20121109Complaint and Petition.pdf

HO
REI%F : r PIVER®
An IDACORP Company
1017NOV-9 PM 3:17
DONOVAN E. WALKER IDAHO jb :Lj.
Lead Counsel UTILITIES CMMiSSiOi
dwaIkercidahopower.com
November 9, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-12-25
Complaint and Petition of Idaho Power Company for Declaratory Order
New Energy Two, LLC - Swager Farms
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of the
Complaint and Petition of Idaho Power Company for Declaratory Order.
Pursuant to our telephone discussion, it is Idaho Power Company's understanding
that you, the Idaho Public Utilities Commission Secretary, has authorized Idaho Power
Company, pursuant to RP 61.04, to modify the number of copies and form of the filing as
follows:
Reduce the number of attachment copies that must be filed to four (4)
copies; and
2. That the filed materials be provided to the Idaho Public Utilities
Commission in electronic format.
Thank you for your prompt attention and consideration.
Very ours,
Donovan E Wa er
DEW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83703
Telephone: [phone]
Facsimile: [phone]
dwalker(idahoDower.com
211 I2Uciy-9 PH 3:7
UTILITIES COMM'
Attorney for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMPLAINT
AND PETITION OF IDAHO POWER
COMPANY FOR A DECLARATORY
ORDER REGARDING THE FIRM ENERGY
SALES AGREEMENT AND GENERATOR
INTERCONNECTION AGREEMENT WITH
NEW ENERGY TWO, LLC.
CASE NO. IPC-E-12-25
IDAHO POWER COMPANY'S
COMPLAINT AND PETITION FOR
DECLARATORY ORDER
COMES NOW the Petitioner/Complainant, Idaho Power Company ("Idaho
Power"), by and through its attorney, Donovan Walker, and pursuant to this
Commission's Rules of Procedure, including but not limited to RP 54 and RP 101,
hereby files this Complaint and Petition for Declaratory Order.
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -1
Communications regarding this Complaint and Petition for Declaratory Order
should be sent to:
Donovan Walker
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83703
Telephone: [phone]
Facsimile: [phone]
dwalker(ãidahopower.com
SUMMARY OF THE CASE
1.This is a dispute between Idaho Power and New Energy Two, LLC ("New
Energy Two") a special purpose entity that is intended to own and control a biogas
generation facility identified as the Swager Farms Dairy Anaerobic Digester Project
("Swager Farms") to be developed by Exergy Development Group of Idaho, LLC
("Exergy Development"). Over the course of Swager Farms' contacts with Idaho Power
Company ("Idaho Power") there have been at least four special purpose entities
involved representing Swager Farms' project development/management: Andgar
Corporation; The New Energy Company, LLC; New Energy Two, LLC; and Exergy New
Energy, LLC. In May of 2010 Idaho Power and one of the special purpose entities, New
Energy Two, entered into a Firm Energy Sales Agreement ("FESA") pursuant to the
Public Utility Regulatory Policies Act of 1978 ("PURPA"), which provides that New
Energy Two will design, construct, own, maintain and operate a biogas generation
facility as a PURPA qualifying facility ("QF") and that Idaho Power will buy the electric
energy produced by the facility at avoided cost rates. (Attachment 1.)
2.The FESA requires, among other things, that New Energy Two meet
certain construction deadlines, such as placing the project in service by the Scheduled
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -2
Operation Date of October 1, 2012. New Energy Two selected the Scheduled
Operation Date of October 1, 2012. New Energy Two did not achieve the Scheduled
Operation Date of October 1, 2012, and will likely not achieve the Operation Date by
December 30, 2012. New Energy Two has failed to take the necessary steps required
to bring the facility online and operational by the dates required in the FESA including,
but not limited to, failing to take the steps required to secure the interconnection of its
proposed facility to Idaho Powers system. Rather than pursue the necessary generator
interconnection system upgrades required to connect its proposed project to Idaho
Power's system and bring the project online and operational, New Energy Two chose to
pursue a claim of force majeure based upon other pending proceedings at the
Commission, claiming such proceedings excuses its performance under the FESA.
Exergy Development, on behalf of New Energy Two, asserts that because of pending
PURPA proceedings at the Commission renewable energy project lenders are unwilling
to lend in Idaho pending the outcome of those proceedings. Exergy Development
claims that its lack of ability to finance its project is an event of force majeure excusing
its performance under the FESA. Idaho Power does not agree that Exergy
Development has identified a valid event of force majeure. Idaho Power disagrees that
the claimed events excuse New Energy Two from meeting its operational requirements
pursuant to the Commission approved FESA, and seeks authorization to assess
damages and terminate the FESA.
3. The FESA provides clear remedies for a party's failure to achieve
construction deadlines, among them termination of the FESA and delay damages. With
this Complaint and Petition, Idaho Power is requesting the Idaho Public Utilities
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -3
Commission ("Commission") to issue an order declaring that Idaho Power is authorized
to apply such remedies against New Energy Two and the special purpose entities in the
event that the Swager Farms Project is not completed by December 30, 2012. More
specifically, Idaho Power asks the Commission to make findings and enter a declaratory
order that: 1) the Commission has jurisdiction over the interpretation and enforcement
of the FESA and the generator interconnection agreement ("GIA"); 2) the Swager Farms
Project has failed to meet the Scheduled Operation Date of October 1, 2012, and that
Idaho Power may terminate the FESA as of December 30, 2012, if the Swager Farms
Project fails to achieve its Operation Date; 3) New Energy Two's claim of force majeure
does not exist so as to excuse the Swager Farms Project's failure to meet the
Scheduled Operation Date; and 4) Idaho Power is entitled to damages pursuant to the
FESA.
FACTUAL ALLEGATIONS
4.Idaho Power is an Idaho public utility subject to the jurisdiction of the
Commission
5.The New Energy Company, LLC ("New Energy") is an Idaho limited
liability company.
6.New Energy Two, LLC is an Idaho limited liability company.
7.Exergy New Energy, LLC ("Exergy") is an Idaho limited liability company.
8.Interconnection for the Swager Farms project was originally requested by
the Andgar Corporation in September of 2008. In May of 2009 Andgar withdrew its
request. See, May 27, 2009, letter attached hereto as Attachment 2 and incorporated
herein by this reference. On October 9, 2009, New Energy filed a Small Generator
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -4
Interconnection Request for a proposed 1.2 MW biogas generator project for Swager
Farms. At the time the application was filed, the Legal Name of the Interconnection
Customer was identified as "Owner/Operator company development in progress." The
application was executed by Laura Knothe. According to the Certificate of Organization
filed with the Idaho Secretary of State on September 16, 2008, Laura Knothe is the
Registered Agent for RETRO-comm, LLC which was changed to New Energy in
February 2009. The Annual Report Form filed in August 2010 listed Leslie White as the
Manager of New Energy. On May 24, 2010, New Energy Two entered into a FESA for
a 15-year term for energy deliveries of less than 10 aMW. Laura Knothe executed the
FESA on behalf of New Energy Two. According to the Certificate of Organization filed
with the Idaho Secretary of State on March 25, 2010, Leslie White is the Registered
Agent and Manager of New Energy Two. The Annual Report Form filed in April 2012
listed Laura Knothe as the Managing Partner of New Energy Two. In May 2011 Laura
Knothe gave permission for Collin Rudeen of Exergy Development to be involved in
team meetings, discussions, and be provided information relating to the Swager Farms
Projects. On May 9, 2012, James Carkulis, of Exergy and Exergy Development,
executed a Small Generator Feasibility Study Agreement for Swager Farms GI #307.
