20110324Mikell Affidavit.pdf

Peter J. Richardson (lSB No. 3195)
Gregory M. Adas (ISB No: 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peter~richardsonandoleary .com
greg~richardsonandolear .com
Attorneys for Grouse Creek Wind Park, LLC
and Grouse Creek Wind Park II, LLC
2G11MAR 24 Pli 2: OS
BEFORE THE IDAHO
PUBLIC UTILITIES COMMISSION
IN TH MATTR OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR A DETERMNATION
REGARING THE FIRM ENERGY
SALES AGREEMENT FOR THE SALE
AN PURCHASE OF ELECTIDC
ENERGY BETWEEN IDAHO POWER
COMPANY AND GROUSE CREEK
WI PAR, LLC
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR A DETERMATION
REGARING THE FIRM ENERGY
SALES AGREEMENT FOR THE SALE
AND PURCHASE OF ELECTIDC
ENERGY BETWEEN IDAHO POWER
COMPANY AN GROUSE CREEK
WID PAR II, LLC
) CASE NO. IPC-E-IO-61
)
) AFFIDAVIT OF CHISTIN MIKELL
) IN SUPPORT OF APPROV AL OF
) THE ENERGY SALES AGREEMENT
) FOR GROUSE CREEK WID PAR
) LLC
)
) CASE NO. IPC-E-IO-62
)
) AFFIDAVIT OF CHID STIE MIKELL
) IN SUPPORT OF APPROVAL OF
) TH ENERGY SALES AGREEMENT
) FOR GROUSE CREEK WI PARK
) 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"), whch is a wid power development company.
2. My priar responsibilities include the oversight of WW's portfolio of
projects. In ths 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
facilties ("QFs").
3. As Project Developer of the Grouse Creek Wind Park, LLC and Grouse
Creek Wind Park II, LLC, I am responsible for maning the land acquisition, the
interconnection process, the transmission service agreements, environmental and cultual
stdies as well as negotiating the Fir Energy Sales Agreements ("FESAs").
General Project Development Background
4. WW intially intended to place a 150 megawatt ("MW") project on a
combination of private land and approxiately 1,000 acres of land manged 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 manager of the
Projects.
6. WW first obtained a permt to begin wid monitoring on private land
from Box Elder County, Uta in October 2007, and began wind monitorig in December
2007.
7. WW obtaed a right-of-way from the BLM to conduct wid monitorig
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PAGE 2
in August 2008, and began wid monitorig activities on BLM lands.
8. WW also began meeting with federal offcials in March 2008 regarding
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 Environmenta Policy Act ("NEPA") compliance in great detal from
March 2008 until March 2010.
10. Ultimately, the costs and complexities of the federal permtting process
resulted in removal of the BLM lands from the project area on March 15,2010, and we
eventuly 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 permits 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 WW's approach to those issues. From the
sureys and studies conducted, on which WW has spent in excess of $275,000, WW
and its wildlife consultants have identified no wildlife issues tht would preclude
development of the Projects on private lands.
13. Additionally, WW has collected sufcient wid data to be confdent that
the wid 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 that 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 total of 168 workers. It is expected that
these workers will stay in American Falls, Idao 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 substatibn:,:we expect at least
haf of these continuing 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 size
to 95 MW.
19. The System Impact Study ("SIS") agreement was signed and GC fuded
BPA an additional $50,000 in April 2009. The SIS completed by BPA on September 25,
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PAGE 4
2009 concluded again that there was 93 MW of available tranmission and
interconnection capacity available, and BP A agreed that Ra River Rural Electrc
Cooperative would sign the Interconnection Agreement with Wasatch Wind.
20. On Janua 26, 2010, GC executed the Facility Study Agreement and
fuded the study deposit of $46,500. GC signed the Interconnection Agreement with
Ra River on March 31, 2010.
21. BPA issued the Facilty Study Agreement on June 29, 2010.
22. Because WW had decided at this time to remove the federal lands from
the Project and instead develop two smaller 10 average megawatt ("aM) projects,
WW requested an amendment to the Interconnection Agreement. On June 21, 2010,
Raft River Rural Electrc Cooperative ageed to amend the Interconnection Agreement to
accommodate the two smaller projects, which will still 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 Ra River Rural
Electrc Cooperative and an engineerig firm to commence the procedures necessar 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 final
Interconnection Agreement, under which they have subsequently taen steps to proceed
with constrction.
