20110318Murphy Flat Comments.pdf

03-17-11;06:17PM;# 1/ 2
MURHY FLAT WIN LLC
MUHY FLAT ENERGY LLC
MURPHY FLAT MESA LLC
POBox i
Muihy, idaho 83650
1'elephon.e 208-867-6863
Don Barlll Authorized Manager
kr(agscwirIess.net
ZOII MAR 17 Pr' 4= 34
BEFORE THE lDAHO PUBLIC UTITS COMMSSION
TN TH MA TIE'R OF THE )CASE NO. IPC-E-IO-S6
APPLICATION OF IDAHO POWER )
COMPANY FOR A DETERMATION )
REGARING A FI ENRGY SALES )AGREEME BETWEN IDAHO )COMMTS OF MURPHY I-LA'!
POWER AND MUHY FLAT MESA,)MESA. LtC
LLC )
)
IN THE MA'IR OF TH )CASE NO. lPC-E.l0..57
APPLICATION OF IDAHO POWE )
COMPANY FOR A DETERMJNATION )
REGARING A FIRM ENERGY SALES )
AGREEMET BETWEEN IDAHO )
POWER AN MURPHY FLAT )COMMNTS OF MURPHY FLAT
ENRGY, LLC )ENERGY,LLC
)
IN TI MA TIER OF THE )CASE NO. IPC-E-l0-S8
APPLICATTON OF IDAHO POWER )
COMPAN FOR A DETERMINATION )
REGARDING A FIRM ENERGY SALES ).
AGREEMENT B,BTWEEN IDAHO )
POWER AND MUPHY :F.LAT WIND,)COMMNTS OF MUHY FLAT
LLC )WIN, LLC
)
MUHY FLAT WIND LLC
MURHY FLAT ENRGY LLC
MURPHY FLAT .MESA LLC
Commenls - March 17, 201 J
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03-17-11;06:17PM;# 2/ 2
The fol1owing documents consist of informational exhbits regaring the project actvities and
efforts leadi.ng up to finalizing the firm energy sales agrment beeen Idaho Power Company
iid Murh)' Flat Mesa LLC, the finn energy sales agrement between Idah.o Power Company
and Murphy Plat Energy LLC, and the fum energy sales agreement beeen Idaho Power
Company and Murhy Flat Wind LLC"
Attachment 1 :
Marh 1.7,2011 Memo from Amc.ri,can Wind Group with Projeet Hitory Timeline 2009.2010
Attchment 2:
November i 7,2010 Emai frm. Amercan Wind Group. Brian Jackson to idaho l'ower regarding
negotiations.
Dated and respectfly submitted as comments on the cases Mllch 17~ 2011.
n Barhil
WIntercanp Ranch Trust
Authorized Manager
MUHY :FLAT WIN LLC
MUHY FLAT ENRGY LLC
MURPHY FLAT MESA LLC
Comments - March 17,2011 2
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Attachment 1:
March 17,2011 Memo from American Wind Group
with Project History Timeline 2009-2010
MURPHY FLAT WI LLC
MUHY FLAT ENERGY LLC
MUHY FLAT MESA LLCComments - March 17, 2011 3
Murphy Flat Wind LLC
Murphy Flat Energy LLC
Murphy Flat Mesa LLC
It should be emphasized that each of these projects are initially designed and intended to be exactly
20MW nameplate in size and qualify as 10 average MW for design production at this site with eight
2.5MW Turbines. The projects are all physically located more than a mile from each other. Up to
25MW nameplate could be installed with certain turbine models and only 20MW nameplate with other
models so the PPA states the project size to be "up to 25MW."
Historical Timeline
2008 - Initial Projec Discussions
Brian Jackson and Don Barnhil began talking about Murphy Flat for wind possibilties in 2008 and felt
that the location had some unique potentiaL. The cost of performing a feasibility study was evaluated
and the discussions continued into 2009. We felt there was potential, but the cost of projects was
increasing dramatically each year. When the Federal Government announced the Investment Tax Credit
as a major incentive, we evaluated the possibilties and felt the newer turbines and this special incentive
to promote construction could make the difference in the abilty to finance a project on Murphy Flat.
Spring and Summer of 200 - Preliminary Evaluation and USDA Grant Applications
We performed preliminary site evaluations and analysis of nearby anemometer data from a historical
perspective. Renaissance Engineering & Design put together some reports and preliminary studies that
were used to apply for a USDA Feasibility Study Grant which was awarded. The grant application
emphasized the potential to grow the site in the future from one project to add future phases and
growth. The initial project intention was a single 20MW project on one single landowner's propert.
The goal was to keep landowner ownership as a unique element and do this project with the help of
local consultants and the USDA assistance. The company Murphy Flat Wind LLC was created for the
project development and study. The entire plan at that point was for a single 20MW development.
