20110324Mikell Affidavit.pdf

Peter J. Richardson (ISB No. 3195)
Gregory M. Adas (ISB No: 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
Boise, Idao 83702
Telephone: [phone]
Fax: [phone]
petercgrichardsonandolear .com
gregcgrichardsonandolear .com
Attorneys for Grouse Creek Wind Park, LLC
and Grouse Creek Wind Park II, LLC
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BEFORE THE IDAHO
PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR A DETERMATION
REGARING THE FIRM ENERGY
SALES AGREEMENT FOR THE SALE
AN PURCHASE OF ELECTRIC
ENERGY BETWEEN IDAHO POWER
COMPANY AN GROUSE CREEK
WID PAR, LLC
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR A DETERMATION
REGARING THE FIRM ENERGY
SALES AGREEMENT FOR THE SALE
AN PURCHASE OF ELECTRC
ENERGY BETWEEN IDAHO POWER
COMPANY AN GROUSE CREEK
WI PAR II, LLC
) CASE NO. IPC-E-IO-61
)
) AFFIDAVIT OF CHRISTINE MIKELL
) IN SUPPORT OF APPROVAL OF
) THE ENERGY SALES AGREEMENT
) FOR GROUSE CREEK WIND PAR
) LLC
)
) CASE NO. IPC-E-IO-62
)
) AFFIDA VIT OF CHRSTI MIKELL
) IN SUPPORT OF APPROVAL OF
) THE ENERGY SALES AGREEMENT
) FOR GROUSE CREEK WID PAR
) II, LLC
)
I, Chrstine Mikell, do declare the following and if called to testify, would and
could competently testify thereto:
1. I am over the age of 18, and I am Director of Development for Wasatch
Wind Intermounta, LLC ("WW"), which is a wid power development company.
2. My priar responsibilties include the oversight of WW's portfolio of
projects. In this role, I act as Project Developer of the Grouse Creek Wind Park, LLC
and Grouse Creek Wind Park II, LLC ("GC" and "GCII," or the "Project(s)") quaifying
facilities ("QFs").
3. As Project Developer of the Grouse Creek Wind Park, LLC and Grouse
Creek Wind Park II, LLC, I am responsible for mang the land acquisition, the
interconnection process, the transmission servce agreements, envionmenta and cultual
studies as well as negotiating the Fir Energy Sales Agreements ("FESAs").
General Project Development Backgound
4. WW initially intended to place a 150 megawatt ("MW") project on a
combintion of private land and approxiately 1 ,000 acres of land maaged by the
Bureau of Land Management ("BLM") near Lynn, Uta, very close to the Uta-Idaho
border. WW secured leases for over 3,000 acres of private land near Lynn, Uta on
Febru 4, 2008.
5. WW formed Grouse Creek Wind Park, LLC in July 2009, and formed
Grouse Creek Wind Park II, LLC in September 2010, and WWI is the manger of the
Projects.
6. WW first obtained a permt to begin wid monitorig on private land
from Box Elder County, Uta in October 2007, and began wind monitoring in December
2007.
7. WW obtained a right-of-way from the BLM to conduct wind monitoring
AFFIDAVIT OF CHRSTI MIKELL
PAGE 2
in August 2008, and began wid monitorig activities on BLM lands.
8. WW also began meeting with federal offcials in March 2008 regardig
vegetation and wildlife concerns. WWI also consulted subsequently with the U.S. Fish
and Wildlife Service ("USFWS") and Uta Division of Wildlife Resources ("UDWR")
regarding the project.
9. WW and the agencies discussed wildlife and vegetation concerns, as well
as the National Environmental Policy Act ("NEPA") compliance in great detal from
March 2008 until March 2010.
10. Ultiately, 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 we
eventully scaled the intial 150 MW project down to two smaller 21 MW QFs separated
by at least one mile.
11. WW curently possesses the real propert rights for wid project
development on both the GCWP and GCWP II sites.
