20061030Comments.pdf

RECEIVED
Peter J. Richardson
Mark Thompson
RICHARDSON & O'LEARY PLLC
515 N. 2ih Street
Boise, Idaho 83702
Telephone: [phone] I
Fax: [phone]
peter(g)xichardsonando I eary. com
2006 OCT 27 Pf1 I:
10/,;';0 fJ U Ul.IC
UTILITIES CO~ii\'ISSION
Attorneys for Exergy Development Group of Idaho LLC
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASSIA WIND FARM LLC ET AL.
COMMENTS OF EXERGY
DEVELOPMENT GROUP OF IDAHO
LLC
CASE NO. IPC-06-
IDAHO POWER COMPANY
COMES NOW, Exergy Development Group ofIdaho LLC, hereinafter referred to as
Exergy," and pursuant to that Notice of Complaint and Notice of Comment Deadlines issued by
this Commission on September 27 2006 and hereby lodges its Comments on the Complaint filed
by the Cassia Wind Farm LLC
, ("
Cassia
Cassia s statement of the case and the Commission s Notice fairly set out the facts and
correctly identify this Commission as the jurisdictional entity with authority over the dispute.
Exergy is similarly situated with Cassia in this matter in that it holds contracts for the
construction of several small wind parks in the Twin Falls area of Idaho Power s service
territory. Exergy respectfully urges this Commission to, as requested by Cassia, order Idaho
REPLY COMMENTS OF EXERGY DEVELOPMENT GROUP
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Power to proceed with the interconnection of Cassia and other QF's without assignment to them
of any grid upgrade costs.
THE N-l ISSUE
CAN BE ADDRESSED BY WIND GENERA TORS
WITHOUT TRANSMISSION UPGRADES
An N-l contingency is commonly known as a planning contingency where one piece of
the transmission system fails during a time when the transmission is loaded at its peak. It is a
system planning tool that assumes all of the wind resources are on line at the time of peak
loading on the transmission system. However the N-l assumptions are inappropriately applied in
this instance. While transmission system peaks may occur at times other than load system peaks
we can be confident there is a strong relationship between the two. Idaho Power and Rocky
Mountain Energy both experience their load peaks in the summer and last July 24 they, along
with the rest ofthe Western Interconnect, experienced record peak loads. However, wind
resources were notably not producing during the time of the system peak last July 24. This is not
because the turbines were not available, but because typically during unusually hot periods in the
intermountain west, the weather is dominated by high pressure systems with little gradient
resulting in the wind being very calm. The lack of wind generating resources on July 24 was
well documented in the press. Because wind is not competing for generating space when the
system s peak in the summer it makes no sense to plan an N-l contingency with the assumption
that all wind capacity is on line.
But the Commission need not rely on historical or meteorological patterns to assure itself
that the transmission system is built and planned to meet all possible contingencies. Wind, by its
very nature is variable. During times of transmission peak that are planned for in the N-
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contingency, the utility should be given the right to trip the wind resources off line, That would
not affect the reliability of the wind resource over time as the occurrence of an actual N-
contingency is extremely rare. New wind projects in the Twin Falls area should be permitted the
right to connect to the system with the understanding that they may be curtailed during the
occurrence of an N -1 event.
IDAHO POWER'S PROPOSAL
TO ALLOCATE TRANSMISSION UPGRADES TO WIND DEVELOPERS
IS CONTRARY TO ESTABLISHED FERC POLICY
It is clear that FERC does not have jurisdiction over the interconnection of QFs to Idaho
Power s system when those QFs connect for the purpose of selling their output to Idaho Power.
FERC does, however, have jurisdiction over interconnections when those QFs interconnect for
the purpose of utilizing Idaho Power s transmission system to sell to a third party. Although all
of the wind projects in the Twin Falls area are selling to Idaho Power, there is no reason they
could not have chosen to wheel their power over Idaho s transmission system to sell to Rocky
Mountain Power or to Idaho Power in its capacity as an Oregon investor-owned utility.
In such cases, FERC has had many opportunities to address whether a QF or IPP can be
assigned responsibility for transmission system upgrades even when the QF or IPP project is the
cause ofthe need for the upgrade. FERC has consistently and unequivocally held that all
transmission customers share the responsibility for such upgrades:
Thus, the basic premise of average system transmission rates is that all customers share in
all costs of the grid, without regard to which customer caused the various construction
projects, because all grid additions benefit all customers using the grid.
Alabama Power Co., FERC Docket No. ER93-191-000 at pp. 7 - 8; 66 FERC ~ 61 309 (1993).
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As the FERC has explained:
(T)he Commission (FERC) has long held that an integrated transmission grid is a
cohesive network moving electricity in bulk. The Commission has rejected the direct
cost assignment of integrated grid facilities to requirements customers even if the grid
facilities would not be installed but for a particular customers ' service. The Commission
has reasoned that, even if a customer can be said to have caused the addition of a grid
facility, the addition represents a system expansion used by and benefiting all users due
to the integrated nature of the grid.
Appalachian Power Company, FERC Docket No. ER93-200-000 at pp. 3 - 4; 66 FERC ~ 61 151
(1993). Emphasis provided.