Fall 2009 - Tall Tower Anemometer Instllation
After notice of the USDA Grant Selection, plans were in process to install a GOm XHD Tall Tower
anemometer. Our team knew we needed to get the full year of data through 2010 and that the whole
project would converge during the fall of 2010 based on the results of the data from this tower. The
push was to get the anemometer installed as quickly as possible and protect the tower and data to be
ready for fall of 2010.
American Wind Group LLC Murphy Flat Development Project History Pagel
Spring and Summer 2010 - Data Collecion. Contractor Discussions. Equipment Evaluations
We knew we needed to spend most of 2010 working towards the data collection and analysis and had
designed the project Feasibilty Study process with the USDA to be in stages with points along the way
where the project was continually evaluated on feasibility and steps ahead. Idaho Power was contacted
on May 25th, 2010 to basically ask for a draft PPA to do our financial modeling. We were told that the
web draft was accessible and that certain steps had to be done for Idaho Power to actually send an
1I0ffcial" draft to someone. Of course since it was a IIstandard offet' contract, we knew that the terms
and conditions are typically not negotiable so any draft at that point was acceptable.
In March 2010, the PURPA avoided cost rates had been lowered which we felt might jeopardize our
project finance abilty, but we knew we simply did not have enough data or enough progress to try and
qualify for a contract under the previous rates. We focused on the steps needed to get to the point that
we could start construction by December of 2010 as required by the rules to qualify for the ITC
incentive.
We initiated the environmental, archaeological, and geotechnical studies in the summer and knew that
the site conditions would need to be carefully documented in preparation for the critical project
conditional use permitting in Owyhee County.
We spent the months leading up to July/August in preparation of the project design and anticipation of
a single 20MW project on a propert owned by Wintercamp Ranch Trust. As we evaluated the land and
electric grid in the area, we determined that the logical project would really need to be two 20MW
projects and to be developed at the same time instead of at some point in the future. The development
was anticipated as a joint project between that landowner and our new Idaho development company
American Wind Group LlC.
The company Murphy Flat Energy LLC was created in July 2010 for the second project company.
As we got closer and closer to development and the environmental study and wind results looked
promising, we began to prepare the interconnection applications. Along the way we also had
discussions with the other propert owners on Murphy Flats. We had started with a vision for the
development of a first project to be followed by a Phase II and Phase III possibilities with so much farm
land on the flats. As we prepared our documents for the conditional use permit and the interconnection
studies with Idaho Power, we realized that the project needed to be at least two 20MW projects to
effectively deal with the construction expenses. As we laid out the turbine configurations, many
landowners were being left out of the project and we thought that any development would have to
encompass the design needs of each development at the, same time, particularly to meet the rules of a
mile of separation and to incorporate the right electrical equipment designs. A couple weeks later we
determined that the project size should encompass more of the landowners instead of leaving some
out. Also, the permitting and building of all three projects at one time would become critical to justify
the construction and expense of the required substation and power line extension. The overall design of
the project would need to critically include all the anticipated turbines to make sure the projects had a
American Wind Group LLC Murphy Flat Development Project History Page 2
minimal impact on each other. Furthermore, the environmental and archaeological studies would need
to be on the entire included land parcels for all of the projects to be done right.
August 2010 -Interconnecion Work and Environmental Studies
The interconnection application for Murphy Flat Wind llC and Murphy Flat Energy LLC were filed with
Idaho Power on August 5, 2010
On August 5th, 2010 Brian Jackson from American Wind Group and Don Barnhil from Wintercamp Ranch
Trust met with Randy Allphin to discuss the project needs and steps involved to secure the required
Power Purchase agreements. Randy at that time said that we should send an official email request with
specific details.
On August 6, 2010 the next day, Randy Allphin was contacted by email with a formal request regarding
the PPA needs and transmission study needs for Murphy Flat Wind and Murphy Flat Energy as he had
instructed. The email very specifically expressed the project details and critical needs to secure the PPAs
over the coming months in order to line up project financing and to specifically start construction at
least in a minimal sense during 2010 in order to qualify for the FederallTC incentive.
In preparing the interconnection applications and defining where the projects could be located it
became clear that a third project would not only be possible, but would truly help offset the capital
costs involved with the Idaho Power line extension work and what would become the need for a project
substation.
On August 12, 2010, the company Murphy Flat Mesa llC was created for the third project and the
Interconnection Application for Murphy Flat Mesa was made to Idaho Power Company for that project
in addition on August 16, 2010.
On August 31, 2010 Idaho Power formally responded to Murphy Flat Wind and Murphy Flat Energ to
enter into the PPA process and provided a Transmission Capacity Agreement to sign and submit.
On August 31, 2010 a request was made for Murphy Flat Mesa to enter into the PPA process in addition
to the first two. It took a few emails to understand the formal request format and on September 22,
2010 Idaho Power formally responded to Murphy Flat Mesa to include the Transmission Study Request
and start the PPA process.
Many of the project activities in September were focused on the intense preparations for the
Conditional Use Permitting process. The Conditional Use Permit for this project was viewed as the
absolute most critical part of the project since the appropriate studies were underway with the utilty
and the data was showing enough promise for commercial viabilty. Once that permit was achieved
with Owyhee County, the projects could fully count on moving forward.
