20070821Answer.pdf

..,.
DAHO~POWER~
An IDACORP Company
'""
r ,.. t:: \\JtCv"- .
. .
Barton L. Kline
Senior Attorney
7ftnl ,1!:: ?
. .
. 3: 31..\Lv" I ;.\.~v '-
August 21 2007
Jean D. Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise , Idaho 83720-0074
Re:Case No. IPC-07-
Exergy Development Group of Idhao, LLC v.
Idaho Power Company
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of Idaho Power
Company s Answer to Exergy Development Group s Complaint in the above-referneced
matter.
I would appreciate it if you would return a stamped copy of this transmittal letter in
the enclosed self-addressed , stamped envelope.
very
1ffil)Y y
...
( .:vx v4 0--
Barton L. Kline
BLK:sh
Enclosures
o. Box 70 (83707)
1221 W. Idaho St.
Boise, 10 83702
BARTON KLINE , ISB # 1526
MONICA MOEN , ISB # 5734
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
'-C'F Vt""
...
.J
"' ;;
nit (' '1
""\
J. vv I ;,Uu L ...,.J ..J'
;.. .
UT1UTH~S ION
Attorney for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
vs.
EXERGY DEVELOPMENT GROUP OF
IDAHO , LLC CASE NO. IPC-07-
Petitioner IDAHO POWER COMPANY'S ANSWER
IDAHO POWER COMPANY
Respondent.
COMES NOW Idaho Power Company ("Idaho Power" or the "Company ) and
pursuant to RP 057., hereby answers the Complaint of Exergy Development Group of
Idaho, LLC ("Exergy
FACTUAL BACKGROUND
In its Complaint , Exergy alleges that Idaho Power is unlawfully requesting
Exergy to provide cash deposits to cover a portion of the expense Idaho Power will incur
conduct certain transmission studies. The Company performs these transmission studies
to determine what facilities , if any, must be constructed to allow generation projects , like
IDAHO POWER COMPANY'S ANSWER-
those Exergy proposes to construct, to safely and reliably interconnect with the Company
distribution and transmission system.
Idaho Power requires all generation facility developers that cannot meet
minimum credit worthiness standards that would qualify them for unsecured credit, to
provide a reasonable deposit or other liquid security before performing transmission
studies. There are two principal reasons for this requirement:
First, The Company is required by the orders of the Federal Energy
Regulatory Commission ("FE RC") to perform studies of the costs of
interconnection in order to provide generation developers with an accurate
estimate of interconnection costs.FERC's orders also authorize the
Company to obtain deposits for a portion of the cost of the studies from
those generation facility developers that cannot meet minimum credit
worthiness standards.
Second, the Company believes that obtaining such deposits from
generation project developers is a prudent business practice that mitigates
customer risk. Specifically, the deposit requirement mitigates the risk that
generation facility developers will not reimburse the Company for the costs it
incurs studying interconnection requirements if the developers ultimately
decide not to proceed with their projects.Costs not recovered from
developers will put upward pressure on customer rates.
1 Standardization of Generator Interconnection Agreements and Procedures, Order Nos. 2003, 2003-
2003-, 2003-, 2006 and 2006-A. Large Generator Interconnection Procedures (LGIA) 99 6, 7 and 8,
Small Generator Interconnection Procedures (SGIA) 994.7 and 4.
Ibid LGIA 99 7 and 8 SGIP 99 3.47, 3.55.
IDAHO POWER COMPANY'S ANSWER - 2
The cost of engineering and interconnection studies for generation projects is
not insignificant. Idaho Power s experience shows that design costs and engineering costs
comprise approximately twenty percent (20%) of the total cost of a generation
interconnection. As a result, if the total cost of a generation interconnection is $2 million
approximately $400 000 of the total cost of the interconnection would be attributable to
engineering and design. The deposit Idaho Power requires from generation developers
like Exergy that cannot meet minimum credit worthiness standards, is limited to ten percent
(10%) of the estimated interconnection cost with a cap of $100 000.
II.
REGULATORY JURISDICTION OVER INTERCONNECTION COSTS.
When interconnecting generating resources with the Company s distribution
and transmission system, Idaho Power is subject to the jurisdiction of three regulatory
authorities.First, the FERC exercises exclusive jurisdiction over the Company
interconnections with generating facilities that intend to sell their generation on the
wholesale market and desire to utilize Idaho Power s FERC jurisdictional transmission
system to deliver their energy. Second , the Idaho Public Utilities Commission ("IPUC") and
the Public Utility Commission of Oregon ("OPUC") exercise their respective jurisdictions in
Idaho and Oregon over interconnections of qualifying generating facilities ("OFs ) that
qualify for the mandatory purchase requirements under the Public Utility Regulatory
Policies Act of 1978 ("PURPA"). The Idaho and Oregon Commissions have exclusive
jurisdiction over interconnections between Idaho Power and OFs sitused in Idaho or
Oregon respectively, so long as the OFs sell the output of their generation to Idaho Power.
