20110324Comments.pdf

Peter J. Richardson (lSB No. 3195)
Gregory M. Adams (lSB No: 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteri$richardsonandolear.com
gregi$richardsonandoleary.com
Attorneys for Grouse Creek Wind Park, LLC
and Grouse Creek Wind Park II, LLC
oi:CEIi H.~j ¡
ZOU MAD"'1 P\"diê.'i M I:S9
BEFORE THE IDAHO
PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR A DETERMINATION
REGARDING THE FIRM ENERGY
SALES AGREEMENT FOR THE SALE
AND PURCHASE OF ELECTRIC
ENERGY BETWEEN IDAHO POWER
COMPANY AND GROUSE CREEK
WIND PAR, LLC
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR A DETERMINATION
REGARDING THE FIRM ENERGY
SALES AGREEMENT FOR THE SALE
AND PURCHASE OF ELECTRIC
ENERGY BETWEEN IDAHO POWER
COMPANY AND GROUSE CREEK
WIND PAR II, LLC
) CASE NO. IPC-E-IO-61
)
) COMMENTS OF GROUSE CREEK
) WIND PARK, LLC IN SUPPORT OF
) APPROVAL OF THE ENERGY
) SALES AGREEMENT
)
)
) CASE NO. IPC-E-IO-62
)
) COMMENTS OF GROUSE CREEK
) WIND PAR II, LLC IN SUPPORT
) OF APPROVAL OF THE ENERGY
) SALES AGREEMENT
)
)
COMES NOW, Grouse Creek Wind Park, LLC and Grouse Creek Wind Park II, LLC,
each of which is managed by Wasatch Wind Intermountain (the "Grouse Creek QF", the
"Grouse Creek II QF," or collectively the "Grouse Creek QFs"), and pursuant to the Idaho Public
Utilties Commission's ("Commission's") Notice of Modified Procedure and Order No. 32191,
hereby fies these Comments in the above-captioned matters. i For the reasons set forth below,
the Grouse Creek QFs respectfully request that the Commission approve the Firm Energy Sales
Agreements ("FESAs") with Idaho Power for both projects.
INTRODUCTION
The Grouse Creek QFs are each located on privately-owned land near Lynn, Utah, close
to the Utah-Idaho Border, and are each qualifying facilities ("QFs") entitled to contracts with
rates set at Idaho Power's full avoided costs, under the Public Utilty Regulatory Policies Act of
1978 ("PURP A"), as implemented by the Idaho Public Utilities Commission. Each wil have a
nameplate capacity of 21 megawatts ("MW") but generate 1 0 average monthly megawatts
("aMW") or less. The Grouse Creek QFs and their predecessors and parent companies began
developing these wind projects in 2007, have possessed rights to use all private lands for the
project sites since February 2008, and have over two years of wind data supporting the output
projections.
Under a Large Generator Interconnection Agreement with Raft River Rural Electric
Cooperative that has been in effect since March 2010, the Grouse Creek QFs have finalized the
Facilities Study Agreement and have even taken steps to commence constrction of
interconnection facilities for a June 2013 online date. The Grouse Creek QFs have had
The relevant facts for each of these projects are substatially similar. Counsel for the
Grouse Creek QFs has therefore filed a single set of Comments applicable to both projects to
save the Commission and other interested paries from the need to review two separate sets of
Comments.
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communications with Bonnevile Power Administration since early 2010 indicating that point to
point ("PTP") transmission to Idaho Power's Minidoka substation is available, and have been
engaged in the process of entering into a PTP service agreement. BP A has indicated that it will
forward a 20-year PTP transmission service agreement for each project by the end of March
2011. The developers of the two projects have spent $467,000 on interconnection, transmission,
and wildlife studies alone.
The Grouse Creek QFs have been engaged in negotiations with Idaho Power for
purchase of the output since early 2010. Wasatch Wind initially discussed a single project up to
65 MW in size with Idaho Power, which would have encompassed federal lands. Idaho Power's
initial response to the request for a power purchase agreement in March 2010 stated that Wasatch
Wind must have a final Interconnection Agreement, firm PTP transmission to Idaho Power's
system, and firm rights to deliver the output over Idaho Power's system to its load center, all
prior to execution of a FESA. Wasatch Wind subsequently took steps to proceed towards
finalization of those processes, as described above. Due to diffculties in federal permitting,
Wasatch Wind reduced the overall project footprint and amended its request to Idaho Power to
requests for two standard PURPA contracts for QFs under 10 aMW in June 2010. Wasatch
Wind clearly described its executed Interconnection Agreement, discussions with BP A
establishing availabilty of transmission, and requested that Idaho Power commence the
investigation of transmission availability on its own system. Through the fall of 201 0, the
Grouse Creek QFs continued to request two stadard PURPA contracts, and for Idaho Power to
study transmission availabilty on its system. After Idaho Power, along with Avista Utilties and
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Rocky Mountain Power, fied the Joint Motion to Reduce the Published Rate Eligibilty Cap on
November 5, 2010, the Grouse Creek QFs each fied complaints against Idaho Power on
November 8, 2010.