On October 14, 2010 Brian Jackson sent an email to Idaho Power to the Small Generator Interconnection
Team and the PPA/ransmission team and the after the successful Conditional Use Permit hearing with
American Wind Group LLC Murphy Flat Development Project History Page 3
Owyhee County which requested a meeting as quickly as possible specifically from American Wind
Group
lito proceed with the Transmission Request documents and progress. We would like to pursue
the appropriate PPA contract agreements as welL.
We are in final stages of negotiations for turbines and supply agreements and trying to
determine the fastest on-line date possible considering the utility needs for interconnections
and their equipment supply to enable the project.
I appreciated your letter and wanted to respond as soon as we passed the first stages in the
interconnection and project permitting. We are well past that now and want to formalize the
power sales agreements."
Interconnection
An email was also sent to the Idaho Power Interconnection team pointing out that with our conditional
use approval at the county for the entire development, all three projects were ready to move quickly
and asked if we could skip any of the study steps. On October 18, 2010 a response from that team
mentioned that the full System Impact Study would be required due to the location. On November 2,
2010 the fully executed System Impact Study Agreement was implemented along with the deposit for
the interconnection study with an estimated completion date of January 10, 2011. Idaho Power
informed the projects that the specific PSSE Models that the manufacturers intended to supply for the
turbines were not acceptable and they would require "GE's PSlF generic model data for the wind
turbines". Our supplier had not developed those models and estimated it would take a few weeks to
get that data done and provide that to the utilty. In fact they had to hire a consultant to finish the task
as other utilities had not required this form of data. On December 6th Idaho Power informed the
projects that the dynamic data was critical and the manufacturer and Idaho Power were in
communications to get that part done but that it was required before the end of December or the
projects would lose their application status. On December 23, 2010 Idaho Power sent a letter regarding
the interconnection studies and pointed out that delays in finally receiving the PSLF data from the
manufacturer resulted in a new forecast for the completion of the System Impact Studies Report of
March 22, 2011 but that during the study period we would be apprised of progress.
PPA and Transmission
Follow up meetings were held at the end of October to hand in the signed Transmission Study
Agreements and on November 1, 2010 a WIND DRAFT CONTRACT TEMPLATE was provided for the first
time by Idaho Power. Several emails that day back and forth settled on a face to face meeting at Idaho
Power for Thursday morning November 4th.
Thursday, November 4th was a significant meeting for all the projects to establish the steps needed to
finalize PPAs by the end of the month. The terms and conditions of the draft PPAwere discussed for all
projects in a joint meeting that included Brian Jackson, Pike Teinert, Randy Allphin, and Michael
American Wind Group LLC Murphy Flat Development Project History Page 4
Darrington. That meeting went through the PPA discussions for the three Murphy Flat Projects and the
two Rainbow Ranch projects which are not related to Murphy Flats at alL. At that meeting American
Wind Group agreed to fill in the draft blank PPA document terms and conditions. Again, the need for
the projects to finalize the agreements by the end of November was brought up be able to spend the
month of December working on project finance issues to qualify for the ITC. American Wind Group
pointed out again that the two methods typically being discussed were to facilitate turbine deposits
and/or physically start construction on the project. We said that for either case, we had to have the PPA
signed or it would be hard to prove that the project really started without a signed PPA and virtually
impossible to obtain any financing whatsoever. We pointed out that we were in final stages with certain
manufacturers and expected to wrap those meetings up over the next few weeks by the end of the
month also.
On the following Thursday, November 11th in a discussion with another developer we found out Idaho
Power had filed to change the PPA rules at the Idaho PUC the previous week. No one from Idaho Power
had contacted us regarding this November 5th filing and we were proceeding as planned and on
schedule from our perspective. We really didn't know what to do or how to respond to anyone at that
point. Our projects seemed to be in terrible jeopardy after years and months of effort only weeks
before we were to be finalizing turbine orders and attempting to be starting construction. We finalized
a version of the PPA on Friday November 12th, signed the agreement and let Peter Richardson submit
that to Idaho Power.
On Monday, November 15th, 2010 after several phone calls and messages to Idaho Power requesting a
personal meeting, we sent the MS Word version of our PPA document for each of the three projects
separately to Randy Allphin and Michael Darrington with the project information filled in. We requested
meetings, but were told that Randy Allphin would be out until after Thanksgiving and perhaps we could
meet then. The email response from Randy Allphin on November 16th saying he couldn't meet also had
the first mention from Idaho Power that "If you had not already been made aware, on November 5,
2010 Idaho Power filed a joint petition with the Idaho Public Utilities Commission (IPUC) requesting the
IPUC to adjust the published avoided cost rate eligibilty cap from 10 aMW to 100 kW in IPUC Case No.
GNR-E-10-o4. The adjustment requested in this filing could affect your project's eligibilty for the
published avoided cost rate."
