 U.S.C. § 824d(e) (2011).
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 20
rights of QFs, but strikes a proper balance between those rights and the rights of utilty
customers to not purchase QF power at unjust and unreasonable rates.
FERC has itself suggested that a state commission can stay a utilty's PURPA
purchase obligation while the state commission completes its administrative process to
establish a QF price methodology that accurately models the utility's avoided cost. In
Southern California Edison Company, two California utilities petitioned FERC to enforce
PURPA. The utilities asked FERC to declare that the California PUC's approach to
calculating PURPA rates violated PURPA.65 FERC agreed with the utilties and
concluded that the California methodology violated PURPA because it generated QF
prices in excess of avoided cost. As a result, the California PUC needed to engage in
further administrative process to establish a rate methodology that did not violate
PURPA. FERC recognized that QFs might seek contracts before the new methodology
could be established and that such contracts, if based on the old methodology, would
contain pricing that violated PURPA. FERC therefore suggested to the California PUC
that "it would be appropriate for the California Commission to stay its requirements
directing (the utilties) to purchase (QF output) pending the outcome of further
(California) administrative procedures in accordance with PURPA.,,66 Based on this
recommendation, it is clear FERC believes a state commission can stay the PURPA
purchase obligation when the state needs time to complete an administrative
proceeding intended to correct an inaccurate avoided cost pricing methodology.
A stay need not affect QF sales in specific instances where prices are known to
be just and reasonable. The Colorado and Idaho Commissions did not prohibit the
6570 FERC'r 61,215 (1995).
661d. at 61,677-61,678.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 21
utilty and the QF from reaching bilateral agreement on fixed-price contracts. Nor did
they suspend the sale and purchase of non-firm, as-available QF output during the stay.
Idaho Power supports this principle. Idaho Powets Schedule 86 permits QFs to sell
energy to Idaho Power at the market energy price, as determined by the weighted
average of the daily on-peak and off-peak Dow Jones Mid-Columbia Electricity Price
Index.67 Idaho Power does not propose that a stay on Schedule 86 is necessary.
Finally, a stay should not unduly discriminate against QFs competing with non-
QFs to satisfy a utility's identified resource needs. The proposed stay would impose no
greater burden on QFs seeking to sell generation to Idaho Power than do other state
programs in Washington and California that require QFs seeking to sell capacity to do
so through a Request for Proposal ("RFP") process. RFP programs are used in
Washington and California and have been affirmed by FERC as compliant with
PURPA.68 Under the RFP process, a utility solicits proposals for new capacity on a
periodic basis. Applicants seeking to sell between auctions may do so pursuant to
negotiation with the utilty or else may sell to the utility under an energy-only tariff.
67 Idaho Power IPUC No. 29, Tariff No. 101, Schedule 86 Cogeneration and Small Power
Production Non-Firm Energy (eff. March 1, 2008) available via the following link:
http://ww.idahopower.com/AboutUs/RatesRegulatorylT ariff/tariffDF .cfm?id=55.
68 See Administrative Determination of Full Avoided Costs, Sales of Power to Qualifying Facilities,
and Interconnection Facilties, 84 FERC ,r 61,265, 62,301 (1998) (FERC has "acknowledged the diffculty
of administratively setting avoided cost rates, and particularly recognized that competitive bidding was a
viable alternative to determining avoided cost" and found that "well over half the states now use
competitive bidding to one degree or another in settng avoided cost rates."); see also Pub. Servo Co. of
N.H. v. N.H. E1ec. Coop., Inc., 83 FERC ,r 61,224, 62,000 (1998) (approving New Hampshire's RFP
competitive bidding process, stating "parties to QF purchases are free to negotiate purchase rates");
Doswell LP, 50 FERC'r 61,251 (1990) (involving a solicitation for capacity and QF competitive bidding
process); see In the Matter of Pacific Power & Light Co. Pet. for Waiver from Certain Req. for Proposals
Requirements, Wash. Uti i. & Transp. Commn. Docket UE-111418, Order 01 (2011); Order Instituting
Rulemaking, CaL. PUC Decision 04-01-050; see also S. Cal. Edison Co., 71 FERC ,r 61,269, 62,080
(1995) ("T)he California Commission must include all sources in determining avoided cost rates, either
administratively, through an auction, or a process that combines both..." (emphasis added)); see also
Cal. Pub. Util. Commn., 133 FERC'r 61,059, P 28 (2010) (clarifying meaning of S. Cal. Edison Co., 71
FERC ,r 61 ,269, reiterating bidding as means for determining avoided cost).
