20120104Comments.pdf

a'-eEI('\t. '_.I ';o:~ iDONOVAN E. WALKER (ISB No. 5921)
JASON B. WILLIAMS (ISB No. 8718)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalkerCëidahopower.com
jwilliams(?idahopower.com
1012 JAN -4 PM~: ~9
UTI
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-11-23
DECLARATORY ORDER REGARDING )
PURPA JURISDICTION. ) COMMENTS OF IDAHO POWER
) COMPANY
)
Idaho Power Company ("Idaho Powet' or "Company"), pursuant to the Idaho
Public Utilties Commission's ("Idaho Commission" or "Commission") Notice of Petition
and Notice of Comment Deadline, Order No. 32410, issued in the above-referenced
case, hereby files the following Comments:
I. INTRODUCTION
On November 3, 2011, Idaho Power filed a Petition for Declaratory Order
requesting that the Commission 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") transaction proposed by Kootenai Electric
Cooperative, Inc. ("Kootenai" or "Kootenai Electric" or "Project"). Specifically, Idaho
Power asks the Commission to find that, under the facts of Kootenai's proposed PURPA
COMMENTS OF IDAHO POWER COMPANY - 1
QF transaction, the Commission wil assert primary jurisdiction over the sale to Idaho
Power and declare that the applicable avoided cost for the Project's output is the Idaho
avoided cost rate and contract terms.
On November 25, 2011, Kootenai Electric filed an Answer and Motion to Dismiss.
Kootenai argues that the Commission has no jurisdiction to intervene in the proposed
transaction and asks that the Petition therefore be dismissed. Additionally, on January
3, 2012, Kootenai served a Complaint upon Idaho Power with the Public Utilty
Commission of Oregon ("Oregon Commission") asking the Oregon Commission to
require Idaho Power to enter into Oregon Tariff Schedule 85 power purchase
agreements with Kootenai.
II. COMMENTS
A. The Idaho Commission Has Jurisdiction Over This Matter.
Kootenai's primary argument is that the Idaho Commission has no jurisdiction
over this matter. Answer at pp. 2, 9-19. This argument is entirely dependent upon a
factual determination regarding the point of delivery. Kootenai argues that because the
designated point of change in ownership of the owned line segment (LoLo-Oxbow 230
kilovolt ("kV") line) jointly owned by Idaho Power and Avista Corp. ("Avista") on which
the Project's energy wil be transmitted occurs across the Idaho border in the state of
Oregon that this defeats the Idaho Commission's jurisdiction in this matter. This is,
however, the wrong inquiry. The correct inquiry is where the point of delivery of the
Project's energy exists. Here the point of delivery occurs at the LoLo substation, in the
state of Idaho. The entirety of Kootenai's argument assumes that the point of delivery
occurs in the state of Oregon, which it does not. The fact that the point of delivery is in
Idaho, that the QF is in Idaho, and that Idaho Power is regulated by the Idaho
COMMENTS OF IDAHO POWER COMPANY - 2
Commission all support the Idaho Commission's exercise of its jurisdiction to implement
PURPA for a proposed transaction with Idaho Power.
The Commission has established that it has federally derived jurisdiction
pursuant to PURPA over any utilty that it has ratemaking authority over. Order No.
25245, p. 5; Order No. 25174, pp. 6-7. Additionally, the Commission has stated that
this federally derived jurisdiction over a multi-state utility may exist concurrently with
other state regulatory authorities that also have ratemaking authority over the utilty.
Order No. 25249, p. 2; 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 (1994); Vaagen Bros. Lumber, Inc. VS. The
Washington Water Power Company, Case No. WWP-E-94-6, Order No. 25176 (1994);
See Petition at p. 3.
