20110909Comments.pdf

DONOVAN E. WALKER
Lead Counsel
dwalkertâidahopower.com
eslDA~POR~
An IDACORP Company
September 8, 2011
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-11-14
IN THE MATTER OF THE PETITION OF IDAHO POWER COMPANY FOR
A DECLARATORY ORDER REGARDING PURPA JURISDICTION
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of the Comments
of Idaho Power Company in the above matter.
fa/
DEW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, 10 83707
DONOVAN E. WALKER (ISB No. 5921)
JASON B. WILLIAMS
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalkerØ2idahopower.com
jwilliamsØ2idahopower.com
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Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF )
IDAHO POWER COMPANY FOR A ) CASE NO. IPC-E-11-14
DECLARATORY ORDER REGARDING )
PURPA JURISDICTION. ) COMMENTS OF IDAHO POWER
) COMPANY
)
Idaho Power Company ("Idaho Powet' or "Company"), pursuant to the Idaho
Public Utilities Commission's ("Commission") Notice of Petition and Notice of Comment
Deadline, Order No. 32332, in the above-referenced case, hereby files the following
Comments:
I. INTROCUCTION
On July 8, 2011, Idaho Power filed a Petition for Declaratory Order requesting
that the Commission issue an Order determining that the Commission wil exercise
jurisdiction over the proposed Public Utilty Regulatory Policies Act of 1978 ("PURPA")
qualifying facilty ("OF") transactions proposed by Western Desert Energy 1, LLC
("Western Desert") and Tumbleweed Energy II, LLC ("Tumbleweed"). Specifically,
Idaho Power asks the Commission to find that a OF located in Idaho Powets service
COMMENTS OF IDAHO POWER COMPANY - 1
territory in the state of Idaho, interconnecting with Idaho Power's system in the state of
Idaho, must contract with Idaho Power pursuant to the Idaho Commission's PURPA
rules, rates, and regulations.
On July 29, 2011, Western Desert and Tumbleweed (the "Projects") filed a
"collective" Answer and Motion to Dismiss. The Projects argue that Idaho Powets
Petition is fatally flawed because it fails to cite any Order, law, or rule upon which it is
based. The Projects further maintain that the Commission is prohibited by federal law
from regulating OFs and, therefore, does not have authority to restrict its access to
markets. The Projects state that granting the Petition would violate the Commerce
Clause of the United States Constitution by restricting OFs from access to markets
outside of Idaho's borders. The Projects ask that the Commission dismiss Idaho
Powets Petition with prejudice. See Notice of Petition and Notice of Comment
Deadline, Order No. 32332.
On August 8, 2011, both Western Desert and Tumbleweed filed Complaints
against Idaho Power with the Public Utilty Commission of Oregon ("Oregon
Commission") seeking the Oregon Commission to require Idaho Power to tender
Oregon Tariff Schedule 85 power purchase agreements to the Projects. Case Nos. UM
1552 (Tumbleweed) and UM 1553 (Western Desert). These Complaints are attached
hereto as Attachment No.1. On August 30, 2011, Idaho Power filed Answers to both
Complaints asking the Oregon Commission to dismiss the Complaints, as the issues
are more properly before the Idaho Commission in this proceeding. Idaho Powets
Answers are attached hereto as Attachment No.2. No other proceedings have been
ordered or are pending in the Oregon dockets.
COMMENTS OF IDAHO POWER COMPANY - 2
II. COMMENTS
In these Comments, Idaho Power wil: (1) clarify its request and (2) address the
issues raised by Western Desert and Tumbleweed in their Answer and Motion to
Dismiss.
A. Clarification of Request: Where the Projects Have Chosen to
Contract With Idaho Power, They Must Do So Pursuant to the Idaho
Commission's Rates, Rules, and Procedures, and Not Those of the
Oregon Commission.
In their Answer and Motion to Dismiss the Projects completely misconstrue what
it is that Idaho Power has asked the Commission to do. The Projects' first two
substantive arguments are: "The Idaho Public Utilties Commission does not have
jurisdiction over QFs and hence cannot order QFs to sell their electric output to a utility
of Idaho Power's choosing." Answer and Motion, p. 4, and "The Commission is
prohibited from regulating QFs." Answer and Motion, p. 7. Both of these arguments
are red-herring issues. They are based entirely upon the Projects' misconstrued
understanding of what it is that Idaho Power is asking of the Commission.
First of all, nowhere in Idaho Powets Petition, does Idaho Power assert that it is
directing the Projects to sell their output to a utility of its choosing, nor does Idaho
Power ask the Commission to make such direction. In its Petition for Declaratory Order,
Idaho Power asks the Commission: "... to issue an Order determining that the
Commission wil exercise its jurisdiction over the proposed Public Utilty Regulatory
Policies Act of 1978 ("PURPA") Qualifying Facilty ("QF") transactions proposed by
Western Desert Energy 1, LLC ("Western Desert") and Tumbleweed Energy II, LLC
("Tumbleweed")." Petition, p. 1. Additionally, Idaho Power stated:
COMMENTS OF IDAHO POWER COMPANY - 3
Idaho Power respectfully requests that the Commission
issue a Declaratory Order finding that under the facts of
these two proposed PURPA QF transactions, the Idaho
Commission wil exercise its jurisdiction in implementing
PURPA regulations and require that such transactions be
conducted pursuant to Idaho's PURPA rules, rates, and
regulations. More specifically, Idaho Power requests
findings by the Commission stating that a QF located in
Idaho Powets service territory in the state of Idaho,
interconnecting with Idaho Powets system in the state of
Idaho, must contract with Idaho Power pursuant to the Idaho
Commission's PURPA rules, rates, and regulations.
Petition, p. 12.
The Projects have misconstrued Idaho Power's statement above, ". . . must
contract with Idaho Power. . ." to mean that Idaho Power is directing QFs "to sell their
electric output to a utilty of Idaho Powets choosing." This is obviously not the case.
Idaho Powets statements above are clearly qualified and limited to ". . . under the facts
of these two proposed PURPA QF transactions. . . ." These two PURPA projects have
already chosen to sell their output to Idaho Power. Idaho Power is not directing them,
nor asking the Commission to direct them, to sell their output to Idaho Power regardless
of where their project is located or where their interconnection may be. What is clearly
meant by the above language is that if these Projects choose to sell their output to
Idaho Power, which they have done, that they must sell to Idaho Power pursuant to the
Idaho Commission's PURPA rules, rates, and regulations, and not those of the Oregon
Commission.
Consequently, the entire sections of the Projects' substantive arguments related
to establishing that the Commission has no jurisdiction over a QF, Answer and Motion
pp. 4-7, and that the Commission is prohibited from regulating QFs, Answer and Motion
pp. 7-8, are completely without merit.
COMMENTS OF IDAHO POWER COMPANY - 4
B. Clarification of Request: Idaho Power Has Not Asked that the
Projects Be Prohibited from Sellng their Output in Other States, Nor
That They Be Prohibited from Wheeling their Output to Third-Party
Purchasers.
The next substantive arguments put forth by the Projects are that, "Prohibiting
QFs from sellng their output in other states violates the interstate commerce clause."
Answer and Motion, p. 8, and "FERC rules specifically require utilties to wheel QF
output to third party purchasers." Answer and Motion, p. 10. These also are red-herring
issues, and based upon the Project's misconstrued understanding of what Idaho Power
has asked of the Commission.
The Projects claim, "Idaho Power is asking this Commission to prohibit an Idaho
based wind QF from transmitting its output across state lines." Answer and Motion, p.
10. Nothing could be further from the truth. Idaho Power has not asked the
Commission in any way, shape, or form to prohibit the Projects from transmitting their
power anywhere they want/or can transmit it to. However, what Idaho Power is asking
the Commission to do, is to order that if the Projects choose to sell their output to Idaho
Power, that they must do so under the Idaho Commission's rules, rates, and
procedures. One key to this difference is best stated by the Projects themselves in the
last substantive section of their Answer and Motion: "FERC rules specifically require
utilties to wheel QF output to third part purchasers." Answer and Motion, p. 10
(emphasis added). That may be the case, the problem here is that the Projects have
not asked to wheel their output to a third-party purchaser, they have asked to wheel
power to a different location on Idaho Power's system in an attempt to manipulate their
eligibilty for avoided cost rates.
COMMENTS OF IDAHO POWER COMPANY - 5
In fact, the authority cited in their Answer and Motion, 18 C.F.R. § 292.303(d) is
titled, "Transmission to other electric utilties." Answer and Motion, p. 10 (emphasis
added). That federal regulation states, "If a qualifying facilty agrees, an electric utilty
which would otherwise be obligated to purchase energy or capacity from such qualifying
facility may transmit the energy or capacity to any other electric utilty." Id. (emphasis
added). The intent of this provision is clearly not meant to enable a QF to accomplish
what the Projects here propose: to require the interconnecting utility where the Projects
are citied to wheel the power to a different point on that same utility's system in another
state, in order to avoid the pricing applicable to that utility set by the jurisdiction in which
the Projects chose to cite themselves and interconnect with such utilty. If the Projects
desire Idaho Power to wheel their output across its system, Idaho Power wil
accommodate such request in a non-discriminatory manner according to the provisions
of its Open Access Transmission Tariff ("OATT") as it is required to do. This, however,
is an entirely different issue and question then whether Idaho Power is required to
purchase the Project's output pursuant to the Oregon Commission's rates and rules.