On November 17, 2010, Brian Jackson drafted and sent an extremely long and detailed email to Idaho
Power which outlined the jeopardy the projects were being placed through these actions by Idaho
Power without some solution for the projects. That day Idaho Powers Donovan Walker called and
expressed that Idaho Power was proceeding with negotiations in spite of the filngs and would work
with us. We were able to set up a meeting for November 19, 2010.
November 19th Meeing at Idaho Power
The most significant meeting was held on November 19th with Randy Allphin, Michael Darrington and
Donovan Walker from Idaho Power. The other participants were Peter Richardson, Brian Jackson, Pike
American Wind Group LLC Murphy Flat Development Project History PageS
Teinert, and David Warrick from American Wind Group as well as Don Barnhil from Wintercamp Ranch
Trust (the landowner partner company in the Murphy Flats projects) and Josh Beardall from Innovative
Energy (the landowner partner company in the Rainbow Ranch projects). The meeting went well and
agreements were presented to Murphy Flat projects for the transmission studies. Don Barnhil signed
the agreements and gave Idaho Power a check to proceed immediately.
The project teams spent the following week in Chicago and Los Angeles formalizing the turbine supply
negotiations to be able to finish the PPA documentation. Also, the formal wind study report was
completed with long term energy correlations. Turbine size options and expected performance was
critical to completion of the PPA exhibits.
After the significant November 19th meeting at Idaho Power, and after having submitted previous draft
documents for each project to Idaho Power, an entirely new BLANK PPA was provided to the projects by
Idaho Power Company. On December 3rd, the filed in document was provided back to Idaho Power with
the agreement contacts and specific project items. Of course the agreement itself was not modified,
just project details filed in. Over the weekend, the rest of the exhibits were finished and the document
submitted to our legal review team on Sunday, December 5th. On December 7th Tuesday the completed
contract agreement from each project was approved and discussed with Idaho Power. On late
Wednesday December 8th the complete final documents were submitted back from Idaho Power for a
final review and approval by the projects. On 8:36 am December 9th, our response was that the
documents looked great and the request from Brian Jackson emphasized in the email included the
following question: "PLEASE LET US KNOW HOW FAST WE CAN SIGN THESE?" At that point the projects
were working on financial terms with manufacturers to secure turbine deposits by the end of 2010 and
clearly confident that the PPA contracts would be signed by both parties immediately. The American
Wind Group team was in Portland that week meeting with potential finance partners and with BPA
regarding interconnection progress on the Rainbow Ranch projects. It was pointed out that if Idaho
Power called to sign the agreements on Thursday or Friday we would be hopping on a plane to come
back and sign them that day.
At almost noon, Monday December 13, 2010 we were informed that the final contracts would be
available to pick up at 2PM and we were asked if we wanted them to be mailed or to pick them up in
person. We thought that was a funny request because certainly mailng them at this point would not be
reasonable from our perspective. We knew the Idaho PUC had designated the 14th as a critical date, but
thought since we were signing the documents we were past the critical risks. At this point we were
getting nervous but stil expected Idaho Power to follow through appropriately as we thought had been
the understanding on the November 19th meeting. We responded that we would be there at 2pm to
sign the documents. The cover letter stated that if we did not return the signed PPAs before Monday
December 20th, Idaho Power would reserve the right to change the agreements. We thought that was
funny because we already had approved them the previous week and at every communication
expressed our desire to sign them right away. Our team included Brian Jackson, Pike Teinert, and David
Warrick. The agreements were picked up from Michael Darrington at the front desk of Idaho Powers
corporate headquarters. The envelopes included three originals of each of the Murphy Flat agreements
so there were nine 60+/- pagedocuments. The American Wind Group team went to the Owyhee Plaza
American Wind Group LLC Murphy Flat Development Project History Page 6
restaurant and flipped through the documents, signing each original and being careful not to mix them
up. We immediately returned to Idaho Power.
Upon returning to Idaho Power with the signed stack of agreements, we were told by Michael
Darrington that Idaho Power would not be signing these agreements or further reviewing them that
afternoon. We were informed that they may be signed any time in the next couple days in fact. With
that information, we asked if it truly would make no difference if we reviewed the agreements overnight
and Idaho Power said it simply could not be dealt with by their company on this day. We took those
documents home to review and returned them the following morning to Idaho Power in person again.
We asked that morning if there was any way to get the contract agreements signed that day and were
told that no one was sure how long it would take to get to them and to submit them to the Idaho PUC.
W e pointed out that we felt they had been finalized the previous week and all they were waiting for
now was a signature by both parties. We left them there, wondering what impact that might have on
the agreement approval process. We were confident, however, that our part had been done on the 13th
as much as possible.
Ultimately, Idaho Power signed the three Murphy Flat agreements on December 15, 2010 and
submitted them for IPUC approval the next day.
Conclusion
The Murphy Flat Wind LLC project was started to be developed as a PURPA project and sellng energy to
Idaho Power under a 20 year standard offer PPA in July of 2009. In July of 2010, the Murphy Flat Energy
LLC project development was added with the inclusion of more landowners and in August of 2010, the
Murphy Flat Mesa LLC project was added. These projects are the result of years of effort and
development.