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 22
Idaho Power's proposed stay, which causes QFs who want to sell generation to Idaho
Power to wait until new rate methodologies are approved by the Commission, imposes
no greater burden on QFs than the does the periodic bid process utilzed in Washington,
California, and other states. Furthermore, because Idaho Power has no plans to
obligate itself to purchase any new capacity, from QFs or otherwise, in 2012, QFs
cannot reasonably claim that the stay favors non-QF generation sources.
2. The Balance of Hardships Favors Granting a Stay.
The interim relief requested may cause delay in timelines for QF developers.
Idaho Power does not minimize this potential adverse consequence. However, a QF
developer may reasonably expect that, at the end of this proceeding, the proper avoided
cost rates will be available to it, whether or not it signed an agreement in the interim.
Developers' harm, therefore, is limited to the costs associated with a delay in
determining the correct rate. On the other hand, Idaho Power has alleged that its
current IRP-based avoided cost rates are between 25 percent and 32 percent higher
than the rates calculated using its proposed revised methodology. If this is true, then
the $2.5 billon in QF contracts identified in Section III.B above that Idaho Power may
become obligated to execute equates to between $625 millon and $800 millon in
excess costs to Idaho Power's customers over the next 20 years. On balance, the risk
of harm to Idaho Powets customers is much greater than the risk of harm to QF
developers.
C. If the Commission Does Not Grant a Stay as Requested. Other Interim
Relief is Warranted.
If the Commission does not stay Idaho Powets requirement to enter into new
and additional QF purchases during the pendency of this proceeding, other action is
urgently needed to prevent the likelihood of substantial harm to customers until the
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 23
Commission renders its decision in the general proceeding. Three alternative remedies
are discussed below.
1. Make the Rates Contained in Power Purchases with QFs Subject to
the Commission's Final Determination in This Case.
As an alternative to a stay, the Commission could declare that the avoided cost
of any fixed-term contract executed after the date of Idaho Power's Motion shall be the
price determined using the applicable methodology ultimately approved in this
proceeding. There is Commission precedent for this alternative. While the Commission
investigated the reasonableness of the utilties' avoided cost rates in 1994, the IOUs
asked the Commission to make temporary adjustment to the published avoided cost
rates or otherwise limit the utiities' financial exposure during the Commission's
investigation.69 The Commission found that interim relief from the approved avoided
cost methodology was in the public interest, and opted to make published rates subject
to the final outcome of its investigation:
We find that it is reasonable to offer the utilties, and their
ratepayers, some form of interim protection against rates
that may be excessive. We find that a reasonable way of
providing such protection is to allow the utilties to include a
provision in contracts executed after the date of this Order
that makes the rates of purchase subject to our final rate
determinations in these cases.70
Although Idaho Power prefers that the requested stay be granted because it
would be more effective at focusing the parties' energy on resolving this proceeding,
making new power purchase agreements subject to revision to conform with the
69 In the Matter of the Application of the Wash. Water Power Co. for an Order Revising Avoided
Costs Rates, IPUC Case Nos. WWP-E-93-10, PPL-E-93-3, UPL-E-93-3, PPL-E-93-5, UPL-E-93-7, IPC-
E-93-28, Order No. 25361 (1994). The hearing consolidated the Commission's investigation of common
elements of the separate applications for avoided cost rate revisions filed by Washington Water Power
(Avista), PacifiCorp, and Idaho Power and their related requests for interim relief.
