20050830Answer to petition for stay etc.pdf

Peter J. Richardson
RICHARDSON & O'LEARY PLLC
515 N. 2ib St
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peter~ri chardsonando I eary. com
Attorneys Exergy Development Group of Idaho LLC
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION
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-05-
EXERGY DEVELOPMENT
GROUP OF IDAHO'
ANSWER TO WINDLAND'
MOTIONS TO STAY AND
FOR RECONSIDERATION
COMES NOW Exergy Development Group of Idaho, LLC ("Exergy ) by and through its
attorneys of record and hereby lodges its answer to Windland Incorporated's ("Windland"
Petitions to Stay and for Reconsideration of Order No. 29839 issued by the Idaho Public Utilities
Commission ("Commission ) in the above captioned docket. In support of this Answer, Exergy
says as follows:
Background
Windland seeks a stay of this Commission s decision to permit a certain class of potential
wind developers to seek grandfather status from the Commission from its decision to reduce the
Exergy s Answer to Windland's Motions to Stay and for Reconsideration
threshold for entitlement to the published avoided cost rates from 10 000 kW to 100 kW in Order
No. 29839. The Commission declared, in that Order that:
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. . .
Order No. 29839 p. 8.
The Commission then determined that certain potential wind projects that had reached a certain
stage of maturity would be eligible for the published rates if they can demonstrate they had
achieved certain milestones as of July 1 2005, the date of the Commission s Notice in this
docket. These potential projects are referred to as "grandfathered" projects if they can
successfully demonstrate that they have achieved those milestones. The exact number of projects
that will ultimately be entitled to grandfathered status is unknown at this time and may not be
known for quite some time to come. In fact, if past experience repeats itself, we can expect the
issue of grandfathered status to be contentious and litigious and may take several years before
final resolution of that question is determined.
Windland seeks a stay of the Commission s decision to allow those potential projects to
seek grandfather status based on the following three grounds:
1. The Order requires Idaho Power to enter into contracts at rates exceeding avoided
cost and such requirement is contrary to the public and the law.2. The Order sets criteria for "grandfathering" certain proposed QF projects that do
not have established contractual rights to old, clearly outdated avoided cost rates, contrary
to the public interest and law.3. The Commission s implementation of "grandfathering" will detrimentally impact
and potentially eliminate Idaho Power s acquisition of wind resource generating options
that are more cost effective.
Windland Petition at pp 1-
Exergy s Answer to Windland's Motions to Stay and for Reconsideration
Windland also filed a Petition for Reconsideration using identical arguments. This
Answer to the Motion to Stay should also be considered an Answer to the Petition for
Reconsideration pursuant to Rule 331(05). References to Windland's Petition throughout this
Answer are to the Petition to Stay.
Windland's petition for stay should be denied by this Commission because it is (1) not
ripe; (2) Windland lacks standing; (3) Windland fundamentally misconstrues the Commission
Order; (4) Windland's Petition is an impermissible collateral attack on a final Commission order;
(5) Windland's Petition inaccurately asserts that the avoided cost rates for wind are too high.
III
WINDLAND'S PETITION IS NOT RIPE
Windland seeks a stay of the Commission s order setting parameters to determine
whether any particular project is eligible for grandfathered status. The Commission s decision
merely sets the stage to determine whether any individual project is, indeed, entitled to
grandfathered status. No one knows, at this point, whether any potential project will be able to
satisfy the criteria to be able to legitimately claim they are grandfathered. Given that uncertainty
it is impossible to gauge what impact, if any, the Commission s ruling will have on Idaho
Power s "acquisition of wind resource generating options that are more cost effective.
Windland Petition at p. 2.
The fact is, Windland has no idea whether or not the Commission s decision to establish
grandfather criteria will actually result in any projects being grandfathered. In addition
Windland has no idea whether, if some potential projects are grandfathered, that fact will impact
Idaho Power s decision to "acquire resource generating options that are more cost effective.
Windland Petition at p. 2. In order to be ripe for adjudication a party must:
Exergy s Answer to Windland's Motions to Stay and for Reconsideration
raise issues that are definite and concrete, and must involve a real and substantial
controversy as opposed to an advisory opinion based upon hypothetical facts. Ripeness
asks whether there is any need for court action at the present time." 116 Idaho at 642
778 P.2d at 764.
Boundary Backpackers v. Idaho County, 128 Idaho 371 , 376 (1996).
Windland's Petition is based on hypothetical "facts" at best. It hypothecates that the
Commission will grant grandfathered status to enough potential wind developers such that Idaho
Power may then decide to take action that might reduce the amount of power it acquires from a
source of power that might be less expensive that the rate paid to the, as yet unknown
grandfathered projects. This is hardly a "real and substantial" controversy worthy of the
Commission s action.
