20110318Rainbow Wind Comments.pdf

Rabow Rach Wind LLC
Rainbow West Wind LLC
2792 Desert Wind Road
Oasis, Idao 83647
Telephone [phone]
Bnan D. Jackson, Authorized Manager
Bnan~encan Wind.net
. .i:o4- ~,o
BEFORE THE IDAHO
PUBLIC UTILITIES COMMSSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR A DETERMINATION
REGARING A FIRM ENERGY SALES
AGREEMENT BETWEEN IDAHO
POWER AND MUHY FLAT MESA,
LLC
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR A DETERMINATION
REGARING A FIRM ENERGY SALES
AGREEMENT BETWEEN IDAHO
POWER AN MUHY FLAT
ENERGY,LLC
RABOW RANCH WID LLC
RABOW WEST WID LLC
Comments - March 17, 2011
) CASE NO. IPC-E-IO-59
)
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)
) COMMNTS OF RAOW RACH) WILLC
)
)
) CASE NO. IPC-E-I0-60
)
)
)
)
) COMMENTS OF RAOW WEST) WILLC
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1
The following documents consist of inormational exhibits regarding the project activities and
efforts leading up to fializing the firm energy sales agreement between Idaho Power Company
and Rainbow Rach Wind LLC and the firm energy sales agreement between Idaho Power
Company and Rainbow West Wind LLC.
Attchment 1:
March 17,2011 Memo from Amencan Wind Group with Project History Timeline 2009-2010
Attchment 2:
November 17, 2010 Email from Amencan Wind Group, Bnan Jackson to Idaho Power regarding
negotiations.
Dated and respectflly submitted as comments on the cases March 17, 2011.
4f)d.
Authonzed Manager
RABOW RACH WI LLC
RABOW WEST WIND LLC
Comments - March 17, 2011 2
Attachment 1:
March 17,2011 Memo from American Wind Group
with Project History Timeline 2009-2010
RAOW RACH WIN LLC
RAINBOW WEST WID LLCComments - Marh 17, 2011 3
WIND GROUP
March 17,2011
MEMO: History of Rainbow Ranch Development and Utilty Interactions
CASES:RAINBOW RANCH WIND LLC
RAINBOW WEST WIND LLC
CASE IPC-E-l0-59
CAE IPC-E-l0-60
Dear Commissioners:
American Wind Group was completely involved on behalf of the developments in most of the
project activities and was asked to simply document and outline the extensive interactions,
discussions, meetings and progress over the past which has brought the projects to the point of
signing contracts with Idaho Power. To the best of my knowledge and abilty I have tried to
document accurately the events, dates, and circumstances and include them in this write-up.
The one point I would simply emphasize is that at all times during 2010 the efforts and activities
were wrapped around the intention to sign the standard offer contract for the power sales
agreement with Idaho Power in November of 2010. That point was emphasized to Idaho Power
in August. These projects were financed for the development stages entirely out of the
development and landowner teams along with a USDA feasibility study grant for part of the
expenses to keep more value locally than most wind projects typically achieve. Certain project
features, permitting, assessments, and critical analyses were not completed, and could not be
completed before October. The intention was and always had been to finish those tasks in time
to make sure the projects were past critical steps which were achieved in October so the
contracts could be signed in November.
The certain Utilty created events and filngs in November regarding available rates and
contracts did not accelerate activities and intentions for these projects but instead served to
delay the intended progress on the PPA documents to the point of not getting them signed until
December 13, 2010.
Sincerely,
~¿3Á
Brian D. Jackson
President, American Wind Group LLC
2792 Desert Wind Road Oasis, Idaho 83647-5020
www.AmericanWind.net 208-859-1882
RAINBOW RANCH WIND LLC, 20MW
RAINBOW WEST WIND LLC, 20MW
It should be emphasized that each of these projects were designed and intended originally 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 two projects are physically located more than 1 mile apart from each other. Up to
23MW nameplate could be installed with certain turbine models and only 20MW nameplate with other
turbine models so the PPA states the project size to be "up to 23MW:'
Historical Timeline
2008 - Initial Projec Discussions
Ben Bartlett, the owner of the Rainbow Ranch property and Brian Jackson began talking about Rainbow
Ranch for wind possibilities in 2008 and were looking at the substantial data that had already been
collected for several years on Rainbow Ranch propert. The cost of performing a feasibilty study was
evaluated and the discussions continued into 2009 when the decision was made to apply to the USDA
for a Feasibilty Study Grant. We felt there was potential, but the cost of projects was increasing
dramatically each year and smaller projects of 20MW or under were difficult to get financing for as
stand-alone developments. 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 Federal
incentive to promote construction could make the difference in the abilty to finance a project on
Rainbow Ranch.
