20120531Comments.pdf

OHO
POWER
An IDACORP company
JASON B WILLIAMS
Corporate Counsel
iwulliamsidah000wer.com JTL.TL )MM1SSCN
May 31, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-10-19
Grand View Solar One PV, LLC, Firm Energy Sales Agreement -
Comments
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Comments in the above matter.
Very truly yours,
Jason B. Williams
JBW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
DONOVAN E. WALKER (ISB No. 5921)
JASON B. WILLIAMS (ISB No. 8718)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: (208y388-5317
Facsimile: [phone]
dwaIkeridahoDower.com
iwiIIiams(äidahoDower.com
RECEIVED
2012 MAY 31 PM 14:3f
JDAHC PUL. UTILITIES
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AMENDMENTS
TO THE FIRM ENERGY SALES ) CASE NO. IPC-E-10-19
AGREEMENT BETWEEN IDAHO )
POWER COMPANY AND GRAND VIEW ) IDAHO POWER COMPANY'S
SOLAR ONE PV, LLC. ) COMMENTS
COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), by and
through its undersigned counsel, and hereby submits the following Comments in the
above-captioned proceeding.
I. BACKGROUND
On June 14, 2010, Idaho Power filed an Application with the Idaho Public Utilities
Commission ("Commission") requesting approval of a 20-year Firm Energy Sales
Agreement between Idaho Power and Grand View Solar One PV, LLC ("Grand View
Solar One") dated June 8, 2010 ("FESA"). Under the terms of the FESA, Idaho Power
would purchase the electric energy generated by the 20 megawatt Grand View Solar
One photovoltaic solar project to be located in Elmore County, Idaho ("Project"). The
IDAHO POWER COMPANY'S COMMENTS -1
Commission approved Idaho Power's Application and the FESA in Case No. IPC-E-10-
10 in Order No. 32068 issued September 14, 2010.
On March 22, 2012, Idaho Power sent Grand View Solar One a Notice of
Material Breach of the FESA and a Notice of Termination ("Notice") for (1) failing to
maintain the required liquid Delay Security as required by the FESA and (2) failing to
achieve the FESA's Scheduled Operation Date. In addition, the Notice sought
collection of Delay Liquidated Damages in the amount of $900,000 for the Project's
failure to achieve the Scheduled Operation Date.
On March 23, 2012, Idaho Power received a response to the Notice from Grand
View Solar One wherein Grand View Solar One disputed Idaho Power's claim that it
failed to meet the Scheduled Operation Date. In addition, Grand View Solar One's
response to the Notice claimed that it had immediately available funds in the amount of
$475,000 to pay the obligation associated with its Generator Interconnection Agreement
("GIA") as well as a Letter of Credit necessary to meet the FESA's $900,000 Delay
Security obligations. Grand View Solar One's response further stated that it would
make the required GIA payment as well as post the Letter of Credit if Idaho Power
would agree to not pursue its Delay Liquidated Damages claim.
Idaho Power and Grand View Solar One entered into a Letter of Understanding
and Agreement Relating to Contract Default, Scheduled Operation Date, and Generator
Interconnection Agreement dated April 3, 2012 ("Letter Agreement"), attached hereto as
Attachment No. 1. The substantive terms of the Letter Agreement established an
Operation Date of no later than January 12, 2013, and required Grand View Solar One
to post its Delay Security as well as fund the construction deposit of its GIA by no later
IDAHO POWER COMPANY'S COMMENTS -2
than close of business on April 6, 2012. Grand View Solar One posted its Delay
Security and funded the construction costs for its GIA in accordance with the deadlines
in the Letter Agreement.
On April 11, 2012, Idaho Power filed the Letter Agreement with the Commission
as an informational filing in Case No. IPC-E-10-19. On April 24, 2012, the Commission
issued a Notice of Proposed Amendments to FESA/Notice of Modified Procedure
seeking comments on the Letter Agreement by no later than May 31, 2012. Order No.