After the Commission did not immediately reduce the eligibility cap, Idaho Power and
the Grouse Creek QFs agreed on November 19, 2010, to stay the complaint proceedings and
execute stadard QF wind contracts contaning the $45/kw delay security but not containing the
precondition of firm transmission rights prior to execution. The terms and conditions were
materially complete at this point. The Grouse Creek QFs provided Idaho Power with contracts
containing the project specifics for each project on December 2,2010, and on December 9,2010,
clarified the online date to comply with the BP A transmission service request. After Idaho
Power's final processing of execution-ready FESAs, the Grouse Creek QFs executed the
agreements on December 21, 2010, and sent them to Idaho Power, which executed them on
December 28,2010, and filed the contracts for Commission approval on December 29,2010.
Because the Grouse Creek QFs had meritorious complaints on file on November 8, 2010,
and because all project specifics and material terms of the contracts to which the Grouse Creek
QFs have obligated themselves were final before December 14, 2010, the Commission should
approve both FESAs containing the published avoided cost rates.2
2 The Grouse Creek QFs note that several parties to GNR-E-1O-04 have disputed whether
the effective date of Order No. 32176 could be retroactively effective on December 14, 2010.
For puroses of these comments, the Grouse Creek QFs will use December 14, 2010, as the
effective date, without conceding that the Commission had the authority to make the reduction in
the eligibility cap retroactively effective.
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LEGAL BACKGROUND
A. The Public Utilty Regulatory Policies Act of 1978's Mandatory Purchase Provisions
This case involves the Commission's implementation of the mandatory purchase
obligation of PURP A, which requires electric utilties to purchase power produced by
cogenerators or small power producers that obtain status as a QF. 16 U.S.C. § 824a-3(a)(2).
Congress's intent "was to encourage the promotion and development of renewable energy
technologies as alternatives to fossil fuels and the constrction of new generating facilities by
electric utilities." Rosebud Enterprises, Inc. v. Idaho Pub. Uti!. Commn., 128 Idaho 609, 613,
917 P.2d 766, 780 (1996). "Traditional electric utilties were reluctant to purchase power from,
and sell power to, the nontraditional facilities." FERC v. Mississippi, 456 U.S. 742, 750, 102
S.Ct. 2126, 2132-2133 (1982). To overcome this problem, "§ 210(a) (of PURPA) directs the
(Federal Energy Regulatory Commission ("FERC")), in consultation with state regulatory
authorities, to promulgate such rules as it determnes necessar to encourage cogeneration and
small power production, including rules requiring utilties to offer to sell electricity to, and
purchase electricity from, qualifying cogeneration and small power production facilities." Id.,
456 U.S. at 750-51, 102 S.Ct. at 2133.
The price PURPA section 21O(b) requires the utilities to pay to QFs in exchange for a
QF's electrical output is termed the avoided cost rate, which is the cost to the utility of producing
the energy itself or purchasing it from an alternative source. 16 U.S.c. § 824a-3(b), (d). FERC
promulgated regulations requiring utilities to compensate QFs for the utilties' full avoided cost.
18 C.F.R. § 292.304(a), (b); Small Power Production and Cogeneration Facilties; Regulations
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Implementing Section 210 of the Public Utilty Regulatory Policy Act of 1978, 45 Fed. Reg.
12,214, 12,222-12,223 (Feb. 25, 1980). The U.S. Supreme Cour directly affirmed FERC's
"ful-avoided-cost rule," American Paper Institute, Inc. v. FERC, 461 U.S. 402, 417-18, 103
S.Ct. 1921, 1930 (1983), and that rule is stil in effect today.
FERC's regulations entitle QFs to long term contract rates set at the utilities' full avoided
costs at the time the QF commts itself to a legally enforceable obligation to deliver its project's
output. 18 C.F.R. § 292.304(a), (b), (d)(2)(ii); JD Wind 1, LLC, "Order Denying 'Request for
Rehearing, Reconsideration or Clarfication,'" 130 FERC ir 61,127, ir 23 (Februar 19, 2010).
With regard to off-system QFs, "Any electric utility to which such energy or capacity is
delivered must purchase this energy under the obligations set forth in these rules as if the
purchase were made directly from the quaifying facilty." 45 Fed. Reg. at 12,220, codifing 18
C.F.R. § 292.303(a)(2).
Furher, FERC's regulations require utilities to publish "stadard rates" available for long
term contracts available to QFs below a state-implemented maximum generating capacity. 18
C.F.R. § 292.304(c)(I)-(3). The Idaho Commssion requires utilties in Idaho to make the rates in
the published rate schedule available to QFs that generate less than 10 aM. See u.s. Geothermal,
Inc. v. Idaho Power Company, Case No. IPC-E-04-8, Order No. 29632, p. 14 (2004). On
Februar 7, 2011, however, the Commission reduced the eligibility cap to 100 kw for wind and
solar QFs and stated the effective date of this reduction would be December 14,2010. See Order
No. 32176, at pp. 11-12.
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B. PURP A Grandfathering Criteria
When the published rates change, or become otherwse unavailable to a QF before the QF
can obtain a contract, the QF is entitled to grandfathered rates if it can "demonstrate that 'but for'
the actions of (the utility, the QF) was otherwse entitled to a power purchase contract." Earth
Power Resources, Inc. v. Washington Water Power Company, Case No. WWP-E-96-6, Order
No. 27231 (1997) (finding utility delayed negotiations and therefore QF was entitled to
grandfathered rate); see also Blind Canyon Aquaranch v. Idaho Power Company, Case No. IPC-
E-94-1, Order No. 25802 (1994); Snow Mountain Pine v. Maudin, 84 Or. App. 590, 600, 734
P.2d 1366, 1371 (1987).
