20110909Petition & Comments.pdf

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September 8, 2011
VI ELECTRONIC MAL AND OVERNIGHT DELIRY
Jea D. Jewell, Seceta
Idaho Public Utilities Commssion
472 W Washigton Stree
Boise, il 83702-5918
Re: Case No. IPC-E-1l-14
IN THE MATIR OF THE PETITION OF IDAHO POWER COMPAN FOR A
DECLARTORY ORDER REGARING PUR A JUSDICTION
Dear Ms. Jewell:
Enclosed for fiing in the above-captioned docket ar an origial and seven (7) copies of
PETITION TO INERVENE AN COMMENTS OF ROCKY MOUNAI POWER.
An extr copy of ths cover leter is enclosed. Please date stap the extr copy and ret it to
me in the envelope provided.
Than you in advance for your assistace.
Sincerely,~(-:k
Kenet E. Kaufian
cc: IPC-E-II-14 Serce List
Enclosures
Jeffrey S. Lovinger
Kenneth E. Kaufman
Lovinger Kaufman LLP
825 NE Multnomah, Suite 925
Portland, Oregon 97232
Telephone: [phone]
Fax: [phone]
10vinger(ßlklaw.com
kaufman(ßlklaw.com
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ioii SEP -9 AM 9: 31
Attorneys for Rocky Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION FOR
DECLARTORY ORDER
REGARDING PURPA JURISDICTION
) Case No. IPC-E-11-14
)
) PETITION TO INTERVENE AND
) COMMENTS OF ROCKY
) MOUNTAINPOWER
)
)
)
Pursuant to Idaho Administrative Rules 31.01.01.331.071 and 31.01.01.331.203,
PacifiCorp, dba Rocky Mountain Power (the "Company"), petitions the Idaho Public
Utilties Commission (the "Commission") for leave to intervene and to appear and
paricipate as a par in the above-captioned matter. The Company fuher submits the
following comments in support of the petition for declaratory order filed by Idaho Power
Company ("Idaho Power") on July 8,2011. Idaho Power's petition addresses Qualifying
Facility ("QF") transactions proposed by Western Desert Energy 1, LLC and
Tumbleweed Energy II, LLC (collectively, the "LLCs").
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER 1
I. Contact Information and Representatives
Copies of all pleadings and other correspondence in this matter should be served
upon counsel for Rocky Mountain Power at:
Jeffrey S. Lovinger
Kenneth E. Kaufman
Lovinger Kaufman LLP
825 NE Multnomah, Suite 925
Portland, Oregon 97232
Telephone: [phone]
Fax: [phone]
Lovinger~lklaw.com
Kaufman~lkaw.com
Daniel E. Solander
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
Daniel.soiander~pacificorp.com
II. Petition to Intervene
As basis for its petition to intervene, Rocky Mountain Power states as follows:
(I) The name and address of this intervenor is:
Rocky Mountain Power
201 S. Main St., Suite 2300
Salt Lake City, UT 84111
(2) Rocky Mountain Power has a direct and substatial interest in this
proceeding and intends to paricipate in all respects herein as a par as may be required
to represent its interests.
(3) Without the opportunty to intervene herein, Rocky Mountain Power
would be without a maner or means of paricipating in the lawf determination of
issues that wil affect its obligations to QFs and the rates that Rocky Mountain Power's
customers are required to pay for energy from QFs.
(4) Rocky Mountain Power expects in the future to be faced with QFs
proposing the same transactional strctue proposed by the LLCs.
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER
2
III. Comments
A. The Commission has jurisdiction over sales of QFs to utilties for which the
Commission has ratemaking authority.
Section 210(f) of PURPA authorizes state utility commissions to apply PURPA
regulations to utilties for which they have ratemaking authority. i Both the Commission
and the Public Utility Commission of Oregon ("OPUC") have jurisdiction over Idaho
Power's PURPA transactions, including the QF transactions proposed by the LLCs. The
Commission (citing PURP A Section 210) has recognzed that "jursdiction under PURP A
is shared by all state regulatory authorities who exercise 'ratemakng authority' over
multi-jursdictional utilties."i
B. A QF waives its PURP A right to obligate a utilty to purchase net output
when the QF requires the utilty to wheel the QF's net output.
The LLCs seek to interconnect their projects to Idaho Power in Idaho and to
compel Idaho Power to purchase net output from the projects under PURP A in Oregon.
In order for the LLCs' plan to succeed, they must accomplish thee things. First, they
must compel Idaho Power to interconnect with the LLCs' projects at a point of
interconnection on Idaho Power's electrcal system in Idaho. Second, they must compel
Idaho Power to wheel the net output from the point of interconnection in Idaho to a point
of delivery on Idaho Power's electrcal system in Oregon. Third, they must compel Idaho
Power to purchase the QF net output at that point of delivery in Oregon. The LLCs assert
i 18 U.S.C. § 824a-3(f)(1) ("(E)ach State regulatory authority shall, after notice and opportnity for public
hearing, implement such rule (or revised rule) for each electric utilty for which it has ratemaking
authority.").
