20051214Memorandum in support of order.pdf

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DeanJ. Miller ISB #1968
McDEVTIT & MILLER LLP
420 West Bannock Street
O. Box 2564-83701
Boise, ill 83702
Tel: [phone]
Fax: [phone]
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Attorneys for Cassia Gulch Wind Park LLC
and Cassia Wind Farm LLC
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MA TIER OF THE PETITION OF
CASSIA WIND TO DETERMINE
EXEMPTION STATUS
Case No. IPC-O5-
MEMORANDUM IN SUPPORT OF
ORDER DETERMINING
EXEMPTION STATUS
This Memorandum is submitted in support of the motion of Cassia Gulch Wind
Park LLC and Cassia Wind Farm LLC ("Cassia Wind") for the entry of an Order
determining that Cassia Wind is exempt from the rate eligibility cap contained in Order
No. 29839.
The Standard.
In Case No. IPC-05-22 the Commission reduced the eligibility cap for
entitlement to published avoided costs from 10 aMW to 100 kw. As is often the case when
rules are charged, it was necessary to draw a line between projects that are to be subject to
the new eligibility cap and projects that are subject to then existing eligibility cap.
Order No 29839 the Commission created the following standard for determining which
projects are exempt from the new cap:
MEMORANDUM IN SUPPORT OF ORDER DETERMINING EXEMPTION STATUS -
For purposes of determining eligibility we find it reasonable to use the date
of the Commission s Notice in this case, i., July 1 2005. For those QF
projects in the negotiation queue on that date, the criteria that we will look
at to determine project eligibility are: (1) submittal of a signed power
purchase agreement to the utility, or (2) submittal to the utility of a
completed Application for the Interconnection Study and payment of fee.
In addition to a finding of existence of one or both of the preceding
threshold criteria, the QF must also be able to demonstrate other indicia of
substantial progress and project maturity, e., (1) a wind study
demonstrating a viable site for the project, (2) a signed contract for wind
turbines, (3) arranged financing for the project, and/or (4) related progress
on the facility permitting and licensing path.
Subsequently, the Commission re-affirmed the articulated standard in denying
Petitions for Reconsideration filed by Windland, Staff and Idaho Power Company.
The exemption standard has only been subject to interpretation in one subsequent
case. In PacifiCorp s application for approval of the Schwendiman agreement, Staff
asserted that the exemption standard was satisfied if evidence showed the existence of one
of the primary criteria and at least one of the secondary criteria. Staff did not require proof
that all of the secondary criteria be established; nor did it assert that some were more
important than others.
1 It was not necessary for the Commission to discuss Staffs interpretation because the Commission
determined that the Schwendiman agreement was not subject to the exemption analysis.
MEMORANDUM IN SUPPORT OF ORDER DETERMINING EXEMPTION STATUS - 2
Cassia Wind's entitlement to an exemption
It is clear that Cassia Wind meets one of the primary criteria. A request for
interconnection study was filed prior to the relevant date. And, Cassia would have met the
other primary criteria-a signed purchase power agreement-but for the reluctance or in-
action of Idaho Power Company.
The Affidavit of Jared Grover dated October 27 2005 discusses the secondary
criteria, establishing evidence of project maturity. For the convenience ofthe
Commission, that discussion is set forth below:
Wind Study
I have collected a substantial amount of data, and have completed a
wind study. I have a percentage ownership in four anemometer towers used
for collecting data, and also have complete ownership of an additional 50
meter tower at my site. Usually at least six months to one year of data from
one or more anemometers is required to complete a wind study. Data was
collected from the oldest anemometer that I have ownership in back 2002.
The projects I am involved with have much more data than minimally
required.
I have used tools developed by the Idaho National Lab to evaluate
my data. The nearby operational Fossil Gulch wind project also validates
the viability of my projects wind resources. Based on this I believe the
projects are viable. The investors I have worked with hired independent
consultants to verify my wind study. Based on the results of my wind
MEMORANDUM IN SUPPORT OF ORDER DETERMINING EXEMPTION STATUS - 3
study, if I am able to get a power purchase agreement, the investors feel
confident that my project will be a success.
The data and the results of the analysis are highly confidential.
They will be made available upon execution of an appropriate Protective
Agreement.
I believe that for these reasons, the both projects meet the
secondary criteria" for grandfathered status.