The most onerous test the Commission has ever used for determining grandfather
eligibilty is the pre-filed complaint test. This test requires, prior to the effective date of the rate
change, the QF must have obtained an executed contract, or have filed a meritorious complaint at
the Commission alleging it is entitled to a contract. See A. W Brown Co., Inc. v. Idaho Power
Co., 121 Idaho 812, 816-18, 828 P.2d 841, 845-47 (1992). The Idaho Supreme Cour has never
mandated ths test as the Commission's only available way to test whether a QF had effected a
legally enforceable obligation, and the Commission has not applied this onerous pre-fied
complaint test consistently. See, e.g., Blind Canyon Aquaranch, Order No. 25802; Earth Power
Resources, Inc., Order No. 27231.
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PROCEDURAL AND FACTUAL BACKGROUND
A. General Background on the Projects and Development
Wasatch Wind initially intended to place a 150 MW project on a combination of over
3,000 acres of private land and approximately 1,000 acres of land managed by the Bureau of
Land Management ("BLM") in Northern Utah, near Uta-Idaho border. Affdavit of Christine
Mikell, at ir 4.3 Wasatch Wind began wind monitoring on the private lands in December 2007,
and, on Febru 4, 2008, finalized wind project leases for the private land encompassing the
rights necessar for the wind project sites at issue in these contract approval dockets. Id. at irir 4,
6, 11. Wasatch Wind obtained a right-of-way from the BLM to conduct wind monitoring in
August 2008, and began wind monitoring activities on BLM lands. Id. at ir 7. Ultimately, the
costs and complexities of the federal permitting process resulted in removal of the BLM lands
from the project area on March 15, 2010, and Wasatch Wind eventually scaled the initial 150
MW project down to the two smaller 21 MW QFs separated by at least one mile. Id. at ir 10.
From the $275,000 in wildlife and vegetation sureys and studies conducted, Wasatch Wind has
identified no wildlife issues that would preclude development of the QFs on private lands. Id. at
ir 12. Wind data collected for over two years indicates that the wind resource is very good, and
has allowed Wasatch Wind to accurately predict the electrical output of the Grouse Creek QFs.
Id. at ir 13.
Should the Commssion approve the FESAs, Wasatch Wind expects that there will be an
3 The Affdavit of Christine Mikell and its Exhibits provide a detailed narative of the
Grouse Creek QFs development and contracting efforts in greater detail than these Comments.
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average of 96 on-site construction workers over the six months of the wind park constrction,
with as many as 168 workers at one point. Id. at ir 14. Once the Projects are built, there would
also be between 3-5 workers on site. Many of the workers and employees are expected to be
Idaho residents because the closest city of substantial size is in Idaho. Id.
B. Interconnection and Transmission Rights
Grouse Creek Wind Park, LLC submitted a Large Generation Interconnection
Application to BPA for 150 MW on May 5, 2008, for interconnection to a 138 kilovolt line
leased to BPA by Raft River Rural Electric Cooperative. Id. at ir 16. The Feasibility and System
Impact Studies both indicated that 93 MW was available for interconnection. Id. at irir 17-19.
With BPA's agreement, the Grouse Creek QF signed an Interconnection Agreement with Raft
River Rural Electric Cooperative on March 31, 2010. Id. at ir 20. In June 2010, BPA issued the
Facilty Study Agreement, and Raft River Rural Electric Cooperative agreed to amend the
Interconnection Agreement to accommodate the two smaller projects, which will stil use the
same single point of interconnection. Id. at irir 21-22. Most recently, on February 24, 2011,
Wasatch Wind met with Raft River Rural Electric Cooperative and an engineering firm to
commence the procedures necessary to design the project and interconnection substations. Id. at
ir 24.
With regard to PTP transmission to Idaho Power's system, BPA stated during the
interconnection studies in 2009 that the amount of capacity Wasatch Wind could interconnect
(93 MW) was the same as the amount they could deliver to Idaho Power because the applicable
transmission line is stranded and not connected to any other par of BPA's system. See id. at
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Exhibit D, pp. 1-2. But Wasatch Wind understads that entering into a PTP service agreement
requires submission of a substantial non-refudable deposit and requires obligating the Grouse
Creek QFs to ongoing fees for transmission for the entire 20-year term. Id. at ir 33. Thus, the
Grouse Creek QFs initiated this process afer the interconnection process to limit its irretrievable
financial expenditures prior to knowing the QFs would obtain FESAs.
On June 30, 2010, the Projects submitted the necessar applications for BPA's 2010
Network Open Season ("NOS") to achieve the initially projected online date of June 2012, for a
30 MW and a 21 MW project. Id. at ir 27. Due to confusion in the contracting process with
Idaho Power at that time, Wasatch Wind backed out of the BPA NOS, which would have
required a Performance Assurance $794,376 by August 18, 2010. Id. at ir 28. As a result,
Wasatch Wind was unable to achieve the initially projected online date of June 2012.