12. Although no permts will be needed from these federal agencies to
commence operations now that the Projects do not impact federal lands, WW continued
to meet with the federal agencies regarding potential impacts to adjacent private lands,
and the agencies have expressed support for WWls approach to those issues. From the
sureys and stdies conducted, on which WW has spent in excess of $275,000, WW
and its wildlife consultants have identified no wildlife issues that would preclude
development of the Projects on private lands.
13. Additionally, WW ha collected sufcient wid data to be confdent that
the wind resource is very good, and to allow WW to accurately predict the output of the
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Projects' at issue in these contract approval cases.
14. Based on other projects, WW expects tht there will be an average of 96
on-site constrction workers over the six months of the wid park constrction. The peak
number or workers would come in month two at a tota of 168 workers. It is expected that
these workers will stay in American Falls, Idaho as ths is the closest city to the Projects.
Once the Projects are built, it is expected that there will be between 3-5 workers on site
with additional support for the Projects and interconnection substation. We expect at least
half of these continuig employees to live in Idao.
Efforts to Secure an Interconnection Agreement
15. WW has expended substatial amounts of time and money durng the
Large Generator Interconnection Process with Bonnevile Power Admstration
("BPA").
16. Grouse Creek Wind Park, LLC submitted its Large Generation
Interconnection Application to BPA for 150 MW on May 5, 2008, along with a $10,000
fee, for interconnection to a 138 kilovolt line leased to BPA by Raft River Rural Electrc
Cooperative.
17. Next, GC signed the Feasibilty Study agreement on September 2, 2008,
and fuded BPA an additional $10,000. The Feasibilty Study suggested that there was
93 MW of available transmission and interconnection capacity on the line.
18. On August 7, 2009, GC submitted a request to change the requested siz
to95MW.
19. The System Impact Study ("SIS") ageement was signed and GC fuded
BPA an additional $50,000 in April 2009. The SIS completed by BPA on September 25,
AFFIDAVIT OF CHRISTINE MIKELL
PAGE 4
2009 concluded again that there was 93 MW of available transmission and
interconnection capacity available, and BP A agreed tht Ra River Rural Electrc
Cooperative would sign the Interconnection Agreement with Wasatch Wind.
20. On Janua 26, 2010, GC executed the Facilty Study Agreement and
fuded the study deposit of $46,500. GC signed the Interconnection Agreement with
Raft River on March 31,2010.
21. BPA issued the Facility Study Agreement on June 29, 2010.
22. Because WW had decided at ths time to remove the federal lands from
the Project and intead develop two smaller 10 average megawatt ("aMW") projects,
WW requested an amendment to the Interconnection Agreement. On June 21, 2010,
Raf River Rural Electrc Cooperative aged to amend the Interconnection Agreement to
accommodate the two smaller projects, which will stil use the same single point of
interconnection.
23. BPA ha also subsequently authoried the reduced size of the Projects to a
cumulative output of 42 MW.
24. Most recently, on Febru 24, 2011, WW met with Raft River Rural
Electrc Cooperative and an engineering fir to commence the procedures necessa to
design the project and interconnection substations with an in-service date of sumer
2013.
25. In sum, the Projects and their predecessors have spent a tota of $116,500
on the interconnection process, and prior to December 14, 2010 possessed a fial
Interconnection Agreement, under which they have subsequently taen steps to proceed
with constrction.
AFFIDAVIT OF CHRSTI MIKELL
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Point to Point Transmission on BP A's System for Delivery to Idaho Power
26. WW has also engaged in the transmission process to deliver the output
from the point of interconnection to Idao Power's Mindoka substation, and has paid
BP A over $76,000 in efforts to establish fir point to point trsmission ("PTP") servce.
27. On June 30, 2010, the Projects submitted the necessar applications for
BPA's 2010 Network Open Season ("NOS") to achieve the intially projected online date
of June 2012, for a 30 MW and a 21 MW project on June 30,2010. The next step was to
provide BPA with a Performance Assurance $794,376 by Augut 18, 2010.
28. Due to confion in the contracting process with Idao Power at that time,
WW was not comfortable makng this fiancial expenditue, and backed out of the BPA
NOS. As a result, it appeared unikely that WW could achieve an online date in June
2012, as planed.
