20110325Decker Di.pdf

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DeanJ. Miler (ISBNo. 1968) RECEtVED
Chas. F. McDevitt (ISB No. ~diJJ.4AR
McDEVITT & MILLER LLP rr fi" 25 PM I: 02
420 West Banock Street
P.O. Box 2564-83701
Boise, il 83702
Tel: [phone]
Fax: [phone]
joe(fcdevitt-miller.com
chascmmcdevitt -miler. com
Attorneys for Renewable Northwest Project
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
COMMISSION'S INVESTIGATION
INTO DISAGGREGATION AND
AN APPROPRIATE PUBLISHED
AVOIDED COST RATE
ELIGIBILITY CAP STRUCTURE
Case No. GNR-E-ll-Ol
DIRECT TESTIMONY OF MEGAN DECKER
ON BEHALF OF RENEWABLE NORTHWST PROJECT
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WHAT is YOUR NAME AN OCCUPATION?
My name is Megan Decker. I am Senor Staff Counsel with Renewable Northwest
Project (RNP). RNP is a regional coalition of public interest and industr groups who
advocate for policy supporting the expansion of responsibly sited new renewable energy.
I am responsible for overseeing state regulatory activities in the four states that RNP
covers-Washington, Oregon, Idaho and Montana-and I occasionally assist with siting
policy issues. I also represent RNP on the Green-E Goverance Board and the Energy
Trust of Oregon's Renewable Resources Advisory CounciL.
PLEASE DESCRIBE YOUR EDUCATION AND PROFESSIONAL EXPERIENCE.
I hold a Jurs Doctor from the Univerity of Washigton and a Bachelor of Ars from
Stanford University. Durng Sumer 2000, I was a legal intern with the Washington
Utilities and Transportation Commission. From 2003 to 2005, I was a judicial clerk with
the United States Cour of Appeals for the Ninth Circuit. From 2005 to 2010, I practiced
law at Ball Janik LLP in Portland, Oregon, focusing on land use permittng, appeals, and
miscellaneous litigation. I joined RNP as Senior Staff Counsel in May 2010.
WHAT is THE PURPOSE OF YOUR TESTIMONY?
The purose of my testimony is to share information about different methods by which
agencies in other states have attempted, within a varety of policy schemes, to discern
whether paricular renewable generation should be considered a single large project or
multiple smaller projects. I also wil explain my understanding of the rationale for
distinguishing between smaller, published rate projects and larger, negotiated projects
within the regulatory scheme established by the Public Utilities Reguatory Policy Act of
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1978 (PURP A), as implemented by varous states and by the Idaho Public Utilties
Commission ("Commission") in paricular. Finally, I wil present my opinion about the
most important characteristics and methods that Idaho could use to distinguish multiple
small projects from single large projects for purposes of implementing PURPA. I wish to
be clear that the purose of my testimony is not to express a policy preference for small
renewable projects. Larger projects, by takng advantage of economies of scale, can be
the most effcient form of renewable generation for utilities and their customers. Thus, in
addition to adopting a framework to limit published rates to single projects smaller than
10 aMW, the Commission also should support larger projects by developing (1) a fair and
transparent avoided cost methodology for qualified facilities (QFs) above the PURPA
published rate theshold and (2) strong integrated resourçe planing and competitive
procurement policies to support large-scale commercial generation.
WHY DOES RN SUPPORT A METHODOLOGY FOR DISTINGUISHING SMALL
PROJECTS FROM LARGE PROJECTS?
RNP has two primar reasons for supporting a methodology to distinguish small from
large projects.
The most immediate reason is to enable development of small wind and solar projects to
continue while the Commission considers the diverse issues related to Idaho Power's
rapid increase in PUR A wind generation, which may not be problematic but has
nonetheless prompted this theshold reduction. When the Commission last made
published rates unavailable to projects larger than 100 kW, all PURP A development
halted for several years. There is no reason for development of small and communty
scale projects to be stifled for several years while the Commission again takes up a wide
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range ofPURPA issues. By allowing small and communty scale projects to go forward,
the Commission can avoid additional rapid increases in PURP A generation over the next
several years without stiflng all development of smaller-scale renewable generation.
A second reason that RNP has supported a workable distinction between PURP A
published rate projects, negotiated PURP A projects, and large commercial scale projects
is our belief that good policy reasons support treating these thee categories differently.
WHAT is THE RATIONALE FOR DISTINGUISHING AMONG THESE THREE
PROJECT CATEGORIES?
The purose of published rates and stadard contracts is to remove transaction costs that
act as market barers for small generators. Small and communty scale projects may not
anticipate revenues high enough to justify the upfront legal costs to negotiate an
agreement with the utility, and certainty about rates may improve fiancing prospects for
small and community scale generation. Broader market barers for QFs also include
asymetrc information (i.e., a utility wil know much more about its own system costs
and capabilities than any QF) and a unbalanced playing field (i.e., utilties have superor
bargaining positions and no incentive to negotiate promptly or to reach agreements with
QFs). At the same time, standard rates and contracts may overlook project characteristics
that cause the utility's cost savings from a paricular QF to differ from the utility's actual
avoided costs. In requiring published rates for the smallest QFs, FERC balanced
eliminating market barers with accurate pricing and said:
"The (Federal Energy Regulatory Commission) is aware that the supply
characteristics of a paricular facility may vary in value from the average rates set
fort in the utility's standard rates required by ths paragraph. If the Commission
Decker, Di-Test 4
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1 were to require individualized rates, however, the transaction costs associated
2 with administration of the program would likely render the program uneconomic
3 for this size of qualifyng facility." Order No. 69, Small Power Production and
4 Cogeneration Facilities, FERC Regulation Preambles 1977-1981 ir 30,128,45
5 12,214 (Feb. 25, 1980,45 Fed. Reg. 24, 126 (Apr. 9, 1980).
6 States deterine the appropriate size theshold for published rates in order to eliminate
7 these market barers. See 18 C.F.R. 292.304(c)(2).
8 Larger QFs differ from smaller QFs in that they may have suffcient revenues and access
9 to financing to overcome at least the narowest set of transaction costs. In addition, the
10 potential asymetr between the supply value of a larger QF and the standard rates can
11 have greater consequences for utility portfolios and customer costs. Thus, because larger
12 QFs have greater abilty to negotiate project-specific avoided cost rates, published rates
13 may not be appropriate for larger QFs. Yet, at the same time, larger QFs experience the
14 same market barers-asymmetrc information about the utility's system and inferior
15 bargaining positions-as small QFs in negotiating with utilties. Therefore, it is
16 appropriate to reduce market barers and economic impediments for larger QFs by
17 adopting improved negotiation parameters and gudelines and mandating greater
18 transparency in the negotiation process. At the same time as the Commission works to
19 ensure that published rates are only available to projects under the 10 aMW theshold,
20 RNP urges the Commission to make a careful examination of the fairness and
21 transparency of the IRP methodology employed by the utilities for calculating avoided
22 cost in negotiated PURP A contracts and of other elements that can make negotiation
23 between utilities and QFs more fai and transparent.
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Finally, RNP believes that large commercial projects above the 80 MW PURP A
threshold should compete though a transparent and regulated utility RFP process in
which decisions are based on price and other negotiated terms. Competition and
negotiation among large projects is appropriate due to the sophisticated development and
financing teams involved in commercial development. In addition, it is sensible for
utilities to have greater control over larger additions to their portfolios.
In short, RNP generally supports different approaches for the thee different "buckets"
described above, and believes there is value in developing a rigorous method to
determine which ''bucket'' a given project or projects fall within. At the same time, RN
recognzes that the absence of supportive policy in the larger acquisition categories has
prevented those methods from being successfu in bringig signficant penetration of new
renewable generation to Idaho utilities.
HAS RNP PROPOSED A METHOD FOR DETERMINING ELIGIBILITY FOR
PUBLISHED RATES?
In Case No. GNR-E-I0-04, RNP submitted joint public reply comments with Idaho
Conservation League. Attchment 1 to those comments was a Discussion Draft for a
"Single Qualifyng Facility Requirement," which is attached as Exhibit 1901 to this
testimony (hereafter, "Discussion Draft"). RNP viewed this proposal as a staring point
for discussion rather than a final proposal. Indeed, as RNP has conducted fuer
discussion and research on the issue, RNP's view of the Discussion Draft has shifted.