On August 19, 2010, Wasatch Wind made a traditional transmission service request
("TSR") on BPA's OASIS website with a delayed star date of June 1,2013. Id. at ir 29. All of
the other parameters of the projects remained the same. Id. As expected all along, this process
has proceeded well in advance of the projected online date, and on March 18,2011, BPA stated
it will send two Firm PTP agreements for the 21 MW Grouse Creek QF and the 21 MW Grouse
Creek II QF by the end of the March 2011. Id. at ir 31. At that point, the QFs will have 15 days
to obligate themselves to the two 20-year PTP transmission agreements, or again lose their
position in the queue. Id. at irir 31-33.
C. Firm Energy Sales Agreement Negotiations with Idaho Power
Wasatch Wind has been engaged in formal power sales contract discussions with Idaho
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Power since at least Februar 26, 2010, when it emailed Randy Allphin, of Idaho Power, and
described the project, progress though the interconnection process with BPA, and that it
appeared from Idaho Power's OASIS website that adequate transmission was available on Idaho
Power's system from the Minidoka substation to its Treasure Valley load center. Id. at ir 34 and
Exhibit A. Mr. Allphin stated on March 2, 2010, that prior to execution of a power sales
contract, Wasatch Wind must complete execution of an interconnection agreement and reserve
firm transmission on both the BP A and the Idaho Power transmission systems to get the energy
from the project to Idaho Power customer loads. Id.
As described above, Wasatch Wind had long since commenced the processes necessar
to interconnect and deliver the output to Idaho Power's system. But under the FERC's approved
Open Access Transmission Tariff ("OATT"), the TSR on Idaho Power's system to its own load
center would be a request by Idaho Power's merchant ar to Idaho Power's transmission ar to
designate generating facilities as network resources. See id. at Exhibit C, pp. 4-5 (describing the
process). As such, Wasatch Wind had no power to lodge this request internally within Idaho
Power, and once lodged Wasatch Wind would have no direct access to the Idaho Power's
transmission personneL. Unlike its interconnection and PTP transmission requests with BP A for
which Wasatch Wind had direct access to the BPA transmission personnel, Idaho Power's
PURPA contracts administrators would handle the TSR on Idaho Power's system.
Wasatch Wind requested that Idaho Power provide it with a PURPA contract for a project
up to 65 MW in April 2010, and on June 2, 2010, Idaho Power provided pricing it stated it had
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generated with its AUROA modeL. Id. at irir 35-36 and Exhibit B.4 On June 17, 2010, Wasatch
Wind signed a letter or understading provided by Idaho Power, which stated Idaho Power
would not execute a power sales contract prior to when the Project received confirmation that the
results of the initial Idaho Power transmission capacity application for transmission to its load
center are known and the Project accepts the results. Id. at ir 37 and Exhibit C, p. 3. The only
other requirements to obtain a power purchase agreement involved interconnection, and Wasatch
Wind had already met those interconnection requirements. Id.
Wasatch Wind was under the impression that Mr. Allphin was working with his team to
make the necessary TSR on Idaho Power's system. Id. at ir 39. On June 25, 2010, Wasatch
Wind again responded to Mr. Allphin that based on studies and conversations with BP A, there
were 93 MW available on the necessar BP A line to the Minidoka substation, and therefore
interconnection and transmission of 65 MW to Idaho Power would not be a problem. Id. at irir
40,42.
In the June 25, 2010 email, Wasatch Wind also indicated that due to federal permitting
4 The contract prices provided in Idaho Power's June 2, 2010 letter appear to have been
based entirely on the AURORA modeL. Recently, Idaho Power stated, in defense of its
implementation of the IRP Methodology for projects not entitled to published avoided cost rates,
that it first generates an avoided cost of energy with AURORA, and then "a capacity (fixed) cost
credit using a CCCT is added to the value of energy calculated in the AURORA modeL." Idaho
Power's Answer to NIPPC's Petition for Reconsideration, Case No. GNR-E-1O-04, at p. 11
(March 7, 2011). Although Mr. Allphin's letter sent June 2, 2010 provided a detailed rate char
titled "Contract Price," it made no reference to any fixed cost addition to the AURORA rates
calculated for the proposed 65 MW Grouse Creek project. Affdavit of Christine Mikell, at
Exhibit B, p. 3. This evidence of Idaho Power's under-estimation of avoided cost rates with its
implementation of the IRP Methodology calls into question any arguent Idaho Power may raise
that these two QFs were improperly "disaggregated" to obtain published rates because, as noted
above, each QF is entitled rates set at the utility's full avoided costs.
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issues, Wasatch Wind intended to reduce its overall footprint and wished to discuss power sales
contracts for two single 10 aMW projects, instead of the large 65 MW project. Id. at ir 43. On
July 14, 2010, Wasatch Wind submitted a formal request for two 10 aMW PURPA contracts to
Mr. Allphin. Id. at irir 44-45 and Exhibit D. Wasatch Wind explained the matuty of the
Projects in detal, including the Interconnection Agreement which already had progressed to the
Facilties Study stage, two years of wind data supporting output projections, final land leases,
and explained in detail that BPA had stated transmission would be available to Idaho Power's
Minidoka substation. Id. at Exhibit D. Wasatch Wind informed Mr. Allphin that on June 30,
2010, Wasatch Wind submitted into BPA's NOS and that by August 18, 2010, BPA would
require Wasatch Wind to post the security of approximately $800,000 for this NOS transmission
process. Id. at Exhibit D, p. 2. This July 14, 2010 letter also requested that Idaho Power
investigate availability of transmission on its system to its load center and provided completed
Transmission Capacity Application Questionnaires for each project. Id. at Exhibit D, pp. 2-13.