According to the Certificate of Organization filed on April 5, 2011, Exergy New Energy,
LLC was recorded with the Idaho Secretary of State listing James Carkulis as the
Registered Agent. Throughout the length of New Energy's application for
interconnection all three companies have been involved, whether it is from executing
Agreements or making decisions relating to the Swager Farms Projects.
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -5
9. On September 5, 2008, Andgar Corporation ("Andgar') submitted a Small
Generator Interconnection Request for a proposed 1.5 MW biogas generating project
for Swager Farms. A true and correct copy of the Small Generator Interconnection
Request for Swager Farms is attached hereto as Attachment 3 and incorporated herein
by reference. Idaho Power assigned a Generator Interconnection Queue Number ("GI
#") to Swager Farms of 268.
10.On September 10, 2008, Idaho Power acknowledged receipt of Andgar's
Small Generator Interconnection Request and tendered to Andgar a form Small
Generator Feasibility Study Agreement for Swager Farms GI #268. A true and correct
copy of the form Small Generator Feasibility Study Agreement for Swager Farms GI
#268 tendered by Idaho Power is attached hereto as Attachment 4 and incorporated
herein by reference. On September 19, 2008, Andgar executed the Small Generator
Feasibility Study Agreement for Swager Farms GI #268.
11.On September 18, 2008, Andgar submitted an updated Small Generator
Interconnection Request which changed the output to a proposed 1.2 MW biogas
generating project for Swager Farms GI #268. A true and correct copy of the updated
Small Generator Interconnection Request for Swager Farms GI #268 is attached hereto
as Attachment 5 and incorporated herein by reference.
12.On September 29, 2008, representatives of Idaho Power and Andgar
conducted a scoping meeting. On September 29, 2008, Idaho Power executed the
Small Generator Feasibility Study Agreement for Swager Farms GI #268. A true and
correct copy of the fully executed Small Generator Feasibility Study Agreement for
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -6
Swager Farms GI #268 is attached hereto as Attachment 6 and incorporated herein by
reference.
13.Attached hereto as Attachment 7 and incorporated herein by this
reference is a true and correct copy of the November 13, 2008, Generator
Interconnection Feasibility Study Report for Swager Farms interconnection. This report
was for Andgar's requested configuration of GI #268 located in Idaho Power's southern
Idaho service territory in Twin Falls County, for 1.2 MW at a 12.5 kV connection, with
estimated interconnection cost of $316,250.
14.On November 17, 2008, Idaho Power issued a form Small Generator
System Impact Study Agreement for Swager Farms GI #268. A true and correct copy of
the form Small Generator System Impact Study Agreement for Swager Farms GI #268
is attached hereto as Attachment 8 and incorporated herein by reference.
15.On January 2, 2009, Andgar requested an extension of time for returning
the executed System Impact Study Agreement for Swager Farms GI #268. On January
6, 2009, Idaho Power granted Andgar's request for extension based on the fact that
Andgar's request did not affect other parties in the generator interconnection queue.
Idaho Power extended Andgar's time for return of the executed System Impact Study
Agreement to February 2, 2009.
16.On January 28, 2009, Andgar returned to Idaho Power an executed Small
Generator System Impact Study Agreement for Swager Farms GI #268. A true and
correct copy of the fully executed Small Generator System Impact Study Agreement for
Swager Farms GI #268 is attached hereto as Attachment 9 and incorporated herein by
reference. Idaho Power returned the executed System Impact Study to Andgar on
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER- 7
February 2, 2009. See, February 2, 2009, letter attached hereto as Attachment No. 10
and incorporated herein by this reference.
17.On April 10, 2009, Idaho Power informed Andgar that Swager Farms GI
#268 was reviewed for system impacts, and that the review identified other projects as
well as other transmission system requests ("TSR5") ahead of Swager Farms in the
queue. Because of this the impact of the project was inconclusive without the
associated TSR from the energy provider, which is submitted once a power sales
contract is entered into between the project and the energy provider. Idaho Power
stated no additional transmission system upgrades had been identified other than those
identified in the Feasibility Study Report. Andgar was informed after a contract had
been reached between Swager Farms GI #268 and the energy provider, any required
TSR would be submitted by the energy provider and a more detailed study would occur.
See, April 10, 2009, letter attached hereto as Attachment 11 and incorporated herein by
this reference.
18.On April 24, 2009, Idaho Power tendered a form Facilities Study
Agreement for Swager Farms GI #268. A true and correct copy of the form Facilities
Study Agreement for Swager Farms GI #268 is attached hereto as Attachment 12 and
incorporated herein by reference.
19.On May 27, 2009, Andgar informed Idaho Power they were no longer
willing to proceed with the Facility Study for Swager Farms GI #268 due to project
uncertainties. See, May 27, 2009, letter attached hereto as Attachment 2 and
incorporated herein by this reference. Consequently, GI #268 was terminated and
Swager Farms was removed from Idaho Power's generator interconnection queue. On
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -8
June 8, 2009, Idaho Power returned Andgar's original deposit. See, June 8, 2009, letter
attached hereto as Attachment 13 and incorporated herein by this reference.
20.On October 12, 2009, New Energy submitted a new Small Generator
Interconnection Request for a proposed 1.2 MW methane gas generating project for
Swager Farms. A true and correct copy of the Small Generator Interconnection
Request for Swager Farms is attached hereto as Attachment 14 and incorporated
herein by reference. Idaho Power assigned a GI # to Swager Farms of #307.
21.On October 19, 2009, Idaho Power acknowledged receipt of New
Energy's Small Generator Interconnection Request and tendered to New Energy a form
Small Generator Feasibility Study Agreement for Swager Farms #307. A true and
correct copy of the letter sending the form Small Generator Feasibility Study Agreement
for Swager Farms #307 tendered by Idaho Power is attached hereto as Attachment 15
and incorporated herein by reference.
22.On October 27, 2009, Idaho Power and New Energy conducted a scoping
meeting. Attached hereto as Attachment 16 and incorporated herein by this reference
is a true and correct copy of an October 27, 2009, Feasibility Study Agreement for
Swager Farms GI #307, executed by Idaho Power and Exergy. Idaho Power
acknowledged the executed Feasibility Study Agreement on November 2, 2009, and
provided a Draft Feasibility Study Agreement to New Energy on December 15, 2009, for
GI #307, #308, and #309.
23.Attached hereto as Attachment 17 and incorporated herein by this
reference is a true and correct copy of the January 13, 2010, Generator Interconnection
Feasibility Study Report for Swager Farms interconnection. This report was for New
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -9
Energy's requested configuration of GI #307 located in Idaho Power's southern Idaho
service territory in Twin Falls County, for 1.2 MW at a 12.5 kV connection, with
estimated interconnection cost of $234,800.
24.On January 13, 2010, Idaho Power sent a letter attaching a copy of the
Final Feasibility Study Report. This letter advises that the feasibility analysis indicates
the system is capable of integrating the Swager Farms generator at the proposed
location. However, the study did not provide any transmission rights which might be
required for the sale of energy from Swager Farms GI #307. Further, Idaho Power
recommends New Energy contact Idaho Power's Power Supply Department to begin
the study process for delivery of energy, and that additional network upgrades might be
required which could have a significant financial impact. Idaho Power forwarded a form
Facility Study Agreement for Swager Farms GI #307 based on the fact a System Impact
Study was not required. The letter advises that payment must be received by March 1,
2010, or the application will be deemed withdrawn. A true and correct copy of the
January 13, 2010, letter is attached hereto as Attachment 18 and incorporated herein by
reference.
