20070913Brief in Support of Motion.pdf

Peter J. Richardson
ISB No. 3195
Richardson & O'Leary
515 N. 2ih Street
O. Box 7218
Boise, Idaho 83702
Telephone: [phone] Tel
Fax: [phone] Fax
peter(illrichardsonandoleary.com
Attorneys for Exergy Development Group of Idaho, LLC
; -,~ -
:rl C't"P i O D:'; "). ?.,"ij I ,,
...
1 I j j j 0' LL.
PUi:3;
CO,\.;fVJISS:
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
EXERGY DEVELOPMENT GROUP OF
IDAHO, LLC
Respondent.
CASE NO. IPC-07-
BRIEF IN SUPPORT OF
) MOTION TO COMPEL RETENTION
) IN IDAHO POWER'
) INTERCONNECTION QUEUE AND TO
) PROHIBIT IDAHO POWER FROM
) ASSESSING EXTRA-LEGAL
) INTERCONNECTION STUDY DEPOSITS
Petitioner
vs.
IDAHO POWER COMPANY
COMES NOW, Exergy Development Group ofIdaho, LLC ("Exergy,), by and through
its attorneys of record, Richardson & O'Leary, and pursuant to this Commission s Rules of
Procedure, Rule 56 IDAP A 31.01.01.056 hereby files its legal brief in support of its Motion to
Compel.
IDAHO POWER'S AUTHORITY TO
COLLECT THE COSTS OF INTERCONNECTING QFs
IS FOUND SOLELY IN THIS COMMISSION'S APPROVED TARIFF SCHEDULE 72
Exergy wants to be clear up front that it accepts full responsibility for paying Idaho
Power Company ("Company ) all prudently incurred interconnection costs. This case is not
about cost responsibility, but rather it is about the timing of those costs and Idaho Power s failure
to consistently and faithfully follow the rules this Commission has adopted for assessing and
collecting those costs.
Idaho Power s Schedule 72 governs the process for interconnecting non-utility generators
to the Company s system. In 2002, in an order updating and revising Schedule 72, the
Commission expressed concern that the Company might abuse its discretion in interconnection
matters. It therefore it invited complaints such as Exergy s in the event such abuses occurred. In
its Order the Commission warned the Company:
Regarding interconnection cost responsibility, we find that it is important for the
tariff to explicitly state that all interconnection costs will be borne by the
customer-generator. If interconnection requires more than the customer-furnished
standard equipment, it is the customer-generator s responsibility to bear those
additional interconnection expenses. We appreciate the QF's desire for certainty.
We put the Company on notice that should it abuse its discretion in interconnect
matters and thwart the development of non-utility generation, the Commission
will entertain a complaint and revisit the issue
Order No. 29092, Case IPC-01-38 (August 27 2002), at page 8. Emphasis provided.
While the discretion the Commission referred to in that Order was not necessarily related to
interconnect study deposits, the overall concern is as apropos now as it was in 2002.
Schedule 72 provides:
Service under this schedule is available throughout the Company s service area
within the State of Idaho to Sellers owning or operating Qualifying Facilities that
sign a Uniform Interconnection Agreement or that qualify under Schedule 84.
Schedule 72 "Availability" Paragraph. First Revised Sheet No. 72-
It is undisputed that the QF projects that are the subject of Exergy s Complaint are
Qualifying Facilities because its generators will be wind powered. Schedule 72 defines
Qualifying Facility as:
MOTION TO COMPEL
Qualifying Facility is a cogeneration facility or a small power production facility
which meets the PURP A criteria for qualification set forth in Subpart B of Part
292, Subchapter K, Chapter Title 18, of the Code of Federal Regulations.
Schedule 72 at First Revised Sheet No. 72-2. Emphasis in original.
The five wind park QFs at issue in this docket are:
Golden Valley Wind Park; FERC Docket No. QF-05-89-000
Milner Dam Wind Park; FERC Docket No. QF-06-000
Notch Butte Wind Park; FERC Docket No. QF-06-000
Lava Beds Wind Park; FERC Docket No. QF-06-11-000
Salmon Falls Wind Park; FERC Docket No. QF-06-000
This Commission may take official notice as to the status of the five Qualifying Facilities
pursuant to this Commission s Rules of Procedure, Rule 263. (IDAPA ~31.01.01.263). Each of
the five wind parks has a Commission approved power purchase agreement pursuant to which
each is obligated to sell their entire electrical output to Idaho Power Company. Again, the
Commission may take official notice of the fact that each is obligated to sell their electrical
output to Idaho Power as the Commission has issued an order approving each project's power
purchase agreement.