2 In the Matter of the Application of Idaho Power Co. for a Determination Regarding the Firm Energy
Sales Agreement with Clark Canyon, LLC for the Sale and Purchase of Electric Energy, Order No. 32294,
5-7 (2011).
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER 3
that PURP A allows for such a contrivance. In fact, the novel transaction proposed by the
LLCs is not authorized by FERC's PURPA regulations.
FERC's implementation of PURPA in 18 C.F.R. Part 292 provides two ways a
QF may impose a PURPA purchase obligation on a utility. QFs have the right to
interconnect with a public utilty and sell the net output of the QF to the directly
interconnected utilty.3 Alternatively, a QF may forego the right to sell to the directly
interconnected utility and instead compel another utilty to purchase its net output if the
QF can wheel its net output to the second utility.4 The LLCs do not propose either of
these outcomes. Rather, they propose a third transactional strcture, a structue that has
no basis in FERC's implementation ofPURPA.
The relevant regulation is 18 C.F.R. § 292.303. Paragraph (a) of the regulation
provides the QF with alternative options for sellng its output:
(a) Obligation to purchase from qualifing facilties. Each electric
utility shall purchase ... any energy and capacity which is made
available from a qualifying facility:
(1) Directly to the electric utility; or
(2) Indirectly to the electric utilty in accordance
with paragraph (d) of this section.5
Option (a)(l) in FERC's rule is direct sale to the electric utility with which a QF is
interconnected.
Indirect sales under option (a)(2) are provided for in paragraph (d):
(d) Transmission to other electric utilties. If a qualifying facility
agrees, an electric utilty which would otherwise be obligated to
purchase energy or capacity from such qualifying facility may
transmit the energy or capacity to any other electric utilty. Any
318 C.F.R. § 292.303(a)(1).
4 18 C.F.R. § 292.303(a)(2).
518 C.F.R. § 292.303(a).
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER 4
electrc utility to which such energy or capacity is transmitted shall
purchase such energy or capacity under this subpar as if the
qualifying facility were supplying energy or capacity directly to
such electrc utility. . .6
Option (a)(2), as explained in paragraph (d) of the regulation, explicitly applies to sales to
"any other electric utilty" other than the transmitting utilty. In other words, the indirect
purchase obligation in paragraph (a)(2) only applies to a utility other than the wheeling
utility.7 Furhermore, paragraph (d) provides that the wheeling utilty is relieved of its
purchase obligation.8 Thus, not only does the indirect purchase obligation only arise for
sales to third-par (non-wheeling) utilities, but by choosing to have a directly
interconnected utility wheel net output, the QF developer thereby waives its right to
obligate the directly interconnected utilty to purchase net output. In sum, under FERC's
implementation of PURP A, a QF developer canot obligate a utility to wheel its net
output and purchase its net output. Yet that is exactly what the LLCs propose to do
here.9
FERC's implementation of uniform federal interconnection rues in Order No.
2003 and Order No. 2006 are consistent with the plain-language of 18 C.F.R.
§ 292.303. io In Order No. 2003 and Order No. 2006, FERC sought to establish uniform
618 C.F.R. § 292.303(d) (emphasis added).
7 See e.g. ExonMobil Chemical Co. v. Entergy Gulf States, Inc., 91 FERC ii 61,106, 61,383 (2000) (finding
292.303( d) not relevant where QF sells to directly interconnected utility); see also Pub. Servo Co. of New
Hampshire V. New Hampshire Elec. Coop., Inc., 83 FERC ii 61,224, 61 (1998) (applying 292.303(d) in
context ofQF wheeling net output to third-par (not directly interconnected) utilty).
8 "(A)n electric utility which would otherwise be obligated to purchase energy... may transmit the energy
or capacity to any other electric utility..." 18 C.F.R. § 292.303(d) (emphasis added).
9 The LLCs assert that FERC rules require utilties to wheel QF output to third parties but do not explain in
their Answer how this requirement applies to their proposed transaction, where there wil be no wheel to a
third par. LLCs Answer at 10 (under the heading "FERC RULES SPECIFICALLY REQUIRE
UTILITIES TO WHEEL QF OUTPUT TO THIRD PARTY PURCHASERS").
10 Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, 104 FERC ii
61,103 (2003), order on reh'g, Order No. 2003-A, 106 FERC ii 61,220 (2004), order on reh'g, Order No.