25.On March 3, 2010, Idaho Power Energy Contracts submitted a Letter of
Understanding for Swager Farms GI #307 to New Energy. A true and correct copy of
the form Letter of Understanding for Swager Farms GI #307 is attached hereto as
Attachment 19 and incorporated herein by reference. The Letter of Understanding
informs New Energy that Swager Farms GI #307 appears to be eligible for a purchase
power agreement under the guidelines for a QF as defined by PURPA. (Attachment
19 at p. 1.) The Letter of Understanding also informs New Energy that Swager Farms
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -10
GI #307 must (i) complete the interconnection process and execute a GIA in
accordance with the applicable state and federal requirements and (ii) be designated as
a DNR to sell the energy from the projects to Idaho Power. (Id. at p. 2.)
26. On March 3, 2010, New Energy requested an extension for the execution
of the Facility Study Agreement for Swager Farms GI #307. On March 3, 2010, Idaho
Power granted New Energy's request for extension based on the fact New Energy's
request did not affect other parties in the generator interconnection queue. Idaho
Power extended New Energy's return of the executed Facility Study Agreement to April
3, 2010, and noted that if prior to April 3, 2010, it appeared the extension could impact
other projects, Idaho Power would request an earlier response from New Energy.
- 27. On April 1, 2010, New Energy returned an executed Letter of
Understanding for Swager Farms GI #307 to Idaho Power. A true and correct copy of
the Letter of Understanding for Swager Farms GI #307 is attached hereto as
Attachment 20 and incorporated herein by reference. Subsequent to receipt of the
executed Letter of Understanding for Swager Farms GI #307, Idaho Power submitted a
TSR for this project.
28.On April 2, 2010, New Energy returned to Idaho Power an executed
Facilities Study Agreement for Swager Farms GI #307. A true and correct copy of the
fully executed Facility Study Agreement for Swager Farms GI #307 is attached hereto
as Attachment 21 and incorporated herein by reference.
29.On May 4, 2010, Idaho Power, as transmission provider, notified Idaho
Power, as transmission customer, that the TSR had been put into study and would be
accepted upon receipt of a designated network resource ("DNR").
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -11
30.On May 7, 2010, Idaho Power sent a letter and PURPA purchase power
agreement to New Energy. A true and correct copy of the May 4, 2010, communication
is attached hereto as Attachment 22 and incorporated herein by reference. This letter
addresses Order No. 31025 issued by the Commission on March 16, 2010, which
revised the Published Avoided Cost Rates. Although the Order was specific in stating
that any contracts executed after March 16, 2010, must have new energy pricing, Idaho
Power was willing to execute a PURPA purchase power agreement that contained the
energy prices that were in effect prior to the Order issued on March 16, 2010, as
outlined in this letter, as long as New Energy returned fully executed agreements prior
to 5 PM Mountain time, on May 24, 2010.
31.On May 24, 2010, Idaho Power and New Energy Two entered into a FESA
for a 15-year term using the then-current non-levelized published avoided cost rates as
established by the Commission for energy deliveries of less than 10 aMW. A true and
correct copy of the FESA, dated May 24, 2010, between Idaho Power and New Energy
Two is attached hereto as Attachment I and incorporated herein by reference. New
Energy Two selected September 1, 2011, as the Scheduled First Energy Date, and
October 1, 2012, as the Scheduled Operation Date. (Attachment I at Appx. B.)
32.On May 25, 2010, Idaho Power filed an Application with the Commission
in Case No. IPC-E-10-17 requesting approval of the 15-year FESA between Idaho
Power and New Energy Two. The Commission approved the FESA in Order No. 32026
issued July 1, 2010.
33.On June 21, 2010, Idaho Power requested from New Energy whether they
had identified a specific interconnection point, as this information was needed in order
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -12
to proceed with the Facility Study. New Energy was notified the Facility Study Report
would be produced approximately one month after identification of the interconnection
34.On August 17, 2010, Idaho Power issued a Draft Facility Study Report for
Swager Farms GI #307, which begins a comment period for New Energy extending to
September 17, 2010. A true and correct copy of the August 17, 2010, Draft Facility
Study Report, with cover letter, is attached hereto as Attachment 23 and incorporated
herein by reference.
35.On August 30, 2010, Western States Equipment Company provided a
Letter of Guarantee for the payment of Liquidated Damages payable under the FESA
for the Swager Farms Project. A true and correct copy of the August 30, 2010, Letter of
Guarantee is attached hereto as Attachment 24 and incorporated herein by reference.
36.On September 16, 2010, Idaho Power issued the Final Facility Study
Report to New Energy for Swager Farms GI #307. A true and correct copy of the
September 16, 2010, Final Facility Study Report, with cover letter, is attached hereto as
Attachment 25 and incorporated herein by reference.
37.On October 25, 2010, Idaho Power sent a Draft Generator Interconnection
Agreement ("GIA") to New Energy. A true and correct copy of the October 25, 2010,
Draft GIA, with transmittal letter, is attached hereto as Attachment 26 and incorporated
herein by reference. This communication to New Energy indicates Idaho Power drafted
the GIA Attachments from the September 16, 2010, Facility Study Report. Idaho Power
requested review of the Attachments to make sure they were comprehensive and
accurate and to advise of any changes. The completed attachments were to be
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -13
returned to Idaho Power by November 29, 2010, so a GIA could be prepared for
execution, and that failure to respond to the letter and requests will be considered as an
election not to proceed with the project.
38.On January 3, 2011, New Energy advised Idaho Power they had a new
investor on board and would want to proceed with the GIA in the next week, and they
were looking at construction this spring/summer and an operation date in September or
October.
39.Idaho Power responded the same day to New Energy's January 3, 2011,
email. Idaho Power advises New Energy that the Facility Study Report states it would
be six (6) months from the time Idaho Power received construction funding to the time
the project would be in-service on Idaho Power's end and still in good shape for meeting
a late summer or early fall date. However, Idaho Power mentions the sooner the
funding is received the sooner the materials can be ordered and get the designers going
on the final design. Idaho Power feels receipt of payment within the next four to six
weeks would be best so construction resources could be scheduled for summer.
Attached hereto as Attachment 27 and incorporated herein by this reference is a true
and correct copy of the e-mail string of communications between Idaho Power and New
Energy on January 3, 2011.
40.On January 12, 2011, New Energy Two submitted a new request to
expand the capacity of the proposed project by an additional 800 kW bringing the total
capacity to 2 MW. Attached hereto as Attachment 28 and incorporated herein by this
reference is a true and correct copy of the January 12, 2011, Small Generator
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -14
Interconnection Request by New Energy Two for the Swager Farms Expansion Project
requesting the interconnection of 2 MW. This request was assigned GI #364.
41.On January 20, 2011, Idaho Power acknowledged receipt of New Energy
Two's Small Generator Interconnection Request, tendered to New Energy Two a form
Small Generator Feasibility Study Agreement for Swager Farms GI #364, and advised
New Energy Two of the next steps in the interconnection process. A true and correct
copy of the letter sending the form Small Generator Feasibility Study Agreement for
Swager Farms GI #364 tendered by Idaho Power is attached hereto as Attachment 29
and incorporated herein by reference.
