20130115Response to Petitions and Cross-Petitions.pdf

I
An IDACORP Company
2013 J99, (50 PM t: 26
DONOVAN E. WALKER IDAH&) P.UBL
Lead Counsel LJTILITS MtSSTO
dwalkertidahoDOwer.cOm
January 15, 2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. GNR-E-11-03
PURPASAR and IRP Methodologies— Idaho Power Company's Response to
Petitions and Cross-Petition for Reconsideration
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of Idaho
Power Company's Response to Petitions for Reconsideration, Response to Petition for
Clarification, and Cross-Petition for Reconsideration.
Very truly yours,
Donovan E. Walker
DEW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalkeridahopower.com
20tPJ15 PM!26
• . .............,
Attorney for Idaho Power Company
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 AVOIDED COST RATES.
CASE NO. GNR-E-11-03
IDAHO POWER COMPANY'S
RESPONSE TO PETITIONS FOR
RECONSIDERATION,
RESPONSE TO PETITION FOR
CLARIFICATION, AND
CROSS-PETITION FOR
RECONSIDERATION
Idaho Power Company ("Idaho Power" or "Company"), in accordance with Idaho
Code § 61-626 and RP 331, hereby: (1) responds to the Petition for Clarification filed
by the Renewable Energy Coalition ("Coalition"); (2) responds to the Petitions for
Reconsideration filed by Renewable Northwest Project ("RNP"), the Idaho Conservation
League ("ICL"), and J.R. Simplot Company and Clearwater Paper Corporation
("SimplotlClearwater")(RNP, ICL, and Simplot/Clearwater sometimes referred to
hereafter as "Petitioners"); and (3) Cross-Petitions for Reconsideration of final Order No.
32697, dated December 18, 2012.
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -1
Petitioners have failed to demonstrate that the Idaho Public Utilities
Commission's ("Commission") Order No. 32697 is unreasonable, unlawful, erroneous,
or not in conformity with the law. RP 331.01. The Commission's Order No. 32697 is
based upon substantial and competent evidence in the record. The Commission
regularly pursued its authority and was acting within its discretion. Consequently,
reconsideration should be denied.
Should the Commission determine to grant reconsideration as to the issues
raised by Petitioners, Idaho Power respectfully hereby Cross-Petitions for
Reconsideration and will present testimony, evidence, argument, and legal authority
supporting its position as set forth and advocated in the proceedings before the
Commission. RP 331.
I. BACKGROUND
This matter originated with a November 5, 2010, filing by Idaho Power, Avista
Corporation, and Rocky Mountain Power requesting that the Commission investigate
various Public Utility Regulatory Policies Act of 1978 ("PURPA") avoided cost rate and
contracting issues. Phase I (GNR-E-10-04) considered a PURPA qualifying facility's
("QF") eligibility for published avoided cost rates. Phase II (GNR-E-1 1-01) investigated
disaggregation and its effect on published avoided cost rates. This proceeding, Phase
Ill, was initiated on September 1, 2011, to investigate the avoided cost methodologies,
the contracting terms contained in PURPA power purchase agreements, and several
other issues related to the implementation of PURPA in the state of Idaho.
Parties to this proceeding filed direct and rebuttal testimony, submitted legal
briefs, and participated in a three-day technical hearing commenced on August 7, 2012.
The Commission issued final Order No. 32697 on December 18, 2012, which modified
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
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published avoided cost rates established with the SAR methodology and negotiated
avoided cost rates established with an IRP methodology. The Commission also
addressed, established, and adopted several other terms for power purchase
agreements entered into between regulated utilities and PURPA Us.
On January 8, 2013, Idaho Power filed a Petition for Clarification and/or
Reconsideration seeking clarification regarding: (1) the methodology and inputs utilized
to establish the published avoided cost rates that appear as Attachments A, B, and C to
Order No. 32697; (2) the Commission's finding that curtailment under 18 C.F.R. § 304(f)
"was not reasonably contemplated when the parties entered into their agreements"; (3)
the Commission's use of the terms "contract extensions or renewals"; and (4) whether
the June 1 date for the update of the surrogate avoided resource ("SAR") published
rates and the integrated resource plan ("IRP") fuel price and load forecasts is the most
appropriate date.
Also on January 8, 2013, the Coalition filed a Petition for Clarification seeking
clarification regarding the published avoided cost rate schedules for existing projects
and the definition of a "canal drop hydro" project for purposes of the published avoided
cost rates. RNP and ICL each filed a Petition for Reconsideration regarding the issue of
Renewable Energy Certificates ("RECs"). Simplot/Clearwater filed a Petition for
Reconsideration regarding the Commission's adoption of revisions to the IRP
methodology and regarding the issue of RECs.