Therefore Idaho Power s Schedule 72 applies to the interconnection of these projects to
Idaho Power s electrical system. Schedule 72 provides:
Unless agreed otherwise in a written agreement between 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 any other
way work associated with the Interconnection Facilities.
Id.
MOTION TO COMPEL
Schedule 72 requires Idaho Power to provide the Seller with an "initial cost estimate of
Company-owned Interconnection Facilities" the payment of which is a prerequisite to the
company s commencement of construction of said interconnection facilities. There is no
provision in Schedule 72 for the pre-payment of interconnection costs, nor is there any reference
in Schedule 72 to the imposition of deposits in advance of the provision of the "initial cost
estimate.
It is black letter law that a utility may only charge those rates and provide
those services it is permitted to charge by the Commission. Idaho Code Section 61-
313 provides that no public utility shall "collect or receive a greater or less or
different compensation" for any service rendered to the public than the charges
applicable to such services as specified in its tariffs on file with the Commission and
in effect at the time. This concept, known as the "filed rate doctrine" was described
by the United States Supreme Court as an obligation on the part of the utility to only
collect the rates set out in its tariffs and schedules despite a quoted charge of a lesser
or greater amount. Regardless of the utility s motive or intent in quoting or charging
a rate that is greater or lesser than the filed rate, no utility may charge anything other
than what it is permitted to charge in its tariffs.
(d)eviation from (the filed rates) is not permitted upon any pretext.
Shippers and travelers are charged with notice of it and they as well as
the carrier must abide by it, unless it is found by the commission to be
unreasonable. Ignorance or misquotation of rates is not an excuse for
paying or charging either less or more than the rate filed. This rule is
undeniably strict and it obviously may work hardship in some cases
but it embodies the policy which has been adopted by Congress in the
regulation of interstate commerce in order to prevent unjust
discrimination.
MOTION TO COMPEL
AT&Tv. Central Office Telephone 524 U.S. 214 118 S.Ct. 1956, 1963 (1998) citing Louisville
and Nashville R.Co. v. Maxwell 237 u.S. 94, 97 (1915) (emphasis added).
This Commission has consistently adhered to and has strictly followed the strictures of the filed
rate doctrine - even when it seemed that doing so appeared harsh. Typically such cases arise in
the case of a mistaken quote or misread meter. See e.
g.
Emereck v. Idaho Power IPC-00-3. In
short, when the Commission publishes a tariff for a service, it expects the utility to adhere to that
tariff. Even if a utility attempts to deviate from its tariff for the alleged benefit of its ratepayers
the filed rate doctrine prohibits such unilateral unsupervised rate making.
Idaho Power s answer, at its core, contains three separate arguments. First, it attempts to
read something (a pre-study deposit requirement) into Schedule 72 that is simply not there.
Second, it makes a broad public interest argument that it is entitled to ignore Schedule 72 and
impose the complex and detailed interconnection procedures adopted by the Federal Energy
Regulatory Commission. FERC's rules apply only to generating projects that are
interconnecting for the purpose of effecting a wholesale transaction utilizing Idaho Power
system to 'wheel' its output to a third party purchaser. Third, the Company argues that it simply
made a mistake when it posted the costs of interconnection study deposits on its interconnection
procedure web site and now wants this Commission to ratify a "do-over" in terms of the
Company s public offer of fixed interconnection study deposits. Each argument is fatally flawed
and will be discussed in turn.
SCHEDULE 72 IS THE SOLE SOURCE OF AUTHORITY FOR IDAHO POWER'
INTERCONNECTION PROCESS FOR QFs
Idaho Power admits that it does not apply Schedule 72 to its Idaho QF interconnection
customers.
MOTION TO COMPEL
To assure compliance with FERC regulations, Idaho Power applies FERC rules
for processing all interconnection requests, including QF requests for
interconnection. Applying FERC procedures to all interconnection requests
including QFs, establishes a uniform, consistent process for analyzing
transmission interconnection requests. It provides QFs 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.