The issue is well settled:
(G) rid upgrades. .. are system transmission costs and are ineligible for recovery through
direct assignment as interconnection costs. Rather, such costs must be recovered through
the public utility s transmission rates reflecting, at the utility's option, either the average
cost of the transmission grid or the incremental cost of the transmission grid.
Western Mass. Elec. Co., FERC Docket No. ER92-67-000 atp. 8; 77 FERC 61 268
All transmission customers must pay for transmission system upgrades regardless of
whether those upgrades were triggered by an individual QF or IPP
, "
it does not matter that the
grid construction would not have occurred but for a request from a particular customer.
Western Mass. Elec. Co., FERC Docket No. ER93-219-001 at p. 8; 66 FERC ~ 61 167.
It is important to note that we are talking about transmission system upgrades and NOT
the cost of interconnection. There is no dispute that interconnection costs are clearly the
responsibility of the generator requesting interconnection.
That a transmission system upgrade is caused by a generator that is connecting pursuant
to a PURP A contract does not change FERC's view of the integrated transmission network and
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who shares in the cost of that system:
The Commission has also held that the direct assignment of the kinds of costs at issue
here, as proposed by WMECO, is not required by PURP A. The treatment of grid
upgrade costs is controlled by "well-established Commission policy developed under the
Federal Power Act. 66 FERC at 61 335"
Id. at p. 8.
FERC's policy that all transmission customers should pay for the grid is well founded.
Here Idaho Power is bringing a mix of new resources (both from QFs and resources Idaho Power
itself plans to construct) to its load center. Regardless of whether the resources it acquires are
QFs or company-owned resources, the transmission system connecting the Boise load center
with the rest of the system will have to be upgraded. All of Idaho Power s customers should be
responsible for those upgrades based on the well-established public policy that has been
articulated by FERC.
DISCRIMINATORY TREATMENT
If one ofthe QFs in the Twin Falls area requested wheeling service to Idaho Power
service territory in Oregon, the transmission system upgrade for that QF would be FERC
jurisdictional and, hence, rolled into Idaho Power s transmission rates. Ifthat QF's neighbor
sought to sell to Idaho Power in Idaho, according to Idaho Power s proposal, it would be directly
assigned the costs of the transmission upgrade. However, there is no difference in the delivery of
the power from the two identically situated generators. In fact, the load center being served is
the same because Ontario, Oregon is part ofthe Boise valley load center. However, Idaho Power
proposes to treat each radically differently in terms of cost recovery. This is a prima facie case
of discriminatory treatment of similarly situated customers. The only solution to such
discriminatory treatment is for this Commission to roll in the costs of transmission system
upgrades without direct assignment.
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CREDITS SHOULD BE BASED
ON FULL CAPACITY OF THE
WIND GENERATOR AND NOT ON ENERGY PRODUCTION
If QFs are charged for upgrades and then credited back their contributions over time, the
credits should be based on the capacity of the wind park and not on the energy produced. Doing
so maintains the symmetry of the transaction in that the initial transmission upgrade charges are
based on the capacity of the interconnect request, therefore the credit should also be based on the
capacity of the QF. In addition, ifthe wind developers are forced to "invest" in Idaho Power
transmission system they should be compensated at the same returns that Idaho Power earns on
its own investment in its transmission system. Any carrying charge on such contributions must
be set at Idaho Power s return on equity rate in order to make the wind developers close to
whole..
POLICY DECISION
This is a policy decision on the Commission s part and does not require an evidentiary
hearing. The policy should be guided, however, by the Federal policy to encourage the
development of cogeneration and small power production facilities as a matter of national
importance and, subsequently, national security. It should also be guided by the policy against
assigning transmission system upgrades to individual generators where the upgrades result in an
expansion of the network grid.
WHEREFORE Exergy respectfully requests that this Commission grant Cassia s prayer
for relief in this proceeding and order Idaho Power to roll in the costs of transmission upgrades
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that are necessary to serve its load center in and around the City of Boise.
DATED this 27th day of October 2006.
By v/a.
Peter Richardson
Attorneys for Exergy Development Group of Idaho LLC
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the ih day of May, a true and correct copy of the within and
foregoing REPL Y COMMENTS , were served electronically via e-mail and by U.S. Mail
postage prepaid, to:
Barton Kline
Monica Moen
Idaho Power Company
PO Box 70
Boise, Idaho 80707-0070
Cassia Wind Gulch Park LLC
Joe Miller
McDevitt & Miller
420 West Bannock
Boise, Idaho 83702
David Sikes
Idaho Power Company
PO Box 70
Boise, Idaho 83707-0070
Ronald K Arrington
Assoc Chief Counsel
John Deere Credit
6400 NW 86th St.
Johnston, IA 50131
David Meyer
Senior VP
A vista Utilities
PO Box 3727
Spokane, W A 99220
Brian Dickman
Dean S. Brockbank
Rocky Mountain Power
201 S. Main Street, Ste. 2300
Salt Lake City, UT 84111
And hand-delivered to:
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83702
Peter Rich dson
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