Spring and Summer of 2009 - Preliminary Evaluation and USDA Grant Applications
We performed preliminary site evaluations and analysis of nearby anemometer data from a historical
perspective. That 20m anemometer which had collected several years of data at Rainbow Ranch but
had been ultimately neglected and almost destroyed by the cattle as well as other anemometers around
the area indicated that this location may have enough wind. Renaissance Engineering & Design put
together some reports and preliminary studies that were used to apply for a USDA Feasibilty Study
Grant which was awarded. The initial project intention was a single 20MW project on the Rainbow
Ranch propert which included almost 2,00 total acres with one single landowner - Ben Bartlett. The
goal was to keep landowner ownership as a unique element and to figure out a way to develop this
project with a team approach and the help of local consultants and the USDA assistance.
The company Innovative Energy LLC was created as a development organization and Rainbow Ranch
Wind LLC was ultimately created for the project development.
American Wind Group LLC Rainbow Ranch Development Project History Pagel
Fall 2009 - Tall Tower Anemometer installation
After notice of the USDA Grant Selection, plans were in process to install a GOm XHD Tall Tower
anemometer at Rainbow Ranch near the freeway. 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 key issue was that the Investment Tax Credit at that time
required projects to start before the end of 2010 and to finish construction by the end of 2012. Several
discussions about the risks of the project included evaluations of the existing PPA rates in fall of 2009
and the potential to secure the turbines at a price that would work and the PPA at a price that could be
financed.
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 process with the USDA to be in stages with points along the way where
the project was continually evaluated on feasibilty 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 offer" contract, we knew that the terms and
conditions are typically not negotiable so any draft at that point was acceptable. The Rainbow Ranch
project had applied for a grant with the USDA exactly in step with another project at Murphy Flat in
Western Idaho.
In March 2010, the PURPA avoided cost rates had been lowered which we felt might jeopardize our
project finance abilty, but we felt that we simply did not have enough data or enough progress to try
and qualify for a contract under the previous rates. The project team had several discussions about this
since the project had been initiated early in 2009, but simply felt that without the confirmation from the
tall tower data, unfortunately, the project was in no position to try and defend a position to 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 studies and geotechnical evluations in the summer and knew that the
site conditions would need to be carefully documented. For this location in Cassia County, the project
site is approved for a wind projec development. Even though this area is specifically zoned for a wind
project development, the project team was determined to perform extensive studies and environmental
documentation in every way.
We spent the months leading up to August in preparation of the project design and anticipation of a
single 20MW project on this Rainbow Ranch propert owned by Ben Bartlett. The development was
anticipated as a joint project effort by Innovative Energ LLC and our new Idaho development company
American Wind Group LLC. When the site layout was explored, it became evident that with the 200
acres, the site could support two project developments and not just one. Also, with the anticipated
transmission line extension and upgrade costs, the abilty to develop two projects might prove critical to
project financing. From a finance standpoint it also became critically apparent that with the intention to
American Wind Group LLC Rainbow Ranch Development Project History Page 2
achieve local equity from Idaho investors and bank financing from local Idaho banks as well as pursue
USDA grants and loan guarantees, the projects would absolutely have to be completely separate and file
for their own contracts, bank loans, and equity partners.
As we got closer and closer to development and the environmental study results and wind data looked
promising, we began to prepare the interconnection applications. We began to explore the
development of a first project to be followed by a possible future project. The land was about 2000
acres but had the freeway running right through the propert. As we prepared our documents for the
interconnection studies with Idaho Power, we realized that the project would likely need to be at least
two 20MW projects to effectively deal with the construction expenses which at a minimum included at
least 4 miles of transmission line and possibly 8-9 miles to get to the grid depending on the directions.
The site was located outside of Idaho Powets actual service territory even though it is completely within
the Idaho Power Control Area. We didn't really understand what that meant at first, but it was
explained and emphasized over and over again. The location is rather unique in that it is along the
freeway just East of the 1-82 and 1-84 split just past Burley where the freeway heads East to Pocatello or
South to Salt Lake City.
