20071024Intermountain Wind comments.pdf

McDevitt & Miller LLP
Lawyers
HECE;
[phone]
[phone] (Fax)
420 W. Bannock Street .. O"'1-
O. Box 2564-i~rnC"f 23 Iii ,.I' n
Boise, Idaho 8370:k)!\;i
\ \~'\,
~\1 \C~
UT \L d~3)(~(51Xi;j\\SS \0,
Chas. F. McDevitt
Dean J. (Joe) Miller
October 23, 2007
Via Hand Delivery
Ms. Jean Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83720
Re: Case No. IPC-07-
Dear Ms. Jewell:
Enclosed for filing in the above matter, please find the original and seven (7) copies of
Intermountain Wind LLC's Comments.
An additional copy of the document and this letter is included for return to me with
your file stamp thereon.
Thank you for you assistance.
Very truly yours
McDEVITr & MILLER LLP
\M
Wl---
Dean J. Miller
DJM/hh
Enclosures
ORIGINAL
Dean J. Miller ISB 968
McDEVITT & MILLER LLP
420 West Bannock Street
O. Box 2564-83701
Boise, ill 83702
Tel: [phone]
Fax: [phone]
joe~mcdevitt-m iller .com
REGEl ':,
20lli arT , P~
;~.
I 1/ v .
,~,
I,,",ft,'(.r100
Attorneys for Intermountain Wind LLC
IN THE MATTER OF IDAHO POWER'
PETITION TO MODIFY THE
METHODOLOGY FOR DETERMINING
FUEL COSTS USED TO ESTABLISH
PUBLISHED RATES FOR PURP
QUALIFYING FACILITIES
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
:XP~Case N o~E-O7 -
COMMENTS
COMES NOW Intermountain Wind LLC ("Intermountain ) and, pursuant to the
Commission s Notice of Petition dated September 27, 2007, submits the following Comments to
wit:
Introduction
In this proceeding, the Petitioner Idaho Power Company ("Idaho Power ), asks the
Commission to adopt a new method for calculation of gas prices in determination of avoided cost
rates.
Intermountain is an Idaho limited liability company that desires and intends to develop
PURP A wind projects in the State of Idaho, and, accordingly has a direct and substantial interest
in the proceeding.
For the reasons set forth below, Intermountain recommends that the Petition ofldaho
Power be denied.
COMMENTS- 1
Are:ument
Idaho Power s Proposal is Inconsistent with the Policy Disfavoring Single Issue Rate Cases.
In the context of retail rate-setting, the Commission has historically resisted the idea of
conducting "single issue rate cases." A single issue rate case is a proceeding in which one item
out of many, is proposed to be adjusted in the calculation of rates. Adjustment of only one item
that makes up an overall rate, without examining all components of the overall rate, makes it
impossible for the Commission to make the statutorily required finding that the overall rate is
fair just and reasonable.(See Idaho Code 61-502).
The only exception to the policy against single issue rate cases is with respect to expenses
that are uncontrollable. In JR. Simp/ot Company v. Intermountain Gas 102 Idaho 341 , 630 P.2d
133 (1981) the court said:
Where, as in this case, the utility has no control over substantially increased costs, and
pass-through rate increase to cover the additional costs will not impact the authorized rate
of return. In such situations, the common utility regulation practice is to permit a scaled
down proceeding focusing only on the particular increase.
The Commission has followed the Simp/ot rule and employed single issue cases only
with respect to uncontrollable expenses. (See In the Matter of the Investigation of the Effects of
Revisions of the Federal Income Tax Code, Case No. U-1500-164, Order No. 21640 (1987)).
Avoided costs rates established under the Public Utility Regulatory Practices Act of 1978
(PURP A), are subject to the same "fair just and reasonable" standard as are retail rates. "The
rates for such purchases (from qualifying facilities) shall be just and reasonable to the electric
consumers ofthe electric utility and in the public interest." 16 U.c. 824a-3(b)(1).
COMMENTS- 2
Idaho Power s proposal to adjust only one element of the avoided cost calculation makes
it impossible for the Commission to make the statutorily required public interest finding that the
resulting overall rate is just and reasonable. Further, Idaho Power is not seeking to pass through
an uncontrollable expense but, instead, is proposing a change in the method by which expenses
are projected.
For both of these reasons, Idaho Power s proposal is inconsistent with the policy
disfavoring single issue rate cases.
This is not to suggest that the Commission should, at the present time, undertake a
proceeding to examine all elements of the avoided cost rate. Since the issuance of Order No.
29872, in Case No. IPC-05-22 in September of2005, there has been a de facto moratorium on
the development ofPURPA projects larger than 100 kW. Only projects that meet the
Commission s "grandfathering" criteria contained in Order No. 29872 have been able to proceed.