Idaho Power Company s Answer, p. 5. Emphasis provided.
Idaho Power fails to point to any authority by which this Commission has authorized it to impose
interconnection rules other than Schedule 72 upon QFs seeking to interconnect to Idaho Power
system.
There is no question that this Commission has exclusive jurisdiction over QF
interconnections. Indeed, Idaho Power correctly observed in its Answer that this Commission
has the exclusive jurisdiction over QF interconnections. Nevertheless, Idaho Power has taken it
upon itself to impose FERC's interconnection rules on Idaho QFs - even in light ofthe fact that
it concedes that FERC has no jurisdiction over such interconnections:
(T)he 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 facilities ("QFs ) that qualify for
the mandatory purchase requirements under the Public Utility Regulatory Policies
Act of 1978 ("PURP A"
).
The Idaho and Oregon Commissions have exclusive
jurisdiction over interconnections between Idaho Power and QFs sitused in Idaho
or Oregon respectively,so long as the QFs sell the output of their generation to
Idaho Power.
Idaho Power Company s Answer, p. 3. Emphasis provided.
In short, and according to Idaho Power s own Answer
, "
Idaho Power applies FERC rules for
processing all interconnection studies" despite the fact that "The Idaho. .. Commission
ha(sJ..exclusivejurisdiction over interconnection between Idaho Power and QFs . The fragrant
and blatant disregard of this Commission s "exclusive jurisdiction" over interconnections in
MOTION TO COMPEL
favor of a foreign tribunal's rules threatens the very integrity of this Commission s orders and
authority over its regulated utilities. Permitting Idaho Power to unilaterally disregard its
Schedule 72 would set a dangerous precedent. This is precisely the type of self-serving deviation
from publish rates and schedules that the filed rate doctrine prohibits. Even if the result appears
harsh, the filed rate doctrine does not permit a utility to simply ignore its tariffs.
FERC has made it clear in its Small Generator Interconnection order that states have
exclusive jurisdiction over QF interconnection:
This Final Rule does not violate the FP A section 201 (b)(1) provision that the
Commission (FERCJ does not have jurisdiction over local distribution facilities
except as specifically provided..." (citation omitted). This is because the Final
Rule applies only to interconnections to facilities that are already subject to a
jurisdictional OATT at the time the interconnection request is made and that will
be used for purposes of jurisdictional wholesale sales. Because of the limited
applicability of this Final Rule, and because the majority of small generators
interconnect with facilities that are not subject to an OATT, this Final Rule will
not apply to most small generator interconnections. Nonetheless, our hope is that
states may find this rule helpful in formulating their own interconnection rules.
FERC Docket No. RM02-12-000; Order No. 2006, p. 5. Emphasis provided.
FERC continues to leave it to the states to formulate their own interconnection rules for QFs.
Idaho has an interconnection rule in place (Schedule 72) that is unique and distinct from the
FERC Final Rule. Without first implementing a rulemaking procedure or opening a docket to
amend Schedule 72, both Idaho Power and its QF customers are limited to the four corners of
Schedule 72 and nothing more.
IDAHO POWER READING OF SCHEDULE 72
STRAINS CREDIBILITY
Idaho Power incorrectly argues that Schedule 72 permits it to charge a deposit to cover
anticipated interconnect study costs. In support of its assertion Idaho Power makes the following
argument:
MOTION TO COMPEL
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.
Idaho Power Company s Answer, p. 6. Emphasis in original.
Idaho Power puts the cart before the horse. The phrase "payment of the estimated costs
necessarily assumes that there IS an estimate of the costs. Schedule 72 clearly requires Idaho
Power, prior to assessing any costs to the developer, to provide the developer with an estimate of
the costs of "ordering, installing, modifying, upgrading or performing in any other way, work
associated with the interconnection facilities . Any other reading changes the plain meaning of
Schedule 72, in which the word "deposit" never appears. If the Commission had contemplated
the use of deposits it would surely have provided for a mechanism for collecting, refunding and
accounting for such deposits. Schedule 72 simply does not contemplate nor does it permit the
assessment of deposits.