For instance; upon fuer research, RNP has concluded that a distace requirement
between separate projects is an importt element that is not likely preempted by federal
law. Also, RNP has come to believe that joint fiancing, contracting, equipment
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purchases, and revenue sharng are indicators that are as important as ownership in
deterining which projects are eligible for the published rate. In this testimony, I will
share the results of that research and discussion but wil not make an alternate proposal at
this time.
WHAT SOURCES HAS RNP CONSULTED TO GAIN INFORMTION ABOUT
WAYS TO DETERMINE PROJECT SIZE?
RNP has reviewed several different examples of methods and characteristics that have
been or could be used to distinguish between single large projects and multiple small
projects. They are as follows: (1) Oregon PUC Order No. 06-586, Appendix B, pages
11-12 (setting fort principles for determining eligibilty for published rates), attached as
Exhibit 1902 to ths testimony; (2) Oregon Administrative Regulations (OAR), section
33-090-0120(2)(b) (setting fort factors for deterining whether separate applications for
state tax incentives should be combined), attached as Exhbit 1903 to ths testimony; (3)
Oregon PUC Docket No. UE 200, Staffs Opening Brief at 8-9 and PacifiCorp's Opening
Brief at 8-11 (dispute over whether PacifiCorp's two 99 MW facilities should have been
treated as one facility and, therefore, subject to the RFP requirement for projects 100 MW
or larger), attached as Exhibit 1904 to this testimony; (4) set of fifteen questions, attached
as Exhbit 1905 to ths testimony, that the Oregon Energy Facility Siting Council (EFSC)
staff once used informally to obtain information relevant to applying EFSC's
jursdictional threshold to a specific project; and (5) Minnesota Statutes section 216F.011
(2010) (setting forth method for making a "size determination" to determine which level
of governent has siting jursdiction), attached as Exhibit 1906 to this testimony.
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Each of these examples provides helpful background in thinking about how the
Commission should determine eligibility for published rates. However, most of the
methods and project characteristics used in these examples are motivated by quite
different policy goals than the one facing the Commission: namely, to ensure that access
to published rates is limited to projects that require the greatest level of assistace in
eliminating transaction costs and other market barers. They also differ in their method
for ensurng compliance. In many cases, a regulatory agency makes the initial
determination; in PURP A examples, by contrast, the utility makes the theshold
determination and disputes are settled by the Commission.
WHAT ARE THE PROJECT CHARCTERISTICS MOST FREQUENTLY
CONSIDERED IN DETERMINING SINGLE OR MULTIPLE PROJECT STATUS?
The following is a list of the project 'characteristics used in the varous reguatory
schemes I have come across in my research to date:
. Ownership. Because separate corporate entities are simple to create, regulators look
beyond the first level of legal ownership to see whether the companies are related
though a parent corporation or other beneficial owner. The Oregon PUC approach
excludes common passive investors from this evaluation where the primar
ownership interest is not in the project itself but in ''utilizing production tax credits,
green tag values and (tax) depreciation" from the project. See Exhibit 1902.
. Location. There are two different approaches to evaluating location. One is the
proximity of the facilities (i.e., with one mile or five miles). Another is whether the
projects are located on the same or adjacent parcels.
Decker, Di-Test 8
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1 · Financing. The presence of separate financing arangements that are not
2 interdependent can be an indicator of separate projects.
3 · Timing. Applications, constrction, and in-serice dates close in time (usually within
4 12 months of one another) can favor treatment as a single project.
5 · Siting Application(s). Single siting perit applications tend to suggest single
6 projects, even where those siting perit applications have different phases.
7 · Purchase of Generating Equipment. Combined negotiation and a single agreement to
8 purchase generating equipment are one indicator of a possible single project.
9 · Power Purchase and Transmission Agreements. Separate power marketing activities,
10 power purchase agreements, and transmission agreements suggest separate projects.
11 This factor is not as relevant for PURP A regulation, as each QF by definition has a
12 separate PPA with the utility (and possibly a separate transmission agreement as
13 well).
14 · Transmission Infrastrctue. As with many of these factors, sharng transmission
15 infrastrctue (collector lines, substations) does not in itself indicate a single project,
16 but is considered by some regulators in evaluating the totaity of the circumstances.
17 · Constrction Contract(s). At least one regulatory scheme considers a single contract
18 with a general contractor, or multiple contracts entered withn a year of another, to
19 suggest a single project.
20 · Staffng/personnel. Where multiple projects share personnel for output dispatching
21 decisions and/or operations and maintenance, this can be a factor suggesting a single
22 larger project.
Decker, Di- Test 9
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. Operations and Dispatch Decisions. Where operational and power output dispatch
decisions are made for several projects in the aggregate, ths can be a sign that
multiple projects should be treated as a single, interdependent project.
. Control Room and Equipment. Projects operated from separate control rooms or
buildings, with separate control equipment, may be separate projects. Shared
infrastrctue among trly separate projects should not be discouraged, however.
. Related/Supporting Facilities. Shared access roads, substations, O&M strctues,
perimeter fencing, water supply or discharge lines, storage areas, parking areas, etc.,
can be considered in the totality of the circumstances to support a finding of a single
project.
. Expenses and Revenues. Where several projects agree to share project expenses and
revenues, ths can support consideration as one larger project.
Again, the above is a sumar of the factors I came across in my research across a
varety of reguatory schemes that require determination of whether multiple projects are
trly separate. None of the factors alone would be a suffcient indication, nor does their
presence in another regulatory scheme mean that any or all of them is right for Idaho's
implementation of PURP A. The purose of sumarzing them is merely to demonstrate
that there is a wide range of factors that have been considered across many different
reguatory schemes in makng this determination.
WHAT is THE MOST APPROPRITE METHOD FOR EVALUATING THESE
FACTORS?
Several of the regulatory schemes i have reviewed for distingushing multiple from single
projects involve a flexible application of the above factors by the decision making
Decker, Di- Test 10
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agency. Flexibility and discretion to apply the factors can help to prevent technicalities
from controlling decisions. In other schemes, however, application of specific criteria is
absolute and not discretionar, and regulators do not make a determnation unless a
dispute arses between the negotiating paries. This approach requires less regulatory
involvement, and is more susceptible to self-policing though contract provisions that wil
be reviewed by lenders, but can make it harder to captue all of the situations where
aggregation occurs and, at the same time, to avoid captung trly separate projects.
In the PURP A context, it may be most appropriate to establish non-discretionar crteria.
Utilities, rather than regulators, wil be the first point of contact for developers. It does
not seem appropriate to allow discretion to one interested negotiating pary to apply a set
of subjective factors in evaluating eligibility for published rates. Therefore, uness the
Commission or another neutral reguatory agency is available to make a theshold
determination based on discretionar factors for every QF, I believe that the non-
discretionar Oregon PUC parial stipulation is a good approach. There, QFs provide the
utility with documentation upon which the utility makes an initial deterination; only
disputes are presented to the PUC for resolution. One way to gain some of the benefits of
flexibilty even while using this approach would be for the Commission to adopt non-
discretionar criteria to be applied initially by the utilty; then, if a dispute arose, the
Commission could make its ruling based on a broader set of more flexible crteria.
WHICH OF THE ABOVE PROJECT CHARACTERISTICS DOES RNP BELIEVE
ARE MOST SIGNIFICANT FOR DETERMINING ELIGIBILITY FOR PUBLISHED
RATES?
Decker, Di-Test 11
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The most appropriate characteristics to consider wil be drven by the purose of the
regulatory scheme. For permitting thesholds, which are intended to require more robust
land use and environmental review for large projects, shared facilities and geographic
proximity may be the most salient factors. For enforcing the PUR A published rate
threshold, where the rationale for published rates is drven by the QF's level of economic
and bargaing power, the most important characterstics may be financial in natue:
beneficial ownership, financing, cost and revenue sharng, combined purchases of
generating equipment, and combined constrction contracts. However, because each of
those factors could be relatively easy to obscure with extra paperork and possibly
difficult to determine at the time of intial contracting, a distance factor between projects
may be a necessar addition to the framework.
