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HomeMy WebLinkAbout20101018Comments.pdfPeter J. Richardson ISB No. 3195 Greg Adams ISB No. 7454 Richardson & O'Leary PLLC 515 N. 27th Street P.O. Box 7218 Boise, Idaho 83702 Telephone: (208) 938-7901 Fax: (208) 938-7904 peter(frichardsonandoleary.com greg~richardsonandolear.com Attorneys for the Exergy Development Group of Idaho, LLC R..."'F.tJf-..-. .. ¡ '" ,..'I b V l=.. i .''f ""_-" ZÐlOOCT 18 PH 4: 27 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF)IDAHO POWER COMPANY FOR ) APPROVAL OF A FIRM ENERGY SALES ) AGREEMENT WITH YELLOWSTONE ) POWER, INC. FOR THE SALE AND ) PURCHASE OF ELECTRIC ENERGY ) ) ) CASE NO. IPC-E-I0-22 COMMENTS OF THE EXERGY DEVELOPMENT GROUP OF IDAHO LLC COMES NOW, the Exergy Development Group of Idaho, LLC, hereinafter referred to as "Exergy," and pursuant to this Commission's Notice of Reply Comment Deadline and states as follows: Exergy does not tae a position on the question of whether or not Yellowstone Power is entitled to grandfather status. Exergy is very concerned, however, that the Staff and Rocky Mountan Power are misstating the stadard this Commission has long used to evaluate grandfather petitions. In its Comments, Staff makes the statement that there are two tests for determination of entitlement to grandfathered rates. The first stadard is that the COMMENTS OF EXERGY DEVELOPMENT GROUP, LLC -1 developer should have executed a power sales agreement with the utility at the rate in question before a successor rate becomes effective. The second stadard is that the developer must have fied a meritorious complaint alleging entitlement to the published rates BEFORE the new lower rates are made effective. See Staf Comments p. 3. Rocky Mountain Power comments that it supports the Staff and it urges the Commission retain the curent Staff position. Rocky Mountain Power Comments p. 2. Rocky Mountain Power goes on to state that, should the Commission deviate from the two standards in this case, that it should do so only if the utility and the developer can demonstrate that they have settled all material terms of the power purchase agreement prior to the rate change. ¡d. p.3. As discussed below, the stadard for determining grandfather status is much broader than suggested by Staff and urged by Rocky Mountan Power. The broader stadard has been applied consistently by the Commission in the past and is clearly set forth in FERC decisions. When published avoided cost rates change, issues often arise as to whether QFs attempting to obtan a PP A prior the rate change are entitled to the new rates or to be "grandfathered" at the old rates. FERC reguations provide that QFs may select the "avoided costs calculated at the time the obligation (to provide energy or capacity) is incured" 18 C.F.R. § 292.304( d)(2)(ii). In sum, "a QF, by committing itself to sell to an electric utility, also commits the electric utilty to buy from the QF; these commitments result either in contracts or in non-contractual, but binding, legally enforceable obligations." JD Wind 1, LLC, "Notice of Intent Not to Act and Declaratory Order," 129 FERC ir 61,148, at p. 10-11 (November 19,2009). COMMENTS OF EXERGY DEVELOPMENT GROUP, LLC -2 FERC, however, has generally left it up to the individual states to determine as a matter of state contract law when a QF has incured its obligation to deliver energy and capacity, and thereby lock in the rates in effect on that date. See West Penn Power Co., 71 FERC ir 61,153 (May 8, 1995) Nevertheless, the state's power is not limitless. See JD Wind 1, LLC, "Order Denying 'Request for Rehearng, Reconsideration or Clarfication,''' 130 FERC ir 61,127, at p. 11 (Februar 19, 2010). JD Wind 1, LLC involved the Texas Commission's rule that no wind developers could incur a legally enforceable obligation on the asserted ground that they do not deliver firm power. FERC rejected that analysis, and on reconsideration fuher held that a state commission's prior implementation inconsistent with the plain language of the federal regulations "is not evidence as to the proper implementation of the regulation. Nor is the fact that the inconsistent implementation may have been long standing." Id. at p. 7 n.28. That FERC generally leaves to the states the issue of determining when a legally enforceable obligation is incured "does not mean that a state commission is free to ignore the requirements of PURPA or the Commission's regulations." Id. at pp. 10-11; see also Independent Energy Producers Ass'n v. California Pub. Utils. Comm 'n, 36 F 3d 848, 853-54 (9th Cir. 1994). Here, Idaho PUC and Supreme Cour case law requires that QFs engage in some negotiations and provide the utilty with a binding offer containing the essential elements of the PUPRA PP A prior to the rate change to obtan grandfather status. See Empire Lumber Co. v. Wash. Water Power Co., 114 Idaho 191 (1987); Island Power Company v. Utah Power & Light Co., Case No. UPL-E-93-4, Order No. 25528 (1994). Under this test, the QF must prove that "but for" the utility's actions or inactions, the paries would COMMENTS OF EXERGY DEVELOPMENT GROUP, LLC -3 have entered into a PPA prior to the rate change. In one case for a non-Ievelized rate contract where the risk of overpayment liability was low, the Commission granted grandfather status to