II. STANDARD OF REVIEW
Reconsideration provides an opportunity for a party to bring to the
Commission's attention any question previously determined and thereby affords the
Commission an opportunity to rectify any mistake or omission. Washington Water
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
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Power Co. v. Kootenai Environmental Alliance, 99 Idaho 875, 879, 591 P.2d 122, 126
(1979). Petitions for reconsideration must set forth specifically the ground or grounds
why the petitioner contends that the order or any issue decided in the order is
unreasonable, unlawful, erroneous or not in conformity with the law. RP 331.01.
A party must seek reconsideration with the Commission prior to seeking judicial
review with the Idaho Supreme Court. Idaho Code § 61-627. With regard to findings of
fact, if the Commission's findings are supported by substantial, competent evidence, the
Court must affirm those findings. Industrial Customers of Idaho Power v. Idaho PUC,
134 Idaho 285, 288, 1 P.3d 786, 789 (2000), even if the Court would have made a
different choice had the matter been before it de novo. Hulet v. Idaho PUC, 138 Idaho
476, 478, 65 P.3d 498, 500 (2003). Substantial, competent evidence is defined as more
than a mere scintilla, but something less than the weight of the evidence. Industrial
Customers, 134 Idaho at 292-93, 1 P.3d at 793-94. On questions of law, review is
limited to the determination of whether the Commission has regularly pursued its
authority. A. W. Brown Company v. Idaho Power Company, 121 Idaho 812, 815, 828
P.2d 841, 844 (1992); Hulet, 138 Idaho at 478, 65 P.3d at 500. The Commission order
or ruling will not be set aside unless it has failed to follow the law or has abused its
discretion. Application of Boise Water Corp., 82 Idaho 81, 86, 349 P.2d 711, 713
(1 960)(citing cases).
III. REVS PETITION FOR CLARIFICAITON
The Coalition petitioned for clarification regarding two issues: (1) the published
avoided cost rate schedules for existing projects that enter into new contracts and (2)
the definition of a "canal drop hydro" project for purposes of its qualification for
published avoided cost rates. Idaho Power agrees with the Coalition's request for the
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -4
Commission to publish additional SAR avoided cost rate tables applicable to existing
projects that enter into new contracts and that, pursuant to Order No. 32697, would be
exempt from the utility's capacity sufficiency determination. Idaho Power does not
agree with the Coalition's proposed definitional changes to "canal drop hydro."
A.Published Rates for Existing Projects.
The Commission determined that existing QF projects that were receiving a
capacity payment at the end of their current contract term would be entitled to receive a
capacity payment during the entire term of a new contract they would enter into with the
utility. Order No. 32697 at p. 21. In other words, an existing QF whose contract term
expires and who chooses to enter into a new contract for its facility with the utility is
exempt from Order No. 32697's requirement that Us receiving the published rates do
not receive a capacity payment when the utility is capacity sufficient.
The Coalition sought clarification and asked the Commission to provide a
separate attachment, similar to Attachment A to Order No. 32697, showing published
rates for existing Us seeking a new contract which would include capacity payments in
the initial years of capacity sufficiency. Idaho Power agrees that the requested
additional published avoided cost rate tables should be provided. Consistent with the
Coalition's filing, Idaho Power also agrees the additional published avoided cost rate
tables should clearly state that these rates are only applicable to projects with existing
agreements that expire and the same project elects to execute a new QF agreement
with the same utility.
B.Definition of Canal Drop Hydro Proiect.
Idaho Power agrees with the Coalition that the definition of "canal drop hydro" is
not the model of clarity; however, the Company disagrees with the Coalition's proposed
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
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changes to the Commission's definition found in the first Note on the Canal Drop Hydro
rate table provided in Attachment A to Order No. 32697.
First of all, the underlying concept of having a separate rate for a canal drop
hydro project is not necessarily its source of water, but the fact that it produces power
that is dependable, non-intermittent, and is delivered to Idaho Power during Idaho
Power's peak power consumption summer months. The approved IRP incremental
pricing methodology does a very good job of valuing these types of seasonal peak hour
power deliveries as it values the energy based on the hour in which it is delivered to
Idaho Power. However, with the Commission's directive to differentiate within the SAR
published avoided cost rates among different generation types based upon their
capacity factor, projects that both provide most or all of their power deliveries during a
utility's peak power needs, and correspondingly does not provide a lot of power
deliveries during the utility's non-peak hours, receive a higher avoided cost rate,
corresponding to higher value of what they provide and, in concept, what they enable
the utility to avoid. Consequently, the most important part of the definition of "canal drop
hydro" is not necessarily its source of water, but when it generates and delivers energy
to Idaho Power. The definition references the source of water because that is typically
what determines when it generates power and, correspondingly, makes deliveries to the
utility.