HOW MUCH DISTANCE SEPARTION WOULD BE APPROPRIATE AND
EFFECTIVE?
Although any distace rule can be overcome with creative planing, a larger distance
requirement is more likely to deter a project from organizing into smaller pieces to obtain
published rates. Both the Parial Stipulation used by the Oregon PUC for eligibilty for
published rates and the Minnesota Statutes section peraining to siting jursdiction use
five miles as the geographic limitation. Because states clearly have been delegated the
authority to set the published rate theshold (18 C.F.R. 292.304(c)(2)), I do not
understand a legal basis on which a state would be preempted in applying a distance
requirement for the published rate threshold that is different from the one-mile threshold
that FERC uses to apply the 80 MW theshold for non-eligible facilities (18 C.F .R.
292.204(a)(2)). It should be noted that FERC does not use the one-mile rule for
Decker, Di- Test 12
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hydroelectrc facilities, but rather considers them to be at the same site if they ''use water
from the same impoundment for power generation." 18 C.F.R. 292.204(a)(2). A
different type of aggregation principle could be applied for hydroelectrc QFs in Idaho as
well.
HOW SHOULD COMMON OWNERSHIP BE EVALUATED?
The presence of separate LLCs should not determine whether ownership is separate,
because separate LLCs are relatively simple to create. Common ownership can be
evaluated by looking within those corporate entities to understand whether they are
related by a parent corporation or, stil fuer, whether there is overlap in the companes'
underlying beneficial ownership.
At the same time, I believe that it is important not to combine multiple projects merely
because of common passive investors whose sole purose is to use ta credits or
depreciation or to acquire the project's RECs. Finding a pass-though parer is a critical
piece of economic viability for many renewable projects that depend on incentives; ths is
probably even more important for small and community scale developers who lack
significant tax appetite. Moreover, the few REC marketers in the countr may provide
value streams to a number of small projects in the same area, but may have nothing to do
with any project's development, ownership, control, or management.
HOW SHOULD SHARED INFRASTRUCTURE BE EVALUATED?
Shared infrastructue and related facilities should not be a threshold factor for
disqualification from published rates. Shared facilities among separate projects should
continue to be encouraged as a method of improving the efficiency of the power system.
Only when combined with revenue sharng, negotiations for generating equipment,
Decker, Di-Test 13
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combined fiancing and contracting, revenue and expense sharng, and related ownership
strctues does shared infrastrctue have any bearng on the economic power and
bargaining position of the QFs. Shared infrastrctue should be a minor factor for
puroses of applying the PURP A published rate theshold.
HOW CAN FINANCIAL ARGEMENTS BE PART OF THE DETERMINATION
WITHOUT FORCING A QF TO RELEASE PROPRIETARY INFORMATION TO
THE UTILITY?
Evaluating combined financial arangements without compromising proprieta
information is important. Relyig on review by Commission staff or project lenders
appears to be the only way to avoid makng utilities the recipient of sensitive contract
documents. A standard contract provision waranting separate financing, constrction
contracts, etc., could be a way to encourage lenders to self-police projects, since lenders
presumably see all of these agreements in the course of project financing due dilgence.
In addition, the Commission could require presentation of such agreements, subject to a
protective order, in any proceeding to resolve disputes about eligibility for published
rates.
DO YOU HAVE ANYTHING ELSE TO ADD TO YOUR TESTIMONY?
Not at this time.
Decker, Di-Test 14
Renewable Nortwest Project
CERTIFICATE OF SERVICE
I hereby certify that on the deay of March, 2011, I caused to be served, via the
methodes) indicated below, tre and correct copies of DIRECT TESTIMONY OF MEGANDECKER ON BEHAF OF RENEWABLE NORTHWST PROJECT, upon:
Jean Jewell, Secreta
Idao Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise, ID 83720-0074
jjewell~puc.state.id.us
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Donovan Walker
Lisa Nordstrom
Idaho Public Utilties Commission
472 West Washington Stret
P.O. Box 83720
Boise, ID 83720-0074
dwalker~idahopower.com
Inordstrom~idahopower.com
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Donald L. Howell, II
Krstine A. Sasser
Deputy Attorneys General
Idaho Public Utilities Commission
472 W. Washington (83702)
POBox 83720
Boise, il 83720-0074
don.howell(iuc.idaho.gov
kris.sasser~puc.idaho.gov
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Michael C. Andrea
A visita Utilties
P.O. Box 3727
1411 E. Mission Ave
Spokane, WA 99220-3727
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Brian Olmstead Hand Delivered ~'-
General Manager U.S. Mail ~'-
Twin Falls Canal Company Fax ~'-
PO Box 326 Fed. Express ~'-
Twin Falls, ID 83303 Email Y-olmsteadCBtfcanal.com
Ted Diehl Hand Delivered ~'-
General Manager U.S. Mail ~'-
Nort Side Canal Company Fax ~'-
921 N. Lincoln St.Fed. Express ~'-
Jerome, ID 83338 Email X
nscanalCBcableone.net
Peter J. Richardson Hand Delivered ~'-
Gregory M. Adams U.S. Mail ~'-
~
Richardson & O'Lear, PLLC Fax '-
Fed. Express ~
PO Box 7218 '-
Boise,ID 83702 Email ~
peterCBrichardsonandolear.com
greg(ßchardsonandolear.com
Bil Brown, Chair Hand Delivered ~'-
Board of Commissioners of Adams County U.S. Mail ~'-
PO Box 48 Fax ~'-
Council, ID 83612 Fed. Express ~
,Kbdbrown~frontier.net Email
MJ. Humphries Hand Delivered ~'-
Blue Ribbon Energy, LLC U.S. Mail ~'-
4515 S. Ammon Road Fax ~'-
Ammon, Idaho 83406 Fed. Express ~'-
blueribbonenergy~gmail.com Email X
Aaron F. Jepson Hand Delivered ~1.
Blue Ribbon Energy, LLC U.S. Mail ~1.
10660 South 540 East Fax ~-1.
Sandy, UT84070 Fed. Express ~1.
aronesq'iaol.com Email X
Gar Seifert Hand Delivered ~1.
Kurt Meyers U.S. Mail ~1.
Idaho National Lab Conventional Fax ~1.
Renewable Energy Group Fed. Express ~1.
2525 Fremont, Ave.Email Y!Idaho Falls, il 83415-3810
Gar. Seifertcæin. gov;
Kur.Meyerscæinl.gov
Benjamin J. Oto Hand Delivered ~1.
710 N. 6th Street U.S. Mail ~1.
P.O. Box 844 Fax ~1.
Boise, il 83701 Fed. Express ~1.botto~idahoconservation.org Email Æ
Glen Ikemoto Hand Delivered ~1.
Margaret Rueger U.S. Mail ~1.Idao Windfars, LLC Fax ~1.
672 Blair Avenue Fed. Express ~1.
Piedmont, CA 946 i 1 Email ~glenni~envisionwind.com
Margaret'ienvisionwind.com
M.J. Humpheries Hand Delivered ~1.
Blue Ribbon Energy LLC U.S. Mail ~1.
45 i 5 S. Ammon Road Fax ~1.Ammon, il 83406 Fed. Express ~1.
blueribbonenergygmail.com Email Æ
Aaron F. Jepson Hand Delivered ~1.
Blue Ribbon Energy LLC U.S. Mail ~1.
i 0660 South 540 East Fax ~1.
Sandy, UT 84070 Fed. Express ~1.
arronesq'iaol.com Email y
Exhibit No. 1901
Case No. GNR-E-11-01
M. Decker, Renewable Northwest Project
Attachment 1: Discussion Draft January 19, 2011
Single Qualing Facilty Requirement
A single Quaifyig Facilty (QF) is eligible to receive published rates for delivery up to 10
average MW monthly.
Single OF Criteria
In setting rates and approving contracts, the Commission wi consider the followig
criteria in determining whether a project with multiple generation sources qualifies as a single
Qualifyig Facilty. Whether each generation source withi the applicable QF:
(i) uses the same motive force as the QF;
(ü) is owned or controlled by the same person(s) or affiiated person (s);
(ii) is placed in servce within 12 months of the QF's in-servce date;.and
(iv) shares common interconnection or control, communications, and operation facilties.
