20050628Petition to intervene and comments.pdf

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DAVID J. MEYER
VICE PRESIDENT, CHIEF COUNSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
VISTA CORPORATION
O. BOX 3727
1411 EAST MISSION AVENUE, MSC-
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: [phone]
FACSIMILE: [phone]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY FOR AN
ORDER TEMPORARIL Y SUSPENDING
IDAHO POWER'S PURP A OBLIGATION
TO ENTER INTO CONTRACTS TO
PURCHASE ENERGY GENERATED BY
WIND-POWERED SMALL POWER
PRODUCTION FACILITIES.
) PETITION AND COMMENTS OF
) A VISTA CORPORATION
CASE NO. IPC-05-
Avista Corporation ("Avista ), pursuant to RP 053 and 072 of the IPUC Rules of
Procedure, hereby submits its Petition and Comments in the above-captioned matter.
I. INTRODUCTION
On June 17, 2005 , Idaho Power Company ("Idaho Power ) filed a petition requesting that
the Commission issue its order temporarily suspending Idaho Power s obligation, under Sections
201 and 210 of the Public Utility Regulatory Policies Act of 1978 ("PURPA") and various
Commission orders, to enter into new contracts to purchase energy generated by qualifying
wind-powered small power production facilities ("QF" or "Qualifying Facilities
).
Idaho
Power s request for a temporary suspension of its PURPA purchase obligation is limited to new
PETITION AND COMMENTS OF A VISTA CORPORA nON -
contracts for purchases of energy from wind-powered QFs. The suspension would not affect
new contracts with QFs utilizing other generating technologies.
As stated in Idaho Power s Petition, the investigation would consider: (1) the impact of
intermittent wind resources on the Company s total cost of power supply, (2) the impact of
intermittent wind resources on the reliability of electric service to customers, (3) whether the
current avoided cost methodology correctly measures the power supply costs that the Company
can actually avoid by adding intermittent wind generation resources, and (4) such other matters
as the Commission deems appropriate.
II. COMMENTSIPETITION OF A VISTA
For the following reasons, A vista concurs with the arguments set forth in Idaho Power
Petition and specifically requests and petitions that the temporary suspension of the PURP
purchase obligation as it would apply to new contracts for the purchase of energy from wind-
powered QFs apply to A vista as well. Accordingly, the rates, terms and conditions for all new
contracts from this date forward for wind QF developers on A vista s system should, as with the
case of Idaho Power, be governed by the outcome of this proceeding. Issues raised by Idaho
Power have a broader application to other utilities in this jurisdiction.
The character and quality of the power output from a wind-powered generation project is
materially different from that of a combined-cycle combustion turbine (CCCT) generation
project upon which the posted avoided costs for QFs under the 10 MW size are based. A CCCT
project is designed for base load use and its output is considered as firm capacity and energy for
planning and operations purposes. A CCCT project contributes capacity to planning margins
which are necessary in the event of adverse weather and/or hydroelectric generating conditions.
A CCCT project also is able to forecast its generation production level for future hours.
PETITION AND COMMENTS OF A VISTA CORPORATION - 2
Furthermore, a CCCT project is able to change its generation output level in response to system
conditions. (It is dispatchable.) A wind project does not provide these capacity characteristics.
As described by Idaho Power, in order to assure system reliability, intermittent wind resources
must be "firmed" by ancillary servIces. Those ancillary servIces may be provided by the
purchasing utility, to the extent system capacity is available, or they may be purchased from the
market. In either scenario, there is a cost for such ancillary services. A vista, therefore, supports
comments made by Idaho Power indicating that it is time to reassess how avoided costs should
be computed for intermittent wind-powered generating resources.An analysis of those
characteristics would consider the cost of firming and integrating intermittent QF wind-power
resources into A vista s system.
Based on response to utility RFPs in the region, information from the Northwest Power
and Conservation Council, and information in the trade press, there appears to be a substantial
amount of wind-powered generation either being competitively developed or offered for
development. A vista concurs with Idaho Power that federal and state tax incentives, including
the federal income tax credit equal to approximately $18 per MWh, have been significant factors
stimulating wind-powered generation development. A robust and competitive market exists for
wind-powered generation in the region.