The Projects are located in Idaho, interconnect with Idaho Power's system in Idaho, and
have chosen to contract for the sale of their output with Idaho Power. Under this
scenario, the proposed PURPA transaction is under the jurisdiction of the Idaho
Commission.
c. The Petition Complies With the Commission's Procedural
Requirements.
The Projects claim that Idaho Powets Petition is somehow procedurally
insufficient, alleging that it fails to cite to a statute or rule, and further making the
inflammatory and dramatic claim that, "none of the four cited legal authorities provide
COMMENTS OF IDAHO POWER COMPANY - 6
even a modicum of support for the incredible request that the Commission close Idaho's
borders to exported wholesale electric power." Answer and Motion, pp. 3-4. The
Projects even question the way in which the Petition cites to the Commission's Rules of
Procedure in footnote 1 of the Answer and Motion, p. 3.1 Idaho Power has not
requested that the Commission "close Idaho's borders to exported wholesale electric
powet' and thus would not expect its cited legal authorities to stand for that proposition
either. However, the Petition does contain cited legal authorities in the form of
Commission Rules and Orders, all of which are based upon. statutory and other legal
authority including Federal Energy Regulatory Commission ("FERC") and the Idaho
Supreme Court, as well as citation to Idaho Supreme Court case law, and the Code of
Federal Regulations. Petition, pp. 1,4,5,6,7,8,9, and 11.
RP 101 states:
Form of Petition. Any person petitioning for a declaratory
ruling must substantially follow this form. .. Indicate the
statute, order, rule, or other controllng law, and the factual
allegations upon which petitioner relies to support the
petition. Legal assertions in these paragraphs may be
accompanied by citations of cases and/or statutory
provisions.
(emphasis added). To claim that citation to over eight different Commission Orders
from at least four different cases, as well as to four Idaho Supreme Court cases is
insufficient to substantially indicate the applicable statutes, orders, rules, or other
controllng law that are relied upon by the Petitioner is disingenuous at best. The
Petition contains over six pages of discussion and citation to Commission Orders and
Idaho Supreme Court case law discussing PURPA. The cases are examined,
1 See RP 6, IDAPA 31.01.01.006, "In documents submitted to the Commission or issued by the
Commission, these rules may be cited as Idaho Public Utilities Commission Rule of Procedure (IPUCRP
or RP). For example, this rule may be cited as RP 6."
COMMENTS OF IDAHO POWER COMPANY - 7
analyzed, and decided in reference to Idaho Code, Title 61, Sections 201 and 210 of
PURPA, as well as the implementing rules and regulations of FERC, included and cited
here for the record. Idaho Code, Title 61,16 U.S.C. § 824,18 C.F.R. § 292.
The legal authorities cited and discussed in the Petition, (Earth Power Energy
and Minerals, Inc. VS. Idaho Power Company, Case No. IPC-E-92-29, Order Nos.
25174, 25249 (1993); Island Power Company, Inc. vs. PacifiCorp, dba Utah Power &
Light Company, Case No. UPL-E-93-4, Order Nos. 25245 (1993), 25528 J1994);
Vaagen Bros. Lumber, Inc. vs. The Washington Water Power Company, Case No.
WWP-E-94-6, Order No. 25176 (1994); Case No. GNR-E-11-01, Order No. 32262;
Order No. 32176; Order No. 32212; The Public Utility Regulatory Policies Act of 1978,
16 U.S.C. § 824; and 18 C.F.R. § 292), are more than sufficient to substantially indicate
the applicable statutes, orders, rules, or other controllng law that are relied upon by the
Petitioner and to meet the procedural requirements of RP 101.
II. CONCLUSION
Idaho Power respectfully requests that the Commission issue a Declaratory
Order finding that under the facts of these two proposed PURPA QF transactions, the
Idaho Commission wil exercise its jurisdiction in implementing PURPA regulations and
require that such transactions be conducted pursuant to Idaho's PURPA rules, rates,
and regulations if the Projects choose to sell their output to Idaho Power. More
specifically, Idaho Power requests findings by the Commission stating that aQF located
in Idaho Powets service territory in the state of Idaho, interconnecting with Idaho
Power's system in the state of Idaho, if it chooses to contract with Idaho Power must do
so pursuant to the Idaho Commission's PURPA rules, rates, and regulations, and not
COMMENTS OF IDAHO POWER COMPANY - 8
those of the Oregon Commission. Such a QF project cannot avoid the application of
Idaho's rates, rules, and regulations by proposing to wheel its power across Idaho
Powets system purportedly to make a delivery back to Idaho Power in Idaho Powets
Oregon service territory, and demand different PURPA rates, rules, and regulations
established by the Oregon Commission. To allow such a circumstance to take place
would allow a gross manipulation and avoidance of the Idaho Commission's rules and
regulations designed and implemented to protect the customers of Idaho Power and the
public interest.2
Respectfully submitted at Boise, Idaho, this 8th day of September 2011.
fúrX
AN E. WALKER
Attorney for Idaho Power Company
2 Power supply expenses for Idaho and Oregon PURPA projects are not directly assigned, but
are jurisdictionalized. Both are paid approximately 95 percent by Idaho customers and 5 percent by
Oregon customers.
COMMENTS OF IDAHO POWER COMPANY - 9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 8th day of July 2011 I served a true and correct
copy of the within and foregoing COMMENTS OF IDAHO POWER COMPANY upon the
following named parties by the method indicated below, and addressed to the following:
Commission Staff
Kristine Sasser
Deputy Attorney General
Idaho Public Utilties Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Sandy Sanderson, Consultant
Western Desert Energy 1, LLC
1770 West State Street #317
Boise, Idaho 83702
Richard Hansen, Manager
Tumbleweed Energy II, LLC
7154 W. State Street #330
Boise, Idaho 83714
Peter J. Richardson
RICHARDSON & O'LEARY, PLLC
515 North 27th Street
P.O. Box 7218
Boise, Idaho 83702
COMMENTS OF IDAHO POWER COMPANY -10
Hand Delivered
~U.S. Mail
_ Overnight Mail
FAX
~ Email Kris.Sasser(ëpuc.idaho.gov
Hand Delivered
~U.S.Mail
_ Overnight Mail
FAX
~ Email sandy(ëgreenenergywest.com
Hand Delivered
~U.S. Mail
_ Overnight Mail
FAX
~ Email engrwevr(ëhotmail.com
Hand Delivered
~U.S. Mail
_ Overnight Mail
FAX
~ Email peter(ërichardsonandolearv.com
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-11-14
IDAHO POWER COMPANY.
ATTACHMENT NO.1
Pet J. Rìchason (08B# 06668)
Grgory M. Ada (OSB# 101779)
Rìchardsn &, Olear, PLLC
515 N. 27th Strt
P.O. Box 1218
Boise, Idao 83702
Telephone: [phone]
Fax: [phone]
peter(clwdsoiydQlear.com
grg(lchadsonadQlear.com
Attorneys for Complait
BEFORE THE
PUBLIC UTLIT COMMISSION OF OREGON
Tumblewee Ener II, LLC,Complait,)
)
)
)
)
)
)
)
FORM COMPLAIT
OF TUMBLEWEED ENERGY, LLC
AGAINST IDAHO POWER
COMPANY
Cae No.
vs.
IDAHO POWER COMPANY,
Defendat.
1 PARTÆS
2 Ths is a form complaint filed by Tumblewee Energy, LLC with the Public Utility
3 Commission of Orgon (th"Commssiorl) puruat to Oregon Admstrtive Rules an Orgon
4 Revised Statutes. Tumblewee Energy II, LLC ~Crumbleweed) reuested that Idao Power
5 Company ~'Io Power) execute a stda Public Utiity Regulatory Policies Act of 1978
6 ~'PÆ) power purhae agreeent ~'PP Æ) for quafyg facilties ('QFs) under ten megawatt
7 puruat to Ida Powefs Tarff Schedule 85. It ha an anticipate on line date j¡ the sumer of
8 2012.
9 Becuse Tumbleweeds prjec happens to be located in Idao, and will be internnected
10 to Idao Powets electrc syste in Idao, Idao Power ha refused to offer a contrct or acept
Page I-FORM COMPLAIT
i contract or accep deliveres of Tumbleweed' s electca output in its Orgon serce terrtory
2 puruat to Oregon's avoided cost rues and regulatons.
3 PRELIMINARY MATTERS
4 Copies of all pleags and other corrndence in ths matt should be served upon
5 counsel for Tumbleweed Energy II LLC at:
6 Pete J. Richadson7 Grgory M. Ada8 Richason & O'le, PLLC9 515 N. 27th Stret10 P.O. Box 721811 Boise, Idao 83702
12 Telephone: [phone] Fax: [phone]
peterWichardsonandolear .com
14 gr g(arichardsonadolear. com
15
16 In support of this Complaint, Tumblewee alleges as follows:
17 IDENTITY OF PARTIES
18 1.Idao Power is an Idao Coipration with its pnncipa place of business at 1221
19 West Idao Street, Boise, Idao 83702. Idao Power Compay is an electc company and a
20 public utility subject to the jursdction and reguation of the Orgon Public Utilty Commission.
21 In addition to the Oregon Public Utility Commssion, Idao Power is subject to the jursdcton
22 the Idao Public Utilities Commssion and the Federa Energy Reguatory Commssion.
