20121204notice_of_complaints_order_no_32692.pdf

Office of the Secretary
Service Date
December 4,2012
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMPLAINT )
AND PETITION OF IDAHO POWER )CASE NO.IPC-E-12-25
COMPANY FOR A DECLARATORY )
ORDER REGARDING THE FIRM ENERGY )
SALES AGREEMENT AND GENERATOR )
INTERCONNECTION AGREEMENT WITH )
NEW ENERGY TWO,LLC.)
________________________________________________________________________________________
)
IN THE MATTER OF THE COMPLAINT )AND PETITION OF IDAHO POWER )CASE NO.IPC-E-12-26
COMPANY FOR A DECLARATORY )
ORDER REGARDING THE FIRM ENERGY )NOTICE OF COMPLAINTS AND
SALES AGREEMENT AND GENERATOR )PETITIONS FOR
INTERCONNECTION AGREEMENT WITH )DECLARATORY ORDER
NEW ENERGY THREE,LLC.)
______________________________
)ORDER NO.32692
On November 9,2012,Idaho Power Company filed a Complaint and Petition for
Declaratory Order regarding a Power Purchase Agreement (PPA)between itself and New Energy
Two,LLC.In May 2010,Idaho Power and New Energy Two entered into a PPA under which
New Energy will operate an anaerobic digester (i.e.,the qualifying facility (QF))at the Swager
Farms dairy and provide 1.2 MW of power to the utility.The Agreement provided that the
scheduled operation date for the digester is October 1,2012.Complaint at 2;PPA at App.B.In
its complaint (12-25),Idaho Power alleges that the QF did not achieve its scheduled operation
date of October 1,2012.
On November 21,2012,Idaho Power filed a Complaint and Petition for Declaratory
Order regarding a PPA between itself and New Energy Three,LLC.In May 2010,Idaho Power
and New Energy Three entered into a PPA under which New Energy proposed to operate an
anaerobic digester at the Double B Dairy and provide 1.2 MW of power to the utility.The
Double B Agreement provides that the scheduled operation date for the digester is December 1,
2012.In its complaint (12-26),Idaho Power alleges that Double B will not achieve its scheduled
operation date of “December 1,2012,and will likely not achieve [commercial operation]by
March 1,2013.”Complaint at2.
NOTICE OF COMPLAINTS AND
PETITIONS FOR DECLARATORY ORDER
ORDER NO.32692
Idaho Power asserts in both complaints that the QFs have “failed to take the necessary
steps required to bring the facilit[ies]online and operational by the dates required in the [PPAs]
including,...failing to take steps required to secure the interconnection of [their]proposed
facilit[ies]to Idaho Power’s system.”Complaints at 3.
BACKGROUND
A.Swager Farms
In October 2009,New Energy Two submitted a small generator interconnection (01)
request for a proposed 1.2 MW methane gas generating project at Swager Farms.Idaho Power
assigned the project GI No.307.Idaho Power and New Energy subsequently held a scoping
meeting and executed a Facility Study Agreement on October 27,2009.Complaint at Tab 16.
In January 2010,Idaho Power submitted its 01 Facility Study Report to New Energy.
The report estimated that Idaho Power could construct the necessary interconnection facilities
with the project in Twin Falls County at a cost of about $234,800.Complaint at ¶23.On May
24,2010,Idaho Power and New Energy Two entered into a PPA for a 15-year term at PURPA
avoided cost rates which were in effect prior to the issuance of Order No.31025 on March 16,
2010.The PPA provides that the scheduled operation date for the Swager Farms facility is
October 1,2012.Complaint at ¶31;Atch.I at Appx.B.On May 24,2012,Idaho Power filed
an application requesting that the Commission approve the PPA.The Commission approved the
Agreement in Order No.32026 issued July 1,2010.