70 Id. at 5.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 24
Commission's ultimate decision regarding the avoided cost methodology and pricing
would be an alternative way to protect customers during the interim. When the
Commission has suspended rates in the past, it has required the IOUs to continue to
negotiate in good faith with QFs. Given the critical importance of quickly and correctly
resolving the many outstanding questions about Idaho's avoided cost methodologies in
this proceeding, Idaho Power submits that all parties would be better served if they
ceased negotiations and focused instead on this proceeding. Notwithstanding this
preference, Idaho Power believes that a temporary suspension of the IRP and SAR
methodologies can provide substantial interim relief. Previously, some parties
expressed concerns about whether making new power purchase agreements subject to
revision to conform with the Commission's ultimate decision regarding the avoided cost
methodology and pricing violated the filed rate doctrine or was otherwise ilegaL.
However, the Commission's ruling on this issue, in Order No. 32176, has put that issue
to rest.71
2. Interim Avoided Cost Rates During the Commission's Investigation.
Another alternative is to authorize Idaho Power to pay new QFs the avoided cost
rate calculated by Idaho Power using the modified IRP methodology recommended and
described in its direct testimony. Under this approach, Idaho Power, as an alternative to
a stay, would enter into contracts at the applicable avoided cost rate (depending upon
71 In Order 32176, the Commission considered and rejected arguments that making its order
effective on December 14,2010, violated the filed rate doctrine or was otherwise unlawfuL. On November
5, 2010, the IOUs filed a joint Petition and Motion asking the Commission to reduce the eligibilty cap for
published avoided cost rates from 10 aMW down to 100 kW on a temporary basis while the Commission
investigated various matters related to published avoided costs. The Commission published its Notice of
the Joint Petition on December 3, 2010, established a schedule for comments, and declared that its final
decision on whether to lower the rate cap would be effective as of December 14, 2010. On February 7,
2011, the Commission found that petitioners had made a "convincing case" to lower temporarily the
eligibilty cap for wind and solar projects, from 10 aMW, down to 100 kW, effective December 14, 2010. In
the Matter of the Jt. Pet. Of Idaho Power Co., Avista Corp., and PacifiCorp to Address Avoided Cost
Issues, IPUC Case No. GNR-E-10-04, Order No. 32176 at 1 (2011) ("Eligibility Cap 2011").
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 25
the resource) shown in Table 2 of this Memorandum. The Idaho Supreme Court has
determined that the Commission has authority to impose interim rates pending the
outcome of an investigation.72 There is ample evidence in the record to demonstrate
that existing avoided cost rates exceed Idaho Powets avoided cost and are harming
customers. Idaho Power's modified methodology incorporates some changes that have
already been recommended by Staff and Idaho Powets proposed modifications are
likely to generate rates that are much closer to Idaho Power's avoided cost than the
current methodologies. In addition, the Commission has recently recognized the
desirability of changing QF rates on short or no notice where "a delay in changing the
present avoided cost rates would result in PURPA rates that are higher than avoided
costs and therefore unreasonable.,,73 To further diminish any risk of prejudice to QFs,
Idaho Power could include a provision in any power purchase agreement with interim
prices giving the QF an option, within 90 days of the Commission's final determination
of Idaho Powets avoided cost methodology, to opt into a power purchase agreement
under the terms, conditions, and prices ultimately approved by the Commission in this
matter.
3. Limit New QF Contracts to One-Year Terms During the Investigation.
A third alternative is for the Commission to order Idaho Power to immediately
reduce the maximum term of new QF contracts over 100 kW to one year pending the
72 Grindstone Butte Mut. Canal Co. v. Idaho Power Co., 98 Idaho 860, 862 (1978) ("All
Commission orders as to rates are subject to change, given the mandate of I.C. § 61-502 that the
Commission continue to evaluate the rates charged and make changes as necessary. It is true that no
statute gives explicit authority to the Commission to enter "interim" or "temporary" orders; however,
implied in the directive of on-going investigation is the power to make orders effecting rates that are
temporary in nature." Id.)