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Point to Point Transmission on BP A's System for Delivery to Idaho Power
26. WWI has also engaged in the transmission process to deliver the output
from the point of interconnection to Idaho Power's Midoka substation, and has paid
BPA over $76,000 in efforts to establish firm point to point transmission ("PTP") serice.
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 Pedormance Assurance $794,376 by August 18,2010.
28. Due to confsion in the contracting process with Idao Power at that time,
WW was not comfortble makng this fiancial expenditue, and backed out of the BP A
NOS. As a result, it appeared unikely that WWI could achieve an onlne date in June
2012, as planed.
29. On August 19,2010, WW made a trditiona tranmission servce 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 changed project parameters for GC, and the TSR for GC
II is stil 21 MW.
31. Transmission has appeared 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 transmission
agreements.
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PAGE 6
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 statu of the FESAs with Idao Power.
33. I understad that signg the PTP ageements with BPA would, not only
be the point at which the Projects canot obtan a refud of the initial deposit of $76,000,
but also will obligate the Projects to pay for transmission service for the 20 yea 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 third par or resale ths fi service on the tranmission
provider's OASIS. WW is concerned that it would be unikely that another transmission
customer would need the exact, same amount of PTP trmission service with the same
Point of Integration, Point of Receipt and Point of Delivery, and tht redirecting firm
transmission service to alternate points is often a diffcult task.
Firm Energy Sales Agreement Negotiations with Idaho Power
34. WW has been engaged in formal power sales contract discussions with
Idao Power since at least Febru 26, 2010, when I emailed Rady Allphi, of Idao
Power, and described the project, our progress though the interconnection process with
BP A, and that it appeared that adequate transmission was available on Idaho Power's
system from the Mindoka 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 CHISTIN 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 Idaho Power provide it with a PURA
contract 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 attched a
tre and correct copy of Mr. Allphi's letter providing the pricing from its AURORA
model as Exhibit B.
37. WW signed a letter of understadig provided by Idao Power, and sent
it to Idao Power on June 17, 2010. I have attched a tre and correct copy of that
communcation and the letter of understading as Exhibit C.
38. The letter or understading stated Idao Power would not execute a power
sales contrct prior to when the Project received confrmation that the results of the intial
Idaho Power tranmission capacity application for transmission to its load center are
known and the Project accepts the results. The only other requiements to obtain a power
purchase ageement involved interconnection, and WW had aleady met those
interconnection requirements.
39. From the discussions, WW felt that Mr. Allphi was working with his
team to mae 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 tranmission personnel would not accept Idaho Power's contracts
unt's request for network integration TSR prior to the time that WW had secured firm
PTP tranmission rights on BPA's system from the Project to the Minidoka substation.
Ths was consistent with Mr. Allphi's intial sttement on March 2,2010, that we must
AFFIDAVIT OF CHISTINE 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 permtting
concern with using the 1,000 acres ofBLM land intially included in the Project.
42. On June 25,2010, WW again responded to Mr. Allphi that based on our
interconnection studies and conversations tht we had with BP A, there are 93 MW
available on the necessar BP A line to the Mindoka substtion, and therefore
interconnection and tranmission of 65 MW to Idao Power would not be a problem.
43. In the June 25, 2010 email, WW also indicated that due to
communcations with the federal agencies, WW wished to reduce its overall footprint
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, WW formally submitted its request for two 10 aM
PUR A contracts to Mr. Allphi. In ths request, WW explaied the matuty of the
Projects in detail, includig the Interconnection Agreement which already ha progressed
to the Facilities Study ste, two years of wid data supporting output projections, fina
land leases, and explained in detal that BP A had stated transmission would be available
to Idaho Power's Mindoka substtion.
45. Ths letter also requested that Idaho Power investigate availabilty of
tranmission on its system to its load center and provided completed Tranmission
Capacity Application Questionnaires for each project. WW also explained that on June
30, 2010, WW submitted into BPA's NOS and that by Augut 18, 2010, BPA would
requie WWI to post the substatial securty for this NOS transmission process. I have
AFFIDAVIT OF CHI STI MIKELL
PAGE 9
attched a tre and correct copy of ths correspondence as Exhibit D.