But the letter also explained, "Per your suggestion, (Wasatch Wind) went ahead and confired
on OASIS to the best of our ability that there is capacity form Minidoka Substation to Treasure
Valley for Idaho Power to obtain Network Service on behalf of our Quaifying Facilities." Id. at
Exhibit D, p. 2.
Randy Allphin stated on July 21, 2010 in an e-mail, "I have not been able to submit the
TSR. Been getting buy in from various people, looks like I will probably be filing the TSR
sometime next week." Id. at ir 46 and Exhbit E, p. 1; see also id. at Exhbit E, p. 2 (Mr.
Allphin's June 29,2010 email stating his routine process was to "not develop a draft agreement
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for a paricular project until the interconnection and transmission is pinned down"). After some
more unsuccessful communcations, Wasatch Wind became frstrated with the lack of progress,
and decided to retain attorneys to assist in the negotiations. Id. at irir 47-48.
Wasatch Wind sent Idaho Power an email on August 17, 2010, in which it clarified that it
was formally requesting two power sales contracts for PURP A projects, and explained that each
of the Projects would be physically limited such that each would generate no more than 10
average megawatts in a single month. Id. at irir 49-50 and Exhibit F. The email also included,
yet again, the two completed Transmission Capacity Application Questionnaires for the two
separate projects. Id. at Exhibit F, pp. 5-16. This August 17th email also stated that Wasatch
Wind did "not believe the study process should delay the submission of execution ready power
purchase agreements. With the substatial delay securty being required in recent Idaho Power
PPAs, the risk of our project's failng to come on line due to transmission constraints is
completely mitigated." Id. at Exhibit F, p. 1; see also id. at Exhibit A, p 1 (Mr. Allphin's March
2010 email describing the delay securty clause). From emails and a telephone conversation in
late August, Wasatch Wind understood there to be a question as to whether Idaho Power would
agree to submit a request to its transmission personnel for both Grouse Creek QFs at the same
time. Id. at ir 51.
On October 1, 2010, counsel for Wasatch Wind sent a letter to Idaho Power for each
Grouse Creek QF, expressing Wasatch Wind's intent to obligate the QFs to two power sales
agreements for the two QF projects. Id. at ir 52-57 and Exhibit G. These letters listed several
stadard terms applicable through Commission orders, including the daily and seasonality load
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shape price adjustments (Order No. 30415), as well as the wid integration charge, mechancal
availabilty guarantee, and wind forecasting and cost sharg provisions (Order No. 30488). Id. at
Exhbit G. The October 1 st letters objected to any fuher delay in submitting both TSRs on
Idaho Power's system. Id. The October 1 st letters expressed Wasatch Wind's concern also with
the legality of the high $45/k delay liquidated damages securty provision Idaho Power had begu
requing, and stated the QFs would agree "to any amount deemed reasonable by the Commission
if Idaho Power insists on a provision requiring Wasatch to post a delay default liquidated
damages security." Id. at Exhibit G, pp. 3, 11. The October 1st letters provided very detailed
project information for each of the Grouse Creek QFs, and stated that both projects would now
be sized at 21 MW of maximum capacity and again stated they would generate under 10 aMW.
Id. at Exhibit G. Idaho Power did not respond by October 27, 2010, and counsel for Wasatch
Wind sent a follow up letter to Idaho Power on that same date, reminding Idaho Power that it had
stil not even provided draft contracts. Id. at ir 58 and Exhibit H.
On November 1, 2010, Idaho Power responded with a letter from Mr. Allphin, stating
that he had not yet submitted the TSRs to Idaho Power's transmission personneL. Id. at irir 59-60
and Exhibit i. Mr. Allphin stated Idaho Power would fie TSRs for Grouse Creek Wind Park I
for nameplate rating of21 MWand Grouse Creek Wind Park II for nameplate rating of21 MW.
Id. at ir 61 and Exhibit 1.5 Id. Mr. Allphin's November 1st letter also expressed Idaho Power's
5 Although Mr. Allphin's November 1, 2010 letter seemed to imply that he had witheld
the TSRs on account of changes in the project sizes, the same changes did not compromise
Wasatch Wind's abilty to proceed through the interconnection and PTP transmission processes
with Raf River Rural Electric Cooperative and BPA. See id. at irir 22,23,30.
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position that the Projects must agree to a $45/kw delay security amount, and for the first time
provided a draft stadard FESA for the Projects. Id. Ths FESA contained the $45/kw delay
security clause. Id. It also required in Section 5.7, that prior to execution of the FESA, with
regard to the TSR for Idaho Power's system, "Results of the initial transmission capacity request
are known and acceptable to the Seller," and that "Seller must provide evidence that the Seller
has acquired firm transmission capacity from all required transmitting entities to deliver the
Facility's energy to an acceptable point of delivery on the Idaho Power electrical system." Id. at
Exhibit I, pp. 16-17.
The QFs had not met these transmission requirements. In the case of the TSR on Idaho
Power's system, Mr. Allphin had not yet even initiated that process despite repeated requests to
do so since at least June 2010. In the case of BPA, compliance with Idaho Power's requirement
would have required the QFs to obligate themselves to long-term PTP wheeling agreements prior
to any assurance they could secure executed power sales contracts with the published rates.
