20040601Decision Memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
CO MMISSI 0 NER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
ATE:MAY 27,2004
RE:CASE NO. IPC-04-
S. GEOTHERMAL vs. IDAHO POWER
CASE NO. IPC-04-
LEWANDOWSKI AND SCHROEDER vs. IDAHO POWER
MOTION FOR CONSOLIDATION AND/OR INTERVENTION
Case No. IPC-04-8 U.S. Geothennal
On March 25, 2004, U.S. Geothennal, Inc. in Case No. IPC-04-8 filed a complaint
against Idaho Power Company alleging that Idaho Power was proposing PURP A contract tenns
that were unjust, unreasonable and unlawful. U.S. Geothennal is the owner and developer of the
Raft River Geothennal Power Plant, a 15 MW air-cooled, closed cycle geothennal electric
generating plant to be constructed in Cassia County, Idaho (Raft River Facility). The Raft River
Facility is a Qualifying Facility as that tenn is used and defined in the Public Utility Regulatory
Policies Act of 1978 (PURP A) and 18 C.F .R. 9 292.207.
As reflected in the U.S. Geothennal complaint, Idaho Power s contract demands are
unjust, unreasonable and contrary to law because:
1. Idaho Power refuses to purchase an annual average of 10 MW of power from U.
Geothennal at the Commission-approved non-Ievelized posted rates. Instead, Idaho Power
insists that it will only purchase a maximum of 10 MW in any given hour at the posted rates.
S. Geothennal contends that there is no basis in law or in fact with such a limitation.
2. Idaho Power insists on extreme financial penalties if U.S. Geothennal's total
output in any month falls below 90%, or above 100%, of its projected output. U.S. Geothennal
contends that there is no basis in law or in fact for such penalties.
DECISION MEMORANDUM
3. Idaho Power insists that it must have the ability to tenninate its contractual
obligation to purchase U.S. Geothennal's power if (1) Idaho law is modified to pennit any other
party to sell electricity at retail in Idaho Power s service territory and (2) such change in law
results in Idaho Power being unable to recover in its retail revenue requirement all costs
attributable to the agreement with U.S. Geothermal. U.S. Geothennal contends that there is no
basis in law or in fact for Idaho Power s position, and it would effectively nullify this
Commission s rules by making it extremely costly, if not impossible, to finance PURPA projects.
On April 19 , Idaho Power filed an Answer.
Case No. IPC-04-
On April 28, 2004, Bob Lewandowski and Mark Schroeder filed a complaint against
Idaho Power Company in Case No. IPC-04-10. Both Mr. Lewandowski and Mr. Schroeder
are in the process of developing wind power projects in Idaho, projects that will be qualifying
facilities pursuant to PURP
Mr. Lewandowski and Mr. Schroeder complain that (1) Idaho Power is insisting on
contract provisions that obviate the requirement that a purchase of all of the output from these
projects at full avoided cost rates when said output is less than 90% or more than 110% of
projected output in the contract. (2) Idaho Power is also insisting on a contract provision called
shortfall energy" which would actually require the developer to pay Idaho Power for electricity
not produced by the project with no cap or ceiling on the price. (3) By later amendment the
complainants also incorporated a third count regarding Idaho Power s proposal to tenninate the
agreement should retail deregulation be implemented in Idaho. They contend there is no basis in
law or fact for this position and that it would effectively nullify the Commission s rules by
making it extremely costly, if not impossible, to finance PURPA projects.
On May 17, 2004, Idaho Power filed an Answer. The complainants allege that
further answer as to its third count should not burden Idaho Power Company, the complainants
expecting that the Company s response on that issue will be the identical one sentence denial it
filed in its Answer to U.S. Geothennal's complaint.
DECISION MEMORANDUM
Motion to Consolidate and/or Intervene
On May 12, 2004, complainants Lewandowski' and Schroeder filed a Motion to
Consolidate their complaint in Case No. IPC-04-10 with the U.S. Geothennal complaint in
Case No. IPC-04-8. Alternatively, they request authority to intervene as a party in the U.
Geothennal docket.
MOTION TO CONSOLIDATE
Mr. Lewandowski and Mr. Schroeder contend that the issues raised in Case
Nos. IPC-04-10 and IPC-04-8 both deal with PURP A contract tenns insisted on by Idaho
Power Company. The issues in both complaints, they contend, are essentially identical. The
defendant in both dockets is Idaho Power Company and the complainants in both dockets are QF
developers who seek Commission guidance on Power Purchase Agreement issues that are
essentially identical.