In Case No. IPC-05-, Idaho Power estimated that a moratorium period of nine (9) months
would be adequate to investigate the issue of wind integration costs. (See Testimony ofRic R.
Gale, Case No. IPC-05-02). The moratorium is now stretching into its third year.
In Case No. IPC-07-03 the Commission now has before it a Settlement Stipulation
resolving the integration cost issue and which, if approved, would allow the moratorium to be
terminated. In general, that settlement proposes an integration cost mechanism that would reduce
avoided costs by eight percent (8%), or up to $6.50 per Mwh.
In the present case, Idaho Power proposes an adjustment to the gas price calculation that
would reduce avoided costs by $4.50 per Mwh from the rate level that would exist if Idaho
Power s proposal is not adopted. (See Petition to Modify Methodology, Attachment 4).
COMMENTS- 3
Thus, the combined effect of the integration cost adjustment and the proposed change in
gas methodology could reduce avoided costs by up to $11.00 per Mwh, resulting in an effective
rate below the current published rate for contracts with a 2007 on-line date.
In Intermountain s opinion, the effective rate produced by these combined adjustments
would seriously and negatively impact project feasibility and could have the practical result of
continuing the de facto moratorium currently in effect. Intermountain further suggests that after
a two-year hiatus, at the present time the Commission s primary policy objective should be to re-
start PURPA implementation in Idaho. Accepting Idaho Power s proposal to adjust only one
rate element in a single issue rate case would put that policy objective in jeopardy.
Idaho Power s Proposal is an Impermissible Collateral Attack on Order No. 29124.
Idaho Code 61-625 provides
, "
All Orders and decisions of the commission which have
become final and conclusive shall not be attached collaterally." The purpose ofthis prohibition
is to afford orders of the Commission a degree of finality similar to that possessed by judgments
made by a court of law. Utah-Idaho Sugar Company v. Intermountain Gas Company, 100 Idaho
368, 597 P.2d 1058 (1981). "A different rule would lead to endless consideration of matter
previously presented to the Commission and confusion about the effectiveness of Commission
orders.Supra at 373.
The current methodology for escalation of gas prices was adopted in Case No. GNR-
02-, Order No. 29124 (2002). A review of the transcript and testimonies in that case discloses
that gas price methodology was a central contested issue and the Commission had before it six
different recommended methodologies. (See Rebuttal Testimony of Dennis Peseau on behalf of
Idaho Power Company). One of the methods was proposed by expert witness Stuart Tripple on
behalf of the Independent Energy Producers of Idaho. Idaho Power opposed this method
COMMENTS- 4
claiming it would produce avoided costs that were too high. (See Peseau Rebuttal Testimony,
supra). Ultimately, after due consideration, the Commission adopted the methodology proposed
by Mr. Tripple. (See Order No. 29124, pg. 11).
In the present case, the thrust of Idaho Power s argument in favor of changing the
methodology is not that there has been a change in circumstances that warrant a departure from
the current method. Rather, Idaho Power argues, as it did in GNR-02-, that method produces
a result Idaho Power believes to be too high.
Conclusion
At the present time, the Commission s primary policy objective should be to re-start
PURP A implementation in Idaho. The current method of gas price calculation was adopted by
the Commission based on a complete record and after due consideration. The Commission
should not use the vehicle of a single issue rate case to reconsider arguments against the current
method, when to do so would put the goal ofPURPA re-implementation in jeopardy. The
Commission should enter its Order denying the Petition.
DATED this ---22- day of October, 2007.
Respectfully submitted
McDEVITT & MILLER LLP
ill
Dean J. iller
McDevitt & Miller LLP
420 W. Bannock
Boise, ID 83702
Phone: [phone]
Fax: [phone]
Counsel for Intermountain Wind LLC
COMMENTS- 5
CERTIFICATE OF SERVICE
I hereby certify that on the ~ay of October, 2007, I caused to be served, via the
methodes) indicated below, true and correct copies of the foregoing document, upon:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, ID 83720-0074
iiewell~puc.state.id.
Hand Delivered
S. Mail
Fax
Fed. Express
Email
Barton Kline
Lisa Nordstrom
Ric Gale
Idaho Power Company
PO Box 83720
Boise, ID 83702
bkline~idahopower.com
lnordstrom~idahopower .com
rgale~idahopower.com
Hand Delivered
S. Mail
Fax
Fed. Express
Email
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington Street(83702)
O. Box 83720
Boise, ID 83702
Scott. woodbury~puc.idaho. gov
Hand Delivered
S. Mail
Fax
Fed. Express
Email
McDEVITT & MILLER LLP
By:
COMMENTS- 6