23 2.Tumblewed LLC is an Idao limted liabilty company. Tumbleweed ha the
24 rights to develop and dispose of the output of the Tumbleweed Wind project, which is a
.25 quaifyg facilty under the Public Utility Regatory Policies Act of 1978. Its QF number is
26 QFI1-380.
27 JUSDICTION
P~e 2 - FORM COMPLNNT
1 3. This ca învo1ves PURA's àvoided cost prvisions and FERes ìtplementg
2 reguations thereto, which PUR A dicts states to implement. See 16 U.S.C.. § 824&3 (a)~(g);
3 FERC v. Mississippi, 456 U.S. 742, 751 (1982). In Orgon, the Commssion possesses
4 jursdiction over complaits regarng the obligaton of utilities to enter into PURP A contts at
5 avoided cost rates. See Orgon Revise Statutes Title 57, Chapt 758.
6
7 FACTUAL BACKGROUND
8 4. Tumblewee ha been actively engaged în the development of a wid electrc
9 generg prject in Elmore County, Idao, Ea of Boise, Idaho th is design to generate 10
10 MW of naeplat capacity.
11 5. Tumbleweed will be physically interconnected to Idao Power's electrc system
12 in Elmore County, Idao.
13 6. Tumbleweed ha requested, and Idaho Power ha refued to offer, Idao Power's
14 stdad Orgon Schedule 85 power purchae agrement.
15 7. Tumbleweed is in the process of obtang a wheeling agement with Idaho
16 Power's tranission business unt for the delivery of all of the output frm the project to Idao
17 Power's servce terrtory in Oregon. Tumblewee intends to pay to wheel its outut to Idao
i 8 Power's Oregon serce teritory for sae in Oregon.
19 8. Tumblewee ha made substatial invesents in development of the project.
20 The project is matue and entitled to obligate itslf to a long~tenn PPA for a PUR A QF
21 puruat to Idao Power's Scheule 85, according to Contr ter contaned in the taff
22 contrt.
Page 3 - FORM COMPLAIT
1 9. Tumbleweed is ready and wili to ente into the st PURA PPA with
2 Idaho Power pumt to Schedule 85.
34 LEGAL CLAI
5 Complant's Claim! for Relief
6 Idaho Power is in violation ofPURA, FERC's relations and orders, and the
7 Commission's orders and relations by refusin to otJer a power purchase agreement to
8 Tumbleweed.
9 10. Tumblewee re-alleges and incorporates al precedng paragphs.
10 11. Tiublewee ha attempte in goo faith to engage in negotiations to obta Idao
11 Power's stada Schede 85 power pW'ha agent.
12 12. Idao Power is very faliar with the spifics of the project and possesses all
13 ìnormtion necessar to complete and execute a stdard taff PP A.
14 13. Tumbleweed's intercnnection and whelinargements ar not under the
15 jursdiction of the Oregon Commssion.
16 14. Idao Power's oblìgation to pur the output of Turbleweed's QF project
17 arses upon Tumbleweed's commtment to sell and deliver its output to Idao Power in Orgon.
18 15. It is not a requìrement of PURP A or the Oregon implementig rues tht a QF sell
19 its output to the utility to which it interconnects.
20 16. It is not a requirement of PURP A or the Oregon implementing rues tht a QF
21 sell its output under the implementig rues of the st in whìch it is locted.
22 17. The State of Idao has not implemented PURP A in a ma tht encourges the
23 development of wid energy QFs.
Page 4 - FORML COMPLAI
1 18. The State of Oregon ha implemented PURP A in a maer tht enCOurs the
2 development of wid energy QFs, and therfore it is reanable and in the public interst to or
3 Idao Power to comply with its taff and offer a Schedule 85 power purhase ageement to
4 Tumblewee.
5
6 PRAYER FOR RELffF
7 WHEREFORE, Tumbleweed LLC respctfly requests tht the Commssion issue an
8 Orr:
9 1.Declarng that Idao Power is in violation ofPURPA, FERC's implementig
10 regulations, and this Commission's orders.
11 2.Requing Idao Power to tender its stdad tarff Schedule 85 power purchae
12 ageement to Tumbleweed.
13 3.Granting any other relief that the Commssion dee necessar.
14
15
16
Resy subin ths ~ of Aug 201 i17
18 RICHARDSON AND O'LEARY, PLLC
19
20
21
22
23
Page 5 - FORM COMPLAIT
CERTIFICATE OF SERVICE
I HEREBY CERTIY tht on the 8th day of Augu 2011, a tr and correct copy of the with
and foregoing COMPLAINT OF TULEWEED ENRGY AGAINST IDAHO POWER wa
sered by ELECTRONIC MA and US MAL, to:
Donovan E. Waler
Lìsa Nordstom
Idaho Power Company
1221 West Idaho Strt
8oise, Idaho 83707-0070
dwalker(gìiqaopower.com
Inordsomrgidaopower.com
Üi1... ÛM 5h~Nin Curs
CERTIFICATE OF SERVICE
TUMBLEWEED COMPLAINT
Peter J. Richason (OSB# 0668)
Gregory M. Ada (OSB# 101779)
Richadsn & O'Lear, PLLC
515 N. 27tb Stret
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: (208) 938~ 7904
peterigricharsoAAdolear.com
grgrgchaonandolear.com
Attorneys for Complainat
BEFORE TH
PUBLIC UTITY COMMSSION OF OREGON
Western Deser Energy, LLC,
Complainant,)
)
)
)
)
)
)
)
FORM COMPLAINT
OF WESTERN DESERT ENERGY 1,
LLC AGAINST IDAHO POWER
COMPANY
Ca No.
vs.
IDAHO POWER COMPAN,
Defendat.
1 PARTIES
2 Ths is a formal complait filed by Weste Desert Energy, LLC with the Public Utility
3 Commission of Oregon (the "Commssion") purt to Oregon Admstve Rules and
4 Orgon Revised Statutes. Wes Desert Energy, LLC ("Westrn qeser") requested tht Ida
5 Power Compay ("Idao Power") execte a stadard Public Utilty Regulatory Policies Act of
6 1978 ("PUR A") power purcha agrment ("PPA") for quaifing facilties ("QFs") under ten
7 megawatt puruat to Idao Power's Tarff Schedule 85. It ha an anticipad on line date in
8 the sumer of2012.
9 Becus Wesern Deser's project ha to be locted in Idao, and will be
10 interconnected to Idao Power's electrc systm in Idao, Idao Power ha refued to offer a
Page 1 - FORMAL COMPLAIT
1 contract or accept deliveres of West Desert's electrca output in its Oregon servce tertory
2 purt to Orgon's avoided cost rues and regulations.
3 PRELIMINARY MATTERS
4 Copies of all pleaings and other corresndence in ths matter should be seed upn
5 counsel for Weste Dese LLC at:
6 Pet J. Richadson7 Gregory M. Adas8 Richadson & O'Lear, PLLC9 515 N. 27th Street10 P.O. Box 721811 Boise, Idaho 8370212 Telephone: [phone] Fax: [phone]
oeter(ßrichardsnadolear.com14 greg(ßrichardsonandolear .com
15
16 In support of this Complajnt Western Desert LLC alleges as follows:
17 IDENTITY OF PARTIES
18 1.Idao Power is an Idao Corporation with its prcipal place of business at 1221
19 West Idao Street, Boise, Idao 83702. Idaho Power Company is an electc compay and a
20 public utility subject to the jursdcton and reguation of the Orgon Public Utilty Commssion.
21 In addition to the Oregon Public Utility Commission, Idao Power is subjec to thjursdiction
22 the Idao Public Utilities Commission and the Feder Energy Reguatory Commission.
23 2.Wester Desert LLC is an Oregon limited liabilty compay. Weste Deser
24 ha the rights to develop and dispse öf the output of the Weste Desert Wind project, which is
25 a quaifyng facilty under the Public Utilty Regatory Policies Act of 1978. Its QF numbe is
26 QFII-387.
27 JURISDICTION
Page 2 - FORM COMPLAI
1 3. Ths ca involves PURP A's avoide cost provisions and FERC's implementing
2 reguations theret, which PURP A dicts sttes to implement. See 16 U.s.C. § 824a-3 (a)-(g);
3 FERC v. Mississippi, 456 U.S. 742, 751 (1982). In Orgon, the Commission possesses
4 jursdcton over complaints rearding the obligation of utilties to enter into PURA contr at
5 avoided cost rates. See Orgon Revise Statutes Title 57, Chapter 758.
6
7 FACTUAL BACKGROUN
8 4. Wester Dese, ha been actively enaged in the development of a wind electc
9 generatig prject in Owhee County, Idao, West of Jorda Valley, Oregon tht is designed to
10 generate 5 MW of nalate caacity.
11 5. Western Desert will be physically interconnected to Idao Power's electrc syst
12 in Owyhee County, Idao.
13 6. Western Des has requested, an Idao Power has refued to offer, Idao
14 Power's stdad Oregon Schedule 85 power purhase agrement.
15 7. Wester Desert is in the process of obtang a wheeling agrment with Idao
16 Power's trsmssion busines unit for the deliver of all of the output from the project to Idah
i 7 Power's servce tertory in Orgon. Weste Desert inteds to pay to wheel its output to Idao
18 Power's Oregon servce terrtory for sale in Oregon.
19 8. West Desert has mae substatial investments in development of the project.