August 2010 - Interconnecion Work and Environmental Studies
The main focus on the project site in August and September was for the environmental studies even
though the projects were in a location that did not require a conditional use permit. This is a specific
part of Cassia County that is zoned for development of commercial wind farms. The environmental
studies to date have included complete surveys of birds, bats, wildlife, and plants. Those studies are
intended as a baseline for future environmental activities and studies in conjunction with the wind
project developments and anticipated studies to follow after the turbines are installed also.
The company Rainbow Ranch Wind LLC was created on August 23, 2010 for the project ownership
company. The company Rainbow West Wind LLC was created simultaneously for ownership of the
second project development company. Both companies were created for the project development and
each project filed completely separate small generator interconnection applications (SGIAs) on August
23,2010 with separate fees and documentation.
On August 27th, 2010 Idaho Power replied that it was unclear where the projects would connect since
the site was not in Idaho Powets territory. On the same day, the projects replied and clarified the
interconnection options from the project perspective. The projects also asked for the coordinates of the
likely connections. On August 31, 2010, Idaho Power responded that they were not able to provide
coordinates but the estimated distances from the site to Idaho Power facilities were between 5 and 9
miles for distribution and transmission facilties.
On August 31, 2010 Idaho Power asked if the intention was to withdraw the applications or pursue them
based on the previous correspondence. The projects responded that the intention was to pursue the
American Wind Group LLC Rainbow Ranch Development Project History Page 3
applications and have a scoping meeting as soon as possible. On September 8th, 2010 after several
emails back and forth, the projects further confirmed to Idaho Power that the projects intended to be a
Network Resource, NR, and intended that each project would be:
IIRainbow Ranch Wind LLC 20MW PURPA contract OF to IPCO
Rainbow West Wind LLC 20MW PURPA contract OF to IPCO"
On September 14th, 2010 Idaho Power sent the acknowledgement letter also dated september 14th,
2010 stating that all of the required information and materials were received from the projects for the
interconnection applications. That letter was copied to Marc Patterson and also to Randy Allphin. That
letter also stated IISince you wil have a Power Sales Agreement in place with Idaho Power-Power
Supply, this wil be handled by the Power Supply Merchant group."
A scoping meeting was set up ultimately for Friday September 24th, 2010. At that meeting with Marc
Patterson, the Idaho Power team as well as Brian Jackson and David Warrick several scenarios were
presented. The discussions mentioned that the projects could explore multiple connection options at
the same time with Idaho Power, BPA, and Raft River and make the decision ultimately based on the
results. On Wednesday, september 29th a communication from Idaho Power stated that by close of
business Friday October 1, 2010 the projects were required to identify and clarify the study information
and connection intentions regarding the project status or lose their interconnection position.
On Friday, October 1, 2010 after several discussions with Raft River Rural Electric Cooperative and a
personal meeting with Bonneville Power Administration in Vancouver, Washington that week, the
projects responded to Idaho Power with three Interconnection options, two of which involved the same
line but different paths to get there. On October 6th, 2010 Idaho Power questioned whether the
projects would be dropping the Idaho Power applications and pursuing the connections through BPA
only. The same day, the projects responded immediately that they would intend to pursue and evaluate
the direct connection options to Idaho Power and the options of connecting through BPA and/or Raft
River. The projects absolutely had no intention of dropping the applications with Idaho Power and
responded as such on the same day.
On October 13th the projects requested an earliest possible meeting to make sure the studies were on
progress with Idaho Power and make sure there were no outstanding confusion issues about the
intentions. The projects had never waived from the original intentions from the first scoping meeting,
but the points needed to be reinforced. Idaho Power proceeded from that point to follow through with
the Feasibility Study as requested and on to the rest of the interconnection study in December after the
turbine specific modeling data was provided.
On October 22, 2010 interconnection applications were filed with BPA to evaluate the option of
connecting directly to their lines in addition to connections directly to Idaho Power already under study.
Those studies are still underway in addition to the ones with Idaho Power.
American Wind Group LLC Rainbow Ranch Development Project History Page 4
By October, 2010 enough wind data was available from the towers to perform the required analysis and
justify the wind resource for the projects to enable turbine evaluations, negotiations and the turbine
selection process. Without the wind data, the turbine manufacturers could not perform the site
suitabilty analysis and verify the expected turbine performance.