A "true" canal drop hydro project is a project that only delivers energy during the
irrigation season (during Idaho Power's peak energy needs), which is when water is in
the canal system and produces no generation during winter months as there is no water
in the canal system. However, the Company does recognize, as the Coalition has
discussed, that some hydro projects that are not on manmade canals do provide similar
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
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peaking generation profiles as canal drop hydro projects. One example of this may be
due to a common irrigation practice of some irrigation companies using natural
waterways as canals during irrigation seasons. The irrigation company releases
additional water from upstream reservoirs into the river system that is then subsequently
pumped out of the river at a downstream location for irrigation purposes. As some QF
generation facilities are located between these points of irrigation water releases and
pumping locations, they see an increased level of generation during the summer
irrigation season, and then run of river generation patterns during non-irrigation
seasons.
Idaho Power's main concern with the definition of "canal drop hydro" is the
phrase "produces a majority of its generation during the irrigation season" and, more
specifically, the use of the words "majority" and "irrigation season" in that phrase.
"Irrigation season" is only relevant because it happens to coincide with Idaho Power's
peak power demands on its system. "Majority" is problematic because what is really
contemplated is that it would provide "all" of its generation during peak demands, and,
correspondingly, not provide deliveries when the power is not needed in off-peak hours
and seasons. For example, "majority" could mean that the project provides 51 percent
of its deliveries during the peak summer season, but also that it delivers 49 percent
during non-peak times, when the power is not needed, and the utility's avoided cost is
much less, or even negative. In contrast to a "true" canal drop hydro that only provides
generation during the peak summer season, the project with a simple "majority" of 51
percent will have a significantly different capacity factor and avoided cost. While
recognizing that some projects may fall somewhere in between where they do actually
provide most of their generation during the irrigation season, but still have some amount
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of year round off-peak generation, Idaho Power proposes that only those canal drop
hydro projects whose off-season, off-peak generation is de minimis when compared to
their in-season, on-peak generation be qualified to receive the higher capacity factor,
"canal drop hydro" published avoided rate.
That being said, Idaho Power recognizes that this definition has not been a
source of disagreement or conflict in the past, and since the record before the
Commission did not directly address or confront this particular definition, that perhaps
the best course of action is to leave the definition as it exists and address any issues
that may arise with a particular project's qualification as a "canal drop hydro" facility on a
case-by-case basis according to the project's actual generation profile and capacity
factor.
IV. IDAHO POWER'S PETITION FOR CLARIFICATION
Idaho Power filed a Petition for Clarification and/or Reconsideration seeking
clarification regarding: (1) the methodology and inputs utilized to establish the
published avoided cost rates that appear as Attachments A, B, and C to Order No.
32697; (2) the Commission's finding that curtailment under 18 C.F.R. § 304(f) "was not
reasonably contemplated when the parties entered into their agreements"; (3) the
Commission's use of the terms "contract extensions or renewals"; and (4) whether the
June 1 date for the update of the SAR published rates and the IRP fuel price and load
forecasts is the most appropriate date.
Since filing its Petition for Clarification and/or Reconsideration on January 8,
2013, Idaho Power has obtained from Commission Staff additional information
regarding the methodology and inputs utilized in the published rate avoided cost rate
calculations as referenced above, and in its Petition as item (1). It appears that, with
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
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the exception of the natural gas prices and the Levelized Carrying Cost ($/MWh), the
inputs are identical to the inputs established in Commission Order No. 32337 dated
August 30, 2011, which established the previous published avoided costs values. The
natural gas forecast utilized in the published avoided cost calculations appears to be the
Mountain Region Natural Gas forecast as published in the Energy Information
Administration's (EIA) 2012 Annual Energy Outlook report as directed by Order No.
32697. The Levelized Carrying Cost ($/MWh) input is a calculation based upon the
capacity factor applied to each resource type. As Order No. 32697 specified that a
unique capacity factor be applied to each resource type, it is appropriate that this input
component be different than the previous established value. In reviewing calculations
within the provided model, it appears these revised inputs are working correctly. Idaho
Power agrees this is the appropriate application of Commission Order No. 32697, as
this Order instructed the continued use of the SAR model for creation of published
avoided cost for eligible projects with only modifications to the natural gas forecast and
the use of resource specific capacity factors. Idaho Power asks for this
clarification/confirmation from the Commission.