42.The Feasibility Study Agreement for New Energy Two's requested
expansion was executed by the parties on February 2, 2011. Attached hereto as
Attachment 30 and incorporated herein by this reference is a true and correct copy of
the February 2, 2011, Small Generator Feasibility Study Agreement for Swager Farms
GI #364.
43.A Draft Feasibility Study Report was issued on March 16, 2011, attached
hereto as Attachment 31 and incorporated herein by this reference, and a Final
Feasibility Study Report was issued on April 26, 2011, attached hereto as Attachment
32 and incorporated herein by this reference, for Swager Farms' Expansion Project
interconnection. This report was for New Energy Two's requested configuration of GI
#364 located in Twin Falls County, for 2.0 MW at a 12.5 kV connection, with estimated
interconnection cost of $1,713,000. This report also addressed New Energy's
requested configuration of GI #307 located in Idaho Power's southern Idaho service
territory in Twin Falls County, for 1.2 MW at a 12.5 kV connection, with estimated
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -15
interconnection cost of $234,800 as of January 13, 2010. This report indicates that
Idaho Power recently updated its operating requirements for generators interconnecting
to the distribution system. Because of these new requirements, there are additional
upgrades required to the existing Idaho Power distribution system to interconnect the
1.2 MW generator project at Swager Farms GI #307, with estimated interconnection
cost of $575,000.
44.On April 27, 2011, Idaho Power sent a letter attaching a copy of the Final
Feasibility Study Report. The letter advises that the executed Facility Study Agreement,
a completed Attachment A, and payment of the required deposit must be received by
June 9, 2011, or the application will be deemed withdrawn. A true and correct copy of
the April 27, 2011, letter is attached hereto as Attachment 33 and incorporated herein
by reference.
45.On May 24, 2011, Laura Knothe gave permission for Idaho Power to
involve Collin Rudeen of Exergy Development in team meetings and discussions and
provide information pertaining to the Swager Farms Projects.
46.On June 10, 2011, Idaho Power sent a letter notifying New Energy they
were to execute and return the Facility Study Agreement for interconnection of the
proposed Swager Farms GI #364 tendered on April 27, 2011, to Idaho Power with the
required deposit by June 9, 2011. Because the time period had expired without
authorization to proceed and payment, the application for Generation Interconnection
for Swager Farms GI #364 was deemed withdrawn. The letter notifies New Energy that
failure to submit the deficient items by June 24, 2011, will cause Generator
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -16
Interconnection request to be terminated. A true and correct copy of the June 10, 2011,
letter is attached hereto as Attachment 34 and incorporated herein by reference.
47.On August 26, 2011, Idaho Power issued a Revised Feasibility Study
Report for Swager Farms requested configuration in GI #307. Attached hereto as
Attachment 35 and incorporated herein by this reference is a true and correct copy of
the August 26, 2011, Revised Generator Interconnection Feasibility Study Report for
Swager Farms. This revised report was for New Energy's requested configuration of GI
#307 located in Idaho Powers southern Idaho service territory in Twin Falls County, for
1.2 MW at a 12.5 kV connection, with estimated interconnection cost of $575,000.
48.On September 9, 2011, Idaho Power sent a letter attaching a copy of the
Revised Feasibility Study Report. This letter states that the feasibility analysis indicates
that the modification/addition of some facilities will be required to integrate the network
resource capacity addition of Swager Farms GI #307 into the Idaho Power system.
Idaho Power forwarded a form Facility Study Agreement for Swager Farms GI #307.
The letter advises that payment must be received by October 21, 2011, or the
application will be deemed withdrawn. A true and correct copy of the April 27, 2011,
letter and the form Facility Study Agreement for Swager Farms GI #307 are attached
hereto as Attachment 36 and incorporated herein by reference.
49.On October 20, 2011, New Energy provided a Certification of Authority for
Agents authorizing Laura Knothe and Leslie White to execute instruments, agreements,
certificates, and other documents and to take actions on behalf of New Energy. A true
and correct copy of the Certification of Authority for Agents is attached hereto as
Attachment 37 and incorporated herein by reference.
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -17
50.On October 21, 2011, New Energy returned an executed Facilities Study
Agreement for Swager Farms GI #307. A true and correct copy of the fully executed
Facilities Study Agreement for Swager Farms GI #307 is attached hereto as Attachment
38 and incorporated herein by reference. On this date, Idaho Power also received a
Proof of Site Control pertaining to Swager Farms. A true and correct copy of the Proof
of Site Control is attached hereto as Attachment 39 and incorporated herein by
reference. Also on this date, when returning the Facility Study Agreement and required
deposit to proceed with the Facility Study for Swager Farms GI #307, Exergy
Development requested clarification regarding the various studies and reports that had
been conducted and issued since October 25, 2010, to consider their different
configurations and requests for the Swager Farms interconnection. A true and correct
copy of the October 21, 2011, letter is attached hereto as Attachment 40 and
incorporated herein by reference.
51.Idaho Power and representatives of Swager Farms met to discuss the
interconnection on November 3, 2011. On November 9, 2011, Idaho Power confirmed
with Leslie White, on behalf of the project, that Idaho Power had already considered the
additional system changes suggested by Exergy Development at the November 3,
2011, meeting, and that both of the options (which included capacitor controls and a line
voltage regulator) were already being implemented on the feeder that Swager Farms
#307 will connect.
52.On December 1, 2011, Leslie White of Exergy requested further
clarification and information regarding the interconnection requirements such as
additional definition of the equipment and conductors on the line, line loads, other
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -18
details of Idaho Power's system modeling and analysis, and drawings depicting what
infrastructure exists in the area. A true and correct copy of the December 1, 2011,
email correspondence is attached hereto as Attachment 41 and incorporated herein by
reference.
53.On December 8, 2011, Idaho Power responded to Exergy's December 1,
2011, request for additional information. Idaho Power stated that it would not provide
detailed system information and customer information to Exergy (this information is
restricted by rules regarding Critical Infrastructure Protection, and customer
confidentiality). The email reiterates that when Idaho Power completed the Revised
Feasibility Study it identified the necessary upgrades required to interconnect to Swager
Farms GI #307, and that Idaho Power also reviewed the system changes as suggested
by Exergy Development at the November 3, 2011, meeting which options had already
been considered in the study process. Idaho Power further informs Exergy the Facility
Study would be completed the next week providing further details, and suggested
waiting for that Facility Study Report before setting another meeting. A true and correct
copy of the December 8, 2011, email correspondence is attached hereto as Attachment
41 and incorporated herein by reference.
54.On December 15, 2011, Idaho Power issued a Draft Facility Study Report
for Swager Farms GI #307, which began a comment period for New Energy Two
extending to January 15, 2012. A true and correct copy of the December 15, 2011,
Draft Facility Study Report, with cover letter, is attached hereto as Attachment 42 and
incorporated herein by reference.
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -19
55.Idaho Power received no comments from Swager Farms on the Draft
Facility Study, and on January 25, 2012, Idaho Power issued the Final Facility Study
Report for Swager Farms #307. A true and correct copy of the January 25, 2012, Final
Facility Study Report, with cover letter, is attached hereto as Attachment 43 and
incorporated herein by reference.
