20120531Joint Motion.pdf

IDHO
PIVER® R An IDACORP Company
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JASON B. WILLIAMS ñ
Corporate Counsel
IwiIIiamsidah000wer.com
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-10-22
Yellowstone Power, Inc., Firm Energy Sales Agreement - Joint Motion for
Approval of Settlement Stipulation and Settlement Stipulation
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of the Joint Motion
for Approval of Settlement Stipulation and the Settlement Stipulation (Attachment No. I to
Motion) in the above matter.
Very truly yours,
ason B. Williams
JBW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
RECEfV it: D
DEAN J. MILLER (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, Idaho 83701
Telephone: [phone]
Facsimile: [phone]
joemcdevitt-m II Ier.com
Attorneys for Yellowstone Power, Inc.
2012 MAY 3 1 PM 14: 30
OAHU PLUC UTILITIES OOMMfSSON
JASON B. WILLIAMS (ISB No. 8718)
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
jwilliams(idahopower.com
dwaIkeridahopower.com
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR ) CASE NO. IPC-E-10-22
APPROVAL OF A FIRM ENERGY SALES )
AGREEMENT WITH YELLOWSTONE ) JOINT MOTION FOR APPROVAL OF
POWER, INC. FOR THE SALE AND ) SETTLEMENT STIPULATION
PURCHASE OF ELECTRIC ENERGY. )
COMES NOW, Yellowstone Power, Inc. ("Yellowstone") and Idaho Power
Company ("Idaho Power" or "Company") (hereinafter referred to as the "Parties"), by
and through their undersigned attorneys, and hereby move the Idaho Public Utilities
Commission ("Commission") for an order accepting the settlement stipulation
("Settlement Stipulation") filed herewith as Attachment No. 1. This Motion is based on
the following:
JOINT MOTION FOR APPROVAL OF SETTLEMENT STIPULATION -1
I. BACKGROUND
1.On February 19, 2004, Idaho Power filed an Application with the
Commission requesting approval of an Agreement for Sale and Purchase of Electric
Energy between Idaho Power and Renewable Energy of Idaho, Inc. ("Renewable
Energy Agreement") for a 17.5 megawatt ("MW") biomass generating facility to be
located at the old Boise Cascade Plant site near Emmett, Idaho ("Renewable Power
Project"). The Agreement was negotiated, and the power from the Renewable Power
Project was to be supplied, pursuant to the Public Utility Regulatory Policies Act of
1978. The Commission approved the Application and the Agreement in Case No. IPC-
E-04-05, Order No. 29437.
2.The Renewable Energy Agreement went into default and was ultimately
terminated when Renewable Energy, for reasons it alleged were beyond its control, was
unable to meet its Scheduled Operation Date. Thereafter, Idaho Power determined it
had incurred damages for Renewable Energy's non-performance of the Renewable
Energy Agreement in the amount of $106,804. Renewable Energy did not have the
funds or assets to make the payment.
3.On August 13, 2010, Idaho Power filed an Application with the
Commission requesting approval of a 15-year Firm Energy Sales Agreement ("FESA")
between Idaho Power and Yellowstone dated July 28, 2010, for an 11.7 MW biomass
fueled combined heat and power generator located at the same site as the Renewable
Energy Project ("Yellowstone Project."). Richard Vinson, one of the principals of
Yellowstone, was also a principal member of Renewable Energy. Although the non-
performance damages of the Renewable Energy Agreement was the liability of
JOINT MOTION FOR APPROVAL OF SETTLEMENT STIPULATION -2
Renewable Energy and not Yellowstone, Mr. Vinson agreed, as part of the FESA, to
pay the non-performance damages of the Renewable Energy Agreement as an offset to
the energy payments Yellowstone was to receive in the FESA. On September 3, 2010,
the Commission issued a Notice of Application/Modified Procedure and set an October
1, 2010, comment deadline. Order No. 32065. Commission Staff was the only party to
submit comments. In response to Staff comments, Yellowstone filed a motion on
October 1, 2010, to permit reply comments, and a subsequent motion on October 7,
2010, requesting oral argument following reply comments. The Commission granted
Yellowstone's motions and heard oral arguments from Yellowstone, Idaho Power, and
Commission Staff on October 26, 2010. Order Nos. 32083 and 32094.