73 In the Matter of the Adjustment of Avoided Cost, IPUC Case No. GNR-E-11-04, Order No.
32337 (finding good cause under Idaho Code § 61-307 to issue new rates without further notice) (citing
Order No. 31092 at 11; citing PURPA § 210(b), 16 U.S.C. § 824a-3(b); citing Idaho Code § 61-622; citing
Order No. 31057 at 6).
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 26
Commission's final resolution of its investigation. The California PUC has shortened the
term of standard offer contracts in a similar manner on several occasions when it
needed time to investigate and revise its comprehensive QF pricing and procurement
strategy.
74 Idaho Power disfavors this approach compared to the requested stay
because of the extra administrative cost and burden of renegotiating contracts after one
year, and because the prices in the hypothetical one-year contract based upon Idaho
Power's current SAR or IRP methodology are greater than Idaho Power's avoided cost.
4. Proposed QF Projects Can Avail Themselves of a Schedule 86. Non-
Firm Power Sales Agreement During the Pendency of This Case.
A fourth alternative to allow QF development to move forward, while allowing for
the protection of Idaho Power's customers from rates that exceed avoided costs during
the pendency of this proceeding, would be for QFs to enter in standard, Schedule 86,
non-firm power purchase agreements. Following such a procedure would allow a
proposed QF to continue development, complete its interconnection, and come on-line
during the interim, and ultimately conform its power purchase agreement to the
Commission's final determination in this matter, once made.
D. Urgent Facts Warrant Immediate Relief; the Commission Holds Requisite
Authority.
The Commission has long recognized that actions, such as Idaho Power's
Motion for a stay, or actions by which the Commission may institute changes to avoided
cost rates, wil instigate a flood of QF power purchase agreement requests to Idaho
Power.
75 In fact, earlier in this very proceeding when the Commission denied the
74 See Application of San Diego & Electric Company (U 902-E) for an Ex Parte Order Approving
Modifications to Uniform Standard Offer NO.1 and Standard Offer No.3, CaL. PUC Application 96-01-014,
Decision 96-10-036, 25-27 (1996).
75 Supra n. 60 and accompanying text (discussing Order No. 21249).
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 27
utilties' request for immediate action in its November 5, 2010, Joint Petition, Idaho
Power saw a flood of QF contracts attempt to obligate Idaho Power customers to
previously effective avoided cost rates. Between the November 5, 2010, filing and the
end of 2012,25 QF power purchase agreements representing 518 MW were demanded
from Idaho Power, and ultimately filed with the Commission for its review. A stay must
be made effective as soon as possible. Every day of delay in granting a stay wil result
in more QFs attempting to lock-in current rates. Idaho Power respectfully requests that
the Commission make a stay effective as soon as possible, but in no event more than
four business days from the date of Idaho Power's Motion.76
The Idaho Supreme Court recognizes that the Commission has authority to grant
immediate interim relief "expeditiously" when avoided costs are excessive.77 The Court
stated that a prima facie showing by the utilty that rates are inaccurate is suffcient
grounds for immediate interim relief.78 This brief and evidence previously submitted by
Idaho Power in this Case No. GNR-E-11-03 inarguably demonstrate a prima facie
showing.
To the extent Idaho Code § 61-307 applies to relief granted by the Commission,
for "good cause shown" the Commission may waive the notice requirement in that
76 Idaho Power requests ruling on the third or fourth business day. If the Commission rules
before two full days have elapsed, it's order wil expire after only 7 days. If the Commission rules beyond
four days after the motion is filed, Idaho Power anticipates that it wil see a sharp spike in new QF
contract requests as a result of its Motion.
77 Empire Lumber Co. v. Washington Water Power Co., 114 Idaho 191, 233 (1988) (The Court
suggested the utilty should have filed for immediate interim rate relief with the Commission, and that if
the Commission found it appropriate, a new interim avoided cost could be set expeditiously. The court
noted that in 1985 the Commission set an interim rate for within 10 days of the utilty's motion.).
781d.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 28
statute.79 Such good cause clearly exists. In addition, QFs that would be affected by a
suspension do not have a due process right to current avoided cost rates.80
QFs wil not be irreparably harmed by an immediate stay. If, weeks from now,
the Commission's careful consideration of Idaho Powets Motion and opposing
arguments causes the Commission to lift the interim stay, QFs can be kept whole. The
opposite is not true. If the Commission delays for weeks granting a stay, in the interim
Idaho Power wil be met by a flood QFs locking in 20-year contracts.
