20060509Answer to Magic Wind's motion.pdf

IDAHO POWER COMPANY
O, BOX 70
BOISE, IDAHO 83707
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BARTON L. KLINE
Senior Attorney
An IDACORP Company
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May 8, 2006
Jean Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise , Idaho 83720-0074
Re:Case No. IPC-05-
Idaho Power Company s Answer to Magic Wind'
Motion For Declaratory Order
Dear Ms. Jewell:
Please find enclosed for filing with the Commission an original and seven
(7) copies of Idaho Power Company s Answer to Magic Wind's Motion for Declaratory
Order regarding the above-referenced case.
I would appreciate it if you would return a stamped copy of this letter to me
in the enclosed self-addressed envelope.
Pi2~Bal'1on L. Kline
BLK:jb
Enclosures
Telephone [phone] Fax [phone] E-mail BKline&Jidahopower.com
BARTON L. KLINE ISB #1526
MONICA MOEN ISB #5734
Idaho Power Company
O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
E-mail: bkline (fY idahopower.com
E-mail: mmoen (fY idahopower.com
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Attorneys for Idaho Power Company
Street Address for Express Mail
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF)
MAGIC WIND LLC TO DETERMINEEXEMPTION STATUS
CASE NO. IPC-05-
IDAHO POWER COMPANY'
ANSWER TO MAGIC WIND'
MOTION FOR DECLARATORY
ORDER
Idaho Power Company ("Idaho Power" or "the Company ), in accordance
with RP 057, hereby answers the Motion for Declaratory Order of Magic Wind LLC ("Magic
Wind") in the above-entitled case as follows:
While Magic Wind has identified its pleading as a Motion, it has
indicated that it is seeking a declaratory order in accordance with RP 101 et. seq. As a
result, this answer responds to Magic Wind's Motion as an answer to a petition for a
declaratory order in accordance with RP 101 et. seq.
Idaho Power admits the allegations contained in Magic Wind'
Paragraphs I , II, III and VIII of Magic Wind's Motion.
IDAHO POWER COMPANY'S ANSWER TO MAGIC WIND'
MOTION FOR DECLARATORY ORDER Page
With respect to the allegations contained in Magic Wind'
Paragraph IV , Idaho Power denies that Magic Wind and Idaho Power have undertaken
negotiations regarding the terms of a power purchase agreement. On June 14, 2005,
Magic Wind presented a signed Firm Energy Sales Agreement to Idaho Power. On
several occasions since it initially determined that Magic Wind's project appeared to qualify
for grandfathering to the published rates, Idaho Power has advised Magic Wind that it is
prepared to enter into a Firm Energy Sales Agreement with Magic Wind in the form
tendered by Magic Wind on June 14 , 2005. On April 5, 2006 , for the first time, Idaho
Power was advised by Magic Wind that it did not intend to enter into the Firm Energy
Sales Agreement it had previously signed and submitted to Idaho Power, but instead
desired to negotiate a contract that included some of the provisions in the PacifiCorp-
Schwendiman Power Purchase Agreement that had been approved by the Commission in
Order No. 30000. A chronology demonstrating Idaho Power s efforts to enter into a Firm
Energy Sales Agreement with Magic Wind is included with this Answer as Attachment 1 .
With respect to the allegations contained in Paragraph V, Idaho
Power admits that the Commission issued Order No. 30000 in Case No. PAC-05-06.
Order No. 30000 speaks for itself. The balance of the statements in Paragraph V
constitute legal conclusions and arguments , not allegations of fact that can be admitted or
denied. As such , Idaho Power denies the same.
With respect to the allegations contained in Paragraph VI, Idaho
Power admits that on April 5, 2006, Magic Wind transmitted a draft Firm Energy Sales
Agreement to Idaho Power and requested that Idaho Power enter into negotiations with
Magic Wind to revise the Firm Energy Sales Agreement Magic Wind had previously
IDAHO POWER COMPANY'S ANSWER TO MAGIC WIND'
MOTION FOR DECLARATORY ORDER Page 2
signed and tendered to Idaho Power in a manner consistent with the April 5, 2006
submittal.
With respect to the allegations contained in Paragraph VII , Idaho
Power does not have sufficient information to either admit or deny the allegations
contained in Paragraph VII and consequently Idaho Power denies the same.
Commission Order No. 30000 stated that the Commission s approval
of the Schwendiman-PacifiCorp agreement did not set precedent. Idaho Power has fully
satisfied its mandatory purchase obligation under PURPA by offering to purchase the
generation from Magic Wind's proposed wind farm by entering into a Firm Energy Sales
Agreement in the form previously signed and tendered by Magic Wind. The Commission
has approved the Firm Energy Sales Agreement offered by Idaho Power to Magic Wind on
numerous occasions.
