20100409Complaint.pdf

Peter J. FUchardson
Gregory M. Adams
FUchardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peterCirichardsonandoleary.com
gregCirichardsonandolear.com
ZûHHìPR -9 M~": 59
Attorneys for Complainant AgPower Jerome, LLC
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
AGPOWER JEROME, LLC,
Complainant,
IDAHO POWER COMPANY,
Defendant.
~ Case No. rpc -Ë -/0- L(
)
) FORMAL COMPLAINT
)
)
)
)
vs.
1 INTRODUCTION
2 This is a formal complaint fied by AgPower Jerome, LLC ("AgPower") with the Idaho
3 Public Utilties Commission (the "Commission") pursuant to Idaho Administrative Riles
4 31.01.01.054. Prior to March 16,2010, AgPower requested, thatIdaho Power Company ("Idaho
5 Power"), execute a stadard Public Utility Regulatory Policies Act of 1978 ("PURP A") power
6 purchase agreement ("PPA") for qualifying facilties ("QFs") under 1 0 average monthly mega-
7 watts ("aMW) for AgPower's biomass to renewable energy QF - the Double A Dairy Digester
8 Project in Jerome, Idaho. Because Idaho Power has rejected AgPower's attempt to obligate itself
9 the terms of a stadard PP A at the published avoided cost rates effective prior to March 16,
10 2010, AgPower respectfully requests that the Commssion issue a declaratory judgment that
Page 1 - Formal Complaint of AgPower Jerome, LLC
1 AgPower is entitled to such a PP A and fuher requests that the Commission order Idaho Power
2 to enter into a PPA at the rates in effect prior to March 16,2010.
3 PRELIMINARY MATTERS
4 Copies of all pleadings and other correspondence in this matter shoild be served upon
5 counsel for AgPower at:
6 Peter J. FUchardson7 Gregory M. Adams8 FUchardson & O'Lear, PLLC9 515 N. 27th Street10 P.O. Box 721811 Boise, Idaho 8370212 Telephone: [phone] Fax: [phone]
peterCirichardsonandolear .com
14 gregCirichardsonandoleary.com
15
16 In support of this Complaint, AgPower alleges as follows:
17 IDENTITY OF PARTIES
18 1.Idaho Power is an Idaho Corporation with its principal place of business at 1221
19 West Idaho Street, Boise, Idaho 83702. Idaho Power Company is an electric company and a
20 public utility subject to the jurisdiction and regulation of the Idaho Public Utilities Commission
21 pursuant to I.C. § 61-129. Idaho Power is subject to the jurisdiction of the Commission, the
22 Public Utility Commission of Oregon, and the Federal Energy Regulatory Commission
23 ("FERC").
24 2.AgPower is a Delaware limited liabilty company, and the address of its principle
25 place of business is AgPower Jerome, LLC, c/o Cenergy, USA, Inc., 11500 Parham Road, Suite
26 9, Little Rock, Arkansas 72212. AgPower has assumed the rights of other entities engaged in
27 developing the anaerobic digester at the Double A Dairy in Jerome, Idaho - the Double A Dairy
Page 2 - Formal Complaint of AgPower Jerome, LLC
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Digester. For puroses of ths complaint, "AgPower" includes AgPower and those other entities
previously engaged in developing the Double A Dairy Digester.
JURISDICTION
3. This case involves PURPA's avoided cost provisions and FERC implementing
regu1ations thereto, which PURPA directs states to implement. See 16 U.S.C. § 824a-3 (a)-(g);
FERC v. Mississippi, 456 U.S. 742, 751 (1982). In Idaho, the Commission possesses jurisdiction
over complaints regarding rates of public utilties, including PURPA rates. I.C. §§ 61-129, -501.
-502, -503, -612; see also Afton Energy Inc. v. Idaho Power Co., 111 Idaho 925, 929, 729 P. 2d
400, 404 (1986). The Commission has jurisdiction to issue declaratory judgments regarding
utility contracts pursuant Idaho's Declaratory Judgment Act, i.e. § 10-1203. See Utah Power
and Light v. Idaho Pub. Utilities Commission, 112 Idaho 10, 12, 730 P.2d 930,932 (1986).