Eligibilty for Published Rates
Multiple Facilities that satisfy al of (i)-(iv), above, and deliver more than 10 a MW per
month shal be aggegated for purposes of calculating eligibilty for a Single Smal Qualifyg
Facility published rates.
Definitions
As used above, the term "person(s)" means one or more natural persons or lega entities.
"Affilated person(s)" means a natur person or persons or lega entity or entities shargcommon ownership, management or acting jointly or in concert with or exercisig influence over
the policies or actions of another person or entity. "Affilated person(s)" does not include passive
investors whose sole ownership benefit is using product_on tax credits, green tag values, or
depreciation, or a combination of these.
QF Responsibilties
Upon request, the QF wi verify to the utilty the ownership, management and financial
structure of the QF in reasonably sufficient detai to alow the utilty to make an initial
determination of compliance with the ownership requiement. Any dispute concerning a QF's
entitlement to published rates shal be presented to the Commission for resolution.
In each contract for payment of published rates, the seller shal:
(i) warant the project satisfies the single Qualifng Facilty requirement;
(ii) warrant and represent that the seller wil not make any changes in its ownership,
control or management durg the term of the contract that would cause it not to be in
compliance with the single Qualifyg Facilty requiement;
(ii) agree to provide buyer with documentation of compliance with the separate ownership
. requirement upon buyer's request, made no more frequently than every 3 years, subject to
the buyer maitaining the confidentiality of the documentation provided; and
(iv) acknowledge that, upon a Commission findig that the Single Qualifyng Facilty
requiement is no longer met, the seller wi be in default under the contract.
Attachment 1ICL and RNP Reply Comments January 19, 2011
GNR-E-10-04
i 1
Exhibit No. 1902
Case No. GNR-E-11-01
M. Decker, Renewable Nortwest Project
.~
ORDER NO. 06-586
EXHIBIT "A"
TO PARTIAL STIPULATION
Definition of a Small Cogeneration Facilty or Small Power Production Facilty
Eligible to Receive the Standard Rates and Standard Contract:
A Qualifying Facilty (either a small power production facilty or a cogeneration facilty)
("QF") will be eligible to receive the standard rates and standard contract if the
nameplate capacity of the OF, together with any other electric generating facilty using
the same motive force, owned or controlled by the same person(s) or affilated
person(s), and located at the same site, does not exceed 10 MW.
Definition of Person(s) or Affilated Person(s):
As used above, the term "same person(s)" or "affilated person(s)" means a natural
person or persons or any legal entity or entities sharing common ownership,
management or acting jointly or in concert with or exercising influence over the policies
or actions of another person or entity. However, two facilties wil not be held to be
owned or controlled by the same person(s) or affilated person(s) solely because they
are developed by a single entity. Furthermore, two facilties will not be held to be owned
or controlled by the same person(s) or affilated person(s) if such common person or
persons is a "passive investor" whose ownership interest in the QF is primarily related to
utilzing production tax credits, green tag values and MACRS depreciation as the
primary ownership benefit. A unit of Oregon local government may also be a "passive
investor" if the local governmental unit demonstrates that it wil not have an equity
ownership interest in or exercise any control over the management of the OF and that
its only interest is a share of the cash flow from the OF, which share wil not exceed
20%. The 20% cash flow share limit may only be exceeded for good cause shown and
only with the prior approval of the Commission.
Definition of Same Site:
For purposes of the foregoing, generating facilities are considered to be located at the
same site as the OF for which qualification for the standard rates and standard contract
is sought if they are located within a five-mile radius of any generating facilties or
equipment providing fuel or motive force associated with the OF for which qualification
for the standard rates and standard contract is sought.
Shared Interconnection and Infrastructure:
QFs otherwise meeting the above-described separate ownership test and thereby
qualified for entitlement to the standard rates and standard contract wil not be
disqualified by utilzing an interconnection or other infrastructure not providing motive
force or fuel that is shared with other QFs qualifying for the standard rates and standard
Page 1
APPENJX.6
PAGE 1L OF I?
ORDER NO. 06-586
EXHIBIT" A"
TO PARTIAL STIPULATION
contract so long as the use of the shared interconnection complies with the
interconnecting utility's safety and reliabilty standards, interconnection contract
requirements and Prudent Electrical Practices as that term is defined in the
interconnecting utility's approved standard contract.
Dispute Resolution:
Upon request, the OF wil provide the purchasing utilty with documentation verifying the
ownership, management and financial structure of the OF in reasonably suffcient detail
to allow the utiliy to make an initial determination of whether or not the OF meets the
above-described criteria for entitlement to the standard rates and standard contract.
Any dispute concerning a OF's entitlement to the standard rates and standard contract
shall be presented to the Commission for resolution.
Standard Contract Provision
To insure continued compliance with the requirements stated above, the standard
contracts shall contain a representation in substantially the following form: "Seller wil
not make any changes in its ownership, control or management during the term of this
Agreement that would cause it to not be in compliance with the Definition of a Small
Cogeneration Facility or Small Power Production Facility Eligible to Receive the
Standard Rates and Standard Contract approved by the Commission at the time this
Agreement is executed. Seller wil provide, upon request by Buyer not more frequently
than every 36 months, such documentation and information as may be reasonably
required to establish Sellets continued compliance with such Definition. Buyer agrees
to take reasonable steps to maintain the confidentiality of any portion of the above-
described documentation and information that the Seller identifies as confidential except
Buyer will provide all such confidential information to the Public Utility Commission of
Oregon upon the Commission's request."
APPBNDJXb
"PAGE.l¿ OF j.2~,
Page 2
Exhibit No. 1903
Case No. GNR~E-11-01
M. Decker, Renewable Northwest Project
Department of Energy_330_090
(b) A Publicly Owned Utilty (POU) and people's utility distrct as defined in ORS 261.010, or a municipal
or cooperative utilty.
(76) "Vanpool Program": means a program that provides opportunities for a designated group of riders to
share the usage of a vehicle to commute between diferent communities/neighborhoods on a regular basis.
(77) "Vehicle Miles Reduced (VMR)": Reduction in miles achieved by a facilty when compared to single
occupant vehicles.
(78) "Waste-to-Energy Facilty": means an energy resource facilty that recovers materials and energy from
a waste stream under conditions listed below. The BETC program intends to encourage the responsible use
of all resources including waste streams. Generally, recovery of a material wil be preferred in comparison
to recovery of energy. In order to respect the embedded energy of a material stream the following criteria
have been established to define facilties that do not meet the definition of a recycling facilty, but provide
environmentally responsible recovery from a waste stream. Therefore, equipment used to recover materials
and energy from a waste stream is an eligible facilty when all of the following conditions are met:
(a) The value of the marketable materials and energy resources recovered from the waste str, less the
value of the external energy resources consumed in the recovery process is greater than the magnitude of the
costs incuned or revenues derived in disposal of the waste stream in standard industr practice.
(b) Recovered material/end product, exclusive of fuel or lubricant, exceeds 50 percent or higher on a dry
mass basis.
(c) The facilty does not increase the release of toxins, fossil-derived greenhouse gas emissions, or other
emissions.
(d) The facilty does not divert materials from a higher value use.
(e) The facilty has an acceptable energy balance as determined by the Director.
(79) "Wind Facilty": means a facilty that converts wind power into another energy resource.
(80) "Year": Calendar year.
(ED. NOTE: Tables & publications referenced are available from the agency.)