32535. Idaho Power now submits these Comments.
II. COMMENTS
Among Idaho Power's approximately 120 PURPA contracts, this FESA is unique
in its description of the Scheduled Operation Date. None of Idaho Power's other Public
Utility Regulatory Policies Act of 1978 contracts contain the language that was at issue
between Idaho Power and Grand View Solar One. Specifically, Appendix B, item B-3 of
the FESA describes the Project's Scheduled Operation Date as follows:
1.) 90 days past the date identified within the final Facility
Study report in which Idaho Power shall have completed
installation of the Idaho Power interconnection equipment as
the Scheduled Operation Date or 2.) If by Seller action or
inaction, a final Facility Study is not completed or the
installation of Idaho Power interconnection equipment is
delayed, January 30, 2011 shall be the Scheduled Operation
Date.
As evident in the above-quoted language, the FESA contains no firm Scheduled
Operation Date, thus providing no firm Commercial Operation Date. This shortcoming
created ambiguity, and Idaho Power and Grand View Solar One each interpreted the
above-quoted language differently, leading to a dispute between the parties as to when
the Scheduled Operation Date was to occur. This good faith dispute around the
IDAHO POWER COMPANY'S COMMENTS -3
ambiguity in the FESA resulted in the parties settling the dispute by requiring Grand
View Solar One to make cash payments to move its project forward and establishing a
firm Commercial Operation Date of January 12, 2013. Establishing this firm
Commercial Operation Date removed the ambiguity from the FESA and gave both
Idaho Power and Grand View Solar One certainty as to the parties' obligations and
performance requirements under the FESA, and brought the contractual terms
regarding the Scheduled Operation Date in line with Idaho Powers other Commission-
approved FESAs.
More specifically, as part of agreeing to set a firm Commercial Operation Date,
Grand View Solar One agreed to immediately refresh its $900,000 Delay Security,
which had recently expired, as well as immediately pay the required $475,000 deposit
for construction of its generator interconnection facilities. Based upon the good faith
dispute among the parties regarding the unique language pertaining to the Schedule
Operation Date in the FESA, as well as Grand View Solar One's immediate remedy and
payment of the necessary funding for the Project, Idaho Power determined that settling
this matter with Grand View Solar One was reasonable. Thus, in examining the totality
of the circumstances in this unique FESA and situation, it was reasonable to enter into
the Letter Agreement with Grand View Solar One to remove the ambiguity contained in
the FESA.
DATED at Boise, Idaho, this 31st day of May 2012.
J 0!Ø. WILLIAMS
AttQrr'Iey for Idaho Power Company
IDAHO POWER COMPANY'S COMMENTS -4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 31st day of May 2012 I served a true and correct
copy of IDAHO POWER COMPANY'S COMMENTS upon the following named parties
by the method indicated below, and addressed to the following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Grand View Solar One PV, LLC
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
Sean Stocker, Director of Development
5 Whitney Lane
New Ulm, Minnesota 56073
X Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email kris.sasserpuc.idaho.gov
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email petercrichardsonandoleary.com
p reç rich a rd so na ndo lea ry. co
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email sstockercoronacaDitaIpartners.com
c1 ICXIQQ
Christa Bearry, Legal Assistant
IDAHO POWER COMPANY'S COMMENTS -5
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-10-19
ATTACHMENT NO. I
LETTER AGREEMENT
JASON B. WILLIAMS
Corporate Counsel
jwdliams©Idahopower.com
April 3, 2012
VIA E-MAIL: sstocker©coronacapitalpartners.com
Sean Stocker
Corona Capital Partners
300 Great Oaks Boulevard, Suite 320
Albany, New York 12203
Re: Grand View Solar One PV -Lefter of Understanding and Agreement Relating
to Contract Default, Scheduled Operation Date, and Generator Interconnection
Agreement-IPUC Case No. IPC-E-10-19
Mr. Stocker:
As Idaho Power Company's (Idaho Power") Randy Allphin explained in his phone call
with you on March 28, 2012, this Letter of Understanding and Agreement is meant to express, In
writing, the mutual agreement and understandings reached between Idaho Power and Grand
View Solar One PV, LLC (Grand View One") for Its qualifying facility generation project
("Project") regarding the Material Breach for failing to maintain the required security and for
failing to meet the Scheduled Operation Date required in Grand View One's Idaho Public
Utilities Commission-approved Firm Energy Sales Agreement dated June 8, 2010 ("FESA").