4.In approving the FESA, the Commission analyzed the "totality of the
circumstances," including the fact that the FESA allowed for Idaho Power to recover the
$106,804 in non-performance damages from the Renewable Energy Agreement, "for
the benefit of ratepayers, that [Idaho Power] could not otherwise collect." Order No.
32104 at 12. Notably, the Commission-approved FESA had a Scheduled Commercial
Operation date of December 31, 2011, which was selected by Yellowstone. In addition,
the FESA required Yellowstone to post a Delay Liquidated Damages deposit in the
amount of $450,000. Yellowstone timely posted this required deposit in the form of a
Letter of Credit.
5.The Yellowstone Project failed to achieve its Scheduled Operation Date.
On May 3, 2012, Idaho Power sent Yellowstone a Notice of Material Breach for failing to
achieve its Scheduled Operation Date and stating that it would collect on the Letter of
Credit by May 10, 2012, if Yellowstone failed to cure the Material Breach. In response,
JOINT MOTION FOR APPROVAL OF SETTLEMENT STIPULATION -3
Yellowstone submitted a letter to Idaho Power alleging a force majeure event had
occurred, precluding Idaho Power from collecting the Delay Security. Settlement
discussions between the Parties ensued. The Settlement Stipulation is the result of
those settlement negotiations.
6.The Parties recommend that the Commission grant this Motion and
approve the Settlement Stipulation in its entirety, without material change or condition,
pursuant to RP 274.
II. REQUEST FOR MODIFIED PROCEDURE
7.Pursuant to RP 201, the Parties believe the public interest does not
require a hearing to consider the issues presented by this Motion and the Parties
request it be processed by Modified Procedure.
NOW, THEREFORE, the Parties respectfully request that the Commission enter
its Order (1) directing that consideration of the Settlement Stipulation be conducted by
Modified Procedure and (2) approving the Settlement Stipulation without material
condition or modification.
Respectfully submitted this 31st day of May 2012.
JAS B. WILLIAMS
orney for Idaho Power Company
DEAN J. MILLER
Attorney for Yellowstone Power, Inc.
JOINT MOTION FOR APPROVAL OF SETTLEMENT STIPULATION -4
Yellowstone submitted a letter to Idaho Power alleging a force majeure event had
occurred, precluding Idaho Power from collecting the Delay Security. Settlement
discussions between the Parties ensued. The Settlement Stipulation is the result of
those settlement negotiations.
6.The Parties recommend that the Commission grant this Motion and
approve the Settlement Stipulation in its entirety, without material change or condition,
pursuant to RP 274.
II. REQUEST FOR MODIFIED PROCEDURE
7.Pursuant to RP 201, the Parties believe the public interest does not
require a hearing to consider the issues presented by this Motion and the Parties
request it be processed by Modified Procedure.
NOW, THEREFORE, the Parties respectfully request that the Commission enter
its Order (1) directing that consideration of the Settlement Stipulation be conducted by
Modified Procedure and (2) approving the Settlement Stipulation without material
condition or modification.
Respectfully submitted this 31st day of May 2012.
JASON B. WILLIAMS
Attorney for Idaho Power Company
"'4 ~
137EWNT MILLER
Attorney for Yellowstone Power, Inc.
JOINT MOTION FOR APPROVAL OF SETTLEMENT STIPULATION -4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 31st day of May 2012 I served a true and correct
copy of the within and foregoing JOINT MOTION FOR APPROVAL OF SETTLEMENT
STIPULATION upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Kristine Sasser, Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Yellowstone Power, Inc.
Dick Vinson
Yellowstone Power, Inc.
P.O. Box 1539
Thompson Falls, Montana 59873
Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street
P.O. Box 2564
Boise, Idaho 83701
X Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email Kris. Sasser(Duc.idaho.Qov
Hand Delivered
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FAX
X Email dickblackfoot.net
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X Email joecmcdevitt-miller.com
Christa Bearry, Legal Assistant
JOINT MOTION FOR APPROVAL OF SETTLEMENT STIPULATION -5
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-10-22
ATTACHMENT NO. I
SETTLEMENT STIPULATION
DEAN J. MILLER (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, Idaho 83701
Telephone: [phone]
Facsimile: [phone]
ioemcdevitt-milIer.com
Attorneys for Yellowstone Power, Inc.
