20120503Zamora Direct.pdf

RECEIVED
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSIO2 MA y _ p 59
IN THE MATTER OF THE
COMMISSION'S REVIEW OF PURPA
QF CONTRACT PROVISION
INCLUDING THE SUBROGATE
AVOIDED RESOURCE (SAR) AND
INTEGRATED RESOURCE
PLANNING (IRP) METHODOLOGIES
FOR CALCULATING PUBLISHED
AVOIDED COST RATES.
iHQ P(J!3L.U. Til COMMISSj
Case No. GNR-E-1 1-03
PREFILED DIRECT TESTIMONY OF
LOUIS ZAMORA
ON BEHALF OF
TWIN FALLS CANAL COMPANY
NORTH SIDE CANAL COMPANY
I Q. PLEASE STATE YOUR NAME.

2 A. Louis Zamora
3 Q. WHAT IS YOUR BUSINESS ADDRESS?

4 A. Twin Falls Canal Company, P.O. Box 326, Twin Falls, Idaho, 83303.
5 Q. HOW ARE YOU EMPLOYED?

6 A. I am an Engineering Technician and Field Supervisor for Twin Falls Canal

7 Company ("TFCC"), and Assistant Secretary to Twin Falls Energy, Inc., a

8 subsidiary of TFCC. I oversee operation at the Midway Power Plant.
9 Q. WHAT IS YOUR EDUCATIONAL BACKGROUND?

10 A. I received an Associate of Applied Science Degree in 1993 from College of

11 Southern Idaho.
12 Q. WHAT IS YOUR WORK EXPERIENCE?

13 A. For five years after graduation, I worked in the construction trades. Since then, I

14 have worked at TFCC.
15 Q. PLEASE DESCRIBE YOUR DUTIES IN YOUR PRESENT

16 EMPLOYMENT.
17 A. I do surveying and water measurement. I am responsible for maintaining the

18 automation of the facilities on our canal system. Concerning energy matters, I

19 am the company's liaison with third parties.
20 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY HERE?

21 A. The purpose of my testimony here is to describe our canal project; the energy

22 production aspects of our project; how and for whom the energy aspects of our
Case No. GNR-E-1 1-03 Zamora, Di
May 2, 2012 Twin Falls Canal Company
North Side Canal Company
Page 1 of

1 project enhance the economic welfare of our shareholders and our local

2 communities; how PURPA made this possible; and how some of the proposals

3 made in this case will stymie potential future benefits from PURPA to our

4 projects and shareholders without the need to do so.
5 Q. PLEASE DESCRIBE YOUR PROJECT.

6 A. TFCC is an Idaho nonprofit corporation formed under the Carey Act and owned

7 by individual shareholders who pay annual assessments for the operation,

8 maintenance, and management of TFCC. Some of the costs of operating TFCC

9 are offset by income received through power generation. TFCC delivers water to

10 over 200,000 acres of farm ground through over 1,100 miles of canals. TFCC

11 also has two wholly owned subsidiaries, Twin Falls Energy Company ("TFEC")

12 and Midway Power, LLC.
13 Q. PLEASE DESCRIBE THE PLANTS OWNED BY YOUR PROJECT.

14 A. TFEC is a fifty-fifty partner with Ida-West on the eight megawatt South Forks

15 Plant, and sole owner of the 2.5 megawatt Lowline Midway Hydro, and has an

16 interest in Lowline #2.
17 Q. PLEASE CATALOGUE THE FUTURE POTENTIAL ENERGY

18 ASPECTS OF YOUR PROJECT.

19 A. The future potential energy production from our project is difficult to pinpoint

20 without a feasibility study. While we contemplated a feasibility study, we

21 cancelled it due to the current unsettled nature of PURPA project development in

22 Idaho. We have identified at least two potential one megawatt sites. More

23 importantly to us, however, is that fact that we have 1,100 miles of canals. We
Case No. GNR-E-1 1-03 Zamora, Di
May 2, 2012 Twin Falls Canal Company
North Side Canal Company
Page 2 of 7