Paragraph 5.7 of the FESA requires the Project to post security In the amount of
$900,000 This amount may be reduced by ten percent (10%) if the Project evidences
that the interconnection is progressing and will enable the Project to meet the Scheduled
Operation Date. Idaho Power received a Standby Letter of Credit In the amount of
$900000 which was subsequently reduced to $810,000 pursuant to the terms of the
FESA.
The Standby Letter of Credit expired on March 1, 2012 and was not otherwise extended,
updated or replaced. Thus, the Project was in Materiel Breach effective March 1, 2012.
The FESA also contains a provision which Idaho Power has interpreted to mean that the
Project's Scheduled Operation Date was January 30, 3011. The Project did not achieve its
Operation Date by January 30, 2011 Grand View One disputes Idaho Power's interpretation of
the FESA that the Scheduled Operation Date was January 30, 2011, and, instead, asserts that
the FESA has a "rolling" Scheduled Operation Date and the deadline for such Operation Date
has not yet expired.
Letter of Understanding and Agreement
April 3.2012 Page 1 of 3
On March 22, 2012, Idaho Power sent Grand View Solar One a Notice of Material
Breath of the Firm Energy Sales Agreement and Notice of Termination ("Notice") for falling to
maintain the required security; and (2) failing to meet the Scheduled Operation Date. Pursuant
to the Section 5.3.2 of the FESA, the Notice also sought collection of Delay Liquidated Damages
in the amount of $900,000 for the Project's failure to achieve its Scheduled Operation Date
On March 23, 2012, Idaho Power received a response to the Notice from Grand View
One wherein Grand View One disputed Idaho Powe?s claim that it failed to meet the Scheduled
Operation Date. In addition, Grand View One's response claimed it had immediately available
funds in the amount of $475,000 to pay the obligation associated with its Generator
Interconnection Agreement ("Gig) as well as a letter of credit necessary to meet its security
obligations. Grand View One indicated it would be willing to make the GIA payment as well as
post the letter of credit if Idaho Power would agree to not pursue its Delay Liquidated Damages
claim.
Pursuant to Mr. Allphin's March 28, 2012, telephone cell with you, the Notice, and Grand
View One's response to the Notice the parties' mutual understanding and agreement having the
benefit of consultation with their own respective counsel, is as follows:
The parties hereby agree as follows:
(1)An Operation Date of no later than January 12, 2013, is a commercially reasonable time
period in which to allow Grand View One to have its project commercially operational;
(2)The commercially reasonable time period granted to Grand View One to achieve its
Operation Date is a fair and reasonable time for Grand View One to achieve its Operation Date
and Grand View One shall not bring any legal or equitable challenge to the same and by this
agreement knowingly and intelligently waives its rights to bring any possible legal claim related
thereto;
(3)Grand View One shall post security as required by the FESA in the amount of Eight-
Hundred Ten Thousand Dollars ($810,000) to secure the Operation Date commitment ("Delay
Security) This Delay Security shall be posted no later than Friday, April 8 2012 by 5:00 p.m.