Stat. Auth.: ORS 469.040 & 469.165
Stats. Implemented: ORS 469.185 - 469.225
Hist.: DOE 7-1985, f. 12-31-85, ef. 1-1-86; DOE 3-1986, f. & ef. 8-29-86; DOE 2-1988, f. & cert. ef. 3-17-
88; DOE 3-1989, f. 12-28-89, cert. ef. 1-1-90; DOE 3-1990,f. & cert. ef. 9-20-90; DOE 4-1991, f. & cert.
ef. 12-31-91; DOE 2-1992(Temp), f. 12-14-92, cert. ef. 12-15-92; DOE 2-1993, f. & cert. ef. 1-28-93; DOE
5-1993, f. & cert. ef. 12-14-93; DOE 2-1995, f. 12-12-95, cert. ef. 12-15-95; DOE 3-1996, f. & cert. ef. 11-
27-96; DOE 2-1997, f. 12-15-97, cert. ef. 1-1-98; DOE 4-1998, f. 12-14-98, cert. ef. 12-15-98; DOE 2-
1999, f. 12-22-99,cert. ef. 1-1-00; DOE 1-2001, f. 10-5-01, cert. ef. 10-8-01; DOE 2-2004, f. & cert. ef. 1-
21-04; DOE 3-2004, f. & cert. ef. 7-1-04; DOE 1-2005, f. 12-30-05, cert. ef. 1-1-06; DOE 2-2006, f. 9-29-
06, cert. ef. 10-1-06; DOE 3-2006, f. 11-27-06, cert. ef. 12-1-06; DOE 3-2008, f. & cert. ef. 3-21-08; DOE
4-2008, f. 6-19-08, cert. ef. 6-20-08; DOE 2-209(Temp), f. & cert. ef. 11-3-09 thr 5-1-10; DOE 3-2010,
f. & cert. ef. 4-30-10; DOE 4-201O(Temp), f. 5-21-10, cert. ef. 5-27-10 thr 11-2-10; Administrative
correction 11-23-10; DOE 14-2010, f. & cert. ef. 11-23-10
330~090.()JiO
Preliary Certificate Applicatioii ltequb-ementsfora BETC
(1) Eligible facilties
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Department of Energy_330_090 3/24/11 10:34 AM
(a) The Deparent may j~sue only one BETC for each separate and distinct facilty under these rules. The
following facilties, as further defined in these rules, are eligible for a BETC: An energy facilty, recycling
facilty, rental dwelling weatherization facilty. transportation facilty. car sharing facilty, sustainable
building practices facilty, alternative fuel vehicle or facilties necessar to operate alternative fuel vehicles,
including but not limited to an altemative fuel vehicle refueling station, a high-efficiency combined heat
and power facilty, a high-pedormance home, a homebuilder-installed renewable energy system, a
renewable energy resource equipment manufacturing facilty or a research development & demonstration
facilty that complies with these rules.
(b) A proposed facilty must meet applicable codes and standards, must include a warranty and must be
serviceable locally.
(2) Required information
(a) Persons requesting a BETC shall apply on the Department-approved form for a preliminary certficate.
In addition to the information required in ORS 469.205, the applicant shall provide the following
information:
(A) The name, address, and phone number of the applicant, owners of the facilty, and the developers of the
project.
(B) The applicant's federal tax identification number or social security number which may be shared with
the Department of Revenue to facilitate the administration of the state tax law.
(C) Proposed facilty construction and operational start and finish dates. A facilty's start date is the date thatthe project applicant financially commits to the project. Financial commitment includes, but is not limted
to: making a down-payment or deposit, signing a contract with a vendor, ordering material or equipment,
beginng constrction or installation.
(D) The proposed facilty location within the geographical confines of Oregon or in the case of an alternate
fuel vehicle demonstrated intent that the vehicle wil be titled in the State of Oregon.
(E) Information demonstrating that the proposed facilty wil comply with or have a variance from the land
use laws of the city or county where the facilty wil be located;
(F) Information demonstrating that the proposed facilty wil comply with all other local, federaL. and state
laws, including but not limited to the following:
(i) A water power energy facilty that uses navigable waters or that sells electricity must have a permit,
license or exemption from the Oregon Department of Water Resources (DWR) and the Federal Energy
Regulatory Commssion (pERC). Proof of permits, licenses, or exemptions from DWR and the FERC must
be submitted to the Department before a facilty is eligible to receive final certification. Also, if the facilty
uses water from the Columbia River basin, it must comply with the Northwest Power and Conservation
Council's Fish and Wildlife Program.
(ii) A geothermal energy facilty must have the proper permit from the Oregon Department of Geology and
Mineral Industries (DOGAMI) or a permit from DWR.
(ii) A biomass energy facilty must have required permits from the Oregon Department of Environmental
Quality (DEQ).
(G) A list of appropriate authorizations for all work performed including but not limited to appropriate
licenses, permits, or other authorizations that are required by state or local jurisdiction for the facilty.
(H) Information demonstrating the intended operation, maintenance and use of the facilty, including but not
limited to, where appropriate, the amount and type of jobs potentially created or eliminated in the
constnlction, installation and operation of the facilty in Oregon, the benefits of the facilty with regard to
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Department of Energy_330_090
overall economic activity in ths state, the amount of projected energy saved, generated or transmitted and a
demonstrated intent that the facilty wil be maintained and operated for at least five yeas after the facilty
is operational. Except that, as a condition of the preliminary and final certificate, the following facilties
must remain in operation for one year: Tele-workng equipment, transit passes, transportation services,
incentive programs, car-share programs and individualzed travel behavior change programs, and van-pool
programs. H an applicant expects that a facilty not listed in this subsection wil operate less than five years,
the applicant may submit a request for approval of the shorter operating period as part of 1:eir application
for preliminary certification. This request shall include information describing the proposed facilty and
supportg the proposed operating period. The Director wil determie whether to approve the sh01ter
operating period and may include conditions, reductions or other limits on any potential tax credits.
(1) A declaration from the applicant that all property taxes for the facilty have been paid and there are no
delinquent property taxes associated with the facilty.
(1) If the application is for a Renewable Energy Resource Equipment Manufacturing Facilty. information
that demonstrates that the facilty wil be used solely to manufacture 'equipment, machiery or other
products that wil be used exclusively for renewable energy resource facilties. An applicant shall provide
sufficient information relating to the specific characteristics of the equipment, machinery or other products
that demonstrate how such equipment, machinery or other products wil be used exclusively for renewable
energy resource facilties and not for other commercial purposes. In the case of a facilty manufacturing
Electric Vehicles under the all-terrain-vehicles standards, an applicant shall provide information that
demonstrates that the vehicles wil be used for agricultural, commercial, industrial or governmental
purposes.
(K) Applications for facilties using or producing renewable energy resources, or facilities listed as
renewable energy resources as defined under ORS 469.185 shall provide all information required as part of
the tiered priority system under OAR 330-090-0350.
(b) The Deparment may request additional infOrmation from the applicant in order to determine whether
multiple applications . have beeii made. for the same facilty". The depariit wil mae its determination
based on the following: .
(A) Al applications under consideration wil be reviewed against other current applications, facilties that
have received prelinary certifcation and facilties that have received final certification withi the past 12
months. Further review shall be given to applications which:
(i) when combined exceed the annual limit for a tax credit found in ORS 469.200.
(ii) are individually below the thrshold for one year tax credit found in ORS 315.354, but if combined
exceed this threshold; or
(iii) when combined, result in assessment within a different category or tier, or against different criteria or
cost allowances.
(B) Applications for facilties using or producing renewable energy resources, or facilities listed as
renewable energy resources as defined under ORS 469.i 85 wil be determed to be a single facilty, despite
the number of applications, owners or constrction phases, if three or more of the following apply:
(i) The facilty is located on one or more adjacent parcels of land or parcels;
(ii) The facilty has been recognized in a license or permit as a single facilty by a federal, state, county, city
or local authority including, but not limited to siting council, state or local boards or commissions, or the
facilty has obtained or applied for siting or land use approval and other applicable pennts, licenses or site
certificates as a single facilty or on a single application;
(iii) When the facilty is designed to generate energy, the construction of the facilty is pedormed under the
same contract with a general contractor licensed under ORS 70 i or multiple contracts entered into within
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Department of Energy_~30_090 3/24/1110:34 AM
one year of each other with one or more general contractors licensed under ORS 701. If facilties wil be
completed in phases over time, the applicant must demonstrate that each of the phases of the facilty would
independently qualify as an eligible facilty and that each phase of the facilty is not interdependent in
purpose or the manner in which it wil be owned, financed, constructed, operated, or maintained or the
facilties or phases of the facilty wil be determined to be one facilty for the purposes of these rules;
(iv) The facilty owners have entered into or expect to enter into agreements to share project expenses,
personnel, capital investments including generating equipment or other resources related to the facilty;
(v) The generating equipment for the facility and the related facilty was purchased by the same person or
persons who own or operate the facilty or have taken action under any of the above factors;
(vi) A facilty is connected to the grid through a single connection or multiple connections when there is a
shared net metering, power purchase or other applicable transmission agreement; or
(vii) Other factors or considerations which demonstrate tht the facilty is not a separate and distinct facilty
based.on its construction, operation, maintenance and output.