Project Financing
I have been working with several different investors which have
been interested in financing the projects. None of the investors I have met
with have been willing to commit to financing without a signed Power
Purchase Agreement. However, anticipating a power purchase agreement
the investors have performed due diligence on the projects and are very
interested to provide financing as well as turbines for the projects.
The potential investors have requested that they remain anonymous
to the public and to my competitors. Upon execution of a confidentiality
agreement, and if either project does not already meet the secondary criteria
the two-prong grandfathering test with the wind study, documentation can
be provided to Commissioners or Staff regarding Project Financing.
Wind Turbines
Wind turbines are available for my wind projects. The investors
interested in my project have allotted turbines for my project. (See Exhibit
A) The investors have contracts in place for supply of wind turbines. I
MEMORANDUM IN SUPPORT OF ORDER DETERMINING EXEMPTION STATUS - 4
have selected one investor out of several investors having access to
turbines, but obviously a power purchase agreement needs to be signed
before they make a multi million dollar commitment of turbines to my
specific project.
Permitting and Licensing and Other Progress
Although one would typically wait for a power purchase agreement
and interconnection study before investing a substantial amount of time and
money in obtaining permits, access rights, and licenses for the potential
project, I have chosen to continue to move ahead anyway.
Much progress has been made on the permitting and licensing path
for the Cassia Wind projects. Since land where these projects will be
constructed is owned by members of the wind projects, and because country
roads and utilities border the properties, access controls (easements etc) to
land for roads, utilities etc are not an issue. I own the land for one of the
projects, and another member of the Cassia Wind Farm LLC owns the other
property. Exhibit B is a letter providing Cassia Wind Farm LLC with the
option of arranging a wind farm on that property.
In addition to owning the land, extraordinary efforts are being taken
to ensure a smooth completion of the permitting process. One such effort is
arranging a land swap for a neighboring land owner. I am under obligation
to finalize the purchase of approximately 700 additional acres ofland (See
Exhibit C) that may be used for the land swap as well as to provide
alternative sites for access to the projects. The additional land can also
MEMORANDUM IN SUPPORT OF ORDER DETERMINING EXEMPTION STATUS - 5
provide alternative turbine placement options if necessary based on the
geothermal studies, planning and zoning, or interconnection studies are
finished. With the price ofland being sold for over 300 dollars an acre, the
obligation to purchase this much additional land for my wind project comes
at a significant cost. Based on a $300 per acre price, the cost is over
$200 000. I will be liable to purchase this land even if I fail to get a Power
Purchase Agreement from Idaho Power Inc.
Both projects have filed as Qualifying Facilities under FERC and
were issued QF numbers before the August 4th 2005. Since that time FAA
filings have also been submitted.
I have been in contact with Bureau of Land Management, Idaho Fish
and Game, the Twin Falls Planning and Zoning Administration as well as
the Idaho Transportation Department for applicable permits and licenses.
The Interconnection Feasibility study for one of the projects has been
completed. Completion of other studies such as System Impact Study, and
Facility Study, and Interconnection Agreement may be required before
finalizing easements and collecting details for final permits.
The Supplemental Affidavit of Jared Grover shows that since the spring and
summer of2005 Cassia Wind has continued to pursue development of the projects
culminating in a declaration of intent of John Deere Credit Corporation, subject to usual
contingencies, to supply both turbines and project financing.
MEMORANDUM IN SUPPORT OF ORDER DETERMINING EXEMPTION STATUS - 6
Conclusion.
For the reasons set forth above, the Commission should enter its Order determining
that Cassia Wind is exempt from the new rate eligibility cap contained in Order No. 29839.
DATED this day of December, 2005.
Respectfully submitted
McDEVITT & MILLER LLP
Dean J. i ler
McDevitt & Miller LLP
420 W. Bannock
Boise, ID 83702
Phone: [phone]Fax: [phone]
Counsel for Cassia Gulch Wind Park
LLC and Cassia Wind Farm LLC
MEMORANDUM IN SUPPORT OF ORDER DETERMINING EXEMPTION STATUS - 7
CERTIFICATE OF SERVICE
I hereby certify that on the day of December, 2005, I caused to be served, via the
methodes) indicated below, true and correct copies of the foregoing document, upon:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, ID 83720-0074
i i ewellcmpuc.state.id. us
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Barton L. Kline
Monica B. Moen
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise, ID 83707
B Klinecmidahopower. com
MMoencmidahopower. com
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MEMORANDUM IN SUPPORT OF ORDER DETERMINING EXEMPTION STATUS - 8