Commission Rule of Procedure 247 (IDAPA 31.01.01.247) allows the Commission to
consolidate dockets when "it finds that they present issues that are related and that the rights of
the parties will not be prejudiced." Mr. Lewandowski and Mr. Schroeder contend that no party
will be prejudiced by consolidation because no procedural actions have been taken in either
docket except for the actual filing of the complaint and the Company s Answers. In addition
they contend that there is no prejudice because the issues in both dockets are so closely related.
IDAHO POWER RESPONSE
Idaho Power by way of response recommends consolidating Case Nos. IPC- E-04-
and IPC-04-10. The principal differences between the two complaints, the Company notes
appear to be (1) interconnection issues arising out of the fact that U. S. Geothennal' s Raft River
Project is physically located in the service area of the Raft River Co-op and (2) U.
Geothennal's request that the Commission order Idaho Power to purchase generation from the
Raft River Project at the published rates approved for QF's smaller than 10 MW even though
S. Geothennal's Raft River Project has a capacity larger than 10 MW. Mr. Lewandowski'
and Mr. Schroeder s respective projects will be directly interconnected with the Company
system and have capacities less than 10 MW.
Idaho Power contends that if the two cases were consolidated, the issues that are
unique to U.S. Geothennal's complaint could be easily separated from the issues that are
common to both complaints. Under the circumstances, Idaho Power does not believe it is either
DECISION MEMORANDUM
necessary or desirable for the Commission to conduct two separate proceedings when both of the
complaints seek a resolution of the same issues.
S. GEOTHERMAL OPPOSITION TO MOTION TO CONSOLIDATE
S. Geothennal opposes Mr. Lewandowski's and Mr. Schroeder s Motion to
Consolidate. In order to speed the resolution of this case, U.S. Geothennal states that it has
agreed to an expedited filing of its testimony. Pursuant to infonnal agreement of U.
Geothennal, Idaho Power and Commission Staff, the following scheduling has been agreed to:
Direct testimony deadline-S Geothennal June 2, 2004
Direct testimony deadline-Idaho Power July 15 2004
Direct testimony deadline-Staff August 5 2004
Rebuttal testimony deadline August 19, 2004
A tentative hearing date of September 2 (03), 2004, has been reserved on the Commission
calendar
Granting the Motion to Consolidate, U.S. Geothermal contends, would undoubtedly
require the Commission to establish a schedule for the proceeding other than the one agreed to
thus prejudicing U.S. Geothennal's attempt to resolve this case as rapidly as possible. Because
of the prejudice or impact on U.S. Geothennal, it contends that consolidation is not appropriate
under the provisions of Rule 247 of the Commission s Rules of Procedure.
MOTION TO INTERVENE
Should the Commission not allow consolidation on the two dockets, Mr.
Lewandowski and Mr. Schroeder respectfully request that the Commission grant them status as
an intervening party in the U.S. Geothennal docket, Case No. IPC-04-8. Issues raised in that
docket, they contend, will substantially impact their ability to proceed with their respective wind
projects. They therefore contend that they have a direct and substantial interest in that docket.
Rule 74 of the Commission s Rules provides that "if a Petition to Intervene shows direct and
substantial interest in any part of the subject matter of a proceeding and does not unduly broaden
the issues, the Commission... will grant intervention.
S. Geothennal admits that Mr. Lewandowski and Mr. Schroeder have a "direct and
substantial interest" in the U.S. Geothennal proceedings, and therefore have a right to intervene
in the proceeding so long as their participation does not unduly broaden the scope of the
proceedings.
DECISION MEMORANDUM
COMMISSION DECISION
Two complaint proceedings are pending before the Commission against Idaho Power
Company. At issue in both complaints are the contract tenns required by Idaho Power of
PURPA QFs. Mr. Lewandowski and Mr. Schroeder request that the two dockets be
consolidated. The Motion for Consolidation is supported by Idaho Power and opposed by U.
Geothennal. U.S. Geothermal contends that scheduling has been agreed to and that the speedy
resolution of its case is important. Staff notes that if the cases are consolidated Idaho Power
agrees to slip the direct testimony file date for Mr. Lewandowski and Mr. Schroeder to June 09
2004. All other proposed scheduling dates remain the same. Alternatively, Mr. Lewandowski
and Mr. Schroeder request authority to intervene in the U.S. Geothennal Docket.
Does the Commission find it reasonable to consolidate Docket Nos. IPC-04-8 and
IPC- E-04-1 O? If not, how does the Commission wish to process the two cases? Does the
Commission find the foregoing scheduling for the U.S. Geothennal complaint (or consolidated
docket) acceptable?
Scott Woodbury
Vld/M:IPCEO408 10 sw
DECISION MEMORANDUM