20040318Petition to Intervene Comments Motion.pdf

Peter Richardson Isb # 3195
Richardson & O'Leary PLLC
PO Box 1849
99 East State Street
Eagle, Idaho 83616
[phone]
[phone] fax
peter~richardsonando I eary. com
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BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MA TIER OF A PETITION
FILED BY IDAHO OWER COMPANY
FOR AN ORDER DETERMINING
OWNERSHIP OF THE
ENVIRONMENTAL ATTRIBUTES
FACILITY UPON PURC ASE BY A
UTILITY OF THE ENERGY
PRODUCED BY A QUALIFYING
ACTILITY
CASE NO. IPC-04-
COMMENTS OF BOB
LEWANDOWSKI AND MARK
SCHROEDER AND PETITION
TO INTERVENE
MOTION TO STRIKE
PORTIONS OF IDAHO
POWER'S PETITION FOR
DECLARATORY RULING
COMES NOW, Mr. Bob Lewandowski and Mr. Mark Schroeder by and
through their attorney of record in response to that Notice of Comment / Protest
Deadline issued by the Secretary of the Idaho Public Utilities Commission
(Commission) on February 20 2004, and make the following comments:
INTRODUCTION
Mr. Lewandowski is the current owner of Idaho s first commercial wind
power generating facility. Located South of Interstate 84 between Boise and
Mountain home, Mr. Lewandowski currently operates one wind generator and has
plans to construct additional wind generators in the future. Mr. Schroeder
currently owns and farms several thousand acres contained within the Bell Rapids
Irrigation District. Given the cost of electrical power to irrigate his farm and its
location in a desirable wind resource area, Mr. Schroeder is currently actively
planning to construct a large (under ten megawatt) wind facility. Both Mr.
Lewandowski and Mr. Schoeder are vitally interested in the outcome of this
proceeding and hereby request to be made parties to this proceeding should the
Commission expand the procedural scope of this matter beyond just Modified
Procedure.
SUMMARY
The Commission should reject Idaho Power s Petition for a right of first
refusal to purchase Green Tags. from QFs from whom it is also purchasing
electricity at avoided cost rates. In the argument below, Mr. Lewandowski and Mr.
Schroeder point out that the premise used by Idaho Power in its "argument" that
Green tags should follow a power purchase agreement to the purchasing utility is
faulty, and that Idaho Power has no interest in, or right to, the Green Tags created
by a QF.
I We are using the tenn "Green Tags" as defined by Idaho Power it its Petition at page 3 fn #1.
MOTION TO STRIKE PORITIONS OF IDAHO POWER'S PETITION
FOR DECLARATORY RULING AND/OR REQUEST FOR EVIDENTIARY
HEARING
A not insignificant portion of Idaho Power s Petition is filled with an
exposition on why Idaho Power should actually own the Green Tags produced by a
QF from whom it purchases electricity at avoided cost rates. Idaho Power asserts
that QFs in Idaho are actually receiving more value for their electricity than the
avoided cost paid to the QFs for the energy produced." Petition at p. 3.
According to the Company, "QF developers. . . receive value from Idaho Power
for the electricity the QFs generate beyond the purchase price of the energy.
Petition at p. 5, the emphasis is Idaho Power s. It is unclear why Idaho Power goes
through the exercise of arguing that it ought to own the Green Tags if, at the end of
the day, it concludes that the developer should retain them. Nevertheless, the
premise that the QF is compensated in addition to the avoided cost rates is simply
false and should be stricken from the record used by this Commission as support
for any decision giving Idaho Power a right of first refusal to the ownership of
Green Tags.
The Company s avoided cost rates are totally unrelated to a QF's internal
finances. Avoided cost rates are determined based on the utilities' cost of bringing
on a new resource. The fact that a QF is entitled to a twenty-year contract only
assures the QF of receiving the utility's avoided cost rate for a twenty-year period -
nothing more. Similarly, the fact that Idaho Power is able to rate base generating
plant for the life of the plant assures Idaho Power of recovering its costs - nothing
more. If Idaho Power truly believes that QFs are receiving more than avoided
costs for their power then it should bring that fact to the attention of the
Commission in an appropriate docket. However, the Commission just recently
concluded an extensive avoided cost proceeding in which Idaho Power actively
participated. Idaho Power did not, at the conclusion of that proceeding seek
reconsideration or proffer an appeal of ostensibly overstated avoided cost rates.
QFs in Idaho do not receive additional value over and above the bare-bone avoided
cost rates by virtue of twenty-year contracts. Idaho Power s assertion to the
contrary is simply wrong.