29. On August 19, 2010, WW made a traditional transmission serice request
("TSR") on BPA's OASIS site with a new sta date of June 1, 2013. All the other
parameters of the projects remained the same.
30. Subsequently, BPA has approved a resubmitted 21 MW request to replace
the 30 MW request to reflect the chaged project parameters for GC, and the TSR for GC
II is stil 21 MW.
31. Transmission has appeed to be feasible all along for the output of the
two QFs. Most recently, on March 18,2011, BPA, stated in emails and phone calls from
Craig Hardin, that the Fir Point to Point agreements will arive to WW by the end of
the March, and WW will have 15 days from then to execute the two tranmission
agreements.
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32. At that time, we will have to decide whether it makes sense for the
Projects to execute the agreements and obligate themselves to 20 year PTP agreements in
light of the status of the FESAs with Idaho Power.
33. I understad that signng the PTP agreements with BPA would, not only
be the point at which the Projects canot obta a refud of the intial deposit of $76,000,
but also will obligate the Projects to pay for tranmission service for the 20 year term. If
the FESAs are not approved, the Projects obviously will not use the reserved transmission
themselves. I understad that the only way to resolve ths sitution is to assign the
transmission service to a thrd par or resale ths firm service on the transmission
provider's OASIS. WWI is concered that it would be unikely that another trsmission
customer would need the exact, same amount of PTP transmission servce with the same
Point of Integrtion, Point of Receipt and Point of Delivery, and that redirectig fi
transmission service to alternate points is often a diffcult tak.
Firm Energy Sales Agreement Negotiations with Idaho Power
34. WW has been engaged in formal power sales contract discussions with
Idaho Power since at least Febru 26, 2010, when I emailed Randy Allphi of Idaho
Power, and described the project, our progress though the interconnection process with
BP A, and that it appeared tht adequate transmission was available on Idao Power's
system from the Midoka substation to its Treasure Valley load center. Mr. Allphi
responded on March 2,2010. He stated the requirements WW would have to meet prior
to execution of a power sales contract, which included execution of an interconnection
agreement and reservation of firm transmission on both the BP A and Idao Power
transmission system to get the energy from the project to Idaho Power customer loads. I
AFFIDAVIT OF CHRSTIN MIKELL
PAGE 7
have attched a tre and correct copy of our initial request and Idaho Power's initial
response as Exhibit A.
35. WW formally requested that Idao Power provide it with a PURPA
contrct for a project between 57.5 and 65 MW in April 2010.
36. On June 2, 2010, WW received pricing for 65 MWs. I have atthed a
tre and correct copy of Mr. Allphin's letter providing the pricing from its AURORA
model as Exhibit B.
37. WW signed a letter of understading provided by Idao Power, and sent
it to Idao Power on June 17, 2010. I have atthed a tre and correct copy of tht
communication and the letter of understading as Exhibit C.
38. The letter or understading stated Idao Power would not execute a power
sales contract prior to when the Project received confrmation that the results of the intial
Idao Power transmission capacity application for transmission to its load center are
known and the Project accepts the results. The only other requirements to obtain a power
purchase agreement involved interconnection, and WW ha already met those
interconnection requirements.
39. From the discussions, WW felt that Mr. Allphi was workig with his
team to make the necessar TSR on Idaho Power's system.
40. Mr. Allphi stated in an e-mail on June 23, 2010, that he was concerned
that Idao Power's trsmission personnel would not accept Idao Power's contrcts
unt's request for network integration TSR prior to the time that WW had secured fir
PTP tranmission rights on BPA's system from the Project to the Mindoka substation.
Ths was consistent with Mr. Allphi's initial statement on March 2,2010, tht we must
AFFIDAVIT OF CHRSTIN MIKELL
PAGE 8
secure firm transmission rights prior to execution of a contract.
41. Also in June 2010, Wasatch Wind began to seriously reevaluate the
number of tubines the project could accommodate because of the federal permttg
concerns with using the 1,000 acres ofBLM land intially included in the Project.
42. On June 25,2010, WW again responded to Mr. Allphin that basd on our
interconnection studies and conversations that we had with BP A, there are 93 MW
available on the necessar BP A line to the Mindoka substation, and therefore
interconnection and transmission of 65 MW to Idaho Power would not be a problem.