46. Rady Allphi 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
filing the TSR sometie next week." I have attched a tre and correct copy of this
correspondence as Exhibit E.
47. On August 2,2010, Mr. Allphi asked ifWWI was submitting 30 MWs or
21 MW s and appeared confsed that WW in fact intended for there to be two separate
projects. In a separate email later the same day, Mr. Allphin recognzed the error and
asked WW for which of the two QFs it would prefer him to place a TSR fist 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 retain attorneys to assist in the negotiations. WW ha 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 obtain PURP A contracts.
49. WW sent Idaho Power an email on August 17, 2010, in which WW
clarfied tht WW was formally requesting two power saes contracts for PUR A
projects, the GC Project tht 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 explaied that each of the Projects would be physically limted
such that each would generate no more than 10 average megawatt in a single month.
The email also included two completed Trasmission Capacity Application
Questionnaires for the two Projects.
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PAGE 10
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
agree to submit a request to its transmission personnel for both Projects at the same time
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 Richadson, sent a letter to
Idaho 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 atthed a tre and
correct copy of ths letter as Exhibit G.
53. The October 1st letters listed several stadad terms applicable though
Public Utilities Commssion orders, including the daily and seonaity load shape price
adjusents (Order No. 30415), as well as the wid integrtion chage, mechacal
availability guante, and wid forecasing and cost shag provisions (Order No. 30488).
54. The October 1 st letter expressed concern that Idaho Power may have taen
the position that Idao Power would only submit a single tranmission reuest for one
project, and then wait the six to nie months it may tae for completion of processing of tht
request, prior to even submitting/processing the request for the second project.
55. The October 1 st letter expressed WW's objection to th process, and
remided Idao Power that WW ha submittd Trasmission Capacity Applications for the
Grous Creek Wind Park and Grouse Creek Wind Park II on Augut 19,2010, in an effort
to become a network resource, and expected the applications be processed in pareL.
56. The October 1 st letter expressed WW's concer also with the legality of the
high delay securty provision Idao Power had begu chagig to QFs. Specifcally, the
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PAGE 11
lettr stted, "Wasatch Wind will not agree to a $45/kw 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
requirng Wasatch to post a delay default liquidated daages securty."
57. The October 1st letter provided very detailed project inormation for each
of the Grouse Creek QFs, and stated that both projects would now be sized at 21 MWof
maimum 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 Idao Power on that same date. I have attched a tre and
correct copy of ths letter as Exhibit H.
59. On November 1, 2010, Idaho Power responded with a letter from Mr.
Allphi addrssing 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 tht lettr, Mr. Allphi maintaed that Idao 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 Idao Power will fie TSRs for Grouse Creek Wind
Park I for nameplate 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
tht the Projects must agree to a $45/k delay securty amount, and for the first time
AFFIDAVIT OF CHISTI MIKELL
PAGE 12
provided WW with a draft stadad FESA for the Projects.
63. Ths FESA contained the $45/k delay securty clause. It also required in
Section 5.7, that prior to execution of the FE SA, with regard to the TSR for Idao
Power's system, "Results of the intial transmission capacity request are known and
acceptable to the Seller," and that "Seller must provide evidence that the Seller has
acquied fi tranmission capacity from all required transmitting entities to deliver the
Facilty's energy to an acceptable point of delivery on the Idaho 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 agreements prior to any assurance they could secure executed power sales
contracts with the published rates.
65. Then, on November 5, 2010, Idao Power, along with Avista Utilties and
Rocky Mounta Power, fied the Joint Motion to Reduce the Published Rate Eligibilty
Cap.
66. Prior to that tie, nobody from Idao Power had informed WW that it
would make this request for a reduction in the eligibilty cap.
67. The Grouse Creek Wind Park, LLC and the Grouse Creek Wind Park II,
LLC each filed complaits agait Idaho Power on November 8, 2010, alleging Idaho
Power had acted in bad faith by requiring completion of interconnection processes and
transmission service requests prior to executing the power sales contract and refusing to
enter into an agreement without a puntive delay liquidated damages securty provision
requirig the QF to post $45/k nameplate capacity.
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68. The Complaints fuer alleged that the QFs had expressd a willigness
to agree to a delay securty daages clause reasonably calculated by the Commission to
approxiate Idaho Power's damages in the event of a delay default, and that each
remained commtted to such a provision deemed reasonable by the Commission, which
made Idaho Power's insistence on completion of the protrted interconnection and
transmission processes prior to executing a power saes contract uneasonable.