(C) Applications for renewable energy resource equipment manufacturing facilties wil be considered a
single facilty unless each phase of development or each expansion of or additon to existing facilties or
production lines can be demonstrated to meet, through increased production and number of jobs created, the
requirements of ORS 469.197 (4) and these rules.
(D) Applications other than those described in subsections (B) and (C) wil be considered a single faciltY if
three or more of the following apply:
(i) shared ownerslup of facilties,
(ii) shared location of facilties,
(ii) project permits are issued to a common entity or at the same time or
(iv) a shared contract to cönstruct the facilties.
(c) Anticipated capital expenditures and other costs as defined in these rules for the erection, construction,
instalation or acquisition of the proposed facilty, its expected operational life, and its simple payback as
defined in ORS Chapter 469 and these rules~
(d) Inormation demonstrating anticipated substatial energy savings or a description of products that wil
result from the facilty and how those products wil result in substantial energy savings.
(e) For a proposed renewable energy resource facilty, proof the resource level is adequate for a feasible
facilty. Such proof includes data listed in (A) thugh (G). Other data may be used if the listed data cannot
be obtained at a reasonable cost, such as for RD&D facilties.
(A) For a solar energy facilty: A sun chart and solar insolation data for the site. Facilties must have a Total
Solar Resource Fraction of at Let 75 percent.
(B) For a wind energy facilty:
(i) The average montWy wind speed for 12 consecutive months at the proposed site. Measure wind speed at
or as close as practically feasible to the hub height of a horizontal axis wind machine; or, the equator of a
vertical axis wind machine; or
(ii) Measure wind speed at two heights for 12 consecutive months, the lowest one at least 10 meters above
ground and estimate the wind speed at hub or equator height; or
(ii) In the event of less than one year's measurements at the proposed site, include the months of on-site
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Exhibit No. 1904
Case No. GNR-E-11-01
M. Decker, Renewable Northwest Project
1
2
3
4
5
6
7
8
BEFORE TH PUBLIC UTILITY COMMISSION
OF OREGON
UE200
In the Matter of
PACIFICORP STAFF'S OPENING BRIF
2009 Renewable Energy Adjustment Clause
Schedule 202
9 1. Introduction
10 The issues in this proceeding have.been narowed considerably. As to the major
11 remaig disputes, staf recommends adjustments to wind facilties at PacifCorp's Dave
12 Johnston site, presented by the company in the Transition Adjustment Mechaism (TAM)
13 proceeding (Docketed as UE 199) and the companion Renewable Adjustment Clause (RC)
14 proceeding (Docketed as UE 200), as the Rollng Hils and Glenrock projects. PacifiCorp
15 opposes stas recommendation to make capacity factoNelated adjustments; Industal
16 Customers of Nortwest Utilties (ICN supports stas recommendatión.
17 While the overarching issue is simply statedt it contais several complex, potentially
18 confsing, subpars. P:s such, staff will summarze the natue of Rollng Hils/Glenrock as a
19 Major Resource under Order No. 06-446, and then tu to staffs proposed adjustments and
20 explain why the Administrative Law Judge and the Commission should adopt them. Stafwill
21 also include its recommenclation as to "where" (i.e. UE 199 (TAM) or UE 200 (RC)) each
22 adjustment should be reflected.
23
24 2. Brief Summary of Relevant Facts Concerning Rollng Hils/Glenrock!
25
26 1 Unless otherwse specifically stated, all references to testimony and exhibits are to the material. fied in UE 200.
Page 1- STAFF'S OPENING BRIF
Deparent of Justice
i 162 Court Steet NE
Salem, OR 97301 -4096
[phone]/ Fax: [phone]
,.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
and the accompanying recommendation thatJ should such a finding be madeJ 38 percent be used
as the correct capacity factor when calculating the capital cost of the investment.
A. Prudence
The concept of "prudenceu is important in the UE 200 RAC proceeding because the
relevant statute, ORS 469 A. 120(1 ), provides in par that "ali prudently incurred costs associated
with compliance with a renewable portolio standard are recoverable in rates of an electrc
company." Generally stated, to be "prudentJJ a utilty decision must have been reasonable under
the circumstances that were known, or could have been known, at the time the decision was
made. Furer, as staf noted in its response to PacifiCorp's Data Request (DR) 3.20, the
Commssion held in its Order No. 87-1017 (at 10):
The Commission concludes that the prudence of a utilityJs decision is not relevant to the
issue of whether to include a facilty in rate base...Prudence in planing and constrèting
a plant is relevant for determining the valuation of the facilty once placed in rate base. If
a plant shown to be used and useful was constcted at an unecessarily high cost, only
the cost deemed appropriate, rather than the actual historical cost, would be placed in rate
base.
15 See, e.g. PPL Cross Exhibit 2.
16 B. PacifCorp's decision to develop Rollng Hils was imprudent
17 Staf determined that PacifiCorp made an imprudent decision to develop and construct
18 Rollng Hils. Sta reached this determination based upon several troubling aspects surrounding
19 PacifiCorp's decision to proceed with the Rollng Hils project.
20 First, PacifiCorp knew, or should have known, that Rollng Hils/Glenrock is properly
21 viewed as a Major Resource under the Commission's competitive bidding guidelines. Viewed
22 together as constitutig 198 MW at a single site rather than two separate projects, PacifiCorp had
23 an obligation to proceed through the "competitive biddig processu set fort in Order No. 06-
24 446. PacifiCorpJs decision to proced with Rollng Hils outside of the competitive bidding
25 process was imprudent. See generally Sta200, Schwarzl3-7 (UE 199).
26
Page 7 - STAFF'S OPENING BRIEF
Deparment of Justice
I i 62 Court Stret NE
Salem. OR 97301-4096
[phone]/ Fax: [phone]
1 Commission Order No. 06-446 applies to a utility's acquisitioll of a "Major Resource."
2 A Major Resource is defined as a resource with a capacity theshold of 100 MW or more and
3 with a duration threshold of 5 years or more. See Order No. 06-446 at 3. If a utilty intends to
4 acquire a Major Resource, it must do so through the Request for Proposals (RP) competitive-
5 bidding process and other guidelines delineated in Order No. 06-446. Importantly, the
6 Commssion set fort exceptions to the RFP process for certain Major Resource acquisitions. Id
7 at 4.
8 A key goal, or purose, behind the competitive bidding process is to "(pJrovide the
9 opportty to miimize long-term energy costs. .." Id at 2. In other words, without a
10 competitive bidding process, there is no price discovery to show that the project wil "minimize
11 long-term energy costs" for PacifiCorp's customers. See also Staf/200, Schwarz/9.
12 During cross examination, Ms. Schwar acknowledged that Order No. 06-446 did not
13 expressly provide criteria for determining when an alleged two (or more) projects that were each
14 under 100 MW should be considered as one over-l 00 MW project. TR at 65 (Schwai1z).
15 Nevertheless, Ms. Schwarz stated there is a need to maintain the "integrity" of the Order's
16 Major Resource theshold criteria. TR at 64 (Schwar). In other words, it defeats the purose
17 of issuing a competitive bidding order if a utility were allowed to play fast and loose with the
18 criteria that would trigger application of the process mandated under the Order for acquiring
19 Major Resources.
20 In the preent circumstace, Ms. Schwart testified that PacifiCorp's attempt to stylize
21 Rollng Hils/Glenrock as two separate projects was "not a close case" which "did not pass the
22 laugh test." TR at 62, 65 (Schwai1z). Ms. Schwar reached ths conclusion based upon the
23 characteristics of the project. These chaacteristics include the followingS:
24
25
26 5 Where no citation is provided for a listed fact, it is because it has already been provided earlier
in the brief.