43. In the June 25, 2010 email, WW also indicated that due to
communications with the federal agencies, WW wished to reduce its overall footprit
and wished to discuss power sales contrcts for two single 10 aMW projects, instead of
the large 65 MW project.
44. On July 14,2010, WWI formally submitted its request for two 10 aM
PUR A contracts to Mr. Allphi. In ths request, WW explained the matuty of the
Projects in detail, including the Interconnection Agreement which aleady had progressed
to the Facilities Study stage, two years of wid data supporting output projections, final
land leases, and explained in detail that BP A had stated trsmission would be available
to Idao Power's Mindoka substtion.
45. This letter also requested that Idaho Power investigate availabilty of
transmission on its system to its load center and provided completed Trasmission
Capacity Application Questionnaires for each project. WW also explained that on June
30, 2010, WW submitted into BPA's NOS and that by August 18, 2010, BPA would
requie WW to post the substatial securty for ths NOS transmission process. I have
AFFIDAVIT OF CHRSTIE MIKELL
PAGE 9
attched a tre and correct copy of this correspondence as Exhibit D.
46. Rady Allphin stated on July 21, 2010 in an e-mail, "I have not been able
to submit the TSR. Been getting buy in from varous people, looks like I will probably be
fiing the TSR sometime next week." I have atthed a tre and correct copy of ths
correspondence as Exhibit E.
47. On Augut 2,2010, Mr. Allphi asked ifWWI was submitting 30 MWs or
21 MWs and appeared confsed that WWI in fact intended for there to be two separate
projects. In a separate email later the same day, Mr. Allphi recognzed the error and
asked WW for which of the two QFs it would prefer him to place a TSR first and
questioned whether they quaified for stadad 10 aMW contracts.
48. WW became frtrated with the confsion and many months of attempted
negotiation without yet having even received a draft power purchase agreement, and
decided to reta attorneys to assist in the negotiations. WW has negotiated PURP A
contracts with other utilities, without the assistace of attorneys, and ths is the fist time
we felt the need to hie attorneys to obta PURP A contracts.
49. WW sent Idaho Power an email on Augst 17, 2010, in which WW
clarfied that WW was formally requesting two power sales contracts for PURP A
projects, the GC Project that would be 30 MW and the GC II Project which would be 21
MW. I have attched a tre and correct copy of ths email as Exhibit F.
50. Ths email explained tht each of the Projects would be physically limted
such that eah would generate no more than 10 average megawatt in a single month.
The email also included two completed Transmission Capacity Application
Questionnaires for the two Projects.
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51. The paries discussed the network integration transmission requests on the
telephone, but there appeared to WW to be confsion as to whether Idao Power would
agee to submit a request to its tranmission personnel for both Projects at the sae tie
or submit one request and wait for the response on it prior to sending the request for the
second project.
52. On October 1, 2010, counsel for WW, Peter Richardson, sent a letter to
Idao Power for each Grouse Creek QF, expressing WW's intent to obligate itself at that
tie to two power sales agreements for the two QF projects. I have attched a tre and
correct copy of ths letter as Exhibit G.
53. The October 1st letters listed several stadard terms applicable though
Public Utilities Commssion orders, including the day and seasonaity load shape price
adjusents (Order No. 30415), as well as the wid integrtion chage, mechacal
availability guantee, and wid forecatig and cost sharg provisions (Order No. 30488).
54. The October 1 st letter expressed concern that Idaho Power may have taen
the position that Idaho Power would only submit a single trmission request for one
project, and then wait the six to nie month it may tae for completion of processing of tht
request, prior to even submitting/processing the request for the second project.
55. The October 1st letter expressed WW's objection to th process, and
remided Idao Power tht WW had submitt Trasmission Capacity Applications for the
Grous Creek Wind Park and Grous Creek Wind Park II on Augut 19,2010, in an effort
to become a netork resource, and expected the applications be procssed in paralleL.