I contemplate that as technology improves, and that improvement of technology

2 escalates, what would not now be a practical site may be a practical site in the

3 future. Future upward avoided cost price changes would also influence when we

4 would begin our feasibility study and contemplate development of more canal

5 based hydroelectric projects.
6 Q. WHAT DOES YOUR COMPANY DO WITH THE PROCEEDS IT

7 RECEIVES FROM ENERGY?

8 A. Revenues from electric sales from our hydro plants are used as an offset to

9 assessments made against our shareholders for water delivery and use. This

10 revenue stream reduces the variable cost of production for irrigated agricultural

11 products in the Magic Valley, provides a boost to the economy of our service

12 area, and positively affects our statewide agricultural economy. The redirection

13 of the revenues we receive for electric sales to Idaho Power is a very important

14 boost to the agricultural economy in southern Idaho, all the while leaving the

15 Company's rate payers indifferent as to where the power came from.
16 Q. WOULD THE DEVELOPMENT OF YOUR SMALL HYDRO PROJECTS

17 HAVE BEEN POSSIBLE WITHOUT PURPA?

18 A. No. We understand the purpose of PURPA is to encourage the development of

19 local, independent and/or renewable resources, while keeping the ratepayers of

20 the utility indifferent, as to where the power comes from. That renewable energy

21 may otherwise have been forfeited and lost due to traditional utility reluctance to

22 purchase alternative energy. We understand that the encouragement of PURPA

23 resource development comes by excusing cogeneration and small power
Case No. GNR-E-1 1-03 Zamora, Di
May 2, 2012 Twin Falls Canal Company
North Side Canal Company
Page 3 of 7

I production from traditional utility styled ratemaking and regulation, and the

2 establishment of a power purchase price that is supposed to be equal the cost to

3 Idaho Power of otherwise generating the electricity itself.

4 These incentives have been successful for our canal company and others,

5 resulting in the development of plants on our canals would not have been

6 developed. In fact, PURPA has resulted in some partnerships between the canal

7 companies and utilities, providing mutual benefits through net wins for both the

8 utility and the canal company.
9 Q. DO YOU HAVE CONCERN REGARDING IDAHO POWER'S

10 PROPOSAL WOULD ALLOW THE UTILITY TO CURTAIL ENERGY

11 FROM QUALIFIYING FACILITIES?

12 A. Yes. For our existing generating facilities, we simply did not contract for this,

13 nor does it appear necessary given the predictability of the energy we deliver.

14 For future generation projects, it would severely limit our ability to debt finance

15 them, where the revenue stream was subject to such an unpredictable

16 interruption. Without the ability to finance such a large capital expenditure, it is

17 doubtful we would be able to proceed.
18 Q. WHAT EFFECT WOULD THE PROPOSAL THAT PURPA

19 CONTRACTS BE LIMITED TO FIVE YEARS HAVE UPON THE

20 FUTURE POTENTIAL ENERGY DEVELOPMENT ON YOUR

21 PROJECT?

22 A. Although I will defer to the technical expertise of our expert, Don Schoenbeck,

23 some of the proposals will be fatal to future development of small hydro on our
Case No. GNR-E-1 1-03 Zamora, Di
May 2, 2012 Twin Falls Canal Company
North Side Canal Company
Page 4 of 7

I system. The reduction of the term of a power purchase agreement from twenty

2 years to five years will kill our ability to finance either new plants or rebuilds on

3 existing plants. While short term PURPA contracts may lead to more accurate

4 avoided cost pricing, limiting power purchase agreement terms to periods too

5 short to finance fails to serve the purpose of PURPA, which is to encourage the

6 development of alternate energy. There must be some balance. We believe that,

7 at least for small hydros providing reliable, predictable power, the previous

8 twenty-year term provided that balance.
9 Q. DO YOU HAVE A RECOMMENDATION CONCERNING AN