JASON B. WILLIAMS (ISB No. 8718)
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
iwilIiamsidahoDower.com
dwalker(idahopower.com
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR ) CASE NO. IPC-E-10-22
APPROVAL OF A FIRM ENERGY SALES )
AGREEMENT WITH YELLOWSTONE ) SETTLEMENT STIPULATION
POWER, INC. FOR THE SALE AND )
PURCHASE OF ELECTRIC ENERGY. )
This settlement stipulation ("Settlement Stipulation") is entered into between
Yellowstone Power, Inc. ("Yellowstone") and Idaho Power Company ("Idaho Power" or
"Company"), referred to herein individually as a Party and collectively as the "Parties."
The Parties agree as follows.
SETTLEMENT STIPULATION -1
I. INTRODUCTION
1. The terms and conditions of this Settlement Stipulation are set forth
herein. The Parties agree that this Settlement Stipulation represents a fair, just, and
reasonable compromise of the dispute between the Parties and that this Settlement
Stipulation is in the public interest. The Parties maintain that the Settlement Stipulation
and its acceptance by the Idaho Public Utilities Commission ("Commission") represent a
reasonable resolution of all issues identified between the Parties. Therefore, the Parties
recommend that the Commission, in accordance with RP 274-76, approve the
Settlement Stipulation and all of its terms and conditions without material change or
condition.
II. BACKGROUND
2.On February 19, 2004, Idaho Power filed an Application with the
Commission requesting approval of an Agreement for Sale and Purchase of Electric
Energy between Idaho Power and Renewable Energy of Idaho, Inc. ("Renewable
Energy Agreement") for a 17.5 megawatt ("MW") biomass generating facility to be
located at the old Boise Cascade Plant site near Emmett, Idaho ("Renewable Power
Project"). The Agreement was negotiated, and the power from the Renewable Power
Project was to be supplied, pursuant to the Public Utility Regulatory Policies Act of
1978. The Commission approved the Application and the Agreement in Case No. IPC-
E-04-05, Order No. 29437.
3.The Renewable Energy Agreement went into default and was ultimately
terminated when Renewable Energy, for reasons it alleged were beyond its control, was
unable to meet its Scheduled Operation Date. Thereafter, Idaho Power determined it
had incurred damages for Renewable Energy's non-performance of the Renewable
SETTLEMENT STIPULATION -2
Energy Agreement in the amount of $106,804. Renewable Energy did not have the
funds or assets to make the payment.
4.On August 13, 2010, Idaho Power filed an Application with the
Commission requesting approval of a 15-year Firm Energy Sales Agreement ("FESA")
between Idaho Power and Yellowstone dated July 28, 2010, for an 11.7 MW biomass
fueled combined heat and power generator located at the same site as the Renewable
Energy Project ("Yellowstone Project"). Richard Vinson, one of the principals of
Yellowstone, was also a principal member of Renewable Energy. Although the non-
performance damages of the Renewable Energy Agreement was the liability of
Renewable Energy and not Yellowstone, Mr. Vinson agreed, as part of the FESA, to
pay the non-performance damages of the Renewable Energy Agreement as an offset to
the energy payments Yellowstone was to receive in the FESA. On September 3, 2010,
the Commission issued a Notice of Application/Modified Procedure and set an October
1, 2010, comment deadline. Order No. 32065. Commission Staff was the only party to
submit comments. In response to Staff comments, Yellowstone filed a motion on
October 1, 2010, to permit reply comments, and a subsequent motion on October 7,
2010, requesting oral argument following reply comments. The Commission granted
Yellowstone's motions and heard oral arguments from Yellowstone, Idaho Power, and
Commission Staff on October 26, 2010. Order Nos. 32083 and 32094.
5.In approving the FESA, the Commission analyzed the "totality of the
circumstances," including the fact that the FESA allowed for Idaho Power to recover the
$106,804 in non-performance damages from the Renewable Energy Agreement, "for
the benefit of ratepayers, that [Idaho Power] could not otherwise collect." Order No.
32104 at 12. Notably, the Commission-approved FESA had a Scheduled Commercial
SETTLEMENT STIPULATION -3
Operation date of December 31, 2011, which was selected by Yellowstone. In addition,
the FESA required Yellowstone to post a Delay Liquidated Damages deposit in the
amount of $450,000. Yellowstone timely posted this required deposit in the form of a
Letter of Credit.