20 The project is matue and entitled to obligate itslf to a long-term PPA for a PUR A QF
2 i puruat to Idao Powe's Schedule 85, accordng to contract ters contaed in the taff
22 contrt.
Page 3 - FORM COMPLAIT
I 9. Western Dese is rey an willing to enter into the stadad PUR A PP A with
2 Idaho Power puruat to Schedule 85.
3
4 LEGAL CLAIM
5 Complant's Claim for Relief
6 Idaho Power is in violatin of PURP A, FERC's retions and orders, and the
7 Commission's orders and relations by refusing to offer a power purchase agrment to
8 Western Desert.
9 10. Western Deser LLC fe-alleges and incorporates all preceding pargrhs.
10 I I. Western Desrt Wind has atempted in good faith to engage in negotiatons to
11 obtain Idao Power's stadad Schedule 85 power purcha ageeent.
12 12. Idao Power is very famliar with the spifics of the projec and possesses aIi
13 information necessar to complete and execute a stadad taff PP A.
14 13. Western Desert's inteonnection and wheeling argements ar not uner th
15 jursdiction of the Oregon Commission.
16 14. Idaho Power's obligation to purcha the outut of West em Dese's QF prject
17 arses upon Wester Dese's commitment to sell and deliver its output to Idaho Power in
18 Orgon.
19 15. It is not a requiement of PURPA Or the Oregon implementìng rues tht a QF sell
20 its output to the utility to which it interconnec.
21 16. It is not a requient of PURP A or the Oregon implementig rues that a QF
22 sell its output under the implementing rues of the state in which it is located.
Page 4 - FORMAL COMPLAIT
1 i 7. The State of Idao has not implemented PUR A in a maner tht encoures the
2 development of wid energy QFs.
3 18. The Sta of Oregon ha implemented PURA in a maier tht enourages the
4 development of wid energy QFs, and therefore it is reasonable and in the public intest to order
5 Idaho Power to comply with its taff and offer a Schedule 85 power purcha agent to
6 Western Desert.
7
8 PRAYER FOR RELIEF
9 WHREFORE, Western Desert respectfly requests tht the Commission issue an
10 Order:
11 1.Declarng tht Idaho Power is in violation ofPURPA, FERC's implementing
12 reguations, ánd ths Commission's orders.
13 2.Requi Idao Power to tender its stadad Tarff Schedule 85 power purcha
14 ageement to Western Deser.
15 3. Grting any other relief tht the Commission deems necessar.
Resectfly submitted ths 81 of August, 201116
18
RICHASON AN O'LEARY, PLLC
pl¿flfi
Gregory M. Adams (OSB# 101779)
..
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Page 5 - FORMAL COMPLAIT
CERTIFICATE OF SERVICE
I HEREBY CERTIFY tht on the 8th day of Augu, 2011, a tre and corrt copy of the withn
and foregoing COMPLAIT OF WESTERN DESERT ENERGY AGAINST IDAHO POWER
wa served by ELECTRONIC MAL and US MAIL. to:
Donovan E. Walker
Lisa Nordstrom
Idao Power Company
1221 West Idao Stret
Boise, Idaho 83707-0070
dwaler(àJidaopower .com
InordstromCâidaopower.com~,l~~
Nina urs
CERTIFICATE OF SERVICE
WESTERN DESERT COMPLA1NT
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-11-14
IDAHO POWER COMPANY
ATTACHMENT NO.2
1
2
3
4
BEFORE THE PUBLIC UTILITY COMMISSION
OF OREGON
UM 1552
5 I n the Matter of IDAHO POWER COMPANY'S ANSWER
6 TUMBLEWEED ENERGY II, LLC,
7 Complainant,
8 v.
9 IDAHO POWER COMPANY,
10 Defendant.
11
12 1.Pursuant to ORS 756.512(1), OAR 860-001-0400(3), and OAR 860-029-
13 0100(7) Idaho Power Company ("Idaho Power" or "Company") hereby files with the Public
14 Utilty Commission of Oregon ("Commission") its Answer to the Complaint filed by
15 Tumbleweed Energy II, LLC ("Tumbleweed Energy" or "Tumbleweed") on August 8,2011,
16 and served on Idaho Power on August 10, 2011.
17
18
i. INTRODUCTION
2.Tumbleweed Energy is an Idaho Limited Liability Company that is developing
19 a proposed 10 megawatt ("MW") wind farm to be built in Elmore County, Idaho.
20 Tumbleweed has certified the Elmore County wind farm as a 'Qualifying Facilty ("QF")
21 under the Public Utilty Regulatory Policies Act ("PURPA"). Tumbleweed wil be
22 interconnected with Idaho Power in Idaho and proposes to deliver power to Idaho Power
23 in Idaho. Despite these facts, Tumbleweed is asking the Commission to require Idaho
24 Power to offer Tumbleweed an Oregon QF contract to purchase Tumbleweed's produced
25 energy at Oregon avoided cost rates. The Commission should deny Tumbleweed's
26 complaint.
Page 1 - IDAHO POWER COMPANY'S ANSWER McDowell Rackner & Gibson PC
419 SW Eleventh Ave, Ste. 400
Portand, OR 97205
1 3.Tumbleweed is located in Idaho Power's Idaho service territory, interconnects
2 to Idaho Power's system in Idaho, and has no reason to request that Idaho Power
3 transport the project's output to itself in Oregon and purchase that power under an Oregon
4 contract-except in order to exploit the current, and Idaho power believes temporary,
5 diffrence betwen avoided cost rates in Oregon and Idaho. The Commission should not
6 allow Tumbleweed to game the system in this fashion. If Tumbleweed wishes to take
7 advantage of its QF status to obtain a PURPA contract for this project with Idaho Power, it
8 must do so according to the procedures required in the Company's Idaho jurisdiction. For
9 this reason the Commission should deny Tumbleweed's complaint.
10
11
12
13
II.BACKGROUND
A.The Idaho Public Utilties Commission ("I PUC") Recently Modified Its
Approved Methods for Calculating the Avoided Cost.
4,On June 8, 2011, the IPUC issued Order No. 32262. In that order the IPUC
14 made pennanent its temporary reduction in the eligibilty cap for the published avoided
15 cost rate from 10 average MW ("aMW") to 1 00 kilowatts ("kW') for wind and solar QFs.1
16 Thus, all wind QFs with a capacity greater than 100 kW must enter into a negotiated
17 avoided cost rate that is based on the Integrated Resource Plan ("IRP")-based avoided
18 cost methodology. Wind QFs with a capacity of less than 100 kW remain eligible for the
19 published avoided cost rate, which is determined using the Surrogate Avoidable Resource
20 ("SAR") avoided cost methodology. As a result of the IPUC's recent ruling, Tumbleweed's
21 10 MW QF would be ineligible for the SAR based avoided cost rate in Idaho and instead, it
22 would be obligated to negotiate a rate based upon the IRP-based methodology. Currently,
23
24 1 Re the Commission's Investigation into Disaggregation and an Appropriate Published Avoided Cost
25 Rate Eligibility Cap Structure for PURPA QualifyIng Facilties, Case No. GNR-E-11-01, Order No.32262 at 8 (June 8, 2011). In Order No. 32176 in the GNR-E-10-04 case the IPUC temporarily
26 reduce the eligibilty cap for wind and solar QFs from 10 aMW to 100 kW. The IPUC affrmed thisdecision in Order No. 32212 in that same case.
Page 2 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 the IRP-based methodology results in a lower avoided cost rate for wind projects. As
2 described in detail in the Company's Reply Comments in Docket UM 1396, this is largely
3 because the IRP-based methodology considers a wind project's lower peak-hour capacity
4 factor when determining the capacity cost and considers the energy quantity and supply
5 shape that a specific wind project provides when determining the energy costs.2 Because
6 the IRP-based methodology is more comprehensive than the SAR methodology, it results
7 in a more accurate avoided cost.
8
9
10
B.Idaho Power Has Requested that the Commission Adopt Similar Modifications
to Those Adopted by the IPUC.
5.The avoided cost calculation in Oregon is very similar to that in Idatro, with
11 the exception of the eligibility caps for OFs to receive the published rate. Currently in
12 Oregon all OFs with a capacity of less than 10 MW are eligible for the Company's
13 published avoided cost rate. Like the published rate in Idaho, the Oregon published rate is
14 based on the SAR avoided cost methodology. Unlike Idaho, however, because the
15 eligibilty cap is much greater in Oregon, many more OFs qualify for the SAR-based
16 published rates. For OF projects with a capacity greater than 10 MW, the IRP-based
17 methodology forms the basis for the Company's negotiated avoided cost rates. Under the
18 current system, in Oregon a 10 MW wind OF is eligible for the Company's SAR-based
19 published avoided cost, which is higher than the IRP-based avoided cost it would receive
20 in Idaho.
21 6.In Docket UM 1396, the Company has requested that the Commission
22 authonze it to use its IRP-based methodology to calculate its avoided costs for all
23
24
25
26 2 Se Re Investigation into Resource Suffciency, Docket UM 1396, Idaho Power's Reply Comments(June 28.2011).