Idaho Power s Petition spends an inordinate amount of time on its view of
the value that twenty-year contracts "bestow" on QF developers in Idaho -
especially since contract length is not at all relevant to the question of whether or
not Idaho Power should be bestowed with a right of first refusal for a QF's Green
Tags. The Company points out that twenty-year contracts are not required in
surrounding states. But it is worth noting here that every single state that is
adjacent to Idaho has multiple tax incentives, including outright monetary grants to
encourage the development of renewable energy projects. The State of Idaho has
no such incentives. Nevertheless, Idaho Power s ratepayers enjoy the benefits of
what was once a robust QF industrY thanks to the innovative foresight of this
Commission. The 69 QF contracts that Idaho Power s ratepayers currently benefit
from actually produce power at a lower overall cost than the Idaho Power projects
brought on line during the same time period. This fact alone, suggests that QFs are
actually being paid less than Idaho Power s true avoided costs - not more as
argued by Idaho Power in its Petition.
The Commission s decision in this matter must be based on the record
before it. Idaho Power s Petition contains factual assertions that are unsupported
and are, obviously, quite controversial. In addition, those assertions relative to the
value "bestowed" on QFs by twenty-year contracts is completely irrelevant to the
question of whether Idaho Power should retain a right of first refusal as to the
ownership of Green Tags. Because the Commission s decision in this matter
cannot be based on any of the assertions contained in Idaho Power s Petition
relative to QFs in Idaho being overcompensated by Idaho Power then, those
provisions should be stricken from the record. At a minimum, if those provisions
2 The industry was robust prior to the reduction of standard contract tenns to five years and one
megawatt. Although the Commission recently returned to the old standard, it remains to be seen
whether Idaho Power will be successful in preventing the development of a robust QF industry
remain in the record then it is clear that that modified procedure is inappropriate
and a full evidentiary hearing must be conducted. Contested factual assertions
dealing with the proper level of Idaho Power s avoided cost rates cannot be
answered absent a full hearing.
THE IDAHO COMMISSION HAS ONLY LIMITED AUTHORITY AND HAS
NO AUTHORITY TO RULE ON OWNERSHIP OF GREEN TAGS
Although given great discretion in interpreting and implementing the Public
Utility Code by the Courts, it is clear that the Idaho Public Utilities Commission
has limited (if any) authority when it comes to making law. The Commission
jurisdiction is limited and must be found entirely in its enabling statutes. Arrow
Transportation Company v. Idaho Public Utilities Commission 85 Idaho 307, 379
2d 422 (1963). The Idaho Supreme Court in Empire Lumber v. Washington
Water Power 114 Idaho 191 , 755 P.2d 1229 (1988), provides a cogent overview of
the authority granted to the Commission under the Public Utility Regulatory Policy
Act of 1978.3 That Court observed:
Section 210 of that Act (PURP A) requires electric utilities
to purchase the power produced by co-generators or small power
producers, which obtain qualifying status under the Act. Pursuant
to section 201 of the Act, co-generators or small producers must
meet three criteria to become Qualified Facilities (QF). Those
criteria encompass size, fuel, and ownership. Upon satisfaction of
those criteria, the owner or operator is required to furnish notice to
the Federal Energy Regulatory Commission (FERC). FERC
through burdensome contract tenns that make long tenn financing difficult.
3 P.L. 95-617, 92 Stat. 3117 (1978)
promulgated regulations implementing sections 201-210 of
PURP A.
The Court also noted that the State Commission is the proper entity in Idaho to implement
PURP A:
The implementation of PURP A as it relates to co-generation and
small power producers, and the regulations promulgated by FERC
have been largely left to the regulatory authorities of the individual
states. PURP A, section 21 O( f), provides in part: "Each state
regulatory. . . shall implement such FERC rule. . . for each
electric utility for which it has ratemaking authority.
The relevant FERC regulation is found at 18 C.R. ~ 29.401(a) which provides:
Such (state) implementation may consist of the issuance of
regulations, an undertaking to resolve disputes between qualifying
facilities and electric utilities under subpart C (arrangements
between electric utilities and qualifying cogeneration and small
power production facilities under ~ 210 of (PURP A) or any other
action reasonably designed to implement such subpart.
Relying on the above regulation and its understanding that the Idaho PUC is the agency charged
with regulating utilities, the court was able to conclude:
(I)t is clear that the Idaho Public Utilities Commission is granted
authority by the Idaho statutes to, and is the appropriate forum to
resolve whether a co-generator or small power producer has
satisfied the criteria for "qualified facility" status, and to detennine
whether a regulated utility has an obligation under PURP A to
purchase power from an applicant.
