20120424final_order_no_32531.pdf

Office of the Secretary
Service Date
April 24,2012
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
INTERCONNECT SOLAR )
DEVELOPMENT,LLC,)CASE NO.IPC-E-12-1O
)
COMPLAINANT,)
)
v.)
)
IDAHO POWER COMPANY,)ORDER NO.32531
)
RESPONDENT )
On February 14,2012,Interconnect Solar Development,LLC (Interconnect Solar,
Project)filed a Complaint and Request to Intervene with the Commission.Interconnect Solar
maintains that Idaho Power improperly cancelled its Firm Energy Sales Agreement (FESA)and
mishandled its Generator Interconnection Agreement (GIA)and facility study.’In its Answer,
Idaho Power denies Interconnect Solar’s allegations of wrongdoing and requests that the
Commission dismiss the complaint with prejudice.Based on a thorough review of the evidence
presented in this case,we dismiss the complaint filed by Interconnect Solar as set out in greater
detail in the body of this Order.
BACKGROUND
On June 17,2011,Idaho Power Company filed an Application with the Commission
requesting acceptance or rejection of a 25-year Firm Energy Sales Agreement (Agreement)
between Idaho Power and Interconnect Solar.Interconnect Solar would sell and Idaho Power
would purchase electric energy generated by the Murphy Flats Solar Power Project located near
Murphy,Idaho.On July 8,2011,the Commission issued a Notice of Application/Notice of
Modified Procedure and established comment deadlines.2 Order No.32290.
Following the submission of comments by the parties and the public the case was
fully submitted for the Commission’s consideration.On September 20,2011,the Commission
The record in this case closed on April 9,2012,when the case was fully submitted to the Commission for
deliberations.On April 16,2012,Interconnect Solar filed a request for oral argument.Interconnect Solar’s request
is untimely and,therefore,will not be considered.
2 Comment deadlines were modified twice with comments ultimately being due no later than September 9,2011,
and reply comments due no later than September 16,2011.Order Nos.32308 and 32347.
ORDERNO.32531 1
issued Order No.32361.The Commission noted that all parties had acknowledged a
computational error that was made in the escalation rate that was applied to the CCCT capital
cost component from the 2009 IRP that was carried through and used in the IRP pricing model
for the Interconnect Solar project.In an effort to permit the parties an opportunity to correct the
mathematical error without creating undue delay,the Commission allowed Idaho Power and
Interconnect Solar additional time to resubmit their Firm Energy Sales Agreement with accurate
calculations prior to the Commission making a final determination regarding the Agreement.
Order Nos.32361 and 32364.
On October 11,2011,pursuant to Commission Order Nos.32361 and 32364,Idaho
Power resubmitted the parties’Firm Energy Sales Agreement.The adjustments resulted in a
levelized price of $97.47 per MWh.In the modified Agreement,Interconnect Solar selected
September 1,2012,as its commercial operation date (COD).The Project had been advised by
Idaho Power that its COD was prior to such time that interconnectionltransmission facilities were
scheduled to be constructed and complete.Interconnect Solar acknowledged and expressly
agreed to accept the risk associated with not meeting its COD.On October 20,2011,the
Commission approved the replacement Agreement signed by Idaho Power and Interconnect
Solar on October 4,2011,for the sale and purchase of electric energy.Order No.32384.
THE COMPLAINT
Interconnect Solar complains that Idaho Power improperly cancelled its FESA and
mishandled its GIA and facility study.Interconnect Solar states that,since it no longer has a
valid GIA “and the in service date has not been moved,Interconnect Solar has not been able to
complete the new loan based on the ‘Investment Tax Credit’and ‘Accelerated Depreciation’and
post the required LD’s [liquidated damages]for the PPA.”Complaint at 4.Interconnect Solar
maintains that its lenders “are not willing to post a security deposit that is a set-up for failure.”
Id.
Interconnect Solar requests that the Commission (1)require Idaho Power to provide a
revised in-service date in its FESA to comport with “the ever moving GIA schedule-72”;(2)
require Idaho Power to provide a corrected GIA “which lines up with the BLM meeting and
schedules set forth and agreed upon by all Parties”;(3)require Idaho Power to provide the BLM
with “a timely EA [Environmental Assessment]and spring Botanical study so the BLM can
ORDERNO.32531 2
expedite the ROW GRANT”;and (4)direct Idaho Power “to stop delaying the project and
damaging Interconnect Solar.”Id.at 5.
IDAHO POWER’S ANSWER
Idaho Power asserts that Interconnect Solar was put on notice that BLM permitting
issues were outside of its control and could influence the Project’s commercial operation date.
Answer at 2.Idaho Power states that Interconnect Solar agreed to the delay security provisions
in its FESA.The Project has failed to post the security pursuant to the terms of the Agreement.
As a result,Idaho Power terminated the Agreement.