APPLICABLE LAWS AND REGULATIONS
4. Section 210 of PURP A requires electric utilities to purchase power produced by
small power producers that obtain QF status under section 201. 16 U.S.C. § 824a-3(a)(2). FERC
rules provide QFs with the option of sellng electricity and capacity to a utilty based on the
utility's "avoided costs" at the time the QF incurs a legally enforceable obligation to deliver
energy or capacity over a specified term. See 18 C.F.R. § 292.304(d)(2)(ii). Thus, "a QF, by
committing itself to sell to an electric utility, also commits the electric utilty to buy from the QF;
these commitments result either in contracts or in non-contractua, but binding, legally
enforceable obligations." JD Wind 1, LLC, "Notice ofIntent Not to Act and Declaratory Order,"
129 FERC ir 61,148, at p. 10-11 (November 19,2009).
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1 FACTUAL BACKGROUND
2 5. AgPower has been actively engaged in the development of a 4.5 MW anaerobic
3 digester project at the Double A Dairy in Jerome, Idaho.
4 6. AgPower's Double A Dair Digester will employ six 750 kW synchronous
5 generators to convert methane gas given off from dairy waste into 4.5 MW of clean, renewable
6 energy, and is already a self-certified QF under PURA.
7 7. In addition to the benefits of renewable energy generated, the Double A Dairy
8 Digester will provide substantial waste-management benefits by converting a large quantity of
9 dairy cattle waste to a liquid effluent that can be used as fertilzer and a pathogen-free fiber
10 usefu for cattle bedding or other puroses. Additionally, the project will reduce the amount of
11 methane - a very potent greenhouse gas - released into the atmosphere by putting it to the
12 beneficial use of renewable energy production.
13 8. AgPower's Double A Dairy Digester will also generate substatial income for the
14 host dairy, and therefore, as with other dairy digesters, will support Idaho's dairy industr with
15 an additional income stream from what was formerly a waste product.
16 9. To achieve these benefits, AgPower must secure a power purchase agreement
17 with Idaho Power - the nearest utility, and AgPower therefore initiated contact with Idaho Power
18 in 2007.
19 10. Over the two years since initiating contact with Idaho Power, AgPower has
20 incured substatial expenses on a completed interconnection study and work orders relative to
21 upgrading Idaho Power's distribution system for interconnection of the project. Idaho Power has
22 not indicated that interconnection and transmission capacity are unattinable.
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1 11. AgPower has also had extensive contact with Idaho Power regarding a PP A for
2 the project, and in response to AgPower's request, Ida!0 Power delivered a draf PPA to
3 AgPower in Augut 2009, contaning the avoided cost rates contained in Order No. 30744.
4 12. In par in reliance on the rate strcture contained in that draft PP A, AgPower has
5 made substatial investments in development of the project, including completing permitting,
6 finalizing site control, commencing constrction and pourg foundations, and has secured
7 equity investors and is nearing completion of debt financing.
8 13. Idaho Power's draft contract contained clauses regarding liquidated damages and
9 a required delay security of $20 per kw of maximum output.
10 14. These clauses required liquidated damages and delay security far in excess of the
11 clauses contained in a PURP A PP A with Idaho Power in April 2008 for the another dair
12 digester - the Big Sky West Dairy Digester.
13 15. Idaho Power insisted on the increased delay damages even though energy prices
14 have dropped signficantly since April 2008. And Idaho Power is even less likely to incur
15 daages to replace energy contracted for from Double A Dairy Digester in the event of a delay
16 in achieving the online date than Idaho Power would have been in the event of defau1t on the
17 April 2008 contract. Idaho Power's delay damages clauses for the Double A Dairy Digester
18 were therefore puntive and designed to discourage this PURP A development.
19 16. Neverteless, before the service date of Order No. 31025 and the new rates
20 contaned therein, AgPower provided Idaho Power with the essential elements regarding the
21 Double A Dairy Digester to complete the draft PPA with the rates contaned in Order No. 30744.
22 AgPower obligated itself to enter into that draft PPA, even though Idaho Power's draft PPA
23 contained the onerous and punitive clauses regarding liquidated damages and a required delay
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1 security of $20 per kw of maximum output because Idaho Power told AgPower it had no choice
2 regarding the securty.
3 17. AgPower also informed Idaho Power's contract administrator at this time that
4 AgPower's interconnection study was complete.
5 18. On March 9,2010, Idaho Power received a letter from the Commission's Staff,
6 stating that the published avoided cost rates would be recalcu1ated. The letter included Staf s
7 recalculation of the avoided cost rates, which were substatially lower than those in Order No.
8 30744 and included in the draft PPA Idaho Power sent to AgPower.
9 19. Idaho Power concured in Staffs recalcu1ation on March 10, 2010, without
10 providing AgPower with notice of Staffs recalcu1ated rates or Idaho Power's concurence.
11 20. Instead, on March 11,2010, two days afer Idaho Power received notice of a
12 proposed significant decrease in the published avoided cost rates, Idaho Power rejected
13 AgPower's binding offer to enter into a PPA according to the terms in Idaho Power's draft PPA,
14 including the punitive delay damages clause and the rates from Order No. 30744.