Here it is without dispute that the Idaho Commission has ratemaking authority
over Idaho Power, which provides retail electric service to customers in both Idaho and
eastern Oregon. It is also without question that the Idaho Commission has in place a
regulatory framework for the implementation of PURPA. See supra. Through the cases
cited above, the Commission has discussed certain circumstances where it determines
whether it wil elect to exercise that jurisdiction or not. What necessarily follows the
Commission's exercise, or deferral, of its jurisdiction is whether the Commission's
PURPA rules, regulations, and procedures - including which state's avoided cost rates
and contract - wil apply to the proposed QF transaction. Consequently, the question is
not whether the Commission has jurisdiction or not, the question is whether the Idaho
Commission wil exercise, or defer, that jurisdiction. It is proper and in the public
COMMENTS OF IDAHO POWER COMPANY - 3
interest that the Commission assert its jurisdiction over Kootenai Electric's proposed QF
transaction with Idaho Power.
B. The Point of Delivery Is in the State of Idaho.
For the determination of whether to exercise or defer its jurisdiction the
Commission looks in the first instance at where the point of interconnection is. The
point of interconnection is the relevant consideration for a QF that is located on the
same utilty's transmission system that it is proposing to sell its electric output to
pursuant to PURPA. When the QF resides off system, or has an interconnection to a
different utility than that which it proposes to sell its electrical output to, then the relevant
determination is where the point of delivery is located. See Case No. IPC-E-11-14,
incorporated herein by this reference, for a more detailed discussion of the above-
referenced cases; See also Rocky Mountain Powets Petition to Intervene and
Comments, Case No. IPC-E-11-14, incorporated herein by this reference, for a more
detailed discussion regarding multi-state PURPA jurisdictional issues and the federal
PURPA obligations implicated thereby.1
Kootenai goes through great lengths in its Answer attempting to establish that the
change in ownership of the LoLo-Oxbow 230 kV transmission line exists in the state of
Oregon. However, the actual point of delivery for a transfer from Avista to Idaho Power
at this location occurs, and is metered, at the LoLo substation, located entirely within the
state of Idaho. Terminal facilties between Avista and Idaho Power are located at the
LoLo substation, which is located entirely within the state of Idaho. Idaho Power has
facilties located in the LoLo substation, which include the meter for such
1 The points and authorities cited by Idaho Power and Rocky Mountain Power in Case No. IPC-E-
11-14 are relevant to the Commission's requested determination in this matter. To avoid undue
repetition, they are not fully duplicated or repeated here. However, those points and authorities are fully
incorporated herein by reference and properly before the Commission in this matter.
COMMENTS OF IDAHO POWER COMPANY - 4
transactions/transfers. The point of delivery in is Idaho. Kootenai admits in its
pleadings that pursuant to the Island Power case, the Commission has established that
it wil exercise primary jurisdiction over a QF sale when the point of delivery is within the
state of Idaho. Answer pp. 17-18.
C. The Proposed Delivery of Electricity Would Serve Idaho Load and Be Paid
for by Idaho Customers.
A delivery of electricity from Avista to Idaho Power at the LoLo substation is a
delivery into Idaho, and not to an ownership point in Oregon. A QF's output must be a
Designated Network Resource ("DNR") on Idaho Power's transmission system, which
means in a basic sense that it is studied to serve load, must have available transmission
capacity, and is designated to serve native loads on Idaho Powets system. As a DNR
delivered from Avista to Idaho Power at the LoLo substation, the output from Kootenai's
QF cannot be used to serve only Oregon load. It is used to serve Idaho system load,
which is not specific to Oregon. It is a delivery into Idaho, and not to an ownership point
in Oregon.
Additionally, the electric output delivered by Kootenai, an Idaho QF, to a point of
delivery in the state of Idaho, LoLo substation, wil be a DNR on Idaho Power's system,
as are all PURPA QFs, that wil primarily serve Idaho load, and be paid for primarily by
Idaho customers. Kootenai states in its Answer that any difference in avoided cost
rates between Idaho and Oregon is a red herring and is not relevant. Answer pp. 22-23.
