HomeMy WebLinkAbout20050831Reconsideration petition and cross-petition.pdfSCOTT D. WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-0320
IDAHO BAR NO. 1895
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY FOR AN
ORDER TEMPORARILY SUSPENDING
IDAHO POWER'S PURP A OBLIGATION TO
ENTER INTO CONTRACTS TO PURCHASE
ENERGY GENERA TED BY WIND-
POWERED SMALL POWER PRODUCTIONFACILITIES
CASE NO. IPC-O5-
COMMISSION STAFF'
PETITION FOR
RECONSIDERATION OF FINAL
ORDER NO. 29851
CROSS-PETITION FOR
RECONSIDERATION OF FINAL
ORDER NO. 29851
COMES NOW Commission Staff, by and through its attorney of record, Scott D.
Woodbury, Deputy Attorney General, and hereby requests pursuant to Idaho Code 9 61-626 and
Commission Rule of Procedure 331.01 (Petition for Reconsideration) and RP 331.02 (Cross-
Petition for Reconsideration) that the Commission reconsider final Order No. 29851 issued on
August 23 , 2005.
INTRODUCTION
On August 23 , 2005 , the Commission in Order No. 29851 designated the following
language set forth in prior interlocutory Order No. 29839 a final Order for purposes of
reconsideration and appeal:
At the beginning of hearing on July 22, the Commission adjourned to allow
the parties to explore whether any consensus could be reached regarding
those PURP A projects that were in various stages of negotiation with Idaho
COMMISSION STAFF'S PETITION
FOR RECONSIDERATION OF FINAL
ORDER NO. 29851
CROSS-PETITION FOR RECONSIDERATION
OF FINAL ORDER NO. 29851
Power. The parties were unable to reach consensus. Accordingly, this
Commission finds it reasonable to establish the following criteria to
determine the eligibility of PURP A qualifying wind generating facilities for
contracts at the published avoided cost rates. For purposes of determining
eligibility we find it reasonable to use the date of the Commission s Notice in
this case, i., July 1 , 2005. For those QF projects in the negotiation queue on
that date, the criteria that we will look at to determine project eligibility are:
(1) submittal of a signed power purchase agreement to the utility, or (2)
submittal to the utility of a completed Application for Interconnection Study
and payment of fee. In addition to a finding of existence of one or both of the
preceding threshold criteria, the QF must also be able to demonstrate other
indicia of substantial progress and project maturity, e., (1) a wind study
demonstrating a viable site for the project, (2) a signed contract for wind
turbines, (3) arranged financing for the project, and/or (4) related progress on
the facility permitting and licensing path.
Order No. 29839, pp. 9-10.
Also pursuant to Order No. 29851 , the August 5 , 2005 Petition for Reconsideration
of Windland Incorporated is viewed for statutory and procedural purposes as filed on August 24
2005. Reference Idaho Code 9 61-626; RP 331.01. Windland requested that the Commission
reconsider its decision regarding "grandfathering," contending the published avoided cost rates
for wind QFs do not accurately reflect the costs of alternative energy and are unjust and
unreasonable. Citing PURP A, Section 21 O(b )(2).
ARGUMENT
A utility s avoided cost, as defined by FERC regulations, is the incremental cost of
energy or capacity or both to the utility which, but for the purchase from the QF, the utility
would generate itself or purchase elsewhere. 18 C.R. 9292(b)(6). The underlying premise of
Windland's Petition is that the Commission in Order No. 29839 "requires Idaho Power to enter
into contracts (for grandfathered projects) at rates exceeding avoided cost, contrary to law.
Windland Reconsideration Petition, p. 2. Windland contends that the evidence demonstrates that
the current avoided cost rate established in Order No. 29646 (December 1 , 2004) is too high, at
least for wind powered QFs. Windland's argument is based in part on a self-serving belief that
the published levelized avoided cost rate available to wind QFs must not exceed the rate for wind
established in Idaho Power s wind Request for Proposals (RFP), a bidding method that Windland
contends produces the "incremental cost of wind-generated alternative electric energy.The
COMMISSION STAFF'S PETITION
FOR RECONSIDERATION OF FINAL
ORDER NO. 29851
CROSS-PETITION FOR RECONSIDERATION
OF FINAL ORDER NO. 29851
Idaho Commission has not established the RFP resource procurement process as a benchmark for
avoided cost. Instead, the utility avoided cost is based on a hypothetical Surrogate Avoided
Resource (SAR), presently a natural gas combined cycle combustion turbine (CCCT).