Each project has been working on the interconnection and PPA negotiation process throughout the fall
of 2010 and also extensively working on project permitting and environmental studies for responsible
development. The projects have involved significant local investment from Idaho companies in
consulting, time and effort, and expenses totaling hundreds of thousands of dollars. These projects are
committed to provide a long term energy resource to Idaho Power and the contracts were negotiated
and signed by both parties in anticipation of the rules and conditions included in the contract
agreements which were finalized completely by December 8th and executed by the projects within hours
of their receipt from Idaho Power on December 13th.
The extension of the Federal incentive for project construction was critical for the success of these and
other projects that were working dilgently to qualify by the end of 2010 but now have until the end of
2011 to start construction. The approval of the project agreements as originally signed and submitted is
critical to the success of the projects.
American Wind Group LLC Murphy Flat Development Project History Page 7
Attachment 2:
November 17,2010 Email from American Wind
Group, Brian Jackson to Idaho Power regarding
negotiations.
MUHY FLAT WI LLC
MUHY FLAT ENERGY LLC
MUHY FLAT MESA LLC
Comments - March 17, 2011 4
Brian Jackson
Subject:
Brian Jackson (bnan~clever-ideas.coml
Wednesday, November 17, 20103:10 PM
'Allphin, Randy'; 'Walker, Donovan'
'Snyder, Carlene'; 'Darnngton, Michael'; peter~nchardsonandolery.com;
'David~ericanWind.net; 'Pike Teinert; dsikes~idahopower.co
Murphy Flat Wind LLC, Murphy Flat Energy LLC, Murphy Flat Mesa LLC, Rainbo Ranch
Wind LLC, Rainbow West Wind LLC - PURPA OF Projects
From:
Sent:
To:
Cc:
Randy,
We have been continuously meeting with Idaho Power on almost a weekly basis since the first of August. We have met
in the cafeteria, the front lobby, various conference rooms. We have met with the interconnection side at the Plaza
multiple times. We have met with Idaho Power and brought various landowner development partners, as well as
various people from our American Wind Group team and our finance team to the meetings and discussed
interconnections, turbine selections, contracts and agreements. We have met with Gene Fadness and Rick Sterling at
the Idaho PUC and discussed these projects. Monday this week I talked with Carlene, and yesterday Tuesday November
16th I talked at length with Michael Darrington reflecting that I would really like to negotiate a solution instead of proving
our position. i have sent emails every day and each time I have requested a meeting as quickly as possible to discuss the
things included in this letter. I am asking Idaho Power to please consider this information and meet with our teams to
help resolve this situation.
With Idaho Power we have discussed the three Murphy Flat development projects: (Murphy Flat Wind LLC, Murphy Flat
Energy llC, Murphy Flat Mesa LLC) at length and we have discussed the two Rainbow Ranch development projects
(Rainbow Ranch Wind LLC and Rainbow West Wind LLC) as welL. Besides our personal discussions on the phone and in
person, you were copied in various letters from the Interconnection Applications on every one of these five projects. In
every discussion I have been open and honest with you about the need for these projects to converge by the end of the
year with signed contracts with Idaho Power to proceed with construction and qualify for the Investment Tax Credit
stimulus incentives. I have also told you that these projects were all planned for 2011 construction and in our
discussions I also pointed out that they could be delayed and finished by the end of 2012 depending on turbine and
equipment supply issues if needed as long as they started this year in 2010. I kept you informed when we passed our
planning and zoning permitting for the three projects in Owyhee County and shared that the projects in Cassia County
are in a special location that is specifically zoned for a wind project and does not require a Conditional Use permit so
that project is ready to proceed as welL.
I have agreed with you that the recently negotiated Rockland 80MW PURPA contract was well done and clearly provides
a tremendous benefit to Idaho Power and the ratepayers while it also has some benefits to the developer. In October
you asked me if I would sign that document and I told you directly and right away that I would sign that for the projects
I'm working on under a few circumstances and considered that an option we should discuss. I also pointed out to you
that the Murphy projects as an example really needed to be three separate projects for development and financing
reasons, not just for the "Standard Offet' contract. The same applies to the Rainbow Ranch projects. In our discussions
Wednesday November 3, 2010 after the Wind SAR meeting at the Public Utilties Commission you asked me specifically
what other projects I might have or be working on. I told you that the three Murphy Flat projects and the two Rainbow
Ranch projects near Raft River were the only projects I was working on in Idaho right now and that all five projects were
in the crucial period to start construction and that we needed to finalize contracts with Idaho Power as fast as possible. I
explained how INl had helped us with some of the previous data collection over the past couple years and Kurt Myers
had helped me with the array layouts, but that we were down to final turbine supply negotiations and felt that was the
last variable in our agreements. You clearly agreed with us on the need to move quickly, but left it at that.