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER 5
rules for all interconnections subject to federal jurisdiction. 11 In addressing QF
interconnections, FERC described the unverse of QF interconnections where the QF sells
pursuant tò the PURPA purchase obligation, referrng to 18 C.F.R. § 292.303. According
to FERC, QFs interconnect to sell directly (without wheeling) to the interconnected
utility or QFs interconnect and wheel to third-par (non-wheeling) utilities.12 The
distinction between the two forms of transaction creates a jurisdictional boundar
between FERC and state regulatory entities.FERC asserts jurisdiction over
interconnections resulting in QF sales where the QF's net output is wheeled to a third-
par utility; states retain jurisdiction over interconnections resulting in QF sales to the
directly interconnected utilty.13 FERC did not consider, and has not considered, the
scenario proposed by the LLCs where a QF sells net output to the directly interconnected
utility pursuant to a PURP A purchase obligation after having the directly interconnected
utility wheel the net output to itself at an alternate point of delivery. Consistent with the
plain language of 18 C.F.R. § 292.303 and Order Nos. 2003 and 2006, a QF may invoke
2003-B, 109 FERC ir 61,287 (2004), order on reh'g, Order No. 2003-C, 111 FERC ir 61,401 (2005);
Standardization of Small Generator Interconnection Agreements and Procedures, Order No. 2006, FERC
Stats. & Regs. ir 31,180, order on reh'g, Order No. 2006-A, FERC Stats. & Regs. ir 31,196 (2005), order
granting clarification, Order No. 2006-B, FERC Stats. & Regs. ir 31,221 (2006). Order No. 2003 addresses
interconnection of generators with a capacity over 20 MW; Order No. 2006 addresses interconnection of
smaller generators. Both orders apply the same jurisdictional analysis to QFs.
ii FERC has jurisdiction over all interconnections relating to transmission in interstate commerce or sales
for resale (wholesale sales) of electric power. See 16 U.S.C. §§ 824d, 824e. Because FERC perceives that
generator interconnection service is an integral part of transmission service, FERC regulates
interconnections where the generator would wheel power. See Order No. 2003 at irir 10-11.
12 Order No. 2003 at irir 813-815; Order No. 2006 at irir 516-518.
l3 Order No. 2003 at ir 813 ("(FERC's) Regulations govern a QF's interconnection with most electric
utilties in the United States, including normally nonjurisdictional utilties. When an electric utilty is
obligated to interconnect under Section 292.303 of the Commission's Regulations, that is, when it
purchases the QF's total output, the relevant state authority exercises authority over the interconnection and
the allocation of interconnection costs. But when an electric utilty interconnecting with a QF does not
purchase all of the QF's output and instead transmits the QF power in interstate commerce, the
Commission exercises jurisdiction over the rates, terms and conditions affecting or related to such service,
such as interconnections." (internal citations omitted)).
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER 6
the PURPA purchase obligation by interconnecting and selling directly (without
wheeling) to the interconnected utility or by wheeling though the interconnected utility
and selling to a third-par utility. Nothing in PURPA or Order Nos. 2003 and 2006
gives a QF the right to require the directly interconnected utility to both wheel and
purchase the QF output.
The transaction proposed by the LLCs does not invoke the PURP A mandatory
purchase obligation. The LLCs do not propose to interconnect with and sell directly to
Idaho Power (without a wheel) under 18 C.F.R. § 292.303(a)(1). Nor do the LLCs
propose to have Idaho Power, the directly interconnected utility wheel the net output so
that the QF can sell to another utility under 18 C.F.R. § 292.303(a)(2) and (d). A QF that
interconnects to a utilty's system in one state and buys point-to-point transmission from
that utilty to deliver net output to the utilty's system in a different state is an
unauthorized combination of two well-defined and mutually exclusive legal options.
Neither FERC's regulations implementing PURA nor its regulations implementing its
OATTl4 recognize the fanciful creatue proposed by the LLCs. There is simply no right
under FERC's PURPA regulations to require the same utility to wheel and purchase the
QF's net output. Because PURP A only requires a utilty to purchase QF net output at the
point of interconnection or wheel the net output to a different utility, the Commission
should declare that the LLCs would waive their rights to obligate Idaho Power to
purchase net output unless they deliver net output to Idaho Power at the point of
interconnection with Idaho Power.
14 Although not an issue curently before this Commission, whether the LLCs are eligible for the benefits of
Idaho Power's OATT is another open question requiring resolution if the LLCs are to sell net output to
Idaho Power in Oregon.
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER 7
c. In the alternative, PURP A does not give QFs delivering to the second state
the right to have the second state determine the avoided cost rates.