Contrary to Windland'contention at Reconsideration Petition page 3 , the
Commission did not find that avoided cost rates are set too high for wind QFs. The Commission
language cited speaks for itself:
Based on the record established in this case the Commission finds reason to
believe that wind generation presents operational integration costs to a utility
different from other PURP A qualified resources. We find that the unique
supply characteristics of wind generation and the related integration costs
provide a basis for adjustment to the published avoided cost rates, a
calculated figure that may be different for each regulated utility.
Order No. 29839, p. 8. As the Commission further states
, "
the procedure to determine the
appropriate amount of adjustment, we find, and the identification of what studies, if any, need to
be performed to provide such a number is a matter appropriate for further proceedings.Id.
significance, the published avoided cost rates remain in place; they have not been changed; they
have not been found to be unjust or unreasonable. As indicated by the Commission in Earth
Power v. Washington Water Power
, "
the posted rates are approved by the Commission, are
presumed just and reasonable, and remain the effective avoided cost rates until determined
otherwise by Commission Order." Case No. WWP-96-, Order No. 27231. In this case the
Commission authorized an investigation, lowered the published rate eligibility cap to 100 k W for
certain wind QFs and required individual negotiation for larger wind QFs.
It is from its faulty reading of the Commission s findings that Windland reached the
conclusion that "this being the case, the current avoided cost rate is unjust and unreasonable as
applied to the parties and matters before the Commission in the instant case.Windland
Reconsideration Petition
, p.
3. Drawing from its conclusion, Windland objects to the
grandfathering" of eligible wind QFs under the published rates.
Windland's argument in part, however, is also that "in so doing, the Commission
requires Idaho Power to enter into contracts with which it has no legal obligation under contract
law.Windland Reconsideration Petition, p. 4. Windland cites the Idaho Supreme Court'
pronouncement of the Commission s standard for locking-in a rate, i.
COMMISSION STAFF'S PETITION
FOR RECONSIDERATION OF FINAL
ORDER NO. 29851
CROSS-PETITION FOR RECONSIDERATION
OF FINAL ORDER NO. 29851
In A.W. Brown Co., this Court ruled that IPUC has authority, under state and
federal law, to require that before a developer can lock-in a certain rate, there
must be either a signed contract to sell at that rate or a meritorious complaint
alleging that the project is mature and that the developer has attempted and
failed to negotiate a contract with the utility; that is, there would be a contract
but for" the conduct of the utility. A. W Brown v. Idaho Power 121 Idaho
812 816 828 P.2d 841 845 (1992).
Rosebud Enterprises, Inc. v. Idaho Public Utilities Commission and Idaho Power Company, 131
Idaho 1 at 9 951 P.2d 521 (1997). Staff agrees with this standard - there must be a "legally
enforceable obligation" or a demonstration that the QF was "ready, willing and able" to sign a
firm energy sales contract and that "but for" the actions of the utility would have had a contract
at the published rate. Staff differs from Windland in that Staff believes the determination of
project eligibility and entitlement for a contract at the published avoided cost rates should go
forward.
In A.W. Brown (IPC-88-, Order No. 23271) the Commission made the following
findings:
QF status alone confers only eligibility for avoided cost rates; it does not
automatically entitle a QF to lock-in avoided cost rates.
signed power purchase contract for sale of QF power to regulated
utilities must be presented to the Commission for review, approval and
lock-in of avoided cost rates. Alternatively, a meritorious complaint
must be filed with the Commission showing "but for" the actions of the
utility, the QF is otherwise entitled to a contract and avoided cost rates.
The Commission requirements are valid regulatory policies and have
been affirmed by the Idaho Supreme Court. See Empire Lumber
Washington Water Power 114 Idaho 191 , 755 P.2d 1229 (1988) and
Afton Energy, Inc. v. Idaho Power Co.107 Idaho 781 , 693 P .2d 427
(1984). Accord A.Brown, Inc. v. Idaho Power Co.121 Idaho 812
828 P.2d 841 (1992).
Since its initial implementation of PURP A in 1980, the Commission has required
that signed contracts be submitted for review, approval and lock-in of effective rates. Case No.
300-, Order No. 15746. A lock-in of rates does not occur until the Commission approves
the contract and the developer assumes a legally enforceable obligation to provide power.
Reference 18 C.R. 9 292.304(d); Earth Power (WWP-96-, Order No. 27231).
COMMISSION STAFF'S PETITION
FOR RECONSIDERATION OF FINAL
ORDER NO. 29851
CROSS-PETITION FOR RECONSIDERATION
OF FINAL ORDER NO. 29851
In Earth Power the Commission stated "to qualify for the grandfathered rate, Earth
Power must demonstrate that it was 'ready, willing and able' to sign the contract, that it
demonstrated a commitment to enter into a 'legal enforceable obligation' and that 'but for' the
actions of Water Power, Earth Power would have otherwise secured a contract prior to the rate
change." Earth Power, Order No. 27231.