69. The Commission docketed the Complaints in Case Nos. IPC-E-1O-29 and
-30.
70. Afer the Commission did not grant the imediate reduction in the
published rate eligibility cap requested by the Joint Utilties, on November 19, 2010,
Idaho Power and the Projects ageed to stay the complaint proceeding and execute
stdad QF wid contracts contag the published rates.
71. Idao Power sent a letter dated November 24, 2010, acknowledging
WW's agreement to accept the $45 per kw securty clause, and requestig that it review
the previously provided contracts, fill in project-specific inormation and "retu the dr
to Idao Power so that the Company can then intiate the Sarbanes-Oxley contract
approval process and generate an executable draft for signatues." I have attched a tre
and correct copy of ths letter as Exhibit J.
72. WW sent versions of the Idaho Power's November 30th contract for each
project, containig all project specifics on December 2,2010. I have atthed a tre and
correct copy of ths submittl as Exhibit K.
73. A cover letter from Mr. Richardson confrmed the paries' agreement that
the FESAs would not conta the onerous tranmission requiements in Section 5.7, but
AFFIDAVIT OF CHISTI MIKELL
PAGE 14
would contain the $45/k delay securty clauses.
74. Idao Power confired receipt in a letter sent by Mr. Allphi on
December 7, 2010.
75. On December 9, 2010, Mr. Richardson requested though email to Idaho
Power that the FESAs contan 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 Projects
in contrcts provided on December 2nd, which were First Energy in December 2012 and
Commercial Online Date June 2013. Ths chage 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 clarification on the identity of the trmitting entity and for
the carographic sections with which for the Projects were located, which items had
inadvertently been omitted from the contracts WW provided on Decmber 2, 201 O.
However, both of these items were previously provided in WW's prior letters from Mr.
Richardson dated October 1, 2010, which is atthed as Exhibit I.
77. On December 15,2010, Idaho Power stated that the online dates provided
December 9th would be included in the contracts, and later that day counel for the GC
and GC II Projects, Greg Adas, provided the transmitting entity and the sections. The
transmitting entity (BPA) and the sections provided were consistent with the information
provided in the October 1, 2010 letters.
78. On December 16, 2010, Idao Power provided the executable FESAs,
which counsel for WW sent by overnght delivery to WWI. These versions of the
AFFIDAVIT OF CHISTINE MIKELL
PAGE 15
FESAs were consistent with the paries' agreement weeks earlier to remove the
requirements in section 5.7 for fir PTP wheeling rights and acceptace of a fial Idaho
Power's network resource capacity finding, 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. Idaho Power executed the FESAs on December 28,2010, and filed them
for Commssion determtion the next day.
81. It is my opinion that, without the confsion regarding Idaho Power's
network integration TSR and seemigly unworkable prerequisite to prove WW secured
capacity for PTP wheeling rights on BPA's system, which Idao Power ultimately
waived, WWI would have obtaned fuly executed stadard PURP A agreements in early
fall 2010.
AFPlDA VlT OF CHISTIN 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 ¡: \ day of March 2011.
~
By ew U\\&,,
Chrstine Mikell
AFFIDAVIT OF CHID STIE MIKELL
PAGE 17
STATE OF UTAH )
l ) ss.COUNTY OF 6u mm i )
On ths :;1 5t day of March 2011, before me, a Notary Public in and for the
State of Uta, personally appeared Chrstie Miell, personally known to me (Qf f)Qved
to-me on th bai;is of i;atisía£tory evidefte) to be the person who executed ths mstrent
and acknowledged it to be her free and volunta act and deed for the uses and puroses
mentioned in the instrent.
IN WISS WHREOF, I have hereunto set my hand and offcial seal the day
and year first above wrtten.
LANI MALONE
Notary Public
State of Utah
Comm. No. 581927
My Comm. Expires Mar 9, 20'14
~'1~
NOTARY PUBLIC for the State of Uta
Residig at '44 of; 3)(O?
'H-CUCiSI U'í 84~0
My Commssion expires
U'o-vctì. q i dO '4
AFFIDAVIT OF CHISTIE MIKELL
PAGE 18