WIND LAND LACKS STANDING
Windland alleges no direct interest in the level of avoided cost rates paid by Idaho
Power, other than a generalized concern that the public interest may be harmed. In order to have
standing a party must meet the following test:
The essence of the standing inquiry is whether the party seeking to invoke the court'
jurisdiction has "alleged such a personal stake in the outcome of the controversy as to
assure the concrete adversariness which sharpens the presentation upon which the court
so depends for illumination of difficult constitutional questions." As refined
subsequent reformation, this requirement of "personal stake" has come to be understood
to require not only a "distinct palpable injury" to the plaintiff, but also a "fairly traceable
causal connection between the claimed injury and the challenged conduct. (citations
omitted)
Miles v. Idaho Power Company 116 Idaho 635, 641 (1989).
Windland never asserts that it is directly harmed, not even as a ratepayer, by Idaho
Power s purchase of allegedly overpriced QF power. It is not clear from its pleading whether or
Exergy s Answer to Windland's Motions to Stay and for Reconsideration
not Windland even is an Idaho Power ratepayer. In Miles Id. the Idaho Supreme Court made it
clear that "when the asserted harm is a generalized grievance" there is an insufficient nexus to
assert standing. Id. Here Windland's grievance is that Idaho Power s purchase of allegedly
overpriced QF power may harm the "pubic interest." Clearly Windland has no "personal stake
in protecting the "public interest" such that it has standing to challenge the Commission
decision to set criteria by which a potential wind project may seek grandfathered status.
Even assuming Windland asserts a direct personal interest because it may be a ratepayer
which it has not, it would still lack standing due to the lack of a connection between its alleged
injury and the challenged conduct. This is true because a second aspect of standing is that the
plaintiff must show or allege an "injury in fact" that is "fairly traceable" to the challenged
conduct. Id. Here Windland' s only "injury in fact" is the fear that (1) the Commission will grant
grandfather status to a certain unspecified number of potential wind projects; (2) that the number
of grandfathered wind projects will be sufficient to induce Idaho Power to rethink the possibility
that it might award a wind power purchase agreement to a bidder in its wind RFP process; (3)
that Windland's bid into the RFP process meets all of Idaho Power s technical requirements to be
considered; (4) that Windland's bid price is the winning bid price; (5) that Idaho Power will
independently decide to award Windland a contract pursuant to the RFP process; and (6) that but
for the granting of grandfather status to the unspecified number of potential wind projects
Windland would have been the successful bidder. The uncertainties abound. There is simply no
fairly traceable" connection between the Commission s action and Windland's alleged injury.
In addition to a connection between the Commission s action and the alleged injury, there
has to be an alleged injury in the first place. In order to have standing the plaintiff must show or
claim that is has suffered a "distinct or palpable injury.Id. Windland has not demonstrated, or
Exergy s Answer to Windland's Motions to Stay and for Reconsideration
asserted, that even if the Commission grants grandfather rights to the unknown number of
potential wind projects, that it has any justifiable hope that it will be awarded a contract in the
RFP process. That process is managed completely at the discretion of Idaho Power Company. In
other words, even if grandfather status were granted, Windland has no claim or right to be
awarded the winning bid in the RFP process. Therefore Windland cannot claim to be injured as a
result of this Commission s establishment of criteria for consideration in a possible
grandfathering claim. Windland is asking this Commission to stay consideration of grandfather
status based on what is essentially a throw of the dice by Windland. Mere speculation that it
might be harmed is simply that, mere speculation. It does not rise to the level of legal standing to
avail itself of the jurisdiction of this Commission.
WIND LAND FUNDAMENTALLY MISREPRESENTS
THE COMMISSION'S DECISION
Windland asserts that the Commission s order "requires Idaho Power to enter into new
contracts with wind-powered QFs Windland Petition p. 3. In fact the order does no such thing.
The Order merely sets forth certain criteria by which a potential QF is to be judged as to
entitlement for published avoided cost rates. After the criteria are applied by Idaho Power, some
potential developers, or perhaps no developers, will be entitled to sign a contract with the
company. Then those contracts will be submitted to the Commission for approval. The
Commission may approve some of those contracts or it may approve none of those contracts.
Windland's cry that the sky is falling is simply not credible - the Commission s grandfathering
criteria do not obligate Idaho Power to enter into contracts; rather, it merely sets criteria by which
possible contracts will be evaluated. Of course, that the Commission has not ordered Idaho
Exergy s Answer to Windland's Motions to Stay and for Reconsideration
Power to enter into a single contract in Order No. 29839 underscores the arguments noted above
relative to standing and ripeness.
WINDLAND'S PETITION IS AN IMPERMISSIBLE
COLLATERAL ATTACK ON FINAL COMMISSION ORDERS
The assertion that avoided cost rates are too high by Windland is likewise a serious
mischaracterization of the Commission s Order. The Commission found only that there was
sufficient evidence to investigate the costs of integrating wind into Idaho Power s system - not
that the avoided cost rates were too high. The current avoided cost rates were set by this
Commission in Order No. 29646 in December of 2004. That order is final and was subject to
petitions for reconsideration by Windland, had it believed that the rates in that order were too
high.! It did not petition for reconsideration and should not now, by way of its Petition to Stay,
be permitted to undermine the findings made by the Commission in that order that the avoided
cost rates are fair, just and reasonable. Windland's Petition is by its very nature an impermissible
collateral attack on a final Commission order. See Idaho Code ~ 61-625.