56.On February 6, 2012, Idaho Power sent email correspondence to Exergy
which requests review of the construction milestones table and specifically requested
what in service date Exergy wanted listed for the project. The information was needed
so Idaho Power could proceed with the Draft Generator Interconnection Agreement for
Swager Farms GI #307. Idaho Power sent follow up email correspondence to Exergy
on February 15 and February 24, 2012, again requesting when Exergy wanted the
project to be in service. A true and correct copy of the February 6, 12, and 24, 2012
email correspondence is attached hereto as Attachment 44 and incorporated herein by
reference.
57.On February 28, 2012, Exergy responded to Idaho Powers inquiries
stating, "I cannot as of yet confirm inservice dates but I appreciate knowing that
construction is dependent upon receipt of funds from Exergy. James will be meeting
with our technology provider within the next two weeks. I should be able to extract the
pertinent data to provide you with inservice dates at that point." See, February 28,
2012, email correspondence attached hereto as Attachment 44 and incorporated herein
by this reference.
58.On March 22, 2012, Idaho Power sent a Draft Generator Interconnection
Agreement ("GIA") to Exergy. A true and correct copy of the March 22, 2012, Draft GIA,
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -20
with transmittal letter, is attached hereto as Attachment 45 and incorporated herein by
reference. This communication to Exergy indicates that its response and authorization
to move forward, including payment of the estimated construction costs deposit, is
required by April 23, 2012, or the interconnection request will be deemed withdrawn and
terminated.
59.On April 23, 2012, Idaho Power received correspondence from Exergy
Development requesting another restudy of the interconnection. The letter contained
technical questions regarding the interconnection requirements and studies. Exergy
Development asks Idaho Power to "revisit the upgrade requirements specific to the
verified capacity of 800 kW." Exergy Development also advises that it intends to
commence construction in the second quarter on the Swager Farms Project. A true and
correct copy of the April 23, 2012, letter is attached hereto as Attachment 46 and
incorporated herein by reference.
60.On May 4, 2012, Idaho Power sent a Re-Study Small Generator
Feasibility Study Agreement for Swager Farms #307 to Exergy Development, which
was returned executed on May 9, 2012. A true and correct copy of the fully executed
Small Generator Feasibility Study Agreement for Swager Farms GI #307 is attached
hereto as Attachment 47 and incorporated herein by reference.
61.Attached hereto as Attachment 48 and incorporated herein by this
reference is a true and correct copy of the June 1, 2012, Re-Study Interconnection
Feasibility Study Report for Swager Farms interconnection. This report was for
Exergy's requested configuration of GI #307 located in Twin Falls County, for .8 MW at
a 12.5 kV connection, with estimated interconnection cost of $225,000.
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -21
62.On June 4, 2012, Idaho Power sent a letter attaching a copy of the Re-
Study Feasibility Report. This letter states that the feasibility analysis indicates that the
modification/addition of some facilities will be required to integrate the network resource
capacity addition of Swager Farms GI #307 into the Idaho Power system. Idaho Power
forwarded a form Facility Study Agreement for Swager Farms GI #307 based on the fact
a System Impact Study was not required. The letter advises that payment must be
received by July 9, 2012, or the application will be deemed withdrawn. A true and
correct copy of the June 4, 2012, letter is attached hereto as Attachment 49 and
incorporated herein by reference.
63.On July 9, 2012, Exergy returned an executed Facilities Study Agreement
for Swager Farms GI #307. A true and correct copy of the fully executed Facilities
Study Agreement for Swager Farms GI #307 is attached hereto as Attachment 50 and
incorporated herein by reference.
64.On July 24, 2012, Idaho Power sent a letter to Exergy acknowledging
receipt of the executed Facilities Study Agreement for Swager Farms GI #307, and
stating that the Facility Study was expected to be completed by September 15, 2012.
65.On September 10, 2012, Idaho Power issued the Facility Study Report for
Swager Farms GI #307 at the projects requested configuration at a total output of 800
W. A true and correct copy of the September 10, 2012, Facility Study Report, with
cover letter, is attached hereto as Attachment 51 and incorporated herein by reference.
The letter notifies Exergy that the Facility Study Report has different requirements than
past reports because the total output for the project is less than I megavoltampere
("MVA"). This Facility Study contained estimated construction milestones with Idaho
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -22
Power completing commission of the required upgraded facilities by July 10, 2013,
assuming construction funds would be received by December 10, 2012. The letter
further advised:
In order to proceed with this project, please provide your
comments to the Facility Study Report to me by October 12,
2012 [30 days from issuance of Study Report] and indicate
whether you wish to proceed with final design and
construction. The final report will be used to prepare a
Generator Interconnection Agreement in preparation for
Construction. ... Before we can begin Construction or order
materials, you are responsible for contacting Idaho Power's
credit department to discuss credit requirements for
construction funding.
66. With Swager Farms' contractual obligation to bring its facility online and
operational before the end of 2012, on September 14, 2012, Idaho Power sent a copy of
the Final Facility Study Report dated September 10, 2012, and forwarded a Final GIA to
Swager Farms for GI #307. A true and correct copy of the September 14, 2012, GIA,
with cover letter, is attached hereto as Attachment 52 and incorporated herein by
reference. The September 14, 2012, letter notifies Exergy:
Pursuant to our standard GIA process, you would normally
be receiving a Draft GIA at this point in time with 30 days to
review and comment, after which time you would be offered
a Final GIA which you would then have 30 days to execute
and fund. The construction sequencing for the project,
based upon Idaho Power's current resources and scheduling
would have Idaho Power construction completion sometime
during approximately May - June 2013, assuming you
execute and fund the GIA by November. However, because
Idaho Power is aware of your need to bring this project
online and operational before the end of the year, and based
upon the unique facts and circumstances of this project,
Idaho Power was able to rearrange some project scheduling
and sequencing in an attempt to offer to you an opportunity
to have the interconnection work completed by the end of
this year. In order for your project to come online by
December 31, 2012, we are providing you with a Final
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -23
Facility Study Report and a Final GIA. Idaho Power must
have the executed GIA and funding no later than October 1,
2012, in order to complete construction by this date.
Of course, if you wish to take time to review Draft versions of
both the Facility Study and the GIA prior to being offered a
Final GIA, please let me know and I will provide you with
those documents. This will however push out the date by
which we will have construction complete. I have provided
you with a Final GIA with this letter, which if acceptable upon
your review, is ready for execution and funding. This is
being offered to you as a way to exøedite the process so that
Idaho Power may have the executed GIA and funding by
October 1, 2012, in order for your proiect to come online by
December 31, 2012.
Failure to submit all of the requested items above by
October 1, 2012 will cause your Generator Interconnection
request to forgo the expedited process and construction
completion will not be possible by December 31, 2012, and
will be schedule[d] for approximately May/June 2013. We
will then provide you with a draft version of the Facility Study
and work through the Generator Interconnection Process as
per the normal schedule.
(Emphasis added.)
67.On and around September 18, 2012, Exergy Development responded to
Idaho Power's September 14, 2012, offer to expedite the process for Swager Farms GI
#307 indicating that its understanding was that Idaho Power had somehow agreed to
extend the Operation Date in Swager Farms' FESA. A true and correct copy of the
September 18, 2012, email correspondence is attached hereto as Attachment 53 and
incorporated herein by reference.
