20100506Answer.pdf

DONOVAN E. WALKER
Senior Counsel
dwalkertidahopower.com
esIDA~POR~
An IDACORP Company
May 5,2010
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-10-11
AGPOWER JEROME, LLC, v. IDAHO POWER COMPANY
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Answer in the above matter.
Very truly yours,
¿K~1L~k
Donovan E. Walker
DEW:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise. ID 83702
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DONOVAN E. WALKER (ISB No. 5921)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
P.O. Box 70
Böise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalkerßYidahopower.com
InordstromßYidahopower.com
201B MAY -5 PM It: 51
IDAHO PUBUÇ
UTILITIES COMMiSSION
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
AGPOWER JEROME, LLC,
Defendant.
)
) CASE NO. IPC-E-10-11
)
) ANSWER
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)
)
)
)
)
Complainant,
v.
IDAHO POWER COMPANY,
COMES NOW, Idaho Power Company (hereinafter referred to as "Idaho Powet'
or "Respondent") by and through its attorneys and hereby answers the Complaint of
AgPower Jerome, LLC (hereinafter referred to as "AgPowet' or "Complainant").
i. INTRODUCTION
1. In this Complaint AgPower is requesting that the Commission order Idaho
Power to enter into a long-term fixed rate contract including purchase rates that exceed
Idaho Powets avoided cost.s as determined by the Commission on March 15, 2010, in
ANSWER-1
,
Order No. 31025 issued in Case No. GNR-E-10-01. The rates the Commission adopted
in Order in No. 31025 are approximately 10 percent lower than the rates previously
adopted in Order No. 30744, Case No. GNR-E-09-01. By its terms, Order No. 31025
applies to new PURPA contracts executed on and after March 16, 2010. Order No.
31025 would require that the rates to be paid to AgPower would be the rates set out in
Order No. 31025 rather the rates approved by the Commission in Order No. 30744.
2. However, this Commission has recognized in prior orders that there are
situations when it would be appropriate to apply a prior vintage of rates to a current
PURPA contract. The Idaho Supreme Court has confirmed that the Commission has
the authority to determine the avoided cost rates which should be applied to a particular
QF project.
1 In several cases litigated in the early to mid-1990s, the Commission
determined, and the Idaho Supreme Court affirmed, certain tests that a QF developer
must satisfy in order to establish an entitlement to sell QF output at a particular
published avoided cost rate.2 One of the tests that would qualify a particular generating
facility to receive a higher superseded rate requires that a developer must have
executed a power sales agreement with the 'utilty at the rate in question before a
successor rate becomes effective. The second test requires the QF developer to file a
meritorious complaint alleging that the QF project was sufficiently mature and far
enough along in the contracting process that but for the conduct of the utilty company,
the developer would have been able to sign a contract with the utilty containing the
superseded rates.
1 Empire Lumber v. Washington Water Power, 114 Idaho 191, 755 P .2d 1229 (1988) and A. W.
Brown Go., Inc., v. Idaho Power Company, 121 Idaho 812,828 P.2d 841 (1992).
2 A. W. Brown, Supra. Rosebud Enterprises, Inc., v. Idaho Public Utilities Gom'n, 128 Idaho 609,
917 P.2d 766 (1996). Rosebud Enterprises, Inc., v. Idaho Public Utilties Gom'n, 128 Idaho 624,917 P.2d
781 (1996). Rosebud Enterprises, Inc., v. Idaho Public Utiliies Gom'n, 131 Idaho 1, 951 P.2d 521 (1997).
ANSWER-2
3. In this case, AgPower had not signed a contract with Idaho Power
including the rates approved by Order No. 30744 on or before March 16, 2010.
Therefore, the only way that AgPower might be entitled to a contract containing the
rates set out in Order No. 30744 is if the Commission finds that the particular facts in
this case demonstrate that but for Idaho Powets actions, AgPower would have received
a contract prior to March 16, 2010.
4. Idaho Power does not believe that AgPower can demonstrate that Idaho
Power acted either unreasonably or in bad faith in declining to sign a contract with
AgPower w~ich would include the higher rates from Order No. 30744.
5. In making its decision to decline to sign a contract with AgPöwer
containing the higher rates, the Company applied the following criteria to the facts in
AgPowets case. The Company concluded that AgPower did not meet the following
criteria prior to March 16, 2010.
a. Interconnection and Transmission
i. Filed an interconnection application; and
ii. Received and accepted an interconnection feasibilty study
report for the project and paid any requested study deposits (or established credit) for
the next phase of the interconnection process in accordance with Schedule 72; and
iii. Received confirmation from Idaho Power that transmission
capacity is available for the project and/or received and accepted transmission capacity
study results and cost estimates.