B.Double B
Also in October 2009,New Energy Three filed a small generator interconnection (Of)
request with Idaho Power for a 1.2 MW biogas generating project at Double B Dairy.Idaho
Power assigned the Double B project GI No.308.On October 14,2009,Luis Bettencourt of
Double B,LLC authorized New Energy to act on its behalf in negotiating with Idaho Power
concerning the proposed QF project.Complaint at ¶10.As was the case with the Swager Farms
project,Idaho Power and New Energy subsequently held a scoping meeting and executed a
Facility Study Agreement for 01 Project No.308 on October 27,2009.Id,at ¶12.
In December 2009,Idaho Power issued a draft 01 Facility Study Report estimating
interconnection for the Double B project at $225,000.Id.at ¶13.On April 2,2010,New
Energy returned an executed Facility Study Agreement for Double B 01 No.308.Id at ¶20.As
was the case with Swager Farms,New Energy entered into a 15-year PPA with Idaho Power on
NOTICE OF COMPLAINTS AND
PETITIONS FOR DECLARATORY ORDER
ORDER NO.32692
May 24,2010.Id.at ¶23.The scheduled operation date for the Double B project is December
1.2012.Id.at ¶23;Atch.1 at App.B.The next day,Idaho Power filed an application seeking
approval of the PPA between Idaho Power and New Energy Three.The Commission approved
the Agreement in Order No.32027 dated July 1,2010.
C.Interconnection
In addition to negotiating PPAs.utilities and QFs must also negotiate interconnection
agreements.Under PURPA,QFs are obligated to pay the cost of constructing the necessary
interconnection facilities between the QF project and the utility’s system.18 C.F.R.§292.306.
In Idaho Power’s case,it typically requires the QF to enter into a Facility Study Agreement,then
it issues a Facility Study Report containing the estimated cost of interconnection,and then the
parties enter into a Generation Interconnection Agreement (GIA)before the utility commences
construction of the interconnection facilities.After the Swager Farms and Double B PPAs were
approved,Idaho Power and the QFs had protracted discussions and communications about
interconnection issues.On May 24,2011,New Energy agent Laura Knothe advised Idaho
Power that Exergy Development was associating itself with New Energy for the Swager Farms
and Double B projects.Swager Farms at ¶45;Double B at ¶37.
On May 9,2012,Idaho Power asserts that it sent a draft GIA to Exergy for the
Double B project and advised it that failure to submit all of the requested items and the executed
GIA “will cause the Generator Interconnection request to have been deemed withdrawn.”
Double B Complaint at ¶49.On June 19,2012,Idaho Power sent Double B a final GIA to be
executed and returned to Idaho Power no later than July 20.or “your Generation Interconnection
Application will be deemed withdrawn.”Id.at ¶53.Idaho Power insists that the GIA was not
returned and that Idaho Power subsequently issued a deficiency notice that the GIA has been
deemed withdrawn and that the project has been removed from Idaho Power’s interconnection
queue.On August 28,2012,Idaho Power refunded Exergy’s deposit for the Double B GI project
No.308.Id at 11 54-55.
On September 14,2012,Idaho Power states that it sent the final GIA to Swager
Farms for GI No.307.Swager Farms at ¶66.The cover letter for the Swager Farms GIA noted
that Idaho Power “must have the executed GIA and funding no later than October 1,2012,in
order to complete construction by [December 31,2012].”Id.(emphasis original).Idaho Power
alleges that Swager Farms did not execute the GIA.
NOTICE OF COMPLAINTS AND
PETITIONS FOR DECLARATORY ORDER
ORDER NO.32692 3
ii.Force Majeure
On September 28,2012,Swager Farms and Double B provided a joint “Notice of
Force Majeure”to Idaho Power.Swager Complaint at ¶71;Double B Complaint at ¶60.In
accordance with Section 14 of their respective PPAs,the QFs notified the utility that they could
not perform under their respective Agreements because of “the occurrence of a Force Majeure
event.”Swager Complaint at Tab 56;Double B Complaint at Tab 36.More specifically,the
QFs allege that current Commission proceedings regarding the ownership of renewable energy
credits (RECs)and the issue of “curtailment”caused lenders to be “unwilling to lend in Idaho
pending the outcome of these proceedings.”Id.Thus,with “no financing available,...it [is]
impossible for [the QFs]to perform [their]obligation”under the PPAs.Id.at ¶4.