68.On September 20, 2012, Idaho Power responded to Exergy Development
regarding the Operation Date and the offer to expedite the construction of the required
interconnection facilities. A true and correct copy of the September 20, 2012, email
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -24
correspondence is attached hereto as Attachment 53 and incorporated herein by
reference. The September 20, 2012, email stated:
There has been no discussion, and absolutely no agreement
from Idaho Power to extend the Scheduled Operation Date
from the PPA for this project, as you have referred to in
conversation with Idaho Power's Josh Harris, and as you
refer to below. The Scheduled Operation Date for the
project remains October 1, 2012. This date will obviously
not be met, and consequently under the terms of the PPA a
90 day cure period will commence.
Idaho Power, through Josh Harris' communication and
forwarding of a GIA to you last week, extended an option for
the project to proceed with the required interconnection work
and a commitment from Idaho Power that it would have its
required work completed by year end, 2012, IF the project
executes the final GIA AND pays the required funding NO
LATER THAN OCTOBER 1, 2012. Mr. Harris' letter of
September 14, 2012, states clearly that in order to take
advantage of this expedited process and construction, you
must authorize Idaho Power to move forward by executing
the GIA and paying the required funding no later than
October 1, 2012. If this date is missed, then it will not be
possible to complete the required interconnection work
before the end of the year 2012.
(Emphasis in original.)
69. On September 27, 2012, Exergy Development responded with a request
for, "a digester meeting ... to sort this out." Idaho Power agreed to meet and reiterated
its position that it would not agree to change the dates in the PPA, as well as reiterating
its offer of an expedited schedule for the construction of the required interconnection
facilities if authorization, payment, and the executed GIA was received by Idaho Power
no later than October 1, 2012. Exergy Development responded, again, with a claim that
Idaho Power had somehow agreed to change the dates for the Swager Farms project in
connection with discussions related to separate matters involving Exergy
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -25
Development's proposed wind QF projects. Idaho Power responded emphatically that
issues related to Exergy Development's biodigester QF projects were specifically and
expressly not discussed, nor agreed to in conjunction with the discussions between
Idaho Power and Exergy Development concerning Exergy's wind projects. Idaho Power
again reiterated its offer to Exergy Development of an expedited schedule that would
allow Idaho Power to complete the required interconnection facilities prior to the end of
year if authorization, payment, and the executed GIA was received by Idaho Power no
later than October 1, 2012. The parties agreed to meet the following day. Attached
hereto as Attachment 54 and incorporated herein by reference is a true and correct
copy of an e-mail string of communications between Idaho Power and Exergy on
September 27, 2012.
70.Subsequent to the parties' meeting on September 28, 2012, Exergy
informed Idaho Power, "we shall not be taking the expedited interconnection process for
Swager. Let's proceed under normal circumstances. As to the PPAs, I think it best that
we file our force majeure positions on those based on the generic PURPA docket going
on." See, September 28, 2012, email correspondence attached hereto as Attachment
55 and incorporated herein by this reference.
71.Subsequent to Exergy Development's notification referenced above that it
was electing not to pursue the expedited construction option offered by Idaho Power,
Exergy Development delivered to Idaho Power a Notice of Force Majeure for the
Swager Farms Project and the Double B Dairy Project. A true and correct copy of the
September 28, 2012, Notice of Force Majeure from Exergy is attached hereto as
Attachment 56 and incorporated herein by reference. Exergy Development bases its
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -26
claim of force majeure on its contentions that, "There are currently ongoing proceedings
upon the IPUC docket, the issues in which include pricing, size, duration and
curtailment." Exergy Development claims that because of the pending proceedings
regarding PURPA related issues before the Commission that they are unable to obtain
financing in order to meet its obligations under the FESA.
72.Swager Farms did not meet its Scheduled Operation Date, as it is
obligated to in the FESA, of October 1, 2012. Consequently, on October 1, 2012, Idaho
Power sent notification to New Energy Two (in care of Exergy Development) of its
failure to meet the October 1, 2012, Scheduled Operation Date for Swager Farms GI
#307 that was established in the FESA dated May 24, 2010. A true and correct copy of
the October 1, 2012, letter from Idaho Power is attached hereto as Attachment 57 and
incorporated herein by reference. This letter also notifies the project that:
Idaho Power received your September 28, 2012, letter
claiming a force majeure event has occurred. Idaho Power
does not agree with your claim - that pending matters at the
Idaho PUC, or your lack of ability to finance a
project/projects are valid events of force majeure pursuant to
the FESA. As of October 1, 2012, Idaho Power has not
received a request for an Operation Date or any information
that would allow Idaho Power to grant an Operation Date for
the Swager Farms project from New Energy Two, LLC.
Therefore, Idaho Power will begin calculating Delay
Liquidated Damages as specified in the FESA.
(Attachment 57 at p. 1.)
73.Because Exergy Development elected not to pursue the expedited option
to complete its interconnection by the end of 2012, on October 2, 2012, Idaho Power
issued a Draft Facility Study Report to Exergy for Swager Farms GI #307, for its review
and comment pursuant to the standard generator interconnection procedures. A true
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -27
and correct copy of the October 2, 2012, Draft Facility Study Report, with cover letter, is
attached hereto as Attachment 58 and incorporated herein by reference. The October
2, 2012, letter acknowledges Exergy's election not to proceed with an expedited GIA.
The issuance of the Draft Facility Study Report begins a comment period for Exergy
extending to November 1, 2012.
74.On November 1, 2012, rather than submit any comments or questions or
proceed forward with the interconnection process, Exergy instead sent a communication
reiterating its claim of force majeure. A true and correct copy of the November 1, 2012,
email correspondence is attached hereto as Attachment 59 and incorporated herein by
reference. The November 1, 2012, email stated:
With regards to the draft FSR for GI #307 and the draft GIA
for GI #390, Exergy provided IPCo with a notice of Force
Majeure on September 28 th As mentioned in the notice a
consequence of the pending IPUC proceedings is that
renewable energy project lenders are unwilling to lend in
Idaho. Therefore with regards to the current status of
Gl#307 and Gl#390 we will remain ready to proceed with
both pending documents upon resolution of the matter at the
IPUC, but until that time I do not see the value in submitting
comments to the FSR or GIA.
75.On November 9, 2012, Idaho Power responded with the filing and service
of this Complaint and Petition.
JURISDICTION
A. The Commission Has Jurisdiction Over Interpretation and Enforcement of
the FESA and the GIA.
76.The Commission has authority to issue declaratory orders pursuant to the
Idaho Uniform Declaratory Judgments Act. Utah Power & Light Co. v. Idaho Pub. Utils.
Comm'n, 112 Idaho 10, 12, 730 P.2d 930, 932 (1987). The Idaho Uniform Declaratory
Judgments Act provides for the issuance of a declaratory judgment in a contract dispute
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -28
"before or after there has been a breach." Harris v. Cassia County, 106 Idaho 513, 516-
517, 681 P.2d 988, 991 (1984).
77.The Commission has jurisdiction over the interpretation of contracts where
the parties have agreed to submit a dispute involving contract interpretation to the
Commission. Afton Energy. Inc. v. Idaho Power Co., 111 Idaho 925, 929, 729 P.2d
400, 404 (1986) 929, 729 P.2d at 404 (citing Bunker Hill Co. v. Wash. Water Power Co.,
98 Idaho 249, 252, 561 P.2d 391, 394 (1977)).
1. The Commission Has Jurisdiction Over Interpretation and
Enforcement of the FESA.