The concept of a "legally enforceable obligation" does not appear in PURP A. Rather
it arises from the implementing regulations promulgated by the Federal Energy Regulatory
Commission (FERC). 18 C.F .R. Section 292.304( d) gives the qualifying facility the right
To provide energy or capacity pursuant to a legally enforceable obligation for
the delivery or energy or capacity over a specified term, in which case the
rates for such purchases shall, at the option of the qualifying facility
exercised prior to the beginning of the specified term, be based on either:
(i) The avoided cost calculated at the time of delivery; or
(ii) The avoided cost calculated at the time the obligation is incurred.
The Idaho Supreme Court in Afton v. Idaho Power recognized that "legally
enforceable obligations" are the rights accruing to a QF and utility when a QF has obligated
itself to deliver at a future date the energy and capacity to an electric utility. Afton v. Idaho
Power 107 Idaho 781 788 (1984). Cited in Rosebud Case No. IPC-96-, Order No. 26795.
The Commission has also provided the following sampling of guidance regarding
eligibility and entitlement to avoided cost rates:
A QF must assume responsibility for initiating and pursuing negotiations, for
developing and perfecting its entitlement to a contract. (Island Power, Case
No. UPL-93-, Order No. 25647.
The standard we established as a general rule of guidance was whether "but
for" the refusal, the obdurance or the intransigence of the utility, the
would be otherwise entitled to sell its power and receive posted rates. Id.
Eligibility is to be distinguished from entitlement. Id.
An expressed desire to sell does not equate with a commitment to sell. Nor
does requesting a draft power purchase contract. Active negotiation is a
prerequisite to qualifying for a contract. Id.
COMMISSION STAFF'S PETITION
FOR RECONSIDERATION OF FINAL
ORDER NO. 29851
CROSS-PETITION FOR RECONSIDERATION
OF FINAL ORDER NO. 29851
Entitlement to rates under a "legally enforceable obligation" carries with it a
concomitant QF obligation to provide sufficient assurance that the energy or
capacity will in fact be delivered, a requisite mutuality of obligation. .
While not mandating that contract negotiation follow a particular form, we
nevertheless require that essential elements be addressed. There is
substitute for active negotiations for developing and perfecting its
entitlement to a contract. We will not infer the requisite commitment from a
QF's actions in beginning construction. Id.
When the Commission determines a utility s avoided costs have changed, the
rights of all parties are affected, not just the right of (potential) contract
signators. The public interest is seeing that ratepayers or customers assume
only a reasonable level of expenses is also implicated and must accordingly
be balanced. I d.
(QF) is not entitled to contract rates until it is ready, willing and able to
sign a contract. It must show that "but for" the actions of the utility it was
otherwise entitled to a contract. In most cases this will entail making a
comprehensive binding offer showing with reasonable specificity, design and
size characteristics and indicating a willingness to rely on proposed contract
terms and proceed there under. (Forest Fuel, Case No. U-1008-248, Order
No. 20486.
By way of Petition for Reconsideration of Order No. 29851 and Cross-Petition to
Windland's Reconsideration Petition, Staff contends that requiring anything other than a legally
enforceable obligation and/or a demonstration of the "but for" test to qualify for grandfathering
eligibility and entitlement for a contract at published avoided cost rates is not in conformity with
the requirements and procedures previously established by the Commission for obtaining
qualifying facility status and eligibility for rates and exemptions. 18 C.R. 99 292.203;
292.207; 292.401(a); PURPA Sections 210, 210(a), 210(f); 16 U.C. 99 824a-, 824a-3(a)(f);
accord: Afton v. Idaho Power 107 Idaho 781 (1984); Empire v. Washington Water Power 114
Idaho 191 (1987; rehrg 1988); cert. denied 488 U.S. 892, 109 S.Ct 228, 102 L.Ed.2d 218 (1988).
Specifically, Staff contends that the second threshold criteria enumerated by the Commission in
Order No. 29851 , i.e.
, "
(2) submittal to the utility of a complete application for interconnection
study and payment of fee is not properly a threshold eligibility criteria for determining
entitlement to published avoided cost rates. An application for interconnection study is not an
enforceable binding QF commitment to provide power and submittal of same should not provide
COMMISSION STAFF'S PETITION
FOR RECONSIDERATION OF FINAL
ORDER NO. 29851
CROSS-PETITION FOR RECONSIDERATION
OF FINAL ORDER NO. 29851
the QF with a non-binding option to secure a contract and lock-in an avoided cost rate.
