20050718Opening brief.pdf

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Peter J. Richardson ISB 3195
RICHARDSON & O'LEARY PLLC
99 East State Street
PO Box 1849
Eagle, Idaho 83616
Telephone: [phone]
Fax: [phone]
peter~ri chrdsonando I eary. com
Attorneys for Exergy Development Group of Idaho LLC
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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 GENERATED BY WIND-
POWERED SMALL POWER PRODUCTION
FACILITIES
CASE NO. IPC-005-
EXERGY DEVELOPMENT GROUP
OF IDAHO LLC'S OPENING BRIEF
ON SUSPENSION ISSUE
COMES NOW, Exergy Development Group of Idaho LLC by and through its attorney of
record, Peter J. Richardson, and pursuant to that notice issued by the Idaho Public Utilities
Commission ("Commission ) on July 7 1 2005, and hereby lodges opening brief in response to
Idaho Power Company s ("Idaho Power" or the "Company ) above captioned Petition. In
support hereof Exergy says as follows:
IDAHO POWER'S TESTIMONY IS INSUFFICIENT UPON WHICH TO BASE A
SUSPENSION OF PURP
Idaho Power initiated this case by filing a Petition to "temporarily suspend" its
obligations under the Public Utility Regulatory Policies Act of 1978 (PURP A). In its order
issue9 on )uly 1~ 2005, the Commission rejected the Petition stating that
, "
the Commission hasOpenIng Bnef of txergy
reviewed the filings of record in Case No. IPC-05-22 and finds the Company s Petition alone
provides insufficient basis to grant the temporary suspension requested." Notice at p. 6. In
response, Idaho Power filed the direct prefiled testimony of Company witness Gale. That
testimony is substantively identical to the Petition and offers no new justification for draconian
action such as suspension of Idaho Power s federal obligation to make purchases from
Qualifying Facilities. Indeed, much of Mr. Gale s testimony is nothing more than the Petition
reformatted into Qs and As. To demonstrate, it is instructive to read the two documents side by
side.
Mr. Gale s testimony at page 10 asserts that:
In deciding to move forward with an RFP program to competitively acquire wind
resources, Idaho Power was hopeful that a bidding process would allow the
Company to take advantage of competition and the economies of scale associated
with large-sized wind generation projects.
The Petition at page 5 states:
In deciding to move forward with an RFP program to competitively acquire wind
resources, the Company was hopeful that a bidding process would allow the
Company to take advantage of competition and the economies of scale associated
with larger sized wind generation projects.
Mr. Gale s testimony asserts at page 10:
Idaho Power anticipated that this strategy would moderate the total cost of wind
energy acquired by averaging the higher cost of smaller QF wind projects
acquired by averaging the higher cost of smaller QF wind projects acquired at the
avoided cost rate with the presumably lower cost of wind acquired by competitive
RFPs.
The Petition at page 5 states:
It was hoped that this strategy would moderate the total cost of wind energy
acquired by averaging the higher cost of smaller QF wind projects acquired at the
avoided cost rate with the presumably lower cost of wind acquired by
competigive RFPs.
Opening Brief of Exergy
Mr. Gale s testimony states at page ten:
Q. Have these expectations been met?
A. No , these expectations have not been met.
The Petition states at page 5:
Unfortunately, these expectations have not been met.
Idaho Power s Petition was denied for lack of demonstrating a primia facia case for
suspension of its obligation to purchase from QFs under PURP A. Mr. Gale s testimony has
almost literally, been cut and pasted from the Petition. Idaho Power has still not met its burden
of proof sufficient for this Commission to take any action.
THE COMMISSION LACKS JURISDICTION
Exergy incorporates by reference the legal arguments made in its Answer filed previously
with the Commission in this docket and which has yet to be responded to by Idaho Power. By
way of supplemental argument, Exergy notes that this Commission s suspension of Idaho
Power s obligation to purchase under PURPA is utterly and completely preempted by PURPA.
States are compelled to administer the federally determined avoided cost rate methodology.
FERC v. Mississippi, 456 U.S. 742 (1982). Even though FERC, pursuant to PURPA, delegates
the regulation and administration of one aspect of interstate wholesale power purchases to the
state commissions, FERC nonetheless declares that "in establishing avoided cost rates, the state
commissions act pursuant to federal, not state, law.Middle S. Servs.. Inc, FERC Docket Nos.