15 21. Contrar to its prior representations, Idaho Power stated on March 11 that it
16 would not enter into a PP A according to terms Idaho Power had initially sent AgPower until
17 AgPower complied with a new process, memorialized in writing for the first time on March 11.
18 Idaho Power's new process required AgPower, prior to receiving a PP A, to (1) provide
19 documentation that it had filed for interconnection; (2) receive an interconnection feasibility
20 study; (3) sign a letter of understanding allowing Idaho Power to fie an application to Idaho
21 Power requesting transmission capacity; and (4) provide acceptace of the results of Idaho
22 Power's initial transmission capacity study.
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1 22. Idaho Power also failed at this time to provide AgPower with an updated version
2 of its initial PP A provided in August 2009, despite AgPower's request for a PP A contanig any
3 necessar updated clauses. Indeed, at all times relevant to this case, Idaho Power delayed
4 progress towards a fully executed PP A by failng to make publicly available a stadard draft
5 PP A containing stadard elements of a PURP A PP A.
6 23. On March 12, AgPower delivered to Idaho Power a signed version of the August
7 2009 draft PPA with the essential, project-specific information provided in AgPower's prior
8 communcation.
9 24. On March 15,2010, the Commission approved the new, signficantly lower
10 avoided cost rates contained in Order No. 31025 with an effective date of March 16,2010.
11 25. On March 17, 2010, Idaho Power informed AgPower that the PP A it had
12 obligated itself to was not the most curent version ofa PURPA PPA, and rejected AgPower's
13 attempt to obligate itself to a stadard PURPA PPA containing the rates in Order No. 30744.
14 LEGAL CLAIM
15 Complainant's Claim for Relief
16 Idaho Power is in violation ofPURPA, FERC's regulations and orders, and the
17 Commission's orders by failng to provide AgPower with a power purchase agreement with
18 published avoided cost rates in effect prior to March 16,2010.
19 26. AgPower re-alleges and incorporates paragraphs 1 - 25.
20 27. AgPower has attempted in good faith to engage in negotiations to obtain a fuly
21 executed power purchase agreement to deliver energy and capacity to Idao Power from the
22 Double A Dairy Digester and provided Idaho Power with the essential, project-specific elements
23 for such an agreement prior to March 16, 2010.
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28. AgPower committed itself to sell energy and capacity from this QF to Idaho
Power prior March 16,2010, and, consequently, AgPower commtted Idaho Power to buy from
AgPower's QF at the rates on fie prior to March 16.
29. These commitments result in non-contractu, but binding, legally enforceable
obligations. 18 C.F.R. § 292.304(d)(2)(ii); JD Wind 1, LLC, 129 FERC ir 61,148, at pp. 10-11.
30. By demanding puntive liquidated daages and security payments for delay
default, imposing unecessar conditions to securng a PURP A PP A, failing to provide publicly
available stadard PPA terms and conditions, and delaying its responses to AgPower's binding
offers to enter into a PURPA PPA for the Double A Dairy Digester, Idaho Power is in violation
ofPURPA, FERC's implementing reguations, and the Commssion's orders. See 16 U.S.C. §
824a-3(a)(2); 18 C.F.R. § 292.304(d)(2)(ii); Blind Canyon Aquaranch v. Idaho Power
Company, Case No. IPC-E-94-1, Order No. 25802 (November 1994).
PRAYER FOR RELIEF
WHEREFORE, AgPower respectfully requests that the Commission issue an Order:
1. Declarng that Idaho Power is in violation ofPURPA, FERC's implementing
regu1ations, and the Commission's orders.
2. Requiring Idaho Power to execute a stadard PUR A power purchase agreement
for AgPower's Double A Dairy Digester QF at Idaho Power's avoided cost rates on fie for QFs
under 10 aMW prior to March 16,2010.
3. Granting any other relief that the Commission deems necessar.
Page 8 - Formal Complaint of AgPower Jerome, LLC
t'
Respectfuly submitted this r day of April 2010,
Page 9 - Formal Complaint of AgPower Jerome, LLC
~¿Peter J. FUchardson
Attorney for AgPower Jerome, LLC
ISB No: 3195
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 9th day of April, 2010, a tre and correct copy ofthe
withn and foregoing FORMAL COMPLAINT OF AGPOWER PARTNERS, LLC
was served in the maner shown to:
Jean Jewell
Commission Secreta
Idaho Public Utilties Commission
472 W Washington
Boise ID 83702
-. Hand Delivery
_U.S. Mail, postage pre-paid
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