20070215Idaho Winds reply comments.pdf

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Idaho Winds LLc
12 February 2007
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, Idaho 83720-0074
Sent via e-mail to jean.jewellcmpuc.idaho.gov
Attention: Ms. Jean Jewell, Secretary
Subject:Reply Comments, Case No. IPC-06-
18 MW Alkali Wind Farm PPA
Dear Ms. Jewell:
Please find attached for filing in the above referenced matter the Reply Comments of Idaho
Winds LLC in Reply to the Comments of the Commission Staff.
An original of our Reply Comments is also being sent to you via U.S. maiL ALPN6 WI"11i s'eve:1\I
(.7) GOP, ES.
Please contact me if you have any questions at 925.388.0072. ~L-P
Sincerely,
Idaho Winds LLC
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William Damon
Vice President
5356 N. Cattail Way. Boise, Idaho 83714
phone [phone] . e-mail wdcmpowerworks.com . www.powerworks.com
William Damon , Vice President
Idaho Winds LLC
5356 N. Cattail Way
Boise , Idaho 83714
Phone: [phone]
Fax: [phone]
wdcmpowerworks.com
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL OF A)
POWER PURCHASE AGREEMENT WITH IDAHOWINDS LLC.
CASE NO. IPC-O6-
REPLY COMMENTS OF IDAHO
WINDS LLC IN REPLY TO THE
COMMENTS OF THE COMMISSION
STAFF
COMES NOW Idaho Winds LLC ("Idaho Winds ), and pursuant to the Idaho Public
Utility Commission s ( the "Commission ) Notice of Application , Notice of Modified Procedure
and Order No. 30221 issued on January 19 2007 , replies to the Comments of the Commission
Staff dated February 9 , 2007 ("Staff Comments
Interest of Idaho Winds
Idaho Winds is one of the parties , along with Idaho Power Company ("Idaho Power ), to
the 18 MW Alkali Wind Farm (the "Project") 20-year Firm Energy Sales Agreement dated
December 12, 2006 (or Power Purchase Agreement
, "
PPA") that is the subject matter of this
case.
Introduction
Idaho Winds wishes to thank the Commission Staff ("Staff") for its recommendation to
approve the Project's PPA. Idaho Winds , however, disagrees with portions of the Staff
Comments that recommend inclusion of conditions related to transmission services. While
Reply Comments of Idaho Winds LLC
Idaho Winds recognizes the implicit linkage between avoided cost calculations and firm
transmission services , this is not the proper proceeding to deal with transmission-related
issues.
Idaho Winds s 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 Winds is aware that most of the Public Utility Regulatory Policy Act ("PURPA"
wind projects with approved PPAs 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 various parties face many complex issues, such as:
The lack of explicit system upgrade costs in the current avoided cost calculation.
The Federal Energy Regulatory Commission ("FERC") requirement for reimbursement
of system upgrade costs which produce network benefits.
The quantification of network benefits.
The reasonableness of the load and resource scenario used in the N-1 study.
The reasonableness of the system upgrade plan.
The appropriateness of various full or partial funding and reimbursement mechanisms.
We understand that these issues are presently being addressed through discussions and
negotiations between the various parties. While Idaho Winds s Project is not in the
transmission constrained area near Twin Falls , some of the issues faced by the other projects
will, however, impact Idaho Winds s transmission negotiations. There has been no information
Reply Comments of Idaho Winds LLC
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 Winds s PPA 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
Project, 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 Project may not have firm transmission service from
Idaho Power and recommend conditioning approval of the PPA on the execution of a final
interconnection agreement. Staff Comments further recommend that the Commission retain
the ability to adjust rates in the PPA in the event the Project does not obtain firm transmission
service. (Staff Comments pgs. 8 - 9.) The Project, however, has requested firm transmission
service and the completed transmission Generator Interconnection Feasibility Study
Feasibility Study has preliminarily identified the costs associated with such service. There
is no reason, in the context of this case, to assume the Project 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 Project has requested, and the transmission Feasibility Study identifies, firm
transmission service. Idaho Power and Idaho Winds must now structure an interconnection
agreement that both deals with the uncertainties surrounding this service and allows the Project
Reply Comments of Idaho Winds LLC
to proceed to construction. Idaho Winds 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 PPA.
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 that 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 Grandfatherina
At its core, a grandfathering proceeding is about fairness. Idaho Winds has spent, and
continues to spend , substantial resources developing this Project. The issue here is whether it
is fair to change the rules which Idaho Winds relied on in its Project investment decisions. Both
Idaho Power and Staff agree that the Project has 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 Winds to accept
restrictions which have not been applied to the rest of the PURPA projects as a condition of its
PPA approval. That would be unreasonably prejudicial to Idaho Winds s upcoming
interconnection negotiation. Idaho Winds s Project should have the same rights and obligations
that are ultimately applied to the other PURPA projects.
Staff Comments correctly note that Idaho Winds s Alkali Project and the recent Bennett
Creek and Hot Springs projects are the first to separate transmission services and power
purchasing obligations , in compliance with the Commission s Order No. 30179. Those
Reply Comments of Idaho Winds LLC
changes, however, were essentially ministerial and did not address any of the issues related to
firm transmission services and cost responsibility. Those changes do not provide the basis for
restricting the Project's transmission options before the establishment of the Commission
ultimate transmission policies.
Conclusion
Regardless of PPA approval , the Project cannot proceed without agreement on
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 Winds s PPA.
DATED this 1 ih day of February, 2007
By:
z.;:JJwy 2.
--(
William Damon , Vice President
Idaho Winds LLC
5356 N. Cattail Way
Boise , Idaho 83714
P: 925.388.0072
F: 925.388.0073
Reply Comments of Idaho Winds LLC
CERTIFICATE OF SERVICE
I hereby certify that on the 12th day of February, 2007, I caused to be served, via the
method(s) 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
jean.jewell~puc.idaho.gov
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Cecelia Gassner
Deputy Attorney General
Idaho Public Utilities Commission
O. Box 83720
Boise, ID 83720-0074
cece .gassner~puc. idaho. gov
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Barton L. Kline , Senior Attorney
Monica B. Moen , Attorney II
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise , ID 83707
bkline~idahopower.com
mmoen~idahopower.com
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Ric Gale
VP-Pricing and Regulatory
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise, ID 83707
c/o rallphin~idahopower.com
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By:
l.J~
William Damon , Vice President
Idaho Wind LLC
Reply Comments of Idaho Winds LLC