ER81-428-000 and ER82-483-000, 33 FERC (CCH) ~ 61,408, 71 P.R 4th 580 (Dec. 23, 1985).
Opening Brief of Exergy
This Commission simply does not have the legal authority to suspend PURP A for any resource.
Doing so would subject the Commission to enforcement action by FERC.
III
SEPARATE AVOIDED COST RATE/SCHEMES
BASED ON THE NATURE OF A QFs MOTIVE
FORCE IS DISCRIMINATORY AND ILLEGAL
It is important to remember that avoided cost rates are based on THE UTILITY'
AVOIDED COSTS and not on the QF's cost to produce power. This Commission has already
determined what Idaho Power s avoided cost rate is and has applied that finding in a non-
discriminatory manner to all QFs seeking to sell their power to it. Rates for purchases from QFs
by such utilities may not discriminate as between cogenerators. Section 210 of PURP A
provides:
The rules prescribed under subsection (a) shall insure that, in requiring any
electric utility to offer to purchase electric energy from any qualifying cogneeratin
facility or qualifying small power production facility, the rates for such purchase
(1) shall be just and reasonable to the electric consumers of the electric
utility and n the public interest, and
(2) shall not discriminate against qualifying cogenerators or qualifying
small power producers.
16 U.C. ~ 824a-3. This prohibition against discriminatory treatment is also found in FERC'
implementing regulations at 18 C.R. ~ 292.304(a)(i), which provides that
, "
Rates for purchases
shall. . . not discriminate against qualifying cogeneration and small power production facilities.
By definition, if Idaho Power is successful in achieving a suspension of entitlement for wind QFs
to take advantage of the Commission s published avoided cost rates it will be discriminating as
between cogenerators and small power producers.
The Commission may take into account several factors affecting rates that are unique to
different types of QFs. Those factors include such things as the ability to dispatch, the
Opening Brief of Exergy
availability of capacity during times of system peaks, the reliability of the particular QF , the
terms of the contract and etc. See 18 C.R. 292.304(e). However, only taking those factors into
consideration for one type of QF would violate the non-discriminatory provisions found in
PURPA and FERC's implementing regulations.
PRA YER FOR RELIEF
For the foregoing reasons the Commission is respectfully requested to deny Idaho
Power s Petition, with prejudice. It is beyond the scope of this Commission s jurisdiction to set
avoided cost rates for just one type of QF resource.
DATED this 15th day of July 2005.
RICHARDSON & O'LEARY PLLC
By fl;sf)
Peter J. Richardson
Attorneys for Exergy Development Group
of Idaho, LLC
Opening Brief of Exergy
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this day, July 15 2005, I caused a true and correct
copy of the foregoing OPENING BRIEF OF EXERGY DEVELOPMENT GROUP OF
IDAHO LLC TO IDAHO POWER COMPANY to be served by the method indicated below
and addressed to the following:
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
POBox 83720
Boise 1083720-0074
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Barton L. Kline
Idaho Power Company
PO Box 70
Boise ID 83707-0070
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John R Gale
Idaho Power Company
PO Box 70
Boise ID 83707-0070 .
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Monica Moen
Idaho Power Company
PO Box 70
Boise ID 83707-0070
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Scott Woodbury
Idaho Public Utilities Commission
424 W Washington Street
Boise ID 83702
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EXERGY DEVELOPMENT GROUP, LLC
CERTIFICATE OF SERVICE -
Richard L. Storro
Director, Power Supply
1411 E Mission Ave
PO Box 3727 MSC-
Spokane W A 99201
R. Blair Strong
Paine, Hamblen, Coffin, Brooke & Miller LLP
717 West Sprague Avenue Ste 1200
Spokane W A 99201-3505
William J. Batt
John R. Hammond, Jr.
Batt & Fisher LLP
US Bank Plaza, 5th Floor
101 S Capitol Blvd
PO Box 1308
Boise ID 83701
EXERGY DEVELOPMENT GROUP, LLC
CERTIFICATE OF SERVICE - 2
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Signed:
()
Peter J. Richardson