Then, on November 5, 2010, Idaho Power, along with Avista Utilities and Rocky
Mountain Power, filed the Joint Motion to Reduce the Published Rate Eligibility Cap. See Case
No. GNR-E-1O-04. The Grouse Creek Wind Park, LLC and the Grouse Creek Wind Park II,
LLC each filed complaints against Idaho Power on November 8, 2010. The Complaints alleged
the QFs had "expressed a wilingness to agree to a delay security damages clause reasonably
calculated by the Commission to approximate Idaho Power's damages in the event of a delay
default, and (that each QF) remain(ed) committed to such a provision deemed reasonable by the
Commission." Complaints, Case Nos. IPC-E-1O-29 and -30, at ir 9. Furher, the QFs alleged that
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CASE NOS. IPC-E-I0-61, IPC-E-I0-62
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with the "commitment to such a provision, Idaho Power's insistence on completion of the
protracted interconnection and transmission processes prior to executing a PPA is uneasonable."
Id.
After the Commission did not grant the immediate reduction in the published rate
eligibility cap, on November 19, 2010, Idaho Power and the QFs agreed to stay the complaint
proceeding and execute stadard QF wind contracts containing the published rates. Id. at ir 70.
Idaho Power sent a letter dated November 24, 2010, acknowledging Wasatch Wind's agreement
to accept the $45/kw security clause, and highlighting some provisions of the November 1 st
FE SA, including those regarding curtilment for system reliabilty puroses. Id. at ir 71 and
Exhbit J. Idaho Power's November 24th letter requested that the QFs fill in .project-specific
information in the November 1 st FESA and "retu the draft to Idaho Power so that the Company
can then initiate the Sarbanes-Oxley contract approval process and generate an executable draft
for signatues." Id.
On December 2, 2010, Wasatch Wind sent a letter and versions of the Idaho Power's
November 1 st contract for each project, containing all project specifics. Id. at ir 72 and Exhibit
K.6 Wasatch Wind's December 2nd letter confrmed the paries' agreement that the FESAs
would not contain the onerous transmission requirements in Section 5.7, but would contain the
$45/k delay security clauses. Id. at Exhibit K, p. 1. The letter also confrmed the QFs
understood the provisions of the November 1st FESA highlighted in Idaho Power's November
6 The Affdavit of Christine Mikell contains a typo referring to Idaho Power's draft FESA
provided November 1 st as "Idaho Power's November 30th contract." See id. at irir 72.
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24th letter. Id. No dispute remained regarding the terms and provisions of the FESAs.
Idaho Power confirmed receipt on December 7, 2010. Id. at ir 74. On December 9, 2010,
counsel for Wasatch Wind requested through email to Idaho Power that the FESAs contain
online dates of a First Energy Date of June 2013 and a Commercial Online Date of December
2013, rather than the dates filled in by the QFs in contracts provided on December 2nd, which
were First Energy in December 2012 and Commercial Online Date June 2013. Id. at ir 75. This
change was consistent with the delay necessar in the wheeling arangements over BPA's system
caused when Wasatch Wind decided not to submit the $794,396 for the 2010 NOS, and instead
proceeded through the traditional TSR on OASIS in August 2010. See id. at irir 27-29.
Idaho Power next contacted the QFs on December 14,2010, but it only responded to ask
for clarification for the carographic sections within which for the QFs were located and for the
identity of the transmitting entity, which items had inadvertently been omitted from blan spaces
in the contracts Wasatch Wind provided on December 2,2010. Id. at ir 76. However, the Grouse
Creek QFs previously provided the carographic sections in the October 1 st letters. See id. at
Exhibit G, pp. 5, 13. And Wasatch Wind had stated that BPA would be the transmitting entity on
multiple occasions. See id. at Exhibit A, p. 2 (February 26,2010), Exhibit C, p. 9 (June 17,
2010); Exhibit D, pp. 1-2, 5, 7, 11, 13 (July 14, 2010); Exhibit F, p. 1, 7, 9, 13, 15 (August 17,
2010); Exhibit G, pp. 1,6,9, 15 (October 1,2010); Complaints, Case Nos. IPC-E-1O-29 and -30,
at ir 7 (November 8, 2010).
On December 15,2010, Idaho Power stated that the online dates provided December 9th
would be included in the contracts, and later that day counsel for the QFs provided the
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PAR II, LLC
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information regarding the transmitting entity and the sections, consistent with the pnor
communcations. Affdavit of Christine Mikell, at ir 77. On December 16,2010, Idaho Power
provided the executable FESAs, which counsel for Wasatch Wind sent by overnight delivery to
Wasatch Wind, which is not located in Boise. Id. at ir 78. These versions of the FESAs were
consistent with the paries' agreement, well in advance of December 14, 2010, to remove the
requirements in section 5.7 for completion of transmission processes. Id. On December 21,
2010, the Grouse Creek QF and the Grouse Creek II QF executed the FESAs, and sent them by
overnght delivery to Idaho Power. Id. at ir 79. Idaho Power executed the FESAs on December
28,2010, and filed them for Commission determination the next day.
COMMENTS
A. The Grouse Creek QFs each satisfy the grandfather tests.
The Grouse Creek QFs each entitled themselves to long term contracts with rates set at
the published avoided costs in Order No. 31025 because each QF satisfied the Commission's
grandfathering tests before December 14,2010.