6.The Yellowstone Project failed to achieve its Scheduled Operation Date.
On May 3, 2012, Idaho Power sent Yellowstone a Notice of Material Breach for failing to
achieve its Scheduled Operation Date and stating that it would collect on the Letter of
Credit by May 10, 2012, if Yellowstone failed to cure the Material Breach. In response,
Yellowstone submitted a letter to Idaho Power alleging a force majeure event had
occurred, precluding Idaho Power from collecting the Delay Security. Settlement
discussions between the Parties ensued. This Settlement Stipulation is the result of
those settlement negotiations.
7.Based upon the settlement discussions, as a compromise of the positions
in this case, and for other consideration as set forth below, the Parties agree to the
following terms:
III. TERMS OF THE SETTLEMENT STIPULATION
8.Termination of FESA. The Parties agree that the FESA shall be
terminated, the Yellowstone Project's Generator Interconnection request shall be
withdrawn, and the Yellowstone Project shall be removed from the Company's
Generator Interconnection queue, all effective upon Commission approval of this
Settlement Stipulation.
9.Mutual Release. Yellowstone and its current and former partners, joint
venturers, representatives, successors, assigns, affiliates, subsidiaries, parents,
divisions, departments, investors, shareholders, officers, directors, employees,
SETTLEMENT STIPULATION -4
managers, agents, attorneys, insurers, and predecessors ("Releasing Parties") fully,
finally, and forever release, discharge, and covenant not to sue Idaho Power and its
current and former partners, joint venturers, representatives, successors, assigns,
affiliates, subsidiaries, parents, divisions, departments, investors, shareholders, officers,
directors, employees, managers, agents, attorneys, insurers, and predecessors
("Released Parties"), to the broadest extent allowed by law, from and for any and all
claims, actions, causes of action, debts, damages, demands, offsets, payments, costs,
rights, liabilities, charges, and expenses, direct or indirect, regardless of the legal or
equitable theory on which they are based, whether known or unknown, liquidated or
unliquidated, accrued or unaccrued, asserted or unasserted, arising from or relating to
the Yellowstone Project.
Idaho Power fully, finally, and forever releases, discharges, and covenants not to
sue Yellowstone and its current and former partners, joint venturers, representatives,
successors, assigns, affiliates, subsidiaries, parents, divisions, departments, investors,
shareholders, officers, directors, employees, managers, agents, attorneys, insurers, and
predecessors ("Released Parties"), to the broadest extent allowed by law, from and for
any and all claims, actions, causes of action, debts, damages, demands, offsets,
payments, costs, rights, liabilities, charges, and expenses, direct or indirect, regardless
of the legal or equitable theory on which they are based, whether known or unknown,
liquidated or unliquidated, asserted or unasserted, arising from the Yellowstone Project.
10. Damages. Yellowstone agrees to pay to Idaho Power the sum of
$200,000 for its material breach of the FESA, which includes the pre-existing debt of
Renewable Energy in the amount of $106,804, which shall be due and payable in full
and in cash to Idaho Power within seven (7) calendar days of the date on which the
SETTLEMENT STIPULATION -5
Parties sign this Settlement Stipulation. If Yellowstone fails to make such payment to
Idaho Power, then Yellowstone agrees that Idaho Power shall be allowed to draw on the
current $450,000 Letter of Credit. Idaho Power agrees to withdraw its current demand
for payment of $450,000 on the Letter of Credit so long as Yellowstone agrees to
maintain said Letter of Credit in full force and effect for the remainder of the term of
such Letter of Credit (i.e., June 23, 2012). In addition, Yellowstone agrees to maintain
the $450,000 Letter of Credit (or a replacement Letter of Credit in an amount of no less
than $450,000) in full force and effect until the Commission issues a final, non-
appealable order approving this Settlement Stipulation, provided, however, that
Yellowstone's liability hereunder shall never exceed $450,000.
II. The Parties agree that this Settlement Stipulation represents a
compromise of the positions of the Parties in this case. Except to the extent necessary
for a Party to explain before the Commission its own statements and positions with
respect to the Settlement Stipulation, all statements made and positions taken in
negotiations relating to this Settlement Stipulation are confidential and will not be
admissible in evidence in this or any other proceeding.
12.The Parties recommend that the Commission issue a Notice of Proposed
Settlement Stipulation via Modified Procedure.