The Commission ordered that QFs only receive payment for capacity at such
time as the utility becomes capacity deficient. Order No. 32697 at p. 21. Idaho Power's
currently approved 2011 IRP shows the first capacity deficiency of approximately
1 megawatt ("MW') occurs for 1 hour in July 2014. The de minimis nature of this deficit
dictated that it be ignored in the IRP because a utility would not plan to bring a new
resource on-line to cover such a small projected deficit. In 2015, the July deficit is 80
MW, which is covered by an assumed market purchase on the east side of Idaho
Power's system. In the IRP, Idaho Power typically only assumes purchases from the
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
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Pacific Northwest market are used to serve load. Although a purchase from the east
would likely be more expensive on a $/MWh basis, the small number of hours required
to cover the 2015 deficit would have little impact on total cost and, again, it would not
make sense for a utility to bring a new resource on-line for such a small deficit that
could be covered by other means. The first resource addition in the 2011 IRP is the
Boardman to Hemingway project in 2016. In reviewing the published avoided cost
calculations provided by staff, it appears that the Commission has included capacity
payment in the published rate tables, Attachment A, starting in 2014. Idaho Power asks
for clarification as to how the capacity sufficient period was established for the
computation of the published avoided cost rates directed by Order No. 32697.
Additionally, Order No. 32697 directs that published rates will be differentiated
based upon resource type stating, "We find that implementation of a separate resource-
specific capacity factor is an appropriate way to value when a QF is able to generate
and deliver energy to a utility." Order No. 32697 at p. 15. Commission Staff utilized
resource specific capacity factors derived from a combination of capacity factors
provided in the Northwest Power & Conservation Council's 6th Power Plan and on-peak
capacity factors provided in testimony to this case. The capacity factors used by Staff
are:
Wind 5%
Solar 35%
Hydro 25%
Canal Drop Hydro 100%
Other 100%
Idaho Power provided the following resource specific capacity factors in
testimony:
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
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Wind 3.9%
Solar 33.2%
Canal Drop Hydro 67.1%
Base load 92%
Stokes Direct, Ex. No. 3, p. 18. Idaho Power's capacity factors, above, for wind, solar,
and canal drop hydro were calculated based upon actual data from existing and
proposed projects. Id. at pp. 24, 30, and 42. The base load capacity factor was
calculated assuming a resource that could control operations and fuel supply to enable
the project to plan to operate at 100 percent during peak-hours. An 8 percent forced
outage rate for a base load resource as identified in the Northwest Power and
Conservation Council's 6th Power Plan was deducted from the 100 percent capacity
factor to establish an expected capacity factor of 92 percent for a base load project. Id.
at p. 18.
Idaho Power respectfully asks the Commission to clarify/reconsider the resource-
specific capacity factors utilized in the SAR published avoided cost rate calculation for
the "canal drop hydro" and for "other" project category. The record indicates that based
upon data from projects on Idaho Power's system, the capacity factor for canal drop
hydro is 67.1 percent, as opposed to the 100 percent capacity factor utilized in the
present calculation. Idaho Power is unsure of the basis for utilizing a 100 percent
capacity factor, especially since Idaho Power's data suggests 67 percent for canal drop
hydro projects. Idaho Power asks that the Commission direct the use of a 67 percent
capacity factor for canal drop hydro projects in the SAR published avoided cost rate
model rather than the 100 percent presently being used.
Idaho Power equates the "other" category established by the Commission to be
the resources that Idaho Power has identified as "base load." These projects are
generation resources that tend to deliver the same level of energy on an hourly basis in
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
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all hours, all days, and for the full-term of the contract. For example, wood waste,
anaerobic digesters, landfill gas, waste to energy, and geothermal projects. Idaho
Power does not disagree that these resource types tend to be continuous, flat running,
base load generation resources. However, it is not reasonable to assume that no
project will achieve a perfect 100 percent capacity factor and will never have any
outages during Idaho Power's peak energy need period during the 20-year contract
term as is implied by the suggested use of a 100 percent capacity factor. Additionally,
the Northwest Power Planning Council's 8 percent forced outage rate is a fair and
reasonable source to provide the appropriate adjustment. Idaho Power asks that the
Commission direct the use of a 92 percent capacity factor for "other," or base load,
projects in the SAR published avoided cost rate model rather than the 100 percent
presently being used.
V. REVISIONS TO THE IRP METHODOLOGY
Simplot/Clearwater seeks reconsideration of the Commission's adoption of Idaho
Power's proposed modifications to the IRP methodology. Simplot/Clearwater has failed
to demonstrate that the Commission's findings are unreasonable, unlawful, erroneous,
or not in conformity with the law. RP 331. The Commission's findings are based upon
substantial and competent evidence in the record. The Commission regularly pursued
its authority and acted well within its discretion to set a methodology aimed at
determining an accurate avoided cost rate. Reconsideration should be denied.