However, as stated in Idaho Power's Petition, the Idaho Commission and the state of
Idaho has a substantial interest in the proposed transaction because Idaho customers
bear approximately 95 percent of the power supply costs associated with Idaho Powets
QF purchases in Oregon. Petition pp. 6-8. Oregon's avoided cost rates for Idaho
Power are much higher than the published avoided cost rates in Idaho. This inevitably
COMMENTS OF IDAHO POWER COMPANY - 5
results in manipulation and gamesmanship by QF developers, such as Kootenai
Electric, looking to boost profis or leverage some other perceived benefit at the
expense of Idaho Power customers, most of which are located in Idaho. The end result
is that if transactions such as that proposed here by Kootenai Electric are permitted,
Idaho Power's Idaho customers pay a price for QF energy that exceeds the utilty's
avoided cost as determined by the Idaho Commission and Idaho customers are not held
indifferent to the utility's purchase from the QF as required by federal law.
Kootenai states in its Answer that it is not concerned with the additional price that
Oregon QFs receive over Idaho QFs, but that it is trying to force a transaction into the
Oregon jurisdiction in order to gain title to the Renewable Energy Certificates/Credits
("RECs") from the project. Answer p. 3 ("Kootenai would have happily accepted the
PPA terms tendered by Avista, including the current IPUC avoided cost rates, if the PPA
allowed Kootenai to retain clear title to the environmental attributes"). There are two
main problems with Kootenai's argument. First, Kootenai has not proposed a
transaction that delivers its output into the state of Oregon. As discussed above, the
point of delivery is in the state of Idaho, the output wil be a DNR used to serve primarily
Idaho load, and it wil be paid for primarily by Idaho customers. Second, the fact that
Kootenai has entered into a transaction purporting to grant ownership of the RECs for
this QF project to another entity, without a power sales agreement and in a climate
where the ownership of RECs from QF projects in the state of Idaho is an unsettled
issue, is questionable at best - and was done at Kootenai's own risk. See Case No.
IPC-E-11-15 (demonstrating uncertainty of ownership of RECs from QFs in the state of
Idaho.
COMMENTS OF IDAHO POWER COMPANY - 6
II. CONCLUSION
The Idaho Commission clearly has jurisdiction over Idaho Power, and over the
proposed PURPA QF transaction. Moreover, because the proposed transaction has a
point of delivery in the state of Idaho, the Idaho Commission should exercise its
jurisdiction over this matter. The QF is located in the state of Idaho. The point of
delivery to Idaho Power occurs at a substation in the state of Idaho. The QF's output
wil be a Designated Network Resource to serve Idaho system loads. The QF's
proposed output is delivered into Idaho, and not an ownership point in Oregon. Ninety-
five percent of the cost paid to the QF for its proposed output wil be paid for by Idaho
customers. Factually, this simply is not a delivery to the Oregon jurisdiction. It is a
delivery to the Idaho jurisdiction and, consequently, it is properly conducted pursuant to
the Idaho Commission's rates, rules, and implementation of PURPA.
Idaho Power respectfully requests that the Commission issue a Declaratory
Order finding that under the facts of Kootenai Electric's proposed PURPA QF
transaction, the Commission wil assert primary jurisdiction over the proposed sale to
Idaho Power and declare that the applicable avoided cost for the Project's output is the
Idaho avoided cost rate and the applicable contract terms and conditions are the Idaho
contractual terms and conditions. To allow Kootenai Electric's proposed transaction to
take place would unduly inflate energy costs for Idaho customers and 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.
Respecully sub_mil\ al Boise, Idah~~
DONOVAN E. WALKER
Attorney for Idaho Power Company
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COMMENTS OF IDAHO POWER COMPANY - 7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 4th day of January 2012 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 A. Sasser
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Kootenai Electric Cooperative, Inc.
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
Doug Ellott, General Manager
Kootenai Electric Cooperative, Inc.
P.O. Box 278
Hayden, Idaho 83835-0278
COMMENTS OF IDAHO POWER COMPANY - 8
.- Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
.- Email Kris.Sasser(?puc.idaho.gov
Hand Delivered
.- U.S. Mail
_ Overnight Mail
FAX
.- Email peter(?richardsonandoleary.com
greg(?richardsonandoleary.com
Hand Delivered
.- U.S. Mail
_ Overnight Mail
FAX
.- Email dellott(?kec.com
Donovan E. Walker