ANSWER-3
b. Purchase Power Agreement
i. An agreement was materially complete and would have
been executed by both parties prior to March 16,2010, but for an unreasonable delay in
the receipt of final approval from Idaho Power.
6. Because the AgPower project is a part of the Twin Falls interconnection-
transmission cluster, the Company has concluded that AgPower meets the above-
described criteria in (a), above, related to the interconnection progress. Idaho Power
has invoiced AgPower for its share of the transmission upgrade costs associated with
its share of the cluster costs. As of the date of this Answer, AgPower has not paid the
invoice but payment is not past due until May 10, 2010. If AgPower does not pay the
invoice on time, AgPower wil lose its place in the interconnection queue.
7. With respect to the Power Purchase Agreement, Idaho Power cannot
conclude that the Company and AgPower had reached an agreement on the rates,
terms, and conditions to be included in a contract prior to the March 16 cutoff date. In
August of 2009, Idaho Power provided a blank QF contract to AgPower as an example
of prior contracts approved by the Commission. When it provided the blank contract,
Idaho Power notified AgPower the blank contract was merely an example and was
subject to change unti executed. AgPowets only response at that time was tö advise
Idaho Power that it objected to the inclusion of security and liquidated damages
provisions in the blank agreement. In its Complaint, AgPower continues to refer to
those provisions as being "punitive and unreasonable." These are the same liquidated
damages and security provisions the Commission has approved in Order Nos. 31060
and 31034 for the Arena Drop hydro project and Dry Creek anaerobic digester projects,
ANSWER-4
respectively. From August 2009 until March of 2010, AgPower contacted Idaho Power
various times with general questions. On March 9, 2010, AgPower filed in some of the
blanks in the August 2009 draft agreement, removed the "Draft designations," signed it,
and sent it to Idaho Power. This draft version of the contract was not the currently
acceptable contract document but was instead an outdated version containing terms
and conditions that are not agreed to by the parties. The security and liquidated
damage provisions in the 2009 draft are inadequate and Idaho Power did not, and wil
not, sign a contract containing these provisions. Subsequent to the 2009 draft contract,
revisions have been made to the Iiquated damage terms and to include security
provisions. As stated previously, these revised liquidated damage and security
provisions have been executed and approved by the Commission for the Arena Drop
hydro project and the Dry Creek anaerobic digester by Order Nos. 31060 and 31034,
respectively. AgPowets counsel was well aware of the Company's position with
respect to those liquidated damage and security provisions and at no time did AgPower
indicate that it was wiling to accept those provisions. Therefore, a substantial and
legitimate disagreement as to the terms and conditions of a contract between Idaho
Power and AgPower existed as of March 16, 2010. AgPowets decision to take an
outdated blank contract and sign it and deliver it to Idaho Power on March 9, 2010, does
not obviate the fact that material provisions of a contract were stil at issue between
AgPower and Idaho Power on March 16,2010.
II. ANSWER
8. Idaho Power hereby admits and denies the allegations contained in the
Complaint as follows:
ANSWER-5
a. Idaho Power denies any allegation not specifically admitted and
reserves the right supplement this Answer if AgPower amends its Complaint.
b. Idaho Power admits the factual allegations contained in paragraphs
1, 11, 13, 18, 19, 23, 24, and 25 of the Complaint.
c. Idaho Power has insufficient information or knowledge regarding
the truth of the allegations contained in paragraphs 2, 5, 6, 7, 8, 9, 10, and 12 and
therefore denies the same.
d. Idaho Power denies the allegations contained in paragraphs 14, 15,
16,17,20,21,22,26,27, and 28.
e. The allegations in paragraphs 3, 4, 29 and 30 are conclusions of
law and require no response.
WHEREFORE, Idaho Power respectfully requests that the Commission issue its
Order denying the relief sought by AgPower in its prayer for relief.
Respectully submitted this 5th day of May 2010.
~~k
DONOVAN~WALKER
Attorney for Idaho Power Company
..
ANSWER-6
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 5th day of May 2010 I served a true and correct
copy of the within and foregoing ANSWER upon the following named parties by the
method indicated below, and addressed to the following:
AgPower Jerome, LLC
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY
515 North 2th Street
P.O. Box 7218
Boise, Idaho 83702
Hand Delivered
i.U.S. Mail
_ Overnight Mail
FAX
i. Email peter(ârichardsonandoleary.com
greg(ârichardsonandoleary.com
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ANSWER -7