The rationale relied upon by Idaho Power is that the quoted passage from Schedule 72
permits the imposition of a deposit requirement only upon those developers who "do not meet
minimum credit requirements . This assertion is taken from whole cloth. The question of the
creditworthiness of a developer is not addressed in Schedule 72. In addition, elsewhere in its
Answer Idaho Power unequivocally contradicts itself by correctly observing that it is illegal for
Idaho Power, or any utility, to delve into the creditworthiness of a QF developer:
Under the Commission s prior orders regarding Idaho Power s ability to obtain
security form QF developers for performance ofFESAs , Idaho Power cannot
1 FESA; Firm Energy Sales Agreement
MOTION TO COMPEL
require disclosure of the identity and credit worthiness of the owners of a QF
limited liability company entering into a FESA with Idaho Power.
Idaho Power Company s Answer, p. 7.
The catch-22 Idaho Power s reasoning places a QF in is apparent. Idaho Power asserts that
because Exergy is not creditworthy it must post a deposit. However, at the same time, it
correctly observes that it cannot make an inquiry into Exergy s creditworthiness. As a result
even the most creditworthy developer will be caught up in Idaho Power s catch-22.
AT A MINIMUM IDAHO POWER SHOULD BE REQUIRED TO HONOR ITS WEB BASED
INTERCONNECTION OFFER WITH RESPECT TO DEPOSIT AMOUNTS
Despite the fact that Idaho Power has no legal authority to charge interconnection
deposits it has already extracted significant study deposits from Exergy. Exergy has paid
deposits based upon Idaho Power s incorrect assertion that it has the legal authority to assess
them. According to the attached affidavit from Mr. Carkulis, Exergy has already paid the
following study deposits:
Golden Valley Wind Park, LLC has paid $11 088 in deposits and an additional
$35 000 is being requested:
Milner Dam Wind Park, LLC has paid $11 088 in deposits and an additional
$100 000 is being requested.
Notch Butte Wind Park, LLC has paid $11 088 in deposits and an additional
$100 000 is being requested.
Lava Beds Wind Park, LLC has paid $500 in deposits and an additional $10 000
is being requested.
Salmon Falls Wind Park, LLC has paid $8 324 in deposits and an additional
$10 000 is being requested.
MOTION TO COMPEL
As noted in Exergy s Complaint at Exhibits Band C, had Idaho Power complied with the
terms of interconnection based on its web site it would be limited to charging no more than a
total of $29 000 in study deposits for each project. Idaho Power s web based interconnection
process included a pro forma Facilities Study Agreement that required a study deposit in the
amount of $26 000. Complaint, Exhibit B. It also included a pro forma System Impact Study
Agreement that required a study deposit in the amount of$3 000. In response to Exergy
complaint that Idaho Power was charging amounts different from the amounts that it had
published on its interconnection web site, Idaho Power claims it published rates were nothing
more than a "clerical error . Answer at p. 6. Although as discussed above, Idaho Power has no
authority to charge a deposit in the first place, its response to Exergy s complaint was to make
the process even less certain:
Idaho Power has amended this oversight on its website and modified the Pro
Forma study agreement to include a blank in paragraphs 6.0 and 10.
respectively.
Answer at p. 6.
At a minimum Idaho Power should be held to the rates published on its web site upon which
Exergy had every right to rely upon. Regardless however, as noted above, Idaho Power has no
authority to assess any study deposit absent this Commission s order requiring it to do so.
Idaho Power asserts that its deposit demands are to assure compliance with FERC'
regulations. That assertion is suspect in light of the fact that it filed an application as recently as
last year to amend Schedule 72 by adopting a uniform interconnection agreement for PURP A QF
interconnection requests. In its application in that docket, IPC- E-06-, Idaho made the
following representation:
A Uniform Interconnection Agreement is also in keeping with utility industry
efforts to standardize interconnection procedures and facilitate investment in
needed utility infrastructure. Patterned after the FERC's standard Small
MOTION TO COMPEL
Generator Interconnection Agreement approved in FERC Order No. 2006, Idaho
Power s proposed Uniform Interconnection Agreement addresses the terms and
conditions of interconnection and integration to Idaho Power
transmission/distribution system and incorporates portions of the Company
template power purchase agreement.