The changes that Magic Wind proposes to make to the Firm Energy
Sales Agreement tendered by Idaho Power eliminates consideration of market prices in
the determination of costs Idaho Power will incur if Magic Wind does not provide the
monthly amount of energy it agreed to provide. It is Idaho Power s belief that elimination
of market prices from consideration will shift costs and risks to customers that should be
appropriately borne by Magic Wind and that such shift is inconsistent with PURPA.
Service of PleadinQs. Communications with reference to this case
should be sent to the following:
IDAHO POWER COMPANY'S ANSWER TO MAGIC WIND'
MOTION FOR DECLARATORY ORDER Page 3
Barton L. Kline
Monica B. Moen
Idaho Power Company
O. Box 70
Boise, Idaho 83707-0070
bkline (fY idahopower.com
mmoen (fY idahopower.com
John R. Gale
Vice President - Regulatory Affairs
Idaho Power Company
O. Box 70
Boise, Idaho 83707-0070
rqale (fY idahopower.com
10.Requested Relief
(1 )Magic Wind's Motion should be treated as a Petition for Declaratory
Order by the Commission;
(2)Magic Wind has not stated a claim of relief which can be granted and
the Motion should be denied by the Commission;
(3)Magic Wind's proposed contract changes are inconsistent with the
requirements of PURPA and Idaho Power should not be ordered to enter into a contract
containing the provisions demanded by Magic Wind; and
(4)Because Magic Wind has requested that the Commission issue a
declaratory order, such an order would be binding on all of the electric utilities subject to
the Commission s jurisdiction. As of the date of this Answer, Idaho Power does not
believe that Magic Wind has served copies of its Motion on either PacifiCorp or Avista.
Idaho Power proposes that Magic Wind serve PacifiCorp and Avista with a copy of its
Motion and that the Commission direct the parties to convene a scheduling conference to
establish the procedure and schedule for processing this case, which schedule would
include an opportunity for parties to intervene.
IDAHO POWER COMPANY'S ANSWER TO MAGIC WIND'
MOTION FOR DECLARATORY ORDER Page 4
-1-"'-
DATED at Boise , Idaho , this day of May, 2006.
BART
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S ANSWER TO MAGIC WIND'
MOTION FOR DECLARATORY ORDER Page 5
ATTACHMENT
On June 14, 2005 , Magic Wind presented a signed Firm Energy Sales
Agreement to Idaho Power and requested that Idaho Power sign the tendered Firm
Energy Sales Agreement. By tendering this signed Firm Energy Sales Agreement to
Idaho Power, Magic Wind satisfied one of the primary criteria for entitlement to exemption
from the rate eligibility cap established by the Commission in Order No. 29839. On
November 22 2003 , to address one of the secondary criteria set out in Order No. 29839
Magic Wind provided a letter dated November 16, 2005 , from Clipper Wind Power, Inc. to
Magic Wind confirming that Clipper Wind Power "has the capacity to and is prepared to
deliver to Magic Wind LLC eight 2.5 MW Clipper wind turbines not later than the first
quarter of 2007." Following receipt of the Clipper Wind Power commitment letter, Idaho
Power advised Magic Wind that it was prepared to enter into a Firm Energy Sales
Agreement in the form previously executed by Magic Wind but that it would be necessary
for Magic Wind to supply and confirm certain information regarding the project. A copy of
an e-mail from Idaho Power to Magic Wind dated December 12 , 2005 requesting this
information is attached as Attachment 1 (a).
During the months of January and February, Idaho Power continued to seek
information from Magic Wind with the intention of completing the Firm Energy Sales
Agreement previously tendered by Magic Wind. A copy of a letter confirming Idaho
Power s ongoing efforts to obtain information needed to complete the Firm Energy Sales
Agreement is attached as Attachment 1 (b).
ATTACHMENT 1 , Page
On March 3, 2006, Magic Wind provided the requested information that
would allow Idaho Power to finalize the Firm Energy Sales Agreement for the Magic Wind
Project. See Attachment 1 (c).
On March 16, 2006, in response to a further inquiry by Idaho Power, Magic
Wind provided additional information needed to finalize the Firm Energy Sales Agreement
in the form requested by Magic Wind. See Attachment 1 (d).
On April 5, 2006, for the first time , Idaho Power was advised by Magic Wind
that it did not intend to enter into the Firm Energy Sales Agreement it had previously
signed and submitted to Idaho Power but instead desired to negotiate a contract that
included provisions that had been approved by the Commission in Order No. 30000.
