HomeMy WebLinkAbout20041220PacifiCorp Answer to Petitions for Rehearing.pdfJames F. Fell (ISB #2274)
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2600
Portland, OR 97204
Telephone: (503) 294-9343
Fax: (503) 220-2480
E-mail: iffell~stoe1.com
Attorneys for Pacifi Corp
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
S. GEOTHERMAL, INC., AN IDAHO
CORPORATION
CASE NO. IPC-O4-
Complainant
vs.
IDAHO POWER COMPANY, AN IDAHO
CORPORATION
Respondent.
BOB LEW ANDOWSKl and BOB
SCHROEDER
CASE NO. IPC-O4-
Complainants
vs.
P ACIFICORP'S ANSWER TO
PETITIONS FOR REHEARING
IDAHO POWER COMPANY, AN IDAHO
CORPORATION
Respondent.
Pursuant to Rule 331.05 of the Rules of Procedure of the Idaho Public Utilities
Commission ("Commission ), PacifiCorp dba Utah Power & Light ("PacifiCorp ) respectfully
submits the following answer to the petitions for reconsideration filed by Mark Schroeder and
Bob Lewandowski (Lewandowski Petition ), Energy Vision, LLC ("EnVision Petition
P ACIFICORP'S ANSWER TO PETITIONS FOR REHEARING
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Renaissance Engineering & Design, LLC ("Renaissance Petition ) and Leroy J arolimek
Jarolimek Petition ) with respect to Commission Order No. 29632 (the "Order
Introduction
The thrust of the petitions for reconsideration is that the monthly 90/110 percent
performance band (the "Performance Band") adopted by the Commission is unreasonable, and
further that the pricing structure adopted for shortfall deliveries is not supported by substantial
evidence. Both of these contentions are without merit. The Commission s Order is lawful
reasonable and supported by substantial and competent evidence in the record.
Legal Standards
Petitioners seeking reconsideration bear the burden of establishing that the Commission
decision is unreasonable, unlawful, erroneous or not in conformity with the law. See Idaho
Commission Rule 331.01. The Commission has broad authority under PURP A to set the rates
terms and conditions of QF purchases. See 18 CFR 9 292.304. Where the Commission is
exercising its ratemaking authority, its legal determinations carry a presumption of validity and
must be upheld absent a showing that the Commission has failed to regularly pursue its authority
or violated the Constitutional rights of the complaining party. A. W. Brown, Inc. v. Idaho Power
Co.121 Idaho 812 (1992). Under the substantial and competent evidence test, the
Commission s factual findings must be upheld absent strong and persuasive evidence that the
Commission abused its discretion. Utah-Idaho Sugar Mountain Co. v. Intermountain Gas Co.
100 Idaho 368, 376 (1979).
The Performance Band Adopted by the Commission is Reasonable and Lawful
The Commission s decision to adopt the Performance Band is well within its legal
authority under PURP A as well as its general ratemaking authority. As correctly noted in the
P ACIFICORP'S ANSWER TO PETITIONS FOR REHEARING
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Order, Qualifying Facilities ("QFs ) seeking firm pricing are subject to a "legally enforceable
obligation" to deliver energy and capacity in the contracted-for amount. (Order at 13.) For this
obligation to have meaning, there must be some consequence associated with the failure of QFs
to deliver the contract amount within reasonable parameters. The Performance Band strikes a
reasonable balance between the need of utilities for certainly concerning QF deliveries, and the
need of intermittent QFs to have a cushion surrounding their monthly delivery commitments.
Petitioners cannot point to any constitutional or legal rights that are violated by the
decision to adopt the Performance Band. Instead, they argue that the band is unfair and
discriminatory because intermittent resources do not have the same level of output predictability
as thermal resources. (See Lewandowski Petition at 5.) This argument assumes that a
performance band would be appropriate for thermal QFs, but not for intermittent resources. The
problem with this argument is that the nature of the resource, not the Commission s decision
puts intermittent and thermal resources on different footing. The Commission s decision treats
all resources fairly by allowing the facility owner to determine the appropriate monthly
commitment levels for the resource.
Avoided costs include both capacity and energy components, which should reflect the
actual capacity and energy costs avoided by the utility. See 16 USC 824a(3)(d). Utilities cannot
be said to avoid capacity costs if the QF is permitted to deliver or not at its sole discretion. Some
measure of meaningful certainty is required. Further, there are consequences to the utility
associated with over- and under-deliveries, such as ramping down lower cost thermal resources
and making market purchases and sales. (Order at 20.) As noted by the Commission, to be
eligible for firm pricing QFs must assume a "legally enforceable obligation" to deliver in
accordance with their commitments. (Id.
P ACIFICORP'S ANSWER TO PETITIONS FOR REHEARING
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The Performance Band is a reasonable, flexible method of ensuring that QFs live up to
their delivery commitments. Far from being a penalty, the Performance Band actually benefits
intermittent resources, which do not have the ability to predict on the hour-to-hour basis typically
required for firm pricing, by allowing them to receive firm pricing based on aggregate monthly
delivery commitments. Over- and under-deliveries are essentially netted on a monthly basis
rather than being imposed hourly or daily, and are further buffered by the 90/110 band.