13.The Parties submit this Settlement Stipulation to the Commission and
recommend approval in its entirety pursuant to RP 274-76. The Parties shall support
this Settlement Stipulation before the Commission, and shall not appeal a Commission
order approving the Settlement Stipulation or an issue resolved by the Settlement
Stipulation. If this Settlement Stipulation is challenged by anyone who is not a Party,
the Parties reserve the right to file testimony, cross-examine witnesses, and put on such
SETTLEMENT STIPULATION -6
case as they deem appropriate to respond fully to the issues presented, including the
right to raise issues that are incorporated in the settlements embodied in this Settlement
Stipulation. Notwithstanding this reservation of rights, the Parties agree that they will
continue to support the Commission's adoption of the terms of this Settlement
Stipulation.
14.If the Commission rejects any part or all of this Settlement Stipulation, or
imposes any additional material conditions on approval of this Settlement Stipulation,
each Party reserves the right, upon written notice to the Commission and the other
Parties to this proceeding, within fourteen (14) days of the date of such action by the
Commission, to withdraw from this Settlement Stipulation. In such case, no Party shall
be bound or prejudiced by the terms of this Settlement Stipulation, and each Party shall
be entitled to seek reconsideration of the Commission's order, file testimony as it
chooses, cross-examine witnesses, and do all other things necessary to put on such
case as it deems appropriate. In such case, the Parties immediately will request the
prompt reconvening of a prehearing conference for purposes of establishing a
procedural schedule for the completion of the case. The Parties agree to cooperate in
development of a schedule that concludes the proceeding on the earliest possible date,
taking into account the needs of the Parties in participating in hearings and preparing
briefs.
15.The Parties agree that this Settlement Stipulation is in the public interest
and that all of its terms and conditions are fair, just, and reasonable.
16.No Party shall be bound, benefited, or prejudiced by any position asserted
in the negotiation of this Settlement Stipulation, except to the extent expressly stated
herein, nor shall this Settlement Stipulation be construed as a waiver of rights unless
SETTLEMENT STIPULATION -7
such rights are expressly waived herein. Except as otherwise expressly provided for
herein, execution of this Settlement Stipulation shall not be deemed to constitute an
acknowledgment by any Party of the validity or invalidity of any particular method,
theory, or principle of regulation or cost recovery. No Party shall be deemed to have
agreed that any method, theory, or principle of regulation or cost recovery employed in
arriving at this Settlement Stipulation is appropriate for resolving any issues in any other
proceeding in the future. No findings of fact or conclusions of law other than those
stated herein shall be deemed to be implicit in this Settlement Stipulation.
17.The obligations of the Parties are subject to the Commission's approval of
this Settlement Stipulation in accordance with its terms and conditions and upon such
approval being upheld on appeal, if any, by a court of competent jurisdiction.
18.This Settlement Stipulation may be executed in counterparts and each
signed counterpart shall constitute an original document.
DATED this 31st day of May 2012.
Yellowstone Power, Inc. Idaho Power Company
BUi
Dean J. Miller
Attorney for Yellowstone Power, Inc.
By
Jason B. Williams
Attorney for Idaho Power Company
SETTLEMENT STIPULATION -8
such rights are expressly waived herein. Except as otherwise expressly provided for
herein, execution of this Settlement Stipulation shall not be deemed to constitute an
acknowledgment by any Party of the validity or invalidity of any particular method,
theory, or principle of regulation or cost recovery. No Party shall be deemed to have
agreed that any method, theory, or principle of regulation or cost recovery employed in
arriving at this Settlement Stipulation is appropriate for resolving any issues in any other
proceeding in the future. No findings of fact or conclusions of law other than those
stated herein shall be deemed to be implicit in this Settlement Stipulation.
17.The obligations of the Parties are subject to the Commission's approval of
this Settlement Stipulation in accordance with its terms and conditions and upon such
approval being upheld on appeal, if any, by a court of competent jurisdiction.
18.This Settlement Stipulation may be executed in counterparts and each
signed counterpart shall constitute an original document.
DATED this 31st day of May 2012.
Yellowstone Power, Inc. Idaho Power Company
By
Dean J. Miller
Attorney for Yellowstone Power, Inc.
42 D
t n B. Williams
ney for Idaho Power Company
SETTLEMENT STIPULATION -8