ATTACHMENT 1 , Page 2
rage 1 OJ 1
Attachment 1 (a)
Allphin, Randy
,,-------------------'--
To: Armand Eckert
Subject: Magic Wind LLC - Proposed wind project
Dear Mr. Eckert
In the recent letter you provided Idaho Power from Clipper Windpower Inc. Clipper committed to deliver 8
- 2.5 MW machines for your proposed project, this calculates to be 20 MW. In the previous information you
had provided for a potential draft purchase power agreement the brand of machines was different and the
nameplate was different. Could you please provide the monthly Kwh estimates, scheduled first energy
date and scheduled operation date to be included in an updated draft purchase power agreement.
Randy Allphin
Idaho Power Company
208-388-2614
12/12/2005
Attachment 1 (b)
...
IDAHO
POWER
An IOACORP company
Randy C. Allphin
Contract Administrator
February 22 2006
Magic Wind
Armand M. Eckert
716-B East 4900 NOIih
Buhl ID83316
E-mail Copy:Armand Eckert
Joe Miller
Armand~safelink.net
joe~mcdevitt-miller.com
Original: US Mail
RE:Magic Wind Wind Park
Dear Mr. Eckert:
As you are aware, based on the documentation you provided that indicated that before and after
August 4 2005, Clipper Windpower had committed to provide eight (8) 2.5 MW Clipper wind turbines
for your proposed wind project, Idaho Power agreed that your project appeared to be eligible for a
PURPA purchase power agreement containing the published avoided costs. Within this documentation
Clipper Windpower s commitment to provide turbines was conditioned upon: a) execution by Idaho
Power Company ofthe Purchase Power Agreement; b) the payment of required deposits by Magic Wind
LLC and c) the execution of Clipper Windpower s standard Turbine Supply Agreement by Magic Wind
LLC.
In conjunction with item a), in early December 2005 , Idaho Power contacted you with a request
for updated information to complete the details for a purchase power agreement. Some of these details
Telephone: [phone] Fax: [phone] Rallphin((!Udahopower,com
~ being estimated monthly kWh deliveries, project description and contact information. As of the date of
this letter, Idaho Power has not received any of the requested data. Is it still your intention to move
forward with this Project?
Ifso, please provide Idaho Power the additional information required to complete the purchase
power agreement (monthly kWh estimates, project description and contact information) and a current
status report on items b) and c) listed above.
In addition, Idaho Power would appreciate an update of Magic Wind's documentation
concerning the status of any ongoing efforts to secure financing for the Project.
If you have any questions please contact me at your convenience.
Very truly yoursf.~
Randy C. Allphin
Idaho Power Company
Contract Administrator
Cc: Bali Kline (lPCa)
Telephone: [phone] Fax: [phone] Rallphin(ip,ldahopower,colll
Attachment 1 (c)
McDevitt & Miller LLP
Lawyers
[phone]
[phone] (Fax)
420 West Bannock Street
O. Box 2564-83701
Boise, Idaho 83702
Chas. F. McDevitt
DeanJ. Qoe) Miller
March 3, 2006
Via E~Mail
BartOn L Kline, Esquire
IDAHO POWER
O. Box 70
Boise, ID 83707
bkline(iYidahopower .com
Re: Magic Wind
Dear Bart:
This is in reply to Randy Allphin's February 22, 2006 letter to Magic Wind. Please excuse the
delay in reply.
Magic fully intends to proceed with the project and continues to take steps toward
construction. The previous turbine commitment from Clipper remains in effect.
With respect to the project description, I believe the following could be used:
The Facility will consist of 8 Clipper Wind turbines with individual ratings of 2.5 MW
for each unit, for a tOtal Facility generator rating of 20 MW.
With respect to monthly generation estimates, I am attaching estimates prepared by
Renaissance Engineering. These are arranged in chronological order. I assume Mr. Allphin can
re-arrange these to take into account the seasonal differences in prices.
Magic continues to believe financing is available for the project, although, as you know
finalization of this must await an executed purchase power agreement.
Very Truly Yours
~:
MIUffi liP
DJMllcC: Armand Eckert
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MAGIC WIND ESTIMATED MONTHLY ENERGY
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100 meter Towers
8 CLIPPER 2.5MW C99~20MW
Estimated Monthly NET
Generation kWh Ave MW /mo Capacity Factor
580 098 6.16 30.80/0
720 491 41.1 %
395 947 36.30/0
370 833 30.40/0
4,105 320 27.60/0
962,172 34.50/0
401 877 4.57 22.90/0
791 276 18.80/0
272 864 29.70/0
4,102 945 5.51 27.60/0
394 931 30.50/0
206 030 35.00/0
304 782 30.40/0
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Page 1 of
Attachment 1 (d)
Allphin, Randy
,-,----
To: Armand~safelink.net; joe~mcdevitt-miller,com
Cc: Kline, Bart
Subject: encrypt
Attachments: Magic Wind non levelized 3-10-2006.doc
Magic Wind LLC draft agreement -
Armand
Attached is a draft agreement with the description and monthly Kwh estimates from Mr. Miller's letter dated March
, 2006.