Prior to the issuance of the Commission s Order No. 29646, Avista conducted a limited
wind generation RFP in 2003 and, through that process, was able to acquire a competitively-
priced 35 MW wind resource for a ten-year term. The Company is currently in the process of
finalizing development of its 2005 Integrated Resource Plan. The preferred resource strategy
developed as part of that IRP targets additional wind resource acquisitions of up to 300 MW by
the year 2013. The trade press indicates that other regional utilities are being successful in their
PETITION AND COMMENTS OF A VISTA CORPORATION - 3
competitive wind resource acquisition processes, as well . Given the unique characteristics of
wind resources, as briefly discussed above, and given the significant amount of wind resources
available, A vista suggests that consideration be given to the use of "competitive processes" to
determine the appropriate level of avoided cost for wind resources.In this manner, wind
resources compete with other wind resources, all of which include the same unique
characteristics. The result should be that utilities are able to acquire the level of wind resources,
consistent with their Integrated Resource Plans, at prices that are more reflective of the costs and
characteristics of those unique resources.
Another unique characteristic of wind-powered generation is that projects can
configured in any number of different power output amounts. Wind projects consist of greater or
lesser numbers of relatively small (approximately 1 MW each) generators.Therefore, wind
projects can configure themselves to meet different project output definitions. As noted by Idaho
Power, it would not be difficult for a wind project greater than 10 MW to reconfigure itself into
multiple projects less than 10 MW in an effort to qualify each project for the published rates.
A vista supports Idaho Power s Petition, which recommends a suspensIon of wind resource
acquisition at this time for all utilities , in part to prevent an unintended situation where wind
project developers reconfigure their projects such that they fall below the threshold in order
qualify for posted rates.
1 Idaho Power cites NorthWestern Energy s recent Montana Commission approval of an agreement with Judith Gap
LLC under which Northwestern will purchase 135-150 MW of wind resource at a competitive price of $31.71 per
MWh.
PETITION AND COMMENTS OF A VISTA CORPORATION - 4
A vista recommends that the following actions take place during the wind QF resource
acquisition suspension period:
1 )An analysis should be performed with regard to the total amount of additional
wind resource that a company s system can absorb without adversely affecting the
company s overall power supply costs and system reliability;
Each company should revisit the computation of avoided costs specifically
tailored to the characteristics of intermittent wind-powered resources.
Consideration should be given by the companies and the Commission as to the
design of wind acquisition programs so that companies can take advantage of the
considerable market interest in wind-powered resources. Wind resources should
more closely reflect actual resource costs and market prices rather than published
avoided cost rates based on other types of resources.
III. PETITION TO INTERVENE
For the foregoing reasons A vista has direct and substantial interest in these
proceedings, and requests the right to intervene.
(a)Name/Address of Petitioner:
A vista Corporation
1411 E. Mission Ave.
Spokane, W A 99220
(b)Nature of Business:A vista is a combination electric and natural gas utility
providing electric service, at retail, to over 330 000 customers in the states of
Idaho and Washington, and natural gas service to over 305 000 customers in
Idaho, Washington and Oregon. As such its rates, charges, services and practices
are regulated inter alia, by this Commission.
PETITION AND COMMENTS OF A VISTA CORPORA nON - 5
(c)Names of Representatives:Communications respecting this matter should
addressed to:
Richard L. Storro
Director, Power Supply
1411 E. Mission Ave
O. Box 3727 , MSC- 7
Phone: [phone]Fax: [phone]
dickstorro (g) avistacorp.com
R. Blair Strong
Paine, Hamblen, Coffin, Brooke & Miller LLP
717 West Sprague Avenue, Suite 1200
Spokane, Washington 99201-3505
Phone: [phone]Fax: [phone]
r. blair. strong
(g)
pai nehamblen.com
Respectfully submitted this 2ih day of June, 2005.
VISTA CORPORATION
By:
~/ //
avid J. Meyer
Vice President, Chief Counsel For
Regulatory and Governmental Affairs
PETITION AND COMMENTS OF A VISTA CORPORATION - 6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have , as of this 27th day of June 2005 , served Avista
Corporation s Petition and Comments in Case No. IPC-05-, by mailing a
copy thereof, properly addressed with postage prepaid to:
Jean 0 Jewell , Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, 10 83720-5983
Barton L. Kline
Monica B. Moen
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise, 10 83707
~ Olsness
Rates Coordinator