If the Commission's findings are supported by substantial, competent evidence,
the Court must affirm those findings. Industrial Customers of Idaho Power v. Idaho
PUC, 134 Idaho 285, 288, 1 P.3d 786, 789 (2000), even if the Court would have made a
different choice had the matter been before it de novo. Hulet v. Idaho PUC, 138 Idaho
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION,I RESPONSE TO
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476, 478, 65 P.3d 498, 500 (2003). Substantial, competent evidence is defined as more
than a mere scintilla, but something less than the weight of the evidence. Industrial
Customers, 134 Idaho at 292-93, 1 P.3d at 793-94.
Simplot/Clearwater has done little more than point to their own (Mr. Reading) and
another party's witnesses' (Mr. Schoenbeck) conflicting testimony that was rejected by
the Commission in favor of the testimony offered by Idaho Power and Commission
Staff. Simplot/Clearwater further has mischaracterized Idaho Power witness Karl
Bokenkamp's testimony apparently in the hope that inflammatory references to his
testimony will somehow discredit it. However, at hearing, Simplot/Clearwater had no
cross-examination of any substance regarding these issues for Mr. Bokenkamp, and
had no questions whatsoever for Idaho Power witness William H. Hieronymus, who also
testified in favor of Idaho Power's methodology.
Simplot/Clearwater's argument for reconsideration is a non sequitor. It argues
that somehow because the Commission found the previously approved IRP
methodology to be reasonable (". . . we find that the IRP models used by each individual
utility produce reasonable avoided cost rates consistent with PURPA and FERC
regulations." Order No. 32697 at p. 20) and determined to retain a SAR-based
published rate methodology for projects below the published rate eligibility cap (Order
No. 32697 at p. 14) that ordering Idaho Power's proposed changes to the IRP
methodology "is perplexing." Simplot/Clearwater Petition at p. 7 ("The inconsistency is
perplexing."). Simplot/Clearwater carries this flawed reasoning further by both
misstating Mr. Bokenkamp's testimony and insinuating that Federal Energy Regulatory
Commission ("FERC") requires a two-run comparative methodology.
Simplot/Clearwater Petition at pp. 8-9.
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Mr. Bokenkamp's testimony did not state that the previously approved (two-run)
IRP methodology was inconsistent with FERC's avoided cost rule, as stated in
Simplot/Clearwater's Petition at p. 8. In Mr. Bokenkamp's testimony, he stated that
Idaho Power's proposed changes to the IRP methodology is better aligned with FERC's
definition of avoided cost because it focuses upon the incremental cost the utility would
incur but for the purchase from the QF to either generate the power itself or purchase it
elsewhere. Bokenkamp Direct at pp. 9-10. Mr. Bokenkamp testified that the previously
approved IRP methodology relies too heavily upon forecasts of future market prices and
because the two-run method, as implemented by Idaho Power, holds Idaho Power's
other resources at the same output levels, it forces QF pricing to either displace a
market purchase or supply a market sale. Id. at pp. 7, 19-20. In contrast, the single-run
methodology more properly focuses the methodology on what FERC directs it to be, the
incremental cost of utility generation or purchases that would occur but for the QF
purchase. Id. at pp. 8-10, 33.
Similarly, the quoted passage from FERC Order 69 (Simplot/Clearwater Petition
at pp. 8-9) does not require the use of a two-run methodology, nor prohibit the use of
the approved single-run methodology. The quoted FERC language discusses, "One
way of determining the avoided cost . . . ." FERC Order No. 69, Simplot/Clearwater
Petition at 8-9. FERC then describes a generic two-run type of methodology similar to
the previously approved IRP methodology in Idaho, but not specific to it. In fact, Idaho
Power witness Dr. Hieronymus also testified about this comparative type of avoided
cost methodology, along with approximately four other groups of different avoided cost
methodologies employed by the various states. Simplot/Clearwater's inference that the
previously approved methodology must be wholly inconsistent with FERC regulations,
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or illegal, in order to authorize this Commission to make changes to the methodology is
wrong.
Simplot/Clearwater further misstates the record by referring to "surplus sales
made possible by QF purchases." Simplot/Clearwater Petition at p. 7 (emphasis in
original). Simplot/Clearwater's statement that QF purchases make possible surplus
sales that actually benefit customers is unsupported in the record. In fact, the evidence
in the record shows the opposite, that required QF purchases do not enable surplus
sales, but cause sales—necessary because of the must take provisions of PURPA
regardless of need or price—at a loss, not a gain, and harms customers contrary to
PURPA's requirement to hold customers indifferent in the QF purchase. Stokes Direct
at p. 18. Idaho Power provided substantial evidence of this that was un-rebutted in the
record. See Stokes Direct at pp. 14-26; Park Direct at pp. 3-14.