I have highlighted in yellow a couple of areas in which I still need some information from you.
A key area being an estimated First energy date and an estimated Scheduled Operation date (Appendix B). As
these are draft agreements you may revise these dates at any time prior to both parties executing the
documents. However, I need at least a good estimate of these dates prior to me forwarding this Agreement to my
management and legal group for a final Idaho Power internal review.
Please send me this information as soon as possible so that we can continue moving this agreement forward,
This draft agreement is for discussion purposes only, Idaho Power reserves the right to modify this draft
agreement at any time until a final agreement has been executed by both parties.
Randy
PS - Armand requested I copy Joe Miller on this e-mail
3/10/2006
Page 1 of
Allphin, Randy
From: Armand Eckert (arm and (gisafelink.net)
Sent: Thursday, March 16 , 2006 8:54 AM
To: Allphin, RandyCc: Granville Eckert; Mike Eckert; Norman Eckert; Ron Elkin
Subject: PPA information
Randy - the information highlighted in yellow on your draft is as follows:
For Magic Wind LLC:
Armand M. Eckert, SecretaryfTreasurer
For Seller Contact
24-Hour Project Operational contact:
Armand M. Eckert
208-543-8518
208-308-7774
Project On-site Contact information:
Larry Zirker
208-680-0809
Scheduled First Energy Date:
December 31,2006
Scheduled Operation Date:
July 01 , 2007
i/1 hf')OOh
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this cg-f6...day of May, 2006, I served a true
and correct copy of IDAHO POWER COMPANY'S ANSWER TO MAGIC WIND LLC'
MOTION FOR DECLARATORY ORDER upon the following named parties by the
method indicated below, and addressed to the following:
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, ID 83720-0074
scott.woodburv(fY puc.ldaho.qov
Hand Delivered
S. Mail
Overnight Mail
FAX [phone]
E-mail
Peter J. Richardson
Richardson & O'Leary PLLC
515 N. 27th Street
O. Box 7218
Boise , ID 83707
peter(fY richardsonandolearv.com
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x U.S. Mail
Overnight Mail
FAX [phone]
E-mail
Richard L. Storro
Director, Power Supply
A vista Corporation
1411 E. Mission Avenue
O. Box 3727, MSC-
Spokane , W A 99220-3727
dick.storro (fY avistacorp.com
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x U.S. Mail
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FAX [phone]
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R. Blair Strong
Paine, Hamblen , Coffin , Brooke & Miller
717 West Sprague Avenue , Suite 1200
Spokane , W A 99201-3505
blair.stronq (fY painehamblen.com
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Dean J. Miller
McDevitt & Miller LLP
420 W. Bannock Street
O. Box 2564
Boise , ID 83701
ioe(fY mcdevitt-miller.com
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x U.S. Mail
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CERTIFICATE OF SERVICE , Page
Glenn Ikemoto
Energy Vision LLC
672 Blair Avenue
Piedmont, CA 94611
qlenni (fY pacbell.net
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FAX [phone]
E-mail
Bob Lively
PacifiCorp
One Utah Center, 23rd Floor
201 S. Main Street
Salt Lake City, UT 84140
bob. lively (fY pacificom.com
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Lisa Nordstrom
PacifiCorp
825 N.E. Multnomah , Suite 1800
Portland , OR 97232
lisa. nordstrom (fY pacificorp.com
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William M. Eddie
Advocates For the West
1320 W. Franklin Street
P . O. Box 1 612
Boise, ID 83701
bilieddie(fY rmcLnet
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David Hawk, Director
Energy Natural Resources
R. Simplot Company
999 Main Street
O. Box 27
Boise , ID 83702
dhawk (fY simplotcom
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R. Scott Pasley
Assistant General Counsel
R. Simplot Company
999 Main Street
O. Box 27
Boise, ID 83702
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CERTIFICATE OF SERVICE, Page 2
William J. Batt
John R. Hammond , Jr.
Batt & Fisher, LLP
101 S. Capitol Blvd., Suite 500
O. Box 1308
Boise, ID 83701
wib (fY battfisher.com
irh (fY battfisher.com
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Michael Heckler
Director of Marketing & Development
Windland Incorporated
7669 W. Riverside Drive , Suite 102
Boise, ID 83714
mheckler (fY windland.com
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CERTIFICATE OF SERVICE, Page 3