Each QF satisfies even the most stringent grandfather test ever used by the Commission
because each had a meritorious complaint on fie at the Commssion on November 8, 2010. See
A. W Brown Co., Inc., 121 Idaho at 816-18, 828 P.2d at 845-47. Each QF's Complaint alleged
Idaho Power's insistence on completion of the protracted transmission processes prior to
executing a PP A was uneasonable because the QFs had expressed willingness to agree to a
delay default liquidated damages security provision reasonably calculated to offset Idaho
Power's actu damages in the event of a delay default.
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PARK II, LLC
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The allegations in the Complaints were meritorious because Idaho Power agreed to
execute standard PURP A contracts without regard to the status of the transmission processes.7
Despite diligent efforts for many months prior to filing the complaints, the QFs did not even
obtain a draft contract until November 1,2010, apparently due to Idaho Power's position that it
does not even provide draft contracts until after interconnection and transmission are "pinned
down." Affdavit of Christine Mikell, Exhibit E, p. 2. Even then, the draf contract contained the
onerous requirements that the QFs secure firm transmission to Idaho Power and proceed through
Idaho Power's internal TSR process prior to execution. The QFs diligently initiated and have
now essentially completed the interconnection and transmission processes on BPA's system.
But the QFs had no power to begin Idaho Power's internal TSR process, and Idaho Power did
not begin that process until November 4, 2010, despite repeated requests that it do so earlier.
That Wasatch Wind reduced the capacity of the QFs caused no problem in the interconnection
and transmission processes with Raft River Rural Electric Cooperative and BP A, and should not
have been a problem for Idaho Power's transmission personnel's processing either, if Idaho
Power had initiated its TSR process when initially requested.
Additionally, the large sums of money and time spent on developing the projects and the
advanced stage of their maturty evidences their intent to obligate themselves to the FESAs. See
In the. Matter of Cassia Wind to Determine Exemption Status, Case No. IPC-E-05-35, Order No.
29954, pp. 2-4 (2006) (finding wind QF entitled to grandfathered rates based on matuty of
7 Furer, the QFs' position on the liquidated damages provision was entirely consistent
with Idaho law and Commission orders. See Magic Valley Truck Brokers, Inc. v. Meyer, 133
Idaho 110, 117,982 P.2d 945, 952 (Ct. App. 1999); Order No. 30608.
COMMENTS OF GROUSE CREEK WIND PARK, LLC ANn GROUSE CREEK WIND
PARK II, LLC
CASE NOS. IPC-E-1O-61, IPC-E-I0-62
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development of project when it had merely submitted a completed application for
interconnection study, including the applicable fee, and had performed wind studies, commenced
preliminar permitting and licensing activities, and made efforts to secure sites to place
tubines). Prior to the rate change date, the Grouse Creek QFs had entered into an
Interconnection Agreement and proceeded to the Facilties Study stage, had obtained all
necessary real property rights for the sites, collected over two years of wind data, conducted
extensive wildlife and vegetation studies, and negotiated various aspects of the projects with
Idaho Power for almost a year.
Finally, the QFs' demonstrated knowledge of the contract terms fuer evidences the
intent of the QFs in this case to obligate themselves prior to the effective date. See In the Matter
of the Application of Idaho Power Company for Approval of a Firm Energy Sales Agreement
with Yellowstone Power Company, Case No. IPC-E-1O-22, Order 32104, p. 12 (2010) (approving
of grandfathered rates despite "the apparent lack of any written documentation . . . evidencing
that the terms of a power purchase agreement were materially complete (before the rate change)"
in par because the QF had "familarity with PURP A projects and the stadard terms of Idaho
Power's power purchase agreements"). The Grouse Creek QFs had obtained and reviewed a
draf PURPA FESA from Idaho Power on November 1,2010, a month and a half prior to rate
change date, and letters exchanged between the parties on November 24,2010, and December 2,
2010, confirm the mutul understading of the terms in the final FESAs. All material terms and
project specifics were well settled by December 14,2010.
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B. The Contract terms and Idaho Power's most-current wind integration study allay
the concerns raised in Idaho Power's Application regarding system reliabilty and
cost.
Idaho Power asserted in each of its Applications that "the request in this Application. . . is
made with the specific reservation of rights and incorporation of the averments set forth in the
Joint Petition and the Company's comments regarding the possible negative effects to the (sic)
both the utility and its customers of additional and unfettered PURA QF generation on system
reliability, utility operations, and costs of incorporating and integrating such a large penetration
level of PURPA QF generation into the utility's system." Application, at p. 3.8 Because the
terms of the FESAs in this case and the curent wind integration charge protects ratepayers, and
because the projects obligated themselves prior to the effective date of the eligibilty cap
reduction, the QFs submit that Idaho Power's concerns should not preclude Commission
approval of the contracts.
First, the Commission should consider the system reliabilty and wind integration
discussion in the Nortwest and Intermountain Power Producers Coalition's ("NIPPC")
Comments in GNR-E-1O-04. See NIPPC Opening Comments, Case No. GNR-E-1O-04, pp. 13-
16 (Dec. 22, 2010). In those Comments, NIPPC pointed out that, despite Idaho Power's
statements in the Joint Motion regarding 1100 MW being near Idaho Power's minimum loads,
Idaho Power's own wind integration study concluded that even at 1200 MW of wind capacity on
8 Because Idaho Power's Applications in Case Nos. IPC-E-I0-61, IPC-E-I0-62 are
substatially the same, these Comments will refer to them interchangeably as the "Application."