Submittal of an application for interconnection study should be regarded instead as an additional
indicia of substantial progress and project maturity.
CONCLUSION
Staff recommends that the Commission reconsider and amend its Order No. 29851 as
recommended above based on the filings of record in Case No. IPC-05-22 and pursuant to
Commission Rule of Procedure 263.01.a, by taking official notice of its prior Orders and the
Idaho Supreme Court opinions referenced herein above. Alternatively, Staff stands ready to
provide further written briefing, comments or oral argument should reconsideration be granted
and the Commission desire same. Reference Commission Rule of Procedure 331.03.
Respectfully submitted this 3l day of August 2005.
~.
Scott D. Woodbury
Deputy Attorney General
bls/N :IPC-O5-22 sw2
COMMISSION STAFF'S PETITION
FOR RECONSIDERATION OF FINAL
ORDER NO. 29851
CROSS-PETITION FOR RECONSIDERATION
OF FINAL ORDER NO. 29851
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 31 st DAY OF AUGUST 2005,
SERVED THE FOREGOING COMMISSION STAFF'S PETITION FOR
RECONSIDERATION OF FINAL ORDER NO. 29851, CROSS-PETITION FOR
RECONSIDERATION OF FINAL ORDER NO. 29851, IN CASE NO. IPC-05-, BY
MAILING A COpy THEREOF POSTAGE PREPAID, AND BY ELECTRONIC MAIL, TO
THE FOLLOWING:
BARTON L KLINE
MONICA MOEN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-mail: bkline~idahopower.com
mmoen(~jdahopower. com
PETER 1. RICHARDSON
RICHARDSON & O'LEARY, PLLC
515 N 27TH STREET
BOISE ID 83702
E- mail: peter~ri c hardsonando I eary com
RICHARD L STORRO
DIRECTOR, POWER SUPPLY
1411 EMISSION AVE
PO BOX 3727 , MSC- 7
SPOKANE WA 99220-3727
E-mail: dick.storro~avistacorp.com
R. BLAIR STRONG
PAINE, HAMBLEN, COFFIN
BROOKE & MILLER, LLP
717 W. SPRAGUE AVE, SUITE 1200
SPOKANE WA 99201-3505
E-mail: blair.strong~painehamblen.com
WILLIAM J BATT
JOHN R HAMMOND JR
BATT & FISHER LLP
101 S CAPITOL BLVD, SUITE 500 (83702)
PO BOX 1308
BOISE ID 83701
E-mail: wib~battfisher.com
rh~ battfisher. com
MI CHAEL HECKLER
DIRECTOR OF MARKETING &
DEVELOPMENT
WINDLAND INCORPORATED
7669 W RIVERSIDE DR, SUITE 102
BOISE ID 83714
E-mail: mheckler~windland.com
DEAN J MILLER
McD EVITT & MILLER LLP
420 W BANNOCK
BOISE ID 83702
E-mail: ioe~mcdevitt-miller.com
JARED GROVER
CASSIA WIND LLC
CASSIA GULCH WIND LLC
3636 KINGSWOOD DR
BOISE ID 83704
ARMAND ECKER
MAGIC WIND LLC
716-B EAST 4900 NORTH
BUHL ID 83316
GLENN IKEMOTO
PRINCIPAL
ENERGY VISION LLC
672 BLAIR AVE
PIEDMONT CA 94611
E-mail: glenni~pacbell.net
CERTIFICATE OF SERVICE
BOB LIVELY
ACIFICORP
ONE UTAH CENTER, 23RD FLOOR
201 S MAIN
SALT LAKE CITY UT 84140
E-mail: bob.lively~pacificorp.com
LISA NORDSTROM
ACIFICORP
825 N MULTNOMAH, SUITE 1800
PORTLAND OR 97232
E- mail: lisa.nordstrom~pacificorp. com
DAVID HAWK
DIRECTOR, ENERGY NATURAL
RESOURCES
1.R. SIMPLOT COMPANY
PO BOX 27
0 IS E IIYKJTOT-0-U27
E-mail: dhawk~simplot.com
R SCOTT PASLEY
ASSISTANT GENERAL COUNSEL
R. SIMPLOT COMPANY
PO BOX 27
BOISE, ID 83707-0027
E-mail ~asley~simpIot.com
WILLIAM M EDDIE
ADVOCATES FOR THE WEST
1320 W FRANKLIN ST (83702)
PO BOX 1612
BOISE ID 83701
E-mail: billeddie~rmci.net
TROY GAGLIANO
917 SW OAK ST, SUITE 303
PORTLAND OR 97205
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SECRETARY
CERTIFICATE OF SERVICE