November 2010 - PPA and Transmission
On Monday November 1, 2010 a meeting was requested to walk through the Rainbow Ranch projects
and discuss progress with Idaho Power in person. That meeting was set up for Thursday after the Wind
Working Group meeting on Wednesday. Based on previous discussions, the project team expected that
PPA process to take about a month and the projects were ready to get that done before the final push
for turbines and financial commitments planned for most of the month of December 2010.
On Wednesday, November 3, 2010 at the Idaho Wind Working Group meeting in Boise, Brian Jackson
and Randy Allphin were discussing the wind projects and Brian Jackson emphasized that American Wind
Group was completely focused in Idaho only on the Murphy Flat and Rainbow Ranch projects and that
the interconnection applications for those projects and studies were all started in August. The Murphy
Flat projects are in no way connected to the Rainbow Ranch projects. Randy Allphin pointed out that
the Rainbow Ranch projects had not offcially requested the PPA and Transmission Study process. Brian
Jackson emphasized that they were all in exactly the same situation to qualify by the end of the year for
the federallTC incentives which were crucial to landowner development and ownership business
models we were trying to achieve including Idaho investors.
On November 3rd, 2010 after the wind working group meeting and discussion, American Wind Group
submitted a formalized form of a request document to Idaho Power's Randy Allphin and Michael
Darrington including maps, electrical layout drawings, and project descriptions. This was submitted
specifically for the Rainbow Ranch Wind Project LLC and separately for the Rainbow West Wind Project
LLC. The email stated specifically among other things:
Wednesday November 3rd 2010 Confirmation Email: (Identical for Rainbow Ranch Wind and Rainbow
West Wind)
HWe intend to sign 20 year non-Ievelized contract with Idaho Power having a starting on-line
date on or before 12-31-2012. We wil have to start construction this year and wil need to figure
out what is required to facilitate the deposit and other contractual requirements on your part
and ours. Of course we wil have to facilitate all of that and sign the documents before start of
construction. II
And:
HThis is located East of Declo and South of Lake Walcott along the freeway as you can see on the
informational Maps attached. The project is located more than a mile apart from the other
American Wind Group LLC Rainbow Ranch Development Project History PageS
project in the vicinity. This is going to really help the local community and the many contractors
involved in the project to keep jobs and the skils we need for the industry in Idaho. /I
And also:
"Please let me know how to proceed. We are looking forward to a very fast, effcient process to
get these projects underway. These are excellent projects in many ways. We are adding a
research facility at the site to conduct ongoing research into wind integration, energy storage,
and wind forecasting with Boise State University and others.
I look forward to continuing discussions. I'm glad we were able to talk about this today and look
forward to our meeting at lOam tomorrow./I
Thursday, November 4th was a significant meeting for all the project to establish the steps needed to
finalize PPAs by the end of the month. The terms and conditions of the draft PPA were discussed for all
projects in a joint meeting that included Brian Jackson, Pike Teinert, Randy Allphin, and Michael
Darrington. That meeting went through the PPA discussions for the three Murphy Flat Projects and the
two Rainbow Ranch projects. At that meeting American Wind Group agreed to fill in the draft blank
PPA document terms and conditions to get these done quickly. 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. Our backup plan included showing up to the project with a
road construction crew if we had to and to be in IIcontinuous construction" as specified by the ITC rules
until project completion if it came down to that. 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, particularly the turbine deposits. 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 first part of December.
On Friday, November 5th, 2010 Idaho Power responded to the previous email from November 3rd and
the meeting discussions on November 4th with the Standard PPA, Interconnection and Transmission
Process letters and the attached Letter of Understanding for Rainbow Ranch Wind and Rainbow West
Wind. The project team wrapped up the week feeling the projects were exactly on track to achieve the
PPA by the end of the month as discussed.
On Tuesday, November 9th the projects each filed the signed Letter of Understanding and Transmission
request documentation which was also acknowledged as having been received by Idaho Power that
same day for Rainbow Ranch Wind and Rainbow West Wind.
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
American Wind Group LLC Rainbow Ranch Development Project History Page 6
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 agreements and let Peter Richardson submit
those to Idaho Power.
On Monday, November 15th, 2010 after several phone calls and messages requesting a personal
meeting, we sent the MS Word version of our PPA document to Idaho Power 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. That would put us almost to the end of November at the
most critical time after we had completely outlined the project goals and intentions continuously. The
email response from Randy Allphin on November 16th saying he couldn't meet also had the first mention
in any communication from Idaho Power that IIlf 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-l0-04. The adjustment requested in this filing could affect your projects eligibilty for the
published avoided cost rate."