Idaho Power acknowledges that on December 21,2011,it received a letter from the
Project’s legal counsel asserting a claim of force majeure.Idaho Power disputes the claim of
force majeure.Id.at 6.Idaho Power argues that Interconnect Solar “affirmatively accepted and
assumed any and all risk associated with the contingency that the interconnection!transmission
facilities would not be constructed by the Scheduled Operation Date....”Id.
Idaho Power asserts several affirmative defenses,i.e.,waiver,estoppel,unclean
hands.Ultimately,Idaho Power claims that Interconnect Solar filed its complaint “for the
purposes of harassment,to cause unnecessary delay and needless increase in the cost of the
parties’outstanding litigation,and without evidentiary support for its factual contentions.”Id.at
7.Idaho Power maintains that any alleged damages suffered by Interconnect Solar were caused
by and the result of Interconnect Solar’s own conduct.Id.at 8.
DISCUSSION AND CONCLUSIONS
The idaho Public Utilities Commission has jurisdiction over Idaho Power,an electric
utility,and the issues raised in this matter pursuant to the authority and power granted it under
Title 61 of the Idaho Code and the Public Utility Regulatory Policies Act of 1978 (PURPA).The
Commission has authority under PURPA and the implementing regulations of the Federal
Energy Regulatory Commission (FERC)to set avoided costs,to order electric utilities to enter
into fixed-term obligations for the purchase of energy from qualified facilities (QFs)and to
implement FERC rules.
Interconnect Solar’s complaint is based on an assertion that Idaho Power improperly
terminated its FESA.Pursuant to the terms of that Agreement,“[w]ithin thirty (30)days of the
date of a final non-appealable Commission Order ...[Interconnect Solar]shall post liquid
security (‘Delay Security’)....Failure to post this Delay Security in the time specified above
ORDERNO.32531 3
will be a i’aterial Breach of this Agreement and Idaho Power may terminate this Agreement.”
Agreement ¶5.8.The Commission’s final Order approving the Agreement was issued on
October 20,2011.No person or party sought reconsideration.Consequently,the Commissions
Order became final and conclusive on November 11,2011.Idaho Code §61-625,61-626.
Interconnect Solar’s Delay Security was,therefore,due no later than December 11,2011.
On December 16,2011,Idaho Power notified interconnect Solar that it was in
material breach of its Agreement because of the Project’s failure to post its required delay
security.Answer,Attachment 1.The Project was put on notice that “Idaho Power will terminate
this FESA if this Material Breach is not cured as expeditiously as possible.”Id On February
23,2012,Idaho Power notified Interconnect Solar that its FESA had been terminated after it
failed to cure the material breach by posting the required delay security deposit.Interconnect
Solar does not dispute that it has not posted the delay security pursuant to Section 5.8 of the
Agreement.Interconnect Solar asserts that it cannot obtain a loan to post the required delay
security with an obsolete GIA and unworkable commercial operation date.
Interconnect Solar was repeatedly warned about choosing a commercial operation
date that preceded Idaho Power’s estimated time for completion of the Project’s interconnection.
At the time the FESA was approved by this Commission,we expressed our concern regarding
the Project’s choice for commercial operation.Specifically,we stated
We share the concerns of Commission Staff and Idaho Power regarding
Interconnect Solar’s choice of a Scheduled Operation Date that precedes
Idaho Power’s estimated date for completion of the Project’s interconnection.
The Project’s optimism may prove to be foolhardy.Interconnect Solar
maintains its position that interconnection will occur ahead of Idaho Power’s
estimated schedule at its own peril.
Order No.32384 at 10.Interconnect Solar argues that its failure to post a delay security stems
from issues with its GIA.However,its Agreement with Idaho Power states that “[d}elays in the
interconnection and transmission network upgrade study,design and construction process that
are not Force Majeure events accepted by both Parties,shall not prevent Delay Liquidated
Damages from being due and owing as calculated in accordance with this Agreement.”
Agreement,¶5.3 (emphasis in original).
This Commission approved the FESA with the admonition that Interconnect Solar
proceeded at its own peril.The concerns of Idaho Power,Staff and this Commission have been
ORDERNO.32531 4
realized.Setbacks with regard to Interconnect Solar’s GIA have affected the Project’s ability to
post its required delay security deposit.Pursuant to the terms of the Agreement,Interconnect
Solar is in material breach and has failed to cure the defect.We find that Idaho Power
terminated its FESA with Interconnect Solar consistent with the terms of the Agreement.
Accordingly,we dismiss the complaint filed by Interconnect Solar.
ORDER
IT IS HEREBY ORDERED that the February 14,2012,complaint filed by
Interconnect Solar against Idaho Power is dismissed.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (2 1)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 2z/
day of April 2012.
ATTEST:
L4(
Jn D.Jewil
iommission Secretary
O:IPC-E-12-lOks
PAUl KJELLANDER,PRHSII)EN1’
MARSHA H.SMITH,COMMISSIONER
MACK A.
ORDER NO.32531 5