a QF who had posted no liability securty and had not completed engineering certification prior to the rate change. See Blind Canyon Aquaranch v. Idaho Power Company, Case No. IPC-E-94-1, Order No. 25802 (November 1994). Requiring extensive negotiations after the QF has tendered the essential elements of the PPA would not be a faithful implementation of the federal regulations. Staff cites (in a footnote) A. W Brown Co., Inc. v. Idaho Power Company, 121 Idaho 812, 828 P. 2d 841(1992) and Rosebud Enterprises, Inc. v. Idaho Power Company, 128 Idaho 624, 917 P.2d 781 (1996), to assert that there are only two ways to perfect grandfather status - a fully executed contract or a complaint for grandfather status pre- fied before the rate change. As noted above, the Commission has historically used a much broader stadard for determining grandfathering status. Furhermore, the two cited cases do not contradict this fact. In A. W Brown the Commssion adopted an identical policy to the one urged by the Staff in this case. That is, in order to be entitled to grandfather status a developer must show there is a signed contract to sell at the old rate or have filed a meritorious complaint alleging that the project was matue and that the developer had attempted, and failed to negotiate a contract with the utility. See Order No. 24192. On appeal, the Supreme Cour upheld the Commission's authority to adopt such a policy. However, the Cour in A. W Brown held only that the policy established by the Commission was within its authority; the Cour did not hold that the policy was legally required or that it was the only possible policy that could be adopted. COMMENTS OF EXERGY DEVELOPMENT GROUP, LLC -4 The Commission is not constrained by Idaho Case law to adopt Staff s recommended polit?Y. In fact,,the Commission is free to adopt whatever policy, within. i .. 'thé'ê'6nstraints af P1JRP A ~d FERC limitations, it deems reasonable. Indeed, this Commission made that fact abundantly clear in the docket in which it reduced the availablility of published rates for wind projects from 10 MW to 100 K w. In that docket the Commission changed some grandfathering policies in light of the circumstances presented and declared: This Commission is not rigidly bound by principles of stare decisis to follow prior precedent so long as a record is developed and suffcient findings supported by the evidence show that our action is not arbitrar anad capricious. We did so in this case. We are a regulatory agency that performs both legislative and quasi- judicial fuctions. Our change in the published rate availability for certain wind QFs was based on the need. . . Order No. 29872 at p. 10 So, to the extent the Commission believes that its curent policy is as stated by Staff, it is certainly not bound to limit the instances of grandfathered rates to only those situtions where a signed contract at the old rates has been obtained or where a complaint has been filed prior to the new rates becoming effective. Indeed, such a policy seems absurd on its face, in this docket at least, for two reasons. First, if one has a signed contract at the old rates, then it seems one already has succeeded in getting a PP A with the old rates. Second, if the rates are changed without prior notice, as in this case, then no developer would be able to have the advance notice required to fie a complaint before the rates change. DATED this 18th day of October 2010. COMMENTS OF EXERGY DEVELOPMENT GROUP, LLC -5 Richardson & O'Leary, PLLC R~By Peter J. Richardson Exergy Development Group of Idaho COMMENTS OF EXERGY DEVELOPMENT GROUP, LLC -6 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 18th day of October, 2010, a tre and correct copy of the withn and foregoing COMMENTS OF EXERGY DEVELOPMENT GROUP OF IDAHO'S was served in the maner shown to: Ms. Jean Jewell Commission Secreta Idaho Public Utilties Commission 472 W. Washington (83702) PO Box 83720 Boise, ID 83720-0074 Krstine Sasser Idaho Public Utilties Commission 472 W. Washington Boise ID 83702 Donovan Walker Lisa Nordstrom Idaho Power Company 1221 W Idaho St Boise ID 83702 dwalker(iidahopower.com lnordstrom(iidahopower.com Randy C. Allphin Idaho Power Company POBox 70 Boise, Idaho 83707-0070 rallphin(iidahopower .com Dean J. Miler Yellowstone Power Inc McDevitt & Miler LLP PO Box 2564 Boise ID 83701 joe(imcdevittmiler .com lL Hand Delivery _U.S. Mail, postage pre-paid Facsimile Electronic Mail L Hand Delivery _U.S. Mail, postage pre-paid Facsimile Electronic Mail _ Hand Delivery jLU.S. Mail, postage pre-paid Facsimile lL Electronic Mail _ Hand Delivery jLU.S. Mail, postage pre-paid Facsimile lL Electronic Mail _ Hand Delivery _U.S. Mail, postage pre-paid Facsimile L Electronic Mail Dick Vinson Yellowstone Power Inc 115 Broad Street Thompson Falls MT 59873 dick(iblackfoot.net Mark Moench Rocky Mountain Power 201 So Main St Ste 2300 Salt Lake City UT 84111 mark.moench(ipacificorp.com Danel E Solander Senior Counsel Rocky Mountain Power 201 So Main St, Ste 2300 Salt Lake City, UT 84111 daniel.solander(ipacificorp.com _ Hand Delivery lLU.S. Mail, postage pre-paid Facsimile lL Electronic Mail _ Hand Delivery _U.S. Mail, postage pre-paid Facsimile lL Electronic Mail _ Hand Delivery _U.S. Mail, postage pre-paid Facsimile K. Electronic Mail CJÛJ% Nina Curis Administrative Assistat