STAFF RECOMMENDATION
At the Commission’s decision meeting held on December 3,2012,Staff
recommended the Commission consolidate these two cases pursuant to Rule 247,IDAPA
3 1.01.01.247.Without addressing the merits of the complaints,Staff suggested that the legal
arguments and the parties in these two cases are the same.Staff also recommended the
Commission Secretary serve a copy of the two complaints pursuant to Rule 54.05,IDAPA
31.01.01,054.05.
FINDINGS
Based upon our review of the two complaints and Staff’s recommendation,we find it
is reasonable to consolidate these cases into a single proceeding.Rule 247.Consequently,we
direct the Commission Secretary to serve a copy of the complaints upon the parties pursuant to
Idaho Code §61-621 and Rule 54.05.Given the voluminous nature of the attachments,and the
fact that Idaho Power has already served both the complaints and attachments upon both New
Energy companies and Exergy Development Group,we find it unnecessary for the Secretary to
serve the attachments to each complaint.We further find that it is appropriate to direct New
Energy Two/Three and Exergy Development Group to file their consolidated answers or motions
to the complaints no later than the close of business on December 27,2012.
ORDER
IT IS HEREBY ORDERED that Idaho Power Company’s complaints/petitions
against New Energy Two and Exergy Development Group in Case No.IPC-E-12-25,and New
Energy Three and Exergy Development Group in Case No.IPC-E-12-26 be consolidated into a
NOTICE OF COMPLAINTS AND
PETITIONS FOR DECLARATORY ORDER
ORDER NO.32692 4
single proceeding,The Commission Secretary shall serve a copy of the two complaints and
petitions (without attachments)upon the parties pursuant to Idaho Code §61-621 and Rule
54.05.The Secretary shall also serve this Order and the complaints via electronic mail pursuant
to Rule 16.01.
IT IS FURTHER ORDERED that New Energy Two/Three and Exergy Development
file their answer or motion in defense to said consolidated complaints and petitions no later than
December 27,2012.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of December 2012.
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MACK A REDF?RDcoMMISSIONER
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MARSHA H.SMITH,COMMISSIONER
ATTEST:
J D.Jewell !
Commission Scretary
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NOTICE OF COMPLAINTS AND
PETITIONS FOR DECLARATORY ORDER
ORDER NO.32692 5
CERTIFICATE OF SERVICE
4IHEREBYCERTIFYTHATIHAVETHISL7 DAY OF DECEMBER 2012.
SERVED THE FOREGOING ORDER NO,32692 ALONG WITH THE COMPLAINTS AND
PETITIONS OF IDAHO POWER IN CASE NOS.IPC-E-12-25 AND IPC-E-12-26,BY
MAILING COPIES THEREOF UPON THE FOLLOWING BY THE METHOD INDICATED
BELOW:
Leslie White,Registered Agent L/Certified Mail
New Energy Two,LLC Email lwhiteexergydevelopment.com
New Energy Three,LLC
6152 N.Sparkford Way
Boise,ID 83713
Exergy Development Group of Idaho,LLC /Certified Mail
Molly O’Leary,Registered Agent/Attorney ?/Email peter(i)richardsonandoieary.com
Peter J.Richardson,Attorney mol Iy(ärichardsonandoi eary.com
RICHARDSON AND O’LEARY
515 N.27th Street
Boise,ID 83702
Laura Knothe /Email lknothei,exergydeveIopment.com
Exergy Development Group of Idaho,LLC
James Carkulis /Email j carkulis(exergydevelopment.corn
Exergy Development Group of Idaho,LLC
Donovan E.Walker,Lead Counsel Z”Email [e-mail]
Idaho Power Company
iN D.JEWIL,COMMISSION SECRETARY
CERTIFICATE OF SERVICE