V. CONCLUSION
For the reasons above, Idaho Power respectfully requests that the Commission
grant the relief requested in its Motion.
DATED this 12th day of March 2012.
c
onovan E. Walker
79 Supra, n. 76.
80 In the Matter of the Adjustment of Avoided Cost Rates for New PURPA Contracts, IPUC Case
No. GNR-E-10-01, Order No. 31092,12 (2010) (QFs without a legally enforceable obligation do not have
a property interest in prior rates) (citing Rosebud Enters. v. Idaho PUC, 131 Idaho 1, 7 (1997)).
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 29
1.1.1. CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 1ih day of March 2012, pursuant to RP 256.02,
that Idaho Power Company contacted one representative from each party listed below
by telephone, as indicated below, and informed said party of the filing of IDAHO
POWER COMPANY'S MOTION FOR, MEMORANDUM IN SUPPORT OF, AND
AFFIDAVIT OF RANDY C. ALLPHIN IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO NEW
POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES.
Each party's representative, as indicated below, was informed by telephone of
the filing requesting expedited, immediate relief, and of the procedure set forth in RP
256.02 to inform the Commission Secretary, either in writing personally delivered to the
Secretary or by telephone, within the next two business days, whether they support or
oppose the Motion and whether they desire to be heard on the Motion in person, in
writing, or by telephone.
Additionally, I HEREBY CERTIFY that on the 12th day of March 2012 I served a
true and correct copy of:
1. Idaho Power Company's Motion for a Temporary Stay of its
Obligation to Enter Into New Power Purchase Agreements with Qualifying Facilities;
2. Memorandum in Support of Idaho Power Company's Motion for a
Temporary Stay of its Obligation to Enter Into New Power Purchase Agreements with
Qualifying Facilties; and
3. Affdavit of Randy C. Allphin in Support of Idaho Power Company's
Motion for a Temporary Stay of its Obligation to Enter Into New Power Purchase
Agreements with Qualifying Facilities.
upon the following named parties by the method indicated below, and addressed to the
following:
Commission Staff
Donald L. Howell, II
Kristine A. Sasser
Deputy Attorneys General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
-- Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email don.howell(ëpuc.idaho.gov
kris.sasser(ëpuc. idaho.gov
-- Telephonic Notice to Kristine A. Sasser at
[phone], at 11 :25 a.m.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 30
Avista Corporation
Michael G. Andrea
Avista Corporation
1411 East Mission Avenue, MSC-23
P.O. Box 3727
Spokane, Washington 99220-3727
PacifiCorp d/b/a Rocky Mountain Power
Daniel E. Solander
PacifiCorp d/b/a Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
Exergy Development, Grand View Solar II,
J.R. Simplot, Northwest and Intermountain
Power Producers Coalition, Board of
Commissioners of Adams County, Idaho,
and Clearwater Paper Corporation
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 2th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
Exergy Development Group
James Carkulis, Managing Member
Exergy Development Group of Idaho, LLC
802 West Bannock Street, Suite 1200
Boise, Idaho 83702
Grand View Solar II
Robert A. Paul
Grand View Solar II
15690 Vista Circle
Desert Hot Springs, California 92241
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email michael.andrea(ëavistacorp.com
-- Telephonic Notice to Michael G. Andrea at
[phone], at 12:24 p.m.
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email daniel.solander(ëpacificorp.com
-- Telephonic Notice to Daniel E. Solander at
[phone], at 11: 15 p.m.
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email peter(ërichardsonandolearv.com
greg(ërichardsonandolearv.com
-- Telephonic Notice to Peter J. Richardson at
[phone], at 2:58 p.m.
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email jcarkulis(ëexergydevelopment.com
-- Telephonic Notice to Peter J. Richardson at
[phone], at 2:58 p.m.