56. The October 1 st lettr expressed WW's concern also with the legality of the
high delay securty provision Idao Power ha begu chagig to QFs. Speificaly, the
AFFIDAVIT OF CHRSTIN MIKELL
PAGE 11
letter stted, "Wasatch Wind will not agree to a $45/k delay securty, uness the
Commssion orders that amount is reasonable. Wasatch Wind intends to obligate itself at
ths time only to a PP A requing it to post no delay default securty amount, or to any
amount deemed reasonable by the Commission if Idao Power insists on a provision
requirig Wasatch to post a delay default liquidated daages securty."
57. The October 1 st letter provided very detaed project inormation for each
of the Grouse Creek QFs, and stated that both projects would now be sized at 21 MWof
maximum capacity and would generate under 10 aMW.
58. Idaho Power did not respond by October 27, 2010, and Mr. Richadson
sent a follow up letter to Idaho Power on that same date. I have attched a tre and
correct copy of ths letter as Exhbit H.
59. On November 1, 2010, Idaho Power responded with a letter from Mr.
Allphi addressing the Grouse Creek projects and another project WW had begu
discussing with Idaho Power. I have attched a tre and correct copy of ths letter as
Exhibit I.
60. In that lettr, Mr. Allphi maitaned that Idaho Power had never stated
that only one of the projects TSRs could be processed at a single time, but also stated he
had not yet submitted the TSRs to its transmission personneL.
61. Mr. Allphi stated Idaho Power will file TSRs for Grouse Creek Wind
Park I for naeplate rating of 21 MW and Grouse Creek Wind Park II for nameplate
rating of21 MW.
62. Mr. Allphi's November 1st letter also expressed Idaho Power's position
that the Projects must agree to a $45/k delay securty amount, and for the first time
AFFIDAVIT OF CHRSTIN MIKELL
PAGE 12
provided WW with a draft stadard FESA for the Projects.
63. This FESA contaed the $45/k delay securty clause. It also requied in
Section 5.7, that prior to execution of the FESA, with regard to the TSR for Idao
Power's system, "Results of the initial transmission capacity request are known and
acceptable to the Seller," and tht "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 Idao Power electrcal
system."
64. The Projects obviously had not met these requirements, and in the case of
BP A doing so would have required the Projects to obligate themselves to long term PTP
wheeling ageements prior to any assurance they could secure executed power sales
contrcts with the published rates.
65. Then, on November 5, 2010, Idao Power, along with Avista Utilties and
Rocky Mountan Power, fied the Joint Motion to Reduce the Published Rate Eligibilty
Cap.
66. Prior to that time, nobody from Idao Power ha inormed WW that it
would make this request for a reduction in the eligibility cap.
67. The Grouse Creek Wind Park, LLC and the Grouse Creek Wind Park II,
LLC each fied complaits agait Idao Power on November 8, 2010, alleging Idao
Power had acted in bad faith by requirig completion of interconnection processes and
transmission servce requests prior to executing the power sales contract and refusing to
enter into an agreement without a puntive delay liquidated dames securty provision
requirig the QF to post $45/k nameplate capacity.
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68. The Complaints fuer alleged tht the QFs had expressed a willigness
to agree to a delay securty damages clause reasonably calculated by the Commission to
approximate Idaho Power's daages in the event of a delay default, and that each
remaed commtted to such a provision deemed reasonable by the Commssion, which
made Idao Power's inistence on completion of the protracted interconnection and
transmission processes prior to executing a power sales contrct uneasonable.
69. The Commission docketed the Complaits in Case Nos. IPC-E-1O-29 and
-30.
70. After the Commssion did not grant the immediate reduction in the
published rate eligibility cap requested by the Joint Utilties, on November 19, 2010,
Idaho Power and the Projects agreed to stay the complait proceeding and execute
stadad QF wid contracts contang the published rates.
71. Idaho Power sent a letter dated November 24, 2010, acknowledging
WW's agreement to accept the $45 per kw securty clause, and requesting that it review
the previously provided contracts, fill in project-specific inormation and "retu the draft
to Idao Power so that the Company can then intiate the Sarbanes-Oxley contrct
approval process and generate an executable draf for signatues." I have attched a tre
and correct copy of this letter as Exhibit J.