If the Commission were to find that the PURP A purchase obligation exists for
Idaho Power under the proposed transaction, the LLCs should receive the avoided cost
rate they would have received if they sold to Idaho Power in Idaho because the wheel
from the point of interconnection in Idaho to the point of delivery in Oregon is a
contrivance aimed only at obtaining Oregon's avoided cost rates. The LLCs admit they
plan to wheel from the point of interconnection to Oregon in order to obtain Oregon
standard prices, which they perceive to be more favorable than prices made available by
the Commission in Idaho. 15 As between the point of delivery and the point of
interconnection, there can be no question that the avoided cost applicable to the output at
the point of interconnection (the point where it first reaches Idaho Power's system) better
represents Idaho Power's true avoided cost than does the avoided cost at a distat point of
delivery on Idaho Power's system selected solely to boost the LLCs' profit. A
transaction that is done for the express purpose of boosting a QF's profit at the expense of
utility ratepayers is not authorized by PURP A.
Because the transaction proposed by the LLCs is contrar to PURP A-a federal
statute-Idaho Power's Oregon avoided cost rates are preempted. The Oregon PUC has
approved, under authority of PURP A, Idaho Power's avoided cost rates for projects with
a capacity of 10 MW or less in Idaho Power's Oregon Schedule 85. Idaho Power's
15 LLCs Answer at 10 ("(T)here is nothing unjust about an Idaho based QF seeking the best available
market for its power."). What the LLCs seek to do is to receive published rates notwithstanding the
Commission's recent decision that wind and solar QFs with capacity above 100 kW are ineligible for
published avoided cost rates.
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER 8
Schedule 85 is subject to federal preemption to the extent it conflcts with PURP A. 16
Here, because the LLCs' proposed transaction is not authorized by PURPA, Idaho
Power's Oregon Schedule 85 is preempted. Consequently, the LLCs may not obtain the
benefits of Idaho Power's Oregon Schedule 85 with the transaction they propose. The
LLCs remain eligible for Idaho state avoided costs.
Policy considerations also favor Idaho asserting primar jursdiction over the
transaction proposed by the LLCs. As noted above, the transaction would have a more
substantial impact on Idaho than on Oregon because the vast majority of Idaho Power's
expenditues on output from the LLCs will be borne by its Idaho customers. The LLCs'
proposed transaction would also complicate the administrative process for utilities and
regulators. As explained in Section II.B, supra, jursdiction over the generator
interconnections in the proposed transactions is uncertain at best. Because FERC did not
conceive that a QF may wheel to the directly interconnected utility and obligate the same
utility to purchase net out in Order No. 2006, it did not specify whether such an
interconnection is subject to FERC jursdiction or state jurisdiction.
IV. Conclusion
Rocky Mountain Power respectfully requests that the Commission grant Rocky
Mountain Power intervenor status in this proceeding. Furermore, Rocky Mountain
Power respectfully requests that the Commission declare that the LLCs have no PUR A
right to interconnect to Idaho Power in Idaho and sell to Idaho Power in Oregon and to
declare that, in the alternative, if the LLCs did have such a right, the Commission would
assert primar jurisdiction over the sale to Idaho Power in Oregon and declare that the
16 Gade v. National Solid Wastes Management Ass'n, 505 U.S. 88, 92, 112 S. Ct. 2374 (1992) (conflct
preemption exists when it is impossible to comply with both state and federal regulations)..
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER 9
applicable avoided cost for net output is Idaho Power's avoided cost at the point of
interconnection in Idaho.
DATED this 8th day of September 201 1.
éO~~60i47
Kenneth E. Kaufmann, OSB 982672
Lovinger Kaufman LLP
Attorneys for Rocky Mountain Power
PETITION TO INTERVENE AND COMMENTS OF
ROCKY MOUNTAIN POWER 10
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that, on the 8th day of September, 2011, a tre and correct copy
ofthe foregoing PETITION TO INTERVENE AND COMMENTS OF ROCKY
MOUNTAIN POWER in Case No. IPC-E-11-14 was sered in the maner shown to:
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, ID 83702-5918
jean. jewellê,uc.idaho.gov
(Overnght Delivery and electronic mail)
Daniel E. Solander
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
daniel.solander(iacificorp.com
(First Class Mail and electronic mail)
Donovan E. Walker
Jason B. Wiliams
Idaho Power Company
POBox 70
Boise, ID 83707-0070
dwalker(iidahopower.com
jwiliams(iidahopower.com
(First Class Mail and electronic mail)
Peter J. Richardson
Gregory M. Adams
Richardson & O'Lear, PLLC
515 N 27th Street
Boise, ID 83702
peter(irichardsonandol ear. com
greg(irichardsonandoleary.com
(First Class Mail and electronic mail)
DATED this 8th day of September, 2011.
LOVINGER KAUFMANN LLP
g¿:~
Kenneth E. Kaufman, OSB 982672
Attorney for Rocky Mountain Power