Page 3 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 resource types and sizes.3 Allowing the Company to use the IRP-based methodology
2 more broadly would better align the avoided cost rates in Idaho and Oregon and would
3 likely make type of scheme Tumbleweed proposes here unnecessary.4 A decision on the
4 Company's request In Docket UM 1396 Is currently pending.
5 C. Tumbleweed's Proposed Transaction is Regulatory Arbitrage.
6 7.On June 24, 2011, Tumbleweed hand delivered to Idaho Power its
7 Certification of OF Status for a Small Power Production or Cogeneration Facilty along with
8 a request for a PURPA OF contract in Oregon. Simultaneously, Tumbleweed also
9 requested firm point-to-point transmission service for 10 MW of capacity from its
10 interconnection with Idaho Power in the state of Idaho for delivery to Idaho Power at an
11 unspecified point in Idaho Powets Oregon jurisdiction. Tumbleweed has requested that
12 Idaho Power engage in a largely fictitious transaction whereby the Company is required to:
13 (1) interconnect with Tumbleweed in Idaho; (2) wheel Tumbleweed's power to itself at a
14 location somewhere in the Company's Oregon jurisdiction; and (3) buy Tumbleweed's
15 power not at the Idaho point of delivery but at the unspecified point in Oregon to which the
16 Company is expected to transmit the power. This scheme is a clear and unapologetic
17 attempt to game the system to the detriment of Idaho Power's ratepayers and results in
18 system inefficiencies resulting from the Company "wheeling" the QFs output to itself in
19 another jurisdiction.
20
21
22
3 See Re Investigation into Resource Suffciency, Docket UM 1396, Idaho Power's Opening
23 Comments (May 13, 2011); Re Investigation into Resource Sufficiency, Docket UM 1396, Idaho
24 Power's Reply Comments (June 28, 2011).
25 4 Oregon PURPA expenses are not directly assigned to Oregon customers; approximately 95 percentare paid by the Company's Idaho customers. Thus, approval of the project's proposed transaction
26 would place the Company in an untenable position whereby it must request rate recovery from theIPUC for PURPA expenses that the IPUC has already determined to be excessive.
Page 4 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portand, OR 97205
Page 5
1
D. A Petition for Declaratory Order is Currently Pending before the IPUC Related
2 to Tumbleweed's Proposed Transaction.
3
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8.In response to Tumbleweed's requests for point-to-point transmission and an
Oregon OF contract, on July 8, 2011, the Company filed a Petition for Declaratory Order
with the IPUC ("Petition").5 In the Petition, Idaho Power requested that the IPUC issue an
order declaring that the IPUC would exercise jurisdiction over this proposed PURPA
transaction because the OF is located in the Company's Idaho service territory and
interconnected with the Company's system in Idaho, and further that if Tumbleweed
wanted to enter into a PURPA transaction with the Company it must do so pursuant to its
Idaho PURPA procedures and contracts.
9.On July 29, 2011, Tumbleweed tiled an answer to the Petition.6 In its answer
Tumbleweed asserted that because of the IPUC's recent decision to lower the eligibilty
captor wind projects and because the IRP-based methodology results in a lower avoided
cost rate than the SAR method, "Tumbleweed has decided not to sell the output from its
OF wind project to any utility that is operating under the jurisdiction of the (IPUC)..7
10.Idaho Power's Petition is currently pending before the IPUC.
II. ANSWER
11.Idaho Power hereby answers Tumbleweed's Complaint as follows. Idaho
Power denies any allegation not specifically admitted above and reserves the right to
21 5 Re Idaho Power Company's Petition for Declaratory Order Regarding PURPA Jurisdicton, Case No.
22 IPC-E-11-14, Petition for Declaratory Order (July 8,2011), The Company's Petition addressed boththis transaction with Tumbleweed and a similar transation with Western Desert Energy, LLC.
23 Western Desert Energy, LLC filed a complaint with the Commission that is nearly identical toTumblewed's. That complaint has been docketed as UM 1553.
24 6 Re Idaho Power Company's Petiion for Declaratory Order Regarding PURPA Jurisdiction, Case No,
25 IPC-E-11-14, Answer and Motion to Dismiss by Western Dessert (sic) Energy and TumbleweedEnergy (July 29,2011).
26 71d. at 2.
IDAHO POWER COMPAN.Y'S ANSWER McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 supplement this Answer if Tumbleweed amends its Complaint. With respect to the
2 particular paragraphs of the Complaint, Idaho Power answers as follows:
3 IDENTITY OF THE PARTIES
4 12.The factual allegations in the first sentence of paragraph 1 are admitted. The
5 remaining legal conclusions require no response. That said, Idaho Power admits that it is
6 a public utilty subject to the jurisdiction of the Commission, the IPUC, and the Federal
7 Energy Regulatory Commission (IlFERC.).
8 13.Idaho Power has insufficient information or knowledge regarding the truth of
9 the allegations in paragraph 2 of the Complaint, which relate to the identity and corporate
10 structure of Tumbleweed. The Company acknowledges that Tumbleweed has provided to
11 it a certification of its OF status and the Company does not dispute this status.
12 JURISDICTION
13 14.The allegations in paragraph 3 identify the applicable provisions of PURPA,
14 FERC's implementing regulations, and Oregon's PURPA-implementing statutes. The
15 allegations in this paragraph are conclusions of law and require no response.s
16 FACTUAL BACKGROUND
17 15.Idaho Power has insuffcient information or knowledge regarding the truth of
18 the allegations in paragraph 4 of the Complaint, which describe Tumbleweed's
19 development efforts. The Company stipulates, however, that it has been advised by
20 Tumbleweed that Tumbleweed is in the process of developing a wind electric generating
21 project that is located entirely within Elmore County, Idaho. The Company also stipulates
22
23 8 The Company notes that this paragraph of the Complaint fails to reference OAR 860-029-0100,
which "applies to a complaint, filed pursuant to ORS 756.500, regarding the negotiation of a24 Qualifying Facility power purchase agreement." It appears that the Complaint is procedurally
25 deficient for fallng to include all of the information reuire by this rule and does not appear to complywith the other procedural requirements of the rule, e.g. the 60 day waiting period. While the
26 Company believes that this Complaint is subject to the requirements of that rule, it does not intend toseek a remedy for the Complaint's alleged procedural deficiencies.
Page 6 - IDAHO POWER COMPANY'S ANSWER McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 that Tumbleweed has indicated to it that the projec is designed to have a 10 MW
2 nameplate capacity. The Company stipulates that no part of the project is located in
3 Oregon.
4 16. The Company admits the allegations in paragraph 5 that Tumbleweed's wind
5 OF will be interconnected to the Idaho Power electric system in Idaho.
6 17. The allegations in paragraph 6 are admitted. Idaho Power refused to offer
7 Tumbleweed its standard Oregon OF contract because Tumbleweed is a OF located in
8 the Company's Idaho service territory and interconnected to the Company's system in the
9 Company's Idaho service territory. As such, the Company maintains that if Tumbleweed
10 wants to enter into a PURPA contract with Idaho Power it must do so in accordance with
11 the terms and conditions dictated by Idaho law and subject to the jurisdiction of the IPUC.
12 18. The allegations in paragraph 7 are admitted in that the Company agrees that
13 Tumbleweed has requested point-ta-point transmission from the point of interconnection in
14 Idaho to an unspecified location in the Company's Oregon service territory. The Company
15 admits that Tumbleweed has indicated that it intends to pay for the wheeling expense
16 associated with its request.
17 19.Idaho Power has insufficient information or knowledge regarding the truth of
18 the allegations in first sentence of paragraph 8 of the Complaint. With respec to the
19 second sentence of paragraph 8, the Company has insufficient information or knowledge
20 regarding the truth of the allegations related to the maturity of Tumbleweed's OF. The
21 remaining allegations in paragraph 8 are conclusions of law that require no response.
22 However, the Company disputes the claim that Tumbleweed is entitled to a "long-term
23 (power purchase agreement) for a PURPA OF pursuant to Idaho Power's (Oregon tarif
24 Schedule 85." Because Tumbleweed is located in Idaho and intends to deliver its output
25 in Idaho, the Company maintains that Tumbleweed is entitled to a long-term PPA for a
26 PURPA OF pursuant to the Company's Idaho contract.
Page 7 - IDAHO POWER COMPANY'S ANSWER McDowell Racknér & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 20.Idaho Power has insufficient knowledge and information to admit or deny the
2 allegations in paragraph 9 relating to willngness of Tumbleweed to enter into a standard
3 PURPA contract.
4 ANSWER TO COMPLAINANT'S CLAIM FOR RELIEF
5 (Idaho Power is in violation of PURPA, FERC's regulations and orders, and the
6 Commission's orders and regulations by refusing to offer a power purchase
7 agreement to Tumbleweed.)
8
9
21.See answers to paragraphs 1 through 20 above.
The allegations in paragraph 11 are admitted in that the Company22.
10 acknowledges that Tumbleweed has made a formal request for an offer of a standard
11 Schedule 85 power purchase agreement. The Company lacks sufficient knowledge to
12 admit or deny whether "Tumbleweed has attempted in good faith to engage in
13 negotiations" to obtain an Oregon contract.