3 Attachment L to Idaho Power s Open Access Transmission Tariff (OATT).
IDAHO POWER COMPANY'S ANSWER - 3
FERC Interconnection Requirements. Beginning with FERC Order 2003 and
continuing in a series of orders and rulemakings 4 the FERC has established detailed and
mandatory procedures to be followed when interconnecting both large and small
generation facilities to utilities' interstate transmission systems.These generation
interconnection procedures direct utilities to undertake engineering studies in three stages
of increasing complexity to determine the cost of interconnections , including transmission
upgrades , required to permit safe and reliable interconnection of generating facilities.
FERC's interconnection procedures establish mandatory time limits for the utility to perform
the interconnection studies. FERC's generation interconnection procedures also provide
that generation project developers that cannot meet minimum credit worthiness standards
for unsecured credit may be required to provide deposits or other liquid security as a
condition of utilities' undertaking interconnection studies.
Idaho Schedule 72. For IPUC jurisdictional interconnections with OFs, Idaho
Power has , for more than ten (10) years, maintained a tariff , Schedule 72 , designed to
provide uniform treatment for all OFs seeking to interconnect with the Company
distribution/transmission system.
Similar to the FERC requirement , Schedule 72 obligates Idaho Power to
perform studies to provide an estimate of interconnection cost. Schedule 72 also requires
OFs to pay 100% of the cost of required interconnection facilities and requires the
Company to reconcile the actual cost of construction of those interconnection facilities with
the estimated cost and refund or recover any difference.
4 Standardization of Generator Interconnection Agreements and Procedures, Order Nos. 2003, 2003-
2003-, 2003-C, 2006 and 2006-
IDAHO POWER COMPANY'S ANSWER - 4
To assure compliance with FERC regulations, Idaho Power applies the FERC
rules for processing all interconnection requests , including OF requests for interconnection.
Applying the FERC procedures to all interconnection requests , including OFs, establishes a
uniform , consistent process for analyzing transmission interconnection requests.
provides OFs with certainty as to the processing times and the rules that will be followed in
processing their requests for interconnection. Application of the FERC rules includes
collecting deposits as a condition of performing interconnection studies.
10.Applyinq the FERC Interconnection Rules to OF Interconnections Is
Consistent with the Provisions of Schedule 72. The provisions of Schedule 72 relating to
payment for interconnection facilities reads as follows:
Unless specifically agreed otherwise by written agreement
between the Seller and the Company, the Seller will pay all
costs of interconnecting a Generation Facility to the
Company s system.
Unless specifically agreed otherwise in a written
agreement between the Seller and the Company, an initial cost
estimate of Company-owned Interconnection Facilities will be
provided to the Seller. Payment of the estimated cost will be
required prior to the Company s ordering, installing, modifying,
upgrading, or performing in any other way, work associated
with the Interconnection Facilities. Upon completion of the
Company-owned Interconnection Facilities , the actual costs
will be reconciled against the estimated cost previously paid by
the Seller and the appropriate billing or refund will be
processed. The Company reserves the right to collect
additional costs from the Seller for any additional Company
equipment, modifications, or upgrades the Company deems
necessary to operate and maintain a safe , reliable electrical
system as a result of the interconnection of the Seller
Generation Facility to the Company s system.
11.As the above-quoted section indicates, Schedule 72 provides that the Seller
will provide all costs of interconnecting a generating facility. (Emphasis added). All costs
IDAHO POWER COMPANY'S ANSWER - 5
include the cost of engineering studies required to provide an accurate , good faith estimate
of the total cost of the interconnection.
12.Schedule 72 goes on to say "Payment of the estimated cost will be required
prior to the Company s ordering, installing, modifying, upgrading or performing in any other
way, work associated with the interconnection facilities.(Emphasis added). This
language authorizes Idaho Power to require that generation developers who do not meet
minimum credit requirements, provide a deposit for a portion of transmission study costs, to
reduce the risk of financial loss (and ultimate upward pressure on customer rates) if the
generation developer subsequently decides not to proceed with its project.