Additionally, QFs are permitted to periodically update their monthly delivery commitment
throughout the contract term, and are excused from delivery in the event of forced outages.
(Order at 20-22-23.
Contrary to Petitioners' assertions , the Performance Band does not force QFs to limit or
minimize their output. It merely limits firm, capacity benefits to the level at which the QF owner
can reliably predict the monthly output of the facility. As noted in the Order, non-firm pricing is
available for QFs that want the ability to deliver on an "as available" basis. (Order at 12.) This
remains true even for QFs that elect to make monthly commitments for firm deliveries, as the
price paid for deliveries in excess of the Performance Band are at the same rate as is otherwise
paid for non-firm deliveries. (Order at 14.
In sum, the Performance Band adopted by the Commission is a reasonable method of
ensuring that capacity benefits paid to QFs bear reasonable proportionality to the delivery
commitments by the facility.
The Commission s Decision Regarding the Pricing for Shortfall Deliveries
Supported by Substantial and Competent Evidence
Idaho Power proposed that QFs falling below the Performance Band be required to pay
an amount equal to 85 percent of the market price for the shortfall, capped at 150 percent of the
contract price. (Order at 20.) The other utilities made similar proposals. (Order at 19.) Finding
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that Idaho Power s proposal "might have the potential of exacting to heavy a price" the
Commission instead adopted a less onerous solution by which all deliveries in a shortfall month
are priced at 85 percent of the market price, or the contract price, whichever is less. (Id.
Petitioners assert that this finding is not supported by substantial evidence because it differs from
any specific remedy proposed by one of the parties. (See Lewandowski Petition at 2; EnVision
Petition at 6.) This contention is without merit.
In Industrial Customers of Idaho Power. v. Idaho PUC 134 Idaho 285 , 293 (1999) the
Idaho Supreme Court rejected this reasoning under very similar circumstances. There, the
appellants asserted that a Commission decision to adopt a 12 year amortization period was not
supported by substantial evidence where the parties had proposed 5 , 7 and 24 year periods. The
court rejected this argument, noting that the Commission was free to balance the proposals of the
~ .
parties and rely on its own expertise in fashioning a reasonable solution. Id. In this case, the
Commission s proposed solution is within the range of the remedies proposed for delivery
shortfalls, and is supported by substantial evidence in the record. Petitioner s argument would
hold that the Commission may never fashion a remedy other than that specifically proposed by
one of the parties. 1 This is not the law in Idaho.
Other Issues
Several of the petitioners that did not participate in the underlying proceeding, namely
EnVision, J arolimek and Renaissance, make factual assertions in their petitions that lack
foundation in the record below. Such assertions, which principally pertain to the speculative
consequences of the Performance Band on financing options for QFs, could have been presented
at the hearing and should not be considered at this untimely stage. Further, Petitioner
Notably, Petitioners offer a number of alternate proposals which likewise have no
specific foundation in the record. (See Lewandowski Petition at 5; EnVision Petition at 6.
P ACIFICORP'S ANSWER TO PETITIONS FOR REHEARING
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Renaissance proposes that QFs be allowed to sell excess delivery amounts at market, an issue
that was outside the scope of the complaints in this proceeding and therefore should not be
considered. (See Order at 5.
Conclusion
For the above reasons, PacifiCorp respectfully requests that the petitions for
reconsideration be denied.
DATED: December 20, 2004.
Attorneys for PacifiCorp
P ACIFICORP'S ANSWER TO PETITIONS FOR REHEARING
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 20th day of December 2004, I caused a true and correct
copy of the foregoing P ACIFICORP'ANSWER TO PETITIONS FOR REHEARING to be
served by the method indicated below, and addressed to the following:
Conley E. Ward
Givens Pursley LLP
601 W Bannock Street
PO Box 2720
Boise, ID 83701-2720
Telephone: (208) 388-1200
cew~givenspursley .com
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Overnight Delivery
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Peter J. Richardson
Richardson & O'Learly PLLC
99 East State Street
Eagle, ID 83616
Telephone: (208) 938-7901
Fax: (208) 938-7904
peter~ri chardsonando leary. com
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Monica B. Moen, Attorney II
Barton L. Kline, Senior Attorney
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
bkline~idahopower. com
mmoen~idahopower. com
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Doug Glaspey
US Geothermal
1509 TYrell Lane
Boise, ID 83706
dglaspey~us geothermal. com
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Brian D. Jackson
Renaissance Engineering & Design PLLC
7800 Alfalfa Lane
Melba, ID 83641
brian~clev er ideas. com
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CERTIFICATE OF SERVICE
Portlnd3-1502906.1 0020017-00002
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Glenn Ikemoto
Energy Vision, LLC
672 Blair Avenue
Piedmond, CA 94611
glenni~pacbell.net
LeRoy Jarolimek
West Slope Wind One LLC
605 S 600 W
Burley, ID 83318
leroyj aro limek~hotmai1. com
CERTIFICATE OF SERVICE
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