Finally, Simplot/Clearwater insinuated that the Commission's findings approving
Idaho Power's proposed changes to the IRP methodology were sparse and somehow
failed to fully consider the entirety of the "highly complex and multi-faceted issue."
Simplot/Clearwater Petition at pp. 5-6. The Commission's findings do not need to be
voluminous and contain an all-inclusive, exhaustive, and specific discussion adopting
and/or rejecting each position put forth to it at hearing and in the proceeding in order to
be valid and proper findings, supported by substantial competent evidence. In fact, the
Commission's findings here with regard to this issue are quite clear:
The IRP Methodology recognizes the individual generation
characteristics of each project by assessing when the QF is
capable of delivering its resources against when the utility is
most in need of such resources. We find the resultant
pricing is reflective of the value of the QF energy being
delivered to the utility . . . . [W]e find that the IRP models
used by each individual utility produce reasonable avoided
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cost rates consistent with PURPA and FERC regulations.
Idaho Power proposed revisions to the IRP Methodology that
focus on identifying the incremental costs that its system
would incur, i.e., a single-run simulation, rather than its
current methodology that is primarily predicated on making
surplus sales at the future market prices developed within
the AURORA model, i.e., a two-run simulation . . . . The
Commission finds Idaho Power's proposed modifications to
the IRP Methodology reasonable. We agree that the
Company's revisions properly focus the determination of
avoided costs on incremental costs, not solely on the value
of potential market sales. The result, we find, is a more
accurate avoided cost. Moreover, we find that the modified
methodology comports with the definition of avoided cost
contained in FERC regulations.
Order No. 32697 at pp. 20-21.
The above-referenced findings are supported by substantial competent evidence
in the record, and are squarely within the Commission's authority and expertise to
make. Simplot/Clearwater has failed to show that these findings are unreasonable,
unlawful, erroneous, or not in conformity with the law. Reconsideration should be
denied.
VI. RENEWABLE ENERGY CREDITS
RNP, ICL, and Simplot/Clearwater each seek reconsideration regarding the
Commission's determination regarding utility ownership of RECs. RNP and
Simplot/Clearwater challenge the Commission's determination as to the utility's 50
percent ownership of RECs for projects that are priced pursuant to the IRP avoided cost
pricing methodology. ICL additionally argues that the Commission is without the
jurisdiction or authority to make a determination of REC ownership. The Commission
clearly has subject matter jurisdiction to make determinations regarding the ownership
of RECs in the federally required purchase of power by a regulated utility from a PURPA
QF. Once jurisdiction is clear, the Commission is allowed all power that is either
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expressly granted by statute or which may fairly be implied to effectuate its purpose.
Idaho State Homebuilders v. Washington Water Power, 107 Idaho 415, 418, 690 P.2d
350, 353 (1984). The Commission regularly pursued its authority and acted within its
discretion to allocate ownership of REC5 pursuant to the avoided cost methodology
applicable to each QF project. Reconsideration should be denied.
A. The Commission Has Subject Matter Jurisdiction.
The Commission clearly has subject matter jurisdiction to make determinations
regarding the ownership of RECs in the federally required purchase of power by a
regulated utility from a PURPA QF. The only party to raise issue with the Commission's
determination that it has the jurisdiction and authority to decide the ownership of RECs
as it pertains to the required purchase of power by a regulated utility from a PURPA QF
is ICL.
Idaho Power provided numerous legal authorities that support the Commission's
subject matter jurisdiction. Idaho Power's Legal Brief at pp. 69-79. Without
unnecessarily repeating those arguments and recitation of authorities contained in the
record here, in sum, FERC, numerous state commissions, the U.S. Court of Appeals for
the Second Circuit, the Connecticut Supreme Court, the West Virginia Supreme Court,
the Court of Appeals in Pennsylvania, the Court of Appeals in New Jersey, and the
Idaho Commission all agree that ownership of REC5 is decided by states even in the
context of a PURPA power sale. Idaho Power is not aware of any decision in any
jurisdiction suggesting that states do not have the authority to determine ownership of
REC5 as an initial matter.
Additionally, the Commission through its organic, or enabling, statutes—including
the power to investigate and fix rates and regulations (l.C. § 61-503), the responsibility
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -17
to determine the reasonableness of rates (I.C. § 61-502), the responsibility to determine
rules and regulations affecting the performance of public utilities (l.C. § 61-507), the
responsibility to approve transfers of utility property (l.C. § 61-328), and the
responsibility to approve the terms and conditions of PURPA contracts—has organic
authority to consider and decide the ownership of RECs, as similar states have found
for their respective commissions. (West Virginia, Connecticut, and Wyoming).