14 23.The allegations in paragraph 12 are admitted to the extent that Tumbleweed
15 has provided the Company with its completed FERC Form 556, which is the Certification
16 of OF Status for Small Power Production or Cogeneration Facilty. The Company also
17 admits that Tumbleweed provided to it on June 24, 2011, a formal request for a standard
18 Schedule 85 contract. That request included the information required by Schedule 85.
19 24. The allegations of paragraph 13 are legal conclusions that require no
20 response. The Company agrees, however, that the interconnection and wheeling
21 arrangements proposed by Tumbleweed that would require Idaho Power to transmit the
22 OF's output to itself and then "buy" the power at some unspecified location in Oregon are
23 not subject to the Commission's jurisdiction.
24 25.The allegations of paragraph 14 are legal conclusions that require no
25 response. The Company agrees that it has an obligation to purchase the output of a OF
26 subject to the terms of PURPA and its implementing regulations and Oregon's PURPA
Page 8 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 implementation statutes and regulations. The Company disagrees with Tumbleweed's
2 legal conclusion that it is obligated to purchase in Oregon the output of a OF located in
3 Idaho that interconnects with the Company's system in Idaho. The Company maintains
4 that its purchase obligations in this case are subject to the jurisdiction of the state of Idaho
5 and the IPUC.
6 26.The allegations of paragraph 15 are legal conclusions that require no
7 response. The Company agrees that neither PURPA nor the implementing regulations or
8 Oregon's implementing statutes require that a OF sell its output to the interconnecting
9 utilty. Indeed, FERC's rules specifically allow a OF to interconnect to one utilty and sell
10 its output to another utilty.9 But that is not the issue presented in this case. Here,
11 Tumbleweed is asking the Commission to require Idaho Power to wheel the OFs output
12 out of the state of Idaho and then "buy" the output in Oregon. Tumbleweed proposes an
13 entirely fictional transaction designed to exploit the differences between the avoided cost
14 rates in Oregon and Idaho. FERC's rules are clear: interconnecting utilties are obligated
15 to "transmit the energy or capacity (from an interconnected OF) to any other electric
16 utility."10 Idaho Power is not "any other electric utilty," it is the same utilty to which the OF
17 is directly connected. Here, Tumbleweed is supplying its energy and capacity directly to
18 Idaho Power in Idaho. Therefore, the transaction should be subject to the jurisdiction of
19 the state of Idaho and the IPUC.
20 27.The allegations of paragraph 16 are legal conclusions that require no
21 response. See the response to paragraph 15 above.
22 28.The allegations of paragraph 17 are legal conclusions that require no
23 response. That said, Tumbleweed's legal conclusion is incomplete to the extent that it
24
25 9 See 18 C.F.R. § 292.303(d).
26 10 C F18 ..R. § 292.303(d).
Page 9 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 suggests that the purpose of PURPA is to encourage the development of OFs. When
2 describing its obligations arising under PURPA, the Commission noted: "We seek to
3 provide maximum incentive for the development of OFs of all sizes, while ensuring that
4 ratepayers remain indifferent to QF power by having utilities pay no more than their
5 avoided costS."ll The Commission has made clear that when determining the avoided
6 cost, the overriding goal is to ensure that a utilty's customers are unaffected by the
7 purchase of the OF's output and that OF transactions create no additional costs for the
8 ratepayer.
12 This requirement ensures that a utilty's customers remain indifferent to the
9 purchase of QF power and that OFs are not subsidized at ratepayers' expense.13
10 Authorizing Tumbleweed to engage in regulatory arbitrage in an attempt to game the
11 system is detrimental to ratepayers because it imposes an obligation on ratepayers that
12 would not otherwise exist and it creates a dangerous precedent going forward if the
13 current differences between the Oregon and Idaho avoided cost methodologies continue.
14 29.The allegations of paragraph 18 are legal conclusions that require no
15 response. The Company disagrees with Tumbleweed's assertion that it is "reasonable
16 and in the public interest" to allow OFs to exploit potentially temporary differences
17 between the avoided cost rates in Idaho and Oregon and require a multijurisdictional utilty
18 to engage in fictitious transactions to the detriment of ratepayers. The Commission has
19
20
21 11 Re Public utility Commission of Oregon Staffs Investigation Relating to Electric Utilty Purchasesfrom Qualifying Facilties, Docket UM 1129, Order No.O 5-584 at 11 (May 13, 2005).; see also In the
22 Matter of Staff's Investigation Relating to Electric Utilty Purchases from Qualifying Facilities, DocketUM 1129, Order No. 07-360 at 1 (Aug. 20, 2007) (PURPA is designed "to encourage the
23 economically efficient development of OFs, while protecting ratepayers by ensuring that utilties incurcosts no greater than they would have Incurre in lieu of purchasing OF power.").
24 12 See Order No. 07-360 at 1.
2 13 Independent Energy Producers Assciation v. California Public utiliies Comm'n, 36 F.3d 848, 8585 (9th Cir. 1994) ("If purchase rates are set at the utilty's avoided cost, consumers are not forced to
26 subsidize OFs beause they are paying the same amount they would have paid if the utilty hadgenerated energy itself or purchased energy elsewhere:).
Page 10 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 been critical of regulatory arbitrage in the past and this transaction is no different.14
2 Moreover, the regulatory arbitrage proposed by Tumbleweed is not authorized by PURPA,
3 FERC's regulations, FERC's orders, Oregon statutes, the Commission's regulations, or
4 the Commission's orders. Indeed, Tumbleweed's Complaint fails to identify a single
5 authority specifically supporting its proposed transaction.
6 THEREFORE, the Commission should deny the relief sought by Tumbleweed in its
7 Prayer for Relief and dismiss the Complaint.
8 Respectfully submitted this 30Ui day of August, 2011.
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16 IDAHO POWER COMPANY
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Donovan Walker
Lead Counsel
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
Attorneys for Idaho Power Company
14 Re Portland General Electric Co., Docket UE 102, Order No. 99-033, 191 P.U.R.4th 87,115-116
25 (Jan. 27, 1999) (Commission rejected allowing industrial and commercial customers to switch back
26 and forth betwen cost-of-service rates and direct access because it constituted "tariff arbitragebased on gaming rather than effciencies" and would hurt both customers and the utilty).
Page 11 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 CERTIFICATE OF SERVICE
2 I hereby certify that I served a true and correct copy of the foregoing document on
3 the following parties of record in Docket UM 1552, on the date indicated below, by email
4 addressed to said person(s) at his or her last-known addressees) indicated below.
5
6 Gregory Marshall Adams
7
Richardson & O'Leary
greg~richardsonandoleary.com
8 DATED: August 30, 2011
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Page 1 -CERTIFICATE OF SERVICE
Peter J. Richardson
Richardson & O'Leary
peter~richardsonandoleary. com
McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1
2
3
4
BEFORE THE PUBLIC UTILITY COMMISSION
OF OREGON
UM 1553
5 In the Matter of IDAHO POWER COMPANY'S ANSWER
6 WESTERN DESERT ENERGY, LLC,
7 Complainant,
8 v.
9 IDAHO POWER COMPANY,
10 Defendant.
11
12 1.Pursuant to ORS 756.512(1), OAR 860-001-0400(3), and OAR 860-029-
13 0100(7) Idaho Power Company ("Idaho Power" or "Company") hereby files with the Public
14 Utilty Commission of Oregon ("Commission") its Answer to the Complaint filed by Western
15 Desert Energy, LLC ("Western Desert") on August 8, 2011, and served on Idaho Power on
16 August 10.2011.
17
18
i. INTRODUCTION
2.Western Desert is an Oregon Limited Liabilty Company that is developing a
19 proposed 5 megawatt (ClMW') wind farm to be built in Owhee County, Idaho. Western
20 Desert has certified the Owyhee County wind farm as a Qualifying Facility (ClQF") under
21 the Public Utilty Regulatory Policies Act (ClPURPA"). Western Desert will be
22 interconnected with Idaho Power in Idaho and proposes to deliver power to Idaho Power
23 in Idaho. Despite these facts, Western Desert is asking the Commission to require Idaho
24 Power to offer Western Desert an Oregon QF contract to purchase Western Desert's
25 produced energy at Oregon avoided cost rates. The Commission should deny Western
26 Desert's complaint.
Page 1 - IDAHO POWER COMPANY'S ANSWER McDowell Rackner & Gibson PC
419 SW Eleventh Ave, Ste. 400
Portland, OR 97205
1 3.Western Desert is located in Idaho Power's Idaho service territory,
2 interconnects to Idaho Power's system in Idaho, and has no reason to request that Idaho
3 Power transport the project's output to itself in Oregon and purchase that power under an
4 Oregon contract-except in order to exploit the current, and Idaho power believes
5 temporary, difference between avoided cost rates in Oregon and Idaho. The Commission
6 should not allow Western Desert to game the system in this fashion. If Western Desert
7 wishes to take advantage of its OF status to obtain a PURPA contract for this project with
8 Idaho Power, it must do so according to the procedures required in the Company's Idaho
9 jurisdiction. For this reason the Commission should deny Western Desert's complaint.
10
11
12
13
II.BACKGROUND
A.The Idaho Public Utilties Commission ("IPUC") Recently Modified Its
Approved Methods for Calculating the Avoided Cost.