Pike Teinert and I met with you and Michael Darrington on Thursday November 4, 2010 at your offices to discuss what
needed to be done to finish the negotiations of the PPAs. You had finally sent us the draft PPA Document on Monday
1
November 1 and we immediately that morning requested a meeting to go over the details. We were told that we could
meet Thursday or Friday but you would not have time Monday or Tuesday so we picked Thursday that week as the
earliest time you allowed because we had to be in a position to get these contracts done this month.
When we met in your office Thursday November 4, 2010 with you and Michael Darrington as well as myself and Pike
Teinert we were completely frank with you and again emphasized that we needed to get these contracts done right
away for our projects to move forward this year. We told you we would absolutely send you each of our PPA drafts and
comments to the Idaho Power PPA with our project details filed in the following week. You pointed out that would be
very important for your legal team to have the information filled in, but that there still could be changes to some
language in the contracts from Idaho Power. We had assumed that the contract agreement would look exactly like the
previously approved contract, but welcomed your possible edits. You even proposed language and terms that were
clearly not part of the standard agreements, we responded that our goal was to sign the same agreement others signed.
We told you that the PPAs were the most important part of the project and we would follow through with whatever was
required on our part. We also told you that we understood that we would not be able to edit or change the documents,
but would sign them as written once the edits were made. You said that it typically takes a couple weeks for those
edited versions to come back from your legal department. That is hard to understand since we were agreeing at the
meeting that the document would not be materially changed. Our instructions from you on Thursday November 4th,
2010 were to fil in the documents and get them back to you to proceed to the next step. Had you stated on Monday
when you sent us that draft that you would be repealing it that week, or told us on Thursday that our time was over, we
would have dropped everyhing to finish the negotiations immediately and completely. I told you we were ready and
we just needed to formally file things. I certainly could have shown up with signed copies on our meeting the 4th if that
was our only and last chance. Also, during our meeting on November 4th we discussed that we felt the liquidated
damages clause was very burdensome and even seemed to be structured to place a huge drain on the project before the
financing would normally be available but that we would be prepared to follow through with the liquidated damages
deposits when that requirement came. In fact, such a deposit is exactly the kind of burden that creates an advantage for
big companies rather than support what PURPA was designed around.
The bottom line is that since we were progressing in our negotiations in good faith on a weekly basis, I had no reason to
believe Idaho Power would not follow through with us to the completion in the next couple weeks. The following bullet
points summarize some of the key details regarding these projects.
. We have been working two years on these projects and invested hundreds of thousands of dollars of time and
expenses. This entire time, everything we have done has been converging on finalizing all of our efforts toward
December 2010. What we are doing is developing the projects with local farmers and ranchers as part of the
ownership not just the land lease payments. This has been done in other states very successfully and provides
tremendous local benefits beyond just the normal developer modeL. For us this raises the stakes tremendously.
We have borrowed money, sold assets and at this point everyhing we own is tied up in these projects and is at
risk. This is not just another project in a developer's portfolio. We don't have other projects, a backup plan or
an exit strategy. In some cases farm land is being pledged as collateral for project expenses we are covering.
We simply must wrap up an agreement with Idaho Power.
. These five projects are the result of USDA Feasibilty Study grants and studies commenced in 2009 and work in
each location started originally with 20m anemometers several years before that. The projects are applying for
USDA Rural Energy for America REAP grants and loan guarantees. We have had multiple executive meetings
with local banks and are securing financing that is only possible with a combination of the available incentives
right now. That financing wil absolutely work under the terms and conditions of the standard offer contract and
wil likely work under similar terms and conditions in your current negotiated contract document. These
projects include local investors and partners including my family and the local Idaho farm families.
. These projects are scheduled to involve local Idaho Contractors as much as possible. These contractors are
struggling and need the jobs and work. Some of them are counting on these projects to help keep them in
business this next year. This wil provide a boost and skils that are critically needed.
2
. These projects provide local tax revenue to counties that are desperate for funds. When we talked to the
commissioners at Cassia County, they were excited and emphasized that we were welcome and ready to work
as quickly as possible and really emphasized that they would like to see local employment. They also
emphasized that the sooner we could build and start paying taxes, the better for everyone. At our Planning and
Zoning hearing in October for the first commercial wind project in Owyhee County the tax payments were a
huge
. These projects capture a resource that is important to the future of our nation.
. In addition to the rural economic benefits we have designed a research center to be built in Owyhee County and
Cassia County at the projects for the benefit of everyone involved from the projects, Idaho Power and other
utilities, as well as schools and universities. These research centers are included in the planning and zoning
permitting already.
. These are much more than just a few PURPA Contracts, I believe these projects are an example and a model to
the future of wind in Idaho and America.
You point out that on November 5th, the day after we met in your office, Idaho Power filed a petition that may affect our
project's eligibilty. You also point out in effect that no one at Idaho Power took the time to even send us a notice of the
filng. In fact, I found out after I had revised the contract documents per your instructions and was preparing to send
them in draft form in the middle of the week. Furthermore, I found that out from a phone call with another developer.