10 ELGIBILITY CAP TO STANDARD PURPA RATES, FOR SMALL

11 HYDRO PROJECTS?

12 A. Yes. Reducing the eligibility cap for published rates from ten megawatts to 100

13 kilowatts, at least in the circumstance of small hydro, is unnecessary and

14 unnecessarily dampening to the encouragement we expect to be offered to

15 PURPA projects. Following the current line of cases, we understand the

16 Commission's purpose is to prevent large projects from "disaggregating" into a

17 group of smaller projects solely to qualify for a published rate. This concern is

18 not applicable to small hydro. We cannot build two diversion structures where

19 one would do. Further, insofar as the reduction of the eligibility cap seeks to

20 control and modulate the mix of resources that come on line such that a

21 purchasing utility's operations not be overborn by variable power, again the

22 reduction does not address any aspect of small hydro. Our power is steady and

23 predictable. As the graph illustrates, small hydro is steady and predictable.
Case No. GNR-E-1 1-03 Zamora, Di
May 2, 2012 Twin Falls Canal Company
North Side Canal Company
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1 Q. DO YOU HAVE AN OPINION ON THE OWNERSHIP OF

2 RENEWABLE ENERGY CREDITS FROM YOUR SMALL HYDRO

3 FACILTIES?

4 A. We cannot understand any of the reasoning for an arbitrary award of a

5 small power producer's Renewable Energy Credits ("REC ' s") to the purchasing

6 utility. Right now, our energy and capacity are priced at avoided cost, which is

7 what we get paid when we deliver the energy and provide the capacity, and the

8 utility receives the energy and has access to the capacity. If we understand the

9 current proposal, without changing any compensation formula or making other

10 adjustments, the REC's would be gratuitously transferred to the utility. Right

11 now, we can, and do, sell those REC's for added compensation because we own

12 and control them. The current explanations provided for changing how our

13 property is handled, and what we are compensated for our property, and the

14 proposal to transfer the REC's, simply makes no sense.
15 Q. DO YOU BELIEVE THAT THE UTILITY PROPOSALS IN THIS CASE

16 ARE NECESSARY TO PROTECT IDAHO POWER RATEPAYERS,

17 WHICH INCLUDES ALL OF YOUR SHAREHOLDERS?

18 A. No, not with small hydro in any event. So long as the mechanism to calculate

19 avoided cost rates reasonably determines the utility's actual avoided cost, the

20 ratepayer remains indifferent whether the energy comes from a utility or a small

21 hydro. Our power is sufficiently reliable so that no gas or carbon spikes are

22 needed to balance unanticipated power swings. Our conclusion is that all the
Case No. GNR-.E-1 1-03 Zamora, Di
May 2, 2012 Twin Falls Canal Company
North Side Canal Company
Page 6 of 7

I reasons given in this case for adoption of a 100 kilowatt cap and a fatally short

2 term power purchase agreement have no application to small hydro.
3 Q. WHAT WOULD YOU PROPOSE CONCERNING THE OUTCOME OF

4 THESE ISSUES?
5 A. The power purchase agreements for small hydro should be for a twenty-year term

6 to afford reasonable certainty, which in turn offers us encouragement to develop

7 our small hydro facilities on our project. The eligibility cap for standard

8 published avoided cost rates for small hydro should be ten megawatts of

9 nameplate capacity. There exists no disaggregation issue with small hydro

10 driving the imposition of an impossibly low eligibility cap. To the extent the

11 Commission desires to address the REC's, those should be confirmed as being

12 the private property of the present owner, the power producer.
13 Q. ARE YOUFAMILIAR WITH THE TESTIMONY OF DON

14 SCHOENBECK?

15 A. Yes.
16 Q. DO YOU CONCUR WITH AND ADOPT THE POSITIONS CONTAINED

17 WITHIN THAT TESTIMONY?

18 A. Yes.
19 Q. DOES THAT CONCLUDE YOUR TESTIMONY?

20 A. Yes.
Case No. GNR-E-1 1-03 Zamora, Di
May 2, 2012 Twin Falls Canal Company
North Side Canal Company
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