The Commission clearly has subject matter jurisdiction to make determinations
regarding the ownership of RECs in the federally required purchase of power by a
regulated utility from a PURPA QF and, as such, it is allowed all power that is either
expressly granted by statute or which may fairly be implied to effectuate its purpose.
B. The Commission's Allocation of RECs.
Simplot/Clearwater, ICL, and RNP all seek reconsideration of the Commission's
determination that QF projects that obtain avoided cost rates determined by the IRP
methodology half of the RECs are owned by the utility. Once jurisdiction is clear, the
Commission is allowed all power that is either expressly granted by statute or which
may fairly be implied to effectuate its purpose. Idaho State Homebuilders v.
Washington Water Power, 107 Idaho 415, 418, 690 P.2d 350, 353 (1984). On
questions of law, review is limited to the determination of whether the Commission has
regularly pursued its authority. A. W. Brown Company v. Idaho Power Company, 121
Idaho 812, 815, 828 P.2d 841, 844 (1992); Hulet, 138 Idaho at 478, 65 P.3d at 500.
The Commission Order or ruling will not be set aside unless it has failed to follow the
law or has abused its discretion. Application of Boise Water Corp., 82 Idaho 81, 86, 349
P.2d 711, 713 (1960)(citing cases).
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -18
Again, Idaho Power provided voluminous citation to authority and argument in its
legal brief addressing the Petitioners' claims relative to RECs put forth in the Petitions
for Reconsideration. Idaho Power's Legal Brief at pp. 79-97. Just as the Petitioner's
advocated that the Commission determine the QF the owner of RECs, Idaho Power
advocated that the utility be determined the owner of REC5 in the initial instance.
Simplot/Clearwater asks on reconsideration that the Commission declare that QFs own
all RECs. ICL and RNP ask the Commission to establish an additional briefing
schedule on reconsideration regarding the Commission's decision that the utility owns
half of the RECs when contracting with Us pursuant to the IRP methodology.
The Commission should deny reconsideration. However, should the
Commission determine to grant reconsideration as to the issues raised by Petitioners,
Idaho Power respectfully hereby Cross-Petitions for Reconsideration and will present
testimony, evidence, argument, and legal authority supporting its position as set forth
and advocated in the proceedings before the Commission. RP 331.
VII. CONCLUSION
Idaho Power agrees that the Commission should clarify Order No. 32697 by
issuing SAR-based avoided cost rate tables, similar to those that appear in Attachment
A to Order No. 32697, that show the full payment without the capacity sufficient period
applicable to existing QF projects that enter into new contracts with the same utility, and
were receiving capacity payments in their previous contracts, as discussed in Order No.
32697. Additionally, Idaho Power asks that the Commission clarify/reconsider the
resource-specific capacity factors utilized in the SAR published avoided cost rate
calculation for the "canal drop hydro" and for "other" project categories to be 67 percent
for canal drop hydro and 92 percent for other.
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -19
Petitioner's have failed to demonstrate that the Commission's Order No. 32697,
or any issue decided in that Order, is unreasonable, unlawful, erroneous, or not in
conformity with the law. RP 331. The Commission's Order No. 32257 is based upon
substantial and competent evidence in the record. The Commission regularly pursued
its authority and was acting within its discretion to protect the public interest.
Reconsideration should be denied.
Should the Commission determine to grant reconsideration as to the issues
raised by Petitioners, Idaho Power respectfully hereby Cross-Petitions for
Reconsideration and will present testimony, evidence, argument, and legal authority
supporting its position as set forth and advocated in the proceedings before the
Commission. RP 331.
Respectfully submitted this 1 5 th day of January 2013.
wa___C ~
DONOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 15th day of January 2013 I served a true and
correct copy of the IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR
RECONSIDERATION, RESPONSE TO PETITION FOR CLARIFICATION, AND
CROSS-PETITION FOR RECONSIDERATION upon the following named parties by the
method indicated below, and addressed to the following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Avista Corporation
Michael G. Andrea
Avista Corporation
1411 East Mission Avenue, MSC-23
Spokane, Washington 99202
PacifiCorp dibla 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 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
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FAX
X Email kris.sassercpuc.idaho.gov
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X U.S. Mail
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FAX
X Email rnichael.and reaavistacom.corn
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X Email daniel.so land ercD-pacificorp.com
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_Overnight Mail
FAX
X Email peter(richardsonandoleary.com
qreqrichardsonandoleary. corn
Exergy Development Group of Idaho, LLC Hand Delivered
James Carkulis, Managing Member X U.S. Mail
Exergy Development Group of Idaho, LLC Overnight Mail
802 West Bannock Street, Suite 1200 FAX
Boise, Idaho 83702 X Email jcarkulis(äexerqydeveIopment.corn
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -21
Dr. Don Reading
6070 Hill Road
Boise, Idaho 83703
Grand View Solar II
Robert A. Paul
Grand View Solar II
15690 Vista Circle
Desert Hot Springs, California 92241
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
Bill Brown, Chair
Board of Commissioners of
Adams County, Idaho
P.O. Box 48
Council, Idaho 83612
Clearwater Paper Corporation
Mary Lewallen
Clearwater Paper Corporation
601 West Riverside Avenue, Suite 1100
Spokane, Washington 99201
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X Email dread ing(ämindsprinc.com
[e-mail]
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X Email robertapauI08cqmaiI.com
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X Email don .sturtevantsimpIot.com
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X Email [e-mail]
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X Email mary.IewaIlencIearwaterpaper.com
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
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Renewable Energy Coalition and Dynamis
Energy, LLC
Ronald L. Williams
WILLIAMS BRADBURY, P.C.