4.On June 8, 2011, the IPUC issued Order No. 32262. In that order the IPUC
14 made permanent its temporary reduction in the eligibilty cap for the published avoided
15 cost rate from 10 average MW ("aMW") to 100 kilowatts ("kW") for wind and solar OFs.1
16 Thus, all wind OFs with a capacity greater than 100 kW must enter into a negotiated
17 avoided cost rate that is based on the Integrated Resource Plan ("IRP")-based avoided
18 cost methodology. Wind OFs with a capacity of less than 100 kW remain eligible for the
19 published avoided cost rate, which is determined using the Surrogate Avoidable Resource
20 ("SAR") avoided cost methodology. As a result of the IPUC's recent ruling, Western
21 Desert's 5 MW OF would be ineligible for the SAR based avoided cost rate in Idaho and
22 instead, it would be obligated to negotiate a rate based upon the IRP-based methodology.
23
24 1 Re the Commission's Investigation into Disaggregation and an Appropriate Published Avoided Cost
25 Rate Eligibiliy Cap Strcture for PURPA Qualifying Facilties, Case No. GNR-E-11-01, Order No.32262 at 8 (June 8, 2011). In Order No. 32176 In the GNR-E-10-04 case the IPUC temporarily
26 reduce the eligibility cap for wind and solar QFs from 10 aMW to 100 kW. The IPUC affrmed thisdecision in Order No. 32212 in that same case.
Page 2 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 Currently, the IRP-based methodology results in a lower avoided cost rate for wind
2 projects. As described in detail in the Company's Reply Comments in Docket UM 1396,
3 this is largely because the IRP-based methodology considers a wind project's lower peak-
4 hour capacity factor when determining the capacity cost and considers the energy quantity
5 and supply shape that a specific wind project provides when determining the energy
6 costs.
2 Because the IRP-based methodology is more comprehensive than the SAR
7 methodology, it results in a more accurate avoided cost.
8
9
10
B.Idaho Power Has Requested that the Commission Adopt Similar Modifications
to Those Adopted by the IPUC.
5.The avoided cost calculation in Oregon is very similar to that in Idaho, with
11 the exception of the eligibilty caps for OFs to receive the published rate. Currently in
12 Oregon all OFs with a capacity of less than 10 MW are eligible for the Company's
13 published avoided cost rate. Like the published rate in Idaho, the Oregon published rate is
14 based on the SAR avoided cost methodology. Unlike Idaho, however, because the
15 eligibilty cap is much greater in Oregon, many more OFs qualif for the SAR-based
16 published rates. For OF projects with a capacity greater than 10 MW, the IRP-based
17 methodology forms the basis for the Company's negotiated avoided cost rates. Under the
18 current system, in Oregon a 10 MW wind OF is eligible for the Company's SAR-based
19 published avoided cost, which is higher than the IRP-based avoided cost it would receive
20 in Idaho.
21 6.In Docket UM 1396, the Company has requested that the Commission
22 authorize it to use its IRP-based methodology to calculate its avoided costs for all
23
24
25
26 2 See Re Investigation into Resource Sufficiency, Docket UM 1396, Idaho Power's Reply Comments(June 28,2011).
Page 3 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 resource types and sizes.3 Allowing the Company to use the IRP-based methodology
2 more broadly would better align the avoided cost rates in Idaho and Oregon and would
3 likely make type of scheme Western Desert proposes here unnecessary.4 A decision on
4 the Company's request in Docket UM 1396 is currently pending.
5 C. Western Deserts Propose Transaction is Regulatory Arbitrage.
6 7.On June 27, 2011, Western Desert hand delivered to Idaho Power its
7 Certification of QF Status for a Small Power Production or Cogeneration Facility along with
8 a request for a PURPA QF contract in Oregon. Simultaneously, Western Desert also
9 requested firm point-to-point transmission service for 5 MW of capacity from its
10 interconnection with Idaho Power in the state of Idaho for delivery to Idaho Power at an
11 unspecified point in Idaho Power's Oregon jurisdiction. Western Desert has requested
12 that Idaho Power engage in a largely fictitious transaction whereby the Company is
13 required to: (1) interconnect with Western Desert in Idaho; (2) wheel Western Desert's
14 power to itself at a location somewhere in the Company's Oregon jurisdiction; and (3) buy
15 Western Desert's power not at the idaho point of delivery but at the unspecified point in
16 Oregon to which the Company is expected to transmit the power. This scheme is a clear
17 and unapologetic attempt to game the system to the detriment of Idaho Power's
18 ratepayers and results in system inefficiencies resulting from the Company "wheeling" the
19 QFs output to itself in another jurisdiction.
20
21
22
23 3 See Re Investigation into Resource Sufñciency, Docket UM 1396, Idaho Powets Opening
Comments (May 13, 2011); Re Investigation into Resource Sufficiency, Docket UM 1396, Idaho
24 Power's Reply Comments (June 28,2011).
25 4 Oregon PURPA expenses are not directly assigned to Oregon customers; approximately 95 percetare paid by the Company's Idaho customers. Thus, approval of the project's proposed transaction
26 would place the Company in an untenable position whereby it must request rate recovery from theIPUC for PURPA expenses that the IPUC has already determined to be excessive.
Page 4 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1
D. A Petition for Declaratory Order is Currently Pending before the IPUC Related
2 to Western Desen's Proposed Transaction.
3 8.In response to Western Desert's requests for point-to-point transmission and
4 an Oregon OF contract, on July 8, 2011, the Company filed a Petition for Declaratory
5 Order with the IPUC ("Petition").5 In the Petition, Idaho Power requested that the IPUC
6 issue an order declaring that the IPUC would exercise jurisdiction over this proposed
7 PURPA transaction because the OF is located in the Company's Idaho service territory
8 and interconnected with the Company's system in Idaho, and further that if Western
9 Desert wanted to enter into a PURPA transaction with the Company it must do so
10 pursuant to its Idaho PURPA procedures and contracts.
11 9.On July 29, 2011, Western Desert filed an answer to the Petition.6 In its
12 answer Western Desert asserted that it had not asked Idaho Power to determine its
13 avoided cost based on the IPR methodology because "Western Desert understands that
14 IRP modeling results are not favorable for the development of wind projects in Idaho."7
15 Thus, Western Desert "has decided not to sell the output from its OF wind project to any
16 utilty that is operating under the jurisdiction of the (I PUC)."B
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20
10.Idaho Power's Petition is currently pending before the IPUC.
21 5 Re Idaho Power Company's Petition for Declaratory Order Regarding PURPA Jurisdiction, Case No.
IPC-E-11-14, Petition for Declaratory Order (July 8,2011). The Company's Petition addressed both
22 this transaction with Westem Desert and a similar transaction with Tumbleweed Energy II, LLC,
Tumbleweed Energy II, LLC filed a complaint with the Commission that is nearly identical to Western
23 Desert's. That complaint has been docketed as UM 1552.
24 6 Re Idaho Power Company's Petition for Declaratory Order Regarding PURPA Jurisdiction, Case No.IPC-E-11-14, Answer and Motion to Dismiss by Western Dessert (sic) Energy and Tumbleweed
25 Energy, LLC (July 29, 2011).71d. at 2.
26 BId. at 2.
Page 5 IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1
2
II. ANSWER
11.Idaho Power hereby answers Western Desert's Complaint as follows. Idaho
3 Power denies any allegation not specifically admitted above and reserves the right to
4 supplement this Answer if Western Desert amends its Complaint. With respect to the
5 particular paragraphs of the Complaint, Idaho Power answers as follows:
6 IDENTITY OF THE PARTIES
7 12.The factual allegations in the first sentence of paragraph 1 are admitted. The
8 remaining legal conclusions require no response. That said. Idaho Power admits that it is
9 a public utilty subject to the jurisdiction of the Commission, the IPUC, and the Federal
10 Energy Regulatory Commission ("FERC").
11 13.Idaho Power has insufficient information or knowledge regarding the truth of
12 the allegations in paragraph 2 of the Complaint, which relate to the identity and corporate
13 structure of Western Desert. The Company acknowledges that Western Desert has
14 provided to it a certification of its OF status and the Company does not dispute this status.
15 JURISDICTION
16 14. The allegations in paragraph 3 identify the applicable provisions of PURPA,
17 FERC's implementing regulations, and Oregon's PURPA-implementing statutes. The
18 allegations in this paragraph are conclusions of law and require no response.9
19 FACTUAL BACKGROUND
20 15.Idaho Power has insufficient information or knowledge regarding the truth of
21 the allegations in paragraph 4 of the Complaint, which describe Western Desert's
22
23 9 The Company notes that this paragraph of the Complaint fails to reference OAR 860-029-0100.
which "applies to a complaint, filed pursuant to ORS 756.500, regarding the negotiation of a24 Qualifying Facilty power purchase agreement." It appears that the Complaint is procdurally
25 deficient for failng to include all of the information required by this rule and does not appear to complywith the other procedural requirements of the rule, e.g. the 60 day waiting period. While the
26 Company believes that this Complaint is subject to the requirements of that rule, it does not Intend toseek a remedy for the Complaint's alleged procedural deficiencies.
Page 6 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 development efforts. The Company stipulates, however, that it has been advised by
2 Western Desert that Western Desert is in the process of developing a wind elecric
3 generating project that is located entirely within Owyhee County, Idaho. The Company
4 also stipulates that Western Desert has indicated to it that the project is designed to have
5 a 5 MW nameplate capacity. The Company stipulates that no part of the project is located
6 in Oregon.
7 16.The Company admits the allegations in paragraph 5 that Western Desert's
8 wind QF will be interconnected to the Idaho Power electric system in Idaho.