78.Paragraph 7.7 of the FESA between Idaho Power and New Energy Two
provides for the continuing jurisdiction of the Commission over the Agreement:
Continuing Jurisdiction of the Commission. This Agreement
is a special contract and, as such, the rates, terms and
conditions contained in this Agreement will be construed in
accordance with Idaho Power Company v. Idaho Public
Utilities Commission and Afton Energy, Inc., 107 Idaho 781,
693 P.2d 427 (1984), Idaho Power Company v. Idaho Public
Utilities Commission, 107 Idaho 1122, 695 P.2d 1 261
(1985), Afton Energy. Inc. v. Idaho Power Company, 111
Idaho 925, 729 P.2d 400 (1986), Section 210 of the Public
Utility Regulatory Policies Act of 1978 and 18 CFR
§292.303-308.
(Attachment 1 at p.17.)
79.Idaho Power and New Energy Two have also agreed to the Commission's
jurisdiction regarding any and all disputes under the FESA. Paragraph 19.1 of the
FESA further provides that all disputes relating to the Agreement will be submitted to
the Commission:
Disputes - All disputes related to or arising under this
Agreement, including, but not limited to, the interpretation of
the terms and conditions of this Agreement, will be submitted
to the Commission for resolution.
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -29
(Attachment I at p. 24.)
80.New Energy Two has reaffirmed its position that the Commission has
jurisdiction with regard to disputes under the FESA. Paragraph 3 of the Notice of Force
Majeure dated September 28, 2012, states as follows:
Further, pursuant to Section 19.1 (Disputes) of Article XIX of
the FESA, if Idaho Power disputes [the claim of Force
Majeure], Seller reserves the right to submit the same to the
Idaho Public Utilities Commission
(Attachment 56 p. 2.) Idaho Power agrees that the Commission has jurisdiction to
interpret and enforce the FESA pursuant to both the FESA itself and the Idaho Uniform
Declaratory Judgments Act.
2. The Commission Has Jurisdiction Over Interpretation and
Enforcement of the GIA.
81.FERC has stated that the relevant state authority exercises exclusive
jurisdiction over interconnections in which the electric utility must purchase the entire
output of the qualifying facility:
When an electric utility is obligated to interconnect under
Section 292.303 of the Commission's Regulations, that is,
when it must purchase the QF's total output, the relevant
state authority exercises authority over the interconnection
and the allocation of interconnection costs.
Standardization of Generator Interconnection Agreements and Procedures, Order
No. 2003, FERC Stats. & Regs. 131,146 at P 813 (2003), order on reh'g, Order
No. 2003-A, FERC Stats. & Regs. ¶31,160, order on reh'ci, Order No. 2003-13, FERC
Stats. & Regs, ¶ 31,171 (2004), order on reh'g, Order No. 2003-C, FERC Stats. & Regs.
K 31,190 (2005), affd sub nom. Nat'l Ass'n of Regulatory Util. Comm'rs v. FERC, 475
F.3d 1277 (D.C. Cir. 2007)). Recently, FERC has reaffirmed the finding that it will have
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -30
jurisdiction over an interconnection with a qualifying facility only if the host utility is given
notice that third-party sales of the facility's output are occurring or are planned:
Therefore, consistent with our conclusions in Niagara
Mohawk, where a host utility is not given notice that third-
party sales of output are occurring or are planned (e.g.,
through a QF's request for wheeling service or a contract
providing the QF an express right to sell output to third
parties), we will assume that all sales of a QF's output are
being made to the host utility and therefore that Commission
jurisdiction will not attach.
Florida Power & Light Co., 133 FERC 161,121 at P22 (2010) (citing Niagara Mohawk
Power Corp., 121 FERC 161,183 (2007), order denying reh'g, 123 FERC 161,061
(2008)). Here, the FESA would obligate Idaho Power to purchase the entire output of
the project. Therefore, this Commission—and not FERC—has jurisdiction over the GIA.
B. The Dispute Is a Justiciable Controversy.
82. This is an action for declaratory order brought for the purpose of
determining a question of actual controversy between the parties. The dispute is as
follows: Idaho Power claims that New Energy Two has failed to meet its Scheduled
Operation Date of October 1, 2012. Idaho Power further claims that if New Energy Two
does not achieve its Operation Date by December 30, 2012, then it will be in material
breach of its FESA. New Energy Two disputes Idaho Power's claim that the failure of
the Swager Farms Project to achieve the Operation Date will result in material breach of
its respective FESA. Specifically, New Energy Two claims Force Majeure events have
occurred that excuse its respective failure to meet the Scheduled Operation Date. See
Attachment 56. Article XIV of the FESA excuses both parties from whatever
performance is affected by "any cause beyond the control of the Seller or of Idaho
Power which, despite the exercise of due diligence, such Party is unable to prevent or
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -31
overcome." Idaho Power disagrees with New Energy Two that any Force Majeure
event has occurred. See Attachment 57.
83.As a general rule, a declaratory judgment can only be rendered in a case
where an actual or justiciable controversy exists. Harris, at 516, citing (internal cites
omitted). A "justiciable controversy" ripe for a declaratory judgment must be one that is
appropriate for judicial determination, must be definite and concrete, touching the legal
relations of parties having adverse legal interests, and must be real and substantial
admitting of specific relief through a decree of a conclusive character, as distinguished
from an opinion advising what the law would be upon a hypothetical state of facts.
Harris, at 516, citing I.C. § 10-1201; Rules Civ.Proc., Rule 57.
84.Idaho Power and New Energy Two agree that the Commission has
jurisdiction over the dispute at hand. The dispute is appropriate for the Commission's
determination because it requires interpretation of several provisions of the FESA, as
well as Schedule 72 and the generator interconnection process for QF generators. The
dispute is definite and concrete because Idaho Power claims current or impending
violations of specific provisions of the FESA by New Energy Two and because Idaho
Power disagrees with any application of the Force Majeure provision of the FESA. The
parties to the FESA have adverse legal interests. The dispute is real and substantial,
as distinguished from a request for an advisory opinion, because it (1) involves actions
or inactions that have actually occurred, (2) calls for interpretation and enforcement of a
valid and enforceable agreement, and (3) the Commission's resolution of the dispute
would likely involve specific relief expressly provided for in the FESA.
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -32
DECLARATORY ORDER TO TERMINATE CONTRACT
85. Idaho Power realleges and hereby incorporates by reference all of the
foregoing allegations as if fully stated herein.
A. Idaho Power May Terminate the FESA Upon Failure of the Project to
Achieve Its Operation Date.
86. New Energy Two has failed to meet the Scheduled Operation Date of
October 1, 2012, as provided in Section B-3 in Appendix B of the FESA. As provided in
Section 5.4 of the FESA, the entity will be in material breach of their respective FESA if
they fail to achieve the Operation Date by December 30, 2012. The Idaho Uniform
Declaratory Judgments Act provides for the issuance of a declaratory judgment in a
contract dispute "before or after there has been a breach." Harris at 516-517, 991
(1984). Section 5.4 of the FESA provides that upon material breach by New Energy
Two, Idaho Power may terminate the FESA at any time. Section 5.3 provides for delay
damages as result of a material breach; therefore, in the event of a breach, Idaho
Power is entitled to delay damages in the amount provided in Section 5.3 of the FESA.
Accordingly, Idaho Power requests an Order from the Commission declaring that Idaho
Power may terminate the FESA and recover delay damages upon the failure of New
Energy Two to achieve the Operation Date by December 30, 2012.