Page 8 - STAFF'S OPENING BRIEF
Deparment of Justice
i 162 Court Strt NE
Salem, OR 97301-4096
[phone]/ Fax: [phone]
1 (1) Both Rollng Hils and Glenrock are located on the sae site, known as the "Dave
2 Johnson" site. TR at 55 (Schwar);
3 (2) At all relevant times, PacifiCorp owned the Dave J olison site. Id; Staff200,
4 Schwarz/9;
5 (3) PacifiCorp submitted one permit application for both projects. Sta/502;
6 (4) Acçording to the application, it would cover the development of the site as a whole;
7 (5) The permit was to build up to three projects in "phases";
8 (6) Both Rollng Hils and Glenrock are being developed and constructed durng 2008;
9 (7) Rollng Hils and Glenrock are currently scheduled to become operational within
10 about one month of each other, and indeed, may even become operational at the same
11 time;
12 (8) Rolling Hils are Glenrock are physically located within one mile of each other and
13 follow the same contours of the land; and
14 (9) Rollng Hils' proximity to Glenrock. for confidential material see Sta200,
15 Schwar17; Sta202, Schwart 32.
16 There may be future caes involving the "is it one project'or two" quesion that are
17 diffcult to determine. But, this is not one of them. The project characteristics set forth above
18 show beyond any reaonable debate that Rollng Hils/Glenrock constitutes a Major Resource.
19 Staf is certainly i:ot alone in considering ownership, operation, proximity and expansion
20 characteristics to determine whether projects are distinct. Both Oregon Deparent of Energy
21 and the Energy Facilty Siting Council do so. Staff600, Schwarzl6-8 (D 199). Furter, the
22 Commission defines utilty self-build options in an RFP - "benchmark resources" - as site-
23 specific. It is reasonable to assume that a company-owned self-build option is site-specific even
24 if it is acquired outside a competitive bidding process. Order No. 06-446 at 5; TR at 54, 65
25 (Schwar).
26
Page 9 - STAFF'S OPENING BRIF
Deparment of Justice
1162 Cour Str NE
Salem, OR 97301-496
[phone]/ Fax: [phone]
1
2
3
BEFORE THE PUBLIC UTILITY COMMISSION
OF OREGON
UE200
4 In the Matter of:
5 PACIFICORP, dba PACIFIC POWER
2009 Renewable Adjustment Clause
6 Schedule 202
PACIFICORP'S OPENING BRIEF
7
8 I. INTRODUCTION
9 This is the first Renewable Adjustment Clause ("RAC") filng before the Public.
1 0 Utilty Commission of Oregon (lithe Commission"), pursuant to Senate Bil 838 ("S8 838" or
.
11 "the Act") and Re Investigation of Automatic Adjustment Clause Pursuant to S8 838, UM
12 1330, Order No. 07-572 (Dec. 19,2007) ("RAC Orden. The clear and fair resolution of
13 this case is a critical implementation milestone for SB 838. It is also a matter of the
.14 greatest importance to PacifiCorp (or lithe Company"),.because the casé includes 713 MWi
15 of new renewable resources, representing a major investment of Company capital and
16 human resources: PPU100, Kelly/6, II. 17-18. The Company's RAC filng asks the
17 Commission to fulfil the requirement of S8 838 that utilties wil recover all of the prudent
18 costs of renewable energy investments necessary to comply with the Act.
19 The parties raised various issues in this case, many of which have been resolved:
20 First, Staff's proposed adjustment for operations and management expenses was settled
21 by a partial stipulation, filed on September 12,2008.
22 Second, through testimony, PacifiCorp addressed and resolved: (1) staff's and the
23 Industrial Customers of Northwest Utilties' ("ICNU") concerns about how to establish RAC
24 Schedule rates usirig 2009 forecast loads (PPLl1 01, Kelly/2, II. 11-15; PPLl400,
25 Ridenour/2, II. 3-10); (2) Staff's objection to the introduction of additional resources,
26 Glenrock II and Seven Mile Hil II, into the RAC (PPLl1 01, Kelly/3, II. 2-7); (3) ICNU's
PAGE 1-PACIFICORP'S OPENING BRIEF McDowell & Rackner PC
520 SW Sixth Avenue, Suite 830
Portland, OR 97204
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Additionally, as Staff as previously noted, the Commission has encouraged
acquisition of shorter-term or smaller resources that fall below the 100 MW threshold for
Major Resources:
Besides the benefits associated with having PPAs with diverse
supply terms, shorter-term PPAs are part of the bridging
strategy the Commission wants the utilties to evaluate in
resource planning and acquisition, considering the costs, risks
and uncertainties of long"term commitments to fossil"fuel
plants. Further, the Commission's resource planning
guidelines emphasize the value of maintaining flexibilty,
including evaluation of resource duration. While the
Commission's resource planning order does not explicitly
address the value of smaller resources, such resources clearly
fall within the Commission's emphasis on optionality. In
various proceedings and reports, staff has noted the benefits
of acquiring resources in a modular fashion, as needed, rather
than all at once as lumpy additions the utilties need to grow
into.
13 Re Investigation Regarding Performance-Based Ratemaking Mechanisms to Address
14 Potential Build-vs.-Buy Bias, Docket UM 1276, Staff's Reply Comments of Lisa Schwart,
15 Commission Staff at 8-9 (Jan. 29, 2008) (footnotes excludéd).3
16 In this case, Staff has argued that Rollng Hils and Glenrock should be deemed
17 aggregated and, therefore, the Guidelínes deemed applicable to Roilng Hils, even
18 though: (1) each resource is 99 MW, below the Major Resource threshold; (2) the
19 decisions to proceed on Rollng Hils and Glenrock were made at diferent times and
,
20 . based on stand-alone economic analysis; (3) each resource has a separate certificate of
21 public convenience and necessary certification from the Wyoming Public Service
22 Commission; (4) each resource has separate constructión contract obligations; (5) each
23 resource has stand-alone collector substations and transformers; and (6) the Company
24
25 3 Pursuant to OAR 860-014-0050(1), PacifiCorp requests that the Commission take offcial
notice of Staffs Reply Comments filed in Docket UM 1276 on January 29, 2008.
26
Page 8 - . PACIFICORP'S OPENING BRIEF
1 procured wind turbines for the resources at diferent times in diferent negotiations.
2 PPU203, Tallman/15, i. 12-Tallman/16, I. 8; UE 199, PPU400, Tallmanl7, i. 15-
3 Tallman/8, i. 15. While the resources were presented to Wyoming siting commission in
4 the same application, they were listed as separate resources, so the siting commission
5 could have permitted none, one, or both resources. PPU203, Tallman/16! II. 6-8.
6 Staff has not articulated any standard for determining when separate renewable
7 energy resources should be aggregated for purposes of determining whether they
8 constitute a Major Resource. Initially, Staff asserted that the Commission should apply the
9 five-mile radius standard the Commission adopted in UM 1129 to determine if separate
10 QF resources with the same owner should be aggregated for purposes of determining
11 whether they were under 10 MW. UE 199, Staff/200, Schwart6, i. 9-Schwartz/7, i. 6;
12 UE 199, Staff/600, Schwa rt5 , i. 9-Schwart6, i. 4. The Stipulation that proposed this
13 proximity standard, however, expressly contained the parties' agreement that the
14 provisions of the Stipulation were not "appropriate for resolving issues in any other
15 proceeding." PPL Cross Exhibit 3, Re Staff's Investigation Relating to Electric Utility
16 Purchases from Qualifying Facilities, Docket UM 1129, Errata Order No. 06-586,
17 Appendix Bat 4 (2006).
18 At hearing, Staff clarified that it was 'advocating only that the Commission adopt the
19 reasoning behind the OF proximity standard. not the five-mile radius standard itself. Tr.
20 54, II. 7-14. When pressed to explain what standard the Commission should apply to
21 determine if aggregation was appropriate, Staff refused to articulate a standard and
22 instead pointed only to the particular facts of this case. Tr. 69, II. 2-16. According to Staff,
23 the fact that Glenrock and Rollng Hils are both owned by the Company, on the same site
24 about one mile apart, and scheduled to come on line in the same year means that it is
25 "obvious" that the resources should be aggregated to constitute a Major Resource. For
26
Page,9 PACIFICORP'S OPENING BRIEF
1 this reason, Staff explained that awe didn't need to go through and develop a set of
2 criteria." Tr. 64, II. 13-14.
