20070205Reply comments.pdf

McDevitt & Miller LLP
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Chas. F. McDevitt
Boise, Idaho 83702 \\;:!~
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: Dean J. (Joe) Miller
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February 5, 2007
F/A HAND DEL/FE/? Y
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington St.
Boise, Idaho 83720
Re: IPC-06-34 Hot Springs Windfarm, LLC.
IPC-06-35 Bennett Creek Windfarm, LLC.
Dear Ms. Jewell:
Enclosed for filing in the above matters please find the original and seven (7) copies of REPLY
COMMENTS OF IDAHO WINDFARMS LLC IN REPLY TO THE INITIAL
COMMENTS OF THE COMMISSION STAFF.
An additional copy of the documents and this letter is included for return to me with your file
stamp thereon.
Very Truly Yours
~LW:LP
DJM/hh
Encls.
Dean 1. Miller (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Bannock Street
O. Box 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
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Attorneys for Idaho Windfarms
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL
OF A FIRM ENERGY SALES AGREEMENT FOR)
THE SALE AND PURCHASE OF ELECTRIC
ENERGY BETWEEN IDAHO POWER
COMPANY AND HOT SPRINGS WINDFARM LLC.
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL
OF A FIRM ENERGY SALES AGREEMENT FOR)
THE SALE AND PURCHASE OF ELECTRIC
ENERGY BETWEEN IDAHO POWER
COMPANY AND BENNETT CREEK WINDF ARM LLC.
CASE NO. IPC-O6-
REPLY COMMENTS OF IDAHO
WINDF ARMS LLC IN REPLY
TO THE INITIAL COMMENTS
OF COMMISSION STAFF
CASE NO. IPC-O6-
COMES NOW Idaho Windfarms LLC ("Idaho Windfarms ), and pursuant to the
Commission s Notice of Application, Notice of Modified Procedure and Notice of
Comments/Protest Deadline issued on January 4 2007, replies to the Comments of the
Commission Staff dated January 26, 2007 ("Staff Comments
REPLY COMMENTS OF IDAHO WIND FARMS -
Interest of Idaho Windfarms
Idaho Windfarms LLC is the sole member of Bennett Creek Windfarm LLC and Hot
Springs LLC, and makes these Reply Comments on behalf of its affiliates, Bennett Creek and
Hot Springs.
Introduction
Idaho Windfarms wishes to thank the Staff for its recommendation to approve the
Bennett Creek and Hot Springs Windfarms' (the "Projects ) power purchase agreements
PP As ). Idaho Windfarms, however, disagrees with portions of the Staff Comments that
recommend inclusion of conditions related to transmission services. While Idaho Windfarms
recognizes the implicit linkage between avoided cost calculations and fll1Il transmission services
this is not the proper proceeding to deal with transmission-related issues.
Idaho Windfarms' objection is based on the following:
. A record for transmission related decisions has not been developed.
. A decision on such issues is not currently required.
Adding transmission considerations now is inconsistent with grandfathering.
No Record
Idaho Windfarms is aware that most of the PURP A wind projects with approved PP
are currently negotiating their interconnection arrangements. This has been complicated by a
lack of existing policies related to the cost responsibilities associated with system upgrades. The
parties face many complex issues, such as:
The lack of explicit system upgrade costs in the current avoided cost calculation.
The FERC requirement for reimbursement of system upgrade costs which produce
network benefits.
REPLY COMMENTS OF IDAHO WINDF ARMS -
The quantification of network benefits.
The reasonableness of the load and resource scenario used in the N-l study.
The reasonableness of the system upgrade plan.
The appropriateness of various full or partial funding and reimbursement mechanisms.
These issues are presently being addressed through discussions and negotiations between
the parties. While Idaho Windfarms' Projects are not in the transmission constrained area near
Twin Falls, some of the issues faced by the other projects will, however, impact Idaho
Windfarms' transmission negotiations. There has been no information placed in the record of
this proceeding which would allow for an informed Commission decision on any of these
matters.
Conditioning the approval of Idaho Windfarms' PP A on transmission matters in this
proceeding would require the Commission to prejudge the outcome of the ongoing negotiations
and make at least a partial policy decision. Such decisions should wait until a comprehensive
proposal is submitted and a fully developed record is available.
Premature Decision
Regardless of the manner in which the issues noted above are resolved with regard to the
Projects, they will almost certainly be brought to the Commission for approval. That will be the
appropriate time to make decisions related to transmission services and establish the
Commission s policies on these matters.