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email robertapaul08(ëgmail.com
-- Telephonic Notice to Peter J. Richardson at
[phone], at 2:58 p.m.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 31
J.R. Simplot Company
Don Sturtevant, Energy Director
J.R. Simplot Company
One Capital Center
999 Main Street
P.O. Box 27
Boise, Idaho 83707-0027
Northwest and Intermountain Power
Producers Coalition
Robert D. Kahn, Executive Director
Northwest and Intermountain Power
Producers Coalition
1117 Minor Avenue, Suite 300
Seattle, Washington 98101
Board of Commissioners of Adams
County, Idaho
Bil Brown, Chair
Board of Commissioners of
Adams County, Idaho
P.O. Box 48
Council, Idaho 83612
Clearwater Paper Corporation
Marv Lewallen
Clearwater Paper Corporation
601 West Riverside Avenue, Suite 1100
Spokane, Washington 99201
Renewable Energy Coalition and Dynamis
Energy, LLC
Ronald L. Willams
WILLIAMS BRADBURY, P.C.
1015 West Hays Street
Boise, Idaho 83702
Hand Delivered
.. U.S. Mail
_ Overnight Mail
FAX
.. Email don.sturtevant(ësimplot.com
.. Telephonic Notice to Peter J. Richardson at
[phone], at 2:58 p.m.
Hand Delivered
.. U.S. Mail
_ Overnight Mail
FAX
.. Email rkahn(ënippc.org
.. Telephonic Notice to Peter J. Richardson at
[phone], at 2:58 p.m.
Hand Delivered
.. U.S. Mail
_ Overnight Mail
FAX
.. Email bdbrown(ëfrontiernet.net
.. Telephonic Notice to Peter J. Richardson at
[phone], at 2:58 p.m.
Hand Delivered
.. U.S. Mail
_ Overnight Mail
FAX
.. Email marv.lewallen(ëclearwaterpaper.com
.. Telephonic Notice to Peter J. Richardson at
[phone], at 2:58 p.m.
Hand Delivered
.. U.S. Mail
_ Overnight Mail
FAX
.. Email ron(ëwiliamsbradburv.com
.. Telephonic Notice to Ronald L. Willams at
[phone], at 1 :46 p.m.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 32
Renewable Energy Coalition
Thomas H. Nelson, Attorney
P.O. Box 1211
Welches, Oregon 97067-1211
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email nelson(ëthneslon.com
-- Telephonic Notice to Ronald L. Wiliams at
[phone], at 1 :46 p.m.
John R. Lowe, Consultant
Renewable Energy Coalition
12050 SW Tremont Street
Portland, Oregon 97225
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email jravenesanmarcos(ëyahoo.com
-- Telephonic Notice to Ronald L. Wiliams at
[phone], at 1 :46 p.m.
Dynamis Energy, LLC
Wade Thomas, General Counsel
Dynamis Energy, LLC
776 East Riverside Drive, Suite 150
Eagle, Idaho 83616
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email wthomas(ëdynamisenergy.com
-- Telephonic Notice to Ronald L. Willams at
[phone], at 1 :46 p.m.
Interconnect Solar Development, LLC
R. Greg Ferney
MIMURA LAW OFFICES, PLLC
2176 East Franklin Road, Suite 120
Meridian, Idaho 83642
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email greg(ëmimuralaw.com
-- Telephonic Voice Mail to R. Greg Ferney at
[phone], at 2:52 p.m.
Bil Piske, Manager
Interconnect Solar Development, LLC
1303 East Carter
Boise, Idaho 83706
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email bilpiske(ëcableone.net
-- Telephonic Voice Mail to R. Greg Ferney at
[phone], at 2:52 p.m.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 33
Renewable Northwest Project and Idaho
Windfarms, LLC
Dean J. Miler
Chas. F. McDevitt
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, Idaho 83701
Megan Walseth Decker
Senior Staff Counsel
Renewable Northwest Project
917 SW Oak Street, Suite 303
Portland, Oregon 97205
Idaho Windfarms, LLC
Glenn Ikemoto
Margaret Rueger
Idaho Windfarms, LLC
672 Blair Avenue
Piedmont, California 94611
Twin Falls Canal Company and North Side
Canal Company
C. Thomas Arkoosh
CAPITOL LAW GROUP, PLLC
205 North 10th Street, 4th Floor
P.O. Box 2598
Boise, Idaho 83701-2598
Twin Falls Canal Company
Brian Olmstead, General Manager
Twin Falls Canal Company
P.O. Box 326
Twin Falls, Idaho 83303
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email joe(ëmcdevitt-miler.com
chas(ëmcdevitt-miller.com
-l Telephonic Notice to Dean J. Miler at
[phone], at 1 :03 p.m.