Id. at 192.
It is clear that the Idaho Courts view this Commission s jurisdiction relative to QFs as
stemming solely from PURP A and FERC's implementing regulations. It is also clear that this
Commission has no authority other than that conferred upon it by Idaho law or through its role as
the state agency regulating utilities under PURP
Given that background on the limited jurisdiction of the Commission, what then, are the
FERC's PURP A regulations this Commission is charged with implementing that deal with
ownership of (including rights of first refusal to) Green Tags. Simply put, there are none. In fact
FERC has ruled that in order for a state regulatory commission to exercise any authority over
Green Tag ownership there must be a state law bestowing that authority upon the Commission.
In the FERC order cited by Idaho Power and quoted in the Commission s Notice, the Federal
agency made it clear that there is nothing in PURP A or FERC's regulations granting the
Commission authority to adjudicate ownership of Green Tags:
RECs are relatively recent creations of the States. Seven States
have adopted Renewable Portfolio Standards that use unbundled
RECs. What is relevant here is that RECs are created by the
States. They exist outside the confines of PURP A. PURP A thus
does not address the ownership of RECs. ... States, in creating
RECs, have the power to determine who owns the REC in the
initial instance, and how they may be sold or traded; it is not an
issue controlled by PURP A.
There are two significant points in the above language from the FERC order. First, is the
recognition that RECs are "created by the states." That, of course does not apply to Idaho.
Idaho has not created a Renewable Portfolio Standard that uses unbundled RECs. The other
important point is that FERC declared that since the States create RECs they may regulate how
RECs are traded. Since Idaho hasn t created RECs, there is nothing for the State to regulate. A
REC, or Green Tag, is private property owned and created by the QF. It is no different from any
other ancillary benefit that might accrue to a QF as a result of building a renewable energy
resource. For example, Mr. Lewandowski's project has become a tourist attraction. Scores
people come by his site asking for tours and wanting to investigate his wind technology. Mr.
Lewandowski has an ancillary asset (possible tourist revenue) that accrues to him as a result of
his project. Neither Idaho Power nor this Commission has any claim to those ancillary assets.
Similarly, many renewable energy projects have some ancillary detriments such as
environmental or visual pollution. The developer is responsible for the costs of those ancillary
detriments in the same way the developer is entitled to ownership of any ancillary assets.
That Idaho Power is asking for a first right of refusal is different only in degree from
asking for outright ownership. For all of the above reasons, Idaho Power s Petition should be
denied because this Commission has no jurisdiction to rule - one way or the other - on
ownership of Green Tags.
CONCLUSION AND PRAYER FOR RELEIF
Idaho Power s Petition for Declaratory Relief should be denied in full and
dismissed with prejudice. Should the Commission decide not to dismiss Idaho
Power s Petition then alternatively, the Commission is respectfully requested to:
Strike all language in said Petition referencing the appropriate level of avoided
cost rates or proceed to hearing on the factual issues raised by that language.
DATED this day of March, 2004.
4 FERC Docket No. EL03-133-000, October 1 , 2003 at page 6.
BOB LEWANDOWSKI
MARK SCHROEDER
By
Peter Richardson
RICHARDSON AND OLEARY
CERTIFICATE OF SERVICE
I HEREBY CERTIfY that on this 17th day of March, 2004, I caused a true and
correct copy of the foregoing Comments of Bob Lewandowski and Mark Schroeder and
Petition to Intervene and Motion to Strike Portions of Idaho Power s Petition for
Declaratory Ruling to be served by the method indicated below, and addressed to the following:
Jean Jewell
Idaho Public Utilities Commission
472 West Washington Street
Post Office Box 83720
Boise, Idaho 83720-0074
(x) U.S. Mail, Postage Prepaid
( ) Hand Delivered
( )
Overnight Mail
( )
Facsimile
( ) Electronic Mail
Monica B. Moen, Attorney II
Barton L. Kline, Seniior Attorney
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
bk1ine~idahopower.com
mmoen~idahopower.com
(x) U.S. Mail, Postage Prepaid
( ) Hand Delivered
( )
Overnight Mail
( )
Facsimile
( ) Electronic Mail
Randy C. Allphin, Contract Admin.
Power Supply Planning
Idaho Power Company
Post Office Box 70
Boise, Idaho 83707-0070
rall phin~idahopower. com
(x) U.S. Mail, Postage Prepaid
( )
Hand Delivered
( ) Overnight Mail
( ) Facsimile
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Signed DLtlJ\ 'I CU/\:TI
Nina M. Curtis
IPC-O4-
CERTIFICATE OF SERVICE - 1