Staff Comments speculate that the Projects may not have fll1Il transmission service from
Idaho Power and recommend conditioning approval of the PP A on the execution of a fInal
Interconnection Agreement. Staff Comments further recommend that the Commission retain the
ability to adjust rates in the PP As in the event the Projects do not obtain firm transmission
REPLY COMMENTS OF IDAHO WINDFARMS - 3
service. (Staff Comments pgs. 7-8). The Projects, however, have requested firm transmission
service and the completed Transmission Feasibility Studies have preliminarily identified the
costs associated with such service. There is no reason, in the context of this case, to assume the
Projects and Idaho Power will fail to achieve an appropriate agreement regarding transmission
cost responsibility. Nor is there any reason in this proceeding to predetermine the substance of
or limits on, the Interconnection Agreement.
As noted, the Projects have requested, and the Transmission Feasibility Studies identify,
firm transmission service. Idaho Power and Idaho Windfarms must now structure an
Interconnection Agreement that both deals with the uncertainties surrounding this service and
allows the Projects to proceed to construction. Idaho Windfarms believes that transmission
service consistent with Idaho s avoided cost calculation is achievable, but it is too early to
determine the form the Interconnection Agreement will take. That work will begin after the
approval of the PP As.
Likewise, Idaho Power believes appropriate transmission arrangements are achievable.
Staff Comments quote from Idaho Power s response to a Staff Production Request as follows:
Idaho Power states it has no reason to believe that a Uniform Interconnection
Agreement will not be signed for this project, and further, that if there are no
cluster or queue issues that arise requiring additional studies, it is anticipated that
the Uniform Interconnection Agreement could be signed by year-end 2007.
(Staff Comments Pg. 7).
Inconsistent With Grandfatherin2
At its core, a grandfathering proceeding is about fairness. Idaho Windfarms has spent
and continues to spend, substantial resources developing these Projects. The issue here is
whether it is fair to change the rules which Idaho Windfarms relied on in its project investment
REPLY COMMENTS OF IDAHO WINDF ARMS -
decisions. Both Idaho Power and Staff agree that the Projects have met the grandfathering
criteria established by the Commission and should be allowed to proceed under the rules that
existed on August 4 2005.
It is now recognized that the policies related to the ultimate funding of transmission
system upgrades were not yet established on that date. As noted above, the process for
establishing those policies is presently ongoing. It is unfair to force Idaho Windfarms to accept
restrictions which have not been applied to the rest of the PURP A projects as a condition of its
PPA approvals. That would be unreasonably prejudicial to Idaho Windfarms' upcoming
interconnection negotiation. Idaho Windfarms' Projects should have the same rights and
obligations that are ultimately applied to the other PURP A projects.
Staff Comments correctly note that Idaho Windfanns' PP As are the fIrst to separate
transmission services and power purchasing obligations, in compliance with the Commission
Order No. 30179. Those changes, however, were essentially ministerial and did not address any
of the issues related to finn transmission services and cost responsibility. Those changes do not
provide the basis for restricting the Project's transmission options before the establishment ofthe
Commission s ultimate transmission policies.
Conclusion
Regardless ofPPA approval, the Projects cannot proceed without agreeing to
transmission services which are acceptable to Idaho Power and the Commission. Therefore, the
Commission does not need to place transmission related conditions on the approval of Idaho
Windfarms' PP As.
REPLY COMMENTS OF IDAHO WINDFARMS - 5
DATED this ~day of February, 2007
REPLY COMMENTS OF IDAHO WINDFARMS - 6
~i
McDevitt & Miller LLP
420 West Bannock
Boise, Idaho 83702
P: 208.343.7500
F: 208.336.6912
Attorney for Idaho Windfarms
CERTIFICATE OF SERVICE
I hereby certify that on the day of February, 2007, I caused to be served, via the
methodes) indicated below, true and correct copies ofthe foregoing document, upon:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, ID 83720-0074
i i ewell(iV,puc.state. id. us
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Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
O. Box 83720
Boise, ID 83707
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Monica B. Moen
Barton L. Kline
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise, ID 83707
BKline~idahovower.com
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Ric Gale
VP-Pricing and Regulatory
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise, ID 83707
rgale~idahopower.com
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BY:
McDevitt & Miller LLP
REPLY COMMENTS OF IDAHO WINDFARMS - 7