9 17.The allegations in paragraph 6 are admitted. Idaho Power refused to offer
10 Western Desert its standard Oregon QF contract because Western Desert is a QF located
11 in the Company's Idaho service territory and interconnected to the Company's system in
12 the Company's Idaho service territory. As such, the Company maintains that if Western
13 Desert wants to enter into a PURPA contract with Idaho Power it must do so in
14 accordance with the terms and conditions dictated by Idaho law and subject to the
15 jurisdiction of the IPUC.
16 18.The allegations in paragraph 7 are admitted in that the Company agrees that
17 Western Desert has requested point-to-point transmission from the point of
18 interconnection in Idaho to an unspecified location in the Company's Oregon service
19 territory. The Company admits that Western Desert has indicated that it intends to pay for
20 the wheeling expense associated with its request.
21 19.Idaho Power has insuficient information or knowledge regarding the truth of
22 the allegations in first sentence of paragraph 8 of the Complaint. With respect to the
23 second sentence of paragraph 8, the Company has insuffcient information or knowledge
24 regarding the truth of the allegations related to the maturity of Western Desert's QF. The
25 remaining allegations in paragraph 8 are conclusions of law that require no response.
26 However, the Company disputes the claim that Western Desert is entitled to a "long-term
Page 7 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 (power purchase agreement) for a PURPA OF pursuant to Idaho Power's (Oregon tariff
2 Schedule 85." Because Western Desert is located in Idaho and intends to deliver its
3 output in Idaho, the Company maintains that Western Desert is entitled to a long-term
4 PPA for a PURPA OF pursuant to the Company's Idaho contract.
5 20.Idaho Power has insufficient knowedge and information to admit or deny the
6 allegations in paragraph 9 relating to willngness of Western Desert to enter into a
7 standard PURPA contract.
8 ANSWER TO COMPLAINANT'S CLAIM FOR RELIEF
9 (Idaho Power is in violation of PURPA, FERC's regulations and orders, and the
10 Commission's orders and regulations by refusing to offer a power purchase
11 agreement to Western Desen.)
12 21. See answers to paragraphs 1 through 20 above.
13 22. The allegations in paragraph 11 are admitted in that the Company
14 acknowledges that Western Desert has made a formal request for an offer of a standard
15 Schedule 85 power purchase agreement. The Company lacks sufficient knowledge to
16 admit or deny whether "Western Desert has attempted in good faith to engage in
17 negotiations" to obtain an Oregon contract.
18 23. The allegations in paragraph 12 are admitted to the extent that Western
19 Desert has provided the Company with its completed FERC Form 556, which is the
20 Certification of OF Status for Small Power Production or Cogeneration Facilty. The
21 Company also admits that Western Desert provided to it on June 27, 2011, a formal
22 request for a standard Schedule 85 contract. That request included the information
23 required by Schedule 85.
24 24. The allegations of paragraph 13 are legal conclusions that require no
25 response. The Company agrees, however, that the interconnection and wheeling
26 arrangements proposed by Western Desert that would require Idaho Power to transmit the
Page 8 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., ste. 400
Portland, OR 97205
1 OF's output to itself and then "buy. the power at some unspecified location in Oregon are
2 not subject to the Commission's jurisdiction.
3 25. The allegations of paragraph 14 are legal conclusions that require no
4 response. The Company agrees that it has an obligation to purchase the output of a OF
5 subject to the terms of PURPA and its implementing regulations and Oregon's PURPA
6 implementation statutes and regulations. The Company disagrees with Western Desert's
7 legal conclusion that it is obligated to purchase in Oregon the output of a OF located in
8 Idaho that interconnects with the Company's system in Idaho. The Company maintains
9 that its purchase obligations in this case are subject to the jurisdiction of the state of Idaho
10 and the IPUC.
11 26. The allegations of paragraph 15 are legal conclusions that require no
12 response. The Company agrees that neither PURPA nor the implementing regulations or
13 Oregon's implementing statutes require that a OF sell its output to the interconnecting
14 utilty. Indeed, FERC's rules specifically allow a OF to interconnect to one utilty and sell
15 its output to another utility.
10 But that is not the issue presented in this case. Here,
16 Western Desert is asking the Commission to require Idaho Power to wheel the OFs output
17 out of the state of Idaho and then "buy" the output in Oregon. Western Desert proposes
18 an entirely fictional transaction designed to exploit the differences betwen the avoided
19 cost rates in Oregon and Idaho. FERC's rules are clear: interconnecting utilties are
20 obligated to "transmit the energy or capacity (from an interconnected OF) to any other
21 electric utiJity."11 Idaho Power is not "any other electric utilty,. it is the same utilty to which
22 the OF is directly connected. Here, Western Desert is supplying its energy and capacity
23 directly to Idaho Power in Idaho, Therefore, the transaction should be subject to the
24 jurisdiction of the state of Idaho and the IPUC.
25 10 See 18 C.F.R § 292.303(d).
26 11 C F R18 . . . § 292.303(d).
Page 9 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 27.The allegations of paragraph 16 are legal conclusions that require no
2 response. See the response to paragraph 15 above.
3 28.The allegations of paragraph 17 are legal conclusions that require no
4 response. That said, Western Desert's legal conclusion is incomplete to the extent that it
5 suggests that the purpose of PURPA is to encourage the development of OFs. When
6 describing its obligations arising under PURPA, the Commission noted: "We seek to
7 provide maximum incentive for the development of OFs of all sizes, while ensuring that
8 ratepayers remain indifferent to QF power by having utilities pay no more than their
9 avoided costs. ..12 The Commission has made clear that when determining the avoided
10 cost, the overriding goal is to ensure that a utilty's customers are unaffected by the
11 purchase of the OF's output and that OF transactions create no additional costs for the
12 ratepayer.13 This requirement ensures that a utility's customers remain indifferent to the
13 purchase of OF power and that OFs are not subsidized at ratepayers' expense,14
14 Authorizing Western Desert to engage in regulatory arbitrage in an attempt to game the
15 system is detrimental to ratepayers because it imposes an obligation on ratepayers that
16 would not otherwse exist and it creates a dangerous precedent going forward if the
17 current differences between the Oregon and Idaho avoided cost methodologies continue.
18 29.The allegations of paragraph 18 are legal conclusions that require no
19 response. The Company disagrees with Western Desert's assertion that it is "reasonable
20
21 12 Re Public Utiliy Commission of Oregon Staffs Investigation Relating to Electric Utiliy Purchasesfrom Qualifying Facilites, Docket UM 1129, Order No.O 5-584 at 11 (May 13, 2005).; see also In the
22 Matter of Staff's Investigation Relating to Electric Utility Purchases from Qualifying Facilities, DocketUM 1129, Order No. 07-360 at 1 (Aug. 20, 2007) (PURPA is designed "to encourage the
23 e~onomically efficient development of QFs, while protecting ratepayers by ensuring that utilties incurcosts no greater than they would have incurred in lieu of purchasing QF power. ").
24 13 See Order No. 07-360 at 1.
25 14 Independent Energy Producers Association v. California Public Utilities Comm'n, 36 F.3d 848, 858(9th Cir. 1994) ("If purchase rates are set at the utilty's avoided cost, consumers are not forced to
26 subsidize QFs because they are paying the same amount they would have paid if the utilty hadgenerated energy itself or purchased energy elsewhere.").
Page 10 - IDAHO POWER COMPANY'S ANSWER McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 and in the public interest" to allow QFs to exploit potentially temporary differences
2 between the avoided cost rates in Idaho and Oregon and require a multijurisdictional utility
3 to engage in fictitious transactions to the detriment of ratepayers. The Commission has
4 been critical of regulatory arbitrage in the past and this transaction is no diferent.15
5 Moreover, the regulatory arbitrage proposed by Western Desert is not authorized by
6 PURPA, FERC's regulations, FERC's orders, Oregon statutes, the Commission's
7 regulations, or the Commission's orders. Indeed, Western Desert's Complaint fails to
8 identify a single authority specifically supportng its proposed transaction.
9 THEREFORE, the Commission should deny the relief sought by Western Desert in
10 its Prayer for Relief and dismiss the Complaint.
11 Respectully submitted this 30th day of August, 2011.
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18 IDAHO POWER COMPANY
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15 Re Portland General Electric Co., Docket UE 102, Order No. 99-033,191 P.U.R.4th 87,115-116
25 (Jan. 27, 1999) (Commission rejected allowing industrial and commercial customers to switch back
26 and fort between cost-of-service rates and direct access because it constituted "tariff arbitragebased on gaming rather than eficiencies" and would hurt both customers and the utilty).
Donovan Walker
Lead Counsel
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
Attorneys for Idaho Power Company
Page 11 - IDAHO POWER COMPANY'S ANSWER
McDowell Rackner & Gibson PC
419 SW Eleventh Ave., Ste. 400
Portland, OR 97205
1 CERTIFICATE OF SERVICE
2 I hereby certify that I served a true and correct copy of the foregoing document on
3 the following parties of record in Docket UM 1553, on the date indicated below, by email
4 addressed to said person(s) at his or her last-known addressees) indicated below,
5
6 Gregory Marshall Adams
7
Richardson & O'Leary
greg~richardsonandoleary .com
8 DATED: August 30, 2011
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Page 1 -CERTIFICATE OF SERVICE
Peter J. Richardson
Richardson & O'Leary
peter~richardsonandoleary.com
McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205