That petition cannot be viewed by our projects as anything less than pulling the rug out from under our feet while we
thought we were standing there shaking hands. I fully understand and comprehend the conditions and reasons
prompting the filng, but I can't help feeling that the timing and work we've done these past four months to come to this
point would certainly not have led to this if Idaho Power was going to deny us a contract in the final weeks of
negotiation. I am certain that Idaho Power intends that these five projects will follow through and execute either a
standard offer contract or a negotiated contract with expediency and integrity. I am certain that these past months of
negotiations with Idaho Power, the fact that you knew we were filing documents and spending precious time and
resources in final negotiations with financing, turbine orders, equipment and contractor selections, and the face to face
discussions we've had wil clearly establish our entitlement to the standard offer contract as long as we stand ready to
execute it as we stated we were on the 4th of November and are again stating that we are at this time. I know you would
not have led us down the path, submitted the letters, sent us a draft document, and let us proceed with so many
expenses and commitments without an intent to execute an agreement. We made it very clear at the outset that these
projects were committed to move forward.
I spent eleven years of my life working for Idaho Power and it was an incredible time. Idaho Power has talented people
and it was an honor to work with them. These five projects are designed to help connect what I see as a gap in the
industry between the developers and the utilties. I want to help make the connection that will lead to greater
understanding of wind energy integration, wind energy forecasting and exploration of energy storage solutions,
technologies, and ideas. My goal is to provide extensive data collection and information to Idaho Power in regards to
turbine performance, voltage, power factor adjustments and other parameters far beyond the normal data needs.
We are ready to negotiate and need to proceed with the standard offer contract or the negotiated contract
immediately. The Idaho Power filing has created shadow of doubt on our position and is now jeopardizing our turbine
deposit funds for December. We told you in person that we were meeting with Turbine manufacturers and negotiating
final turbine supply agreements and securing turbine deposits which had to be made in December. Those meetings are
scheduled for the last days of November 2010. The situation we are now in is pointed out specifically and acknowledged
in your email below. As we were finalizing our negotiations and way past the point of no return, in fact the day after our
meeting in person where we were instructed to return our "draft comments and information" Idaho Power made a filing
that as you state "The adjustment requested in this filng could affect your project's eligibility for the published avoided
cost rate." I would re.phrase that a bit and perhaps say it this way myself:
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"The filing made by Idaho Power during a crucial stage of project negotiations for Murphy Flat Wind LLC, Murphy Flat
Energy LLC, Murphy Flat Mesa LLC, Rainbow Ranch Wind LLC, and Rainbow West Wind LLC have created a situation
which places these five Idaho projects in jeopardy. The issues wil likely be settled in the coming months, but the
confusion over contract terms and conditions may stall turbine deposit funds scheduled for early December 2010.
Those deposits are crucial for qualifying for the 30% Federal Investment Tax incentive that wil pay back over $60M in
project development costs after construction is completed. This particular incentive is only available for projects that
can start substantial construction in 2010. All five projects have been succeeding on crucial milestones during the past
year to qualify just in time for the end of the year. These projects may have to cancel construction bids and negotiations
involving tens of milions of dollars for Idaho Contractors and local economies. Idaho Power is required to purchase the
energy from these projects according Federal law, but stopping the negotiations at the most critical final stage may
close the window of opportunity for these particular developments. The research facilities that were to be installed as
part of the operations offices to provide education and jobs in Owyhee County and Cassia County may not be built as
part of these projects. The programs at these wind project research centers for BSU, ISU, College of Southern Idaho and
other education facilities for Engineering, Technical Training, and Environmental Studies and more are also now at risk:'
There is a better story of course and that is why I'm writing this letter. We need to solve this right away in some manner
that leads to success for Idaho Power and for the projects. I believe there is no situation based on the negotiations up to
this point that these projects would not qualify or finally succeed in getting a Standard Offer Contract. However, I
remain willing to have a very serious discussion right away about the negotiated contracts as you mention in this email
and as you and I have talked about this past month several times. I want to find a solution where everyone wins,
however, the only way we can do that is to meet very quickly to see if Idaho Power wil follow through - and if we can
come to an agreement very quickly. I understand you are out of the office this week and next as you state.
Unfortunately the filing Idaho Power made creates a time frame that "is what it is". Each day I have tried to meet with
Idaho Power this week and we need to have these discussions right away before I finalize the turbine supply
agreements, terms and conditions with our manufacturers.
I called your office and Michael Darrington on Monday, but was at least able to explain many of these things to Carlene
Snyder and asked that she relay the message to you and Michael Darrington. I called Michael yesterday and also
repeated much of this, but felt I needed to really explain our situation and ask that Idaho Power respond and work with
us this week on this matter. Please tell me if there is a way to meet with the Idaho Power Team on Thursday or Friday or
even later today if that is what it takes. I can take the 10minute data from each project site and convert that to an
hourly generation estimate so you can immediately model that as you suggest - we have that data.