Mountain Time in a form as described in Appendix A attached hereto if Grand View One fails to
achieve a January 12, 2013, Operation Date Idaho Power shall have the right to immediately
draw the funds from the Delay Security and the FESA will terminate without any further action or
notice required by Idaho Power. The parties agree that the damages Idaho Power and its
customers incur due to Grand View One's failure to achieve its Operation Date are difficult or
impossible to calculate with certainty, and that the Delay Security Is an appropriate
approximation of such damages The stated Delay Liquidated Damages and Delay Security for
such are reasonable, and Grand View One shall not bring any legal or equitable challenges to
the same, and by this agreement knowingly and intelligently waives its rights to bring any
possible legal claim related thereto;
(4)In the event Grand View One achieves its Operation Date by or before January 12, 2013,
Idaho Power shall release the Delay Security posted hereunder thirty (30) days after the
Operation Date has been achieved;
Letter of Understanding and Agreement
April 3, 2012 Page 2 of 3
(5)If Grand View One does not post the required Delay Security by the date certain of Friday,
April 8 2012 by 500 pm Mountain Time, the FESA will be terminated with no further notice
required or legal challenges to the termination thereof:
(6)if Grand View One does not achieve the Operation Date on or before January 12, 2013, by
5:00 p.m. Mountain Time, the FESA will be terminated with no further notice required or legal
challenges to the termination thereof; and
(7)Grand View One shalt pay Four-Hundred Seventy Five Thousand Dollars ($475,000)
representing the required construction deposit pursuant to the GIA, which payment shall be
made by no later than Friday, April 6, 2012. If Grand View One does not pay the required
construction deposit by Friday, April 6, 2012, by 5:00p.m. Mountain Time, the FESA will be
terminated with no further notice required or legal challenges to the termination thereof.
(8)If it can be reasonably demonstrated that Idaho Power was the cause of any delays that
would prevent Grand Mw One from achieving the Oparon Date of January 12, 2013, then the
Opedkn Data shell be astended by the length of such dsls or to some other reaaons We
as mutually agreed It Is hereby stipulated by both parUss that no such claim that Idaho Power
was orlsthe cause of any such delays e,dstsasof the doe of execution of this Agreement.
Capitalized terms uses in this agreement that are not defined herein shall have the meaning set
forth In the FESA.
Each party's signature below indicates that party's acceptance of this Letter of Understanding
and Agreement and the averments and contents thereof DATED this jday of April 2012
Agreed to and Accepted on behalf of Idaho Power Company: \
/JAaa Grow

jhw%6 B Williams
'SsnIor Vice President, Power Supply Corporate Counsel
Idaho Power Company Idaho Power Company
band ptedon behalf of Grand View Solar One PV, tIC Ag2k
Sean Stocker Peter Richer
Grand View Solar One PV, LLC Attorney for Grand View Solar One PV, LL.0
Letter of Understanding and Agreement
April 3. 2012 Page 3 of 3
APPENDIX A
FORMS OF LIQUID SECURITY
The Seller shall provide Idaho Power with commercially reasonable security instruments such as
Cash Escrow Security, Guarantee or Letter of Credit as those terms are defined below or other
forms of liquid financial security that would provide readily available cash to Idaho Power to
satisfy the Delay Security requirement within this Agreement.
For the purpose of this Appendix A, the term "Credit Requirements" shall mean acceptable
financial creditworthiness of the entity providing the security instrument in relation to the term of
the obligation in the reasonable j udgment of Idaho Power, provided that any guarantee and/or
letter of credit issued by any other entity with a short-term or long-term investment grade credit
rating by Standard & Poor's Corporation or Moody's Investor Services, Inc. shall be deemed to
have acceptable financial creditworthiness.
1.Cash Escrow Security - Seller shall deposit funds in an escrow account established by the
Seller in a banking institution acceptable to both Parties equal to the Delay Security.
2.Guarantee or Letter of Credit Security.- Seller shall post and maintain in an amount
equal to the Delay Security: (a) a guaranty from a party that satisfies the Credit
Requirements, in a form acceptable to Idaho Power at its discretion, or (b) a Letter of
Credit in a form acceptable to Idaho Power, in favor of Idaho Power. The Letter of
Credit will be issued by a financial institution acceptable to both parties.