ASSERTIONS THAT THE AVOIDED COST RATES
ARE TOO HIGH ARE UNSUPPORTABLE
The Commission, in Order No. 29839 found only that the costs of integrating wind into
Idaho Power s system has not been fully explored and that the avoided cost rates for wind should
reflect those costs. However any investigation into the costs of integration will undoubtedly
include benefits of doing so. Since the current mechanism for "banding" wind projects within a
Exergy s Answer to Windland's Motions to Stay and for Reconsideration
90% to 110% target of monthly production already significantly lowers the rates effectively paid
to wind projects, the ultimate result of the investigation of the costs of integration of wind may
be that the rates are too low. Of course, we won know if the rates paid wind projects are
indeed, too high until the investigation is completed. Indeed, it may be that overall the avoided
cost rates need to be revisited in light of current events in energy markets. F or example, today
the non-firm spot market price for wholesale electricity at the Pacific Northwest wholesale
trading hub was in excess of$85 MWH and natural gas at the California Border was over $9.50.
see www.enerfaxdailv.com Certainly assertions that avoided cost rates in the $60 range are too
high in light of these market conditions should be examined with a very critical eye.
CONCLUSION
For all of the foregoing reasons, Exergy respectfully requests the Commission deny
Windland's Petition to Stay and its Petition for Reconsideration.
RICHARDSON & O'LEARY PLLC
By:
Peter J. Richar son, ISB #3195
Attorneys for Exergy Development
Group of Idaho LLC
I Although, for whatever reason, Windland did not participate in that docket it is still allowed to petition for
reconsideration even if was not a party in the proceeding.
Exergy s Answer to Windland's Motions to Stay and for Reconsideration
CERTIFICATE OF SERVICE
I hereby certify that on this 30tb day of August, 2005, the ANSWER OF
EXERGY DEVELOPMENT GROUP , LLC, TO WINDLAND'S PETITION FOR STAY AND
PETITION FOR RECONSIDERATION was sent to the following parties as shown:
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83702
i i ewell~puc. state.id.
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Monica B. Moen
Barton L. Kline
Idaho Power Company
PO Box 70
Boise ID 83707-0070
MMoen~idahopower. com
BKline~idahopower. com
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Dean J. Miller
McDevitt & Miller LLP
420 West Bannock
Boise, Idaho 83702
ioe~mcdevitt -miller. com
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Glen Ikemoto
Principal
Energy Vision LLC
672 Blair Avenue
Piedmont, CA 94611
glenni~pacbell.net
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Scott Woodbury
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83702
swoodbu((Apuc.state.
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EXERGY DEVELOPMENT GROUP, LLC
CERTIFICATE OF SERVICE -
Data Request Response Ctr
PacifiCorp
825 NE Multnomah, Suite 800
Portland, OR 97232
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William M. Eddie
Advocates for the West
PPO Box 1612
Boise, Idaho 83701
billeddie~rmci.net
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Lisa Nordstrom
PacifiCorp
825 NE Multnomah, Suite 1800
Portland, Oregon 97232
lisa.nordstrom~pacifi corp. com
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Bob Lively
P aci fi Corp
One Utah Center, 23rd Floor
201 S. Main Street
Salt Lake City, UT 84140
Bob .li vel y~pacifi corp. com
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Richard L. Storro
Director Power Supply
A vista Corporation
O. Box 3727 /MSC- 7
Spokane, W A 99220-3727
dick. storro~avistacorp. com
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EXERGY DEVELOPMENT GROUP, LLC
CERTIFICATE OF SERVICE - 2
William J. Batt
John R. Hammond, Jr.
Batt & Fisher, LLP
O. Box 1308
Boise, Idaho 83701
wib~battfisher.com
irh~battfisher. com
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Jared Grover
Cassia Wind LLC
Cassia Gulch Wind Park
4219 N. Creswell Way
Boise, Idaho 83613-2406
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Michael Heckler
Director of Marketing & Development
Windland, Inc.
7669 W Riverside Dr. Ste 102
Boise, Idaho 83714
mheckler~windland. com
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David Hawk
Director, Energy Natural Resources
J .R. Simplot Company
O. Box 27
Boise, Idaho 83707-0027
dhawk~simplot. com
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R. Scott Pasley
Assistant General Counsel
J .Simplot Company
O. Box 27
Boise, Idaho 83707-0027
spasley~simplot. com
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EXERGY DEVELOPMENT GROUP, LLC
CERTIFICATE OF SERVICE - 3
R. Blair Strong
Paine Hamblen et al
717 W. Sprague Ave., Ste 1200
Spokane, WA 99201-3505
r. blair .strong~painehamblen. com
Troy Gagliano
917 SW Oak Street, Ste 303
Portland, OR 97205
renewab les(q?rnp. org
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Signed (W i if\... Cw\ 1\~
Nina Curtis
EXERGY DEVELOPMENT GROUP, LLC
CERTIFICATE OF SERVICE - 4