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the Company's system, wind would reach only 80% of its loads and it would do so only for a
few hours per year. See Enernex's Idaho Power 2007 Wind Study, Case No. IPC-E-07-03, p. 34
(Febru 6, 2007). The settlement that resulted after conclusion of that wind integration study
made the avoided cost rates available to wind developers at a rate reduced by $6.50/MWh for
projects coming online when Idaho Power's cumulative wind power is "501 MW and above."
See Order No. 30488, at p. 8. There is no upper cap contained in the order, and Idaho Power has
not availed itself of the opportunity since to update its wind integration study. Furher, Idaho
Power's wind integration study did not consider the firming ability of any of the Company's 744
MW of gas combustion turbine capacity that will be online by the time Grouse Creek QFs are
online in December 2013. See NIPPC Opening Comments, Case No. GNR-E-I0-04, at p. 15.
The Commission should also consider that the rates in these PURP A agreements are lower than
those in contracts and self-built projects recently approved for Idaho Power. See NIPPC Reply
Comments, Case No. GNR-E-I0-04, pp. 15-20 (Jan. 21,2011).
Furher, the FESAs for each QF contain extensive protections for ratepayers which
address the concerns raised by Idaho Power's application. Idaho Power warants that the
Agreements comport with the terms and conditions of the various Commission Orders applicable
to PURPA agreements for a wind resource. See Application, at p. 4 (citing Order Nos. 30415,
30488, 30738 and 31025). According to those orders, the rate in the FESA for each of the
projects is reduced by the Idaho Power's wind integration charge. Order No. 30488, at pp. 8-9.
The FESAs also contan a Mechancal Availabilty Guarantee, which requires reduced payment
to the QF if its tubines are unavailable for inexcusable reasons. Id. The FESAs require that the
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PAR II, LLC
CASE NOS. IPC-E-I0-61, IPC-E-I0-62
PAGE 23
QF share in the costs of wind forecasting. Id. The FESAs also provide for a reduced rate at
times of the day and months of the year when the energy is wort less to Idaho Power due to
demand and regional market conditions. See Order No. 30415.
Each QF has selected December 1, 2013, as its Scheduled Operation Date, and sections
5.3.2 and 5.8.1 of each FESA contans a liquidated damage and security provision of $45 per kw
of nameplate capacity for failure to achieve that date. That will require the QFs to each post
$945,000 as delay default security after Commission approval of the contracts.
The QFs have accepted the provisions in each FESA and Idaho Power's approved
Schedule 72 regarding non-compensated curlment or disconnection of the QF for system
reliability puroses. This provides Idaho Power the right to exercise "non-compensated
curailment" at times "when the generation being provided by the Facility in certain operating
conditions exceeds or approaches the minimum load levels of (Idaho Power's) system such that
it may have a detrimental effect upon (Idaho Power's) ability to manage its thermal, hydro, and
other resources in order to meet its obligation to reliably serve loads on its system." Application
at p. 7. Thus, even if there were evidence that system reliability issues may evolve in the future,
the contracts allow Idaho Power to take reasonable steps to ensure system integrity.
CONCLUSION
F or the reasons set forth above, Grouse Creek Wind Park, LLC and Grouse Creek Wind
Park II, LLC, respectfully request that the Commission approve the Firm Energy Sales
Agreements.
COMMENTS OF GROUSE CREEK WID PARK, LLC AND GROUSE CREEK WIND
PAR II, LLC
CASE NOS. IPC-E-1O-61, IPC-E-1O-62
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Respectfully submitted this 24th day of March 2011,
RICHARSON & O'LEARY, PLLC
GJ
Pet . Richardson
Gregory M. Adams
Attorneys for Grouse Creek Wind Park,
LLC and Grouse Creek Wind Park II, LLC
COMMENTS OF GROUSE CREEK WID PARK, LLC AND GROUSE CREEK WIND
PARK II, LLC
CASE NOS. IPC-E-I0-61, IPC-E-1O-62
PAGE 25
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 24th day of March, 2011, a tre and correct copy of the
within and foregoing COMMENTS OF THE GROUSE CREEK WIND PARK, LLC,
GROUSE CREEK WIND PAR II, LLC and the AFFIDAVIT OF CHRISTINE MIKELL
was served as shown to the following paries:
Lisa Nordstrom
Donovan Walker
Idaho Power Company
POBox 70
Boise, Idaho 83707
dwalkeri$idahopower.com
lnordstromaYidahopower .com
( ) U.S. Mail, Postage Prepaid
(x) Hand Delivered
( ) Overnight Mail
( ) Facsimile
( ) Electronic Mail
Randy Allphin
Idaho Power Company
PO Box 70
Boise, ID 83707
rallphini$idahopower .com
( ) U.S. Mail, Postage Prepaid
(x) Hand Delivered
( ) Overnight Mail
( ) Facsimile
( ) Electronic Mail
Signedi C0
r ry Adams
COMMENTS OF GROUSE CREEK WID PARK, LLC AND GROUSE CREEK WIND
PAR II, LLC
CASE NOS. IPC-E-I0-61, IPC-E-1O-62
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