72. WW sent versions of the Idaho Power's November 30th contract for each
project, containg all project specifics on December 2,2010. I have attched a tre and
correct copy of this submittl as Exhibit K.
73. A cover letter from Mr. Richardson confrmed the paries' agreement tht
the FESAs would not conta the onerous transmission requiements in Section 5.7, but
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PAGE 14
would conta the $45/kw delay security clauses.
74. Idao Power confed receipt In a letter sent by Mr. Allphi on
December 7, 2010.
75. On December 9, 2010, Mr. Richardson requested through email to Idao
Power that the FESAs conta online dates of a First Energy Date of June 2013 and a
Commercial Online Date of December 2013, rather than the date filled in by the Projects
in contracts provided on December 2nd, which were First Energy in Decmber 2012 and
Commercial Online Date June 2013. Ths change was consistent with the delay
necessar in the wheeling arangements over BPA's system, and with the Projects'
August 19,2010 TSR with BPA for wheeling to commence on June 1,2013.
76. Idao Power next contated the Projects on December 14, 2010, but it
only responded to ask for clarfication on the identity of the transmitting entity and for
the carographic sections with which for the Projects were locate, which items had
inadvertently been omitted from the contracts WW provided on December 2, 2010.
However, both of these items were previously provided in WW's prior letters from Mr.
Richardson dated October 1, 2010, which is attched as Exhibit I.
77. On December 15,2010, Idao Power stated that the online dates provided
December 9th would be included in the contracts, and later that day counsel for the GC
and GC II Projects, Greg Adams, provided the trmitting entity and the sections. The
transmitting entity (BP A) and the sections provided were consistent with the inormtion
provided in the October 1, 2010 letters.
78. On December 16, 2010, Idaho Power provided the executable FESAs,
which counel for WW sent by overnght delivery to WW. These versions of the
AFFIDAVIT OF CHRSTIN MIKELL
PAGE 15
FESAs were consistent with the paries' agreement weeks earlier to remove the
requirements in section 5.7 for fi PTP wheeling rights and acceptace of a final Idao
Power's network resource capacity fidig, prior to execution of the FESAs.
79. On December 21,2010, the Grouse Creek QF and the Grouse Creek II QF
executed the FESAs, and sent them overnght delivery to Idaho Power.
80. Idao Power executed the FESAs on December 28,2010, and filed them
for Commssion determation the next day.
81. It is my opinon that, without the confion regardig Idao Power's
network integration TSR and seemingly unworkable prerequisite to prove WW secured
capacity for PTP wheeling rights on BPA's system, which Idaho Power ultimately
waived, WWI would have obtaed fuly executed stadad PURP A agreements in early
fall 2010.
AFFIDAVIT OF CHRSTI MIKELL
PAGE 16
I declare under penalty of perjur under the laws of the United States and under laws of
the state of Uta that the foregoing is tre and correct.
DATED ths d- \ day of Marh 201 1.
By Cl JJ ~ lQ
Christine Miell
AFFIDAVIT OF CHRSTINE MIKELL
PAGE 17
STATE OF UTAH )
COUNTY OF S U vn 01 i +- ~ ss.
On this :91 st day of March 2011, before me, a Nota Public in and for the
State of Uta, personally appeared Chrstine Mikell, personally known to me (-ø I'l'v-ed:
te me gn the basis ef satisfaetgry eviQenoo) to be the person who executed ths instrent
and acknowledged it to be her free and volunta act and deed for the uses and purses
mentioned in the instrent.
IN WITNSS WHREOF, I have hereunto set my hand and offcial seal the day
and year fist above wrtten.
¿f'f ~~ . lANI MALONE
~.. . Notary Public
State of Utah
~ ... - Comm. No. 581927
~ '._' My Comm. Expires Mar 9. 2014
NOTARY PUBLIC for the State of Uta
Residing at /440 6. 3.; DO ,5 .
fYCU CiS J UT B4D 3(0
My Commssion exPireLl
VYCVCV ai i .;i,
AFFIDAVIT OF CHRSTI MIKELL
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