On November 17, 2010, Brian Jackson drafted and sent an extremely long and detailed four page 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 a few negotiations in spite of the filings and would
work with us. He assured Brian Jackson that the standard processes and procedures were stil in place
until the IPUC made offcial changes. We were able to set up a meeting for November 19, 2010.
November 19th Meeting 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
Teinert, and David Warrick from American Wind Group as well as Don Barnhill 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
the discussions included the exact steps and procedures needed to finalize PPA documents. The formal
Transmission System Impact Study Agreements were presented to the Murphy Flat projects for the
studies. Don Barnhil signed the agreements and gave Idaho Power a check to proceed immediately.
Idaho Power informed the team that the progress was being made on the Rainbow Ranch Wind and
Rainbow West Wind initial Transmission capacity evaluations and requests that had been processed.
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 data wind studies and reports were
American Wind Group LLC Rainbow Ranch Development Project History Page 7
being continuously updated and contributing to the expected long term energy correlations. Turbine
size options and expected performance was critical to completion of the PPA exhibits.
On December 1, 2010 the Transmission System Impact Study agreements were provided to the projects
with a letter stating that the signed agreements were required to be turned back into Idaho Power with
the $10,000 deposit requirement by the close of business on December 13, 2010. Due to travel and
schedules, the signed System Impact Study Agreement was submitted to Idaho Power in person on
December 9th, 2010 and the Cashier's Check for the deposit was handed to Idaho Power in person on
Monday December 13th, 2010.
After the significant November 19th meeting at Idaho Power, and despite 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 to essentially start over. On December 3rd, the filled 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 filled 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?II 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 same day.
PPASlgning
At almost noon, Monday December 13, 2010 we were informed that the final contracts would be
available to pick up at 2PM that afternoon 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 included with the contract 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. We took that
American Wind Group LLC Rainbow Ranch Development Project History Page 8
as a good intention from Idaho Power that clearly these contracts were now considered final based on
the previous week's effort. We also took that to mean that as long as we went ahead and executed
these documents, base on the good faith efforts on both sides these would be executed by Idaho Power.
Our team included Brian Jackson, Pike Teinert, and David Warrick. The agreements were picked up from
Michael Darrington at the front desk of Idaho Power's corporate headquarters. The envelopes included
three originals of each of the Rainbow Ranch agreements so there were six 60+/- page documents.
(Besides the nine originals for Murphy Flat) The American Wind Group team went to the Owyhee Plaza
restaurant and flipped through the documents, signing each original and being careful not to mix them
up. We did not get much of a chance to even check the documents or review them, but 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. The
team left the Rainbow Ranch documents with Idaho Power and returned the next morning. The
agreements had not been signed by late morning and our team asked 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. We 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 Rainbow Ranch agreements later that day on December 14, 2010
and submitted them for IPUC approval evidently two days later.
Conclusion
The Rainbow Ranch Wind Project was essentially started with the intention of being developed as a
PURPA project and sellng energy to Idaho Power under a 20 year standard offer PPA in July of 2009 and
really quite a bit before that with the USDA grant application earlier that year. In August of 2010, the
Rainbow Ranch Wind llC and the Rainbow West Wind LLC projects were formally in the application
process for interconnection with Idaho Power and within a few quick weeks the intention to sign PURPA
agreements was formally clarified to Idaho Power interconnection and Power Purchase Teams and
verified from Idaho Powets return letter and documentation which was copied to both teams. These
projects are the result of years of effort and development. Every effort was made to communicate to
Idaho Power that the project timeline and intentions were to execute contracts and start construction
by the end of 2010. The term IIstarting construction" was explained to be the efforts required to qualify
for the FederallTC incentives but the projects needed to have a PPA in order to secure turbine deposits.
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
American Wind Group LLC Rainbow Ranch Development Project History Page 9
consulting, time and effort, and expenses totaling hundreds of thousands of dollars. These project 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 Brian Jackson for the
projects within hours oftheir receipt from Idaho Power on December 13th.
The Rainbow Ranch location is special for many reasons, but is in a region where the wind is substantial
and there is really not much of anything else around. The highest and best use of this land is for a
commercial wind project as proposed. The development of this project has been done with local
contractors and consultants and in conjunction with the landowner team as an actual development
partner.