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-Å Email megan(ërnp.org
-l Telephonic Notice to Dean J. Miler at
[phone], at 1 :03 p.m.
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email glenni(ëenvisionwind.com
margaret(ëenvisionwind .com
-l Telephonic Notice to Dean J. Miler at
[phone], at 1 :03 p.m.
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email glenni(ëenvisionwind.com
margaret(ëenvisionwind .com
-l Telephonic Voice Mail to C. Thomas
Arkoosh at [phone], at 2:55 p.m.
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email olmstead(ëtfcanal.com
-l Telephonic Voice Mail to C. Thomas
Arkoosh at [phone], at 2:55 p.m.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 34
North Side Canal Company
Ted Diehl, General Manager
North Side Canal Company
921 North Lincoln Street
Jerome, Idaho 83338
Hand Delivered
-X U.S. Mail
_ Overnight Mail
FAX
-X Email nscanal(ëcableone.net
-X Telephonic Voice Mail to C. Thomas
Arkoosh at [phone], at 2:55 p.m.
Birch Power Company
Ted S. Sorenson, P.E.
Birch Power Company
5203 South 11 th East
Idaho Falls, Idaho 83404
Hand Delivered
-X U.S. Mail
_ Overnight Mail
FAX
-X Email ted(ëtsorenson.net
-X Telephonic Notice to Ted S. Sorenson at
[phone], at 3:04 p.m.
Blue Ribbon Energy LLC
M.J. Humphries
Blue Ribbon Energy LLC
4515 South Ammon Road
Ammon, Idaho 83406
Hand Delivered
-X U.S. Mail
_ Overnight Mail
FAX
-X Email blueribbonenergy(ëgmail.com
-X Telephonic Notice to M.J. Humphries at
[phone], at 1 :34 p.m.
Arron F. Jepson
Blue Ribbon Energy LLC
10660 South 540 East
Sandy, Utah 84070
Hand Delivered
-X U.S. Mail
_ Overnight Mail
FAX
-X Email arronesq(ëaol.com
-X Telephonic Notice to M.J. Humphries at
[phone], at 1:34 p.m.
Idaho Conservation League
Benjamin J. Otto
Idaho Conservation League
710 North Sixth Street (83702)
P.O. Box 844
Boise, Idaho 83701
Hand Delivered
-X U.S. Mail
_ Overnight Mail
FAX
-2 Email botto(ëidahoconservation.org
-X Telephonic Notice to Benjamin J. Oto at
[phone] ext. 12, at 1 :12 p.m.
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 35
Snake River Allance
Ken Miler, Clean Energy Program Director
Liz Woodruff, Executive Director
Lisa Young, Clean Energy Organizer
Snake River Allance
350 North 9th Street #B610
P.O. Box 1731
Boise, Idaho 83701
Hand Delivered
-. U.S. Mail
_ Overnight Mail
FAX
i. Email kmiler(ësnakeriveralliance.org
Iwood ruff(ësnakeriveralliance.org
Iyoung(ësnakeriveralliance.org
-. Telephonic Notice to Lisa Young at
[phone], at 2:03 p.m.
Donovan E. Walker
Attorney for Idaho Power Company
MEMORANDUM IN SUPPORT OF IDAHO POWER COMPANY'S
MOTION FOR A TEMPORARY STAY OF ITS OBLIGATION TO ENTER INTO
NEW POWER PURCHASE AGREEMENTS WITH QUALIFYING FACILITIES - 36