3 Staff's position raises numerous policy and practical questions, to which Staff has
4 responded with some version of either "the answer depends on the circumstances of the
5 case" or "we don't know." For example, PPL Cross Exhibit 2, PPL Data Request 3.9
6 asked Staff when a later project is built near an earlier project and the projects total over
7 100 MW, are both projects then subject to the Guidelines, or just the later project? StaffYs
8 response was that "The answer depends on what the Company knew, or could have
9 known, at the time it made the decision to proced with the earlier resource regarding
10 future development plans at the site, and the most economic development ofthe site
11 based on the wind resource, equipment cost trends and other factors." PPL Cross Exhibit
12 2, PPL Data Request 3.9.
13 Similarly, PPL Cross Exhibit 2, PPL Data Request 3.10 asked when a timely
14 request for a waiver of the Guidelines would be due in the case of aggregation. Staff's
15 response pointed to the Guidelines, which as previously noted, are completely silent on
16 this issue and PacifiCorp's application for a waiver for the Chehalis plant, which is
17 completely inapplicable to this scenario. PPL Cross Exhibit 2, PPL Data Request 3.10. At
18 hearing, Staff was asked whether the deemed aggregation would apply if projects were on
19 the same site with the same owners, but came on line in different years. Staff responded
20 only by pointing to its responses to PPL Data Requests 3.9 and 3. 1 O-which do not
21 address this issue at all. Tr. 66, i. 25-Tr. 67, i. 18.
22 When asked about whether Staff had considered recommending a rulemaking or
23 investigation to address the aggregation of resources under the Guidelines, Staff
24 responded: "No. Staff did not contemplate that a utilty would find the Major Resource
25 definition unclear regarding projects the utilty develops at the same site with the same
26 estimated on-line date." PPL Croas Exhibit 2, PPL Data Request 3.17. Staff also
Page 10 - PACIFICORP'S OPENING BRIEF
1 responded that it "did not contemplate that the Commission would apply ownership and
2 proximity criteria only to Qualifying Facilties." Id.
3 Staff's view that there is no need to design and articulate a clear policy around
4 resource åggregation under the Guidelines is in contrast tc? the Commission's approach in
5 the QF docket, where the Commission fully investigated the issue, adopted a well-defined
6 proximity standard, and applied the standard on a prospective basis only. It is also in
7 contrast to the manner in which similar issues have been addressed by the Oregon
8 Department of Energy, which issued OAR 330-090-0120(6), defining standards for distinct
9 facilty characteristics to qualify for BETCs. UE 199, Staff/601, Schwart2-4. Similarly,
10 while Oregon Energy Facilty Siting Council ("EFSC") does not currently apply distance-
11 based criteria in determining jurisdiction over siting (UE 199, PPU400, Tallman/7, 11.11-
12 14), the EFSC minutes attached to Staffs testimony suggest that if EFSC decides to
13 .promulgate new policy on this issue, it would do so through a rulemaking with opportunity
14 for notice and comment. UE 199, Staff/602, Schwartz/3.
15
16
D.PacifiCorp Acquired the Renewable Resources in this Case Through a
Reasonable Resource Acquisition Process.
17 On January 16, 2007, the Commission denied approval of PacifiCorp's draft 2012
18 RFP. Re PacifiCorp Draft 2012 Request for Proposals, Docket UM 1208, Order
19 No. 07-018 (Jan. 16,2007). The Commission indicated that it expected lithe company to
20 fully explore. . . renewable resources . . . at levels incremental to the amounts in the
21 acknowledged 20041RP Action Plan." ¡d. at 6. The Commission noted in this regard "that
22 competitive bidding may not be the appropriate mechanism to acquire all resources that
.23 may be part of the best cost/risk portfolio." ¡d. The Ord.er also noted that "A utilty's RFP
24 must take into account resources that will be acquired through mechanisms other than
25 competitive bidding. . .." ¡d.
26
Page 11 - PACIFICORP'S OPENING BRIEF
Exhibit No. 1905
Case No. GNR-E-11-01
M. Decker, Renewable Northwest Project
Questions for determining when energy
projects are separate projects.
1. What company is the legal owner of the proposed project? Is that company
related to the owner of the nearby wind energy project? For example, are the
companies related through a parent corporation?
2. How close are the two projects geographically?
3. Is any par of the site of the proposed project included withi the site of another
wind project?
4. Would the proposed project share any transmission infrastructure with the
nearby wind project? For the purpose of this question, "transmission
infrastrcture" means related or supporting collector lines or other transmission
lines or equipment associated with a wind project to the point of connèction
with the regional transmission system (the "grid").
5. Would the proposed project share any related or supporting facilties with the
nearby wind energy project (for example, access roads, substations, O&M
stiuctues, perimeter fencing, water supply or discharge lines, storage areas,
parking areas, etc.)?
6. Would the proposed project be operated from a separate control room? Would
the control equipment (central computers) for the proposed project be located in
the same building as the control equipment for the nearby wind energy project?
7. Would power output dispatching decisions for the proposed project be made
independent of such decisions for the nearby wind energy project? Would these
decisions be made by separate personnel?
April 18 EFSC Meeting 1
Oregon Energy Facilty Siting Council
Apri118
Page 2
8. Would operational decisions (such as maintenance, routine inspections, fire
protection agreements with local authorities, weed control, etc.) for the
proposed project be made independent of such operational decision for the
nearby wind energy project? Would separate personnel he responsible for
makig those decisions?
9. Would the proposed project have separate operations or maintenance staff or
would operations and maintenance staff be shared with the nearby wind energy
project?
10.Would the power output from the proposed project be sold into the same market
as the power output from the nearby wind energy project? In what way would
the markets differ?
II.Would the marketing of the power output from the proposed project be done
independent of marketing for the nearby wind energy project?
12.Would contracts for the sale of the power output from the proposed project be
separate from the contracts for sale of power output from the nearby wind
energy project? Would there be any aggregated sales of power output from the
proposed project with power output from the nearby project?
13 . Would the financing for the proposed project be separate from the fiancing for
the nearby project?
14.Would contracts for transmission of the output from the proposed project be
separate from contracts for transmission of the output from the nearby wind
energy proj ect?
15. What other information would support a conclusion that the proposed project
would be a separate wind energy project and not an expansion of a nearby wind
energy project? In what other ways would the projects be operated or otherwise
treated as separate projects?
Exhibit No. 1906
Case No. GNR-E-11-01
M. Decker, Renewable Northwest Project
Page 1
LexisNexis(~
LEXSTAT MINN. STAT. 216F .011
LEXISNEXIS (TM) MISOTA ANNOTATED STATUTES
*** THIS DOCUMENT is CURRNT THROUGH THE 2010 SECOND SPECIAL SESSION ***
*** ANNOTATIONS ARE CURRNT THROUGH DECEMBER 14,2010 ***
UTILITIES
CHAPTER 216F WIND ENERGY CONVERSION SYSTEMS
GO TO MINESOTA STATUTES ARCHIV DIRCTORY
Minn. Stat.ß 216F.Oll (2010)
216F.OII SIZE DETERMINATION
(a) The total size of a combination of wind energy conversion systems for the purpose of determining what jurisdic-
tion has siting authority under this chapter must be determined according to this section. The nameplate capacity of one
wind energy conversion system must be combined with the nameplate capacity of any other wind energy conversion
system that:
(1) is located within five miles of the wind energy conversion system;
(2) is constructed within the same 12-month period as the wind energy conversion system; and
(3) exhibits characteristics of being a single development, including, but not limited to, ownership structure, an um-
brella sales an'angement, shared interconnection, revenue sharing arrangements, and common debt or equity financing.
(b) The commissioner shall provide forms and assistance for project developers to make a request for a size deter-
mination. Upon written request of a project developer, the commissioner of commerce shall provide a written size de-
termination within 30 days of receipt of the request and of any information requested by the commissioner. In the case
of a dispute, the chair of the Public Utilities Commission shall make the final size determination.
(c) An application to a county for a permit under this chapter for a wind energy conversion system is not complete
without a size determination made under this section.
HISTORY: 2007 c 136 art 4 s 12
LexisNexis 50 State Surveys, Legislation & Regulations
Renewable Energy
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