B. No Force Maieure Event Has Occurred
87. New Energy Two claims that events have occurred that constitute Force
Majeure pursuant to Section 14 of the FESA. Paragraph 14.1 states, in relevant part:
As used in this Agreement, "Force Majeure" or "an event of
Force Majeure" means any cause beyond the control of the
Seller or of Idaho Power which, despite the exercise of due
diligence, such Party is unable to prevent or overcome.
Force Majeure includes, but is not limited to, acts of God,
fire, flood, storms, wars, hostilities, civil strife, strikes and
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -33
other labor disturbances, earthquakes, fires, lightning,
epidemics, sabotage, or changes in law or regulation
occurring after the Operation Date, which, by the existence
of reasonable foresight such party could not reasonably
have been expected to avoid and by the exercise of due
diligence, it shall be unable to overcome.
(Attachment I at p. 22.)
88.In its Notice of Force Majeure, Exergy Development contends, among
other things, that other pending proceedings at the Commission excuse its performance
under the FESA. Exergy Development, on behalf of New Energy Two, asserts that
because of pending PURPA proceedings at the Commission renewable energy project
lenders are unwilling to lend in Idaho pending the outcome of those proceedings.
Exergy Development claims that its lack of ability to finance its project is an event of
force majeure excusing its performance under the FESA. Exergy Development has not
identified a valid event of force majeure. The claimed events do not excuse New
Energy Two from meeting the operational requirements pursuant to the Commission
approved FESA.
89.New Energy Two's attempt to excuse its non-performance fails because it
does not meet the FESA's definition of a Force Majeure event, and the project's own
actions and/or inactions, many of which predate the existence of the referred to Idaho
PUG pending actions, caused considerable delay that it now claims constitutes Force
Majeure. New Energy Two has not, to this day, paid the required construction deposit,
nor authorized Idaho Power to move forward with the required work necessary for the
interconnection and transmission upgrades required to connect the project to Idaho
Power's system. The project has established a pattern of continually requesting
changes, restudies, or other issues with and to the requested interconnection
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -34
configuration to avoid committing to any. After over three years of several proposed
interconnection configurations, numerous interconnection studies, and failure to pay and
authorize its interconnection to proceed, New Energy Two now claims a force majeure
when it is out of time to become operational pursuant to the terms of its Commission
approved FESA. Its claim is without merit, and should be rejected.
90.New Energy Two was offered a Final GIA with an expedited construction
schedule that would have their required interconnection facilities completed before the
end of 2012, and before the expiration of its 90 day cure period under the terms of the
FESA. Exergy Development and New Energy Two rejected this option, and claims now
that its inability to obtain financing and construct its project on time and pursuant to the
commitments it made in the FESA is excused by an event of force majeure. New
Energy Two's FESA was executed with an effective date of May 24, 2010. That FESA
was approved by the Idaho PUG on July 1, 2010. The project initiated its
interconnection process more than a year before that in October of 2009. It committed
itself in the FESA to a Scheduled Operation Date of October 1, 2012, with more than
two years of lead time from the time the FESA was effective to become operational. Its
own inability to finance and construct in that time frame does not qualify as an event of
force majeure under the terms of the FESA such that its performance would be
excused.
91.New Energy Two has failed to bring the project online by the Scheduled
Operation Date of October 1, 2012. For these reasons, Idaho Power requests an Order
from the Commission declaring that no Force Majeure event has occurred to excuse
default.
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -35
C. Termination of the FESA is in the Public Interest.
92. Idaho Power's ability to terminate the FESA upon default and breach of
New Energy Two for failure to meet the Operations Date pursuant to Section 5 of the
FESA is in the public interest. The FESA currently provides for rates that have
subsequently been found to not be in the public interest. In The Matter of the
Commission's Review of PURPA QF Contract Provisio ns , Case No. GNR-E-11-03,
Order No. 32498 at 2 (March 22, 2012), this Commission stated:
We also find, however, as stated on the record at the
conclusion of the March 21, 2012, hearing, that the
methodologies previously approved by this Commission, as
utilized and applied by Idaho Power, do not currently
produce rates that reflect Idaho Power's avoided costs and
are not just and reasonable, nor in the public interest.
Effective March 21, 2012, and continuing until altered or
amended by Order of the Commission at the conclusion of
this case, contracts for all proiects over 100 kW entered into
by Idaho Power and presented to this Commission for
approval will be individually evaluated with regard to all
terms contained therein.
(Emphasis added.) The rates at issue in this Complaint Petition are provided in Article
VII of the FESA. The FESA's rates have subsequently been determined, as described
above, to not be in the public interest. If the Commission issues an order declaring that
Idaho Power is authorized to terminate the FESA upon the failure of New Energy Two to
meet its Operation Date of December 30, 2012, rates that have been deemed not to be
in the public interest will likewise be terminated. If Idaho Power and New Energy Two
were to execute a new FESA, the parties must obviously comply with Order 32498,
thereby establishing rates that are in the public interest pursuant to the methodology
approved in Order 32498.
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -36
REQUESTED RELIEF - CONCLUSION
93. Idaho Power respectfully requests that the Commission grant the following
relief:
1)Entry of a declaratory order that the Commission has jurisdiction over the
interpretation and enforcement of the FESA and the GIA;
2)Entry of a declaratory order that Exergy Development's claim of force
majeure does not exist so as to excuse New Energy Two's failure to meet the amended
Scheduled Operation Date for the Swager Farms project;
3)Entry of a declaratory order that New Energy Two has failed to place the
Swager Farms Project in service by the Scheduled Operation Date of October 1, 2012,
and that Idaho Power may terminate the FESA as of December 30, 2012, if the Swager
Farms Project fails to achieve its Operation Date by that date;
4)Entry of a declaratory order stating that, pursuant to the FESA, Idaho
Power is entitled to an award of liquidated damages; and
5)Any further relief to which Idaho Power is entitled.
Respectfully submitted at Boise, Idaho, this 9 th day of November 2012.
DONOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -37
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that, on this 9 th day of November 2012 I served a true and
correct copy of IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR
DECLARATORY ORDER upon the following named parties by the method indicated
below, and addressed to the following:
New Energy Two, LLC
do Exergy Development Group of
Idaho, LLC
Leslie White
802 West Bannock, Suite 1200
Boise, Idaho 83702
X Hand Delivered
U.S. Mail
- Overnight Mail
FAX
Email
Leslie White - Hand Delivered
*Pleading emailed without attachments - U.S. Mail
due to file size. For a copy of the - Overnight Mail
attachments, please see the Idaho Public FAX
Utilities Commission website. XEmail lwhiteexercwdevelopment.com
Laura Knothe - Hand Delivered
*Pleading emailed without attachments - U.S. Mail
due to file size. For a copy of the - Overnight Mail
attachments, please see the Idaho Public FAX
Utilities Commission website. XEmail lknotheexeraydevelopment. corn
James Carkulis - Hand Delivered
*pleading emailed without attachments - U.S. Mail
due to file size. For a copy of the Overnight Mail
attachments, please see the Idaho Public - FAX
Utilities Commission website. XEmail icarkulisäexeravdeveIopment.com
DWJ,& UAL
Danielle Clark, Paralegal
IDAHO POWER COMPANY'S COMPLAINT AND PETITION FOR DECLARATORY ORDER -38