What I need more than anything is to discuss the terms and conditions under which our projects could sign a negotiated
contract agreement and really cannot afford to wait and have that discussion the first week of December. This is my
best effort at clarifying our position right now in the hopes that a little more discussion here can lead to the meeting we
need this week. The timing for us right now is crucial and we really want to come to an agreement instead of pursue the
path of complaining formally and informally as well as documenting all kinds of meetings and notes. We have all seen
that before and what i am asking for all of our benefit is to find a different solution.
I need to either negotiate and sign a PPA right away (which we are prepared to do) or a letter from Idaho Power
indicating that they will indeed negotiate in good faith and intend to execute a PPA with these projects in the next two
weeks. My intention was to discuss this more in person than in a letter, but perhaps this wil help us get there too.
Brian
Brian D. Jackson, PE, MBA, CEM Preident
4
American Wind Group LLC
Renaissance Engineering & Design PLLC
2792 Desert Wind Rd, Oasis, Idaho 83647-5020
P: [phone]
Brian(âClever -Ideas. com
ww.Clever-ldeas.com
A RENAISSANCE
Engineering & Design
CONFIDENTIALITY NOTICE: The infonnation containe in this email message may be privileg, confidential and proteced from disosre. If you are
not the intended repient, any dismination, distribution or copying is stricty prohibited. If you think you have reiv this email mesag in eror,
please notify the sender by reply email and delete the mesage and any attachments.
From: Allphin, Randy (mailto:RAllphin(§idahopwe.com)
Set: Tueay, November 16, 2010 2: 16 PM
To: 'Brian Jackon'; Walker, Donovan
Cc: Snyde, carlene; Darrington, Michael
Subjec: RE: PPA Worc Doment Murpy Flat Mes QF Proje
Brian,
I would be happy to meet with and discuss your issues, however, I am currently out of town on work related matters this
week, and wil be out of town on personal matters until after Thanksgiving. I will be happy to meet with you when I
return. If you had not already been made aware, on November 5, 2010 Idaho Power filed a joint petition with the Idaho
Public Utilities Commission (IPUC) requesting the IPUC to adjust the published avoided cost rate eligibilty cap from 10
aMW to 100 kW in IPUC Case No. GNR-E-1Q-04. The adjustment requested in this filing could affect your projects
eligibilty for the published avoided cost rate. However, it wil not preclude your project from negotiating a purchase
power agreement with Idaho Power. If you wish to pursue an individually negotiated rate PURPA contract, the first step
is to start the modeling process to develop the energy prices for your specific projects. To do that we wil need a good
estimate of the actual hourly generation from your proposed projects for at least a one year period. If you can provide
this data we can get the models running right away. If you wish to go in a different direction please let me know.
Randy
From: Brian Jacksn (mailt:brian(§lever-ideas.co)
Sent: Tuey, November 16, 2010 8:39 AM
To: Allphin, Randy; Walker, Donovan
Cc: Snyder, carlene; Darrington, Michael
Subjec: RE: PPA Word Doment Murphy Flat Mes QF Proje
Thanks Randy,
i would like to meet with Idaho Power at your earliest convenience this morning or this afternoon to work on solutions
rather than complaints. You and I have talked about most of the details and issues and I believe we could work out a
solution right away for my clients' projects.
5
I know small edits can take a few days sometimes so I really wanted to have the discussions today if at all possible.
Brian
Brian D. Jackson, PE, MBA, CEM President
Renaissance Engineering & Design PLLC
2792 Desert Wind Rd, Oasis, Idaho 83647-5020
P: [phone]
Brian(âClever -Ideas. com
ww.Clever-ldeas.com
A RENAISSANCE
Engineering & Design
CONFIDENTIALITY NOTICE: The infonnation containe in this email message may be pnvileed, confiential and proeced fr disosure. If you ..
not the intended repient, any dissmination, distnbution or copying is stnctly prohibited. If you think you have reve this email messa in errr,
please notify the sender by reply email and delete the message and any attachments,
From: Allphin, Randy (mailto:RAllphin(Çidahower.com)
Se: Monday, November 15, 2010 2: 18 PM
To: 'Brian Jacksn'
Cc: Snyder, carlene; Darrington, Michael; Walker, Donovan
Subjec: RE: PPA Word Doment Murpy Flat Mes QF Prjec
Brian, I tried to calf you and your voice message inbox is full and would not let me leave you a message.
i received word that you wanted to discuss negotiating agreements, we would be glad to discuss this. I am out of town
and wil try to call you again tomorrow. If you need immediate answers to your questions please call Donovan Walker.
Randy
(§
This trmission may contn information th is prvilege, confidental and/or exempt frm disclosu imder applicale law. If you ar not th inende repien you ar herby
notified tht any disclosur, copying, distbuion, or use of the informaton contned herein (including any reliance thereon) is STRCTLY PROHffITE. If you recve th
trmission in eror, pleae imedately conta the sender and desy the maal in its entire, wheter in eleconc or bad coy for Th you.
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