Application, Docket No. IPC-06-18 at pages 4-
The Uniform Interconnection Agreement Idaho Power filed and this Commission approved does
not require interconnection study deposits. Indeed, the word "deposit" does not even appear in
the agreement. This Commission approved Idaho Power s application under the impression that
it was accommodating Idaho Power s desire to pattern its interconnection process after FERC'
interconnection procedures. If that was, indeed, the goal it was not accomplished. The end
result is that Idaho Power s interconnection Tariff Schedule 72 still stands as the only legal
authority governing the interconnection process and its simply does not permit Idaho Power to
assess a deposit to conduct an interconnect study.
Idaho Power represented to the Commission that its most recent change to Schedule 72
was based on model interconnection agreements published by FERC and NARUc. The
Commission even observed, in its order approving the Uniform Interconnection Agreement, that:
The Company s proposed Uniform Interconnection Agreement is based upon its
review of model agreements from both NARUC and FERC.
Order No. 30179, Docket IPC-06-18 at p. 4.
Idaho Power obviously had the opportunity to raise the possibility of assessing study deposits in
its most recent Schedule 72 docket. The FERC order on small generator interconnection
processes was issued before that case was filed. It did not seek any Commission treatment of
the study deposit issue in Docket No. IPC-06-18 even though one of the stated reasons for its
application was to more closely align its interconnect process with the interconnect process used
by FERC.
MOTION TO COMPEL
POWER PURCHASE AGREEMENTS APPROVED BY THE COMMISSION
CONTEMPLATE REIMBURSEMENT OF IDAHO POWER'S COSTS NOT PREP A YMENT
The Power Purchase Agreements for each of the five projects that is the subject of this
complaint all have been approved by the Commission. Each of those agreements contains
language that clearly indicates that all ofthe costs incurred by Idaho Power are to be
reimbursed" by the developer and do not contemplate or require the posting of interconnect
study deposits:
The entire Generation Interconnection process, including but not limited to the
equipment specifications and requirements will become an integral part of this
Agreement. Idaho Power owned equipment will be maintained by Idaho Power
with total cost of purchase, installation, operation, and maintenance including
administrative cost to be reimbursed to Idaho Power by Seller.
Appendix B , ,-rB-1 0, Idaho Power Firm Energy Sales Agreement. Emphasis provided.
There can be no doubt that "administrative costs" include such administrative acts as estimating
costs prior to commencement of the interconnection work. Those costs are to be "reimbursed" to
Idaho Power by the developer. Use ofthe term "reimburse" is consistent with the Schedule 72
interconnection process which clearly requires Idaho Power to provide an upfront cost estimate
the expense of which will be reimbursed by the developer.
This Commission has the authority to order reparations of utility overcharges pursuant to
Idaho Code ~ 61-642 which provides:
When complaint has been made to the commission concerning any rate, fare, toll
rental or charge for any product, or commodity, furnished or service performed by
any public utility, and the commission has found, after investigation, that the
public utility has charged an excessive or discriminatory amount for such product
commodity or service, the commission may order that the public utility make due
reparation to the complainant therefore
As shown above, Idaho Power has charged an excessive and discriminatory amount for
interconnect study service contrary to the published tariff. Exergy respectfully requests that it be
MOTION TO COMPEL
duly refunded the amounts overpaid with interest and that Idaho Power be ordered to complete
the interconnect studies pursuant to Schedule 72 and provide an estimate of the cost of said
interconnects.
For the foregoing reasons it is respectfully requested that this Commission grant Exergy
motion, with prejudice, and order Idaho Power to cease collecting interconnect study deposits
and immediately refund those deposits it has heretofore illegally assessed.
DATED this day of September 2007.
Richardson & O'Leary, LLP
By
Peter J. Richardson
Industrial Customers of Idaho Power
MOTION TO COMPEL
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the \-;)'+'r.d ay of September, 2007 , a true and correct copy
of the within and foregoing BRIEF IN SUPPORT OF MOTION TO COMPEL, was served by
personal service to:
Barton Kline
Monica Moen
Idaho Power Company
PO Box 70
Boise, Idaho 83707-0070
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83702
CUJ\
Nina Curtis
Administrative Assistant
MOTION TO COMPEL