The intention with this project is to construct a research center facility out of the on-site offce complex
and provide not only tours and educational venues for local schools, colleges and universities, but also
complete research projects and research project venues for ongoing activities that wil include key
objectives in wind energy forecasting, wind energy integration, energy storage and other generation
technologies. Also, ongoing research activities in environmental studies and evaluations are anticipated
not only on the site but for surrounding areas and other wind project developments in the region.
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 Rainbow Ranch Development Project History Page 10
Attachment 2:
November 17, 2010 Email from American Wind
Group, Brian Jackson to Idaho Power regarding
negotiations.
RABOW RACH WI LLC
RABOW WEST WID LLCComments - March 17, 2011 4
Brian Jackson
From:
Sent:
To:
Cc:
Subject:
Brian Jackson (brian~clever-ideas.coml
Wednesday, November 17, 20103:10 PM
'Allphin, Randy'; 'Walker, Donovan'
'Snyder, Carlene'; 'Darrington, Michael'; peter~richardsonandoleary.com;
'David~AmericanWind.net; 'Pike Teinert; dsikes~idahopower.com
Murphy Flat Wind LLC, Murphy Flat Energy LLC, Murphy Flat Mesa LLC, Rainbow Ranch
Wind LLC, Rainbow West Wind LLC - PURPA OF Projects
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 Offer" contract. The same applies to the Rainbow Ranch projects. In our discussions
Wednesday November 3, 2010 after the Wind SAR meeting at the Public Utilities 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
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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 stil 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 Feasibility 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 will absolutely work under the terms and conditions of the standard offer contract and
will 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 will provide a boost and skills that are critically needed.
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. 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
utilties, 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
filing. 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 wil 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 filng 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 will 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 utilities. 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 Itdraft comments and information" Idaho Power made a filing
that as you state "The adjustment requested in this filing 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:
3
liThe 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 will 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 millions 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 facilties 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 filng Idaho Power made creates a time frame that /lis 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. l 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 perhapsthis will help us get there too.
Brian
Brian D. Jackson, PE, MBA, CEM President
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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
ti il ( N l I S 5 AI.( :1
En!fneill. . Oeìïn
CONFIDENTIALITY NOTICE: The information contained in this email message may be privileged, confidential and protected frm disclosure. If you are
not the intended recipient, any dissemination, distribution or copying is strictly prohibited. If you think you have receive this email message in error,
please notify the sender by reply email and delete the message and any attachments.
From: Allphin, Randy (mailto:RAllphin(Qidahopower.com)
Sent: Tuesday, November 16, 2010 2:16 PM
To: 'Brian Jackson'; Walker, Donovan
Cc: Snyder, Carlene; Darrington, Michael
Subjec: RE: PPA Word Document Murphy Flat Mesa QF Project
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 will 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 eligibility cap from 10
aMW to 100 kW in IPUC Case No. GNR-E-1O-04. The adjustment requested in this filing could affect your project's
eligibility for the published avoided cost rate. However, it will not preclude your project from negotiating a purchase
power agreement with Idaho Power. If you wish to pursue an individually negotiated rate PURPAcontract, the first step
is to start the modeling process to develop the energy prices for your specific projects. To do that we will 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 Jackson (mailto:brian(Qclever-ideas.com)
Sent: Tuesday, November 16, 2010 8:39 AM
To: Allphin, Randy; Walker, Donovan
Cc: Snyder, Carlene; Darrington, Michael
Subject: RE: PPA Word Document Murphy Flat Mesa QF Project
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]
Brìant?Clever-ldeas.com
ww.Clever-ldeas.com
ti B: E N A ISS A I ,e .1
Engineeril18l' Dei!J.. , r. ".
CONFIDENTIAUTY NOTICE: The information containe in this email message may be privileged, confidential and protected from disclosure. If you are
not the intended repient. any dissemination, distribution or copying is strictly prohibited. If you think you have receive this email message in errr,
please notify the sender by reply email and delete the message and any attachments.
From: Allphin, Randy (mailto:RAllphin(gidahopower.com)
sent: Monday, November 15, 2010 2:18 PM
To: 'Brian Jackson'
Cc: Snyder, Carlene; Darrington, Michael; Walker, Donovan
Subject: RE: PPA Word Document Murphy Flat Mesa QF Project
Brian, I tried to call 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
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