13.FERC's Interconnection Procedures Require that Idaho Power Post a Pro
Forma Interconnection Aqreement on its Website . Exergy correctly notes that the Pro
Forma Facilities Study Agreement shown as Exhibit B to Exergy s Complaint and the Pro
Forma System Impact Study Agreement shown as Exhibit C included a deposit amount of
$26 000 and $3 000 respectively. Inclusion of those dollar amounts was a clerical error. A
blank in which the correct deposit amount could be inserted should have been contained
paragraphs 6.0 and 10.0 of the respective agreements rather than the $26 000 and $3 000
amounts shown in the Pro Forma Agreement. Idaho Power has amended this oversight on
its website and modified the Pro Forma study agreement to include a blank in paragraphs
0 and 10.0 respectively.
14.Exergy s assertion that inclusion of the $26 000 and $3 000 deposit amounts
in the Pro Forma Agreements constitutes a binding obligation on the part of Idaho Power to
only collect those specific deposit amounts is unfounded. A fair reading of the provisions
of the generation interconnection procedures on the Company s website makes it
IDAHO POWER COMPANY'S ANSWER - 6
abundantly clear that the amount of the deposit to be included in the Facilities Study
Agreement and the System Impact Study Agreement will vary depending on the complexity
and cost of the interconnection.
III.
RESPONSE TO SPECIFIC ALLEGATIONS
15.RP 057(2) requires that Answers to Complaints must admit or deny each
material allegation of the Complaint. Any material allegation not specifically admitted is
considered to be denied.
16.In paragraphs 1 and 2 of its Complaint, Exergy alleges that it owns other
Idaho limited liability companies for the purpose of developing wind powered generating
facilities for sale to Idaho Power.
17.Exergy then identifies the five (5) "Projects" that are encompassed by its
Complaint. For each of those Projects , Idaho Power has entered into a Firm Energy Sales
Agreement ("FESA") with a separate Idaho limited liability company. The relationship
between each of these limited liability companies and Exergy has not been disclosed to
Idaho Power. Under the Commission s prior orders regarding Idaho Power s ability to
obtain security from OF developers for performance of FESAs , Idaho Power cannot require
disclosure of the identity and credit worthiness of the owners of a OF limited liability
company entering into a FESA with Idaho Power. As a result, Idaho Power is without
sufficient information to either admit or deny the allegations contained in paragraphs 1 and
2 of the Complaint and , therefore, denies the same.
18.In response to paragraphs 3 40 and
, Idaho Power admits the allegations in those paragraphs.
IDAHO POWER COMPANY'S ANSWER - 7
19.In response to paragraphs 13, 31 , 36 , 42, 47 and 51 , Idaho Power has
insufficient information to either admit or deny the allegations and therefore denies the
allegations contained in those paragraphs.
20.In response to paragraphs 10 , 14, 22 , 30, 33, 37, 41 , 44 and 48, Idaho Power
denies the allegations contained in those paragraphs.
21.The Commission s Orders , tariffs and other documents referred to in
paragraphs 2, 5, 21 , 26, 32 and 43 speak for themselves and Complainant's interpretations
of those documents are not factual allegations that can be admitted or denied. As such
Idaho Power denies those allegations.
22.In response to paragraphs 11 25,38,49,
60 and 61 , the assertions in these paragraphs are more like legal arguments than
allegations of fact which can be admitted or denied. As such, Idaho Power denies those
allegations.
IV.
PRAYER FOR RELIEF
23.Idaho Power respectfully requests that the Commission issue its Order
denying the relief requested by Exergy and dismissing this Complaint with prejudice.
s:.J
Respectfully submitted this day of August 2007.(~I~
BARTON L. KLINE
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S ANSWER - 8
CERTIFICATE OF MAILING
'5 t
I HEREBY CERTIFY that on the day of August 2007, I served a true and
correct copy of the within and foregoing upon the following named parties by the method
indicated below, and addressed to the following:
Scott Woodbury
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, Idaho 83702
) U.S. Mail , Postage Prepaid
(X) Hand Delivered
) Overnight Mail
) Facsimile
) Email: scott.woodburv~puc.idaho.qov
Peter J. Richardson
Richardson & O'Leary
515 N. 2ih Street
O. Box 7218
Boise, Idaho 83702
) Hand Delivered
(X) U.S. Mail
) Overnight Mail
) FAX
(X) Email: peter~richardsonandolearv.com
James T. Carkulis
802 W. Bannock street
Boise, Idaho 83702
) Hand Delivered
(X) U.S. Mail
) Overnight Mail
) FAX
(X) Email: mlti ~ in-tch.com
BARTON L. KLINE
CERTIFICATE OF SERVICE