1015 West Hays Street
Boise, Idaho 83702
Renewable Energy Coalition
John R. Lowe, Consultant
Renewable Energy Coalition
12050 SW Tremont Street
Portland, Oregon 97225
Dynamis Energy, LLC
Wade Thomas, General Counsel
Dynamis Energy, LLC
776 East Riverside Drive, Suite 150
Eagle, Idaho 83616
Interconnect Solar Development, LLC
R. Greg Ferney
MIMURA LAW OFFICES, PLLC
2176 East Franklin Road, Suite 120
Meridian, Idaho 83642
Bill Piske, Manager
Interconnect Solar Development, LLC
1303 East Carter
Boise, Idaho 83706
Renewable Northwest Project, Idaho
Windfarms, LLC, and Ridgeline Energy LLC
Dean J. Miller
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
421 SW 6th Avenue, Suite 1125
Portland, Oregon 97204
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chasmcdevitt-miller.com
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IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -23
Idaho Windfarms, LLC
Glenn Ikemoto
Margaret Rueger
Idaho Windfarms, LLC
672 Blair Avenue
Piedmont, California 94611
Twin Falls Canal Company, North Side
Canal Company, Big Wood Canal
Company, and American Falls Reservoir
District No. 2
C. Thomas Arkoosh
ARKOOSH EIGUREN LLC
802 West Bannock, 9th Floor
P.O. Box 2900
Boise, Idaho 83701
ELECTRONIC SERVICE ONLY
Donald W. Schoenbeck
RCS, Inc.
900 Washington Street, Suite 780
Vancouver, Washington 98660
ELECTRONIC SERVICE ONLY
Twin Falls Canal Company
Brian Olmstead, General Manager
Twin Falls Canal Company
P.O. Box 326
Twin Falls, Idaho 83303
ELECTRONIC SERVICE ONLY
North Side Canal Company
Ted Diehl, General Manager
North Side Canal Company
921 North Lincoln Street
Jerome, Idaho 83338
Birch Power Company
Ted S. Sorenson, P.E.
Birch Power Company
5203 South 11th East
Idaho Falls, Idaho 83404
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X Email qIenni(envisionwind.com
margaretenvisionwind .com
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X Email tom.arkoosh(aeIawlobby.com
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X Email dws(är-c-s-inc.com
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IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -24
Blue Ribbon Energy LLC
M.J. Humphries
Blue Ribbon Energy LLC
3470 Rich Lane
Ammon, Idaho 83406-7728
Arron F. Jepson
Blue Ribbon Energy LLC
10660 South 540 East
Sandy, Utah 84070
Idaho Conservation League
Benjamin J. Otto
Idaho Conservation League
710 North Sixth Street (83702)
P.O. Box 844
Boise, Idaho 83701
Snake River Alliance
Liz Woodruff, Executive Director
Ken Miller, Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
Boise, Idaho 83701
Energy Integrity Project
Tauna Christensen
Energy Integrity Project
769 North 1100 East
Shelley, Idaho 83274
Idaho Wind Partners I, LLC
Deborah E. Nelson
Kelsey J. Nunez
GIVENS PURSLEY LLP
601 West Bannock Street (83702)
P.O. Box 2720
Boise, Idaho 83701-2720
Mountain Air Projects, LLC
J. Kahle Becker
The Alaska Center
1020 West Main Street, Suite 400
Boise, Idaho 83702
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X Email bIueribbonenerciycqmaiI.com
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IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -25
Christa Bearry, Legal Assistant
Michael J. Uda
UDA LAW FIRM, P.C.
7 West 6th Avenue, Suite 4E
Helena, Montana 59601
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X Email mudamthelena.com
IDAHO POWER COMPANY'S RESPONSE TO PETITIONS FOR RECONSIDERATION, RESPONSE TO
PETITION FOR CLARIFICATION, AND CROSS-PETITION FOR RECONSIDERATION -26